Northgate sill positioned to pursue acquisition tack

With $178.6 million in cash and investments worth $125.9 million Northgate Exploration (TSE) remains in a strong position to pursue its acquisition strategy.

The Toronto company recently reported unaudited net income of $2.2 million or 10 per share for the nine months ended Sept 30 compared to consolidated net income of $1.35 million or 8 per share at the same time last year.

Results for 1987 include an extraordinary tax recovery of $1.1 million or 7 per share from the application of the previous year’s losses.

Due to the sale of its Chibougamau, Que., gold-copper mines to Western Mining Co. of Australia in late 1987, revenues reported during the first nine months of 1988 decreased to $14.4 million from $40.7 million at the same time last year. Current revenues consist largely of interest earned on short term investments.

The Chibougamau mines sale also cut Northgate’s third-quarter net income considerably to $216,000 or 1 per share from $2.5 million or 13 per share at the same time last year. Third quarter revenues also dropped to $5.1 million from $13.6 million in the first three months of 1987.

Northgate recently agreed to acquire 3.2 million Neptune Resources (TSE) shares for $8 million. As part of the transaction, Northgate agreed to purchase a 35% interest in Neptune affiliate Gold Reserve Corp. for $5 million. Neptune will use the proceeds to bring its Colomac gold project into production.

Under the agreement, Northgate has the option to increase its stake in Gold Reserve, which has a 28% interest in Neptune, to 60%. Gold production attributable to Northgate’s associate companies is expected to reach 150,000 oz this year.