Expanded 2010 Exploration Budget of $21 Million VANCOUVER, Jan. 18
/PRNewswire-FirstCall/ -- (All figures in US dollars except where
noted) - Northgate Minerals Corporation (TSX: NGX, NYSE Amex: NXG)
today reported gold production of 81,098 ounces in the fourth
quarter of 2009, bringing full year production to a record 362,743
ounces of gold. Fourth Quarter and Full Year 2009 Production
Highlights - Quarterly gold production of 81,098 ounces at
Northgate's three operating mines. - Fosterville achieved the
highest quarterly gold production in the history of the mine,
producing 26,615 ounces of gold. Full year production at
Fosterville of 103,360 ounces of gold was also a record high. -
Stawell generated its strongest production quarter of the year,
producing 23,566 ounces of gold. - Kemess reached its quarterly and
annual forecast, producing 30,917 ounces of gold in the fourth
quarter, bringing annual production to a total of 173,040 ounces of
gold. - In addition to strong fourth quarter gold production at
Kemess, the mine also produced 11.7 million pounds of copper for a
total of 52.5 million pounds in 2009. - The estimated average net
cash cost* of production for the fourth quarter was $529 per ounce,
bringing the average cash costs for 2009 to $475 per ounce. -
Northgate's cash balance at the end of 2009 was $253.8 million,
which was $17.9 million higher than the cash balance at the end of
the previous quarter. ---------------------- * The net cash cost
per ounce of production is a non-GAAP measure. See section entitled
"Non-GAAP Measures" in the Corporation's third quarter MD&A
Report. Q4 and full year 2009 cash cost figures are unaudited
estimates and are subject to revision. The following table provides
a summary of production at Northgate's operations in 2009. 2009 Q1
2009 Q2 2009 Q3 2009 Q4 2009 Total
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Gold Production (ounces) Fosterville 25,779 25,416 25,550 26,615
103,360 Stawell 22,392 20,066 20,319 23,566 86,343 Kemess 59,306
47,895 34,922 30,917 173,040
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Total Gold Production (ounces) 107,477 93,377 80,791 81,098 362,743
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Copper Production (thousands pounds) 15,007 13,805 11,934 11,749
52,495 Net cash cost ($/ounce)(1) 396 465 539 529 475
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(1) Q4 and full year 2009 cash cost figures are unaudited estimates
and are subject to revision. Ken Stowe, President & CEO,
commented, "We are pleased to have achieved a second straight year
of record gold production, highlighted by solid fourth quarter
performance at our three producing mines. In Australia, Fosterville
achieved quarterly and annual records for gold production while
Stawell returned to higher production levels to finish the year off
with its strongest quarter. Closer to home, Kemess had an excellent
year, achieving its forecast for gold production while beating cash
cost estimates. Despite a year that started off amid extremely
challenging economic and investment conditions, we remained focused
on the technical, operational and development plans at each of our
operations and we are extremely pleased to have capped off the year
with record gold production and excellent operating cash flow. In
2010, with a strong balance sheet and continuing high metal prices,
we look forward to a successful year highlighted by another annual
production record at Fosterville, the two millionth ounce produced
in the long history of Stawell, continued low-cost production at
Kemess and the commencement of construction at Young-Davidson. In
addition, we have budgeted over $21 million for exploration at
Fosterville, Stawell and Young-Davidson where there is excellent
potential for organic reserve growth." Results of Operations
Fosterville Gold Mine The Fosterville Gold mine achieved its
strongest quarterly production in the history of the mine,
generating 26,615 ounces of gold at a net cash cost of $706 per
ounce. Production for all of 2009 totalled 103,360 ounces of gold,
which was an annual record for the mine and a 46% increase over
2008 production. The average net cash cost of production for 2009
was $573 per ounce, which was a dramatic improvement over the $831
per ounce recorded in the prior year. However, the 2009 net cash
cost in US$/ounce was slightly higher than our guidance due to the
substantial appreciation of the Australian dollar. Stawell Gold
Mine The Stawell Gold mine achieved its strongest production
quarter for the year, generating 23,566 ounces of gold, at a net
cash cost of $719 per ounce. For all of 2009, Stawell produced
86,343 ounces at an average net cash cost of $612 per ounce. The
net cash cost for 2009 was slightly higher than guidance due to the
stronger Australian dollar vs. the US dollar and lower than
forecast production. Production will return to higher levels in
2010 and beyond, as development advances in previous quarters allow
for more mining front flexibility and higher mining rates. Kemess
South The Kemess South mine posted strong fourth quarter production
of 30,917 ounces of gold and 11.7 million pounds of copper,
bringing total production for all of 2009 to 173,040 ounces of gold
and 52.5 million pounds of copper. The net cash costs for the
fourth quarter and full year 2009 were $234 and $348 per ounce,
respectively, which was significantly lower than forecast due to
the exceptional rebound in copper prices. Young-Davidson During the
fourth quarter, shaft dewatering activities and continuation of the
ramp development resumed at site to facilitate the deepening of the
existing Matachewan Consolidated Mine shaft. In addition, purchase
orders were issued for major underground mobile equipment in order
to advance the underground development schedule. Environmental and
permitting activities continued in the fourth quarter with a series
of open houses being held with the local First Nations and
communities. The Feasibility Study for the Young-Davidson project
is being finalized and results from the study will be released
shortly. Year End 2009 Financial Results Northgate's audited
financial results for the year ended December 31, 2009 are
scheduled for release before the market opens on March 9, 2010 and
the Corporation's year-end conference call and webcast for
investors and analysts will be held at 10:00 am (Eastern Time) on
the same day. Dial-in information for the conference call and
webcast will be made available in the coming weeks. 2010 Production
Forecast We are also pleased to provide our 2010 production
forecast and exploration plans for our Canadian and Australian
operations. 2010 Highlights - Northgate is forecasting 2010 gold
production of 316,000 ounces from our three operating mines. -
Fosterville is set to achieve another annual production record of
113,000 ounces of gold. - Stawell will produce its two millionth
ounce of gold in the first quarter of 2010. - Kemess is forecast to
produce 103,500 ounces of gold and 47.6 million pounds of copper. -
Northgate's average cash cost of production, net of by-product
credits, is forecast to be $537 per ounce of gold assuming a copper
price of $3.20 per pound and exchange rates of US$/Cdn$0.97 and
US$/A$0.92. - Exploration spending in Australia is forecast to be
$18.4 million in support of mine-life extensions at both
Fosterville and Stawell. - Exploration spending for the
Young-Davidson property is forecast to be $2.6 million, which will
focus on targets outside of the known resource area. Estimated 2010
production and cash costs for Northgate's three operating mines are
shown below: Gold Copper Cash Cost (ounces) (000s pounds) ($/oz)
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Fosterville 113,000 n/a $655 Stawell 99,500 n/a $633 Kemess 103,500
47,600 $318
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316,000 47,600 $537
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Note: Assuming copper price of $3.20 per pound and exchange rates
of US$/Cdn$0.97 and US$/A$0.92. 2010 Sensitivities Operating Cash
Flow Impact Variable Change (US$ millions)
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Gold Price $25 per ounce $7.9 Copper Price $0.05 per pound $1.3
Cdn$/US$ Foreign Exchange Rate $0.05 $5.0 A$/US$ Foreign Exchange
Rate $0.05 $6.9
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Cash Cost per Ounce Impact Variable Change (US$ per ounce)
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Cdn$/US$ Foreign Exchange Rate $0.05 $25 A$/US$ Foreign Exchange
Rate $0.05 $20
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The following table provides a summary of forecast quarterly gold
production for 2010. 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 production during
2010 is unhedged. As a result, the Company will receive market
prices for all gold sales during the year. In the fourth quarter of
2009, Northgate realigned its existing copper forward sales
position in order to secure a significant portion of cash inflows
over Kemess' remaining life of mine. The realignment involved
closing out Northgate's existing 15.9 million pound ($2.49/lb) US
dollar denominated copper forward hedge position at a cost of $9.9
million and entering into new copper forward sales contracts
denominated in Canadian dollars at an average price of Cdn$3.31 per
pound. The new hedged amount represents approximately 77% of
payable copper production over Kemess' remaining life of mine up
from the previous total of 32%. For 2010, Northgate has copper
forward sales contracts for the April to December period totaling
approximately 26.0 million pounds. For 2011, contracts over the
January to April period have been entered into for approximately
12.3 million pounds. (ounces) Q1 Q2 Q3 Q4 Total
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Fosterville 28,000 29,500 28,000 27,500 113,000 Stawell 23,000
24,500 25,000 27,000 99,500 Kemess 25,000 25,000 26,500 27,000
103,500
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76,000 79,000 79,500 81,500 316,000
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Projected 2010 Mine Production Fosterville Gold Mine
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Ore mined (tonnes) 800,000 Ore milled (tonnes) 800,000 Ore milled
per day (tonnes) 2,193 Gold grade (g/t) 4.79 Gold recovery (%) 87
Gold production (ounces)(1) 113,000 Net cash cost ($/ounce) 655
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(1) 2010 production forecast includes approximately 6,000 ounces
from the carbon-in-leach (CIL) tails retreat. In 2010, the
Fosterville mine plan calls for the mill to process a total of
800,000 tonnes of ore, following on the excellent productivity
achieved at the mill in 2009. Mill head grades are expected to
average 4.79 grams per tonne (g/t) and gold recovery is estimated
at 87% on average. Production in 2010 is forecast to achieve
another annual record of 113,000 ounces of gold, representing a 10%
increase over the prior year. Mine production will come primarily
from the heart of the main Phoenix orebody with the remaining
production from the Ellesmere orebody. Unit operating costs are
forecast to total A$101 per tonne milled, consisting of mining
costs of A$53 per tonne mined, milling costs of A$37 per tonne
milled and general and administrative (G&A) costs of A$11 per
tonne milled. In November of 2009, Northgate commenced the
development of a decline from the Ellesmere Zone towards the
Harrier Underground, which will facilitate future development and
production. Development of the decline is expected to take place
over the next two years, with production in the Harrier Underground
orebody starting in 2012. The Harrier decline ramp will also
provide an ideal platform for exploration and resource definition
drilling into the Phoenix orebody, which has been the most
productive orebody identified on the property to date. Additional
drill testing of targets in other mineralized zones will also take
place along the decline. Capital expenditures at Fosterville are
forecast to total $12.5 million, including $7.4 million for new
mobile equipment, $2.2 million for the tailings storage
infrastructure and $1.2 million for the purchase of approximately
300 acres of land near the mine. Mine development capital and
resource definition drilling costs are forecast to be $29.7
million. Approximately one-third of this amount will be allocated
to the development of the decline towards the Harrier Underground
and the balance primarily allocated to the ongoing development of
the Phoenix and Ellesmere orebodies. Stawell Gold Mine
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Ore mined (tonnes) 833,000 Ore milled (tonnes) 847,000 Ore milled
per day (tonnes) 2,321 Gold grade (g/t) 4.20 Gold recovery (%) 87
Gold production (ounces) 99,500 Net cash cost ($/ounce) 633
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In 2010, the Stawell mine plan calls for 847,000 tonnes to be
milled at an average grade of 4.20 g/t, with gold recovery forecast
to be 87%. Total gold production is forecast to be 99,500 ounces
and in the first quarter of 2010, Stawell will produce its two
millionth ounce of gold since modern production began in the mid
1980s. During the year, ore for the mill will be sourced from the
GG2, GG3, GG5, GG7, C7 and North Magdala reserve blocks while
development towards the GG6 zone continues to advance with
production scheduled for the fourth quarter of 2010. The large
number of working faces developed in the mine during 2009 make the
2010 mining plan very robust and will result in higher mining rates
and lower costs than the operation recorded in 2009. Unit operating
costs are forecast to total A$81 per tonne milled, consisting of
mining costs of A$52 per tonne mined, milling costs of A$22 per
tonne milled and G&A costs of A$9 per tonne milled. Capital
equipment will be replaced in 2010 to support the higher mining
rates going forward as part of our equipment replacement strategy.
A new 6020 truck and 2900 loader will be added to the current fleet
of trucks and loaders allowing for the retirement of older units.
The processing plant will undergo some plant modifications with a
flotation circuit upgrade. The upgrade will allow the flotation
circuit to handle the increased throughputs going forward into 2010
and improve overall gold recovery to 88.5% in the second half of
the year. Capital expenditures at Stawell are forecast to total
$15.6 million, including $9.6 million for new mining equipment,
$3.5 million for additional ventilation improvements and $2.6
million for upgrades and the purchase of critical spares in the
mill. Mine development capital and resource definition drilling
costs are forecast to be $20.7 million primarily related to the
GG5, GG7 and North Magdala reserve blocks and development towards
the GG6 zone, which will support production in 2010, 2011 and 2012.
Kemess South Mine
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Ore plus waste mined (tonnes) 37,148,000 Ore mined (tonnes)
18,916,000 Stripping ratio (waste/ore) 0.964 Ore milled (tonnes)
19,457,000 Ore milled per day (tonnes) 53,307 Gold grade (g/t)
0.282 Copper grade (%) 0.138 Gold recovery (%) 59 Copper recovery
(%) 81 Gold production (ounces) 103,500 Copper production
(thousands pounds) 47,600 Net cash cost ($/ounce) 318
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In 2010, the Kemess mine plan calls for the removal of 18.9 million
tonnes of ore and 18.2 million tonnes of waste from the Kemess open
pit. Ore processed will be mined from the eastern end of the open
pit, with grades and recoveries expected to increase slightly over
the course of the year. The Kemess mill is expected to operate at a
throughput of 53,307 tonnes per day, with the mill operating at 92%
availability. Almost all of the ore milled during the year will be
hypogene ore. Total gold and copper production for 2010 is
anticipated to be 103,500 ounces and 47.6 million pounds,
respectively. Production of gold-copper concentrate is forecast to
total 112,000 dry metric tonnes (dmt), which will be shipped to
Xstrata Copper's Horne smelter in Rouyn-Noranda, Quebec. Annual
smelting and refining terms for 2010 are expected to settle at
around $45 per dmt and 4.5 cents per pound of copper with no price
participation and it is expected that Kemess concentrate will be
processed on comparable terms. The unit mining cost is forecast at
Cdn$1.13 per tonne moved and the total average unit cost of
production is forecast to be Cdn$9.94 per tonne milled, including
Cdn$2.34 per tonne milled for concentrate marketing costs. Assuming
by-product copper and silver prices of $3.20 per pound and $15.00
per ounce, respectively, and an exchange rate of US$/Cdn$0.97, the
net cash cost is projected to be $318 per ounce of gold in 2010. As
Kemess is approaching the end of its mine life, capital
expenditures will amount to only $1.2 million in 2010. 2010
Exploration Program Northgate is also pleased to announce an
aggressive exploration program at Fosterville, Stawell and
Young-Davidson in support of organic reserve growth. Exploration
expenditures of $21 million are forecast in 2010 and include: -
$11.2 million at Fosterville in support of resource conversion and
investigative drilling - $7.2 million at Stawell for drill programs
totaling 26,500 metres (m) focusing on mining lease and near-mine
exploration targets - $2.6 million at Young-Davidson to drill
outside the known resource area Exploration at Fosterville
Exploration expenditures in 2010 are forecast to be $11.2 million
and will focus on five main areas on the Fosterville mining lease
and three areas of adjacent and regional exploration tenements. The
Phoenix Extension and Harrier Underground target areas, as
illustrated in Figure 1 below, are in close proximity to existing
underground development and account for approximately half of the
2010 exploration budget at Fosterville. Detailed section drilling
within the Phoenix Extension (6750N-7050N) will be undertaken in
order to extend reserves in the Phoenix deposit. A significant step
out down plunge from the Phoenix deposit will also take place with
drilling on section 6200N in order to test the large scale
continuity of the Phoenix deposit. In addition, a decline ramp from
the Ellesmere Zone is being developed towards the Harrier
Underground, a distance of approximately 2.2 kilometres (km). The
Harrier decline ramp will provide an ideal platform for exploration
and resource definition drilling into Phoenix, which has been the
most productive orebody identified on the property to date. The
decline ramp will also provide an opportunity for detailed drill
testing of targets in other mineralized zones. Other exploration
work at Fosterville will take place in the vicinity of the 21 past
producing open pit deposits on both the north and south ends of the
mining lease. In addition to on-lease exploration, regional
exploration will include a mix of advanced targets, following up on
historic drill hole intersections within 10 km of the Fosterville
processing facility, as well as drilling geochemical and
geophysical targets in the district. Figure 1 - Exploration Targets
Shown on Longitudinal Projection of the Fosterville Gold Mine
http://www.northgateminerals.com/Theme/Northgate/files/Releases/FGM_Jan10.gif
Exploration at Stawell At Stawell, exploration expenditures of $7.2
million are forecast for 2010 and will focus on 12 target areas,
both on and off mining lease in support of adding to the 2.1
million ounces of past production and reserves on the property.
These programs will total 26,500m split approximately 40% from
surface and 60% underground. Within the mine workings, new target
areas will be tested in the Magdala and the Golden Gift zones. Both
of these orebodies are truncated by late post mineral structures
for which the sense of movement is well understood (northeast over
southwest, see Figure 2 below) although the magnitude of the
displacement is not well documented. Exploration for the fault
offset portion of these orebodies is a high priority as these
targets have the potential to be comparable in size to known and
historic ore deposits. The prime focus for the off mine lease
exploration is the North Magdala area where drilling in the past
year intersected zones of gold mineralization (5.7m of 19.6 g/t
gold and 9.4m of 8.4 g/t gold - see press release dated May 8,
2009). Other target areas in the district include a search for the
bedrock source of alluvial gold (recorded historic production of
2.6 million ounces of gold) as well as around known historic areas
of high grade hardrock production within the general district.
Figure 2 - Exploration Targets Shown on Longitudinal Projection of
the Stawell Gold Mine
http://www.northgateminerals.com//Theme/Northgate/files/Releases/SGM_Jan10.gif
Exploration at Young-Davidson 2010 exploration spending at
Young-Davidson is budgeted at $2.6 million and will focus on
geological settings known to host gold mineralization elsewhere on
the property. One of these is the syenite body with gold
mineralization discovered in late 2009 (see press release dated
September 10, 2009) that is believed to be the fault offset of the
main Young-Davidson gold deposit. A second target setting is the
mafic volcanic rocks from which there has been historic gold
production, in which drill intersections in 2009 (7.6 g/t gold over
13.m - see press release dated October 13, 2009) demonstrated that
there remains significant potential for high grade gold
mineralization. Other targets on the property include a number of
geophysical anomalies that are similar in nature to the
Young-Davidson deposit that have not yet been drill tested.
Northgate Minerals Corporation is a gold and copper producer with
mining operations, development projects and exploration properties
in Canada and Australia. Our vision is to be the leading
intermediate gold producer by identifying, acquiring, developing
and operating profitable, long-life mining properties. We are
forecasting gold production of 316,000 ounces in 2010. Cautionary
Note Regarding Forward-Looking Statements and Information: This
Northgate press release contains "forward-looking information", as
such term is defined in applicable Canadian securities legislation
and "forward-looking statements" within the meaning of the United
States Private Securities Litigation Reform Act of 1995, concerning
Northgate's future financial or operating performance and other
statements that express management's expectations or estimates of
future developments, circumstances or results. Generally,
forward-looking information can be identified by the use of
forward-looking terminology such as "expects", "believes",
"anticipates", "budget", "scheduled", "estimates", "forecasts",
"intends", "plans" and variations of such words and phrases, or by
statements that certain actions, events or results "may", "will",
"could", "would" or "might" "be taken", "occur" or "be achieved".
Forward-looking information is based on a number of assumptions and
estimates that, while considered reasonable by management based on
the business and markets in which Northgate operates, are
inherently subject to significant operational, economic and
competitive uncertainties and contingencies. Northgate cautions
that forward-looking information involves known and unknown risks,
uncertainties and other factors that may cause Northgate's actual
results, performance or achievements to be materially different
from those expressed or implied by such information, including, but
not limited to gold and copper price volatility; fluctuations in
foreign exchange rates and interest rates; the impact of any
hedging activities; discrepancies between actual and estimated
production, between actual and estimated reserves and resources or
between actual and estimated metallurgical recoveries; costs of
production; capital expenditure requirements; the costs and timing
of construction and development of new deposits; and the success of
exploration and permitting activities. In addition, the factors
described or referred to in the section entitled "Risk Factors" in
Northgate's Annual Information Form for the year ended December 31,
2008 or under the heading "Risks and Uncertainties" in Northgate's
2008 Annual Report, both of which are available on the SEDAR
website at http://www.sedar.com/, should be reviewed in conjunction
with the information found in this press release. Although
Northgate has attempted to identify important factors that could
cause actual results, performance or achievements to differ
materially from those contained in forward-looking information,
there can be other factors that cause results, performance or
achievements not to be as anticipated, estimated or intended. There
can be no assurance that such information will prove to be accurate
or that management's expectations or estimates of future
developments, circumstances or results will materialize.
Accordingly, readers should not place undue reliance on
forward-looking information. The forward-looking information in
this press release is made as of the date of this press release,
and Northgate disclaims any intention or obligation to update or
revise such information, except as required by applicable law.
Cautionary Note to US Investors Regarding Mineral Reporting
Standards: The Company prepares its disclosure in accordance with
the requirements of securities laws in effect in Canada, which
differ from the requirements of U.S. securities laws. Terms
relating to mineral resources in this press release are defined in
accordance with National Instrument 43-101 - Standards of
Disclosure for Mineral Projects under the guidelines set out in the
Canadian Institute of Mining, Metallurgy, and Petroleum Standards
on Mineral Resources and Mineral Reserves. The Securities and
Exchange Commission (the "SEC") permits mining companies, in their
filings with the SEC, to disclose only those mineral deposits that
a company can economically and legally extract or produce. The
Company uses certain terms, such as, "measured mineral resources",
"indicated mineral resources", "inferred mineral resources" and
"probable mineral reserves", that the SEC does not recognize (these
terms may be used in this press release and are included in the
Company's public filings which have been filed with securities
commissions or similar authorities in Canada). DATASOURCE:
Northgate Minerals Corporation CONTACT: Ms. Keren R. Yun, Director,
Investor Relations, Tel: (416) 363-1701 ext. 233, Email: , Website:
http://www.northgateminerals.com/
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