VANCOUVER, April 21 /PRNewswire-FirstCall/ -- (All figures are in
US dollars except where noted) - Northgate Minerals Corporation
(TSX: NGX, AMEX: NXG) today reported its first quarter 2008
operating results and updated 2008 production forecast, as well as
its exploration plans for its Australian operations. FIRST QUARTER
2008 HIGHLIGHTS - Total quarterly gold production of approximately
90,000 ounces at Northgate's three operating mines at an average
net cash cost of production of $347 per ounce of gold. - Kemess
produced 49,583 ounces of gold at a cash cost of $105 per ounce. -
Stawell produced 28,363 ounces of gold at a cash cost of $428 per
ounce. - Fosterville produced 11,655 ounces of gold at a cash cost
of $1,185 per ounce. Cash costs were temporarily much higher than
normal as mining activities were curtailed to facilitate the smooth
and safe transition to owner mining soon after the acquisition
closing of Perseverance Corporation. - Kemess produced 14.4 million
pounds of copper in concentrate. - A new three-year collective
agreement was ratified by the International Union of Operating
Engineers Local 115, representing the 300 production and
maintenance employees at Kemess. - Indicated resources underground
at Young-Davidson increased by 137%. - A Memorandum of
Understanding ("MOU") for the development of the Young-Davidson
mine was signed with the Matachewan First Nation. 2008 PRODUCTION
FORECAST HIGHLIGHTS - Total gold production is forecast to be
425,000 ounces: 236,000 ounces at Kemess; 112,000 ounces at
Stawell; and, 77,000 ounces at Fosterville. Gold production
attributable to Northgate from the date of acquisition for Stawell
and Fosterville is 95,000 ounces and 70,000 ounces, respectively,
bringing total production attributable to Northgate to 401,000
ounces. All of Northgate's present and future gold production is
unhedged. - Northgate's overall cash cost of gold production, net
of by-product credits, is forecast to be $272 per ounce of gold
assuming a copper price of $3.50 per pound and exchange rates of
Cdn$/US$1.00 and US$/A $0.93. - In Australia, Northgate plans to
spend a total of $10 million for exploration on near mine targets
designed to increase mineable reserves at Stawell and Fosterville.
Ken Stowe, President & CEO, commented, "This is the first time
we are reporting production for our two newly acquired Australian
mines. The transition to Northgate ownership has gone smoothly and
the management teams at both sites are now working diligently on
addressing the critical strategic issues that we identified during
our due diligence. At Stawell, the key challenge is to increase ore
reserves and we are ramping up an aggressive $7 million exploration
program, which has already had significant success at the Golden
Gift 6 zone as announced last week. At Fosterville, we are in the
process of implementing a number of fundamental operating changes
that are required in order to produce the dramatic improvements in
performance that we expect to see over the remainder of 2008. The
conversion to owner mining, which was announced only a few days
after the acquisition was completed, is one such important example.
Meanwhile, closer to home, we are pleased to have reached a new
three-year collective agreement at Kemess without any disruption to
scheduled production. In addition, excellent progress continues to
be made at the Young-Davidson project with the announcement in
February of a 137% increase in indicated resources underground and
the signing of a Memorandum of Understanding with the Matachewan
First Nation. 2008 will truly be a transformational year for the
company." RESULTS OF OPERATIONS - Q1 2008 Canadian Operations
Kemess South Mine The Kemess South mine posted production of 49,583
ounces of gold and 14.4 million pounds of copper in the first
quarter of 2008 at a net cash cost of $105 per ounce. Metal
production was adversely affected by a number of factors, including
several unscheduled power outages by BC Hydro, which disrupted
scheduled production for a total of five days in the quarter. In
the first quarter, Kemess milled approximately 4.2 million tonnes
of ore grading 0.522 grams per metric tonne (g/t) gold and 0.182%
copper. The following table provides a summary of operations from
the Kemess South mine for the first quarter of 2008: (100% of
production basis) Q1 2008
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Ore plus waste mined (tonnes) 8,536,638 Ore mined (tonnes)
4,766,372 Stripping ratio (waste/ore) 0.791 Ore milled (tonnes)
4,243,891 Ore milled per day (tonnes) 46,636 Gold grade (g/t) 0.522
Copper grade (%) 0.182 Gold recovery (%) 70 Copper recovery (%) 85
Gold production (ounces) 49,583 Copper production (thousands
pounds) 14,380 Net cash cost ($/ounce)(1) 105
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(1) Cash cost figures are unaudited estimates and are subject to
revision. Young-Davidson Project Significant progress on all fronts
was made at Young-Davidson during the first quarter. On February 6,
2008, a revised resource estimate was announced in which total
indicated underground resources increased by 137% to 1.42 million
ounces. Total resources on the property include 1,418,000 ounces of
indicated and 440,000 ounces of inferred resources underground and
a further 464,000 ounces of measured and indicated resources in the
proposed open pit. Exploration drilling continued from surface and
underground during the quarter. To date, a total of 10,353 metres
of diamond drilling have been completed as part of the $5 million
2008 drilling program, which is designed to increase resources
between the two main zones of mineralization at depth and move
additional inferred resources into the indicated category in the
Upper Boundary zone. The underground ramp development continued
with an additional 674 metres during the quarter. A cross cut drift
was completed through the Upper Boundary zone where a 40-tonne bulk
sample was extracted for grinding circuit pilot plant testing. On
March 26, 2008, Northgate signed an MOU with the Matachewan First
Nation. The MOU outlines the framework for the negotiation of an
Impact and Benefit Agreement, which will establish the long-term
working relationship between Northgate and the Matachewan First
Nation during the development and operation of the mine. Northgate
is also working on a 43-101 compliant Preliminary Assessment
Report, which is nearing completion and is expected to be released
by the end of the second quarter of 2008. Australian Operations
Stawell Gold Mine The Stawell mine produced a total of 28,363
ounces of gold in the first quarter of 2008 at a net cash cost of
$428 per ounce. Gold production attributable to Northgate from the
date of acquisition was 11,508 ounces. During the quarter, gold
production was 1,600 ounces higher than forecast, primarily due to
significantly higher than predicted ore grades in the underground
mine. Approximately 167,000 tonnes of ore were milled at a grade of
5.96 g/t in the first quarter of 2008. Gold recoveries in the mill
were in line with expectation at 89%. Fosterville Gold Mine The
Fosterville mine produced 11,655 ounces of gold in the first
quarter of 2008 at a net cash cost of $1,185 per ounce. Gold
production attributable to Northgate from the date of acquisition
was 4,782 ounces. Production at Fosterville during the quarter was
negatively affected by two mining shutdown events. The first was a
10 day suspension of underground mining that began just before
Christmas while the mine was still controlled by its previous
owner. During this suspension, ore from surface stockpiles was
milled to maintain gold production, which reduced the amount and
quality of ore available for processing in January. Upon assuming
control of the mine on February 19, 2008, Northgate temporarily
suspended underground mining activities for a period of eight days
from February 21 - 28, 2008 in order to facilitate a thorough
review of operating procedures in the underground and provide
additional safety training to its mining personnel. In addition to
taking these safety steps, a number of key initiatives were put in
motion to ensure the long-term success of the mine, including
conversion to owner mining from contractor mining and
implementation of a gold recovery enhancement program to improve
overall efficiency and lower costs. The transition to owner mining,
which includes the purchase of new mining fleet, is well advanced
and is expected to be completed by June 2008. During the quarter,
gold recoveries in the milling circuit were well below historic
levels due to the treatment of a very high proportion (60%) of
stockpiled inherently lower recovery carbonaceous ores during the
month of January due to the extended shutdown of underground
activities in late December. This ore type is primarily associated
with the Fosterville fault and typically makes up about 8%-10% of
the ore delivered to the mill. Current and future ore sources have
significantly less carbon content and recoveries had returned to
normal levels by March 2008. A comprehensive recovery improvement
project has been initiated in order to significantly increase the
75%-80% average gold recovery levels achieved in the past. The
project team includes both Northgate staff and world-renowned
experts in the field. A pilot plant is expected to arrive on site
at the end of April, which will expedite the testing of a number of
process improvements that have already been identified as having a
high probability of success. Approximately 139,000 tonnes of ore
were milled at a grade of 4.3 g/t in the first quarter of 2008. The
following table provides a summary of operations from Australian
operations during the first quarter: 2008 Q1 Australian Mine
Production (100% of production basis)(1) Stawell Fosterville
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Ore mined (tonnes) 150,217 110,904 Ore milled (tonnes) 166,835
139,492 Gold grade (g/t) 5.96 4.30 Gold recovery (%) 89 54 Gold
production (ounces) 28,363 11,655(3) Net cash cost ($/ounce)(2) 428
1,185
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(1) Production from Stawell and Fosterville attributable to
Northgate as of February 18, 2008. (2) Cash cost figures are
unaudited estimates and are subject to revision. (3) Gold
production at Fosterville includes a gold in circuit inventory
drawdown of approximately 1,200 ounces. 2008 PRODUCTION FORECAST
FOR AUSTRALIAN MINES Northgate acquired Perseverance Corporation
Ltd. on February 19, 2008. The production forecast provided herein
incorporates full first quarter production figures with forecast
figures for the last three quarters of the 2008 calendar year. 2008
gold production for Stawell and Fosterville is attributable to
Northgate from the date of the acquisition. Stawell Gold Mine The
Stawell Gold mine is located in the historic Stawell goldfield that
has produced approximately five million ounces of gold dating back
to the mid-19th century Victorian gold rushes. Since the
commencement of modern day production in 1984 to the end of 2007,
approximately 1.8 million ounces of gold have been produced from
the Stawell operation. The following chart provides a summary of
historical production at the Stawell Gold mine.
http://www.northgateminerals.com/Theme/Northgate/files/Releases/2008/SGM_History.gif
In 2008, the Stawell mine plan calls for 736,000 tonnes to be
milled at an average grade of 5.3 g/t. Gold recovery is forecast to
be 89% and total gold production is expected to be 112,000 ounces.
Capital expenditures at Stawell include $3.5 million for mill
capital and $7.5 million for the development infrastructure
required for the G5 mining block where current reserves are being
mined. Infrastructure will consist of ramp, level and vent raise
development. In addition, taking advantage of the conversion to
owner mining at Fosterville, the productivity of the Stawell
underground truck fleet will be dramatically upgraded by the
addition of three new 60-tonne trucks for a total investment of
approximately $5 million. The present 50-tonne trucks at Stawell
will be transferred to Fosterville, which operates at much
shallower depths, where these trucks can be more efficiently
utilized. Fosterville Gold mine The Fosterville Gold mine is
located 20 kilometres east of Bendigo in the heart of a region that
is estimated to have produced 22 million ounces of gold since the
first discovery in 1851. While historic production at Fosterville
focused on over 20 small open pits, underground development began
in 2006. The last open pit ore was mined in late 2007 and future
production is expected to come predominately from underground. In
2008, the Fosterville mine plan calls for the mill to process a
total of 572,000 tonnes at a grade of 5.6 g/t. Gold recovery is
estimated to be 75% on average during the year and total 2008
production is forecast to be 77,000 ounces. Gold production will
ramp up significantly in the fourth quarter to long-term levels as
the previously underfunded underground development gets ahead of
the production front for the first time since underground
operations commenced in 2006. Although it is not built into the
current plan, it is also expected that significant benefits of the
metallurgical improvement program will start to become evident as
the year progresses. Capital development in the underground is
forecast to be $21 million, which will be used to advance the
decline below the 4900-level and establish the infrastructure for
mining in the wider areas of the main Phoenix orebody. In addition,
$25 million will be invested during the year on mobile and fixed
plant equipment in conjunction with the conversion to owner mining.
The following table provides a summary of quarterly gold production
and cash costs for 2008.
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2008 Gold Production (ounces)(1) Kemess Stawell Fosterville Total
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Q1 Actual 49,583 28,363 11,655 89,601 Forecast Q2 47,000 27,000
17,000 91,000 Q3 67,500 29,000 19,000 115,500 Q4 71,500 28,000
29,000 128,500
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236,000 112,000 77,000 425,000
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2008 Gold Cash Cost ($/oz)(2,3) Kemess Stawell Fosterville Combined
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Q1 Actual 105 428 1,185 347 Forecast Q2 182 501 878 405 Q3 (76) 466
744 196 Q4 (54) 465 545 195
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$ 20 $ 464 $ 764 $ 272
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(1) Production from Stawell and Fosterville attributable to
Northgate as of February 18, 2008 (2) Cash cost figures are
unaudited estimates and are subject to revision. (3) Assuming
copper price of $3.50 per pound and an exchange rate of
Cdn$/US$1.00 at Kemess; US$/A$0.93 for Fosterville and Stawell 2008
EXPLORATION PLAN Stawell Gold Mine During 2008, Northgate has
allocated $7 million towards an aggressive exploration plan at
Stawell in order to identify new underground resources and to
convert resources to reserves through underground diamond drilling
and surface exploration. Northgate recently announced very positive
drill results from the Golden Gift 6 (GG6) zone at the Stawell Gold
mine in a press release dated April 15, 2008 and will be completing
a resource estimation for this zone in June. In addition to the
drill results at GG6, Northgate is also targeting the North Magdala
zone as a high priority target given its close proximity to
existing mine workings (Figure 1) and the highly prospective nature
of the target. The North Magdala campaign will be conducted from
both surface and underground. Five to six holes will be wedged off
an existing surface hole (SD622), which had an intercept of 9.4m @
8.35 g/t gold. Coupled with the recent results in GG6, the North
Magdala program is expected to add significant resources and extend
the present mine life at Stawell. Figure 1: Stawell - North Magdala
Target (Vertical, West Looking, Longitudinal Section with Metric
Grid)
http://www.northgateminerals.com/Theme/Northgate/files/Releases/2008/SGM_NMag.gif
Fosterville Gold Mine Northgate has allocated $3 million during
2008 towards definition drilling of the Wirrawilla Zone (Figure 2),
which lies about 1.5 kilometres south of the Fosterville processing
facility and 800 metres south of and 500 metres above the known
southern extents of the Phoenix resource. Mineralization at
Wirrawilla plunges south, averaging true widths of 3m - 5m. The
drill spacing in this zone is presently 100m north-south by 50m
down plunge. Significant Wirrawilla downhole drill intercepts
include: SPD261: 10.7m at 11.2 g/t gold SPD382A: 6.5m at 7.9 g/t
gold SPD379: 4.9m at 6.5 g/t gold The Wirrawilla area has an
inferred resource of 4.6 million tonnes @ 3.3 g/t gold for 500,000
contained ounces using a 2.0 g/t gold lower cut-off. At a higher
3.0 g/t gold cut-off, which approximates the present underground
mining cut-off grade, there is 2.7 million tonnes @ 4.1 g/t gold
for 350,000 contained ounces. The resource definition drilling
program will begin in late April and entail 5,000m of reverse
circulation and 12,000m of diamond drilling to increase the drill
hole density to 50m north-south and 50m down-dip. Geotechnical and
metallurgical studies will be undertaken as drilling progresses. On
a regional basis, Northgate has begun a program to evaluate the
extensive land package around the Fosterville mining lease. Within
the land package, the first priority is a reconnaissance drill
program at Myrtle Creek south of Fosterville, where there are
extensive historic workings that have not been subject to modern
exploration and diamond drill testing. Figure 2: Fosterville
Wirrawilla Area
http://www.northgateminerals.com/Theme/Northgate/files/Releases/2008/Wirrawilla.gif
Northgate will release its full first quarter financial results
after market close on May 1, 2008. A conference call and webcast
for investors and analysts will take place on the following day at
10:00 am Toronto time. 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 over 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
http://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.
DATASOURCE: Northgate Minerals Corporation CONTACT: Ms. Keren R.
Yun, Director, Investor Relations, Tel: (416) 216-2781, Email: ,
Website: http://www.northgateminerals.com/
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