Northgate sees record third quarter

Vancouver – Buoyant gold and copper prices have given Northgate Minerals (NGX-T) record quarterly income of US$10 million or 5 per share.

The company’s Kemess mine, in north-central British Columbia, delivered 79,311 ounces of gold and 18.7 million pounds of copper in the third quarter of 2004, compared to 84,132 ounces gold and 17.3 million pounds copper in the corresponding quarter of 2003.

Net cash cost of bullion production was US$129 per ounce over the quarter, significantly improved over the US$201 an ounce in Q3-2003. Production at Kemess is on track for its annual target of 300,000 ounces gold and over 75 million pounds of copper.

A lower stripping ratio, improved recoveries and increased mill throughput have all added to Northgate’s bottom line as operating efficiencies continue to be fine-tuned at Kemess.

The company’s drill program in and around the Kemess South pit has resulted in further conversion of resource material into reserves. About 11.8 million tonnes of ore grading 0.414 grams gold per tonne and 0.147% copper have been added to reserves and the pit had been redesigned.Northgate has completed its feasibility study on the Kemess North project, located about 6 km north of the Kemess South mine, showing positive economics.

The study outlines development of Kemess North potentially commencing in late-2006, with 13 years of production. Ore would initially be blended with that from the present Kemess South operation until its reserves are exhausted in 2012. Plans call for Kemess North ore to be crushed onsite at the North pit then transported by an 8.8 km conveyor to the Kemess South mill. A longer period of simultaneous operation of both mines, where North ore is blended with lower-grade South material, will result in about 25 million tonnes of South resource to be upgraded to ore due to lower unit cost economics.

The report tables an initial US$190 capital investment million for the mine, US$30 million more than outlined in the pre-feasibility study completed earlier this year. A proposed increase in milling capacity from 86,000 to 96,000 tonnes per day is primarily responsible for the increased capital requirement.

Average cash costs are estimated at US$180 per ounce during the 2007-2019 projected lifespan of Kemess North. Once Kemess South is depleted, cash costs drop to about US$110 per ounce when high-grade ore from the core zone of Kemess North is reached. About 2.6 million ounces of gold and 1.3 billion pounds of copper are projected to be produced from Kemess North where proven mineable reserves are 282 million tonnes grading 0.306 grams gold and 0.159% copper have been outlined. There are additional probable reserves of 132 million tonnes at 0.31 grams gold and 0.16% copper.

Northgate is now focused on its permitting process and financing options for development of the new Kemess mine. One option being reviewed by the company includes selling an interest in the project to an Asian group along with a concentrate supply or off-take agreement.