Nickel & Cobalt

[johnlw]

FNX to pay Xstrata $12-million for Craig-Levack drift

2006-12-21 13:31 ET - News Release

Mr. Terry MacGibbon reports

FNX INITIATES ACCESS TO LEVACK FOOTWALL FROM CRAIG MINE

FNX Mining Company Inc. has reached an underground development and advanced exploration agreement with Xstrata Nickel whereby Xstrata Nickel will drive an exploration drift from its Craig mine into FNX's adjoining Levack footwall deposit at the Levack mine property. The development work, totalling 805 metres of 5.0-metre by 5.4-metre drifting from the 4025 level of the Craig mine, consists of a 510-metre access drift to the middle portion of the Levack footwall deposit, 125 metres of crosscut drift to establish diamond drill stations to facilitate detailed drilling of the Levack footwall deposit, and an additional 170 metres of development within the mineralization. This work will also allow geological mapping and sampling of the footwall mineralization and the extraction of a bulk sample for metallurgical testing. Both companies have agreed to discuss driving a similar but shorter (300 m) drift from the Craig mine 30-1 level into the upper portions of the Levack footwall deposit.

The underground program will commence immediately and will continue to the end of 2007 with exposure into the Levack footwall deposit expected by August of 2007. Total cost, including a significant budget for detailed drilling, will be approximately $12-million. Xstrata Nickel will carry out the development work on behalf of FNX and will be reimbursed for all associated costs.

The drilling and downhole geophysical results to date indicate that a continuous polymetallic mineralized system exists from the top of Rob's footwall deposit down to at least the bottom of the lower Levack footwall deposit, a vertical distance of approximately 1,600 feet (2,300 feet along plunge). This mineralized system hosts the Levack high-grade Cu-Ni-Pt-Pd-Au footwall veins and is open in all directions. To date, 59 boreholes have been drilled into the Levack footwall deposit with each borehole containing an average of 9.8 veins that average 2.7 feet in width. The average total width of mineralization per borehole is 26.5 feet grading an average of 12.4 per cent Cu, 1.9 per cent Ni and 11.6 grams per tonne of TPM (Pt+Pd+Au). Forty-one of these boreholes contained an average of 2.7 massive sulphide veins that averaged 4.9 feet in width. The average total width of these massive sulphide veins per borehole was 13.1 feet grading an average of 26.7 per cent Cu, 3.5 per cent Ni and 23.2 grams per tonne TPM. The planned advanced exploration program will help define the deposit and the continuity between the high-grade veins.

Accessing the Levack footwall deposit quickly from underground has been a priority for FNX since the deposit was discovered in February, 2005. The adjoining Craig mine underground infrastructure has already provided excellent drill access from which to drill test the Levack footwall deposit and will now provide a unique opportunity to quickly access the deposit and conduct a planned advanced underground exploration program.

In addition, the company has approved a development and advanced exploration program to be conducted by FNX from its Levack mine 2650 level. The planning and final engineering are expected to be completed by the end of the year with underground work starting early in the new year.

The Craig mine and Levack mine advanced exploration programs will significantly accelerate the delineation and economic evaluation of the Levack footwall deposit and, subject to favourable results, enable it to be put into production as quickly as possible. Although ultimate production plans for the Levack footwall deposit calls for production development and ore extraction through the company's Levack mine infrastructure, underground access from the Craig mine could greatly enhance the production timetable.