Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Northgate Minerals on Target for Early 2012 Production

Northgate Minerals to Produce 180K oz Annually by Q1 2012

Click HERE to watch video

May 8, 2011
Visit Northgate Minerals’ profile at RI Analytics, evaluate their projects and view the company’s videos by clicking HERE.

The Young-Davidson mine with its 2.8 million ounces of gold reserves is located in the southwestern section of the Abitibi Greenstone Belt, one of the largest greenstone belts in the world and home to 160 million ounces of gold from historic and present production.

The mine is scheduled to begin producing gold towards the end of the first quarter of 2012 at an average rate of 180,000 ounces per year. The site lies a short distance from the regional centres of Timmins, North Bay and Sudbury, and within commuting distance from Kirkland Lake, Elk Lake and the town of Matachewan from where an experienced workforce can be drawn during construction and operation of the mine.

The region is attractive due to its rich history of mining, which continues today. Situated in close proximity to a large number of operating mines, Young-Davidson has access to excellent infrastructure, including paved highways and a power grid.

The Young-Davidson property consists of contiguous mineral leases and claims totaling 11,000 acres and is situated on the site of two past producing mines.

These mines produced one million ounces of gold from the 1930s to the 1950s. Exploration on the property began again in the 1980s. When Northgate acquired the property in 2005, it had an inferred resource of approximately 1 million ounces of gold.

Upon taking ownership of the property, Northgate commenced an aggressive exploration program in early 2006 with the goal of doubling the resource base. Over the next two and a half years, the company drilled 274 holes totalling over 100,000 metres and outlined a resource of 4 million ounces of gold, which was converted into 2.8 million ounces of proven and probable reserves in 2009.

The existing reserves at Young-Davidson currently represent the 6th largest gold reserve in Canada and with an additional 600,000 ounces of inferred resources and several highly prospective exploration zones immediately adjacent to the main ore body.

After receiving a “key closure permit” from the provincial government, Northgate commenced construction of the Young-Davidson mine in August 2010. Young-Davidson has a 15-year reserve life and is expected to produce an average of 180,000 ounces of gold per year at a cash cost of just $400 per ounce — This cash cost is well below the industry average due to the favorable geometry, strong continuity and thickness of the orebody, as well as the competent nature of the host rock, which allows low-cost bulk mining techniques to be employed.

During the first two and a half years of its mine life, production will come from an open pit containing 325,000 ounces of gold reserves at a grade of 1.64 grams per tonne. Once production transitions to the underground, the mine will produce approximately 2.3 million ounces of gold at an average grade of 3 grams per tonne over the next 13 years.

Based on a gold price of $1400 per ounce, the mine is expected to generate pre-tax operating cash flow of $1.9 billion. The project’s Net Present Value at a 5% discount rate is $1 billion and has an Internal Rate of Return of 28% based on the initial capital outlay of $130 Million.

In addition to the tremendous value that will be generated from the extraction of the known reserves at Young-Davidson, there is tremendous potential for reserve growth, which will further enhance the value of the property for Northgate’s shareholders. The main geological footprint measures almost 900m east-west by 300m north-south and the deposit remains open to the west, east and down dip.

Exploration drilling in 2010 and early 2011 has identified the YD West zone, a faulted offset extension to the west of the current ore body. This drilling included one of the highest grade-thickness intervals ever intersected on the property at 3.46 g/t gold over 79.5 metres. Other results included 6.16 g/t gold over 21.3 m and 4.37 g/t over 17.8 m.

Northgate has budgeted $2 million on diamond drilling in 2011, much of which will focus on defining an initial resource within the YD West zone.

Visit Northgate Minerals’ profile at RI Analytics, evaluate their projects and view the company’s videos by clicking HERE.

NOTE: This presentation may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. The Issuer relies upon litigation protection for forward-looking statements.

Disclosure: No Positions