Northgate Generates Cash Flow from Operations of $41 million in the Second Quarter
VANCOUVER, Aug 1 /CNW/ - (All figures in US dollars except where noted) -
Northgate Minerals Corporation (TSX: NGX; AMEX: NXG) today reported cash flow
from operations of $40,859,000 or $0.16 per diluted common share for the
second quarter of 2008.
Second Quarter 2008 Highlights
- Total gold production of 83,561 ounces at Northgate's three operating
mines at an average net cash cost of production of $423 per ounce of
gold.
- Gold production for the Kemess South mine was 46,124 ounces at a net
cash cost of $92 per ounce.
- Released exploration results at Young-Davidson, confirming the
continuity of mineralization in the deposit and bringing the Project
closer to its total resource goal of 3 million ounces of gold.
- Completed a NI 43-101 Preliminary Assessment Report for the Young-
Davidson project outlining production of 1.75 million recoverable
ounces of gold over a 12-year mine life at an average cash cost of
$405 per ounce.
- Achieved excellent, high-grade drill results at Stawell's Golden Gift
6 exploration area.
- Completed the conversion to owner mining from contractor mining at
the Fosterville Gold mine.
Ken Stowe, President and CEO, stated, "The second quarter saw
considerable progress made on a number of fronts. At Kemess, gold production
easily exceeded the revised forecast due to the continued strong performance
in both the mining and milling departments, and generated almost $65 million
in cash flow from operations. With strong production forecast in the fourth
quarter of this year and high metal prices, we will continue to generate
significant cash flow to fund our various growth initiatives. At
Young-Davidson, we recently issued two important press releases. First, we
released the results of the Preliminary Assessment Report, which outlines a
12-year mine life with average annual production of 158,000 ounces of gold per
year at a cash cost of $405 per ounce. Second, we released very positive drill
results from our 2008 drill program, which we expect will significantly
increase the resource base upon which the project feasibility study will be
based. At Stawell, our aggressive $7 million exploration program continued to
follow up on the excellent initial drill results in the Golden Gift 6 zone and
examined a number of other in-mine and near-mine targets. At the same time, a
number of strategic capital investments are underway to improve the operation
for the longer term. At Fosterville, the conversion to owner mining went very
smoothly with completion ahead of schedule at the end of May. Underground
development at the mine is now ramping up nicely with the ultimate objective
of increasing mining rates and gold production in the last quarter of 2008. In
addition, in order to speed up the evaluation and engineering of metallurgical
improvements, a pilot plant was constructed and commissioned on site in late
May. Testing to date has demonstrated the potential to improve gold recovery
by approximately 10%. Engineering of the necessary process plant modifications
is presently underway with a planned implementation date in the first quarter
of 2009."
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Executive Overview
Financial Performance
Northgate Minerals Corporation recorded consolidated revenue of
$138,880,000 in the second quarter of 2008, compared with consolidated revenue
of $80,878,000 in the same period last year. Net earnings for the quarter were
$1,085,000 or $0.00 per diluted common share, compared with net earnings of
$8,647,000 or $0.03 per diluted common share during the corresponding quarter
of 2007. Net earnings in the most recent quarter were lower than they are
expected to be in future quarters due to the low gold output from the recently
acquired Australian operations. The low output was combined with temporarily
higher costs as Northgate implemented various improvement projects in order to
rectify a number of production challenges, which were inherited from the
previous owner. These projects are being undertaken to set the operations up
for long-term success, and are now possible due to Northgate's strong
financial position relative to the previous owner. Cash flow from operations
after changes in working capital was $40,859,000 or $0.16 per common share
compared with $43,685,000 or $0.17 per diluted common share during the second
quarter of 2007. Per share data is based on the weighted average diluted
number of shares outstanding of 255,745,076 in the second quarter of 2008 and
255,317,140 in the corresponding period of 2007. As of July 31, 2008, the
Corporation had 255,442,692 issued and outstanding common shares.
Health, Safety and Environment
Kemess recorded one lost time injury during the second quarter of 2008.
The affected employee returned to full duties in mid-July.
In Australia, Northgate continues to promote a strong culture of safety
and is striving to ensure that the highest level of health and safety
standards are maintained at both sites. In the second quarter, Stawell and
Fosterville each recorded one lost time injury. Northgate plans to conduct
audits of the Safety Management systems at both sites in the third quarter and
an environmental audit will be undertaken in the fourth quarter of 2008.
Human Resources
On April 8, 2008, a new three-year collective agreement was ratified by
the International Union of Operating Engineers Local 115, which represents the
300 production and maintenance employees at the Kemess South mine. The
agreement replaces the previous three-year deal that expired on December 31,
2007.
The current collective agreement at the Stawell Gold mine expires on
September 28, 2008. Northgate has commenced negotiations with a committee of
employees and a bargaining agent from the Construction, Forestry, Mining and
Energy Union (CFMEU).
During the quarter, Northgate completed the conversion to owner mining at
the Fosterville Gold mine. All underground activities had been previously
carried out by a privately owned Australian mining contractor. The conversion
included the transfer of approximately 110 mining personnel.
Summarized Consolidated Results
(Thousands of US dollars,
except where noted) Q2 2008 Q2 2007 H1 2008(1) H1 2007
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Operating Data
Gold production
(ounces) 83,561 65,999 171,947(2) 134,109
Gold sales (ounces)(3) 84,281 70,220 61,539 66,480
Average spot gold
price - London
Bullion Market ($/oz) 896 667 911 659
Copper production
(thousands pounds) 13,940 14,839 28,320 32,541
Copper sales
(thousands pounds) 16,080 16,761 29,456 34,031
Average spot copper
price - London Metal
Exchange Cash ($/lb) 3.83 3.47 3.68 3.08
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Financial Data
Revenue $ 138,880 $ 80,878 $ 224,973 $ 155,191
Net earnings 1,085 8,647 21,512 18,053
Earnings per share
Basic 0.00 0.03 0.08 0.07
Diluted 0.00 0.03 0.08 0.07
Cash flow from
operations 40,859 43,685 56,309 62,926
Cash and cash
equivalents 76,876 317,761 76,876 317,761
Total assets $ 730,630 $ 574,417 $ 730,630 $ 574,417
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(1) Half year financial data and gold sales (ounces) include the results
of Northgate's Australian operations from February 19 to June 30,
2008. Other figures are for the six month period ending June 30,
2008.
(2) Half year production for Fosterville excludes the change in gold-in-
circuit inventory previously recorded in production for the first
quarter.
(3) Prior year comparatives reflect gold sales (ounces) for Kemess only.
KEMESS SOUTH MINE
(Thousands of US dollars,
except where noted) Q2 2008 Q2 2007 H1 2008 H1 2007
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Operating Data
Ore plus waste mined
(tonnes) 6,399,810 10,618,547 14,936,448 22,701,404
Ore mined (tonnes) 2,675,933 3,494,752 7,442,305 9,055,785
Stripping ratio
(waste/ore) 1.39 2.04 1.01 1.51
Ore stockpile
rehandle (tonnes) 2,412,730 1,356,720 3,050,033 1,386,836
Ore milled (tonnes) 4,550,947 4,435,557 8,794,838 8,776,979
Ore milled per day
(tonnes) 50,010 48,742 48,323 48,492
Gold
Grade (g/t) 0.468 0.724 0.495 0.701
Recovery (%) 67 64 69 68
Production (ounces) 46,124 65,999 95,707 134,109
Sales (ounces) 50,127 70,220 94,851 136,700
Copper
Grade (%) 0.167 0.199 0.175 0.207
Recovery (%) 83 76 84 81
Production
(thousands pounds) 13,940 14,839 28,320 32,541
Sales
(thousands pounds) 16,080 16,761 29,456 34,031
Net cash cost
($/ounce) 92 35 98 32
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Financial Data
Revenue $ 112,310 $ 109,788 $ 216,326 $ 203,553
Cost of sales 74,295 60,384 123,459 107,370
Earnings from
operations before
income taxes 31,076 38,187 78,115 70,868
Cash flow from
operations 64,585 56,581 91,901 58,167
Capital expenditures 3,021 3,404 4,810 6,147
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Operational Performance
The Kemess South mine posted gold and copper production of 46,124 ounces
and 13.9 million pounds, respectively, in the second quarter of 2008. Gold
production was significantly higher than forecast in the second quarter as
some of the ore that had been scheduled for milling in the third quarter was
milled in June. Gold and copper recoveries were better than forecast and mill
throughput exceeded expectations due to high mill availability. In the third
quarter of this year, gold production is now forecast to be 34,000 ounces as
low grade stockpiled ore is milled and waste stripping continues in the
western end of the Kemess open pit to expose high grade ore that will be
milled in the fourth quarter. Gold and copper production in the fourth quarter
of the year is expected to total 80,000 ounces and 20 million pounds,
respectively.
During the second quarter of 2008, approximately 6.4 million tonnes of
ore and waste were removed from the open pit compared to 10.6 million tonnes
during the corresponding quarter of 2007. Total tonnes moved (mined tonnes
plus stockpile ore rehandle) were 25% lower in the second quarter of 2008 than
they were in the corresponding period last year due to challenging mining
conditions encountered in the northwestern area of the open pit during this
year's spring thaw. Delays in waste stripping have necessitated a change in
the production plan for the third quarter to include the milling of more
stockpiled ore while waste stripping catches up. Unit mining costs were
Cdn $2.07 per tonne moved compared with Cdn$1.64 per tonne moved in the second
quarter of 2007. The unit mining costs in the most recent quarter were higher
than they were in the same period last year due to the lower volume of
material moved, higher prices for diesel fuel and higher maintenance costs.
Mill availability and mill throughput during the second quarter of 2008
were 92% and 50,010 tonnes per day (tpd), respectively, compared with 89%
availability and throughput of 48,742 tpd in the second quarter of 2007. The
ore milled in the second quarter of 2008 had a grade of 0.468 grams per metric
tonne (g/t) for gold and 0.167% for copper.
Gold and copper recoveries averaged 67% and 83%, respectively, compared
with 64% and 76% in the second quarter of 2007. In the most recent quarter,
Kemess exclusively milled hypogene ore while in the same quarter last year,
significant quantities of supergene and leachcap ores, which have
metallurgical characteristics that generate lower metal recoveries, were
milled.
Metal concentrate inventory decreased by 3,500 wet metric tonnes (wmt) in
the second quarter of 2008 to approximately 3,600 wmt, as railcar availability
improved during the quarter with the onset of spring.
During the second quarter of 2008, the average unit cost of production
per tonne milled was Cdn$13.01, including Cdn$3.55 for concentrate marketing
costs, which consist of treatment and refining charges and transportation
fees. The average unit cost in the same quarter in 2007 was
Cdn$13.31 per tonne milled, which included Cdn$3.48 for marketing costs.
Overall units costs have fallen due to a decline in 2008 Benchmark settlement
terms for treatment and refining charges. Although total tonnes moved in the
second quarter of 2008 were 25% lower than they were in the same period last
year and mill throughput was approximately the same, site operating costs of
Cdn$43.4 million were only slightly below those recorded in the second quarter
of 2007 of Cdn$44.3 million. This result is a consequence of the generally
inefficient mining conditions encountered in the second quarter of 2008, as
well as substantial increases in prices for diesel fuel and mill steel, and
increased labour costs associated with the new collective agreement at Kemess.
The net cash cost of production at Kemess in the second quarter of 2008 was
$92 per ounce of gold compared to the $35 per ounce cash cost reported in the
second quarter of 2007. The net cash cost was higher than the figure in the
comparable period due to the combined effects of lower gold and copper
production and the stronger Canadian dollar, which were only partially offset
by stronger copper prices.
Financial Performance
Revenue from the Kemess South mine in the second quarter of 2008 was
$112,310 compared with $109,788 in the corresponding period of 2007 excluding
the effects of mark-to-market adjustments on Northgate's copper hedge book.
Metal sales in the second quarter of 2008 consisted of 50,127 ounces of gold
and 16.1 million pounds of copper, compared with 70,220 ounces of gold and
16.8 million pounds of copper in the same period last year. During the second
quarter of 2008, the price of gold on the London Bullion Market averaged
$896 per ounce and the price of copper on the London Metal Exchange (LME)
averaged $3.83. The net realized metal prices received on sales in the second
quarter of 2008 were approximately $876 per ounce of gold and $4.10 per pound
of copper, compared with $564 per ounce and $2.96 per pound in the same period
of 2007. Realized prices for gold and copper were higher in the most recent
quarter due to general increases in metal prices. In addition, all of the
Corporation's gold and copper sales during the most recent quarter were sold
at market prices compared to 2007, when a significant portion of the
Corporation's sales were hedged at lower than prevailing prices.
The cost of sales in the second quarter of 2008, excluding depreciation
and depletion, was $74,295,000, which was higher than the corresponding period
last year when the cost of sales was $60,384,000. The increase in the most
recent quarter reflects increases in concentrate transportation costs due to
fuel price escalation and the stronger Canadian dollar.
Depreciation and depletion expense in the second quarter was $6,278,000
compared to $8,851,000 during the corresponding period of 2007. The lower
depreciation and depletion expense for the most recent quarter reflects the
reduction in tonnes mined and is slightly offset by an increase in the
amortization rate for 2008 as a result of capital expenditures in the prior
year.
Cash invested in capital expenditures during the second quarter of 2008
totalled $3,021,000 compared to $3,404,000 in the corresponding period of
2007. Capital expenditures in the most recent quarter were primarily devoted
to the ongoing construction of the tailings dam and road infrastructure.
STAWELL GOLD MINE
(Thousands of US dollars,
except where noted) Q2 2008 Q2 2007 H1 2008(1) H1 2007
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Operating Data
Ore mined (tonnes) 143,692 162,725 293,909 327,562
Ore milled (tonnes) 170,765 180,338 337,600 369,198
Ore milled per day
(tonnes) 1,877 1,982 1,855 2,040
Gold
Grade (g/t) 4.87 4.90 5.42 5.50
Recovery (%) 85 90 87 90
Production (ounces) 22,807 25,570 51,170 59,013
Sales (ounces) 21,037 n/a 33,284 n/a
Net cash cost ($/ounce) 627 n/a 596 n/a
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Financial Data
Revenue $ 18,984 n/a $ 30,723 n/a
Cost of sales 13,660 n/a 20,905 n/a
Loss from operations (3,389) n/a (2,706) n/a
Cash flow from
operations 2,914 n/a 9,506 n/a
Capital expenditures 6,509 n/a 9,131 n/a
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(1) Half year financial data and gold sales (ounces) include the results
of Northgate's Australian operations from February 19 to June 30,
2008. Other figures are for the six month period ending June 30,
2008.
The Stawell Gold mine produced a total of 22,807 ounces of gold during
the three months ended June 30, 2008. Production was 4,000 ounces lower than
forecast, primarily due to lower tonnes mined from the underground as a result
of delays in development caused by equipment availability and mine environment
(heat load / ventilation). However, the phased ventilation upgrade project was
advanced during the quarter and four new-design spot coolers were installed,
bringing a pronounced improvement to the working environment. This will have a
positive impact on gold production for the second half of 2008. Approximately
170,765 tonnes of ore at a grade of 4.87 g/t were milled in the second quarter
of 2008. Gold recoveries in the mill were slightly below plan at 85% due to
higher than normal carbon content in the ore milled, which reduces recovery.
Total operating costs during the period were A$15,139,000 equating to an
overall unit operating cost of A$89 per metric tonne (mt) of ore milled.
Mining costs were A$62/mt of ore mined and milling costs were A$25/mt of ore
milled.
The net cash cost of gold for the second quarter was $627 per ounce,
which was higher than plan of $501 per ounce. The cash cost was negatively
impacted primarily by gold production, which was lower than forecast and
consumable costs, which were higher than plan. Cash costs in future quarters
will inherently be lower as a result of higher forecasted gold production.
Underground mine development continued in the Golden Gift (GG) production
zones, GG1, GG3 and GG5L, during the quarter and the development advance
totalled 1,229 metres.
Financial Performance
Stawell's revenue in the second quarter was $18,984,000 based on gold
sales of 21,037 ounces. The cost of sales for this period was $13,660,000 and
the loss from operations recorded for the period was $3,389,000. The mine
generated $2,914,000 in cash flow from operations during the quarter.
Cash invested in capital expenditures at Stawell during the quarter was
$6,509,000 of which $4,756,000 was incurred for mine development and the
balance for the acquisition of plant and equipment. Depreciation and depletion
expense for the three-month period ending June 30, 2008 was $6,556,000.
Exploration Update
Underground and surface based diamond drilling continued at Stawell in
the second quarter of 2008 as part of the aggressive $7 million exploration
budget allocated to identify additional resources on the property and extend
the mine life of the Stawell operation. Diamond drilling results completed
during the first and second quarter of 2008 have outlined high grade gold
mineralization in the Golden Gift 6 (GG6) zone and Northgate expects to
release an updated reserve and resource estimate for the Stawell property in
the next few months. To date, GG6 drilling indicates that the zone has similar
geology and geometry to the other Golden Gift ore bodies at the Stawell mine.
GG6 is situated 210 metres (m) beneath the Golden Gift 5 Lower (GG5L) zone and
is interpreted to be the fault offset of this ore body, which is currently in
production. The grade of the GG6 zone is similar to the previously mined
Golden Gift ore blocks containing, on average, 100,000 ounces of gold.
In addition to the GG6 exploration campaign, Northgate has commenced
drilling in other areas of the mine including the North Magdala target.
Results of these activities will be released in the next few months.
FOSTERVILLE GOLD MINE
(Thousands of US dollars,
except where noted) Q2 2008 Q2 2007 H1 2008(1) H1 2007
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Operating Data
Ore mined (tonnes) 116,709 289,259 227,613 438,907
Ore milled (tonnes) 109,987 257,481 249,479 497,946
Ore milled per day
(tonnes) 1,209 2,829 1,371 2,751
Gold
Grade (g/t) 5.40 2.51 4.85 2.71
Recovery (%) 76 78 65 80
Production (ounces) 14,630 16,248 25,070(2) 34,199
Sales (ounces) 13,117 n/a 17,796 n/a
Net cash cost ($/ounce) 1,150 n/a 1,160 n/a
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Financial Data
Revenue $ 11,666 n/a $ 16,064 n/a
Cost of sales 14,657 n/a 21,003 n/a
Loss from operations (6,650) n/a (10,431) n/a
Cash used in
operations (4,653) n/a (6,561) n/a
Capital expenditures 13,619 n/a 16,215 n/a
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(1) Half year financial data and gold sales (ounces) include the results
of Northgate's Australian operations from February 19 to June 30,
2008. Other figures are for the six month period ending June 30,
2008.
(2) Half year production for Fosterville excludes the change in gold-in-
circuit inventory previously recorded in production for the first
quarter.
The Fosterville mine produced 14,630 ounces of gold during the three
months ended June 30, 2008, which was up significantly from the 10,440 ounces
produced in the first quarter. Grades continued to improve and averaged
5.4 g/t during the second quarter. The key initiatives to ensuring the long
term success of the mine progressed during the quarter. The conversion to
owner mining from contractor mining was completed ahead of schedule in May.
The implementation of the gold recovery enhancement program also progressed
with the installation of a pilot plant to simulate plant conditions, allowing
a number of gold recovery improvement tests to be conducted. The pilot plant
has identified several sources of gold losses in the Carbon-in-Leach (CIL)
circuit and demonstrated that substantial gold recovery improvements can be
obtained by introducing a heated leach process to the process flow.
Preliminary engineering to establish capital and operating costs for a heated
leach circuit has commenced and commissioning of a full scale heated leach
process is expected in the first quarter of 2009.
During the second quarter of 2008, 109,987 tonnes of ore at a grade of
5.4 g/t were milled. Gold recoveries in the milling circuit of 76.2% were
significantly higher than the 54% achieved in the first quarter.
Total operating costs for the second quarter were A$17,823,000, equating
to an overall unit operating cost of A$162/mt of ore milled. Mining costs were
A$94/mt of ore mined and milling costs were A$46/mt of ore milled. Unit costs
during the quarter were much higher than they will ultimately be at
Fosterville due to low ore production from the mine as a consequence of a lack
of accessible mining areas. Mine development rates dramatically improved
during the second quarter of 2008 and 1,844m of advance was recorded. By the
fourth quarter of 2008, development in the mine will have progressed to the
point where ore production will no longer be constrained and unit operating
costs are expected to drop dramatically due to higher ore production and cost
reductions associated with the conversion to owner mining.
Net cash cost for the second quarter was $1,150 per ounce of gold, which
was negatively impacted by lower than forecast gold production and one-time
charges related to the owner mining conversion and the gold recovery
enhancement initiatives currently underway. In the second half of 2008, cash
costs are expected to be significantly lower, as improvements to gold
recoveries are made and gold production is dramatically higher. By the fourth
quarter of 2008, quarterly gold production at Fosterville is expected to rise
to over 25,000 ounces and remain well above this figure in 2009 and beyond.
Financial Performance
Fosterville's revenue for the three months ended June 30, 2008 was
$11,666,000 based on gold sales of 13,117 ounces. The cost of sales excluding
depreciation and depletion for this period was $14,657,000 and the loss from
operations was $6,650,000. The mine utilized $4,653,000 in cash from
operations during the second quarter of 2008.
Cash invested in capital expenditures at Fosterville was $13,619,000 of
which $5,406,000 related to mine development and $8,213,000 related to the
acquisition of plant and equipment, which includes the procurement of mobile
equipment. Depreciation and depletion expense for the three-month period
ending June 30, 2008 was $3,089,000.
Exploration Update
Northgate has allocated $3 million in 2008 towards definition drilling of
the Wirrawilla Zone, which is located 1.5 kilometres south of the Fosterville
processing facility. The drilling program began in May 2008 with the objective
of delineating a minimum of 150,000 high grade resource ounces at a grade of
5.0 g/t or better that could be accessed by a ramp. The program entails
approximately 13,000 metres of diamond drilling with results expected by
November.
Corporate Overview
Northgate had no forward gold contracts outstanding at June 30, 2008.
16,200 mt of copper forward contracts, representing approximately 100% of
Kemess South's copper production for the 12-month period ending June 2010,
remained outstanding at an average price of $2.52 per pound.
Corporate administration costs in the second quarter of 2008 were
$3,066,000 compared with $2,625,000 in the same quarter last year. The
increase is due primarily to administrative expenditures in Australia of
$731,000. Canadian corporate expenditures of $2,335,000 were lower than they
were in the comparative quarter of 2007.
Exploration costs in the second quarter of 2008 were $11,357,000 compared
to $7,842,000 in the corresponding quarter of 2007. In Canada, $8,862,000 was
incurred primarily at the Young-Davidson property where the advanced
underground exploration program continues. A total of $2,495,000 was expended
in Australia during the second quarter with $571,000 incurred at Fosterville
and $1,924,000 incurred at Stawell as both sites continue to identify zones to
extend mine life.
Income tax expense in the second quarter of 2008 was $5,889,000 compared
to a recovery of $495,000 in the corresponding quarter of 2007. The expense is
due entirely to Northgate's Canadian operations and has increased dramatically
from previous periods as the Corporation is now cash taxable in Canada. Cash
paid during the period for income taxes was $4,381,000 while no cash taxes
were paid in the corresponding quarter of 2007.
Liquidity and Capital Resources
Working Capital: At June 30, 2008, Northgate had working capital of
$37,636,000 compared with working capital of $235,739,000 at December 31,
2007. The decrease in working capital was driven primarily by the acquisition
of Perseverance Corporation Limited ("Perseverance"), which was achieved
through the purchase of all ordinary shares, warrants, options and convertible
securities for cash consideration. Cash and cash equivalents at June 30, 2008
amounted to $76,876,000 compared with $266,045,000 at December 31, 2007. All
cash and cash equivalents are held in cash with major financial institutions
in Canada and Australia.
On June 6, 2008, Northgate filed a short form universal base shelf
prospectus (the "Prospectus") with the Securities Commissions in each of the
provinces and territories of Canada and a corresponding registration statement
has been filed with the United States Securities and Exchange Commission. The
Prospectus will facilitate offerings of Northgate's debt securities, common
shares, warrants, share purchase contracts and share purchase or equity units
or any combination thereof up to an aggregate offering size of Cdn$250,000,000
over a 25 month period.
All costs associated with the Prospectus have been deferred as long-term
assets and will be accounted for as either debt issue costs and amortized or
charged directly to equity as applicable, if an offering under the Prospectus
is completed.
Capital Lease Financing: The conversion to owner mining at the
Fosterville Gold mine required an investment in mobile equipment fleet and
other infrastructure. The estimated budget of approximately $23,000,000 has
been partially financed by capital leases totalling $7,557,000. Additional
lease financing of approximately $7,450,000 has been secured and will be
finalized during the second half of 2008.
Investments: Northgate continues to maintain a portion of its investments
in auction rate securities (ARS), which are floating rate securities that are
marketed by financial institutions with auction reset dates at 7, 28, or 35
day intervals to provide short-term liquidity. All ARS were rated AAA when
purchased, pursuant to Northgate's investment policy. Beginning in
August 2007, a number of auctions began to fail and the Corporation is
currently holding ARS with a par value of $72,600,000, which currently lack
liquidity. Northgate's ARS investments were originally structured and marketed
by Lehman Brothers, Inc. ("Lehman"), a major US investment bank.
The estimated fair value of the Corporation's ARS holdings at June 30,
2008 was $61,987,000, which reflects a $7,410,000 adjustment to the
December 31, 2007 estimated fair value of $69,397,000. In estimating the fair
value of ARS, the Corporation considered various variables, including trading
levels of comparable securities markets, the Corporation's rank within the
capital structure of the individual ARS issuers, the credit circumstances of
financial guarantors, and the investments and reserves held by the issuers.
This adjustment was recorded into other comprehensive income as Northgate
believes this decline in value to be temporary. All of the ARS investments
have continued to make regular interest payments. If uncertainties in the
credit and capital markets persist or Northgate experiences further downgrades
on its ARS holdings, the Corporation may incur additional impairments, which
may be judged to be other than temporary. Northgate believes that based on its
cash and cash equivalents balance of $76,876,000 at June 30, 2008 and expected
operating cash flows, the current illiquidity of its ARS investments will not
have a material impact on Northgate's ability to carry on its business.
Further, approximately 57% of the ARS investments are insured by bond
insurer institutions (monoline insurers). Rating agencies such as S&P, Moody's
and Fitch continue to monitor the credit rating of monoline insurers and ARS
investments including those held by Northgate. During the quarter, a number of
bond insurers were downgraded by certain rating agencies, which in some cases
resulted in a downgrade of the AAA securities insured by those institutions.
All of the Corporation's uninsured ARS continue to be rated AAA and Aaa, as
applicable.
The Corporation has no investments in asset backed commercial paper,
mortgage backed securities or collateralized debt obligations.
The balance of Northgate's long-term investments comprises of equity
investments in publicly-listed junior mining companies. These investments are
carried on the balance sheet at fair value based on quoted bid prices.
On July 3, 2008, Northgate filed a Statement of Claim with the Financial
Industry Regulatory Authority ("FINRA") in New York, US. FINRA is a
self-regulatory organization with jurisdiction over various securities
broker-dealers in the United States, and administers a dispute resolution
service for customer-broker disputes. The Statement of Claim lists Lehman and
various Lehman employees as respondents. Among other things, the Statement of
Claim requests that the FINRA arbitration panel award relief to Northgate for
Lehman's wrongful purchase of ARS, which are currently illiquid. The Statement
of Claim also asks the FINRA arbitration panel to relieve Northgate of any
obligation to repay the loan outstanding from Lehman, as part of the
compensation for the damages caused by Lehman's actions. Lehman has not thus
far demanded that Northgate repay the loan principal. The FINRA arbitration is
pending.
Short-Term Loan: In December 2007, Northgate secured a loan from Lehman,
which structured and marketed Northgate's ARS investments. The proceeds of the
loan have been invested in highly liquid investments and can be accessed as
needed for working capital requirements. The loan bears interest at LIBOR plus
100 basis points and matured on June 6, 2008. At June 30, 2008, the balance of
the loan including accrued interest was $44,027,000. As noted in the
Investments section above, Northgate filed a Statement of Claim with FINRA on
July 3, 2008, which includes a request for the FINRA arbitration panel to
relieve Northgate of any obligation to repay the loan outstanding from Lehman.
To date, Lehman has not demanded repayment of the loan principal.
Acquisition of Perseverance: On February 18, 2008, Northgate completed
its acquisition of Perseverance and a total of A$230,552,000 (US$210,516,000)
was paid to Perseverance securityholders. The results of Perseverance have
been included in the interim consolidated financial statements from
February 19, 2008.
In connection with the acquisition of Perseverance, the Corporation was
required to pledge a cash amount of A$109,400,000 in a stand-by letter of
credit ("SBLC"). A portion of the SBLC was released upon payment of the
consideration for the debt instruments noted above. The funds remaining in the
SBLC at December 31, 2007 were used to settle Perseverance's gold forward
contracts for A$49,317,000 (US$45,550,000) and to pledge certain performance
guarantees in Australia for A$8,020,000 (US$7,434,000). In the second quarter,
the SBLC was fully extinguished.
Project Update
Young-Davidson
On June 24, 2008, Northgate reported the completion of a NI 43-101
compliant Preliminary Assessment Report ("Preliminary Assessment") for the
Young-Davidson project. The Preliminary Assessment lays out the basis for the
development of a combined underground and open pit mine, which will produce an
average of 158,000 ounces of gold per year at $405 per ounce over a 12 year
mine life. The initial capital cost of the mine is projected to be
$306 million and can be brought into commercial production in 2011. The
Preliminary Assessment was based on underground mineral resources contained in
a Technical Report filed on SEDAR on March 26, 2008, which included diamond
drilling results up to December 20, 2007.
The Preliminary Assessment outlines aspects of the project that will be
enhanced and optimized in order to enhance the rate of return of the project.
These include:
1. Adding additional resource ounces to the deposit.
2. Reducing backfill requirements and costs from the 100% paste fill
assumption carried in the Preliminary Assessment.
3. Increasing mill throughput and annual gold production.
4. Increasing wall angles in the proposed open pit.
On July 17, 2008, assay results for an additional 34 surface and 59
underground diamond drill holes, representing 33,000 metres of drilling
completed in the first six months of 2008, were released. These drill results,
in addition to results of future drilling that will be completed in the third
quarter of 2008, will be incorporated into the updated resource estimate,
which will be used as a basis for the feasibility study. The updated resource
estimate is expected to be completed in the fourth quarter of 2008 and the
feasibility study will follow in the first quarter of 2009.
Underground ramp development at the Young-Davidson project continued
during the second quarter with an additional 698 metres of linear advance
completed. As part of this advance, a cross cut drift was completed through
the Upper Boundary zone in order to extract a 40-tonne bulk sample for
grinding circuit pilot plant testing and averaged 5.0 g/t gold over a true
thickness of 41m. The testwork indicates that this material is amenable to low
cost autogenous grinding. Dewatering of the existing shaft continued during
the quarter and has progressed to a depth of 422 metres.
Engineering activities will continue through 2008 to support permitting
activities and to complete the feasibility study in the first quarter of 2009.
Orders for long lead equipment will also be placed in the second half of 2008
in order to keep the project on schedule for a start up in 2011.
Exploration Update
Australian Tenements
As part of the Perseverance acquisition, Northgate acquired an extensive
land package in the state of Victoria, Australia. Northgate's strategy is to
focus its exploration efforts on the land tenements immediately surrounding
its two operating mines within a 50 km radius and is also looking to sell or
form strategic partnerships with other companies on its non-core exploration
tenements. Pursuant to this strategy, Northgate recently entered into an
agreement to sell its 49% interest in the Nagambie Property to Panaegis Gold
Mines Limited, the owner of the remaining 51% of the property.
Northgate has entered into an option/joint venture agreement with Rimfire
Minerals ("Rimfire") on three tenements in the Stawell corridor. Under the
agreement, Rimfire has agreed to conduct exploration on these tenements to
maintain the licenses in good standing for the current year and can then elect
to conduct further exploration on any or all three of the licenses, earning a
50% interest on each by spending $500,000 per license over two years.
Northgate then has the option on each license to: 1) carry out the next
$1,500,000 to earn back a 10% interest (total 60%) and another 10% by reaching
a production decision; 2) not participate and allow Rimfire to earn a 100%
interest in the property by spending, or causing to have spent, an additional
$2,000,000 over 4 years; or 3) participate in a 50/50 joint venture.
Non-GAAP Measures
Cash Cost
Northgate has included net cash costs of production per ounce of gold in
the discussion of its results from operations, because it believes that these
figures are a useful indicator to investors and management of a mine's
performance as they provide: (i) a measure of the mine's cash margin per
ounce, by comparison of the cash operating costs per ounce to the price of
gold; (ii) the trend in costs as the mine matures; and, (iii) an internal
benchmark of performance to allow for comparison against other mines. However,
cash costs of production should not be considered as an alternative to net
earnings or as an alternative to other Canadian GAAP measures and may not be
comparable to other similarly titled measures of other companies.
A reconciliation of net cash costs per ounce of production to amounts
reported in the Statement of Operations is shown in the following table.
Q2 2008
(Expressed in
thousands of US$,
except per ounce
amounts) Kemess Stawell Fosterville Combined
-------------------------------------------------------------------------
Gold production
(ounces) 46,124 22,807 14,630 83,561
-------------------------------------------------------------------------
Cost of sales $ 74,295 $ 13,660 $ 14,657 $ 102,612
Change in inventories
and other (15,619) 637 2,174 (12,808)
Gross copper and
silver revenue (54,435) - - (54,435)
-------------------------------------------------------------------------
Total cash cost 4,241 14,297 16,831 35,369
-------------------------------------------------------------------------
Cash cost ($/ounce) $ 92 $ 627 $ 1,150 $ 423
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Q2 2007
(Expressed in
thousands of US$,
except per ounce
amounts) Kemess Stawell Fosterville Combined
-------------------------------------------------------------------------
Gold production
(ounces) 65,999 n/a n/a 65,999
-------------------------------------------------------------------------
Cost of sales $ 60,384 n/a n/a $ 60,384
Change in inventories
and other (6,035) n/a n/a (6,035)
Gross copper and
silver revenue (52,019) n/a n/a (52,019)
-------------------------------------------------------------------------
Total cash cost 2,330 n/a n/a 2,330
-------------------------------------------------------------------------
Cash cost ($/ounce) $ 35 n/a n/a $ 35
-------------------------------------------------------------------------
-------------------------------------------------------------------------
YTD 2008
(Expressed in
thousands of US$,
except per ounce
amounts) Kemess Stawell(1) Fosterville(1) Combined
-------------------------------------------------------------------------
Gold production
(ounces) 95,707 34,315 19,412 149,434
-------------------------------------------------------------------------
Cost of sales $ 123,459 $ 20,905 $ 21,003 $ 165,367
Change in inventories
and other (7,317) (442) 1,519 (6,240)
Gross copper and
silver revenue (106,716) - - (106,716)
-------------------------------------------------------------------------
Total cash cost 9,426 20,463 22,522 52,411
-------------------------------------------------------------------------
Cash cost ($/ounce) $ 98 $ 596 $ 1,160 $ 351
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Financial and operational data include the results of Perseverance
from February 19 to June 30, 2008.
YTD 2007
(Expressed in
thousands of US$,
except per ounce
amounts) Kemess Stawell Fosterville Combined
-------------------------------------------------------------------------
Gold production
(ounces) 134,109 n/a n/a 134,109
-------------------------------------------------------------------------
Cost of sales $ 107,370 n/a n/a $ 107,370
Change in inventories
and other (1,674) n/a n/a (1,674)
Gross copper and
silver revenue (101,425) n/a n/a (101,425)
-------------------------------------------------------------------------
Total cash cost 4,271 n/a n/a 4,271
-------------------------------------------------------------------------
Cash cost ($/ounce) $ 32 n/a n/a $ 32
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Selected Quarterly Financial Data
(Thousands of US
dollars, except per 2008 Quarter Ended 2007 Quarter Ended
share, per ounce and ---------------------------------------------------
per pound amounts) Jun 30 Mar 31 Dec 31 Sep 30
-------------------------------------------------------------------------
Revenue $ 138,880 $ 86,093 $ 95,599 $ 86,756
Earnings (loss) for
the period 1,085 20,427 33,309 (11,937)
Earnings (loss) per
share
Basic $ 0.00 $ 0.08 $ 0.13 $ (0.05)
Diluted $ 0.00 $ 0.08 $ 0.13 $ (0.05)
Metal production
Gold (ounces) 83,561 88,386(1) 41,467 70,055
Copper (thousands
pounds) 13,940 14,380 16,766 18,822
Metal Prices
Gold (London Bullion
Market - $ per ounce) 896 927 788 681
Copper (LME Cash -
$ per pound) 3.83 3.54 3.26 3.50
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(Thousands of US
dollars, except per 2007 Quarter Ended 2006 Quarter Ended
share, per ounce and ---------------------------------------------------
per pound amounts) Jun 30 Mar 31 Dec 31 Sep 30
-------------------------------------------------------------------------
Revenue $ 80,878 $ 74,313 $ 118,239 $ 102,667
Earnings (loss) for
the period 8,647 9,406 19,790 14,902
Earnings (loss) per
share
Basic $ 0.03 $ 0.04 $ 0.09 $ 0.07
Diluted $ 0.03 $ 0.04 $ 0.09 $ 0.07
Metal production
Gold (ounces) 65,999 68,110 81,746 74,789
Copper (thousands
pounds) 14,839 17,702 21,254 19,602
Metal Prices
Gold (London Bullion
Market - $ per ounce) 667 650 614 622
Copper (LME Cash -
$ per pound) 3.47 2.69 3.21 3.48
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Gold production at Fosterville for the quarter ended March 31, 2008
excludes the change in gold-in-circuit inventory previously recorded
in production.
This press release should be read in conjunction with the Corporation's
second quarter MD&A report, which can be found on www.northgateminerals.com,
in the "Investor Info" section, under "Financial Reports - Quarterly Reports".
Notification of Q2 Financial Results
August 1, 2008, 11:00 AM Toronto time
You are invited to participate in the Northgate Minerals Corporation live
conference call and webcast discussing our second quarter financial results on
Friday, August 1, 2008, at 11:00 a.m. Toronto time.
Conference Call
Please call 416-644-3414 or toll free in North America at 1-800-733-7571.
To ensure your participation, please call five minutes prior to the scheduled
start of the call.
Webcast
The webcast package, including the webcast link and management
presentation, will be available on the morning of August 1 and posted on
Northgate's website at www.northgateminerals.com under the Calendar of Events
section. You may also access the webcast at
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2321000.
Replay
A replay of the conference call will be made available beginning on
August 1 at 1:00 pm ET until August 15 at 11:59 pm ET.
Replay Access No. 416-640-1917 or 1-877-289-8525
Passcode: 212 758 47 followed by the number sign
Northgate Minerals Corporation is a mid-tier gold and copper producer
with mining operations, development projects and exploration properties in
Canada and Australia. The company is forecasting 400,000 ounces of unhedged
gold production in 2008 and is targeting growth through further acquisitions
in stable mining jurisdictions around the world. Northgate is listed on the
Toronto Stock Exchange under the symbol NGX and on the American Stock Exchange
under the symbol NXG.
FORWARD-LOOKING STATEMENTS: This news release contains certain
"forward-looking statements" and "forward-looking information" as defined
under applicable Canadian and U.S. securities laws. Forward-looking statements
generally can be identified by the use of forward-looking terminology such as
"may," "will," "expect," "intend," "estimate," "anticipate," "believe," or
"continue" or the negative thereof or variations thereon or similar
terminology. Forward-looking statements are necessarily based on a number of
estimates and assumptions that are inherently subject to significant business,
economic and competitive uncertainties and contingencies. Certain of the
statements made herein by Northgate Minerals Corporation ("Northgate")
including those related to future financial and operating performance and
those related to Northgate's future exploration and development activities,
are forward-looking and subject to important risk factors and uncertainties,
many of which are beyond the Corporation's ability to control or predict.
Known and unknown factors could cause actual results to differ materially from
those projected in the forward-looking statements. Such factors include, among
others: gold price volatility; fluctuations in foreign exchange rates and
interest rates; impact of any hedging activities; discrepancies between actual
and estimated production, between actual and estimated reserves and resources
and between actual and estimated metallurgical recoveries; costs of
production, capital expenditures, costs and timing of construction and the
development of new deposits; and, success of exploration activities and
permitting time lines. In addition, the factors described or referred to in
the section entitled "Risk Factors" of Northgate's Annual Information Form
(AIF) for the year ended December 31, 2007 or under the heading "Risks and
Uncertainties" of Northgate's 2007 Annual Report, both of which are available
on SEDAR at www.sedar.com, should be reviewed in conjunction with this
document. Accordingly, readers should not place undue reliance on
forward-looking statements. The Corporation does not undertake any obligation
to update publicly or release any revisions to forward-looking statements to
reflect events or circumstances after the date of this document or to reflect
the occurrence of unanticipated events, except in each case as required by
law.
Interim Consolidated Balance Sheets
June 30 December 31
Thousands of US dollars 2008 2007
-------------------------------------------------------------------------
(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 76,876 $ 266,045
Trade and other receivables 24,323 14,014
Inventories (note 6) 40,400 35,234
Prepaid expenses 2,241 3,087
Future income tax asset 1,158 1,194
-------------------------------------------------------------------------
144,998 319,574
Other assets 41,739 80,181
Long-term receivables - 25,117
Deferred transaction costs (note 7) 374 1,799
Future income tax asset 16,588 16,507
Mineral property, plant and equipment 389,836 121,337
Investments (note 8) 62,933 70,074
Goodwill 74,162 -
-------------------------------------------------------------------------
$ 730,630 $ 634,589
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued liabilities $ 57,307 $ 35,861
Short-term loan (note 9) 44,027 44,835
Current portion of capital lease
obligations 4,724 2,267
Future income tax liability 1,304 872
-------------------------------------------------------------------------
107,362 83,835
Capital lease obligations 5,184 282
Other long-term liabilities 36,983 12,089
Site closure and reclamation
obligations (note 10) 47,909 49,120
Future income tax liability 13,123 2,487
-------------------------------------------------------------------------
210,561 147,813
Shareholders' Equity
Common shares 311,556 309,455
Contributed surplus 4,679 3,940
Accumulated other comprehensive
income (loss) 5,278 (3,282)
Retained earnings 198,556 176,663
-------------------------------------------------------------------------
520,069 486,776
-------------------------------------------------------------------------
$ 730,630 $ 634,589
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes form an integral part of these interim
consolidated financial statements.
Interim Consolidated Statements of Operations and Comprehensive Income
Thousands of US
dollars, except
share and per
share amounts, Three Months Ended June 30 Six Months Ended June 30
unaudited 2008 2007 2008 2007
-------------------------------------------------------------------------
Revenue $ 138,880 $ 80,878 $ 224,973 $ 155,191
-------------------------------------------------------------------------
Cost of sales 102,612 60,384 165,367 107,370
Administrative
and general 3,066 2,625 6,227 4,753
Depreciation
and depletion 15,982 8,933 28,833 19,959
Net interest
income (1,551) (4,464) (5,163) (7,700)
Exploration 11,357 7,842 17,518 11,435
Currency
translation
loss (gain) 967 (3,972) (6,907) (5,164)
Accretion of
site closure
and reclamation
obligations 213 467 954 905
Other expense
(income) (note 15) (740) 911 (10,576) 911
-------------------------------------------------------------------------
131,906 72,726 196,253 132,469
-------------------------------------------------------------------------
Earnings before
income taxes 6,974 8,152 28,720 22,722
Income tax
recovery (expense)
Current (6,851) (1,905) (8,437) (5,218)
Future 962 2,400 1,229 549
-------------------------------------------------------------------------
(5,889) 495 (7,208) (4,669)
-------------------------------------------------------------------------
Net earnings
for the period $ 1,085 $ 8,647 $ 21,512 $ 18,053
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Other
comprehensive
income (loss)
Reclassification
of net realized
gains on
available for
sale securities
to net earnings - - - (315)
Unrealized gain
(loss) on
available for
sale securities (2,627) 332 (7,125) 466
Unrealized
gain on
translation of
self-sustaining
operations 15,691 - 15,685 -
Reclassification
of deferred
losses on gold
forward
contracts to
net earnings,
net of tax - 4,842 - 9,148
-------------------------------------------------------------------------
13,064 5,174 8,560 9,299
-------------------------------------------------------------------------
Comprehensive
income $ 14,149 $ 13,821 $ 30,072 $ 27,352
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net earnings
per share
Basic $ 0.00 $ 0.03 $ 0.08 $ 0.07
Diluted $ 0.00 $ 0.03 $ 0.08 $ 0.07
Weighted
average shares
outstanding
Basic 255,325,154 254,159,902 255,001,371 254,061,971
Diluted 255,745,076 255,317,140 255,543,256 255,435,956
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes form an integral part of these interim
consolidated financial statements.
Interim Consolidated Statement of Changes in Shareholders' Equity
Number of Common
Thousands of US dollars, Common Shares Contributed
except common shares, unaudited Shares Amount Surplus
-------------------------------------------------------------------------
Balance at December 31, 2007 254,452,862 $ 309,455 $ 3,940
Transitional adjustment on
adoption of inventory
standard (note 4) - - -
Shares issued under employee
share purchase plan 108,530 217 -
Shares issued on exercise
of options 853,300 1,775 (465)
Stock-based compensation - 109 1,204
Net earnings - - -
Other comprehensive income - - -
-------------------------------------------------------------------------
Balance at June 30, 2008 255,414,692 $ 311,556 $ 4,679
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated
Other
Comprehensive Retained
Income (loss) Earnings Total
-------------------------------------------------------------------------
Balance at December 31, 2007 $ (3,282) $ 176,663 $ 486,776
Transitional adjustment on
adoption of inventory
standard (note 4) - 381 381
Shares issued under employee
share purchase plan - - 217
Shares issued on exercise
of options - - 1,310
Stock-based compensation - - 1,313
Net earnings - 21,512 21,512
Other comprehensive income 8,560 - 8,560
-------------------------------------------------------------------------
Balance at June 30, 2008 $ 5,278 $ 198,556 $ 520,069
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Number of Common
Thousands of US dollars, Common Shares Contributed
except common shares, unaudited Shares Amount Surplus
-------------------------------------------------------------------------
Balance at December 31, 2006 253,700,033 $ 307,914 $ 2,596
Transitional adjustment
on adoption of financial
instruments - - -
Shares issued under employee
share purchase plan 74,667 186 -
Shares issued on exercise of
share purchase warrants - - -
Shares issued on exercise
of options 419,020 534 (157)
Stock-based compensation - 92 1,079
Net earnings - - -
Other comprehensive income - - -
-------------------------------------------------------------------------
Balance at June 30, 2007 254,193,720 $ 308,726 $ 3,518
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated
Other
Comprehensive Retained
Income (loss) Earnings Total
-------------------------------------------------------------------------
Balance at December 31, 2006 $ - $ 137,238 $ 447,748
Transitional adjustment
on adoption of financial
instruments (18,676) - (18,676)
Shares issued under employee
share purchase plan - - 186
Shares issued on exercise of
share purchase warrants - - -
Shares issued on exercise
of options - - 377
Stock-based compensation - - 1,171
Net earnings - 18,053 18,053
Other comprehensive income 9,299 - 9,299
-------------------------------------------------------------------------
Balance at June 30, 2007 $ (9,377) $ 155,291 $ 458,158
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes form an integral part of these interim
consolidated financial statements.
Interim Consolidated Statements of Cash Flows
Thousands of
US dollars, Three Months Ended June 30 Six Months Ended June 30
unaudited 2008 2007 2008 2007
-------------------------------------------------------------------------
Operating
activities:
Net earnings
for the
period $ 1,085 $ 8,647 $ 21,512 $ 18,053
Non-cash items:
Depreciation
and depletion 15,982 8,933 28,833 19,959
Unrealized
currency
translation
loss (gain) 3,100 711 (4,269) 676
Unrealized gain
on derivatives - - (9,836) -
Accretion of
site closure
and reclamation
obligations 213 467 954 905
Loss on disposal
of assets (44) - (44) -
Amortization of
hedging losses - 7,350 - 13,887
Amortization of
deferred charges 53 76 107 148
Stock-based
compensation 408 373 1,313 1,171
Accrual of
employee
severance
costs 307 - 307 -
Future income
tax recovery (962) (2,400) (1,229) (549)
Change in fair
value of
forward
contracts 7,601 16,905 38,521 37,004
Gain on sale
of investments - - (1) (315)
Changes in
operating working
capital and other
(note 17) 13,116 2,623 (19,859) (28,013)
-------------------------------------------------------------------------
40,859 43,685 56,309 62,926
-------------------------------------------------------------------------
Investing
activities:
Release of
restricted cash 6,729 - 53,156 -
Increase in
restricted cash - - (23,912) -
Purchase of
mineral
property, plant
and equipment (23,277) (3,573) (30,374) (6,334)
Transaction
costs paid (308) - (2,233) -
Acquisition of
Perseverance,
net of cash
acquired - - (196,590) -
Repayment of
Perseverance
hedge portfolio - - (45,550) -
Proceeds from
sale of
equipment 3,221 - 3,221 -
Purchase of
investments - (637) - (322)
Proceeds from
sale of
investments - - 1 -
-------------------------------------------------------------------------
(13,635) (4,210) (242,281) (6,656)
-------------------------------------------------------------------------
Financing
activities:
Repayment of
capital lease
obligations (2,331) (642) (3,408) (1,271)
Financing from
credit facility 408 - 8,356 -
Repayment of
credit facility (1,418) - (9,164) -
Repayment of
other long-term
liabilities (442) - (746) -
Issuance of
common shares 291 118 1,527 563
-------------------------------------------------------------------------
(3,492) (524) (3,435) (708)
-------------------------------------------------------------------------
Effect of exchange
rate changes on
cash and cash
equivalents 456 - 238 -
-------------------------------------------------------------------------
Increase/
(decrease) in
cash and cash
equivalents 24,188 38,951 (189,169) 55,562
Cash and cash
equivalents,
beginning of
period 52,688 278,810 266,045 262,199
-------------------------------------------------------------------------
Cash and cash
equivalents,
end of period $ 76,876 $ 317,761 $ 76,876 $ 317,761
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Supplementary
information
Cash paid during
the period for:
Interest $ 942 $ 74 $ 1,930 $ 145
Income taxes 4,381 - 4,715 -
Purchase of
mineral property,
plant and
equipment by
assumption of
capital lease
obligations 7,557 - 7,557 -
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes form an integral part of these interim
consolidated financial statements.
To view the notes in PDF format, please click on the following link:
www.northgateminerals.com/Theme/Northgate/files/Releases/Q2_08_Notes.pdf
%CIK: 0000072931
For further information: please contact: Ms. Keren R. Yun, Director, Investor
Relations, Tel: (416) 216-2781, Email: ngx@northgateminerals.com, Website:
www.northgateminerals.com
.
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