Northgate Reports Third Quarter Cash Flow of $50.5 million
Cash on Hand Reaches $235.9 million
Notice: Conference Call and Webcast Today at 10:00 am ET
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Third Quarter 2009 Highlights
- Generated excellent cash flow from operations of $50.5 million or
$0.20 per share, for a year-to-date total of $145.7 million
- Reported adjusted net earnings of $7.7 million or $0.03 per share
- Produced 80,791 ounces of gold and 11.9 million pounds of copper at
an average net cash cost of $539 per ounce of gold
- Sold 85,397 ounces of gold at a realized price of $982 per ounce and
12.8 million pounds of copper at a realized price of $3.39 per pound
- Successfully completed an equity offering for net proceeds of $88.5
million to fund the development of the Young-Davidson mine
- Northgate's cash balance at the end of the third quarter 2009 was
$235.9 million
- Successful organic growth at Northgate's operations:
- Discovered a significant extension of mineralization at
Fosterville, confirming that the Phoenix fault system continues
down plunge
- Discovered a new gold zone located 300 metres (m) east of current
reserves at Young-Davidson. The new zone is completely open down
dip. In addition to this discovery, Northgate also reported drill
results for 29 shallow diamond drill holes located in and around
historic mine workings immediately east of current reserves, which
have the potential to add to the 2.8 million ounces of reserves
already on the property
- Identified approximately 870,000 tonnes of additional mineral
reserves containing 93,000 ounces at Stawell, extending the mine-
life until Q2-2012
Financial Performance
Northgate recorded consolidated revenue of
The net loss for the quarter was
During the third quarter of 2009, Northgate generated excellent cash flow from operations of
In the third quarter of 2009, Northgate's cash and cash equivalents increased by
Results from Operations
Fosterville Gold Mine
During the third quarter of 2009, a total of 201,130 tonnes of ore were mined, following on the excellent performance of 206,829 tonnes of ore mined in the previous quarter. In addition, mine development advanced a record 2,362m during the quarter. Year-to-date mining rates have increased by over 60% since Northgate took ownership of the mine in
A total of 201,866 tonnes of ore were milled at a grade of 4.51 grams per tonne (g/t) during the third quarter. Although the mill continued to operate at higher than plan throughput, mill head grades during the quarter were lower than expected due to dilution on some of the stopes mined and lower development grades. Mill head grades are expected to improve in the fourth quarter with the availability of higher grade stopes.
Fosterville produced a total of 25,550 ounces of gold during the quarter, which was 65% higher than the 15,491 ounces produced in the corresponding quarter last year. However, production was lower than plan as a result of lower than expected head grades mined, delays in the start up of the carbon-in-leach (CIL) tails retreat and a five-day mill shutdown in late September due to a process upset in the BIOX(R) circuit caused by a power outage at site. These issues have since been resolved and gold production forecast in the fourth quarter remains unchanged at 28,000 ounces. Fosterville is expected to produce over 105,000 ounces of gold for the full year 2009, which is a dramatic improvement over the 66,959 ounces produced in the previous year.
The net cash cost of production during the quarter was
Stawell Gold Mine
Record quarterly ore production was achieved at Stawell in the third quarter, as 193,538 and 195,813 tonnes of ore were mined and milled, respectively. Underground mine development advanced a record 1,937m, which will allow for more mining front flexibility in the future. Gold production of 20,319 ounces was lower than forecast as lower grade ore was mined due to changes in the stoping sequence. However, the record development advance in the third quarter has established additional production fronts, which has improved ore availability. Stawell is forecast to produce 25,000 ounces of gold in the fourth quarter, for a total of 88,000 ounces of gold in 2009.
Unit operating costs were at record lows during the quarter, as mining costs were A$56 per tonne of ore mined and milling costs were A$23 per tonne of ore milled.
The net cash cost of production during the quarter was
Kemess South
During the quarter, Kemess posted gold and copper production of 34,922 ounces and 11.9 million pounds, respectively, which was in line with Northgate's production forecast. The net cash cost of production was
During the third quarter of 2009, approximately 8.3 million tonnes of ore and waste were removed from the open pit compared to 5.9 million tonnes during the corresponding quarter of 2008. The higher tonnes moved in the most recent quarter resulted in significantly lower unit mining costs of Cdn$1.25 per tonne moved compared with Cdn$1.99 per tonne moved in the same period last year.
Gold and copper recoveries in the third quarter were higher at 63% and 79%, respectively, compared with 60% and 69% reported in the third quarter of last year. Recoveries in the most recent quarter are dramatically higher due to improvements in the metallurgical process made earlier in the year, which have made the flotation circuit more efficient in processing lower grade ore with higher sulphide content. These improvements are noteworthy, as they will continue to have a positive impact on the profitability of the lower grade ore, which currently makes up the remaining reserves at Kemess.
2009 Production Forecast
Northgate's production forecast is set to achieve an annual record of 365,000 ounces of gold at a net cash cost of
Forecast Forecast
Actual (ounces) (ounces) 2009
--------------------------------------- Total Cash Cost
Q1 Q2 Q3 Q4 (ounces) ($/oz)(1)
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Fosterville 25,779 25,416 25,550 28,000 105,000 $555
Stawell 22,392 20,066 20,319 25,000 88,000 $596
Kemess 59,306 47,895 34,922 30,000 172,000 $403
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107,477 93,377 80,791 83,000 365,000 $493
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(1) Assuming copper price of $2.75/lb and exchange rates of US$/Cdn$0.95
and US$/A$0.925 for Q4 2009.
Moving Ahead with Young-Davidson
In July, Northgate released positive results from its pre-feasibility study for the Young-Davidson project and based on these results, immediately began work on a final feasibility study. During the third quarter, a trade-off study was completed on the underground shaft design required for mine operation. The decision was made to deepen the existing Matachewan Consolidated Mine (MCM) shaft to provide access to raise (rather than sink) a new Young-Davidson production shaft, with the potential to advance the start of underground ore production by up to one year. As a result, the MCM shaft dewatering activities and driving of the underground ramp at site have resumed. The feasibility study is progressing on schedule and is expected to be completed by the end of 2009.
Northgate took a critical step toward its goal of building a new mine at Young-Davidson during the quarter with the successful closing of an
Environmental and permitting activities continued throughout the quarter in support of the project. In addition, the Young-Davidson management team continued to work with local First Nations, with consultations taking place on environmental permit applications and on the implementation of the recently signed IBA.
Exploration Overview
Fosterville Gold Mine
During the third quarter, Northgate's exploration efforts at Fosterville continued to deliver excellent results. Drilling in the
Drilling on the
In the fourth quarter of the year, drilling will continue in the
Stawell Gold Mine
Following the increase in mineral reserves and resources announced in August, the exploration focus at Stawell has turned to definition and exploration drilling at newly discovered and existing zones in support of resource conversion and further mine-life extensions. To date, 39 holes totalling 39,600m have been completed.
Young-Davidson
At Young-Davidson, a new area of gold mineralization was discovered 300m east of current ore reserves when two geotechnical/condemnation holes intersected what appears to be the faulted off extension of the current syenite hosted Young-Davidson ore body. Several follow-up holes are currently being drilled to examine the extent of the mineralization in the area.
In addition, 29 shallow exploration holes totalling 2,424m were drilled immediately east of the current ore reserve in and around historic mine workings. The purpose of the drill program was to assess the potential for high-grade mafic volcanic hosted gold mineralization within 50m of surface, which would have the potential to add open pit reserves in and around existing mine workings.
The mafic volcanic exploration program returned a substantial number of gold intercepts: hole YD09-120 intersected 7.6 g/t gold over 13.5m and hole YD09-114 intersected 13.8 g/t gold over 2.0m and 7.1 g/t gold over 3.8m. Future work will include additional holes along strike to the east and a compilation of data to determine if there are further open pit resources.
Summarized Consolidated Results
(Thousands of
US dollars,
except where
noted) Q3 2009 Q3 2008 YTD 2009 YTD 2008(1)
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Financial Data
Revenue $ 120,163 $ 99,267 $ 374,278 $ 324,240
Adjusted net
earnings(2) 7,660 (28,385) 45,030 9,871
Per share
(diluted) 0.03 (0.11) 0.18 0.04
Net earnings (8,563) (29,438) 18,249 (7,926)
Per share
(diluted) (0.03) (0.12) 0.07 (0.03)
Cash flow from
operations 50,452 638 145,651 56,947
Cash and cash
equivalents 235,929 71,700 235,929 71,700
Total assets $ 787,940 $ 608,589 $ 787,940 $ 608,589
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Operating Data
Gold production
(ounces)
Fosterville 25,550 15,491 76,745 40,561(3)
Stawell 20,319 20,956 62,777 72,126
Kemess 34,922 28,141 142,123 123,848
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Total gold
production 80,791 64,588 281,645 236,535
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Gold sales (ounces)
Fosterville 27,114 14,866 78,352 32,551
Stawell 20,172 22,367 64,415 55,651
Kemess 38,111 27,452 149,886 122,303
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Total gold sales 85,397 64,685 292,653 210,505
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Realized gold price
($/ounce)(4) 982 868 944 900
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Net cash cost
($/ounce)(5)
Fosterville 612 940 526 1,086
Stawell 694 738 573 650
Kemess 395 597 373 212
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Average net cash
cost ($/ounce) 539 725 459 465
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Copper production
(pounds) 11,934 9,195 40,746 37,515
Copper sales (pounds) 12,816 8,633 40,795 38,089
Realized copper price
($/pound)(4) 3.39 2.04 2.70 3.49
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(1) Gold sales, cash costs and Financial Data in YTD 2008 include the
results for Fosterville and Stawell from the date of acquisition of
February 19, 2008.
(2) Adjusted net earnings is a non-GAAP measure. See section entitled
"Non-GAAP Measures" in the Corporation's third quarter MD&A Report.
(3) Production in YTD 2008 for Fosterville excludes the change in gold-
in-circuit inventory previously recorded.
(4) Metal pricing quotational period for Kemess is three months after the
month of arrival (MAMA) at the smelting facility for copper and gold.
Therefore, realized prices reported will differ from the average
quarterly reference prices, since realized price calculations
incorporate the actual settlement price for prior period sales, as
well as the forward price profiles of both metals for unpriced sales
at the end of the quarter.
(5) Net cash cost per ounce of production is a non-GAAP measure. See
section entitled "Non-GAAP Measures" in the Corporation's third
quarter MD&A Report. Cash costs in YTD 2008 include the results for
Fosterville and Stawell from the date of acquisition of February 19,
2008.
Interim Consolidated Balance Sheets
September 30 December 31
Thousands of US dollars 2009 2008
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(Unaudited)
Assets
Current Assets
Cash and cash equivalents $ 235,929 $ 62,419
Trade and other receivables 32,126 18,310
Income taxes receivable - 6,837
Inventories (note 3) 35,914 41,546
Prepaids 886 1,989
Future income tax asset 6,670 5,259
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311,525 136,360
Other assets 27,172 53,606
Deferred transaction costs (note 6) - 775
Future income tax asset 4,638 3,741
Mineral property, plant and equipment 408,491 357,725
Investments (note 4) 36,114 39,422
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$ 787,940 $ 591,629
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Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable and accrued liabilities $ 51,026 $ 56,469
Income taxes payable 26,891 -
Short-term loan (note 5) 41,825 43,096
Capital lease obligations 4,996 4,533
Provision for site closure and reclamation
costs 24,905 8,420
Future income tax liability - 1,895
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149,643 114,413
Capital lease obligations 4,014 6,211
Other long-term liabilities 5,903 3,368
Site closure and reclamation obligations 25,564 37,849
Future income tax liability - 14,350
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185,124 176,191
Shareholders' Equity
Common shares (note 6) 401,993 311,908
Contributed surplus 6,091 5,269
Accumulated other comprehensive loss (11,281) (89,503)
Retained earnings 206,013 187,764
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602,816 415,438
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$ 787,940 $ 591,629
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The accompanying notes form an integral part of these unaudited interim
consolidated financial statements.
Interim Consolidated Statements of Operations and Comprehensive Income
(Loss)
Thousands of
US dollars,
except share
and per share
amounts, Three Months Ended Sep 30 Nine Months Ended Sep 30
unaudited 2009 2008 2009 2008
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Revenue $ 120,163 $ 99,267 $ 374,278 $ 324,240
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Cost of sales
(note 3) 81,959 83,720 228,011 249,087
Depreciation and
depletion 27,804 20,172 77,393 49,005
Administrative and
general 2,424 2,963 7,062 9,190
Net interest income (112) (1,157) (1,022) (6,320)
Exploration 3,132 10,247 11,872 27,765
Currency translation
loss (gain) 1,262 (40) 4,638 (6,947)
Accretion of site
closure and
reclamation
obligations 802 665 2,301 1,619
Write-down of
auction rate
securities
(note 4) 10,440 16,912 10,948 16,912
Other expense
(income) (note 11) (125) (106) (953) (10,682)
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127,586 133,376 340,250 329,629
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Earnings (loss)
before income
taxes (7,423) (34,109) 34,028 (5,389)
Income tax
recovery (expense)
Current (5,333) 2,779 (30,453) (5,658)
Future 4,193 1,892 14,674 3,121
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(1,140) 4,671 (15,779) (2,537)
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Net earnings (loss)
for the period (8,563) (29,438) 18,249 (7,926)
Other comprehensive
income (loss)
Unrealized gain
(loss) on available
for sale
securities (3,622) (15,713) (3,308) (22,838)
Unrealized gain
(loss) on
translation of
self-sustaining
operations 29,527 (59,809) 70,582 (44,124)
Reclassification
of other than
temporary loss on
available for sale
securities to net
earnings 10,440 16,912 10,948 16,912
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36,345 (58,610) 78,222 (50,050)
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Comprehensive
income (loss) $ 27,782 $ (88,048) $ 96,471 $ (57,976)
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Net earnings
(loss) per share
Basic $ (0.03) $ (0.12) $ 0.07 $ (0.03)
Diluted (0.03) (0.12) 0.07 (0.03)
Weighted average
shares
outstanding
Basic 256,014,978 255,467,109 255,876,448 255,157,746
Diluted 256,014,978 255,467,109 256,390,058 255,157,746
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The accompanying notes form an integral part of these interim
consolidated financial statements.
Interim Consolidated Statements of Cash Flows
Thousands
of US dollars, Three Months Ended Sep 30 Nine Months Ended Sep 30
unaudited 2009 2008 2009 2008
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Operating
activities:
Net earnings
(loss) for
the period $ (8,563) $ (29,438) $ 18,249 $ (7,926)
Non-cash items:
Depreciation
and depletion 27,804 20,172 77,393 49,005
Unrealized
currency
translation
loss (gain) 3,828 (42) 3,819 (4,311)
Unrealized gain
on derivative - - - (9,836)
Accretion of site
closure and
reclamation
obligations 802 665 2,301 1,619
Loss on disposal
of assets 93 156 276 112
Amortization of
deferred charges 89 54 196 161
Stock-based
compensation 352 417 1,106 1,730
Accrual of employee
severance costs 197 662 1,527 969
Future income
tax recovery (4,193) (1,892) (14,674) (3,121)
Change in fair
value of forward
contracts 8,262 (22,984) 22,619 15,537
Writedown of
auction rate
securities 10,440 16,912 10,948 16,912
Changes in operating
working capital
and other (note 12) 11,341 15,956 21,891 (3,903)
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50,452 638 145,651 56,948
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Investing activities:
Release of
restricted cash - 14,340 - 67,496
Increase in
restricted cash (302) (811) (438) (24,723)
Purchase of plant
and equipment (7,945) (3,445) (26,833) (20,524)
Mineral property
development (15,047) (10,664) (32,667) (23,959)
Transaction costs
paid - (679) - (2,912)
Acquisition of
Perseverance,
net of cash
acquired - - - (196,590)
Repayment of
Perseverance hedge
portfolio - - - (45,550)
Proceeds from sale
of equipment 21 13 331 3,234
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(23,273) (1,246) (59,607) (243,528)
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Financing activities:
Repayment of
capital lease
obligations (1,145) (1,508) (3,804) (4,916)
Financing from
credit facility 139 389 398 8,745
Repayment of credit
facility (468) (797) (1,667) (9,961)
Repayment of other
long-term
liabilities (4) - (328) (746)
Issuance of common
shares 88,525 173 88,801 1,700
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87,047 (1,743) 83,400 (5,178)
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Effect of exchange
rate changes on
cash and cash
equivalents 944 (2,825) 4,066 (2,587)
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Increase (decrease)
in cash and cash
equivalents 115,170 (5,176) 173,510 (194,345)
Cash and cash
equivalents,
beginning of
period 120,759 76,876 62,419 266,045
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Cash and cash
equivalents,
end of period $ 235,929 $ 71,700 $ 235,929 $ 71,700
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Supplementary cash flow information (note 12)
Interim Consolidated Statement of Shareholders' Equity
Number of Common
Thousands of US dollars, Common Shares Contributed
except common shares, unaudited Shares Amount Surplus
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Balance at December 31, 2007 254,452,862 $ 309,455 $ 3,940
Transitional adjustment on
adoption of inventory standard - - -
Shares issued under employee
share purchase plan 382,909 406 -
Shares issued on exercise of
options 881,300 1,846 (492)
Stock-based compensation - 201 1,821
Net earnings - - -
Other comprehensive income - - -
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Balance at December 31, 2008 255,717,071 311,908 5,269
Shares issued under new equity
offering (note 6) 34,300,000 89,234 -
Shares issued under
employee share purchase plan 243,864 301 -
Shares issued on exercise of
options 144,000 398 (132)
Stock-based compensation - 152 954
Net earnings - - -
Other comprehensive income - - -
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Balance at September 30, 2009 290,404,935 $ 401,993 $ 6,091
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Accumulated
Other
Thousands of US dollars, Comprehensive Retained
except common shares, unaudited Income (loss) Earnings Total
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Balance at December 31, 2007 $ (3,282) $ 176,663 $ 486,776
Transitional adjustment on
adoption of inventory standard - 381 381
Shares issued under employee
share purchase plan - - 406
Shares issued on exercise of
options - - 1,354
Stock-based compensation - - 2,022
Net earnings - 10,720 10,720
Other comprehensive income (86,221) - (86,221)
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Balance at December 31, 2008 (89,503) 187,764 415,438
Shares issued under new equity
offering (note 6) - - 89,234
Shares issued under
employee share purchase plan - - 301
Shares issued on exercise of
options - - 266
Stock-based compensation - - 1,106
Net earnings - 18,249 18,249
Other comprehensive income 78,222 - 78,222
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Balance at September 30, 2009 $ (11,281) $ 206,013 $ 602,816
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The accompanying notes form an integral part of these interim consolidated
financial statements.
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This press release should be read in conjunction with the Corporation's
third quarter MD&A report and accompanying unaudited interim consolidated
financial statements, which can be found on Northgate's website at
www.northgateminerals.com, in the "Investor Info" section, under "Financial
Reports - Quarterly Reports".
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Q3 2009 Financial Results - Conference Call and Webcast
You are invited to participate in today's live conference call and webcast discussing our third quarter financial results. The conference call and webcast will be held at
You may participate in the Northgate Conference Call by calling 416-644-3425 or toll free in
A live audio webcast and presentation package will be available on Northgate's homepage at www.northgateminerals.com.
Conference Replay
A replay of the conference call will be available beginning on
Replay Access No. 416-640-1917 Passcode: 4167 983 followed by the
number sign
Replay Access No. 877-289-8525 Passcode: 4167 983 followed by the
number sign
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Northgate Minerals Corporation is a gold and copper producer with mining operations, development projects and exploration properties in
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Cautionary Note Regarding Forward-Looking Statements and Information:
This Northgate press release contains "forward-looking information", as such term is defined in applicable Canadian securities legislation and "forward-looking statements" within the meaning of the
%CIK: 0000072931
For further information: Ms. Keren R. Yun, Director, Investor Relations, Tel: (416) 363-1701 ext. 233, Email: [email protected], Website: www.northgateminerals.com
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