Permits and expectations are two key areas of consideration when a mining company works to make a go of it in a volatile commodities market. Permits always have longer lead times, and prices, especially in today’s market, can swing on a dime. If, however, a company can go about dealing with these issues in a conservative and efficient way, it may find that the results far outpace the expectations.
Northgate Minerals Corp., a gold and copper mining company, works to develop gold and copper properties in Canada and Australia. The company controls 100% interest in its Canadian properties and partial interest in two Australian properties.
From a general perspective, the company has been hitting a stride. For 2009, it estimates that it will produce a record 390,000 oz. of gold from its primary projects. It also expects new acquisitions to become fairly solid producers going forward. Most recently, the company released a pre-feasibility study for its Young-Davidson project in Matachewan, Canada. From all indications the project is expected to hold approximately 2.8 million ounces of gold over its 15 year life expectancy. In of itself, this would be an exceptional open pit operation. More so, however, are the pricing expectations used to develop the pre-feasibility study. The study uses a sale price of CA$725 per/oz., an extraction cost of CA$333 per/oz. and an average annual output of 170,000 oz/year. With current market conditions, one is likely to understand where the value in this company can be found.
It is perhaps the company’s approach to developing its properties that is most appealing, past the obvious of course. In this respect, the company takes an overall look at a project before it takes action. Infrastructure requirements, testing and market conditions are critical in all respects, but the need for proper social conditions is also a requirement. In this regard, the company’s relationship with the Matachewan First Nation tribal council in Canada might be pointed to. The company recognized the need for solid relationships with First Nation and set about developing them from a position of respect and trust. Having cemented this relationship, it can now expect a reliable work force and all the benefits that working with the First Nation brings.
From all appearances Northgate Minerals seems to be in a solid place for a rather volatile gold market. Its reserves, both proven and probable, are ready for extraction and lend a certain amount of stability at current cost and market levels. Moving forward, it also seems that there are enough reserves in place to keep it moving for some time. Northgate may be one to look at if a miner is a considerable choice for your portfolio.
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