Northgate sees ‘mine in waiting,’ at Young-Davidson

Recent drilling by Northgate Minerals (NGX-T, NXG-X) has returned more encouraging results from the Young-Davidson mine project in the Matachewan camp of Ontario, including a 66.59-metre intersection grading 8.92 grams gold per tonne.

Northgate acquired the historic producer in the fall of 2005, and has since reported some of the best holes ever drilled on the property. One of the first holes drilled this year returned 8.38 grams gold over 7.62 metres, with a second interval averaging 5.65 grams gold over 31.69 metres.

The highlight from the latest set of six holes was the aforementioned 66.59-metre intersection, which included 33.49 grams gold over 9.9 metres, and 16.45 grams over 6.09 metres. This hole is the second-best ever drilled on the property.

The second-deepest hole ever drilled on the property intersected an extension of the Lower Boundary zone and returned 8.28 grams gold over 15.8 metres within a broader zone of 4.49 grams gold over 31.3 metres.

A confirmation hole drilled to test the Upper Boundary zone near historical intersections returned 3.47 grams gold over 32 metres, and 5.33 grams gold over 14.1 metres, both within a broader zone of 2.63 grams gold over 60.6 metres. The company notes that these results are consistent with historical results.

Northgate has four drill rigs turning at Young-Davidson; two testing the Lower Boundary zone, one testing the Lower YD zone, and another testing the Lucky zone. The goal of the ongoing program is to delineate additional resources surrounding and below known resources containing about 1.5 million oz. gold in all categories, including about 500,000 oz. classified as measured and indicated. A new (and upgraded) resource estimate is expected to be in hand by the end of this year.

The Matachewan district of Ontario is situated 60 km west of the prolific Kirkland Lake gold camp, and has a production history dating back to the 1930s through 1950s, when about 1 million oz. was produced from about 10 million tonnes. At the time of acquisition, Northgate described the project as “a mine waiting to be developed.” The company now says recent drill results have provided “compelling evidence” to support this view, while also confirming potential for low-cost bulk-mining, as well the possibility of “jewelry-box” zones.

Northgate’s main asset is the Kemess South copper-gold open-pit mine in northern British Columbia, while its main development asset is the adjacent Kemess North deposit, now in the permitting stage.

Northgate recently announced an unsolicited takeover bid for the shares of Aurizon Mines (ARZ-T, AZK-X) after its initial merger proposal was rejected by the company.

Aurizon has appointed a special committee of directors to review and evaluate the offer, in which Aurizon shareholders would receive 0.741 of a Northgate common share for each common share.

Aurizon plans to regain producer status later this year at its core asset, the past-producing Casa Berardi gold mine in Quebec’s Abitibi district. The company recently raised $126 million of debt and equity financing to bring Casa Berardi back into production at an annual rate of about 175,000 oz. gold, starting later this year.

If the Aurizon takeover proceeds as planned, the “new Northgate” would have a market capitalization of more than US$1 billion, and estimated production in 2007 of about 480,000 oz. gold and 84 million lbs. copper from the Kemess South and Casa Berardi mines.