TORONTO (miningweekly.com) – Toronto-based FNX Mining earned C$12,5-million in the second quarter, compared with C$11,3-million a year earlier, and has signed an agreement with larger rival Xstrata to process ore at Xstrata's nearby mill, the firm said on Friday.

Revenue fell to C$61,9-million for the three months ended June 30, compared with $112,2-million in the second quarter of 2008.

FNX had cash equivalents of C$131,1-million at the end of the second quarter, working capital of C$137,7-million and no debt.

After nickel prices dropped last year, FNX suspended nickel-ore mining at its McCreedy West and Levack mines, but continues to mine higher-margin copper and precious-metals rich areas at McCreedy, Levack and the new Podolsky mine.

The company sold 1,5-million pounds of payable nickel, 7,9-million pounds of copper, 3 195 oz of gold, 5 926 oz of platinum and 7 411 oz of palladium in the second quarter.

FNX has an agreement with Brazilian-owned Vale Inco, which processes all the ore from FNX's Sudbury, Ontario, operations.

However, ore deliveries from FNX mines have been halted since the end of May, after Vale implemented a planned eight-week shut down, in response to market conditions.

Operations were have to restarted by the end of July, but Vale is locked in a contract dispute with its biggest union in Sudbury, and unionised workers began a strike on July 12. Indications are that the stoppage may be a lengthy one, with no talks scheduled yet between the two sides.

FNX has continued mining, and had stockpiled more than 120 000 t of copper/nickel/precious metal ore by early August.

The company announced on Friday it has signed an agreement with Xstrata Nickel to process up to 150 000 t of FNX ore at the bigger firm's Strathcona mill, on confidential terms.

FNX shares gained 4,7% on Friday, to C$9,81 apiece by 13:48 in Toronto.

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