Young-Davidson returns long, strong intercepts for Northgate

Vancouver – After a preliminary economic assessment found its Young-Davidson gold project in Ontario just economic, Northgate Minerals (NGX-T, NGX-X) released a set of drill results from the project sure to grow the resource with long high-grade intercepts.

Northgate drilled 33,000 metres in the first half of 2008 at Young-Davidson, which is near the town of Matachewan in northern Ontario. The drilling effort resulted in two key conclusions. First, drilling results show that the four previously established resource zones are one near-continuous gold zone of overlapping lenses. Second, drilling near the historic Young-Davidson workings uncovered a new area of mineralization.

Several holes drilled into the main resource area confirmed the horizontal and vertical continuity, grade, and thickness of the deposit. Hole 75, directed through the centre of the Upper Boundary zone, returned 4.17 grams gold per tonne over 123.5 metres. Similarly, hole 75A cut 350 metres of 4.12 grams gold (both are down-dip distances, not true widths). Both holes cut through a high-grade hangingwall zone: hole 75 included 71.7 metres of 3 grams gold and hole 75A hit 50 metres of 2.55 grams gold.

Hole 62, also directed through the centre of the Upper Boundary zone, returned 3.8 grams gold over 56.6 metres true width. The results from these three holes increase Northgate’s confidence in its resource estimate, even suggesting the grade shell is conservative.

Six of seven holes drilled from the new underground ramp indicate that the zone is thicker than previously thought. Hole 50 cut 6.4 grams gold over 21.9 metres from the lower part of Upper Boundary, hole 16 returned 5.96 grams gold over 46.6 metres from the middle of the zone, and hole 12 cored 3.93 grams gold over 31.4 metres from near the top of the zone.

Testing the western extent of the Lower Boundary zone, hole 56A cut a wide intersection of 130 metres grading 3.11 grams gold (94 metres true thickness) that will expand the resource to the west. Nearby, hole 78 cored 28.1 metres of 7.9 grams gold. Testing the eastern extent of the zone, hole 67 cut 7.4 metres of 5.23 grams gold; nearby hole 57 returned 4.44 grams gold over 19.2 metres.

In the Lucky zone, hole 58 returned 4.3 grams gold over 11.3 metres and hole 71 cut 10.62 grams gold over 5.3 metres. Both were drilled to convert inferred resources to the indicated category.

And in a new area of mineralization near the old workings, five drill holes returned intercepts above the 2.3 grams gold cut-off grade. The best hit came from hole 68, which returned 11.54 grams gold over 6.9 metres.

In addition, the company drove a crosscut into the upper portion of the Upper Boundary zone to collect a bulk sample for metallurgical testing. The testwork showed that the material is amenable to low-cost autogenous grinding (that is, grinding that does not require steel balls).

News of the drill results boosted Northgate’s share price by as much as 18 in mid-day trading but it settled before day’s end to close up 9 at $2.70. The company has a 52-week trading range of $2.45 to $3.55 and has 255.4 million shares issued.

In late June a preliminary economic assessment set capital costs for developing the combined open pit and underground operation at US$306. The mine would produce 158,000 oz. gold annually at a cash cost of US$405 per oz., based on a gold price of US$625 per oz. Over a 12-year mine life the operation would produce 1.75 million oz. gold.

Young-Davidson carries a net present value of US$18.3 million after tax and a 0.8% internal rate of return. The open pit resource currently stands at 4.3 million indicated tonnes grading 2 grams gold and 42,000 inferred tones grading 2.11 grams gold. The underground deposit hosts 11.5 million indicated tones averaging 3.79 grams gold and 4 million inferred tones grading 3.35 grams gold.

Northgate also operates the Kemess South copper-gold mine in British Columbia as well as two newly acquired miens in Australia.