Attention Business/Financial Editors:
Northgate reports fourth quarter operating results and production forecast for 2008
VANCOUVER, Jan. 28 /CNW/ - (All figures in US dollars except where noted)
- Northgate Minerals Corporation (TSX: NGX, AMEX: NXG) today reported its
fourth quarter 2007 operating results and 2008 production forecast, as well as
2008 exploration plans for its Canadian properties.
FOURTH QUARTER 2007 HIGHLIGHTS
- Quarterly gold production of 41,467 ounces bringing total 2007
production to 245,631 ounces;
- Quarterly copper production of 16.8 million pounds bringing total
2007 production to 68.1 million pounds; and,
- Quarterly gold net cash cost of $48 per ounce bringing annual net
cash cost to negative $16 per ounce of gold for all of 2007.
- Shareholders, warrant holders and noteholders of Perseverance
Corporation Ltd. ("Perseverance") approved Northgate's offer to
acquire the Australian gold producer and the transaction is expected
to close on February 18, 2008.
2008 PRODUCTION FORECAST HIGHLIGHTS
- The Kemess mine is forecast to produce 243,000 ounces of gold and
64.4 million pounds of copper in 2008.
- The cash cost of production, net of by-product credits, is forecast
to be $130 per ounce of gold assuming a copper price of $3.00 per
pound and an exchange rate of Cdn$/US$1.00.
- Canadian exploration spending is forecast to be $22 million, most of
which will be devoted to the Young-Davidson property near Matachewan,
Ontario. The surface and underground diamond drilling programs at
Young-Davidson will continue and Northgate expects to complete a
feasibility study for the project by the end of the year.
- Gold production from the Fosterville and Stawell mines in Australia
is expected to be in the range from 190,000 to 200,000 ounces during
2008 and this production will be included in Northgate's consolidated
results after the transaction closes on February 18. Northgate will
provide further production and cost guidance for its newly acquired
Australian mines in March 2008.
Ken Stowe, President & CEO, commented, "While the revised fourth quarter
production at Kemess fell short of our expectations, our total 2007 production
of 245,631 ounces of gold at a net cash cost of negative $16 per ounce
generated excellent cash flow in 2007's strong metal price environment. With
the acquisition of two operating mines in Australia, Northgate's total metal
production in 2008 is forecast to be over 400,000 ounces of gold and
64.4�million pounds of copper, all of which is unhedged, and will be sold at
spot prices giving us maximum exposure in the current robust metal price
environment. With successful securityholder votes behind us on the
Perseverance transaction and the upcoming resource update we expect to
announce at Young-Davidson, Northgate has become a multi-mine, mid-tier, gold
producer with production platforms in two excellent mining jurisdictions from
which we can generate additional growth opportunities through exploration and
acquisition."
RESULTS OF OPERATIONS
Q4 2007 - Kemess South Mine Performance
The Kemess mine posted production of 41,467 ounces of gold and
16.8�million pounds of copper in the fourth quarter of 2007. Metal production
was significantly lower than forecast due to lower than expected mill
throughput and a 15% copper grade deficit compared to blast hole estimates for
the stockpiled, very unusual, high native copper ore that was milled from
stockpile in November and December. Milling of this ore and other lower grade
stockpiled hypogene ores during November and December was necessitated by the
realignment of the main haul road out of the pit due to a crack, which
developed in a section of the road. This realignment was completed on January
10, 2008 at which time ore production from the west end of the pit resumed.
For the full year, Kemess milled approximately 17.8 million tonnes of ore
grading 0.627 grams per metric tonne (gr/mt) gold and 0.214% copper and posted
gold and copper production of 245,631 ounces and 68.1 million pounds,
respectively.
The cash cost of production at Kemess in the fourth quarter was $48 per
ounce bringing the average 2007 cash cost to negative $16 per ounce.
Northgate's audited financial results for the year ended December 31,
2007 are scheduled for release on February 28, 2008 and the Corporation's
year-end conference call and webcast for investors and analysts will be held
at 10:00 am (Eastern Standard Time) on the following day.
The following table provides a summary of operations for the fourth
quarter and the full year of 2007 and the comparable periods of 2006.
2007 Kemess Mine Production
(100% of production
basis) Q4 2007 Q4 2006 2007 2006
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Ore plus waste mined
(tonnes) 8,042,000 11,018,461 42,025,404 43,045,348
Ore mined (tonnes) 3,206,000 4,746,251 17,060,785 17,219,143
Stripping ratio
(waste/ore) 1.51 1.32 1.46 1.50
Ore milled (tonnes) 4,238,626 4,567,332 17,802,317 18,233,978
Ore milled per day
(tonnes) 46,072 49,645 48,773 49,956
Gold grade (gr/mt) 0.459 0.772 0.627 0.763
Copper grade (%) 0.238 0.243 0.214 0.244
Gold recovery (%) 66 72 68 69
Copper recovery (%) 75 87 81 83
Gold production (ounces) 41,467 81,747 245,631 310,296
Copper production
(thousands pounds) 16,766 21,255 68,129 81,209
Tonnes mined per
shift worked 449 645 589 693
Tonnes milled per
shift worked 237 267 249 277
Net cash cost ($/ounce)(1) 48 (90) (16) (56)
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Note 1: 2007 cash cost figures are unaudited estimates and are subject to
revision.
2008 PRODUCTION FORECAST
Kemess South Mine
In 2008, the mine plan calls for the removal of 18.2 million tonnes of
ore and 19.0 million tonnes of waste from the Kemess South open pit. The
majority of this material, approximately 30 million tonnes, will be mined from
the western end of the open pit and the balance will come from the eastern end
of the pit where pre-stripping of waste for the 2009-2010 ore production will
commence in the second half of this year.
Mill feed will be supplied by ore sourced from the western end of the
open pit and stockpiles and mill throughput is forecast to average
approximately 50,000 tonnes per day (tpd) with the mill operating at 92%
availability. The majority of the ore milled during the year will be hypogene
ore with only a small quantity ((less than)6%) of supergene ore. Total metal
production for 2008 is anticipated to be approximately 243,000 ounces of gold
and 64.4 million pounds of copper.
Production of gold-copper concentrate is forecast to total 148,000 dry
metric tonnes (dmt), which will be shipped to Xstrata Copper's Horne smelter
in Rouyn-Noranda, Quebec. Annual smelting and refining terms for 2008 are
expected to settle at around $45/dmt and 4.5cents/lb of copper with no price
participation, which represents a reduction in concentrate marketing costs of
approximately $3 million from 2007 levels.
Gold Cash Cost
Assuming by-product copper and silver prices of $3.00 per pound and
$12.00 per ounce, respectively, and an exchange rate of Cdn$/US$1.00, the
Kemess mine's 2008 net cash cost is projected to be $130 per ounce of gold
produced. In 2008, each $0.10 per pound change in the copper price and each
$0.03 change in the Cdn$/US$ exchange rate will affect the net cash cost of
production by approximately $25 per ounce.
Projected 2008 Kemess Mine Production
(100% of production basis)
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Ore plus waste mined (tonnes) 37,150,000
Ore mined (tonnes) 18,154,000
Stripping ratio (waste/ore) 1.05
Ore milled (tonnes) 18,224,860
Ore milled per day (tonnes) 49,765
Gold grade (gr/mt) 0.616
Copper grade (%) 0.197
Gold recovery (%) 67
Copper recovery (%) 81
Gold production (ounces) 243,091
Copper production (thousands pounds) 64,361
Net cash cost ($/ounce) 130
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Quarterly Metal Production
Gold and copper output will vary from quarter to quarter due to normal
variations in ore grades, ore types and metallurgical recoveries. All of
Northgate's gold and copper production from Kemess South during 2008 is
unhedged; as a result, the company will receive market prices for all metal
sales during the year.
2008 Kemess South Metal
Production Q1 Q2 Q3 Q4 Total
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Gold Production (ounces) 57,001 47,049 67,431 71,610 243,091
Copper Production
(millions pounds) 15.1 14.1 17.8 17.4 64.4
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Australian Mines
Northgate's acquisition of Perseverance is scheduled to close on
February�18, 2008. From that point forward, gold production from the
Fosterville and Stawell mines will be attributed to Northgate. Initial
projections call for these mines to produce between 190,000 - 200,000 ounces
of gold during 2008, all of which will be sold at spot prices. Northgate will
provide further guidance on gold production, production costs, capital
expenditures and exploration costs for its newly acquired Australian assets in
March 2008.
2008 EXPLORATION PLAN
Young-Davidson
2008 exploration spending at Northgate's Young-Davidson property near
Matachewan, Ontario is forecast to total approximately $21 million and will be
devoted towards surface-based exploration, underground ramp development and
preparation of a feasibility study for the project.
The surfaced-based diamond drilling program that began in 2006 will
continue with a target of completing 25,000 metres of drilling in 2008 at a
cost of $4 million. The primary goal of the surface-based drilling program
continues to be to increase the Syenite-hosted mineral resources in the region
between the Lower YD and Lower Boundary zones and within 1,300 metres of
surface (above the 9000 level). See Figure 1: Young-Davidson Property
(Vertical, North Looking, Longitudinal Section with Metric Grid) at
http://files.newswire.ca/592/Northgate_YD0128.doc.
Excavation of the underground ramp to its final length of 3,000 metres
will continue and is expected to be completed by June 2008. At the same time,
the underground definition drilling program, which began in the last half of
2007, will continue from upper sections of the ramp with the goal of moving
additional resources into the Indicated category. Dewatering and refurbishing
of the Existing No. 3 shaft down to the 14th level at approximately 625 metres
in depth, in order to provide ventilation and secondary access to the
underground ramp workings, will also continue.
In January 2008, Northgate engaged AMEC to prepare a feasibility study
for the Young-Davidson project and expects the work to be largely complete
before the end of the year.
Kemess
Northgate has budgeted to spend up to $750,000 conducting limited diamond
drilling in the area immediately surrounding the Kemess South open pit in
order to test targets that were identified in a deep penetrating IP survey
completed in 2007. The purpose of this program is to identify any potential
extensions to the Kemess South ore body that could add mine life to the Kemess
operation beyond the end of 2010.
(*) (*) (*) (*) (*) (*)
NORTHGATE MINERALS CORPORATION is a gold and copper mining company
focused on operations and opportunities in the Americas and Australia. The
Corporation's principal assets are the Kemess South mine in north-central
British Columbia and the Young-Davidson property in northern Ontario. With the
proposed acquisition of Perseverance Corporation Limited, the addition of two
operating mines will create a leading multi-mine, mid-tier gold producer, with
over 400,000 ounces of gold production in 2008. Northgate is listed on the
Toronto Stock Exchange under the symbol NGX and on the American Stock Exchange
under the symbol NXG.
(*) (*) (*) (*) (*) (*) (*)
NOTE TO SECURITY HOLDERS:
This news release does not constitute an offer to buy or an invitation to
sell, or the solicitation of an offer to buy or invitation to sell, any of the
securities of Northgate or Perseverance. Information about Perseverance is
provided by Perseverance and Northgate has not verified its accuracy or
completeness.
Subject to the terms and conditions set forth in the Merger
Implementation Agreement relating to the proposed transaction, Perseverance
intends to mail a scheme booklet (which will include an explanatory statement
and independent expert's report) to its shareholders . Perseverance
shareholders and other interested parties are strongly advised to read these
documents, as well as any amendments and supplements to these documents, when
they become available because they will contain important information.
FORWARD-LOOKING STATEMENTS:
This news release contains certain "forward-looking statements" and
"forward-looking information" 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, including any
information as to the timing and completion of the proposed transaction, the
potential benefits thereof, the future activities of and developments related
to Perseverance and Northgate prior to the proposed transaction and the
combined company after the proposed transaction, market position, and future
financial or operating performance of Northgate or Perseverance, are
forward-looking and subject to important risk factors and uncertainties, many
of which are beyond the corporations' 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; impact of any hedging activities, including
margin limits and margin calls; 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, success of exploration activities and permitting time lines; changes
in national and local government legislation, taxation, controls, regulations
and political or economic developments in any of the countries in which either
corporation does or may carry out business in the future; risks of sovereign
investment; the speculative nature of gold exploration, development and
mining, including the risks of obtaining necessary licenses and permits;
dilution; competition; loss of key employees; additional funding requirements;
and defective title to mineral claims or property. In addition, there are
risks and hazards associated with the business of gold exploration,
development and mining, including environmental hazards, industrial accidents,
unusual or unexpected formations, pressures, cave-ins, flooding and gold
bullion losses (and the risk of inadequate insurance or inability to obtain
insurance, to cover these risks), as well as the factors described or referred
to in the section entitled "Risk Factors" in Northgate's Annual Information
Form for the year ended December 31, 2006 or under the heading "Risks and
Uncertainties" in Northgate's 2006 annual report, both of which are available
on SEDAR at www.sedar.com, Error! Hyperlink reference not valid.and which
should be reviewed in conjunction with this document. Accordingly, readers
should not place undue reliance on forward-looking statements. Neither
corporation undertakes 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.
For further information about Northgate, please visit
www.northgateminerals.com. For further information about Perseverance, please
visit www.perseverance.com.au.
%CIK: 0000072931
For further information: Ms. Keren R. Yun, Investor Relations, (416) 216-2781,
ngx@northgateminerals.com
