Contractual Obligations and Commitments
Northgate had the following contractual obligations and commitments as at December 31, 2008.
Northgate has a multi-year agreement with Xstrata for the shipment and sale of Kemess gold-copper concentrate. Under the terms of the agreement, treatment and refining charges are adjusted annually based on prevailing world terms, which have been settled at $75/7.5 with no price participation fee for 2009. This agreement expires on December 31, 2009.
Northgate's interest in Kemess is subject to a 1.62% royalty on the value of payable metals produced. Northgate also has an exclusive sales arrangement with AGR Matthey for gold doré bars produced at Fosterville and Stawell.
In June 2006, Northgate entered into a Cooperation Agreement with the Tse Keh Nay (3 Nations) related to the operation of the existing Kemess South mine. Northgate continues to provide funding to benefit the Tse Keh Nay member communities in the amount of Cdn$1,000,000 per year over the remaining Kemess South mine life.
Northgate has a commitment to reclaim land occupied by its mines once operational activities have ceased and is committed to reclaiming any disturbance as a result of exploration and development activities. The undiscounted costs for reclamation are currently $52,543,000. Reclamation for Kemess is expected to take place primarily from 2009 to 2013 with some expenditures, such as monitoring, to continue afterwards. Mine expenditures at Fosterville and Stawell are expected to be spent between 2009 and 2015 with some expenditures to continue until 2019.
Northgate also has a commitment to reclaim the Young-Davidson property after completion of the advanced exploration phase.