Northgate Minerals' Young-Davidson Project Remains On Schedule and On Budget
VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 04/13/11 -- Editors Note: There are four photos and one video associated with this press release.
(All figures in US dollars except where noted)
Northgate Minerals Corporation (TSX: NGX)(NYSE Amex: NXG) is pleased to provide an update on construction activities for our 100% owned Young-Davidson project located beside the town of Matachewan, Ontario, 60 kilometres ('km') west of Kirkland Lake. We are also pleased to report that follow-up drilling on the YD West zone continues to return positive results.
With current proven and probable gold reserves totalling over 2.8 million ounces(1), the Young-Davidson mine is targeting start-up of production in late Q1 2012. The mine is expected to generate an average of 180,000 ounces of gold annually over an initial 15-year mine life.
Highlights
Construction Activities
-- The project remains on schedule:
-- at the end of March 2011, 80% of the contracts have been awarded
(approximately $170 million), 90% of equipment purchase orders have
been placed and 66% of the engineering has been completed.
-- The project remains on budget:
-- at the end of March 2011, Northgate has invested approximately $130
million towards construction of the Young-Davidson mine.
Diamond Drill Program
-- Hole YD10-198B, located approximately 115 metres ('m') below discovery
hole 198, returned 5.43 grams per tonne ('g/t') gold over 10.95 m
(estimated 6.7 m true thickness).
-- A total of 5,332 m of surface diamond drilling has been completed within
the YD West zone in 2011.
'Since breaking ground in August 2010, we're pleased to report that Young-Davidson has remained on schedule and on budget' commented Ken Stowe, President and CEO. 'In particular, we have made great progress on the construction front, having recently completed the raise bore pilot hole for the first leg of the production shaft as well as the concrete foundations for the process plant building. In addition, exploration results continue to prove up the YD West zone, where there is significant potential to add to current reserves. Over the next year, we expect to invest an additional $250 million using existing funds to bring Young-Davidson into production as we move towards our objective of increasing annual production to 350,000 ounces in 2013 and beyond.'
Young-Davidson Targeting Production in 2012
Construction activities on surface facilities and underground development are well advanced and are detailed as follows:
Overall Project Activity and Schedule Update (up to the end of March 2011)
-- Northgate has invested approximately $130 million towards building the
Young-Davidson mine.
-- On surface, continued major earthworks in preparation of the project
site.
-- Received an amended Certificate of Approval permitting the discharge of
treated process water, which is the last significant permit required for
the mine to commence production.
-- Began dewatering the historic Young-Davidson open pit.
-- Commenced construction of the 115 kilovolt ('kV') power line to energize
the site by the beginning of Q4.
Process Plant and Major Equipment
-- Completed pouring the concrete foundations for the process plant
building and major equipment.
-- Currently installing formwork (permanent moulds) and reinforcements for
the autogenous grinding ('AG') mill foundation.
-- One of the Kemess South ball mills has been dismantled and is being
refurbished by the equipment manufacturers in preparation for
installation at Young-Davidson.
-- Erection of the mill building is in progress and is expected to be
completed by June.
-- Major equipment orders are beginning to arrive on site.
Ramp
-- The underground development rate is now averaging almost 14 m per day.
-- During the first quarter, the ramp was extended an additional 290 m to
an approximate length of 4,200 m.
-- The vertical depth of the ramp is currently 680 m and over the next 30
months, will be competed to a depth of 1500 m.
-- An additional 890 m of lateral development was achieved during the
quarter.
Shaft
-- Commissioned the new hoist and have commenced sinking operations of the
existing shaft.
-- The existing shaft will be extended to a depth of 1,500 m.
-- Completed the 446 m raise bore pilot hole for the first leg of the
production shaft.
-- A total of 220 m has been reamed to 5.5 m in diameter for the new
production shaft.
Tailings Impoundment Area ('TIA')
-- Commissioned the dewatering system that will facilitate construction of
the TIA west dam.
-- Quarrying of the rock necessary for the construction of the tailings dam
will be completed within the next two months.
-- Targeting completion of the first two stages of the TIA construction by
year-end.
-- Construction of the haul bridge is scheduled to start in the following
months.
Development activities over the next 12 months include:
-- Awarding the electrical/mechanical equipment installation contract in
April.
-- Tendering the open pit mining contract in April.
-- Starting the open pit pre-production development in Q4.
-- Completing the 115 kV transmission line to energize the site by Q4.
-- Commissioning activities in Q4.
-- Targeting our first gold pour late Q1 2012.
A short video clip and photos have been provided to showcase recent construction activities on-site. A complete photo gallery is available on our website at www.northgateminerals.com.
Young-Davidson Targeting Production in 2012
Targeting our first gold pour in late Q1 2012, the first leg of production will come from a small open pit targeting production in the range of 84,000 - 90,000 ounces in 2012 and 134,000 - 140,000 ounces in 2013. Once underground development is complete, gold production is expected to ramp up to approximately 175,000 ounces in 2014 and 220,000 ounces in 2015. The average annual production over the 15-year mine-life is 180,000 ounces of gold.
Young-Davidson Capital Costs and Economics
The pre-production capital development costs of the Young-Davidson mine are almost exclusively denominated in Canadian dollars. The current estimate of the total capital cost of the project is Cdn$377.1 million and has not changed from the figure contained in the Feasibility Study. However in US dollars, the pre-production capital cost estimate is now $377.1 million reflecting the increase in the exchange rate assumption from US$/Cdn$0.90 to $1.00.
At a gold price of $1,400 per ounce and an exchange rate of US$/Cdn$1.00, the Young-Davidson mine's existing proven and probable reserves are expected to generate $1.9 billion in pre-tax operating cash flow and on a project basis (i.e. prior to any capital investment), has a pre-tax NPV (5%) of $1.0 billion and a pre-tax internal rate of return ('IRR') of 27.6%.
Infrastructure
The Young-Davidson property is located 3 km west of the town of Matachewan, in the gold-producing Abitibi greenstone belt of northern Ontario. It is readily accessible to, and serviced by, surrounding mining communities such as Kirkland Lake (60 km) and Timmins (165 km) via Highways 566, 66 and 101.
The Young-Davidson property sits on the site of two past producing mines, both with track records of successful mining and simple metallurgy, producing approximately one million ounces of gold between the mid 1930's and the mid 1950's. All of the existing underground workings left by the previous owners are in excellent condition.
Human Resources
Work is progressing well at Young-Davidson and has resulted in a significant boost for local and regional employment. Currently, there are approximately 275 contractors and Northgate employees on site, including over 20 First Nations employees. Once production begins in 2012, the mine will provide ongoing direct employment for 275 employees during its 15-year mine-life.
Environment, Permitting and Community Relations
Environmental and permitting activities are ongoing. Open houses will continue to be held with the local communities and First Nations, where there is strong community support. On July 2, 2009, Northgate entered into an Impact and Benefits Agreement with Matachewan First Nation. Since that achievement, the parties have continued to work cooperatively on various aspects of project development.
Exploration Update: YD West Zone
In 2011, a total of 5,332 m of surface diamond drilling has been completed in the YD West zone with the intent of delineating additional resources. The YD West zone was discovered when hole YD10-198 intersected 3.46 g/t gold over 79.5 m. With the current data, the zone appears to have a minimum strike length of approximately 175 m, measures 150 m along dip and averages 20 m in true thickness.
If the 2011 drilling program is successful, it is expected that an initial mineral resource estimate for the YD West zone will be completed by the end of the year.
Northgate Minerals Corporation is a gold and copper producer with mining operations, development projects and exploration properties in Canada and Australia. Our vision is to be the leading intermediate gold producer by identifying, acquiring, developing and operating profitable, long-life mining properties.
To view the full version of the press release issued on April 13, 2011, please visit the company's website at www.northgateminerals.com.
Qualified Persons
John Andrew Cormier, PEng, Project Manager, Northgate Minerals Corporation, is the Qualified Person responsible for reviewing and approving the technical information of this press release.
Carl Edmunds, Exploration Manager, Northgate Minerals Corporation, is the Qualified Person responsible for reviewing and approving the exploration results of this press release.
Cautionary Note Regarding Forward-Looking Statements and Information:
This Northgate press release contains 'forward-looking information', as such term is defined in applicable Canadian securities legislation and 'forward-looking statements' within the meaning of the United States Private Securities Litigation Reform Act of 1995, concerning Northgate's future financial or operating performance and other statements that express management's expectations or estimates of future developments, circumstances or results. Generally, forward-looking information can be identified by the use of forward-looking terminology such as 'expects', 'believes', 'anticipates', 'budget', 'scheduled', 'estimates', 'forecasts', 'intends', 'plans' and variations of such words and phrases, or by statements that certain actions, events or results 'may', 'will', 'could', 'would' or 'might', 'be taken', 'occur' or 'be achieved'. Forward-looking information is based on a number of assumptions and estimates that, while considered reasonable by management based on the business and markets in which Northgate operates, are inherently subject to significant operational, economic and competitive uncertainties and contingencies. Northgate cautions that forward-looking information involves known and unknown risks, uncertainties and other factors that may cause Northgate's actual results, performance or achievements to be materially different from those expressed or implied by such information, including, but not limited to gold and copper price volatility; fluctuations in foreign exchange rates and interest rates; the impact of any hedging activities; discrepancies between actual and estimated production, between actual and estimated reserves and resources or between actual and estimated metallurgical recoveries; costs of production; capital expenditure requirements; the costs and timing of construction and development of new deposits; and the success of exploration and permitting activities. In addition, the factors described or referred to in the section entitled 'Risk Factors' in Northgate's Annual Information Form for the year ended December 31, 2010 or under the heading 'Risks and Uncertainties' in Northgate's 2010 Annual Report, both of which are available on the SEDAR website at www.sedar.com, should be reviewed in conjunction with the information found in this press release.Although Northgate has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in forward-looking information, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management's expectations or estimates of future developments, circumstances or results will materialize. Accordingly, readers should not place undue reliance on forward-looking information. The forward-looking information in this press release is made as of the date of this press release, and Northgate disclaims any intention or obligation to update or revise such information, except as required by applicable law.
Cautionary Note to US Investors Regarding Mineral Reporting Standards:
The Corporation prepares its disclosure in accordance with the requirements of securities laws in effect in Canada, which differ from the requirements of US securities laws. Terms relating to mineral resources in this press release are defined in accordance with National Instrument 43-101-Standards of Disclosure for Mineral Projects under the guidelines set out in the Canadian Institute of Mining, Metallurgy, and Petroleum Standards on Mineral Resources and Mineral Reserves. The Securities and Exchange Commission (the 'SEC') permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. The Corporation uses certain terms, such as, 'measured mineral resources', 'indicated mineral resources', 'inferred mineral resources' and 'probable mineral reserves', that the SEC does not recognize (these terms may be used in this press release and are included in the Corporation's public filings which have been filed with securities commissions or similar authorities in Canada).
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Contacts:
Northgate Minerals Corporation
Ms. Keren R. Yun
Director, Investor Relations
416-216-2781
ngx@northgateminerals.com
www.northgateminerals.com