Vancouver — Despite generating a positive cash flow from its Kemess gold-copper mine in BC, historical low copper prices pushed Northgate Exploration (NGX-T) to a loss of $5.51 million, or 18 per share in the latest quarter ended Sept. 30.
Although still recording significant losses, Northgate’s third quarter of 2001 showed a marked improvement from the $8.31 million, or 28-per-share loss tallied in the corresponding period of 2000. Revenues came in at $37.5 million during the quarter with cash flow from operations hitting $4.6 million, a significant improvement from the operating loss of $7.2 million recorded in the third quarter of 2000.
Located 250 km north of Smithers, the Kemess mine produced 64,300 oz. of gold in the quarter, up from the 59,400 oz. tallied in the same period a year ago. Copper production dropped to 14.4 million lbs. from 15.6 million lbs. recorded in the third quarter of 2000. Gold grades at the operation climbed to 0.81 gram per tonne from 0.69 gram recorded in the corresponding period of last year, while copper grades remained steady at 0.22%. Recovery rates came in at 64% for gold and 76% copper, down from the 68% and 79% rates hit a year earlier. Operating improvements continued to benefit the production with the average mill operating rate coming in at 53,956 tonnes per day, compared to 48,303 tonnes per day in the 2000 quarter. The company realized an average gold price of US$273 per oz. in the latest quarter, while copper averaged US$67 per lb.
As of the end of 2000, mineral reserves mine stood at 145.9 million tonnes grading 0.65 gram gold per tonne and 0.24% copper.
Northgate assumed control of Kemess South from receiver PriceWaterhouseCoopers in late 1999. Now-defunct Royal Oak Mines originally commissioned Kemess in May of 1998. The total development cost of the mine was estimated to exceed $600 million, which contributed to the company’s downfall.
Trilon Financial, Northgate’s largest shareholder, provided most of the cash needed for the acquisition, including a US$145-million bridge loan.
Northgate recently closed a 6-year, US$100-million syndicated project loan designed to re-finance part of the original loan. In addition, the company has raised US$10 million for working capital.
This year, Northgate hopes to produce a total of 265,000 oz. gold and 31,750 tonnes copper at a cash cost of US$190 gold per oz. (net of byproduct credits).
Total production at Kemess in 2000 totaled 225,994 oz. gold and 22,860 tonnes copper, while cash operating costs averaged US$248 gold per oz. The average millhead grade was 0.778 gram gold and 0.22% copper. Recoveries were pegged at 64% and 74% for gold and copper, respectively.
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