NORTHGATE MINERALS in brief

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Virtually a case study...

Northgate Minerals Corporation (changed the name from Northgate Exploration) is a gold and copper mining company, whose principal assets are the 300,000 ounce per year Kemess South mine in British Columbia, the adjacent Kemess North deposit of 4.1 million ounces of gold and the Young-Davidson property in northern Ontario with a total resource base of 1.5 million ounces of gold. Northgate is listed on the Toronto Stock Exchange and on the AMEX (NXG).

In 2005, Northgate had a net profit of $32,9 million, 5% more than in the previous year.

In the first half of 2006 recorded a net profit of $77,9 million and sales of $199,8 million compared with a loss of $13,8 million and sales of $97 million during the corresponding half of 2005.

Northgate has small and decreasing gold and copper forward sales commitments and its financial structure is sound. The ratio of debt to equity is .276, which is excellent.

Even deducting a $17 million non-cash future income tax recovery included in the net earnings for the second quarter of 2006, we arrive to net earnings per diluted share of $0.173 in that quarter. Assuming that the company performance and the price of gold remain the same (which is very modest) we get a PER of 5,8 for the next twelve months (with the present share price). This is extremely favourable and probably unique for the mining sector.

Northgate shares have been climbing since a minimum of 0.92 (May 2005) and could manage to reach 4.82 just one year later. Then a huge correction followed and after a consistent consolidation the share price is now tying to break the 4.00 level. If it succeeds the price may be headed to new all time highs.