Gold Production of 107,477 ounces at a Cash Cost of $396/ounce
VANCOUVER, May 8 /PRNewswire-FirstCall/ -- (All figures in US
dollars except where noted) - Northgate Minerals Corporation (TSX:
NGX; NYSE Amex: NXG) today reported net earnings of $21,410,000 or
$0.08 per diluted common share and cash flow from operations of
$45,202,000 or $0.18 per diluted common share for the first quarter
of 2009. Northgate's cash flow from operations includes cash
proceeds of $19,182,000 from the early settlement of 9,000 tonnes
of copper forward contracts. First Quarter 2009 Highlights - 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 totalled 111,850 ounces at a realized price of
$935 per ounce. - Substantial progress was made on the
pre-feasibility study work at Young-Davidson, where the mine plan
is being redesigned around the new larger 3.3 million ounce
measured and indicated gold resource, using low cost bulk mining
methods to reduce operating costs and increase annual production. -
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 metres of 19.6 g/t gold. - Began commissioning the
heated leach circuit at the Fosterville mine, which will
significantly improve gold recoveries. Ken Stowe, President and
CEO, stated: "Strong financial results were achieved from our
operations during the first quarter, as we beat the forecast for
both gold and copper production, generating excellent cash flow
from operations of $45 million. Kemess performed extremely well
during the quarter, exceeding our expectations for production and
costs. We were equally as pleased with the strong operating results
from both Fosterville and Stawell, where we achieved another solid
quarter of production and lower cash costs. On the exploration
front, drill results over the past six months in the North Magdala
target at Stawell and in the Harrier zone at Fosterville have been
sufficiently compelling that we are commencing development towards
both of these areas while exploration continues. Pre-feasibility
work at Young-Davidson is moving along well, with completion
expected by the end of June." Executive Overview Financial
Performance Northgate Minerals Corporation ("Northgate" or "the
Corporation") recorded consolidated revenue of $123,818,000 in the
first quarter of 2009, compared with $86,093,000 in the same period
last year. Net earnings were $21,410,000 or $0.08 per diluted share
in the first quarter of 2009, compared to net earnings of
$20,427,000 or $0.08 per diluted share for the corresponding
quarter of 2008. Cash flow from operations, after changes in
working capital and other items, was $45,202,000 or $0.18 per
diluted share in the first quarter of 2009, which includes the
early settlement of 9,000 tonnes of copper forward contracts for
cash proceeds of $19,182,000. Cash flow for the same period last
year was $15,450,000 or $0.06 per diluted share. Financial results
for the corresponding quarter of 2008 exclude results from
Fosterville and Stawell prior to Northgate's acquisition of
Perseverance Corporation Limited ("Perseverance") on February 19,
2008. Per share data is based on the weighted average diluted
number of shares outstanding of 255,762,702 in the first quarter of
2009 and 255,338,997 in the corresponding quarter of 2008. As of
May 8, 2009, the Corporation had 255,854,675 issued and outstanding
common shares and 6,958,450 outstanding common share options.
Health, Safety and Environment Northgate promotes a strong culture
of health and safety at its mine sites and strives to ensure that
the highest standards are maintained. During the first quarter of
2009, both Kemess and Young-Davidson performed without a single
lost time incident (LTI). Young-Davidson has continued with its
exemplary performance, as the property has not recorded a single
LTI over the past two years. In Australia, Stawell had no LTIs
during the quarter, while Fosterville recorded one LTI. Human
Resources Negotiations between management and employee
representatives at Fosterville progressed during the quarter with
the goal of executing the site's first employee collective
agreement by the end of the second quarter of 2009. Summarized
Consolidated Results Q1 2009 Q1 2008
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Operating Data Gold Production (ounces) 107,477 88,386(1) Sales
(ounces) 111,850 61,539(2) Realized gold price ($/ounce)(3) 935 962
Copper Production (thousands pounds) 15,007 14,380 Sales (thousands
pounds) 14,788 13,375 Realized copper price ($/pound)(3) 2.07 3.68
Net cash cost ($/ounce) 396 262(4)
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Financial Data (Thousands of US dollars, except where noted)
Revenue 123,818 86,093 Net earnings 21,410 19,665 Earnings per
share Basic 0.08 0.08 Diluted 0.08 0.08 Cash flow from operations
45,202 15,450 Cash and cash equivalents 88,379 52,688 Total assets
593,322 715,625
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(1) Production in Q1 2008 for Fosterville excludes the change in
gold-in- circuit inventory previously recorded. Production figures
are for the full quarter ending March 31, 2008. (2) Gold sales in
Q1 2008 include the results for Fosterville and Stawell from
February 19 to March 31, 2008. (3) Metal pricing quotational period
is three months after the month of arrival (MAMA) at the smelting
facility for copper and two MAMA for gold. Realized prices reported
will differ from the average quarterly reference prices, as
realized price calculations incorporate the actual settlement price
for prior period sales, as well as the forward price profiles of
both metals for unpriced sales at the end of the quarter. (4) Cash
costs in Q1 2008 include the results for Fosterville and Stawell
from February 19 to March 31, 2008. Results of Operations -
Australia Fosterville Gold Mine Q1 2009 Q1 2008
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Operating Data Ore mined (tonnes) 165,355 110,904 Ore milled
(tonnes) 167,924 139,492 Ore milled per day (tonnes) 1,866 1,533
Gold Grade (g/t) 5.53 4.30 Recovery (%) 86 54 Production (ounces)
25,779 10,440(2) Sales (ounces)(1) 26,363 4,568 Net cash cost
($/ounce) 430 1,415
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Financial Data (Thousands of US dollars)(1) Revenue 23,782 4,398
Cost of sales 11,017 6,346 Earnings (loss) from operations 6,483
(3,781) Cash flow from operations 12,748 (1,908) Capital
expenditures 9,747 2,596
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(1) Financial data and gold sales (ounces) for Q1 2008 include the
results of Fosterville from February 19 to March 31, 2008. Other
figures are for the three month period ending March 31, 2008. (2)
Production in Q1 2008 for Fosterville excludes the change in
gold-in- circuit inventory previously recorded. Operational
Performance The Fosterville mine produced 25,779 ounces of gold
during the three months ended March 31, 2009, which exceeded
Northgate's first quarter forecast and represented a significant
improvement from gold production of 10,440 ounces in the
corresponding quarter of the previous year. During the quarter,
165,355 tonnes of ore were mined and mine development advanced
1,900 metres (m), compared with 110,904 tonnes mined and 1,420m
advanced, respectively, in the corresponding period of 2008. Mining
rates dramatically increased in the first quarter of 2009 compared
to the same period last year, resulting from an increase in the
number of working faces made available by the substantial mine
development completed since taking ownership of the mine. In
addition, production figures for the first quarter of 2008 were
adversely affected by a temporary suspension of underground mining
activities in order to facilitate a thorough review of operating
procedures and provide additional safety training to mining
personnel. During the first quarter of 2009, approximately 168,000
tonnes of ore were milled at a grade of 5.53 grams per tonne (g/t),
which was a significant improvement from the 139,000 tonnes of ore
milled at a grade of 4.30 g/t in the first quarter of 2008. Gold
recoveries of 86% in the first quarter of 2009 were dramatically
higher than the 54% recovery recorded in the same period last year.
Higher recoveries were attributable to the lower quantity of
carbonaceous ore milled during the most recent quarter and a
variety of significant process improvements made by Northgate's
engineers in the BIOX(R) and leach circuits over the past year.
Subsequent to the first quarter, the new heated leach circuit was
fully commissioned in April and is expected to further improve gold
recoveries in future quarters. Total operating costs for the first
quarter of 2009 were A$16,661,000 or A$99 (2008 - $A161) per tonne
of ore milled. Operating costs continued to decline from previous
quarters as a result of increased mining efficiencies from the
conversion to owner mining, increased mine output and other
improvements to the manner in which the mine has operated. Mining
costs were A$54 (2008 - A$74) per tonne of ore mined and milling
costs were A$35 (2008 - A$53) per tonne of ore milled. Operating
costs for the corresponding period of 2008 reflect results from the
date of acquisition of Perseverance (February 19, 2008) to March
31, 2008. The net cash cost of production for the first quarter of
2009 was $430 per ounce of gold, which was dramatically lower than
the net cash cost of $1,415 per ounce of gold in the same period
last year. The decrease in net cash cost resulted from lower mining
costs, higher ore grades, improved gold recovery, lower diesel
prices and the stronger US dollar relative to the Australian
dollar. Financial Performance Fosterville's revenue for the three
months ended March 31, 2009 was $23,782,000 based on gold sales of
26,363 ounces, compared to $4,398,000 and gold sales of 4,568
ounces in the corresponding period of 2008. The cost of sales for
the first quarter of 2009, excluding depreciation and depletion,
was $11,017,000 (2008 - $6,346,000) and the depreciation and
depletion expense was $5,155,000 (2008 - $1,667,000). Earnings from
operations before income taxes recorded for the period was
$6,483,000 compared with a loss from operations of $3,781,000 in
the corresponding period of 2008. During the first quarter of 2009,
the mine generated $12,748,000 in cash flow from operations while
$1,908,000 was utilized in the corresponding period of 2008.
Financial performance for the corresponding period of 2008 reflects
results from the date of acquisition of Perseverance (February 19,
2008) to March 31, 2008. Total investment in capital expenditures
at Fosterville was $9,747,000, which included $4,661,000 for mine
development. Capital expenditures for plant and equipment totalled
$5,086,000, which included $2,461,000 for the heated leach project
and $732,000 for the raising of the tailings dam. Cash expenditures
in the corresponding period of 2008 were $2,596,000. Exploration
Update Two surface diamond drills are in operation on the Harrier
Underground zone, located 1.7 kilometres (km) south of the current
Phoenix mining area. Ten holes were drilled (6,269m) in the first
quarter, eight of which were directed at the Osprey and Harrier
Base zones. It is now apparent that there is a moderate southerly
plunging orientation to both the Osprey and Harrier zones, similar
to the Phoenix deposit. The base of the southern lens of the Osprey
zone (Figure 1) is defined by holes SPD512, 512A and 512B. The
upper limit of the northern lens is defined by holes SPD504A and
504B. Within the Osprey zone, hole SPD511 intersected 3.0m of 5.7
g/t gold. The base of the Harrier lens (Figure 2) is similarly
defined by holes SPD512 and 512A. Within the Harrier Base zone,
hole SPD504A intersected 6.4m of 4.8 g/t gold and hole SPD511
intersected 2.3m of 5.2 g/t gold. Both the Harrier and Osprey
lenses are open down plunge. Phase 2 and 3 exploration activities
during the balance of 2009 will infill the high grade zones already
known to exist and step out down plunge to explore the full extent
of these zones. While exploration continues from surface in the
Harrier zone, the decision has been made to advance development in
the Ellesmere ore body, originally scheduled in 2010, to the second
half of 2009 in order to reduce the lead time involved in drifting
over to the Harrier zone. Bringing forward the Ellesmere
development would allow Harrier to be brought into production by
2012. Figure 1: Harrier Underground Longitudinal Section: Osprey
Gold Mineralization
http://www.northgateminerals.com/Theme/Northgate/files/Releases/May07_Osprey.jpg
Figure 2: Harrier Underground Longitudinal Section: Harrier Base
Gold Mineralization
http://www.northgateminerals.com/Theme/Northgate/files/Releases/May07_Harrier.jpg
Stawell Gold Mine Q1 2009 Q1 2008
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Operating Data Ore mined (tonnes) 154,718 150,217 Ore milled
(tonnes) 180,199 166,835 Ore milled per day (tonnes) 2,002 1,833
Gold Grade (g/t) 4.45 5.96 Recovery (%) 87 89 Production (ounces)
22,392 28,363 Sales (ounces)(1) 24,635 12,247 Net cash cost
($/ounce) 432 536
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Financial Data (Thousands of US dollars)(1) Revenue 22,415 11,739
Cost of sales 11,050 7,245 Earnings from operations 4,693 683 Cash
flow from operations 13,008 6,592 Capital expenditures 5,926 2,622
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(1) Financial data and gold sales (ounces) include the results of
Perseverance from February 19 to March 31, 2008. Other figures are
for the three month period ending March 31, 2008. The Stawell mine
produced a total of 22,392 ounces of gold during the three months
ended March 31, 2009 compared to 28,363 ounces of gold in the
corresponding period last year. During the quarter, gold production
was 15% lower than forecast due to a combination of lower mining
rates, ore grades and gold recovery. In January, underground
production blasting was interrupted for ten days while an excessive
blast vibration event was investigated. The suspension led to
production sequencing delays, which resulted in processing a
greater amount of lower grade oxide ore from stockpiles than had
been initially projected. Despite the lower production in the first
quarter, it is expected that total gold production for 2009 will
meet the original forecast of 107,000 ounces. Mine production
during the quarter of 155,000 tonnes of ore was slightly higher
than the 150,000 tonnes mined in the same period of 2008, but lower
than plan due to the 10 day interruption in mining. Underground
mine development continued in the Golden Gift (GG) production
zones, GG1, GG3 and GG5L, during the quarter and the development
advance totalled 1,407m (2008 - 1,201m). Progress was made in
upgrading the underground ventilation systems for the lower areas
of the mine and improving secondary egress routes. During the first
quarter of 2009, approximately 180,000 tonnes of ore was milled at
an average grade of 4.45 g/t compared with 167,000 tonnes of ore at
5.96 g/t in the same period last year. Gold recoveries of 87% in
the first quarter of 2009 were slightly lower than the 89% recovery
recorded in the same period of 2008 as a result of the higher
volume of lower grade stockpiled oxide ore processed. Total
operating costs for the first quarter of 2009 were A$14,542,000 or
A$81 (2008 - A$89) per tonne of ore milled. The decline in
operating cost is primarily attributable to the increase in mill
throughput quarter over quarter. Mining costs were A$57 (2008 -
A$57) per tonne of ore mined and milling costs were A$24 (2008 -
A$29) per tonne of ore milled. Operating costs for the
corresponding period of 2008 reflect results from the date of
acquisition of Perseverance (February 19, 2008) to March 31, 2008.
The net cash cost of production for the first quarter of 2009 was
$432 per ounce of gold, which was significantly lower than the cost
of $536 per ounce of gold recorded in the same period last year.
The decrease in net cash cost resulted from the stronger US dollar
relative to the Australian dollar, which more than offset the
effect of lower ore grades. Financial Performance Stawell's revenue
for the three months ended March 31, 2009 was $22,415,000 based on
gold sales of 24,635 ounces. The cost of sales during the quarter,
excluding depreciation and depletion, was $11,050,000 (2008 -
$7,245,000) and the depreciation and depletion expense was
$5,818,000 (2008 - $3,387,000). Earnings from operations before
income taxes recorded for the period were $4,693,000 compared with
earnings of $683,000 in the corresponding period of 2008. During
the first quarter of 2009, Stawell generated $13,008,000 in cash
flow from operations compared with $6,592,000 in the corresponding
quarter of 2008. Financial performance for the corresponding period
of 2008 reflects results from the date of acquisition of
Perseverance (February 19, 2008) to March 31, 2008. Total
investment in capital expenditures at Stawell was $5,926,000, which
includes $3,179,000 for mine development and $2,747,000 for plant
and equipment. The plant and equipment expenditure includes
$1,064,000 for the purchase of a new haul truck and $732,000 for
the raising of the tailings dam. Capital expenditures in the
corresponding period of 2008 were $2,622,000. Exploration Update
The surface drill working on the North Magdala target area
successfully intersected the target horizon with an intercept of
5.7m of 19.6 g/t gold (true thickness estimated to be 5.1m),
located 100m north of the historic hole SD622 that had intersected
9.4m of 8.4 g/t gold (true thickness estimated at 8.0m). A second
hole from underground intersected the same zone with an intercept
of 2.5m of 6.6 g/t gold. These three intersections are higher grade
than similar styles of mineralization mined in higher levels of the
mine, which averaged 5.0m - 8.0m thickness with an average grade of
4.5 g/t - 5.0 g/t gold. A second deep surface drill hole will
attempt to intersect the North Magdala target with another 100m
step out further to the north. On the strength of the recently
delineated 28,000-ounce inferred resource in the Dukes Flank area
and the very encouraging results in the North Magdala target, the
decision has been made to begin development into Dukes Flank from
the C7 zone. This development will provide a platform for resource
conversion drilling into Dukes Flank and underground exploration of
North Magdala. A second exploration highlight during the quarter
was the discovery of two zones in close proximity to the current
GG5 workings. These two zones have initial intersections of 7.7m of
18.1 g/t gold and 7.5m of 10.6 g/t gold (each with an estimated
true thickness of 5.0m) in the G5L South Block and 10m of 6.9 g/t
gold in the G5 Open Flank (true thickness estimated at 5.5m).
Definition drilling is underway and it is anticipated that these
zones will be converted to the indicated and inferred resource
categories within three months. Figure 3: Stawell Gold Mine:
(Vertical, West Looking, Longitudinal Section with Metric Grid)
http://www.northgateminerals.com/Theme/Northgate/files/Releases/May07_SGM.jpg
Kemess Mine Q1 2009 Q1 2008
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Operating Data Ore plus waste mined (tonnes) 6,752,463 8,536,638
Ore mined (tonnes) 6,146,976 4,766,372 Stripping ratio (waste/ore)
0.099 0.791 Ore milled (tonnes) 4,312,171 4,243,891 Ore milled per
day (tonnes) 47,913 46,636 Gold Grade (g/t) 0.606 0.522 Recovery
(%) 71 70 Production (ounces) 59,306 49,583 Sales (ounces) 60,852
44,724 Copper Grade (%) 0.187 0.182 Recovery (%) 85 85 Production
(thousands pounds) 15,007 14,380 Sales (thousands pounds) 14,788
13,375 Net cash cost ($/ounce) 367 105
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Financial Data (Thousands of US dollars) Revenue 86,153 104,016
Cost of sales 37,251 49,164 Earnings from operations 33,575 47,039
Cash flow from operations 5,875 27,316 Capital expenditures 1,877
1,789
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Operational Performance Kemess posted gold and copper production of
59,306 ounces and 15.0 million pounds, respectively, in the first
quarter of 2009. Metal production was significantly higher than
forecast as a result of better than expected gold grades and the
mining and processing of some higher grade ore from the western end
of the open pit, which had been delayed from the fourth quarter of
2008. During the first quarter of 2009, approximately 6.8 million
tonnes of ore and waste were removed from the western end of the
open pit compared to 8.5 million tonnes during the corresponding
quarter of 2008. Early in the second quarter of 2009, mining
operations in the west pit were temporarily scaled back in response
to typical spring thaw conditions. During this period, the mill
continues to operate normally with previously stockpiled ore. When
normal operations resume towards the end of May, the remaining ore
in the west end of the open pit will be mined and mining operations
will move back into the east end of the open pit for the remainder
of the mine life. Unit mining costs were Cdn$2.30 per tonne moved
compared with Cdn$2.07 per tonne moved in the first quarter of
2008. The unit mining costs in the most recent quarter were higher
than they were in the same period last year due to the
significantly lower volume of material moved and higher maintenance
costs, as higher than planned hours were accumulated on the hauling
truck fleet in the extreme cold weather during the most recent
quarter. Mill throughput and mill availability during the first
quarter of 2009 were 47,913 tonnes per day (tpd) and 91%,
respectively, which was consistent with the performance in the
first quarter of 2008 of 46,636 tpd and 89%. The ore milled in the
first quarter of 2009 had grades of 0.606 g/t for gold and 0.187%
for copper, compared with grades of 0.522 g/t gold and 0.182%
copper in the same period of 2008. Gold and copper recoveries were
consistent year over year and averaged 71% and 85%, respectively,
in the first quarter of 2009 compared with 70% and 85% in the same
period last year. Recoveries during the quarter were better than
forecast due to improvements in the metallurgical process. Going
forward, these improvements will have a very positive impact on the
lower grade ore, which makes up the majority of the remaining
reserves at Kemess. Metal concentrate inventory declined by 2,000
wet metric tonnes (wmt) to approximately 10,000 wmt in the first
quarter of 2009. Railcar availability continued to be poor due to
extreme winter conditions experienced throughout Canada in February
and March. The average unit cost of production at Kemess was
Cdn$13.25 per tonne milled during the first quarter of 2009,
including Cdn$3.61 per tonne for concentrate marketing costs,
comprised of treatment and refining costs and transportation fees.
The unit cost in the same quarter in 2008 was Cdn$13.58 per tonne
milled, which included Cdn$3.18 per tonne for marketing costs.
Concentrate marketing costs have increased year over year as the
2009 smelting and refining terms for 2009 have increased to $75 per
dry metric tonne (dmt) and $0.75 per pound of copper compared with
terms of $45 per dmt and $0.45 per pound in 2008. However, site
operating costs of Cdn$41.6 million have come down approximately 6%
in the first quarter of 2009 (Cdn$44.2 million in the first quarter
of 2008). The decrease in site operating costs is attributed
primarily to the lower cost of diesel fuel and mill steel. The net
cash cost of production at Kemess in the first quarter was $367 per
ounce of gold compared to $105 per ounce reported in the first
quarter of 2008. The net cash cost was significantly lower than
forecast due to the stronger gold and copper production from higher
than expected ore grades and metal recoveries, as well as the
higher than forecast copper prices. However, the net cash cost was
significantly higher than the comparative quarter of 2008 due to
the lower copper price and higher marketing costs, which were only
partially offset by the weaker Canadian dollar and lower Canadian
dollar denominated site costs. Financial Performance Revenue from
Kemess in the first quarter of 2009 was $86,153,000 compared with
$104,016,000 in the corresponding period of 2008 excluding the
effects of mark-to-market adjustments on Northgate's hedge books.
Metal sales in the first quarter of 2009 consisted of 60,852 ounces
of gold and 14.8 million pounds of copper, compared with 44,724
ounces of gold and 13.4 million pounds of copper in the first
quarter of 2008. During the first quarter of 2009, the price of
gold on the London Bullion Market averaged $909 per ounce and the
price of copper on the London Metal Exchange (LME) averaged $1.56
per pound. The net realized metal prices received on sales in the
first quarter of 2009 were approximately $963 per ounce of gold and
$2.07 per pound of copper, compared with $965 per ounce and $3.68
per pound in the first quarter of 2008. Since Northgate's metal
pricing quotational period is three months after the month of
arrival (MAMA) at the smelting facility for copper and two MAMA for
gold, the realized prices reported differ from the average
quarterly reference prices. The realized price calculations
incorporate the actual settlement price for prior period sales, as
well as the forward price profiles of both metals for unpriced
sales at March 31. The cost of sales in the first quarter of 2009
was $37,251,000, which was lower than the corresponding period last
year when the cost of sales was $49,164,000. The decrease in the
most recent quarter reflects the lower costs of production as well
as the impact of the strengthening US dollar. Depreciation and
depletion expense in the first quarter was $12,402,000 compared to
$7,745,000 during the corresponding period of 2008. The higher
depreciation and depletion expense for the most recent quarter
reflects the increase in tonnes of ore mined. Capital expenditures
during the first quarter of 2009 totalled $1,877,000 compared to
$1,789,000 in the corresponding period of 2008. Capital
expenditures in the most recent quarter reflect the impact of the
strengthening US dollar and were primarily devoted to ongoing
construction of the tailings dam and the purchase of new mill
liners. Exploration Update - Young Davidson Pre-feasibility work at
Young-Davidson is moving along well with completion expected by the
end of June. This will include revised economics for the
development of the project using the dramatically higher measured
and indicated gold resource of 3.3 million ounces that was
announced in December 2008. The new larger resource has allowed for
the application of lower cost bulk mining methods that will
decrease mining costs and increase annual production. In addition,
the capital estimates will be updated to reflect changes in
equipment pricing and contractor unit rates that have taken place
over the past 12 months. A feasibility study is scheduled for
completion by year-end. The rocks that host the Young-Davidson
deposit are known to extend to the west under barren cover rocks.
Historically, only a handful of drill holes have been tested along
strike west of the deposit. Drilling in late 2008 and early 2009
has targeted the area outside of the known resource, immediately
west of the open pit. The results are highlighted by hole 91, which
intersected 25.5m of 4.49 g/t gold including 15m of 6.29 g/t gold
and 3.5m of 3.07 g/t gold. Hole YD09-97, located 100m west of hole
91, intersected 11.5m of 2.62 g/t gold and hole YD09-96, located
150m west of hole 91, intersected 6.3m of 1.53 g/t gold. Hole
YD09-98, located 200m west of hole 91, intersected 3.0m of 1.56 g/t
gold and hole YD09-99, located 50m below hole 91 intersected 3.7m
of 1.87 g/t gold and 5.8m of 3.59 g/t gold. Assays on remaining
holes are pending. Exploration diamond drilling on the property
during the balance of 2009 will focus on testing various
geophysical anomalies that have similar characteristics to those of
the known Young-Davidson deposit. Figure 4: Young-Davidson Property
(Vertical, North Looking, Longitudinal Section with Metric Grid)
http://www.northgateminerals.com/Theme/Northgate/files/Releases/May07_YD.jpg
Corporate Overview In the first quarter of 2009, Northgate closed
out 9,000 tonnes of copper forward sales contracts for proceeds of
$19,182,000. The closed-out contracts were spread equally over the
maturity dates from November 2009 to October 2010. At March 31,
2009, there were 7,200 tonnes of copper forward sales outstanding
at an average price of $2.49 per pound over the period from
November 2009 through October 2010. The change in fair value of the
remaining forward contracts during the quarter was a loss of
$8,433,000 resulting from the significant increase in the price of
copper since December 31, 2008. The fair value of these contracts
at March 31, 2009 was an asset of $9,519,000 of which $4,075,000 is
included in trade and other receivables for contracts expiring
within 12 months and $5,444,000 is included in other assets.
Northgate had no forward gold contracts outstanding at March 31,
2009. Corporate administration costs in the first quarter of 2009
were $2,282,000 compared to $3,161,000 in the corresponding quarter
of the prior year, representing a decrease of 28%. The decrease is
due mainly to reduced stock-based compensation, which is $466,000
lower compared to the first quarter of 2008 as a result of
Northgate's lower share price at the grant date. Australian
corporate administration costs of $351,000 have also decreased by
$318,000 compared to the corresponding period in 2008 due to
reduced staffing and the elimination of duplicate administration
costs. Canadian corporate expenditures of $1,931,000 are comprised
mainly of personnel costs, as well as ongoing compliance and
investor relations costs. Northgate granted a total of 1,566,000
options to employees in the first quarter of 2009, compared to
1,480,000 options in the corresponding quarter of 2008. At March
31, 2009, there were 6,963,150 options outstanding, of which
3,981,100 were exercisable. Exploration costs in the first quarter
of 2009 were $3,249,000 compared to $6,161,000 in the first quarter
of 2008. Costs incurred in Canada were $1,367,000, a decrease of
$4,206,000 from the corresponding quarter in 2008 due to decreased
exploration activity at Young-Davidson, which is now focused on
pre-feasibility work rather than exploration activities at site.
This decrease was offset by exploration expenses in Australia of
$1,882,000, as Fosterville and Stawell continue to identify
additional zones with the potential to extend each site's
mine-life. Net interest income was significantly lower at $380,000
in the first quarter of 2009 compared with $3,612,000 in the
corresponding quarter of 2008. The decrease is attributable to
lower average cash balances compared to 2008 when Northgate had
cash and cash equivalents in excess of $250,000,000 prior to the
acquisition of Perseverance for cash consideration. The decrease
also results from increased interest expenses resulting from plant
and equipment acquired by Fosterville and Stawell, beginning in the
second quarter of 2008, through the assumption of capital leases.
Northgate recorded an income tax expense of $11,805,000 in the
first quarter of 2009 compared to $1,319,000 in the corresponding
quarter of 2008. Current income taxes in the current quarter were
$22,853,000 of which $19,555,000 relates to the Canadian
operations. This amount is attributable to the strong financial
results at Kemess in the current quarter and the settlement of the
copper forward contracts. Northgate's Australian operations are
also forecast to be cash taxable in the current fiscal year and
have recognized a current income tax expense of $3,298,000. The
current income tax expense is offset by a future income tax
recovery of $11,048,000, resulting mainly from the reversal of
future tax liabilities relating to the copper forward contracts,
which were in a significant asset position at December 31, 2008.
Other income for the three months ended March 31, 2009 includes an
insurance settlement of $554,000 relating to the collapse of a
buried section of the process water line at Kemess, which occurred
in the third quarter of 2008 and resulted in ten days of lost
production. No amount had previously been accrued in the
consolidated financial statements. Other income in the
corresponding period in 2008 includes a one-time, non-cash
mark-to-market gain of $9,836,000 related to the settlement of
Perseverance's gold forward contracts. In connection with the
acquisition of Perseverance, Northgate had entered into an
agreement to acquire Perseverance's portfolio of gold forward
contracts based on the value of the underlying forward contracts at
October 30, 2007. A gain was recorded to recognize the difference
in the fair value of the portfolio and the settlement amount.
Liquidity and Capital Resources 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 strong cash flow from operations and the
settlement of a portion of the Corporation's copper forward
contracts. Trade and other receivables have increased in light of
higher quarter-end gold and copper prices. Inventories have
increased by $10,577,000 due to the timing of deliveries of
concentrate at Kemess and the increase in ore stockpiles.
Northgate's cash balance at March 31, 2009 amounted to $88,379,000
compared with $62,419,000 at December 31, 2008. All cash is held on
deposit with major established banks in Canada and Australia.
During the quarter, Northgate generated cash flow from operations
of $45,202,000 compared to $15,450,000 for the corresponding
quarter of 2008. The increased cash flow resulted from the increase
in revenues from higher gold sales and the inclusion of the results
from Fosterville and Stawell for the entire quarter, whereas the
corresponding quarter in 2008 included financial results from these
two operations from February 19, 2008 onwards. The increase was
also attributable to the settlement of 9,000 tonnes of Northgate's
copper forward contracts, which generated proceeds of $19,182,000.
Northgate continues to hold investments in auction rate securities
(ARS), which are floating rate securities marketed by financial
institutions with auction reset dates at 7, 28, or 35 day intervals
to provide short-term liquidity. Beginning in August 2007, auctions
at which these securities were to be re-sold began to fail, and as
of the date hereof, attempts to conduct auctions have generally
ceased. Currently, these securities cannot be readily converted to
cash for use by Northgate to make capital investments or for other
business purposes, although the underlying payment and other
obligations of the original issuers of these securities remain
intact, and these issuers continue to make regular interest
payments to the Corporation. The par value of these securities held
by Northgate is $72,600,000. The estimated fair value of
Northgate's ARS holdings at March 31, 2009 was $36,817,000, which
reflects a $2,474,000 decline from the estimated fair value of
$39,291,000 at December 31, 2008. The decline in value is related
mainly to Northgate's ARS investments issued by Regulation XXX
Insurance companies. The Corporation has concluded that this
decline is temporary. In determining that the loss in value is
temporary, the Corporation considered the fact that these
particular securities have a lower probability of future default,
continue to make interest payments, are insured by monoline
insurance companies and continue to maintain a credit rating above
investment grade. Management also considered the senior rank of its
holdings in the capital structures of the respective issuers and
the fiduciary obligation of the major insurance companies who own
the Regulation XXX entities as factors that improve the likelihood
that these investments might eventually return to par value. The
estimated fair value of the Corporation's ARS investments issued by
derivative product companies (companies involved in the issuance of
credit default swaps) increased slightly in the three months ending
March 31, 2009. In previous periods, decreases in the estimated
fair value of these ARS were determined to be other than temporary
and recognized into net earnings. Previous permanent impairments
are not reversed and consequently the increase in estimated fair
value was not recognized in net earnings. Northgate previously
received a short-term loan collateralized by the Corporation's ARS
investments subsequent to such ARS investments becoming illiquid.
As of March 31, 2009, the principal outstanding on the short-term
loan was $42,478,000. Northgate continues to treat the short-term
loan as an obligation of the Corporation and has continued to
classify it as a current liability based on its original maturity
date. Northgate believes that its working capital at March 31,
2009, together with future cash flow from operations, is more than
sufficient to meet its normal operating requirements for the next
year, notwithstanding the current ongoing illiquidity and
impairment of its ARS investments. Non-GAAP Measures Adjusted Net
Earnings The Corporation has prepared a calculation of adjusted net
earnings, which has removed certain non-cash adjustments from its
Canadian generally accepted accounting principles (Canadian GAAP)
calculation of net earnings as it believes this may be a useful
indicator to investors. Adjusted net earnings may not be comparable
to other similarly titled measures of other companies. (Expressed
in thousands of US$, except share amounts) Q1 2009 Q1 2008
-------------------------------------------------------------------------
Net earnings $ 21,410 $ 19,665 Adjustments Unrealized gain on
derivatives related to the acquisition of Perseverance hedge book -
(9,836) Effect of provisional pricing on concentrate sales, net of
tax (3,331) (9,733) Fair value adjustment on copper forward
contracts, net of tax of $2,530 (2008 - $10,530) 5,903 18,802
-------------------------------------------------------------------------
Adjusted net earnings $ 23,982 $ 18,898
-------------------------------------------------------------------------
Diluted common shares outstanding 255,762,702 255,338,997
-------------------------------------------------------------------------
Adjusted net earnings per diluted common share $ 0.09 $ 0.07
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Cash Cost The Corporation 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. Q1 2009 (Expressed
in thousands of US$, except per ounce amounts) Fosterville Stawell
Kemess Combined
-------------------------------------------------------------------------
Gold production (ounces) 25,779 22,392 59,306 107,477
-------------------------------------------------------------------------
Cost of sales $ 11,017 $ 11,050 $ 37,251 $ 59,318 Change in
inventories and other 63 (1,380) 9,011 7,694 Gross copper and
silver revenue - - (24,472) (24,472)
-------------------------------------------------------------------------
Total cash cost $ 11,079 $ 9,671 $ 21,790 $ 42,540
-------------------------------------------------------------------------
Cash cost ($/ounce) $ 430 $ 432 $ 367 $ 396
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Q1 2008 (Expressed in thousands of US$, except per ounce amounts)
Fosterville(1) Stawell(1) Kemess Combined
-------------------------------------------------------------------------
Gold production (ounces) 4,021 11,508 49,583 65,112
-------------------------------------------------------------------------
Cost of sales $ 6,346 $ 7,245 $ 49,164 $ 62,755 Change in
inventories and other (658) (1,075) 8,301 6,568 Gross copper and
silver revenue - - (52,280) (52,280)
-------------------------------------------------------------------------
Total cash cost $ 5,688 $ 6,170 $ 5,185 $ 17,043
-------------------------------------------------------------------------
Cash cost ($/ounce) $ 1,415 $ 536 $ 105 $ 262
-------------------------------------------------------------------------
-------------------------------------------------------------------------
(1) Quarterly data for the Stawell and Fosterville gold mines only
include results from February 19, 2008 to March 31, 2008. Interim
Consolidated Balance Sheets March 31 December 31 Thousands of US
dollars 2009 2008
-------------------------------------------------------------------------
(Unaudited) Assets Current Assets Cash and cash equivalents $
88,379 $ 62,419 Trade and other receivables 33,861 18,310 Income
taxes receivable - 6,837 Inventories (note 3) 52,123 41,546
Prepaids 1,434 1,989 Future income tax asset 5,174 5,259
-------------------------------------------------------------------------
180,971 136,360 Other assets 27,728 53,606 Deferred transaction
costs 775 775 Future income tax asset 3,300 3,741 Mineral property,
plant and equipment 343,612 357,725 Investments (note 4) 36,936
39,422
-------------------------------------------------------------------------
$ 593,322 $ 591,629
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Liabilities and Shareholders' Equity Current Liabilities Accounts
payable and accrued liabilities $ 42,457 $ 56,469 Income taxes
payable 14,863 - Short-term loan (note 5) 42,478 43,096 Capital
lease obligations 3,467 4,533 Provision for site closure and
reclamation costs 8,182 8,420 Future income tax liability 1,194
1,895
-------------------------------------------------------------------------
112,641 114,413 Capital lease obligations 5,953 6,211 Other
long-term liabilities 3,879 3,368 Provision for site closure and
reclamation obligations 36,617 37,849 Future income tax liability
3,313 14,350
-------------------------------------------------------------------------
162,403 176,191 Shareholders' equity Common shares 312,038 311,908
Contributed surplus 5,664 5,269 Accumulated other comprehensive
loss (95,957) (89,503) Retained earnings 209,174 187,764
-------------------------------------------------------------------------
430,919 415,438
-------------------------------------------------------------------------
$ 593,322 $ 591,629
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes form an integral part of these unaudited
interim consolidated financial statements. Interim Consolidated
Statements of Operations and Comprehensive Income Three Months
Ended March 31 Thousands of US dollars, except share and per share
amounts, unaudited 2009 2008
-------------------------------------------------------------------------
Revenue $ 123,818 $ 86,093
-------------------------------------------------------------------------
Cost of sales (note 3) 59,318 62,755 Depreciation and depletion
23,497 12,851 Administrative and general 2,282 3,161 Net interest
income (380) (3,612) Exploration 3,249 6,161 Currency translation
loss (gain) 2,581 (7,112) Accretion of site closure and reclamation
costs 722 741 Other income (666) (9,836)
-------------------------------------------------------------------------
90,603 65,109
-------------------------------------------------------------------------
Earnings before income taxes 33,215 20,984 Income tax recovery
(expense) Current (22,853) (1,586) Future 11,048 267
-------------------------------------------------------------------------
(11,805) (1,319)
-------------------------------------------------------------------------
Net earnings for the period $ 21,410 $ 19,665 Other comprehensive
income (loss) Unrealized loss on available for sale securities
(2,486) (4,498) Unrealized loss on translation of self-sustaining
operations (3,968) (6)
-------------------------------------------------------------------------
(6,454) (4,504)
-------------------------------------------------------------------------
Comprehensive income $ 14,956 $ 15,161
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Net earnings per share Basic $ 0.08 $ 0.08 Diluted $ 0.08 $ 0.08
Weighted average shares outstanding Basic 255,753,359 254,677,588
Diluted 255,762,702 255,338,997
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes form an integral part of these unaudited
interim consolidated financial statements. Interim Consolidated
Statements of Cash Flows Three Months Ended March 31 Thousands of
US dollars, unaudited 2009 2008
-------------------------------------------------------------------------
Operating activities: Net earnings for the period $ 21,410 $ 19,665
Non-cash items: Depreciation and depletion 23,497 12,851 Unrealized
currency translation gain (1,124) (6,607) Unrealized gain on
derivatives - (9,836) Accretion of site closure and reclamation
costs 722 741 Loss on disposal of assets 70 - Amortization of
deferred charges 54 54 Stock-based compensation 439 905 Accrual of
employee severance costs 655 - Future income tax recovery (11,048)
(267) Change in fair value of forward contracts 8,433 30,920 Gain
on sale of investments - (1) Changes in operating working capital
and other (note 10) 2,094 (32,975)
-------------------------------------------------------------------------
45,202 15,450
-------------------------------------------------------------------------
Investing activities: Release of restricted cash - 53,064 Increase
in restricted cash (72) (30,549) Purchase of plant and equipment
(9,740) (3,965) Mineral property development (7,839) (3,132)
Transaction costs paid - (1,925) Acquisition of Perseverance, net
of cash acquired - (196,590) Repayment of Perseverance hedge
portfolio - (45,550) Proceeds from sale of equipment 72 - Proceeds
from sale of investments - 1
-------------------------------------------------------------------------
(17,579) (228,646)
-------------------------------------------------------------------------
Financing activities: Repayment of capital lease obligation (1,112)
(1,077) Financing from credit facility 102 7,948 Repayment of
credit facility (719) (7,746) Repayment of other long-term
liabilities (151) (304) Issuance of common shares 86 1,236
-------------------------------------------------------------------------
(1,794) 57
-------------------------------------------------------------------------
Effect of exchange rate changes on cash and cash equivalents 131
(218)
-------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 25,960 (213,357)
Cash and cash equivalents, beginning of period 62,419 266,045
-------------------------------------------------------------------------
Cash and cash equivalents, end of period $ 88,379 $ 52,688
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes form an integral part of these unaudited
interim consolidated financial statements. Interim Consolidated
Statement of Shareholders' Equity Number of Common Thousands of US
dollars, Common Shares Contributed except common shares, unaudited
Shares Amount Surplus
-------------------------------------------------------------------------
Balance at December 31, 2008 255,717,071 $ 311,908 $ 5,269 Shares
issued under employee share purchase plan 102,713 86 - Shares
issued on exercise of options - - - Stock-based compensation - 44
395 Net earnings - - - Other comprehensive loss - - -
-------------------------------------------------------------------------
Balance at March 31, 2009 255,819,784 $ 312,038 $ 5,664
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated Other Thousands of US dollars, Retained Comprehensive
except common shares, unaudited Earnings Income Total
-------------------------------------------------------------------------
Balance at December 31, 2008 $ 187,764 $ (89,503) $ 415,438 Shares
issued under employee share purchase plan - - 86 Shares issued on
exercise of options - - - Stock-based compensation - - 439 Net
earnings 21,410 - 21,410 Other comprehensive loss - (6,454) (6,454)
-------------------------------------------------------------------------
Balance at March 31, 2009 $ 209,174 $ (95,957) $ 430,919
-------------------------------------------------------------------------
-------------------------------------------------------------------------
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 - - -
Shares issued under employee share purchase plan 50,440 104 -
Shares issued on exercise of options 736,300 1,571 (439)
Stock-based compensation - 52 853 Net earnings - - - Other
comprehensive loss - - -
-------------------------------------------------------------------------
Balance at March 31, 2008 255,239,602 $ 311,182 $ 4,354
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Accumulated Other Thousands of US dollars, Retained Comprehensive
except common shares, unaudited Earnings Income Total
-------------------------------------------------------------------------
Balance at December 31, 2007 $ 176,663 $ (3,282) 486,776
Transitional adjustment on adoption of inventory standard 381 - 381
Shares issued under employee share purchase plan - - 104 Shares
issued on exercise of options - - 1,132 Stock-based compensation -
- 905 Net earnings 19,665 - 19,665 Other comprehensive loss -
(4,504) (4,504)
-------------------------------------------------------------------------
Balance at March 31, 2008 $ 196,709 $ (7,786) $ 504,459
-------------------------------------------------------------------------
-------------------------------------------------------------------------
The accompanying notes form an integral part of these unaudited
interim consolidated financial statements. This press release
should be read in conjunction with the Corporation's first quarter
MD&A report and Notes to the interim consolidated financial
statements, which can be found on
http://www.northgateminerals.com/, in the "Investor Info" section,
under "Financial Reports - Quarterly Reports". Annual General
Meeting and Q1 2009 Financial Results Northgate will be hosting its
Annual General Meeting ("AGM") on Friday, May 8, 2009 at 10:00 am,
Toronto time. The AGM will be held at The Suites at One King West,
King Gallery, 1 King Street West, Toronto, Canada. This event will
also include an overview of Northgate's 2009 first quarter
financial results, which are scheduled for release before market
opens on May 8, 2009. Webcast and Conference Call information,
including podcast and conference replay details, can be found on
Northgate's website at http://www.northgateminerals.com/. Northgate
Minerals Corporation is a gold and copper producer with mining
operations, development projects and exploration properties in
Canada and Australia. The company is forecasting record gold
production of over 390,000 ounces in 2009 and is targeting growth
through further acquisition opportunities in stable mining
jurisdictions around the world. Northgate is listed on the TSX
under the symbol NGX and on the NYSE Amex (formerly AMEX) under the
symbol NXG. Forward-Looking Statements: This Northgate press
release contains "forward-looking information", as such term is
defined in applicable Canadian securities legislation, 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.
DATASOURCE: Northgate Minerals Corporation CONTACT: Ms. Keren R.
Yun, Director, Investor Relations, Tel: (416) 363-1701 ext. 233,
Email: , Website: http://www.northgateminerals.com/
Copyright