November 10, 2010 / 12:26 PM / in 7 years

UPDATE 2-Quadra FNX profit misses expectations, shares fall

* Q3 adjusted EPS $0.22 Vs Wall St. consensus of $0.27

* Q3 revenue more than doubles to $259.1 mln

* Shares down 3.2 pct to C$15.40 in early trade (Rewrites, adds details on results, TORONTO to dateline; Figures in U.S. dollars, unless noted)

TORONTO, Nov 10 (Reuters) - Canadian miner Quadra FNX QUX.TO posted a big jump in quarterly earnings on Wednesday due to increased output and higher metal prices, but profit fell short of expectations partly due to higher operating costs.

Quadra earlier this year acquired FNX in an all-stock deal worth C$1.6 billion creating a mid-tier base metals miner with assets in Canada, the United States and Chile.

The deal gave Quadra access to FNX’s copper-nickel assets in the mineral-rich region of Sudbury, Ontario. The combined company now owns and operates six mines producing copper, as well as nickel and precious metals.

Quadra FNX’s quarterly revenue and profit were boosted by increased output following the combination of both companies. Its third-quarter results were also lifted by a significant rise in the price of copper.

In the quarter ended Sept. 30, Quadra FNX sold a total of 56.8 million pounds of copper at an average realized price of $3.52 per pound. That compared with sales of 27.6 million pounds at an average realized price of $2.65 per pound, a year earlier.

Quadra FNX said it is on track to complete a financing study on its $2.5 billion Sierra Gorda copper project in Chile in the first quarter of 2011. Given the high capital costs tied to the project, the company is seeking a strategic partner to help develop the asset.

Quadra said it is in active talks with potential partners, while indicating that a partnering arrangement on Sierra Gorda is likely to result in it selling a stake of up to 50 percent in the asset.

The company currently plans to begin development work on the project in the third quarter of 2011, with production targeted in the first half of 2014.

QUARTERLY RESULTS

Third-quarter revenue more that doubled to $259.1 million, on the back of increased copper production and higher copper prices.

Excluding the impact of derivative gains, gains and losses on marketable securities and other one-time items, the company earned $42 million, or 22 cents a share.

Analysts on average were expecting the company to earn 27 cents a share on revenue of $250.3 million, according to Thomson Reuters I/B/E/S.

For the July-September quarter, the company posted net income of $37.2 million, or 19 cents a share, up from earnings of $14.7 million, or 15 cents a share, a year ago.

Vancouver-based Quadra’s shares, which have gained roughly 40 percent in value since it reported quarterly results in August, closed at C$15.91 on Tuesday on the Toronto Stock Exchange.

Quadra FNX shares were down 3.2 percent at C$15.40 in early Wednesday trade on the Toronto Stock Exchange. (Reporting by Euan Rocha in Toronto and Arnika Thakur in Bangalore, editing by Don Sebastian, Dave Zimmerman)

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