Northgate making Young-Davidson mine a reality

Progress at one of Ontario’s most exciting gold deposits continues unabated as Northgate Minerals (NGX-T, NXG-X) drives its Young-Davidson mine into production.

Northgate has already put $170 million into construction at the mine, which is located near the town of Matachewan, Ont.

Its efforts have unfolded on-schedule, and on-budget. The company reports that nearly all construction contracts have been awarded and almost all equipment purchase orders have been placed. The bulk of engineering has also been completed.

A mid-shaft crushing and loading facility was one significant addition to the original mine plan in the feasibility study.

Recent optimization studies prompted the change, after determinations that the shaft could provide access to higher grade
underground ore one year earlier than planned.

Northgate says the mid-shaft facility should operate by the first quarter of 2013. The facility is expected to increase sustaining capital in 2014 and 2015 by $25 million.

But while construction at the site pushes ahead, Northgate hasn’t lost track of the property’s exploration potential.

Exploration potential was highlighted by recent drill hole results released in early June. A hole was drilled in what the company calls the West zone, returning 4.31 grams gold over 80 metres.

More ounces could find their way into a future resource update if an upcoming drill program east of the known deposit is successful. Drill testing at this deposit was assigned to the final week of June.

Young-Davidson has proven and probable reserves of 32.4 million tonnes, with grades between 1.6 and 3.2 grams gold for 2.8 million total oz. gold. Gold will be mined using open-pit and underground methods.

A 115-kV electrical-power transmission line from Kirkland Lake to the Matachewan junction brings more good news. Completion of the transmission line is expected ahead of schedule, before September 2011.

Northgate also reports that its new mill facility will be enclosed by early July. That milestone allows processing equipment to be installed. Most of the equipment has already arrived on-site.

In Toronto on June 24 – the day Northgate released its update – shares were off 2¢ to $2.56, on 291,000 shares traded. Share prices have ranged between $2.42 and $3.62 over the last 52 weeks.