* Would consider restarting nickel output when strike ends
* Eager to buy up more castoff Sudbury assets
* Fourth-quarter profit boosted by revenue jump
By Cameron French
TORONTO, Feb 26 (Reuters) - FNX Mining FNX.TO is considering restarting dormant nickel production and seeking acquisitions, but both plans are contingent on Brazilian miner Vale (VALE5.SA) resolving a seven-month old strike at its Sudbury operations, FNX's CEO said on Friday.
The Canadian nickel and copper miner, which operates in Sudbury, Ontario, and processes ore at Vale milling facilities, suspended nickel production in late 2008 due to plunging prices, focusing instead on copper and precious metal output.
Nickel prices have since doubled from their late 2008 lows, and FNX Chief Executive Terry MacGibbon said the big remaining barrier to a restart is the strike at Vale.
"The long-term price is an issue, but the availability of shipping it over to Vale Inco and their being able to handle it is really the key," MacGibbon said on a conference call to discuss the company's fourth-quarter results.
Vale, which took over the Sudbury assets of Inco when it bought the Canadian miner in 2006, has partially restarted the northern Ontario operations using non-union workers, but is not yet ready to take FNX nickel ore.
MacGibbon's comments come as Vale prepares to hold exploratory talks with the United Steelworkers union this weekend, the first meeting between the two sides since the strike began last July.
FNX's ties to Vale Inco go back to 2002, when FNX bought up unwanted aging nickel mines from Inco.
FNX has used cash flow from the mines to fund exploration, and is now raising output at its own deep-level copper-rich "footwall" deposits that will transform the company from mainly a nickel miner into a copper producer.
MacGibbon said FNX is once again looking for acquisition opportunities and would be keen to add more castoff assets in the Sudbury basin, where mining is dominated by Vale and Xstrata XTA.L, which bought Canada's Falconbridge in 2006.
"There are no 'for sale' signs up anywhere, but we think with our cost structure and our way to operate that we might be able to become involved in some of the deposits in Sudbury," he said.
"Once all of the labor disputes and the different distractions in Sudbury are over, we can address that."
FNX posted a net income of C$32.1 million ($30.6 million), or 31 Canadian cents per share, compared with a net loss of C$397.4 million, or C$4.68 a share, last year, when the company took a half billion-dollar writedown.
Analysts had expected earnings of 17 Canadian cents a share.
Revenue for the latest quarter more than doubled to C$108.6 million, as the Vale strike forced FNX to stockpile ore mined in the third quarter and later ship it to Xstrata, where it was processed and the revenue realized in the fourth quarter.
FNX owns the McCreedy West and Levack mines, where it has suspended nickel production, as well as the Podolsky footwall copper mine.
The Levack footwall deposit is expected to begin production around mid-year.
The company said in January it had discovered nickel, copper and precious metals at its Victoria property in Sudbury.
FNX's shares rose 16 Canadian cents to C$12.57.
$1=$1.05 Canadian Additional reporting by Arnika Thakur in Bangalore; editing by Rob Wilson