Fosterville Sets All-Time Gold Production Record
Fourth Quarter 2008 Highlights - Achieved record quarterly gold production of 118,265 ounces, bringing total 2008 production to a record 354,800 ounces. - Strong turnaround at Fosterville with 26,398 ounces produced, representing a new quarterly record. - Production at Stawell of 30,553 ounces of gold, the fourth highest quarterly production in the long 26-year history of the mine. - Kemess produced 61,314 ounces of gold and 14.4 million pounds of copper. - Northgate's average net cash cost of production for its three operating mines was $421 per ounce of gold. - Doubled the total gold resource base to over 4.0 million ounces at the Young-Davidson property. - Announced the discovery of significant extensions to three mineralized zones at Fosterville. 2009 Production Forecast Highlights - Northgate is forecasting record gold production of 392,000 ounces from its three operating mines in Canada and Australia. - Copper production from the Kemess mine is forecast to be 54.0 million pounds. - Northgate's average cash cost of production, net of by-product credits, is forecast to be $461 per ounce of gold assuming a copper price of $1.40 per pound and exchange rates of Cdn$/US$1.25 and A$/US$1.43. - Exploration spending in Australia is forecast to be $8.2 million, split almost equally between the two operations, in support of mine-life extensions. - Exploration spending for the Young-Davidson property is forecast to be $1.2 million, which will focus on targets outside of the known resource area.
Consolidated Fourth Quarter Production Results
The following table provides a summary of operations for the fourth quarter and the full year of 2008 and the comparable periods of 2007.
Q4 2008 Q4 2007 2008 2007 ------------------------------------------------------------------------- Production Gold (ounces)(1) 118,265 41,467 354,800 245,631 Copper (thousands pounds) 14,391 16,766 51,906 68,129 Net cash cost ($/ounce)(2) 421 18 445 (22) ------------------------------------------------------------------------- ------------------------------------------------------------------------- (1) Full year production for Fosterville excludes the change in gold-in- circuit inventory previously recorded in production for the first quarter. (2) Q4 and full year 2008 cash cost figures are unaudited estimates and are subject to revision. Results of Operations - Kemess South Mine Q4 2008 Q4 2007 2008 2007 ------------------------------------------------------------------------- Ore plus waste mined (tonnes) 7,388,248 8,042,000 28,260,894 42,025,404 Ore mined (tonnes) 5,027,556 3,206,000 13,851,896 17,060,785 Stripping ratio (waste/ore) 0.47 1.51 1.04 1.46 Ore stockpile rehandle (tonnes) 1,173,710 2,367,337 7,152,037 4,012,198 Ore milled (tonnes) 4,171,027 4,238,626 16,924,271 17,802,317 Ore milled per day (tonnes) 45,337 46,072 46,252 48,773 Gold Grade (g/t) 0.661 0.459 0.505 0.627 Recovery (%) 69 66 67 68 Production (ounces) 61,314 41,467 185,162 245,631 Copper Grade (%) 0.196 0.238 0.174 0.214 Recovery (%) 80 75 79 81 Production (thousands pounds) 14,391 16,766 51,906 68,129 Net cash cost ($/ounce)(1) 395 18 272 (22) ------------------------------------------------------------------------- (1) Q4 and full year 2008 cash cost figures are unaudited estimates and are subject to revision.
Operational Performance
The Kemess South mine posted production of 61,314 ounces of gold and 14.4 million pounds of copper in the fourth quarter of 2008, which was considerably lower than the forecast of 74,000 ounces and 18.5 million pounds, respectively. Metal production was adversely impacted by a burst water pipe, which caused serious damage to the mill's Distributed Control System (DCS), resulting in six days of downtime just before Christmas. This event, combined with a one week delay in accessing some higher grade ore in the western end of the open pit, were responsible for the shortfall in production during the quarter. However, the ounces that did not materialize in the fourth quarter of 2008 will be produced in the first quarter of 2009.
Mining operations returned to near normal levels in the western end of the open pit once waste rock was removed from the northwest corner where localized sloughing had occurred earlier in the year. A new radar-based wall monitoring system was installed to ensure safe operation until the western end of the pit is mined out in mid-2009.
The mill operated at an average throughput of 45,337 tonnes per day (tpd) during the quarter and would have achieved a more typical 49,000 tpd rate had it not been for the unexpected DCS related outage that occurred just before Christmas. Recoveries in the mill of 69% for gold and 80% for copper were consistent with historic norms for the hypogene ore, which was processed during the quarter.
The cash cost of production at Kemess in the fourth quarter was
Results of Operations - Stawell Gold Mine Q4 2008 Q4 2007 2008 2007 ------------------------------------------------------------------------- Ore mined (tonnes) 177,561 152,791 629,665 652,372 Ore milled (tonnes) 183,415 170,554 698,396 721,723 Ore milled per day (tonnes) 1,994 1,854 1,908 1,978 Gold Grade (g/t) 5.97 6.00 5.25 5.39 Recovery (%) 87 89 87 89 Production (ounces) 30,553 29,635 102,679 112,058 Net cash cost ($/ounce)(1) 393 n/a 541 n/a ------------------------------------------------------------------------- (1) Q4 and full year 2008 cash cost figures are unaudited estimates and are subject to revision.
The Stawell Gold mine produced a total of 30,553 ounces of gold during the three months ended
Mine production of 177,561 tonnes during the quarter increased to its highest level of the year, as improvements in the mine's ventilation and cooling systems and the commissioning of three 60-tonne haul trucks increased the effective mining capacity.
Approximately 183,415 tonnes of ore at a grade of 5.97 grams per tonne (g/t) were milled in the fourth quarter of 2008. Gold recoveries in the mill were 87%, which were on target with plan and consistent with the 87%-90% historic range.
The net cash cost of gold for the fourth quarter was
Results of Operations - Fosterville Gold Mine Q4 2008 Q4 2007 2008 2007 ------------------------------------------------------------------------- Ore mined (tonnes) 167,182 154,887 511,542 799,188 Ore milled (tonnes) 165,654 213,543 540,725 931,886 Ore milled per day (tonnes) 1,801 2,321 1,477 2,555 Gold Grade (g/t) 6.03 4.00 5.39 3.27 Recovery (%) 82 70 70 77 Production (ounces)(1) 26,398 19,198 66,959 73,378 Net cash cost ($/ounce)(2) 513 n/a 836 n/a ------------------------------------------------------------------------- (1) Full year production for Fosterville excludes the change in gold-in- circuit inventory previously recorded in production for the first quarter. (2) Q4 and full year 2008 cash cost figures are unaudited estimates and are subject to revision.
The Fosterville Gold mine produced 26,398 ounces of gold during the three months ended
Mine development activities continued at a high rate during the fourth quarter and now extend into the heart of the thicker, higher grade sections of the main
Net cash cost for the fourth quarter was
Year Ending 2008 Financial Results
Northgate's audited financial results for the year ended
2009 Production Forecast
Northgate is forecasting a record year for production in 2009 of 392,000 ounces of gold at a net cash cost of
Gold Copper Cash Cost (ounces) (000s pounds) (ounces) ------------------------------------------------------------------------- Kemess 173,000 54,000 $517 Stawell 107,000 n/a $388 Fosterville 112,000 n/a $445 ------------------------------------------------------------------------- 392,000 54,000 $461 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Note: Assuming copper price of $1.40 per pound and exchange rates of Cdn$/US$1.25 and A$/US$1.43. In 2009, Northgate's before tax cash flow is subject to the following sensitivities: Before Tax Cash Flow Variable Change (US$ millions) ------------------------------------------------------------------------- Gold Price $25 per ounce $9.8 Copper Price $0.05 per pound $2.6 Cdn$/US$ Foreign Exchange Rate 0.05 $6.2 A$/US$ Foreign Exchange 0.05 $5.3 ------------------------------------------------------------------------- ------------------------------------------------------------------------- The following table provides a summary of forecast quarterly gold production for 2009. Gold and copper output will vary from quarter to quarter due to normal variations in ore grades, ore types and metallurgical recoveries. All of Northgate's gold production during 2009 is unhedged. As a result, the Company will receive market prices for all gold sales during the year. Northgate has entered into copper forward sales contracts for the final two months of 2009 for approximately 6.0 million pounds of copper at a forward price of $2.52 per pound. Kemess Stawell Fosterville Total ------------------------------------------------------------------------- Q1 49,000 26,000 24,000 99,000 Q2 46,000 25,000 30,000 101,000 Q3 50,000 27,000 29,000 106,000 Q4 28,000 29,000 29,000 86,000 ------------------------------------------------------------------------- 173,000 107,000 112,000 392,000 ------------------------------------------------------------------------- ------------------------------------------------------------------------- Kemess South Mine - Projected 2009 Mine Production ------------------------------------------------------------------------- Ore plus waste mined (tonnes) 24,523,000 Ore mined (tonnes) 18,024,000 Stripping ratio (waste/ore) 0.36 Ore milled (tonnes) 17,581,000 Ore milled per day (tonnes) 48,167 Gold grade (g/t) 0.484 Copper grade (%) 0.181 Gold recovery (%) 64 Copper recovery (%) 77 Gold production (ounces) 173,000 Copper production (thousands pounds) 53,800 Net cash cost ($/ounce) 517 ------------------------------------------------------------------------- -------------------------------------------------------------------------
In 2009, the mine plan calls for the removal of 18.0 million tonnes of ore and 6.5 million tonnes of waste from the Kemess open pit. During the first three quarters of the year, the Kemess mill will process higher grade ore that will be mined from the western end of the open pit. Beginning in the fourth quarter, milling of much lower grade ore from surface stockpiles and from the eastern end of the open pit is scheduled to commence.
The Kemess mill is expected to operate at a throughput of 48,167 tpd with the mill operating at 90% availability. The majority of the ore milled during the year will be hypogene ore with only a small quantity (10%) of supergene and leachcap ore. Total metal production for 2009 is anticipated to be 173,000 ounces of gold and 54.0 million pounds of copper.
Production of gold-copper concentrate is forecast to total 131,000 dry metric tonnes (dmt), which will be shipped to Xstrata Copper's Horne smelter in
The unit mining cost is forecasted at
Since Kemess is approaching the end of its mine life, capital expenditures will amount to only
Stawell Gold Mine - Projected 2009 Mine Production ------------------------------------------------------------------------- Ore mined (tonnes) 724,000 Ore milled (tonnes) 833,000 Ore milled per day (tonnes) 2,280 Gold grade (g/t) 4.49 Gold recovery (%) 89 Gold production (ounces) 107,000 Net cash cost ($/ounce) 388 ------------------------------------------------------------------------- -------------------------------------------------------------------------
In 2009, the Stawell mine plan calls for 833,000 tonnes to be milled at an average grade of 4.49 g/t. Gold recovery is forecast to be 89% and total gold production is expected to be 107,000 ounces. Ore for the mill will be sourced from the GG3, GG5 and Magdala reserve blocks while development towards the newly discovered GG6 zone is completed. Unit operating costs are forecast to total
Although Stawell is a mature and well run operation, there are still certain areas where improvements can be made. Due to the success of the pilot plant project at
Capital expenditures at Stawell are forecast to total
Exploration expenditures of
Figure 1 - Stawell Gold Mine 2009 Exploration Program www.northgateminerals.com/Theme/Northgate/files/Releases/SGM_Jan09.jpg Fosterville Gold Mine - Projected 2009 Mine Production ------------------------------------------------------------------------- Ore mined (tonnes) 731,000 Ore milled (tonnes) 733,000 Ore milled per day (tonnes) 2008 Gold grade (g/t) 5.41 Gold recovery (%) 84 Gold production (ounces) 112,000 Net cash cost ($/ounce) 445 ------------------------------------------------------------------------- -------------------------------------------------------------------------
In 2009, the
The heated leach circuit is scheduled to be commissioned in the first quarter of 2009. Pilot plant tests indicated that gold recovery of 90% on average can be achieved once this circuit is in full operation. Once this last operational deficiency has been corrected, attention will be turned to reduce operating costs at the mine with the goal of lowering Australian dollar denominated cash costs per ounce by as much as 10% by optimizing the operation.
Capital expenditures at
Exploration expenditures in 2009 are forecast to be
Figure 2 - Fosterville Gold Mine 2009 Exploration Program www.northgateminerals.com/Theme/Northgate/files/Releases/FGM_Jan09.jpg
Young-Davidson Project
Upon completion of the underground ramp development at the end of 2008, mining equipment was demobilized and the remaining shaft refurbishing work on the 13th level will be completed in early 2009. The number of people working at the property is now 23, down from an average of 115 in 2008, and this group will continue to perform a variety of activities related to permitting and development, while keeping the mine dewatered.
The new resource estimate was released in
The rocks that host the
2009 exploration spending at
Northgate Minerals Corporation is a mid-tier gold and copper producer with mining operations, development projects and exploration properties in
Forward-Looking Statements:
This news release contains certain "forward-looking statements" and "forward-looking information" 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, including any information as to the future activities of and developments related to the business activities of Northgate Minerals Corporation (Northgate) and its subsidiaries, the market position, and future financial or operating performance of Northgate, 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; impact of any hedging activities, including margin limits and margin calls; 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, success of exploration activities and permitting time lines; changes in national and local government legislation, taxation, controls, regulations and political or economic developments in any of the countries in which the corporation does or may carry out business in the future; risks of sovereign investment; the speculative nature of gold exploration, development and mining, including the risks of obtaining necessary licenses and permits; dilution; competition; loss of key employees; additional funding requirements; and defective title to mineral claims or property. In addition, there are risks and hazards associated with the business of gold exploration, development and mining, including environmental hazards, industrial accidents, unusual or unexpected formations, pressures, cave-ins, flooding and gold bullion losses (and the risk of inadequate insurance or inability to obtain insurance, to cover these risks), as well as the factors described or referred to in the section entitled "Risk Factors" in Northgate's Annual Information Form for the year ended
SOURCE Northgate Minerals Corporation