*** Gold/copper related post (NXG) ***
Northgate posts fourth quarter net income of $20 million; Corporate cash reserves increase to $262 million
Thursday March 1, 9:08 pm ET
Stock Symbols: TSX: NGX, AMEX: NXG Website: www.northgateminerals.com For the three months and twelve months ended December 31, 2006 (unaudited)
VANCOUVER, March 1 /CNW/ - (All figures in US dollars except where noted) - Northgate Minerals Corporation (TSX: NGX - News; AMEX: NXG - News) today reported cash flow from operations of $43,884,000 or $0.20 per diluted common share and net earnings of $19,790,000 or $0.09 per diluted common share for the fourth quarter of 2006. Cash flow from operations for all of 2006 was $146,612,000 or $0.66 per diluted common share and net earnings were $106,742,000 or $0.48 per diluted common share.
Fourth Quarter Highlights
- Production of 81,747 ounces of gold and 21.3 million pounds of copper
from the Kemess South mine.
- Quarterly gold net cash cost of negative $89 per ounce and a record
low net cash cost of negative $56 per ounce of gold for all of 2006.
- Increased NI-43-101 compliant gold resources at Young-Davidson to a
total of 2.1 million ounces of gold.
- Hedged 15,000 metric tonnes of the Kemess mine's expected 2007 copper
production at an average price of $3.15 per pound which is
significantly higher than the present spot price.
- Holders of Northgate's common share purchase warrants exercised a
total of 37,895,253 warrants in the fourth quarter, injecting
$99,785,000 into the Northgate's treasury.
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Ken Stowe, President and CEO, stated, "In 2006, tremendous metal prices and record gold and copper production from the Kemess South mine combined to generate financial results that were well beyond our most optimistic expectations set at the beginning of the year. Net earnings of $107 million and cash flow from operations of $147 million during 2006 have transformed our balance sheet, giving us the financial capacity to move forward with our internal development projects and the ability to take advantage of other growth opportunities that we could not have considered even one year ago. And the ride is far from over. In 2007, our Kemess South mine is poised to deliver another strong year of cash flow and earnings. We also look forward to adding to the existing mine-life within the Kemess camp and moving the Young-Davidson project closer to production by further expanding the existing 2.1 million ounce gold resource base, pursuing our underground development program and completing the necessary engineering and environmental studies. By executing these plans and delivering another accretive corporate transaction like the Young-Davidson acquisition, I fully expect that 2007 will be another excellent year for our shareholders."
RESULTS OF OPERATIONS
Northgate recorded net earnings of $19,790,000 or $0.09 per diluted share in the fourth quarter of 2006 compared with net earnings of $44,527,000 or $0.21 per diluted share during the corresponding quarter of 2005. For the full year 2006, net earnings were $106,742,000 or $0.48 per diluted share compared with $39,557,000 or $0.20 in 2005. Earnings for the fourth quarter and the full year of 2006 included a non-cash future income tax expense of $18,443,000 and $11,447,000, respectively. Cash flow from operations, after changes in working capital and other items, was $43,884,000 or $0.20 per diluted share in the fourth quarter of 2006 compared with cash flow of $35,843,000 or $0.17 per diluted share during the same quarter last year. For the full year 2006, cash flow from operations after changes in working capital and other items was $146,612,000 or $0.66 per diluted share compared with $49,039,000 or $0.24 in 2005. Per share data is based on the weighted average diluted number of shares outstanding of 224,674,332 and 222,892,929 in the fourth quarter and full year of 2006. The weighted average diluted number of shares outstanding in the corresponding periods of 2005 was 209,533,541 and 202,858,866.
Kemess South Mine Performance
The Kemess South mine produced 81,747 ounces of gold and 21.3 million pounds of copper during the fourth quarter of 2006. Mill throughput during the quarter averaged 49,645 metric tonnes (mt) per day and consisted exclusively of hypogene ore with an average grade of 0.772 gr/mt gold and 0.243% copper. Over the course of 2006, quarterly metal production was relatively steady as mining was concentrated in the heart of the Kemess South ore body in the western end of the open pit. For the full year, Kemess posted record gold and copper production of 310,296 ounces and 81.2 million pounds, respectively.
During the fourth quarter of 2006, approximately 11.0 million tonnes of ore and waste were removed from the open pit compared to 12.9 million tonnes during the corresponding quarter of 2005. Unit mining costs during the current quarter were Cdn$1.64 per tonne compared with Cdn$1.19 per tonne in the same period of 2005. The higher unit mining cost in the most recent quarter resulted from expenses related to the pushback of the north wall and the escalation in unit costs that occurs naturally as the pit deepens and fewer tonnes are moved using the same complement of mobile equipment. For the total 2006 year, mining costs averaged Cdn$1.49 per tonne compared with Cdn$1.20 per tonne in 2005.
Mill availability during the fourth quarter of 2006 averaged 91% and throughput averaged 49,645 tonnes per day (tpd), compared with 90% availability and throughput of 50,738 tpd in the fourth quarter of 2005. For the full year 2006, mill availability and throughput averaged 91% and 49,956 tpd, respectively, compared with 90% and 49,302 tpd in 2005.
Gold and copper recoveries averaged 72% and 87%, respectively, in the fourth quarter of 2006 compared with 72% and 85% in the fourth quarter of 2005. The 2% increase in copper recovery actually understates the significant improvement of metallurgical performance in the Kemess mill. In the most recent quarter, the ore milled was 15% lower-grade than it was one year ago, which in the absence of process improvements made in the flotation circuit, would have yielded lower recoveries than those reported one year ago. For the full year, gold and copper recoveries were 69% and 83%, respectively, compared with 67% and 81% in 2005.
Metal concentrate inventory increased by 2,000 wet metric tonnes (wmt) to approximately 10,000 wmt during the fourth quarter of 2006 as a result of high copper concentrate production during the quarter. Concentrate inventory is expected to remain high during the first half of 2007 and decline to a more normal level of 5,000 wmt by the middle of 2007.
The total unit cost of production during the fourth quarter of 2006 was Cdn$9.10 per tonne milled, which was higher than the Cdn$8.18 per tonne milled recorded in the corresponding period of 2005. The increase in unit cost in the most recent quarter was due primarily to the higher unit mining costs. Total site operating costs in the fourth quarter of 2006 were Cdn$41.6 million compared with Cdn$38.1 million in the fourth quarter of 2005. The site operating costs in the fourth quarter of 2006 were higher than the period one year ago as a result of the extra drilling and blasting costs associated with the north wall pushback. The net cash cost of production at Kemess in the fourth quarter was negative $89 per ounce bringing the average 2006 cash cost to negative $56 per ounce. The net cash cost of gold production in both periods is negative due to the large by-product credit derived from copper production, which is credited against site operating costs for purposes of calculating cash costs.
The following table provides a summary of operations for the fourth quarter and full year of 2006 and the comparable periods of 2005.
Continued at:
http://biz.yahoo.com/cnw/070301/northgate_q4_results.html?.v=1
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