August 10, 2011 / 11:43 AM / 7 years ago

UPDATE 2-Quadra FNX profit jumps, but costs weigh

* Q2 Adj EPS $0.22 vs $0.16; Street view $0.31

* Miner says profit lifted by copper prices

* Shares down 3 pct on TSX (Adds details, background; in U.S. dollars unless noted)

By Euan Rocha

TORONTO, Aug 10 (Reuters) - Copper miner Quadra FNX QUX.TO said on Wednesday its second-quarter profit rose 75 percent, due to increased copper production and higher prices for the base metal.

The company, which owns assets spread across North America and South America, continues to expect 2011 copper production of about 240 million pounds, but gold output is now expected to be 13 percent below prior forecasts at 100,000 ounces, due to lower production from its Robinson mine in Nevada.

The solid second-quarter results were powered by increased output from Quadra’s Canadian operations in Sudbury, Ontario. This offset some production declines at its U.S. and Chilean operations, the Vancouver-based company said.

However, the results fell short of expectations by some analysts, as copper production costs rose more than 20 percent to $2.33 a pound, sending Quadra FNX shares 3 percent lower on Wednesday morning.

Net income in the period ended June 30 rose to $63.8 million, or 33 cents a share, up from a year-ago profit of $36.5 million, or 26 cents a share.

Excluding a gain from the sale of its stake in Far West Mining and other one-time items, earnings were $42.8 million, or 22 cents a share. That compares with a year-ago profit of $22.9 million, or 16 cents a share.

Quadra owned a 13 percent stake in exploration company Far West, which agreed in April to be bought by Capstone Mining (CS.TO) for about C$685 million ($692 million). At the time, Quadra said it would book a pre-tax gain of about C$60 million from the deal, which closed in mid-June.

Quarterly revenue rose 76 percent to $298 million. Analysts on average had forecast earnings of 31 cents a share on revenue of $284.5 million, according to Thomson Reuters I/B/E/S.

Quadra, which is also developing the huge Sierra Gorda copper-molybdenum project in Chile, said work on the project is progressing. The company said it intends to begin construction of a 6,000-person camp and related facilities at the site later this year.

Earlier this year, Quadra completed a feasibility study on the project and signed a joint venture agreement to develop the $3 billion project in partnership with Japan’s Sumitomo.

“We continue to expect gradual operational improvements during 2011 and positive newsflow from the ongoing Sierra Gorda development,” said RBC Capital Markets analyst Adam Schatzker in a note to clients.

At current metal prices, Quadra said it expects to be able to fund 2011 capital requirements for all of its mines and projects from existing cash on hand and internally generated funds. As of June 30, the company had cash and cash equivalents of $1.03 billion.

Shares of Quadra were down 39 Canadian cents, or 3 percent, at C$12.02 on the Toronto Stock Exchange.

$1=$0.99 Canadian Reporting by Euan Rocha in Toronto and Bhaswati Mukhopadhyay in Bangalore; editing by Rob Wilson

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