Northgate plans first gold pour in Q1 2012 at Young-Davidson

Northgate Minerals (NGX-T, NXG-X) will pour its first gold at its 100%-owned Young-Davidson mine late in the first quarter of 2012.

The mine, just outside the town of Matachewan in Ontario, about 60 km west of Kirkland Lake in the Abitibi greenstone belt, will produce an average of 180,000 ounces of gold a year over the course of its initial 15-year mine life.

The Young-Davidson property sits on the site of two past producing mines, which produced about one million ounces of gold between the mid 1930s and the mid 1950s. All of the existing underground workings are in excellent condition.

The first leg of production will come from a small open pit with production in the range of 84,000-90,000 ounces of gold in 2012 and 134,000-140,000 ounces in 2013.

Once underground development is complete, production is expected to ramp up to about 175,000 ounces of gold in 2014 and 220,000 ounces in 2015.

The approximate life-of-mine cash cost is estimated to be US$400 per oz., partly due to the competent nature of the host rock, which allows low-cost bulk mining techniques, the company says.

Currently Young-Davidson has proven and probable reserves of more than 2.8 million ounces of gold.

The project remains on schedule and at the end of March, 80% of the contracts (worth about US$170 million) had been awarded, with 90% of the equipment purchase orders placed and 66% of the engineering completed.

So far Northgate has spent about US$130 million on construction and says it will spend another US$250 million over the next year using existing funds.

During the first quarter, the ramp was extended 290 metres to a length of 4,200 metres. The vertical depth is about 680 metres and will be completed to a depth of 1,500 metres over the next 30 months.

Northgate has commissioned the new hoist and has started sinking operations of the existing shaft, which will extend to a depth of 1,500 metres.

Surface facilities will consist of a modern 6,000-tonne per day process plant.

The current estimate of the total capital cost of the project is $377.1 million.

Electric power will come from upgrading about 47 km of an existing 115 kilovolt power line and installing 7 km of a new 115 kV line and a mine site transformer station.

Meanwhile, Northgate is trying to add resources and has drilled 5,332 metres so far this year in the YD West zone. The YD West zone was discovered when hole YD10-198 intersected 3.46 grams gold per tonne over 79.5 metres. Highlights from 2011 drilling include 10.95 metres of 5.43 grams gold per tonne in hole YD10-198B, which was about 115 metres below the discovery hole.

If the 2011 drilling program is successful, Northgate expects to put out an initial resource estimate for the YD West zone before the end of the year.

At presstime in Toronto Northgate was trading at $2.71 per share. Over the last year it has traded between a low of $2.42 per share (Jan. 25 2011) and a high of $3.62 per share (Sept. 2010). It has about 291.9 million shares outstanding.