Message to Shareholders
The combination of Quadra Mining Ltd. and FNX Mining Company Inc. created a new intermediate copper-focused company operating in low risk locations in the Americas. Quadra FNX Mining Ltd. has a market capitalization of approximately CDN$3.0 billion giving it the critical mass to aggressively grow through a combination of exploration, organic growth and M&A transactions. The Company has a strong balance sheet to support current and future growth, including approximately US$600 million in cash and investments and US$50 million in debt. Quadra FNX currently operates five mines in Canada, Chile and the US, which are projected to produce approximately 300 million pounds of copper and more than 150,000 ounces of gold, platinum and palladium in 2010. The Company operates in two of the world's most prolific and prospective mining camps, the Sudbury Basin in Canada and Chile's Atacama District.Quadra FNX contains significant organic growth from the high grade, copper-precious metal Morrison Deposit located in the Sudbury Basin and the large scale Sierra Gorda Deposit in Chile. The former is scheduled to commence production in mid-2010, while the latter is the subject of a US$40 million feasibility study to be completed by the end of 2010. Quadra FNX recently entered into a non-binding memorandum of understanding ("MOU") to form a 50/50 joint venture with State Grid International Development Limited ("State Grid") of China on the Franke and Sierra Gorda deposits with the potential to invest in other prospective copper assets, initially in Chile. Under the MOU, State Grid would secure the necessary financing for the Sierra Gorda development and would make a $150 million private placement upon closing of the joint venture.
Quadra FNX combines two entrepreneurial and growth-focused managements and boards. The Company incorporates the exploration, underground mining and contract skills of FNX and the open pit, processing and M&A skills of Quadra. Quadra FNX will provide significant leverage to the copper price and will potentially generate a proforma EBITDA of about US$750 million in 2011 (based on analyst consensus estimates). The larger platform will also allow broader and lower cost access to the capital markets to support organic development and any future M&A transactions. Potential future M&A activities will be copper-focused in locations of low to moderate geopolitical and jurisdictional risks. Quadra FNX will take a disciplined approach to M&A activities, based on strategic fit and valuations.
The current short term priorities of the Quadra FNX management and board are to ensure the successful integration of the merger, optimize current operations, complete the State Grid transaction, bring the high grade copper-precious Morrison Deposit into production in mid-2010 and complete the feasibility study of the world-class Sierra Gorda Deposit.
Quadra FNX is a new mid-tier copper company with an aggressive growth strategy combining organic growth, exploration and disciplined M&A transactions. Our vision is to become a 500 million pound per annum copper producer and a leading consolidator in the base metal sector. Quadra FNX is entering an exciting growth phase in its evolution. With the firm support of all our Stakeholders, the Quadra FNX team looks forward to meeting the challenges and taking advantage of new opportunities.
| Paul Blythe | President and CEO |
| Terry MacGibbon | Chairman |
May 21st 2010