NORTHGATE MINERALS CORP - T.NGX , T:NGX
NORTHGATE MINERALS CORP - T.NGX , T:NGX
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 record production of over 390,000 ounces of un-hedged gold production in 2009 and is targeting growth through further acquisitions in stable mining jurisdictions around the world. As of May 8, 2009, the Corporation had 255,854,675 issued and outstanding common shares and 6,958,450 outstanding common share options. Northgate is listed on the Toronto Stock exchange under NGX.T and the NYSE.
While featuring several active operations, the company has focused its growth strategy on the acquisition of one or more mines and/or late-stage development projects, in order to become a multi-mine gold producer. In 2008 they acquired Perseverance Corporation Limited, a gold producer with two fully permitted operating mines in Australia to achieve this goal.
Northgate management set forth 2009 objectives for various properties:
Fosterville Mine
– Significant increase in production to 112,000 ounces of gold
– Dramatic decline in average net cash cost to $445 per ounce
– Targeting 90% gold recovery with commissioning of heated leach circuit
– $4.2 million budget in support of mine-life extension and resource conversion
_http://www.northgateminerals.com/OperationsProjects/NorthgateFostervilleGoldMine/default.aspx
Stawell
– Steady production of 107,000 ounces of gold
– Continued decline in net cash cost to $388 per ounce
– Targeting 90% gold recovery
– $4.0 million exploration budget in support of mine-life extension
Kemess
– Generate strong free cash flow
– Minimal CAPEX
Young-Davidson
– Drilling on other areas of the property in search of additional gold resources
– Complete pre-feasibility work by the end of Q2
– Complete a feasibility study by the end of the year
– Sign IBA with MFN
Risk:
The balance sheet has $88.4 million in cash in the bank and no long-term debt.
The 2008 property acquisition was paid for in cash. This is reflected in the lower cash and cash equivalent for Q1 2009. Risk of dilution is minimal if they continue this policy. Other risks as for any producer fall in mineral prices.
Recent Production Highlights Q1, 2009:
Total gold production was 107,477 ounces, exceeding the first quarter production forecast: » Kemess produced 59,306 ounces during the first quarter, which was 10,000 ounces above forecast. » Fosterville continued its strong turnaround producing 25,779 ounces during the first quarter, which was 2,000 ounces above forecast. Average net cash cost of production was $396 per ounce, which was significantly lower than first quarter guidance. Gold sales for the first quarter totaled 111,850 ounces at a realized price of $935 per ounce. Began commissioning the heated leach circuit at the Fosterville mine, which will significantly improve gold recoveries.
Recent Acquisitions: As previously mentioned, in 2008 Northgate completed a friendly takeover of Perseverance Corporation Ltd., an Australian-based gold miner with two operating mines in the state of Victoria, for US$257 million.
Joint Ventures:
This program is being conducted under an exploration alliance agreement with Northgate Minerals signed in December 2005. Rimfire and Northgate hold the Boulevard Property jointly with each company having funded the initial $330,000 in targeting and exploration that led to staking of the property. To date, Northgate has funded approximately $435,000 of the required $1.5 million in exploration expenditures to earn an additional 10% interest (for a total of 60%) in the property.
Recent Exploration Activity: Successful exploration drilling at Stawell: Discovered two additional zones of gold mineralization on either side of the GG5 mining zone. Hole SD-622W6 in the North Magdala target area intersected 5.7 meters of 19.6 g/t gold.
Northgate's 2009 exploration budget for its current operations and projects is $10 million: $4.2 million – Fosterville Gold Mine, $4.0 million – Stawell Gold Mine
$1.2 million –Young-Davidson. Northgate’s exploration strategy is to focus on areas around each of our operating mines and development projects.
Finances:
Working Capital: At March 31, 2009, Northgate had working capital of $68,330,000 compared with working capital of $21,947,000 at December 31, 2008. The increase in working capital was driven entirely by increases to current assets as current liabilities have decreased by 2% since December 31, 2008. Northgate’s cash and cash equivalents have increased by $25,960,000 due to cash flow from operations and the settlement of a portion of the Corporation’s copper forward contracts. All cash is held on deposit with major established banks in Canada and Australia.
Q1 2009
Technical Reports:
Fosterville AUS, National Instrument 43-101 Technical Report
http://www.northgateminerals.com/Theme/Northgate/files/pdf/Technical/Fosterville_Report_Final.pdf
Kemess South National Instrument 43-101 Technical Report
Stawell National Instrument 43-101 Technical Report
Young-Davidson National Instrument 43-101 Technical Report
Kemmess North National Instrument 43-101 Technical Report
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