Northgate Minerals will begin construction of its Young-Davidson gold mine near Matachewan, Ontario, Canada, this summer, assuming applicable approvals are received. Production is scheduled to begin in 2012. Project development is based on a final feasibility study released in January 2010 and board approval for the investment announced on February 8, 2010. The feasibility study confirmed a 15-year mine life at an average annual production of 180,000 oz of gold and net cash costs of $350/oz. Proven and probable reserves stand at 2.8 million oz.
Economic assumptions for Young-Davidson development include a gold price of $825/oz and an exchange rate of US$1.00 to C$0.90. Initial capital cost to develop the mine will total US$339 million. Mill throughput is planned at 6,000 mt/d. After two years of production from a small open-pit, gold production from an underground mine will average 190,000 oz/y over the remaining mine life.
The Young-Davidson property is the site of two past producing mines, both with track records of successful mining and simple metallurgy, that produced approximately 1 million oz of gold between the mid-1930s and the mid-1950s. According to the company, existing underground workings left by the previous owners are in excellent condition. Rather than blind sinking a new production shaft from surface, as was postulated in the Young-Davidson prefeasibility study, Northgate has decided to deepen an existing shaft from 775 m to 1,515 m and to raise a new main production shaft in two sections from the bottom of the known reserve at 1,515 m. This construction method will advance the underground development schedule and significantly increase the certainty of completing the underground development according to the feasibility study schedule.
Dewatering of the existing shaft and driving of the exploration ramp past 523 m vertical have recommenced. Detailed engineering for the mill is under way, and construction of surface and shaft facilities is scheduled to begin once the applicable approvals are received.
The Young-Davidson orebody remains open down plunge below existing reserves and resources. Northgate has budgeted $2.6 million for exploration spending on the property during 2010, including 20,000 m of drilling directed at a number of target areas.