Northgate's Kemess South Mine Continues its Record of Operational Efficiency in the First Quarter of 2004
Monday April 26, 8:25 pm ET
VANCOUVER, British Columbia--(BUSINESS WIRE)--April 26, 2004--Northgate Exploration Limited (AMEX:NXG - News; TSX:NGX - News) today reported first quarter operating results from the Kemess South mine located in north central British Columbia.
First Quarter Production Highlights
The Kemess South mining team set a new quarterly record for tonnes mined of almost 157,000 tonnes per day, increasing productivity to 875 tonnes per man shift.
Unit mining costs during the first quarter of 2004 dropped to Cdn$0.84 per tonne mined, 12% lower than the first quarter of the previous year.
First quarter mill availability was over 92% and throughput was almost 50,000 tonnes per day in spite of the harder lower-grade ore processed.
In March, the Kemess mill set new monthly records for availability and hypogene ore throughput of 93.5% and 52,229 tonnes per day respectively.
Kemess South produced a total of 51,500 ounces of gold in the first quarter at a cash cost of $202 per ounce on a full absorption basis, or $163 per ounce under the Gold Institute Methodology.
Ken Stowe, President and CEO, commented, "Our Kemess South operation continued to operate efficiently during the first quarter, setting several new records for mining productivity and demonstrating strong mill throughput in spite of the harder lower-grade ore that was processed. In March, we took the decision to stockpile higher-grade transition ore and process lower-grade ore in its place, reducing first quarter gold production. This re-sequencing was necessary to maintain our 2004 tailings dam construction schedule. The gold ounces we did not produce in the first quarter have been deferred until later in the year and we are still on track to produce 300,000 ounces in 2004 at cash cost in the range of $150 per ounce if copper averages $1.20 during the year."
Kemess South Production
The Kemess South mine produced 51,500 ounces of gold and 17.7 million pounds of copper during the first quarter of 2004. While copper production was slightly above plan, gold production was 15% below plan due primarily to the decision in March to stockpile 400,000 tonnes of higher-grade transition ore and process harder lower-grade ore in its place. The tailings generated by transition ore are unsuitable for tailings dam construction, and the unexpected presence of this ore type necessitated a re-sequencing of ore feed to the mill. As a result of the ore re-sequencing, 2004 dam construction remains on schedule and the ounces that were not produced in the first quarter will arrive in future quarters as shown in the revised production forecast below.
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Revised Kemess South Mine Quarterly Metal Production Forecast
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Total
Q1 Q2 Q3 Q4 2004
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Gold (ounces) 51,500 77,500 87,500 83,500 300,000
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Copper (millions lbs) 17.7 18 19.3 20 75
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Due to the implementation of a variety of productivity improvements in the Kemess South open pit, the mining team set another new record for tonnes mined during the first quarter of 157,000 per day and unit mining costs dropped to Cdn$0.84 per tonne, 12% lower than in the first quarter of 2003.
Mill availability during the first quarter was 92% and throughput was 49,757 tonnes per day in spite of the harder lower-grade ore processed. During the balance of 2004, throughput is expected to be well in excess of 50,000 tonnes per day as the mill is scheduled to process average hypogene ore and inherently softer supergene ore during the balance of the year.
Gold recovery was slightly lower than expected in the first quarter due to lower head grades and a special focus on higher concentrate grade. The focus on concentrate grade was necessary in order to alleviate the inventory backlog that developed due to a railcar shortage caused by a particularly difficult winter shipping season combined with the CN rail strike. Concentrate inventory is expected to return to normal levels during the second quarter.
Kemess' full absorption cash cost of production during the quarter was $202 per ounce, 20% lower than the same period in 2003. The significantly higher by-product credit generated by higher copper prices in the first quarter of 2004 more that made up for the lower gold production and the effect of the stronger Canadian dollar. In future quarters of 2004 the cash cost at Kemess South should be substantially lower than it was in the first quarter, due to the higher gold and copper production forecast and a recent weakening of the Canadian dollar relative to the US dollar. The approximate impact of copper price and exchange rates on 2004 cash cost is shown below.
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Factor Change Impact on Cash Cost
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Copper price $0.05/pound 12
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US$/Cdn$ Exchange rate $0.02 8
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Kemess South Mine Production Table
(100% of production basis) 1Q 04 1Q 03
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Ore + waste mined (tonnes) 14,275,063 13,032,056
Ore mined (tonnes) 5,996,128 4,631,369
Stripping Ratio (waste/ore) 1.38 1.81
Ore milled (tonnes) 4,527,850 4,457,876
Average mill operating rate (tpd) 49,757 49,532
Gold grade (gmt) 0.515 0.601
Copper grade (%) 0.212 0.207
Gold recovery (%) 69 72
Copper recovery (%) 84 84
Gold production (ounces) 51,500 62,000
Copper production (000's pounds) 17,717 17,151
Cash Cost ($/ounce)
Full absorption method 202 255
Gold institute method 163 213
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