"Our company has a strategic position in the trillion-dollar Sudbury Basin which by far, is the richest mining district in North America," observes Terry MacGibbon, executive chair of FNX Mining Company Inc.
 "With China's and eventually India's voracious hunger for metals, expected to last for decades, the long-term growth and future of our company on solid ground."
MacGibbon's dedication to the region is proudly on display in the front lobby of the company's University Ave. head office - adjacent to Toronto's high-rise financial core where many of the country's top mining analysts and investors work - with a bold eight-by-four sculpted wall hanging in the shape of the famous Sudbury Basin.
"Most Canadians don't realize  the Sudbury Basin is a global 'metallic super power' and that there are many incredibly rich mineral deposits still to be discovered here. This 120 year old mining camp will be producing nickel, copper and platinum for at least another century if not more," he said.
With two operating mines on the north range of the Sudbury Basin, another mine ready for production in 2008 and two other promising deposits in the district, many Sudburians have overlooked the phenomenal growth of FNX Mining.
FNX is Sudbury Basin's number three mineral producer.
The company currently employs 570 people in this community and another 950 throughout the rest of Canada and the United States.
In a region that has been dominated by two mining giants Inco and Falconbridge - which are now foreign owned - for over a century, Canadian-controlled FNX has elbowed itself into the Sudbury Basin's number three mineral producer in record time. Some think within a half decade they may be in second place.
In 2007 alone, FNX will have spent about $350 million on supply and services, development, operating and exploration activities in the Sudbury Basin.
FNX's shares which traded at 25 cents in 1997 are now in the $35 range.
According to the Globe and Mail's Report on Business, a $10,000 investment in FNX in 2001 would be worth a million dollars today.
The company has finally established itself as an exceptionally profitable mid-tier producer with a current market value of about $3 billion and forecasts revenues of about $400 million for 2007. FNX is the quintessential rags to riches Canadian mining story.
"I never really intended to retired," said MacGibbon emphatically.
 "After 30 years as an Inco geologist and global manager, I took my pension on Oct. 31, 1997 and the next day became CEO of Fort Knox Gold Resources Inc, the forerunner to FNX.
The company was set up in his basement and started acquiring gold and base metal properties in Newfoundland, Manitoba, Alaska and Ontario.
MacGibbon's strategy was to acquire non-core assets from major companies.
It was not an auspicious start for a mining junior. The Bre-X scandal was discovered earlier that spring, causing many investors to stay away from the mining sector and put their money into technology shares. The dot.com boom was just beginning. In the fall of 1998, the price of nickel hit its lowest price ever - $1.76 (US) - when inflation was factored in.
The company's big break came in 2002 when it acquired five former producing properties from CVRD Inco including the recently-closed Levack and McCreedy West mines.
It also negotiated an agreement that all the ore discovered and developed would be sent to CVRD Inco's Clarabell Mill for processing.
The company employs 570 people in this community and another 950 throughout the rest of Canada and the United States.
"At the time, we knew there were smaller deposits in both mines that a junior could operate at a profit and that CVRD Inco needed that ore due to a shortfall from their other Sudbury Basin properties. The near term mining potential was very good. That is why we bid so aggressively for the assets," MacGibbon said.
In addition, the purchase came with a historical database of almost 8,000 boreholes averaging 1,000 feet per hole for a total of eight million feet. Today, it costs about $30 a foot for exploration drilling - giving an approximate value for all that past work of $240 million.
 "We had the pick of the geologists' crop in the depressed mining sector of 2002 and subsequently built one of the country's biggest, youngest and most innovative exploration teams," continues MacGibbon. "And with all that historical data, our fantastic computer- literate staff played a key role in helping us decide where to drill."
Right from the beginning, this junior's exploration mindset was on steroids.
From 2002 to 2007 FNX will have spent more than $100 million on exploring its properties in the Sudbury Basin.
CVRD Inco spent $124 million in the region during the same period. By the end of this year two million feet of core will have been drilled by FNX, which roughly translates into 600 kilometres or the distance between Toronto and Montreal.
There have been many successes with eight significant mineral discoveries to date, of which five have been or are being considered for production, including the 2005 discovery of the high-grade Levack Footwall Deposit.
Last spring, the company quadrupled its mineral resource inventory. Measured and indicated resources increased to about 43 million tons, while inferred resources went up to 35 million tons. The resource figures for recent copper, nickel and precious metal discoveries in the Levack mine have not yet been established.
A quick note on mineral inventories in the ground is in order. The "Reserve" category is only used for an operating mine or one near production. The "Resource" category is used for all other potential mineral measurements, but do not yet have an approved mining plan in place.
Ore reserves that are classified as "Proven and Probable" have been thoroughly sampled to confirm size, grade and continuity of the deposit and include an approved mining plan.
Ore resources reporting range from "Measured and Indicated" to "Inferred" - the first being the most defined due to extensive sampling while the latter being estimated from limited data.
A $10,000 investment in FNX in 2001 would be worth a million dollars today.
In the Sudbury Basin, CVRD Inco has 175 million tons of proven and probable reserves as of 2006. The 2005 figures for measured and indicated resources were about 47 million tons and approximately 48 million tons of inferred resources.
By comparison Xstrata Nickel has seven million tonnes of "Proven and Probable" reserves in 2006. Their measured and indicated resources are about 26 million tonnes and 29 tonnes of inferred resources.
Many in the mining industry feel that "Measured and "Indicated" carry almost the same certainty as "Proven and Probable." Technically speaking, FNX has become the number two miner in the Sudbury Basin when measured by mineral resources in the ground.
"One of the biggest risks for most junior companies is that they don't have the expertise to build and run a mine," said MacGibbon. "That is why we formed a 75 percent/25 percent partnership with Dynatec, the Sudbury Joint Venture, to benefit from their extensive mining experience. I would say that was one of the key factors for our success," MacGibbon said.
That partnership allowed FNX to get the mothballed McCreedy West Mine into production in less than a year, by the spring of 2003 and generate revenue for the growing company. The reconditioning of the Levack Mine was completed in early 2007, while the brand new Podolsky Mine - the site was a swamp three years ago - should start producing commercial quantities of ore early next year. By 2008, FNX will be supplying CVRD Inco with approximately 1.4 million tons of ore a year - roughly between 15 and 20 percent of that company's Sudbury Basin production.
Last month FNX finalized the purchase of Dynatec's Mining Services Business for $53 million. The acquisition will help support FNX's ambitious expansion plans in Sudbury and, in these times of intense competition for skilled mining technicians, provide many opportunities for other contract business around the world.
The company has a strong balance sheet, $170 million cash and liquid investments in the bank, zero debt and a strong cash flow. They have an aggressive exploration agenda and two more Sudbury Basin deposits to focus on, once their three operating mines are running at full capacity.
With the recent announcement of Xstrata's $3.1 billion bid for Australian nickel producer Jubilee Mines, speculation about how long FNX Mining will remain a Canadian independent is rising.
"We are in this for the long haul, intending to increase shareholder value through organic growth, selective acquisitions, good geological analysis and extensive exploration," said MacGibbon. "We offer shareholders a growth opportunity that in two to three years will see FNX become a two million ton-a-year producer and a major player in Sudbury.
Stan Sudol is a Toronto-based communications consultant who writes extensively on mining issues.[email protected]
