Stop us if you’ve heard this before, but, with the economic world veering toward Hades in a handbasket of its own making, gold appears more and more the place for investors to be. As the shiny yellow metal rocketed its way in the last week of February toward the thousand-dollar mark in U.S. funds, it should come as no surprise that the companies who extract it from the earth are the ones with earnings heading skyward.
The latest example is Vancouver-based Northgate Minerals Corp. (TSX: NGX; NYSE ALTERNEXT/AMEX: NXG), a mid-tier gold and copper producer with mining operations, development projects and exploration properties in Canada and Australia. The company has enjoyed record gold production in recent months, and forecasts times to get only better during 2009. Northgate, whose stock trades on the TSX under the symbol NGX and on the NYSE Alternext index (formerly AMEX) under NXG, also hopes to build on its nest egg by going the acquisition route, finding promising mining partners in stable environments around the world.
The mines under operation these days include the two Kemess mines (north and south) in British Columbia, the Young-Davidson property near the town of Kirkland Lake, Ontario, in the heart of that province’s gold country, and two particularly lucrative mines in Australia, Stawell and, Fosterville.
Strong operation by Northgate has transformed Kemess into one of the most efficient open pit mines in the world. In 2006, Kemess, benefiting from solid mining know-how and a strong metal price environment, produced record earnings of $107 million and record cash flow of approximately $147 million (all funds in U.S. dollars unless specified otherwise).
The Kemess mine, acquired by this 90-year-old company after the bankruptcy of previous owner Royal Oak Mines in the winter of 2000, promises copper production alone near 54 million pounds for 2009.
Overall, the company boasted production of 118,265 ounces, bringing total 2008 production to a record 354,800 ounces, on costs of less than $450 an ounce. Given world prices for the shiny metal these days, it’s enough to make one’s mouth water.
In early March, this activity translated to net earnings of $18.6 million of seven cents per diluted share for the fourth-quarter. For the whole year, net earnings came in at $10.7 million or four cents per diluted share.
Nor does the company predict the good times to end there; NGX forecasts record gold production of 392,000 ounces in the coming year from its three operating mines in Canada and Australia.
The stock’s price has fluctuated between $3.49 last April and 67 cents shortly before Christmas to settle in early March around $1.50, on daily volumes consistently in the tens of thousands. Gold production has created a special buzz in the throes of this recession, and NGX may just set off the right ''buzzers'' among small cap investors.
About AllPennyStocks.com:
AllPennyStocks.com is a website devoted to Canadian and American Stocks and Penny Stocks. Some features in the website include quotes, news and charts. The site also offers weekly write-ups of financial news, weekly penny stocks to watch, daily top 50 penny stocks info, technical analysis, a portfolio manager, a section for visitors to input their own penny stock picks, as well as an elaborate amount of information for beginning investors. Visitors can sign up to the AllPennyStocks.com mailing list to receive more penny stock articles, stock profiles and more. AllPennyStocks.com is a well developed and recognized financial site among the investment community.
by Peter Szafranski
