Vancouver — Lower production resulting from a high stripping ratio at the Kemess mine in north-central British Columbia contributed to a first-quarter loss for
The company lost US$4.4 million (or US2 per share) during the period on revenue of US$26.4 million, compared with a loss of US$3.5 million (US16 per share) on revenue of US$25.5 million in the first three months of 2002.
The Kemess mine produced 62,000 oz. gold and 17.1 million lbs. copper, compared with year-earlier output of 68,193 oz. and 18.5 million lbs. Cash costs per ounce of gold rang in at US$255, or US$57 higher — a consequence of the higher stripping ratio and lower gold production, as well as a stronger Canadian dollar.
Northgate says metal production dropped as a result of lower head grades mined from the eastern section of the pit — part of the planned mining sequence that will continue until the end of the second quarter. Then, for the balance of the year, the mill is expected to process significantly higher-grade ore.
Cash flow from operations, before changes in working capital, amounted to US$4 million in the first quarter (or US2 per fully diluted common share), which is 11% higher than a year earlier.
The average metal prices received on sales were US$352 per oz. gold and US75 per lb. copper, compared with US$291 and US71 per lb. in the first quarter of 2002.
“We’re pleased with the consistency at our operations, as evidenced by the results during the first quarter and over the past year, and are still on schedule to produce a total of approximately 290,000 ounces of gold and more than 75 million pounds of copper during 2003 as ore grades return to average over the balance of the year,” says Northgate President Ken Stowe. “Improving our cash cost per ounce remains a focus, and this should be helped by the higher ore grade scheduled for the second half and by a recovery in the copper market that is anticipated over the balance of the year.”
The company’s net interest expenses totalled US$952,000 during the quarter, down from US$1.6 million a year earlier. The improvement is attributed to the reduction of Northgate’s long-term debt following an equity financing in June 2002.
Capital expenses between the two first quarters fell to US$1.38 million from US$4.4 million.
From the Kemess South pit, Northgate mined a record 13 million tonnes (144,800 tonnes per day), thanks to greater availability of haulage trucks.
The mill was available 90% of the time and processed an average of 49,500 tonnes of ore per day, or 5% more than a year earlier. Metallurgical recoveries were 72% for gold and 84% for copper, respectively. Further improvements are expected as a result of the integration of an expert computer system in the grinding circuit.
Meanwhile, at the Kemess North project, engineering work continues with a prefeasibility study anticipated by mid-year.
“The Kemess North prefeasibility study is well under way and should be completed by the end of June,” says Stowe. “We are also looking forward to another promising field season of drilling in the Kemess camp and surrounding area, including an exciting start to our involvement at the Hyland Gold property.”
This year, the company will launch a US$1.7-million, 14,500-metre program of exploration drilling. The work will focus on the Kemess South mine, with smaller programs planned for the Brenda and Croy properties, which are 28 km north and 73 km south, respectively, of the mine.
A 20-hole, 10,000-metre program of diamond drilling is to start on claims immediately surrounding the Kemess South mine. Targets include the Nugget zone and Kemess Centre.
Meanwhile, as part of a plan to explore the broader Toodoggone region of British Columbia, Northgate will drill at least three holes at the Brenda property and 3-4 holes at the Croy property. The latter was identified and staked by Northgate in 2002 on the basis of the airborne geophysics.
Earlier this year, Northgate entered into an option agreement with StrataGold, a subsidiary of
Beginning in June, the company plans to test two targets with a 12-hole, 2,000-metre program. The first target will be the Main zone, a large aeromagnetic anomaly that hosts a 3.2-km-long zone of anomalous geochemistry.
Previous shallow drilling and trenching intersected gold mineralization ranging from 1 to 5 grams gold per tonne over widths of 10-40 metres. The second target, 4 km to the south, is a geochemical anomaly that measures 500 by 500 metres.
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