Colomac, Choquelimpie cost affects Northgate earnings

The high cost of reorganizing its corporate structure and bringing the Colomac gold project into production was reflected recently in Northgate Exploration’s second- quarter results. The Toronto-based company reported a net loss of $2.7 million or 13 cents per share on revenues of $5.5 million for the three months ended June 30, compared with net income of $880,000 or 3 cents per share on revenues of $4.9 million in the same period last year.

Unaudited net income for the six months ended June 30 dropped to $547,000 or 2 cents per share from $7.8 million or 35 cents per share in the first half of 1989.

However, Northgate said results for 1990 cannot be compared with those of 1989 because of the acquisition of a 35% in the Choquelimpie gold mine in Chile from Westfield Minerals (TSE) and startup costs associated with the Colomac mine in the Northwest Territories.

The Choquelimpie asset is credited for boosting Northgate’s share of gold production to 104,700 oz. in the first half of 1990 from 77,000 oz. last year.

Choquelimpie was also a major reason why Northgate’s first-half revenues climbed to $15.9 million from $8.9 million in the equivalent 1989 period. Northgate’s share of first-half production in Chile was 17,300 oz.

Having spent $166 million to construct the Colomac mine, Northgate’s 50% owned affiliate NorthWest Gold (AMEX) says it requires additional financing for working capital and capital spending purposes.

Slated to produce 200,000 oz. annually, Colomac is expected to reach its 10,000-ton-per-day design capacity by the fourth quarter of this year. NorthWest had a second- quarter net loss of $923,000 or 3 cents per share on revenues of $717,000 compared with net income of $1 million or 7 cents per share on revenues of $2.4 millon at the same time last year.

In the first half of 1990, NorthWest reported a net loss of $1.4 million or 4 cents per share compared with net income of $2.6 million or 17 cents per share in 1989. First-half revenues dropped to $1.9 million from $4.4 million last year.

Meanwhile NorthWest’s 42% owned affiliate Sonora Gold (TSE) reported that its second-quarter results were unchanged from last year. The company had a net loss of $1.1 million or 5 cents per share during the three months ended June 30.

Sonora’s second-quarter revenues dropped sightly to $8.6 million from $10.8 million.

The company reported a first- half net loss of $1.9 million or 9 cents per share on revenues of $17.9 million compared with net income of $550,000 or 3 cents per share on revenues of $21.2 million during the same period last year.

Sonora’s 70% owned Jamestown mine in California produced 55,000 oz. gold at a cost of US$295 per oz. in the first half of 1990, down from 60,100 oz. at US$250 per oz. in the equivalent 1989 period. The drop in production was due to the lower grade of ore mined from Jamestown’s Harvard pit, Sonora said. Northgate Exploration (TSE) $000s except per-share items 3 months ended June 30 1990 1989 Revenue $5,523 $4,982 Net earnings (loss) (2,763 ) 880

Per share (0.13 ) 0.0304NorthWest Gold (AMEX) $000s except per-share items 3 months ended June 30 1990 1989 Revenue $717 $2,484 Net earnings (loss) (923 ) 1,051

Per share (0.03 ) 0.0704Sonora Gold (TSE) $000s except per-share items 3 months ended June 30 1990 1989 Revenue $8,594 $10,819 Net earnings (loss) (1,090 ) (1,111)

Per share (0.05 ) (0.05)