Northgate Minerals Corporation

Northgate Minerals Corporation

January 17, 2006 08:00 ET


VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 17, 2006) - (All figures in US dollars except where noted) - Northgate Minerals Corporation (TSX:NGX)(AMEX:NXG) today reported its fourth quarter 2005 operating results and 2006 forecast for its Kemess mine located in north central British Columbia.

Fourth Quarter 2005 Production Highlights

- Quarterly gold production of 94,405 ounces, the second highest quarterly production in the history of the Kemess mine.

- Record quarterly copper production 24.7 million pounds.

- Record low quarterly cash cost of $59 per ounce.

2006 Production Forecast Highlights

- The Kemess Mine is forecast to produce 320,000 ounces of gold and 84.6 million pounds of copper during 2006.

- The cash cost of production, net of by-product credits, is forecast to be $170 per ounce assuming a copper price of $1.70 per pound.

- Exploration spending will increase to a total of $7.8 million with $3.8 million to be spent on the newly acquired Young-Davidson properties and the balance on Kemess claims and the RDN property.

Ken Stowe, President and CEO, commented, "The Kemess mine finished the year on an extremely strong note, with the highest quarterly gold and copper production of the year and a record low cash cost in the history of the mine. I am especially proud to report that for the fourth year in a row, we delivered on the metal production forecast that we made at the beginning of the year. For 2006, we are projecting record annual gold and copper production at a cash cost of $170 per ounce. As we move into 2006, we are very excited about the prospects for increasing the resource base at our recently acquired Young-Davidson property in Ontario, where we plan to spend $3.8 million on diamond drilling during the year. With metal prices continuing at record levels, our cash flow in the coming year should be excellent and we will easily meet our goal of becoming debt free by the middle of 2006. Management's major focus in the New Year will be to develop additional growth opportunities for Northgate by acquiring new gold reserves either in the form of a late stage development project or an operating mine."


The Kemess mine posted gold and copper production of 94,405 ounces and 24.7 million pounds respectively, in the fourth quarter of 2005. This production was the result of strong mill throughput for hypogene ore of 50,738 tonnes per day combined with above-average hypogene ore grades. Over the course of 2005, ore grades and quarterly metal production varied considerably as different areas of the Kemess pit were mined according to the life of mine schedule. For the full year, the gold and copper production of 279,962 ounces and 73.7 million pounds, respectively, were consistent with the forecast released by Northgate at the beginning of 2005.

The cash cost of production at Kemess in the fourth quarter was $59 per ounce bringing the average 2005 cash cost to $205 per ounce. The record low cash cost set during the fourth quarter stemmed from record copper production and strong copper prices which averaged $1.95 per pound on the London Metal Exchange during the quarter.

In order to fix the price for copper it has already produced, Northgate entered into forward sales contracts prior to year end which locked in a price of $1.98 ($0.03 per pound higher than the average LME Cash price for the quarter) for all copper revenue that will be recognized in the fourth quarter of 2005. As a result, copper revenues that will be reported in the Corporation's 2005 financial statements (scheduled for release on February 23, 2006) will not be dependant on future prices as is normally the case. Northgate's copper production from January 1, 2006 forward remains un-hedged and fully levered to future changes in the price of copper.

Northgate's audited financial results for the year ended December 31, 2005 are scheduled for release on February 23, 2006 and the Corporation's regular quarterly investor conference call and webcast will be held at 10:00 am (Eastern Standard Time) the following day.

2005 Kemess Mine Production

4Q 05 4Q 04 2005 2004

Ore plus waste
mined (tonnes) 12,907,609 13,637,789 51,233,842 56,000,000

Ore mined (tonnes) 6,663,925 4,831,968 19,523,319 19,329,000

Stripping ratio
(waste/ore) 0.94 1.82 1.62 1.90

Tonnes milled (ore) 4,667,874 4,796,471 17,995,159 18,589,662

Average mill
operating rate (tpd) 50,738 52,136 49,302 50,791

Gold grade (gmt) 0.875 0.876 0.723 0.735
Copper grade (%) 0.283 0.270 0.229 0.231

Gold recovery (%) 72 70 67 69
Copper recovery (%) 85 84 81 83

Gold production
(ounces) 94,405 94,673 279,962 303,475
Copper production
(000's pounds) 24,700 23,856 73,722 78,291

Productivity measures:
Tonnes mined per
shift worked 788 826 785 842
Tonnes milled per
shift worked 285 290 276 280

Cash Cost of Production
($/ounce) (1)(2) 59 108 205 135

Notes: (1) The cash cost of production figures reported by Northgate
include the full cost of waste stripping.
(2) 2005 cash cost figures are unaudited estimates and are
subject to revision.


Mine production is forecast to total 45.5 million tonnes of ore and waste with ore being mined primarily from the central and western regions of the pit. The total amount of waste mined is forecast to be 10% lower than it was in 2005 due primarily to a reduction in the waste stripping ratio from 1.62 to 1.48.

Due to the large amount of softer ore in the 2006 mine plan, mill throughput is forecast to rise to an average of approximately 52,700 tonnes per day with the mill operating at 91% availability. Approximately 3.0 million tonnes of supergene and leach cap ore are scheduled for processing in two campaigns during the year, roughly the same as was processed in 2005. Metal production of 320,000 ounces of gold and 84.7 million pounds of copper is anticipated.

Gold Cash Cost

Assuming by-product copper and silver prices of $1.70 per pound and $7.50 per ounce respectively, and a Cdn$/US$ exchange rate of 1.18, the Kemess mine's 2006 cash cost is projected to be $170 per ounce of gold produced including the full cost of all waste stripping. During 2006, each $0.04 per pound change in the copper price or $0.025 change in the Cdn$/US$ exchange rate will affect the cash cost by approximately $10 per ounce.

Unit production costs at Kemess are forecast to decline from the 2005 average of approximately Cdn$8.29 per tonne milled to Cdn$7.84 per tonne milled as a result of decreased waste stripping and increased mill throughput.

Projected 2006 Kemess Mine Production

(100% of production basis) 2006

Ore plus waste mined (tonnes) 45,451,000
Ore mined (tonnes) 18,294,000
Stripping ratio (waste/ore) 1.48

Ore milled (tonnes) 19,238,000
Average mill operating rate (tpd) 52,707

Gold grade (gmt) 0.742
Copper grade (%) 0.243

Gold recovery (%) 70
Copper recovery (%) 82

Gold production (ounces) 320,000
Copper production (000s pounds) 84,700

Productivity measures:
Tonnes mined per man-shift 710
Tonnes milled per man-shift 301

Cash Cost of Production ($/ounce) 170


Quarterly Metal Production

Quarterly gold output in 2006 is expected to average 80,000 ounces while quarterly copper output is expected to average slightly over 21 million pounds. Gold and copper output will vary slightly from quarter to quarter due to normal variations in ore grades, ore types and metallurgical and recoveries from quarter to quarter.

Kemess Mine Quarterly Metal Production Forecast

Q1 Q2 Q3 Q4 2006
Gold (ounces) 74,000 74,000 83,000 89,000 320,000
Copper (millions lbs) 21.3 18.8 21.7 22.9 84.7


Exploration spending in 2006 will increase to approximately $7.8 million. Geological and geophysical work has already commenced on the Young-Davidson property and diamond drilling will commence on January 20. The initial budget for this program is $3.8 million. Work on the Kemess claims will focus on the eastern extension of Kemess North that was intersected by three holes in 2005 (November 24, 2005 press release). The goal of this $2.5 million program is to discover the fault offset high grade portion of Kemess North as well as open pit mineable mineralization close to surface beneath the extensive barren cover rocks south and east of Kemess North. The balance of Northgate's exploration budget will be devoted to exploration on the RDN property in the Eskay Creek district of British Columbia and several new grass roots exploration projects.


In addition to its targeted exploration programs, Northgate is currently examining a variety of opportunities to increase its near-term gold production and diversify its production base through the acquisition of a late-stage project or an operating mine. The ideal acquisition would be a gold asset in a stable political jurisdiction in the Americas with the potential to produce at least 100,000 ounces of gold per year.

Northgate Minerals Corporation is a gold and copper mining company focused on operations and opportunities in the Americas. The Corporation's principal assets are the 300,000-ounce per year Kemess South mine in north-central British Columbia, the adjacent Kemess North deposit, which contains a Proven and Probable Reserve of 4.1 million ounces of gold and the Young-Davidson property in northern Ontario with a total resource base of 1.5 million ounces of gold. 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 includes certain "forward-looking statements" within the meaning of section 21E of the United States Securities Exchange Act of 1934, as amended. These forward-looking statements include estimates, forecasts, and statements as to management's expectations with respect to, among other things, future metal production and production costs, potential mineralization and reserves, exploration results, progress in the development of mineral properties, demand and market outlook for commodities and future plans and objectives of Northgate Minerals Corporation (Northgate). 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 upon a number of estimates and assumptions that, while considered reasonable by management are inherently subject to significant business, economic and competitive uncertainties and contingencies. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from Northgate's expectations are disclosed under the heading "Risk and Uncertainties" in Northgate's 2004 Annual Report and under the heading "Risk Factors" in Northgate's 2004 Annual Information Form (AIF) both of which are filed with Canadian regulators on SEDAR ( and with the United States Securities and Exchange Commission ( Northgate expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Contact Information

  • Northgate Minerals Corporation
    Mr. Ken G. Stowe
    President and Chief Executive Officer
    (416) 216-2772
    Northgate Minerals Corporation
    Mr. Jon A. Douglas
    Senior Vice President and Chief Financial Officer
    (416) 216-2774