Investment Comment Northgate’s cash could help Westfield

With around $200 million in hand from the sale of its mining arm to Australia-based Western ining Corp., Northgate Exploration is well positioned to acquire some new gold properties.

The Toronto outfit is also equipped to advance the cause of key subsidiaries like Westfield Minerals, says Canarim Investment Corp. in recent research report.

As a 48%-owned Northgate subsidiary, Westfield is a junior exploration company with a portfolio of shares in affiliated companies worth about $45 million or $3 a share, writes analyst Stephen Deneniuk.

“Few junior mining companies provide such a wide range of geographically dispersed exploration possibilities,” he says.

Assets include a 35% interest in the Choquelimpie gold/silver deposit in northern Chile where joint venture partners Shell Chile (42%) and Citibank (23%) are spending $40 million(us) to develop the property.

Located 15,200 ft above sea level in Parinacota (near the Bolivian border), the heap leach mine is scheduled to churn out 50,000 oz of gold equivalent annually, starting this summer. Output is expected to increase to around 100,000 oz within three years.

Known reserves on the property stand at seven million tons grading 0.065 oz gold and 2.5 oz silver per ton. With a planned mining rate of 1.1 million tons annually, oxidized reserves are sufficient for a 6-year operation. Sulphide reserves

An additional five million tons of sulphide reserves of similar grade promise a longer mine life.

Westfield has an indirect interest in more than 40 Nevada properties through a 25% interest in the wx Syndicate. Whim Creek Consolidated (25%) and Ennex International (50%) are the other syndicate partners.

Based in Australia, Whim Creek produced 38,000 oz gold in 1986, while Ennex is involved in gold exploration in Ireland.

Key assets are a 43% Syndicate interest in the Little Bald Mountain heap leach operation which produced 4,300 oz gold in 1986. It is expected to produce 8,000 oz this year.

The Syndicate also holds 51% of the Gator prospect, 10 miles farther south of Little Bald Mountain where reserves stand at 560,000 tons grading 0.05 oz gold.

In Canada, Westfield holds a 5% property interest in the 19-claim West Magnacon property with Muscocho Explorations (25%), Flanagan McAdam Resources (50%) and Windarra Minerals (25%).

Located north of Mishibishu Lake, the property contains proven and probable reserves of 443,913 tons in the Main zone grading 0.4 oz. As reported (N.M., Nov 23/87), this is based on a high cutoff grade of 0.2 oz. Cutoff grade

By lowering the cutoff grade to 0.1 oz, the reserves rise to 1.1 million tons grading 0.24 oz, with the majority of reserves lying above 500 ft.

Assuming a 300-ton-per-day operation (mill tune-up is expected later this year), Semeniuk says the pre-tax value of a 5% gross royalty to Westfield should be $4 million.

The company also retains a 50% interest in the 40-claim East Magnacon property with Windarra (50%), which overlies the eastern extension of the Magnacon shear zone.

At least $2 a share in value can be seen in just two individual projects — Choquelimpie ($1.50) and Mishubishu Lake (50 cents ),” Semeniuk predicts.

He says the shares should react as drilling is resumed on the company’s polymetallic discovery at Big Island Lake, near Flin Flon, Man. Westfield is involved there in a joint venture with Goldbrae Developments. By spending $1.28 million by the end of 1992, Westfield can earn a 70% interest in the property.

“While our preference is to buy for long-term gain, investors should note the volatility which the shares have exhibited,” says Semeniuk. They were trading recently on the Toronto Stock Exchange at $2.10 in a 52-week range of $4.85 and $1.75.