Resource boost at Kemess

Vancouver — Northgate Exploration (NGX-T) has expanded the mineralized inventory at its Kemess North deposit in north-central British Columbia.

Kemess North is 5.5 km north of the South pit, which is currently being mined. A 12-hole, 4,100-metre program of diamond drilling resulted in the discovery of a copper-gold porphyry dome, expanding the original Kemess North resource to 360 million tonnes grading 0.154% copper and 0.3 gram gold per tonne. Previous estimates, calculated in 1998, pegged the deposit at 74 million tonnes grading 0.18% copper and 0.34 gram gold.

“We are focused on adding reserves and mine life to current operations,” says Northgate CEO Terry Lyons. “Last year’s drill program was our first opportunity to evaluate our considerable property holdings in the area [estimated at 77,000 acres]; at the same time, we increased our understanding of the mineral potential at Kemess North.”

Lyons says Northgate will carry out additional drilling, as well as metallurgical studies and a scoping study. The cost of developing Kemess North, including infrastructure, will be relatively low, owing to the deposit’s proximity to existing operations at Kemess South.

Six of the 12 holes drilled in the recent program intersected the copper-gold porphyry dome. The weighted average grades of mineralization from these holes is 0.23% copper, plus 0.38 gram gold per tonne. Highlights from these holes are outlined below:

– Hole 5 was collared about 25 metres east of the previously defined resource and intersected 217.29 metres grading 0.25% copper and 0.39 gram gold, starting at a down-hole depth of 182 metres.

– Hole 8, collared 100 metres southeast of hole 5, cut 217.15 metres averaging 0.22% copper and 0.36 gram gold, starting at 237 metres down-hole.

– Hole 9, collared 100 metres north of hole 5, intersected 81.72 metres grading 0.26% copper and 0.38 gram gold at 306.90 metres down-hole.

– Hole 11, collared 200 metres east of hole 5, intersected 191.50 metres grading 0.23% copper and 0.28 gram gold, starting at 303 metres down-hole.

– Hole 12, collared 100 metres northeast of hole 5, cut 296.02 metres grading 0.27% copper and 0.45 gram gold starting at 213 metres down-hole.

The drill results indicate that the average grades of the dome increase at depth and that the system remains open both at depth and to the east. The remaining six holes were drilled along the southern margin of the previously defined resource.

10-hole program

This year, Northgate has budgeted a $500,000, 10-hole drill program to delineate Kemess North. Beginning in May, drilling will test along strike and to depth at the newly discovered porphyry system, focusing on the northeastern section of the dome.

Northgate acquired a direct 95% interest in the Kemess mine at the end of 2000. The operation is expected to produce an average of 280,000 oz. gold and 55 million lbs. copper per year over a mine life of nine years. At year-end, the South pit had proven reserves of 146 million tonnes grading 0.23% copper and 0.65 gram gold.

For the nine months ended Sept. 30, 2000, Northgate recorded a consolidated net loss of $17.2 million (or 57 per share), compared with net income of $2.1 million (7 per share) in the corresponding period of 1999. The loss reflects the interest costs relating to the US$145-million bridge loan facility that the company incurred in order to acquire a 95% convertible royalty interest in the Kemess mine, combined with an unrealized foreign exchange loss on the company’s U.S.-dollar-denominated debt.

Mill throughput in the third quarter averaged 43,136 tonnes per day, 18% higher than in the previous quarter, thanks to improved mill availability and productivity. Northgate says the mill is now positioned to meet its operating target of 48,000 tonnes per day.

Gold production in the third quarter was 59,367 oz., an increase of 3% over the previous 3-month period; meanwhile, copper production rose 42% to 15.6 million lbs.; gold recoveries improved 10% to 67.9%; and copper recoveries improved to 78.8%. Cash operating costs in the third quarter averaged US$231 gold per oz. (net of copper byproduct credits).

Third-quarter operating cash flow reached $7.7 million, compared with $2.3 million in the second quarter and a deficit of $2.9 million in the first quarter. Capital expenditures, including leases during the third quarter, were $20 million, compared with $12.7 million during the first six months of the year.

Results of last year’s drill program at the Kemess North deposit are shown in the accompanying table. The results highlight drill-hole length and average grade.