VANCOUVER, May 20 /PRNewswire/ - Matachewan Consolidated Mines, Limited ("MCM")(TSX-V: MCM.A) announces the sale effective May 12, 2011, to Northgate Minerals Corporation ("Northgate") (TSX:NGX, NYSE-Amex: NXG) of its former producing gold property located in the Matachewan Gold Camp, 50 miles southeast of Timmins, Ontario. The property consists of 24 mining leases in Powell and Cairo townships, Larder Lake Mining Division, Ontario, which prior to the sale had been optioned to Northgate as the company builds the Young- Davidson gold mine.
Terms of the sale include cash of $216,500, retention of the royalty of ore mined and processed from the property, and Northgate assuming liability for a note payable on the property of $383,434.
The base royalty is $1.00 U.S. per ton of ore mined and processed from the property. An additional royalty will be paid when the price of gold exceeds $270 U.S. per ounce. This will amount to 5% of the increase per ounce recovered above the base rate of $270 U.S. per ounce. The royalty relates to the current reserves of approximately 600,000 tonnes on the 24 Powell and Cairo mining leases, subject to this agreement.
These tonnes form part of an open pit containing 6.2 million tonnes of ore and will be mined once Young- Davidson commences production in 2012. In addition, underground exploration activity within these mining leases will commence shortly as Northgate explores outside of its current reserve envelope.Northgate is currently building the Young- Davidson mine, which is scheduled to commence production in late Q1 2012. Young- Davidson is forecasting an initial 15-year mine-life and is projecting average annual production of 180,000 ounces of gold at a cash cost of $400 per ounce.