FNX Mining Company Inc. (TSX:FNX) ("FNX" or the "Company") reports financial and
operational results for the quarter ending June 30, 2009 for its Sudbury Mining
Operations and its DMC Mining Services business ("DMC").
Consolidated net earnings for the second quarter were $12.5 million ($0.14 per
share) on revenues of $61.9 million, compared to net earnings of $11.3 million
($0.13 per share) on $112.2 million in revenues for the same period of 2008. For
the first six months of 2009, the Company had a net loss of $13.7 million
(($0.16) per share) on revenues of $110.8 million, compared to net earnings of
$35.4 million ($0.42 per share) on revenues of $252.9 million for the first six
months of 2008. Excluding the first quarter's Gold Wheaton Gold Corp. ("GLW")
dilution loss, the Company had adjusted earnings of $17.5 million ($0.20 per
share) for the first six months of 2009.
Cash and cash equivalents and working capital as at June 30, 2009 improved to
$131.1 million and $137.7 million respectively, compared to $129.6 million and
$130.1 million respectively as at December 31, 2008 and $114.6 million and
$137.2 million respectively, as at March 31, 2009. FNX continues to have zero
debt.
Terry MacGibbon, Chairman and CEO of FNX stated that, "The benefits of our
earlier prudent and decisive actions to optimize our 2009 operational plans and
the implementation of strict controls on capital, operating and corporate
expenditures to preserve cash are evident in our positive second quarter
results. Not only did the Company generate positive earnings, but we also
strengthened our balance sheet with increases in our cash balance and working
capital, while continuing to aggressively develop our most valuable asset, the
Levack Mine's LFD Deposit."
"However, the Company continues to face challenges at its Sudbury operations
with the extended shutdown of its primary custom processor's Sudbury operations
due to their ongoing labour disruption. The Company suspended all ore shipments
to its primary custom processor at the end of May and to the start of August has
stockpiled on surface over 120,000 tons of Cu-Ni-precious metal ore from its
Podolsky and McCreedy West Mines."
He also stated, "The Company is pleased to announce that it has concluded an
agreement with Xstrata Nickel to process at their Strathcona Mill up to 150,000
tonnes of the Company's stockpiled ore. The terms of the Xstrata Nickel
processing agreement will remain confidential. If the Company's primary custom
processor's facilities continue to be shut down for an extended period, the
Company will continue to mine as planned and to stockpile ore through at least
the rest of 2009. The stockpiled ore will be processed at its primary custom
processor's facilities when their operations resume or possibly at the
Strathcona Mill, if the Xstrata Nickel processing agreement is extended. The
Company has sufficient working capital to continue to mine and stockpile its
production into 2010, if required."
Mr. MacGibbon added, "We will continue to monitor the Company's situation in
light of economic challenges and changes in the global commodity markets and in
the Sudbury mining camp during the balance of 2009. I am confident that, with
its new processing agreement with Xstrata Nickel, a strong balance sheet and
streamlined operations, the Company will not only continue to prosper with
improvements in global markets, but to grow and take advantage of business
opportunities that may emerge."
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Table 1 -
Financial and Operating Highlights Q2 2009 Q2 2008 YTD 2009 YTD 2008
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Consolidated
------------
Revenue 61,869 112,200 110,822 252,916
Net Earnings (Loss) (C$000) 12,453 11,341 (13,698) 35,404
Basic Earnings (Loss) per Share (C$) $0.14 $0.13 ($0.16) $0.42
Diluted Earnings (Loss) per Share (C$) $0.14 $0.13 ($0.16) $0.42
Cash and Cash Equivalents (C$000) 131,076 39,472 131,076 39,472
Cash Flow from Operating Activities
(C$000) 18,076 13,531 15,403 69,327
Cash Flow per Share (C$) $0.21 $0.16 $0.18 $0.82
Adjusted EBITDA (C$000) 17,765 31,645 30,150 79,926
Mining Operations
-----------------
Total Revenue (C$000) 50,196 75,192 85,681 166,515
Cash Operating Costs (C$000) 28,533 51,066 51,439 96,298
Cash Operating Margin (C$000) 21,663 24,126 34,242 70,217
Depreciation and Amortization (C$000) 1,734 12,520 4,766 21,113
Operating Margin (C$000) 19,929 11,606 29,476 49,104
Net Earnings (Loss) (C$000) 13,723 12,957 (11,465) 37,728
Cash Flow From Operating Activities
(C$000) 10,609 10,914 11,962 66,067
Total Ore Sold (tons) 192,023 352,765 297,067 637,664
Nickel Ore Sold (tons) 29,615 220,579 34,030 419,633
Grade of Nickel Ore Sold (%Ni) 2.0 1.1 2.0 1.2
Payable Metal Sold - Nickel (000 lbs) 1,545 3,491 2,722 6,983
Copper Ore Sold (tons) 162,408 132,186 263,037 218,031
Grade of Copper Ore Sold (%Cu) 2.5 2.9 3.8 3.4
Payable Metal Sold - Copper (000 lbs) 7,857 7,262 17,575 14,154
Payable Metal Sold - Total Precious
Metals (oz) 16,532 11,582 23,947 18,854
Minesite Revenue per Ton Sold (C$) 274 213 306 261
Cash Operating Costs per Ton Sold (C$) 148 145 173 151
Minesite Cash Operating Margin per
Ton Sold (C$) 126 68 133 110
Realized Nickel Price (US$/lb) 7.55 9.21 6.45 11.82
Realized Copper Price (US$/lb) 2.51 3.70 2.10 3.77
Exchange Rate (C$ /US$) 1.17 1.01 1.21 1.01
DMC Mining Services
-------------------
Total Revenue (C$000) 11,673 37,008 25,141 86,401
Cash Operating Costs (C$000) 11,269 35,215 24,542 82,199
Cash Operating Margin (C$000) 404 1,793 599 4,202
Net Earnings (Loss) (C$000) (1,270) (1,616) (2,233) (2,324)
Cash Flow from Operating Activities
(C$000) 7,467 2,617 3,441 3,260
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Certain of the above items are considered to be non-GAAP performance
measures (see below)
Cash flow from operating activities and adjusted EBITDA for this quarter were
$18.1 million and $17.8 million respectively, compared to $13.5 million and
$31.6 million respectively in the same period of 2008. For the first half of
2009, cash flow and adjusted EBITDA were $15.4 million and $30.2 million
respectfully, compared to $69.3 million and $79.9 million respectfully in the
first six months of 2008. The net change in cash balance as a result of
operating, financing and investing activities was a net inflow of $16.5 million
during the 2009 second quarter and a net inflow of $1.5 million year to date,
compared to $10.3 million and $4.3 million respectively in 2008.
Mining Operations
Production from the Sudbury Mining Operations during second quarter generated
revenues of $50.2 million and $85.7 million year to date 2009, compared to $75.2
million and $166.5 million respectively for the same periods of 2008. Sudbury
Mining Operations shipped a total of 192,000 tons of ore during the second
quarter bringing total ore shipped for the first half of 2009 to 297,000 tons.
This compares to 353,000 tons and 638,000 tons for the second quarter and first
half of 2008, respectively. The second quarter production consisted of 162,000
tons of footwall ore from PM and Podolsky and 3,249 tons of transition
nickel-copper ore from the up-dip extension of the LFD (formerly Rob's Deposit)
operational earning during second quarter contained a provisional price
adjustment of $13.6 million.
Tables 2 and 3 summarize second quarter and year to date production statistics
from the Podolsky operations and Levack Complex, respectively.
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Table 2 - Production and Sales Summary Three months ended Six months ended
June 30 June 30
Podolsky Mine 2009 2008 2009 2008
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Copper Ore Sold (tons) 64,029 54,895 156,378 79,007
Grade of Copper Ore Sold (%Cu) 4.5 5.4 5.6 7.3
Payable Metal Sold
Nickel (000s lbs) 306 377 1,105 718
Copper (000s lbs) 5,428 4,845 14,780 9,480
TPM (ozs) 7,751 5,349 11,674 8,075
Metal Sales and Costs
Net Minesite Revenue ($/ton of ore sold) 431 519 372 687
Cash Cost ($/ton of ore sold) 175 212 198 257
Minesite Cash Operating Margin ($/ton of
ore sold) 256 307 174 430
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Table 3 - Production and Sales Summary Three months ended Six months ended
June 30 June 30
Levack Complex 2009 2008 2009 2008
----------------------------------------------------------------------------
Nickel Ore Sold (tons) 29,615 220,579 34,030 419,633
Copper Ore Sold (tons) 98,379 77,291 106,659 139,024
----------------------------------
----------------------------------
Total Ore Sold 127,994 297,870 140,689 558,657
----------------------------------
----------------------------------
Grade of Nickel Ore (%Ni) 2.0 1.1 2.0 1.2
Grade of Copper Ore (%Cu) 1.3 1.2 1.3 1.2
Payable Metal Sold
Nickel (000s lbs) 1,239 3,114 1,617 6,265
Copper (000s lbs) 2,429 2,417 2,795 4,674
TPM (ozs) 8,781 6,233 12,273 10,779
Metal Sales and Costs
Net Minesite Revenue ($/ton of ore sold) 195 157 233 201
Cash Cost ($/ton of ore sold) 135 132 145 136
Minesite Cash Operating Margin ($/ton of
ore sold) 60 25 88 65
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Total payable metals for the second quarter consisted of 1.5 million pounds of
nickel, 7.9 million pounds of copper, 3,195 ounces of gold, 5,926 ounces of
platinum and 7,411 ounces of palladium. For the first half of 2009, payable
metals totaled 2.7 million pounds of nickel, 17.6 million pounds of copper,
3,532 ounces of gold, 8,705 ounces of platinum and 11,710 ounces of palladium.
This compares to payable metals in the second quarter of 2008 of 3.5 million
pounds of nickel, 7.3 million pounds of copper and 11,582 ounces of TPM, and 7.0
million pounds, 14.2 million pounds and 18,854 ounces respectively in the first
half of 2008.
The average realized prices for metals in this quarter were US$7.55 per pound
for nickel, US$2.51 per pound for copper, US$931 per ounce for gold, US$1,292
per ounce for platinum and US$279 per ounce for a palladium, compared to
US$9.21, US$3.70, US$862, US$2,041, and US$453 respectively in the same period
in 2008. Year to date the average realized metal prices were US$6.45 per pound
for nickel, US$2.10 per pound for copper, US$1,000 per ounce for gold, US$1,481
per ounce for platinum and US$279 per ounce for palladium, compared to US$11.82,
US$3.77, US$911, US$2,308, and US$524 respectively for the first half of 2008.
The average minesite revenue per ton during this reporting quarter was $274
while the average cash operating cost per ton was $148, leaving an average
minesite cash operating margin per ton of $126, compared to $213, $145 and $68
in the same period of 2008. For the first half of 2009, the average minesite
cash operating margin per ton was $133, compared to $110 in the first half of
2008.
Shipping of ore from the company's Sudbury Mining Operations was suspended at
the end of May, when the Company's third party processor implemented an extended
shutdown, which subsequently became a labour disruption. FNX has continued to
produce ore according to our 2009 production plan and is stockpiling ore on
surface sites for future shipment.
This reporting quarter, the Podolsky Mine shipped 64,000 tons (see Table 2) of
footwall ore with an average copper grade of 4.5%, compared to 55,000 tons at an
average grade of 5.4% copper in the same period last year. Year to date shipped
production from Podolsky totaled 156,000 tons at an average copper grade of
5.6%, compared to 79,000 tons grading 7.3% copper in the six months to June 30,
2008. These production numbers refer only to shipped ore and exclude ore in
stockpile reported as inventory.
Production during the second quarter from the Levack Complex (see Table 3)
consisted of footwall ore from the PM Deposit, limited contact nickel ore from
the Inter Main and transitional nickel-copper ore from the up-dip extension of
the LFD. Total ore shipped from the Levack Complex in this quarter was 128,000
tons producing 1.2 million pounds of payable nickel, 2.4 million pounds of
payable copper and 8,781 ounces of TPM, compared to 298,000 tons yielding 3.1
million pounds of payable nickel, 2.4 million pounds of payable copper and 6,233
ounces of TPM shipped in the same period of 2008. Year to date the Levack
Complex shipped 141,000 tons, compared to 559,000 tons in the first half of
2008. Ore stockpiled and unshipped since the end of May is excluded from these
totals and included in the inventories.
The second quarter safety performance for the Sudbury Mining Operations included
one Lost Time Injury and five Medical Aid Injuries, compared to three Lost Time
Injuries in the 2008 second quarter. The Lost Time Injury Frequency Rate for
Sudbury was 0.9 and the Total Medical Injury Frequency Rate was 5.2, compared to
1.1 and 8.9, respectively in 2008.
There were no reported environmental incidents in this reporting quarter and
year to date.
Development
The primary development focus for the Company continues to be advancing the LFD
toward commercial production start up in 2010. The advance of the access decline
ramp to the LFD remains on schedule. During the second quarter, the ramp face
advanced 190 vertical feet to the 3500 Level. Three ore accesses were
established at the 3390, 3450 and 3510 Levels and an access heading to the fresh
air raise commenced. Extension of a ventilation and secondary egress raise was
completed to the 3220 Level during this quarter. Three underground diamond drill
rigs were active all through second quarter supporting optimal access ramp
planning and targeting sub-level access locations. All three drills will remain
active during the third quarter.
Reconditioning of the Levack #2 Shaft below the 2900 Level continued to progress
during the second quarter, limited by water inflow management. Shaft
reconditioning progressed by 175 vertical ft and should reach the target depth
at the 3600 Level in the third quarter of 2009. The current timeline for the
utilization of the 3600 Level to further develop the LFD remains the fourth
quarter of 2009.
Focused narrow vein mining in the up-dip extension of the LFD continued in the
second quarter. Several level accesses will be driven into ore during the third
quarter in preparation for removal of pre-production LFD development ore late in
2009. Other development work at the Levack Complex during the second quarter
included 1,234 ft of drifting on the PM Deposit at the McCreedy West Mine.
Development at the Podolsky Mine during this reporting quarter focused on
advancing the main access ramp and related lateral development. Total
advancement for the quarter was 1,543 ft, including lateral work on the 2300 and
2375 Levels plus access ramp development up to the 2225 Level. The main access
ramp will be completely connected internally later in 2009 to support ongoing
stope access. Other development at the Podolsky site included work on the
backfill plant and system and work on the new exhaust ventilation raise.
Total capital expenditures for the second quarter were $14.7 million, including
$8.5 million for LFD development, $3.4 million at Podolsky and $1.8 million at
the Levack Complex. Total capital expenditures for 2009 to the end of June were
$27.8 million, compared to $98.4 million to the end of June, 2008.
Exploration
FNX completed a $15.0 million flow-through financing during the second quarter
to be used to explore the Company's non-producing properties in Sudbury. This
flow-through financing will allow FNX's exploration team to dramatically
increase its exploration activity for the balance of 2009 and 2010 without
impacting the Company's cash position.
A preliminary flow-through budget of $6.2 million is planned for 2009 and
flow-through exploration programs began in June. The focus for 2009 flow-through
exploration will be drilling and geophysical programs at Victoria, the
Falconbridge Footwall, Kirkwood, Nickel Lake and Foy Offset.
Total exploration expenditures on all projects in Sudbury during second quarter
were $0.8 million, bringing the total year to date to $0.9 million. During the
second quarter, the focus remained on detailed drilling on the LFD from drill
platforms established from the 2650 access ramp. Three underground drill rigs
continued to test the up-dip extension of the LFD at the 3400, 3450 and 3500
Levels in order to support lateral development planning and to provide data for
resource estimates later in 2009 on the up-dip extension of the LFD. During
second quarter, 50 holes were drilled on the up-dip extension of the LFD for a
total of 25,935 ft. This brings the 2009 year to date total drilling on the
up-dip extension of the LFD to 39,547 ft in 68 holes.
On underground drill rig continued to operate in the McCreedy West PM Deposit in
support of production. In the second quarter at the PM Deposit, 67 holes were
drilled for a total footage of 12,385 ft. This brings the total footage drilled
on the PM Deposit year to date to 38,166 ft in 209 holes.
DMC Mining Services
Revenues from DMC totaled $11.7 million for the three months ended June 30, 2009
and $25.1 million for the first six months of 2009, compared to $37.0 million
and $86.4 million, respectively in 2008. Contract costs for the second quarter
were $11.3 million and depreciation and amortization expenses totaled $1.1
million.
Cash operating margin, calculated as the operating revenues of DMC less
operating costs and excluding depreciation and amortization, was $0.4 million
during this quarter, compared to $1.8 million in the same period of 2008. For
the six months ended June 30, 2009 the cash operating margin was $0.6 million,
compared to $4.2 million in the same period of 2008.
Overall DMC incurred losses of $1.3 million and $2.2 million for the three and
six months ended June 30, 2009 respectively, compared to losses of $1.6 million
and $2.3 million respectively for the comparable periods in 2008.
Operating cash flow for the second quarter and first half of 2009 was $7.5
million and $3.4 million respectively in 2009. As at June 30, 2009, DMC had a
cash balance of $12.5 million compared to $9.4 million December 31, 2008 and
$6.3 million at the end of the first quarter of 2009.
The overall climate for the mining contracting business in the US remains
positive, while the Canadian segment has shown slightly increased levels of
activity, but remains very competitive. At the end of the second quarter, DMC
had a work backlog of approximately $36.9 million with $25.6 million of that
scheduled for completion in 2009. DMC continues to pursue new clients and
contracts to replace expiring contracts. DMC re-structured the organization late
in 2008 to ensure the operating costs were appropriate to the volume of business
forecast for 2009.
These changes have been effective in containing costs and should allow DMC to
break even on a cash flow basis in 2009, based on our current work backlog.
Investments
FNX accounts for its investment in GLW using the equity method and is,
therefore, required to include in earnings FNX's share of GLW's earnings or loss
for the period and the Company's investment therein is adjusted by an equivalent
amount. For the quarter ended June 30, 2009, FNX's 26% share of the earnings of
its equity investee, GLW, was $nil, compared to a loss of $0.2 million in the
first quarter of 2009.
The note receivable from GLW for $50 million was renegotiated on December 8,
2008 and the due date of the note was extended to July 16, 2010. Due to the
nature of the renegotiated note receivable, both a call and put option exist on
the derivative, which must be fair valued at each balance sheet date with any
changes thereto charged or credited to earnings. As a result of the above, the
carrying value of the note receivable at June 30, 2009 was $38.8 million, a
difference of $3.0 million from the end of the first quarter.
As at June 30, 2009, the market value of FNX's 360 million GLW shares was
approximately $97.2 million, while the market value of the entire investment
portfolio was approximately $105.5 million.
Share Capital
During the second quarter, share capital increased to 87,063,190 common shares
issued and outstanding as a result of the exercise of 12,500 options and the
issuance of 2,173,914 flow-through shares in April. Year to date 2009, share
capital has increased by $14.5 million as a result of the 12,500 stock option
exercise and the issuance of flow-through shares. As of June 30, 2009 stock
options to purchase 3,654,833 million Common shares at a weighted average
exercise price of $13.65 were outstanding. Including 320,146 outstanding
deferred share units, the fully diluted share total was 90,718,023 as at June
30, 2009.
Forward-Looking Statement
Certain information included in this press release, including information
relating to future financial or operating performance and other statements that
express management's expectations or estimates of future performance constitute
"forward-looking statements." Such forward-looking statements include, without
limitation, (i) estimates of future capital expenditures; (ii) estimates
regarding timing of future development and production; and (iii) estimates of
future costs towards profitable commercial operations. Where the Company
expresses or implies an expectation or belief as to future events or results,
such expectation or belief is expressed in good faith and believed to have a
reasonable basis. However, forward-looking statements are subject to risks,
uncertainties and other factors, which could cause actual results to differ
materially from future results expressed, projected or implied by such
forward-looking statements. Such risks include, but are not limited to,
interpretation and implications of drilling and geophysical results; estimates
regarding timing of future capital expenditures and costs towards profitable
commercial operations. Other factors that could cause actual results,
developments or events to differ materially from those anticipated include,
among others, increases/decreases in production; volatility in metals prices and
demand; currency fluctuations; cash operating margins; cash operating cost per
pound sold; costs per ton of ore; variances in ore grade or recovery rates from
those assumed in mining plans; reserves and/or resources; the ability to
successfully integrate acquired assets; operational risks inherent in mining or
development activities, and legislative factors relating to prices, taxes,
royalties, land use, title and permits, importing and exporting of minerals and
environmental protection. Accordingly, undue reliance should not be placed on
forward-looking statements. These forward-looking statements are made as at the
date hereof and the Company does not undertake any obligation to update publicly
or revise any such forward-looking statements or any forward-looking statements
contained in any other documents whether as a result of new information, future
events or otherwise, except as may be required under applicable securities law.
For a more detailed discussion of such risks and other factors, see the
Company's latest filings with Canadian securities regulators.
CONFERENCE CALL
FNX will be hosting a Second Quarter Conference Call on August 14, 2009 at 10:00
am Eastern Time.
CONFERENCE CALL numbers are:
Live in North America:
Toll-Free Access: 1-888-789-9572 or 416-695-7806
Ask for the FNX Mining Conference Call or Enter Passcode: 411336#
Replay Access information:
Toll-Free Access: 1-800-408-3053 or 416-695-5800
Passcode: 3186288#
Available until September 18, 2009 at Midnight (Toronto Time)
Slides for the conference call may be accessed on the Company's website
www.fnxmining.com.
Note: The unaudited balance sheet, statement of operations and statement of cash
flow are appended to this news release.
Consolidated Balance Sheets
(in thousands of Canadian dollars)
(Unaudited) June 30 December 31
As at 2009 2008
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$ $
Assets
Current
Cash and cash equivalents 131,076 129,561
Accounts receivable 44,523 59,324
Inventory 5,145 2,307
Prepaid and other assets 2,025 1,504
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182,769 192,696
Investments 8,234 4,009
Investment in Gold Wheaton 187,846 215,620
Property, plant and equipment 455,515 435,114
Reclamation deposits 6,485 6,485
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840,849 853,924
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Liabilities
Current
Accounts payable and accrued liabilities 26,858 36,136
Deferred revenue 18,180 26,433
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45,038 62,569
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Long-term deferred revenue 369,852 368,969
Mine closure and site restoration 5,554 5,393
Future income and resource taxes 56,850 60,499
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432,256 434,861
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477,294 497,430
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Shareholders' equity
Share capital 586,280 571,750
Contributed surplus - stock-based compensation 16,287 13,741
Retained earnings (deficit) (234,278) (220,580)
Accumulated other comprehensive income (loss) (4,734) (8,417)
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363,555 356,494
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840,849 853,924
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Consolidated Segmented Balance Sheets
(in thousands of Canadian dollars) (Unaudited)
As at June 30, 2009 Mining DMC Total
----------------------------------------------------------------------------
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Assets $ $ $
Cash and cash equivalents 118,622 12,454 131,076
Accounts receivable 36,015 8,508 44,523
Other current assets 5,606 1,564 7,170
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160,243 22,526 182,769
Investments 8,234 - 8,234
Investment in Gold Wheaton 187,846 - 187,846
Property, plant and equipment 432,332 23,183 455,515
Reclamation deposits 6,485 - 6,485
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795,140 45,709 840,849
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Liabilities
Accounts payable and accrued liabilities 20,095 6,763 26,858
Deferred revenue 18,090 90 18,180
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38,185 6,853 45,038
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Long-term deferred revenue 369,852 - 369,852
Mine closure and site restoration 5,554 - 5,554
Future income and resource taxes 56,017 833 56,850
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431,423 833 432,256
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469,608 7,686 477,294
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As at December 31, 2008 Mining DMC Total
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Assets $ $ $
Cash and cash equivalents 120,131 9,430 129,561
Accounts receivable 44,459 14,865 59,324
Other current assets 2,823 988 3,811
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167,413 25,283 192,696
Investments 4,009 - 4,009
Investment in Gold Wheaton 215,620 - 215,620
Property, plant and equipment 409,718 25,396 435,114
Reclamation deposits 6,485 - 6,485
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803,245 50,679 853,924
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Liabilities
Accounts payable and accrued liabilities 28,469 7,667 36,136
Deferred revenue 25,456 977 26,433
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53,925 8,644 62,569
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Long-term deferred revenue 368,969 - 368,969
Mine closure and site restoration 5,393 - 5,393
Future income and resource taxes 59,374 1,125 60,499
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433,736 1,125 434,861
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487,661 9,769 497,430
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Consolidated Statements of Operations
(in thousands of Canadian dollars Three months ended Six months ended
except earnings per share) June 30 June 30
(Unaudited) 2009 2008 2009 2008
----------------------------------------------------------------------------
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$ $ $ $
Operating revenues 61,869 112,200 110,822 252,916
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Operating expenses
Expenses, excluding depreciation and
amortization 39,802 86,281 75,981 178,497
Depreciation and amortization 2,857 14,826 7,108 25,716
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42,659 101,107 83,089 204,213
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19,210 11,093 27,733 48,703
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Expenses
Administration 1,502 4,341 4,469 7,016
Capital taxes - (1,803) - (1,803)
Depreciation 215 198 449 418
Stock-based compensation 2,553 1,389 3,906 2,563
Dilution loss - - 31,238 -
Other expenses (income) (531) (8,017) (4,078) (10,839)
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3,739 (3,892) 35,984 (2,645)
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Earnings (loss) before taxes and other 15,471 14,985 (8,251) 51,348
Income and resource taxes recovery
(expense) (3,020) (3,644) (5,219) (15,944)
Share of income (loss) of equity
investee 2 - (228) -
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Net earnings (loss) for the period 12,453 11,341 (13,698) 35,404
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Basic earnings (loss) per share $0.14 $0.13 ($0.16) $0.42
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Diluted earnings (loss) per share $0.14 $0.13 ($0.16) $0.42
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Consolidated Segmented Statements of Operations
(in thousands of Canadian dollars)
(Unaudited)
For the three months ended June 30, 2009 Mining DMC Total
----------------------------------------------------------------------------
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$ $ $
Operating revenues 50,196 11,673 61,869
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Operating expenses
Expenses, excluding depreciation and amortization 28,533 11,269 39,802
Depreciation and amortization 1,734 1,123 2,857
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30,267 12,392 42,659
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19,929 (719) 19,210
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Expenses
Administration 1,502 - 1,502
Depreciation 215 - 215
Stock-based compensation 2,385 168 2,553
Other expenses (income) (559) 28 (531)
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3,543 196 3,739
----------------------------------------------------------------------------
Earnings (loss) before taxes and other 16,386 (915) 15,471
Income and resource taxes recovery (expense) (2,665) (355) (3,020)
Share of income (loss) of equity investee 2 - 2
----------------------------------------------------------------------------
Net earnings (loss) for the period 13,723 (1,270) 12,453
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the six months ended June 30, 2009 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Operating revenues 85,681 25,141 110,822
----------------------------------------------------------------------------
Operating expenses
Expenses, excluding depreciation and amortization 51,439 24,542 75,981
Depreciation and amortization 4,766 2,342 7,108
----------------------------------------------------------------------------
56,205 26,884 83,089
----------------------------------------------------------------------------
29,476 (1,743) 27,733
----------------------------------------------------------------------------
Expenses
Administration 4,469 - 4,469
Depreciation 449 - 449
Stock-based compensation 3,535 371 3,906
Dilution loss 31,238 - 31,238
Other expenses (income) (3,842) (236) (4,078)
----------------------------------------------------------------------------
35,849 135 35,984
----------------------------------------------------------------------------
Earnings (loss) before taxes and other (6,373) (1,878) (8,251)
Income and resource taxes recovery (expense) (4,864) (355) (5,219)
Share of income (loss) of equity investee (228) - (228)
----------------------------------------------------------------------------
Net earnings (loss) for the period (11,465) (2,233) (13,698)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated Segmented Statements of Operations
(in thousands of Canadian dollars)
(Unaudited)
For the three months ended June 30, 2008 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Operating revenues 75,192 37,008 112,200
----------------------------------------------------------------------------
Operating expenses
Expenses, excluding depreciation and amortization 51,066 35,215 86,281
Depreciation and amortization 12,520 2,306 14,826
----------------------------------------------------------------------------
63,586 37,521 101,107
----------------------------------------------------------------------------
11,606 (513) 11,093
----------------------------------------------------------------------------
Expenses
Administration 4,341 - 4,341
Capital taxes (1,803) - (1,803)
Depreciation 198 - 198
Stock-based compensation 832 557 1,389
Other expenses (income) (8,017) - (8,017)
----------------------------------------------------------------------------
(4,449) 557 (3,892)
----------------------------------------------------------------------------
Earnings before taxes 16,055 (1,070) 14,985
Income and resource taxes 3,098 546 3,644
----------------------------------------------------------------------------
Net earnings (loss) for the period 12,957 (1,616) 11,341
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the six months ended June 30, 2008 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Operating revenues 166,515 86,401 252,916
----------------------------------------------------------------------------
Operating expenses
Expenses, excluding depreciation and amortization 96,298 82,199 178,497
Depreciation and amortization 21,113 4,603 25,716
----------------------------------------------------------------------------
117,411 86,802 204,213
----------------------------------------------------------------------------
49,104 (401) 48,703
----------------------------------------------------------------------------
Expenses
Administration 7,016 - 7,016
Capital taxes (1,803) - (1,803)
Depreciation 418 - 418
Stock-based compensation 1,430 1,133 2,563
Other expenses (income) (10,192) (647) (10,839)
----------------------------------------------------------------------------
(3,131) 486 (2,645)
----------------------------------------------------------------------------
Earnings before taxes 52,235 (887) 51,348
Income and resource taxes 14,507 1,437 15,944
----------------------------------------------------------------------------
Net earnings (loss) for the period 37,728 (2,324) 35,404
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated Statements of Cash Flow Three months ended Six months ended
(in thousands of Canadian dollars) June 30 June 30
(Unaudited) 2009 2008 2009 2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $
Operating activities
Net earnings (loss) for the period 12,453 11,341 (13,698) 35,404
Non-cash items
Depreciation and amortization 3,072 15,024 7,557 26,134
Stock-based compensation 1,382 1,389 2,565 2,563
Future income and resource taxes (5,670) 1,523 (3,471) 10,497
Amortization of Gold Wheaton
deferred revenue (4,344) - (6,483) -
Gain on disposal of shares - (8,461) - (8,461)
Gain on disposal of fixed assets (3) - (3) (94)
Mark-to-market and accretion of Gold
Wheaton note receivable (3,004) - (3,692) -
(Increase) decrease in value of
investments held-for-trading (120) 215 (117) 253
Share of (income) loss of equity
investee (2) - 228 -
Dilution loss - - 31,238 -
Other (18) 143 2 (101)
----------------------------------------------------------------------------
3,746 21,174 14,126 66,195
Net change in non-cash working
capital 14,330 (7,643) 1,277 3,132
----------------------------------------------------------------------------
18,076 13,531 15,403 69,327
----------------------------------------------------------------------------
Financing activities
Common shares issued 15,063 301 15,063 641
Transaction costs on shares issued (752) (752)
Bank indebtedness - advance - 45,837 - 45,837
Bank indebtedness - payment - (25,465) - (25,465)
----------------------------------------------------------------------------
14,311 20,673 14,311 21,013
----------------------------------------------------------------------------
Investing activities
Investments - - - (10,000)
Property, plant and equipment (14,663) (45,741) (27,774) (98,401)
Proceeds from disposal of
investments - 21,441 - 21,441
----------------------------------------------------------------------------
(14,663) (24,300) (27,774) (86,960)
----------------------------------------------------------------------------
Effect of exchange rate changes on
cash (1,220) 431 (425) 932
----------------------------------------------------------------------------
Change in cash and cash equivalents
for the period 16,504 10,335 1,515 4,312
Cash and cash equivalents - beginning
of period 114,572 29,137 129,561 35,160
----------------------------------------------------------------------------
Cash and cash equivalents - end of
period 131,076 39,472 131,076 39,472
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated Segmented Statements of Cash Flow
(in thousands of Canadian dollars) (Unaudited)
For the three months ended June 30, 2009 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating activities $ $ $
Net earnings (loss) for the period 13,723 (1,270) 12,453
Non-cash items
Depreciation and amortization 1,949 1,123 3,072
Stock-based compensation 1,214 168 1,382
Future income and resource taxes (5,378) (292) (5,670)
Amortization of Gold Wheaton deferred revenue (4,344) - (4,344)
Mark-to-market and accretion of Gold Wheaton note (3,004) - (3,004)
Share of (income) loss of equity investee (2) - (2)
Other (136) (5) (141)
----------------------------------------------------------------------------
4,022 (276) 3,746
Net change in non-cash working capital 6,587 7,743 14,330
----------------------------------------------------------------------------
10,609 7,467 18,076
Financing activities
Common shares issued 14,311 - 14,311
Investing activities
Property, plant and equipment (14,602) (61) (14,663)
Effect of exchange rate changes on cash - (1,220) (1,220)
----------------------------------------------------------------------------
Change in cash and cash equivalents for the period 10,318 6,186 16,504
Cash and cash equivalents - beginning of period 108,304 6,268 114,572
----------------------------------------------------------------------------
Cash and cash equivalents - end of period 118,622 12,454 131,076
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the six months ended June 30, 2009 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating activities $ $ $
Net earnings (loss) for the period (11,465) (2,233) (13,698)
Non-cash items
Depreciation and amortization 5,215 2,342 7,557
Stock-based compensation 2,194 371 2,565
Future income and resource taxes (3,179) (292) (3,471)
Amortization of Gold Wheaton deferred revenue (6,483) - (6,483)
Mark-to-market and accretion of Gold Wheaton note (3,692) - (3,692)
Share of (income) loss of equity investee 228 - 228
Dilution loss 31,238 - 31,238
Other (261) 143 (118)
----------------------------------------------------------------------------
13,795 331 14,126
Net change in non-cash working capital (1,833) 3,110 1,277
----------------------------------------------------------------------------
11,962 3,441 15,403
Financing activities
Common shares issued 14,311 - 14,311
Investing activities
Property, plant and equipment (27,785) 11 (27,774)
Effect of exchange rate changes on cash - (425) (425)
----------------------------------------------------------------------------
Change in cash and cash equivalents for the period (1,509) 3,024 1,515
Cash and cash equivalents - beginning of period 120,131 9,430 129,561
----------------------------------------------------------------------------
Cash and cash equivalents - end of period 118,622 12,454 131,076
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated Segmented Statements of Cash Flow
(in thousands of Canadian dollars) (Unaudited)
For the three months ended June 30, 2008 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Operating activities
Net earnings (loss) for the period 12,957 (1,616) 11,341
Non-cash items
Depreciation and amortization 12,718 2,306 15,024
Stock-based compensation 1,048 557 1,605
Future income and resource taxes 1,523 - 1,523
Other (8,319) - (8,319)
----------------------------------------------------------------------------
19,927 1,247 21,174
Net change in non-cash working capital (9,013) 1,370 (7,643)
----------------------------------------------------------------------------
10,914 2,617 13,531
Financing activities
Bank indebtedness - net 20,372 - 20,372
Common shares issued 301 - 301
Investing activities
Proceeds from disposal of investments 21,441 - 21,441
Property, plant and equipment (45,711) (30) (45,741)
Effect of exchange rate changes on cash - 431 431
----------------------------------------------------------------------------
Change in cash and cash equivalents for the period 7,317 3,018 10,335
Cash and cash equivalents - beginning of period 18,957 10,180 29,137
----------------------------------------------------------------------------
Cash and cash equivalents - end of period 26,274 13,198 39,472
----------------------------------------------------------------------------
----------------------------------------------------------------------------
For the six months ended June 30, 2008 Mining DMC Total
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $
Operating activities
Net earnings (loss) for the period 37,728 (2,324) 35,404
Non-cash items
Depreciation and amortization 21,531 4,603 26,134
Stock-based compensation 1,673 1,133 2,806
Future income and resource taxes 10,497 - 10,497
Other (8,552) (94) (8,646)
----------------------------------------------------------------------------
62,877 3,318 66,195
Net change in non-cash working capital 3,190 (58) 3,132
----------------------------------------------------------------------------
66,067 3,260 69,327
Financing activities
Bank indebtedness - net 20,372 - 20,372
Common shares issued 641 - 641
Investing activities
Investments (10,000) - (10,000)
Property, plant and equipment (96,494) (1,907) (98,401)
Proceeds from disposal of investment 21,441 - 21,441
Effect of exchange rate changes on cash - 932 932
----------------------------------------------------------------------------
Change in cash and cash equivalents for the period 2,027 2,285 4,312
Cash and cash equivalents - beginning of period 24,247 10,913 35,160
----------------------------------------------------------------------------
Cash and cash equivalents - end of period 26,274 13,198 39,472
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated Statements of Retained Earnings (Deficit)
(in thousands of Canadian dollars)
(Unaudited) Three months ended Six months ended
June 30 June 30
2009 2008 2009 2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $
Retained earnings (deficit) -
beginning of period (246,731) 192,023 (220,580) 167,960
Net earnings (loss) for the period 12,453 11,341 (13,698) 35,404
----------------------------------------------------------------------------
Retained earnings (deficit) - end of
period (234,278) 203,364 (234,278) 203,364
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Consolidated Statements of Comprehensive Income (Loss)
(in thousands of Canadian dollars)
(Unaudited) Three months ended Six months ended
June 30 June 30
2009 2008 2009 2008
----------------------------------------------------------------------------
----------------------------------------------------------------------------
$ $ $ $
Net earnings (loss) for the period 12,453 11,341 (13,698) 35,404
Other comprehensive income, net of
tax
Unrealized gains (loss) on available
for sale investments 3,515 (5,727) 4,108 (7,802)
Cumulative translation adjustment (1,220) (109) (425) 561
----------------------------------------------------------------------------
Comprehensive income (loss) 14,748 5,505 (10,015) 28,163
----------------------------------------------------------------------------
----------------------------------------------------------------------------
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