�(All figures
in US dollars except where noted) - Northgate
Minerals Corporation ("Northgate"
or the "Corporation") (TSX: NGX) (NYSE Amex: NXG) today
announced its financial and operating results for the three months ended March
31, 2011 in accordance with the newly adopted International Financial
Reporting Standards ("IFRS").
First Quarter Highlights
- The net profit was $19.8 million
or $0.07 per share.
- The adjusted net profit(1) was $7.5
million or $0.02 per share.
- Strong cash flow from operations of $40.1
million or $0.14 per share.
- First quarter production was 51,210 ounces of
gold and 6.5 million pounds of copper at an average net cash cost of $699
per ounce.
- Production guidance for 2011
remains unchanged: 195,000 ounces - 205,000 ounces at a cash cost of $805
- $845 per ounce.
- First quarter metal sales were 56,937 ounces of
gold at a realized price of $1,386 per ounce and
9.0 million pounds of copper at a realized price of $2.77
per pound.
- Northgate's cash balance at the end of the
first quarter 2011 was $308.1 million.
- Construction activities at Young-Davidson
remain on schedule and on budget. At the end of the first quarter
2011, Northgate had invested approximately $130 million
towards construction of the Young-Davidson
mine.
- Subsequent to the end of the first quarter,
Northgate entered into a Cdn$40 million three-year senior
secured revolving credit facility with BNP Paribas.
"First quarter production was highlighted by an
excellent performance at Kemess South, as the mine
wrapped up with higher gold and copper production than forecast"
commented Ken Stowe, President and CEO. "While
production at our Australian mines came in lower than plan, we are pleased to
report that our guidance remains the same for the year as both mines are
forecasting higher production for the balance of 2011. On the development
front, we are excited with the excellent progress being made at Young-Davidson,
as the project remains on schedule and on budget.."
"As the Kemess South
mine came to a close in March, I would like to take this opportunity to thank
our dedicated workforce that has been a part of the Northgate-Kemess family since taking ownership of the mine in 2000.
The work and commitment of our workforce have been exemplary, transforming
the mine into a world-class asset, with production close to 3 million
ounces of gold and 700 million pounds of copper. We now look forward to the
rebirth of Kemess, having recently released an
updated resource estimate for the Kemess
Underground project and are expecting to complete a Preliminary Assessment by
the summer."
Financial Performance
Northgate recorded consolidated revenue of $123.0
million in the first quarter of 2011, compared with revenue of $125.3 million
recorded in the same period last year. Revenues were strong in the first
quarter as a result of higher metal prices.
The adjusted net profit for the first quarter of
2011 was $7.5 million or $0.02 per share,
compared with $6.3 million or $0.02 per
share in the first quarter of 2010. The net profit for the first quarter of
2011 was $19.8 million or $0.07 per share,
compared with $3.9 million or $0.01 per share
in the first quarter of 2010.
Northgate generated excellent cash flow from
operations of $40.1 million or $0.14 per
share in the first quarter of 2011. The Corporation continues to maintain a
strong balance sheet, with cash and cash equivalents totalling
$308.1 million as of March 31, 2011.
Corporate Revolver
Subsequent to the end of the first quarter 2011,
Northgate entered into a Cdn$40 million, three-year senior
secured revolving credit facility (the "Revolver") with BNP
Paribas. While Northgate does not forecast the need to draw down any
funds, the Revolver provides additional financial capacity, if necessary, for
the construction of the Young-Davidson
mine.
Adoption of International Financial Reporting
Standards ("IFRS")
In February 2008, the Accounting
Standards Board confirmed that publicly-accountable entities will be
required to prepare financial statements in accordance with IFRS for interim
and annual financial statements for fiscal years beginning on or after January
1, 2011. Accordingly, Northgate has adopted IFRS effective January
1, 2011, which is reflected in our unaudited condensed consolidated
interim financial statements for the first quarter ended March 31, 2011.
In addition, all comparative figures for the 2010 fiscal year, included in
our interim financial statements and related first quarter management's
discussion and analysis ("MD&A"), have been restated in
accordance with IFRS. Previously, Northgate prepared its consolidated annual
and consolidated interim financial statements in accordance with Canadian
generally accepted accounting principles ("Canadian GAAP").
Details of the significant accounting differences
between IFRS and Canadian GAAP can be found in Northgate's first quarter
MD&A and note 16 of our interim financial statements.
Results from Operations
Fosterville Gold Mine
Fosterville
achieved production of 20,632 ounces of gold in the first quarter of 2011.
Early in the year, the mill was impacted by issues within the BIOX� circuit,
which affected production for the quarter. These issues have since been resolved
and there is no material impact to the mine's annual production forecast..
Production is back on track, highlighted by a monthly record of just over
11,000 ounces in March. We are pleased to announce that Fosterville
produced its half-millionth ounce of gold on the property in April.
During the quarter, mine development continued to
progress well and was in line with forecast. A total of 188,906 tonnes of ore was mined and mine development advanced
2,203 m. Development towards the new Harrier zone also continued to
progress well and production is on track to commence in the second half of
2011.
During the quarter, 161,064 tonnes
of ore was milled at a grade of 4.96 grams per tonne
("g/t"), compared with the 191,663 tonnes
milled at a grade of 5.11 g/t in the corresponding quarter of 2010.
The average net cash cost of production for the
first quarter of 2011 was $1,012 per ounce, which was
adversely effected by the dramatic increase in the Australian dollar relative
to the US dollar and, to a lesser extent, by lower gold production. In the
most recent quarter, the Australian dollar averaged 11% higher compared to
the corresponding period last year. For the balance of 2011, cash costs in
Australian dollars are expected to decrease relative to the first quarter and
the annual forecast remains consistent with the original guidance provided.
Stawell
Gold Mine
During the first quarter, the Stawell
mine produced 16,006 ounces of gold, as a result of lower head grades mined.
In the second quarter of 2011, production is expected to rise as grades
improve and the annual production forecast remains unchanged.
During the quarter, a total of 197,317 tonnes of ore was mined and mine development advanced
1,493 m. Also during the quarter, 211,349 tonnes
of ore was milled at an average grade of 2.85 g/t. Although mill
production was higher than plan, the processing of higher carbonaceous and
low-grade ore resulted in lower-head grades, which impacted gold recoveries
and production during the quarter.
Total operating costs were lower during the first
quarter at A$76 per tonne of ore
milled. Mining costs were A$50 per tonne
of ore mined.
During the first quarter of 2011, the average net
cash cost of production was $1,010 per ounce, resulting from
the dramatic increase in the Australian dollar relative to the US dollar and
lower gold production. For the balance of 2011, cash costs in
Australian dollars are expected to decrease relative to the first quarter and
the annual forecast remains consistent with the original guidance provided.
Kemess
South
During the first quarter, Kemess South posted
strong production of 14,572 ounces of gold and 6.5 million pounds of copper.
Quarterly production exceeded original guidance as a result of higher grades
and higher mill throughput. After processing all remaining stockpiles,
the mill ceased production in March. The net cash cost of production for the
first quarter was negative $85 per ounce of gold, as a result
of higher copper prices, which increased 33% from the same period last year.
During the quarter, approximately 0.3 million tonnes of ore and waste were removed from the eastern end
of the open pit. Unit mining costs were low at Cdn$0.92 per tonne moved.
2011 Production Forecast
Production for the full year 2011 remains unchanged from the original
forecast:
|
|
|
|
Total
(ounces)
|
Forecast
2011 Cash Cost ($/oz) 1
|
|
Fosterville
|
97,000
- 102,000
|
$885
- $930
|
Stawell
|
86,000
- 91,000
|
$800
- $850
|
Kemess (Actual)
|
14,572
|
($85)
|
|
195,000
- 205,000
|
$805
- $845
|
1 Assuming
exchange rates of US$/Cdn$1.00 and US$/A$1..00
for Q2 to Q4 2011.
Building Young-Davidson
Construction activities at Young-Davidson
remain on schedule and on budget. By the end of the first quarter 2011,
Northgate had invested approximately $130 million towards
construction of the Young-Davidson
mine. In addition, 80% of the contracts worth approximately $170
million were awarded, 90% of the equipment purchase orders were
placed and 66% of the engineering was completed.
Young-Davidson
is scheduled for commissioning activities in the fourth quarter of 2011 and
is targeting start-up of production in late Q1 2012. The mine is
expected to generate an average of 180,000 ounces of gold annually over an
initial 15-year mine life.
Exploration Overview
Young-Davidson
Exploration at Young-Davidson
in the first quarter was part of a $2.0 m drill program
to explore for other deposits outside of the known reserves and resources
currently being developed. Two drills totaling 5,000 m operated during the
quarter focusing on the YD West zone. Hole YD10-198B (see press release dated
April 13, 2011), located approximately 115 m below discovery
hole 198, returned 5.43 g/t gold over 10.95 m. Drilling for the balance of
2011 will continue to focus on the YD West zone with the intent of
delineating additional resources. If the 2011 drilling program is
successful, it is expected that an initial mineral resource estimate for the
YD West zone will be completed by the end of the year.
In addition to this exploration program, underground
delineation drilling in support of future underground mining activities began
in late 2010 and is currently focusing on a sector of the Upper Boundary
Zone. This portion of the program is nearly complete and will be
reported upon during the second quarter of 2011 once all results have been
received.. It is expected that the results of this program will be
incorporated into the annual reserve and resource re-estimate at the end of
2011.
Kemess
Underground
During the quarter, Northgate released an updated resource estimate for its Kemess Underground project, located five kilometres north of the Kemess
South mine in north-central British
Columbia. The updated resource estimate followed on the completion
of a 30-hole infill diamond drill program at Kemess
Underground that was completed in 2010. The updated resource estimate
now contains an indicated resource of 136.5 million tonnes
with 2.6 million ounces of gold and 860.6 million pounds of copper.
This represents 18% increase in tonnes, a 10%
increase in contained gold and a 9% increase in contained copper when
compared with the May 2010 total.
The mineral resource estimate will form the basis of
a Preliminary Assessment, which will outline the economics and timeline for
mining the current resources. Northgate expects to file the Preliminary
Assessment in the third quarter of 2011.
Australia
At Stawell, drilling focused mainly on
three target areas on or immediately adjacent to the current mining
lease. Two of these areas, the Northgate Gift and Wonga Dome, were
discovered by diamond drilling during our "Big Fish" exploration
campaign in 2010. The third target area is GG6L, located below GG6,
where there is potential to add to high-grade reserves.
During the quarter, approximately 8,800 m of
drilling was completed. Within the Northgate Gift, a wedge hole intersected a
target zone located 240 m above and south of the initial discovery hole,
which suggests a continuous mineralized horizon. Follow-up drilling, which
will take all of 2011 to complete, will better define the size and geometry
of the zone and associated mineralization
Within the Wonga Dome, subsequent drilling has intersected
lower sections of the basalt dome, where it is flanked by coarser grained
sediments less favourable for gold mineralization.
The next few holes are designed to intersect the basalt dome at a similar
elevation and geologic setting as discovery hole 649 (13.7 g/t over 5.45 m -
see press release dated November 1, 2010), at which point
Northgate will evaluate whether mineralization in the area is sufficiently
robust to support driving across to the zone to complete resource definition
drilling.
Exploration activity at Fosterville,
which had been scheduled for the first quarter, was deferred until the second
quarter and commenced in April.. Exploration expenditures are forecast
to be $3.8 million for approximately 18,000 m of diamond
drilling, mainly focusing on resource conversion targets below and along
trend from the currently mined Phoenix
deposit.
Summarized Consolidated Results
(Thousands of US dollars, except where noted)
|
|
|
Q1 2011
|
Q1
2010
|
Financial
Data
|
|
|
|
|
Revenue
|
|
|
$ 123,027
|
$ 125,278
|
Adjusted net profit 1
|
|
|
7,476
|
6,291
|
Per
share (basic)
|
|
|
0.02
|
0.02
|
Net
profit
|
|
|
19,755
|
3,887
|
Per
share (basic)
|
|
|
0.07
|
0.01
|
Cash
flow from operations
|
|
|
40,109
|
12,052
|
Cash
and cash equivalents
|
|
|
308,088
|
230,306
|
Total
assets
|
|
|
$ 815,415
|
$ 713,710
|
Operating
Data
|
|
|
|
|
Gold
production (ounces)
|
|
|
|
|
Fosterville
|
|
|
20,632
|
26,421
|
Stawell
|
|
|
16,006
|
22,238
|
Kemess
|
|
|
14,572
|
24,703
|
Total
gold production
|
|
|
51,210
|
73,362
|
Gold
sales (ounces)
|
|
|
|
|
Fosterville
|
|
|
19,137
|
25,944
|
Stawell
|
|
|
16,470
|
21,411
|
Kemess
|
|
|
21,330
|
27,773
|
Total
gold sales
|
|
|
56,937
|
75,128
|
Realized gold price ($/ounce) 2
|
|
|
1,386
|
1,128
|
Net
cash cost ($/ounce) 3
|
|
|
|
|
Fosterville
|
|
|
1,012
|
679
|
Stawell
|
|
|
1,000
|
794
|
Kemess
|
|
|
(85)
|
502
|
Average net cash cost ($/ounce)
|
|
|
696
|
654
|
Copper
production (thousands pounds)
|
|
|
6,497
|
9,529
|
Copper
sales (thousands pounds)
|
|
|
8,998
|
11,145
|
Realized copper price
($/pound) 2
|
|
|
2.77
|
3.49
|
1
|
Adjusted net profit is a non-IFRS measure.
See section entitled "Non-IFRS Measures" in the Corporation's
interim MD&A Report.
|
2
|
Commencing in the fourth quarter of 2010, metal
pricing quotational period is three months after
the month of ship loading for copper and one month after the month of ship
loading for gold produced at Kemess South.
Previously, the metal pricing quotational period
was three months after the month of arrival ("MAMA") at the
receiving facility for copper and one MAMA for gold. Therefore, realized
prices reported will differ from the average quarterly reference prices,
since realized price calculations incorporate the actual settlement price
for prior period sales, as well as the forward price profiles of both
metals for unpriced sales at the end of the
quarter.
|
3
|
Net cash cost per ounce of production is a
non-IFRS measure. See section entitled "Non-IFRS Measures"
in the Corporation's interim MD&A Report.
|
Interim Condensed Consolidated Statements of
Financial Position
(Previously referred to as the Consolidated Balance Sheets)
|
|
|
|
|
March 31
|
|
December 31
|
|
January 1
|
|
Thousands of US dollars, unaudited
|
2011
|
|
2010
|
|
2010
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash
and cash equivalents
|
$ 308,088
|
|
$ 334,840
|
|
$ 253,544
|
|
Trade and other receivables, including derivatives
|
44,151
|
|
62,051
|
|
27,961
|
|
Income taxes receivable
|
-
|
|
2,236
|
|
-
|
|
Inventories
(note 3)
|
28,569
|
|
46,268
|
|
44,599
|
|
Prepaid expenses
|
3,915
|
|
2,367
|
|
2,566
|
|
Assets held for sale (note 4)
|
13,075
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
Total
Current Assets
|
397,798
|
|
447,762
|
|
328,670
|
|
|
|
|
|
|
|
|
Non-current Assets
|
|
|
|
|
|
|
Other assets
|
41,740
|
|
40,819
|
|
27,544
|
|
Deferred tax assets
|
21,898
|
|
13,014
|
|
20,113
|
|
Mineral property, plant and equipment
|
352,497
|
|
323,903
|
|
316,086
|
|
Investments (note 5)
|
1,482
|
|
36,519
|
|
38,001
|
|
|
|
|
|
|
|
|
Total
Non-current Assets
|
417,617
|
|
414,255
|
|
401,744
|
|
|
|
|
|
|
|
|
Total
Assets
|
$ 815,415
|
|
$ 862,017
|
|
$ 730,414
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' Equity
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
Accounts payable and accrued liabilities,
including derivatives
|
$ 73,458
|
|
$ 93,534
|
|
$ 51,717
|
|
Income taxes payable
|
3,873
|
|
-
|
|
29,395
|
|
Short-term loan (note 6)
|
-
|
|
40,161
|
|
41,515
|
|
Equipment
financing obligations
|
7,742
|
|
7,945
|
|
5,995
|
|
Provisions
(note 7)
|
26,880
|
|
38,359
|
|
31,717
|
|
|
|
|
|
|
|
|
Total
Current Liabilities
|
111,953
|
|
179,999
|
|
160,339
|
|
|
|
|
|
|
|
|
Non-current Liabilities
|
|
|
|
|
|
|
Equipment
financing obligations
|
13,011
|
|
10,763
|
|
4,656
|
|
Convertible
senior notes
|
132,594
|
|
131,235
|
|
-
|
|
Option component of convertible senior notes
|
36,787
|
|
47,414
|
|
-
|
|
Other long-term liabilities
|
378
|
|
379
|
|
3,619
|
|
Provisions
(note 7)
|
31,226
|
|
30,459
|
|
29,963
|
|
|
|
|
|
|
|
|
Total
Non-current Liabilities
|
213,996
|
|
220,250
|
|
38,238
|
|
|
|
|
|
|
|
|
Total
Liabilities
|
325,949
|
|
400,249
|
|
198,577
|
|
|
|
|
|
|
|
|
Shareholders' Equity
|
|
|
|
|
|
|
Common
shares
|
407,197
|
|
407,029
|
|
402,879
|
|
Contributed surplus
|
10,083
|
|
8,915
|
|
7,090
|
|
Accumulated other comprehensive income (loss)
|
29,621
|
|
23,014
|
|
(4,108)
|
|
Retained earnings
|
42,565
|
|
22,810
|
|
125,976
|
|
|
|
|
|
|
|
|
Total
Shareholders' Equity
|
489,466
|
|
461,768
|
|
531,837
|
|
|
|
|
|
|
|
|
Total Liabilities and Shareholders' Equity
|
$
815,415
|
|
$
862,017
|
|
$
730,414
|
|
Subsequent event (note 15)
The accompanying notes form an integral part of
these condensed consolidated interim financial statements.
Interim Condensed Consolidated Statements of
Comprehensive Income
|
|
|
|
Three Months
Ended March 31
|
Thousands of US dollars, except share and per
share amounts, unaudited
|
|
|
2011
|
|
2010
|
Revenue
|
|
|
$ 123,027
|
|
$ 125,278
|
Operating
expenses
|
|
|
|
|
|
Cost of sales (note 3)
|
|
|
110,095
|
|
116,102
|
Administrative and general
|
|
|
3,785
|
|
3,786
|
Exploration
|
|
|
4,901
|
|
4,127
|
Other expenses (note
11)
|
|
|
852
|
|
249
|
|
|
|
119,633
|
|
124,264
|
Profit
from operating activities
|
|
|
3,394
|
|
1,014
|
Financing income (expenses)
|
|
|
|
|
|
Interest income
|
|
|
1,659
|
|
932
|
Finance costs (note 10)
|
|
|
(753)
|
|
(744)
|
Currency translation gain
|
|
|
5,184
|
|
4,293
|
Fair value adjustment on option component
of convertible notes
|
|
|
10,627
|
|
-
|
Write-down of investments
|
|
|
-
|
|
(340)
|
|
|
|
16,717
|
|
4,141
|
Profit
before income taxes
|
|
|
20,111
|
|
5,155
|
Income tax expense
|
|
|
(356)
|
|
(1,268)
|
Net profit for the period
|
|
|
19,755
|
|
3,887
|
Other comprehensive income (loss)
|
|
|
|
|
|
Unrealized loss on available for sale
securities
|
|
(114)
|
|
(866)
|
Unrealized gain on translation of foreign
operations
|
|
|
1,787
|
|
4,965
|
Reclassification of impairment on available
for sale investments to profit or loss
|
|
-
|
|
340
|
Reclassification of realized loss on
available for sale investments to profit or loss
|
|
|
4,934
|
|
-
|
|
|
|
6,607
|
|
4,439
|
Comprehensive income
|
|
|
$ 26,362
|
|
$ 8,326
|
Earnings per share (note 12)
|
|
|
|
|
|
Basic
|
|
|
$ 0.07
|
|
$ 0.01
|
Diluted
|
|
|
$ 0.03
|
|
$ 0.01
|
Weighted average shares outstanding (note 12)
|
|
|
|
|
|
Basic
|
|
|
291,877,902
|
|
290,718,756
|
Diluted
|
|
|
334,617,292
|
|
292,005,260
|
The accompanying notes form an integral part of
these condensed consolidated interim financial statements.
|
|
|
|
|
|
|
Interim Condensed Consolidated Statements of Cash
Flows
|
|
|
|
|
|
Three Months
Ended March 31
|
|
|
Thousands of US dollars, unaudited
|
|
|
2011
|
|
2010
|
|
|
Operating
Activities
|
|
|
|
|
|
|
|
Net profit for the period
|
|
|
$ 19,755
|
|
$ 3,887
|
|
|
Adjustments for:
|
|
|
|
|
|
|
|
Depreciation and depletion
|
|
|
31,592
|
|
31,558
|
|
|
Unrealized currency
translation gains
|
|
|
(352)
|
|
(324)
|
|
|
Loss (gain) on disposal of assets
|
|
|
(394)
|
|
333
|
|
|
Stock-based compensation
|
|
|
1,225
|
|
1,386
|
|
|
Accrual of employee severance costs
|
|
|
995
|
|
438
|
|
|
Interest income
|
|
|
(1,659)
|
|
(932)
|
|
|
Finance costs
|
|
|
753
|
|
744
|
|
|
Income tax expense
|
|
|
356
|
|
1,268
|
|
|
Income tax credited to exploration expense
|
|
|
(97)
|
|
-
|
|
|
Change in fair value of forward contracts
|
|
|
(967)
|
|
2,894
|
|
|
Fair value adjustment on option component
of convertible notes
|
|
|
(10,627)
|
|
-
|
|
|
Write-down of investments
|
|
|
-
|
|
340
|
|
|
Gain on sale of investments
|
|
|
(17)
|
|
-
|
|
|
Changes in operating working capital and other
(note 14)
|
|
|
1,666
|
|
(2,080)
|
|
|
Interest received
|
|
|
1,468
|
|
932
|
|
|
Interest paid
|
|
|
(3,461)
|
|
(564)
|
|
|
Income taxes paid
|
|
|
(127)
|
|
(27,828)
|
|
|
|
|
|
40,109
|
|
12,052
|
|
|
|
|
|
|
|
|
|
|
Investing Activities
|
|
|
|
|
|
|
|
Increase in restricted cash
|
|
|
-
|
|
(9,879)
|
|
|
Purchase of plant and equipment
|
|
|
(4,975)
|
|
(8,768)
|
|
|
Mineral property development
|
|
|
(14,680)
|
|
(12,541)
|
|
|
Assets under construction
|
|
|
(45,938)
|
|
(2,848)
|
|
|
Proceeds from sale of equipment
|
|
|
49
|
|
251
|
|
|
Proceeds from sale of investments
|
|
|
40,954
|
|
-
|
|
|
Purchase of investments
|
|
|
(201)
|
|
-
|
|
|
Deferred transaction costs paid
|
|
|
(123)
|
|
-
|
|
|
|
|
|
(24,914)
|
|
(33,785)
|
|
|
|
|
|
|
|
|
|
|
Financing Activities
|
|
|
|
|
|
|
|
Repayment of equipment financing obligations
|
|
|
(2,748)
|
|
(1,514)
|
|
|
Cash
from equipment financing
|
|
|
1,275
|
|
-
|
|
|
Repayment of short-term loan
|
|
|
(40,161)
|
|
(378)
|
|
|
Repayment of other long-term liabilities
|
|
|
(453)
|
|
(217)
|
|
|
Issuance of common shares
|
|
|
111
|
|
223
|
|
|
|
|
|
(41,976)
|
|
(1,886)
|
|
|
Effect of exchange rate changes on cash and cash
equivalents
|
|
|
29
|
|
381
|
|
|
Decrease in cash and cash equivalents
|
|
|
(26,752)
|
|
(23,238)
|
|
|
Cash and cash equivalents, beginning of period
|
|
|
334,840
|
|
253,544
|
|
|
Cash and cash equivalents, end of period
|
|
|
$ 308,088
|
|
$ 230,306
|
|
|
|
|
|
|
|
|
|
|
The accompanying notes form an integral part of
these condensed consolidated interim financial statements.
|
|
|
|
|
|
|
|