VANCOUVER – Oct. 14, 2011 eMediaWorld Reports Quadra FNX Mining Ltd. (TSX:QUX) struck a deal Friday October 14, 2011 with Xstrata Nickel to use a mine shaft owned by the company to help develop its Levack mine in northern Ontario.
The company, which also warned that weaker copper prices will affect its third-quarter sales, said the mine shaft will significantly improve flexibility and provide more access to the ore, thereby boosting production.
The 1,500-metre shaft is connected to Quadra FNX’s Morrison deposit.
For Xstrata Nickel, the deal with Quadra FNX allows it to maintain the infrastructure at the former Falconbridge’s Craig mine, which closed in 2009, in working order.
“The access arrangement with Xstrata Nickel provides mutual benefits to both parties going forward,” Blythe said in a release before stock markets opened Friday.
“This will be a significant step forward in the optimization of our high-grade Morrison deposit.”
Under the deal, Quadra FNX will pay US$10 million during the first year of operation and a $2 million a year after that, plus a sliding scale amount for each ton of ore hoisted to the surface using the shaft.
The agreement came as Quadra FNX said its 2011 copper production will come in at the low end of its guidance for about 240 million pounds of copper, plus or minus 10 per cent.
As well, the company said lower copper prices will take a US$6 million bite out of the company’s revenues in the third quarter and it will have to repay about US$20 million for provisional payments received from customers.
Vancouver-based Quadra FNX said Friday that production from its Robinson Mine in Nevada will fall by up to 20 million pounds because of issues which affected operations and access to higher grade ores.
Despite the problems, the company produced 60 million pounds of copper, 26,000 ounces of precious metals and three million pounds of nickel in the third quarter.
“This is our strongest quarter since 2009, driven by Robinson and continuing strong performance from our Sudbury operations,” Blythe said in statement.
Quadra FNX is a mid-tier miner which produces copper, nickel, gold and silver and employs about 2,500 people in North and South America.
In addition to the Robinson and Levack mines, the company has the mines in Nevada, Arizona, northern Chile. The miner also has two big development projects: the Sierra Gorda copper-molybdenum prospect in Chile, and the Victoria project in Sudbury.
Blythe said the company will press ahead to develop its new projects to cash in on expected higher metal prices in the future.
“We will continue to develop Sierra Gorda and Victoria and to increase operating flexibility, so that we are well positioned to take advantage of the higher copper prices that we believe will inevitably return.”
Quadra FNX shares were up 18 cents at $10.40 on the Toronto Stock Exchange.