NXG purchases copper resources near Kemess South:
June 22, 2004 06:22 PM US Eastern Timezone
Northgate Minerals Acquires the Sustut Copper Deposit from Doublestar Resources
VANCOUVER, British Columbia--(BUSINESS WIRE)--June 22, 2004--Northgate Minerals Corporation (AMEX:NXG) (TSX:NGX) and Doublestar Resources Ltd. (TSX VENTURE:DSR) are pleased to announce that they have signed a letter of intent whereby Northgate Minerals can acquire 100% of the high grade Sustut Copper deposit. This agreement is subject to legal due diligence and Board of Director approvals, with the definitive purchase agreement to be negotiated over the next few weeks. Closing of the transaction is expected by mid-summer.
The Sustut Copper deposit is located 40 km south of Northgate's Kemess South mine and milling complex in north-central British Columbia, where it is expected that the Sustut Copper ore will be processed. Since its discovery in 1971 by Falconbridge Limited, who retain a 9% Net Profits Interest (NPI) royalty, 21,588 metres of exploration and resource definition diamond drilling has been completed at Sustut. In 2002, Pincock Allen & Holt qualified a resource at Sustut in compliance with National Instrument 43-101. This work demonstrated a total measured resource for two zones, the Southeast and Southwest, of 4,871,000 tonnes grading 1.70% copper, and a total indicated resource of 2,761,000 tonnes at 1.61% copper, both at a 0.70% copper cut off. As part of a feasibility study completed in 2003, AMEC designed an open pit containing 4,676,000 tonnes of ore at an average grade of 2.02% copper and 6 grams per tonne silver using a 0.745% copper cut off. This represents an in-situ copper resource of 208 million pounds which would result in 150 million pounds of copper and 0.6 million ounces of silver based on the most recent metallurgical test work.
Under the terms of the agreement, Northgate will acquire 100% of the Sustut deposit for Cdn$1,705,000, subject to a positive production decision by Dec. 31, 2006. Payments will be made in stages as the project progresses through the following development milestones:
- $500,000 upon execution of the definitive purchase agreement
- $500,000 upon the granting of a mining permit
- $250,000 upon a Sustut Mine production decision
- $250,000 when construction is completed
- $205,000 90 days after the start of production
Doublestar will also receive a sliding scale royalty per tonne of ore mined based on the resource in the AMEC Feasibility Study, as follows:
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Copper Price Royalty /Tonne
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(US $) (CDN $)
0.94-1.00 0.25
1.00-1.10 0.50
1.10-1.20 0.90
1.20-1.30 1.10
1.30-1.40 1.40
greater than 1.40 2.00
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Ken Stowe, President and CEO of Northgate said, "Our acquisition of 100% of the Sustut Copper deposit provides Northgate with the opportunity to substantially increase copper production at Kemess by blending high grade Sustut ore with ore from Kemess South and Kemess North, while preserving the low unit costs of these operations. Over the coming months, our operating team will be reviewing the Sustut feasibility study in order to identify synergies and determine the most effective way of integrating this exciting project with the Kemess operation."
Doublestar Chairman and CEO Alan Savage noted that "The Sustut operation will be the first source of recurring revenue from mining operations for Doublestar and the royalty structure allows us to participate in the upside on copper prices. This will enable Doublestar to target other acquisitions while contributing to the development of its existing projects."
Northgate is a gold and copper mining company focused on operations and opportunities in North and South America. The Corporation's principal assets are the 300,000-ounce per year Kemess South mine in north-central British Columbia and the adjacent Kemess North deposit, which contains a Proven and Probable Reserve of 4.1 million ounces of gold. Northgate is listed on the Toronto Stock Exchange under the symbol NGX and on the American Stock Exchange under the symbol NXG.
Doublestar is a Canadian mineral resource exploration and development company with a large portfolio of advanced mineral properties containing base and precious metal resources extending from Canada's Northwest Territories to Honduras. Doublestar's mission is to advance its key properties to production while continuing to seek attractive exploration or early-stage development projects that will contribute to shareholder value. Doublestar's shares trade on the TSX Venture Exchange under the ticker symbol "DSR".
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