Northgate posts fourth quarter net income of $20 million; Corporate cash reserves increase to $262 million



    Stock Symbols: TSX: NGX, AMEX:   NXG
    Website: www.northgateminerals.com
    For the three months and twelve months ended December 31, 2006
    (unaudited)

    VANCOUVER, March 1 /CNW/ - (All figures in US dollars except where noted)
- Northgate Minerals Corporation (TSX: NGX; AMEX:   NXG) today reported cash
flow from operations of $43,884,000 or $0.20 per diluted common share and net
earnings of $19,790,000 or $0.09 per diluted common share for the fourth
quarter of 2006. Cash flow from operations for all of 2006 was $146,612,000 or
$0.66 per diluted common share and net earnings were $106,742,000 or $0.48 per
diluted common share.

    
    -------------------------------------------------------------------------

                          Fourth Quarter Highlights

    -   Production of 81,747 ounces of gold and 21.3 million pounds of copper
        from the Kemess South mine.

    -   Quarterly gold net cash cost of negative $89 per ounce and a record
        low net cash cost of negative $56 per ounce of gold for all of 2006.

    -   Increased NI-43-101 compliant gold resources at Young-Davidson to a
        total of 2.1 million ounces of gold.

    -   Hedged 15,000 metric tonnes of the Kemess mine's expected 2007 copper
        production at an average price of $3.15 per pound which is
        significantly higher than the present spot price.

    -   Holders of Northgate's common share purchase warrants exercised a
        total of 37,895,253 warrants in the fourth quarter, injecting
        $99,785,000 into the Northgate's treasury.
    
    -------------------------------------------------------------------------

    Ken Stowe, President and CEO, stated, "In 2006, tremendous metal prices
and record gold and copper production from the Kemess South mine combined to
generate financial results that were well beyond our most optimistic
expectations set at the beginning of the year. Net earnings of $107 million
and cash flow from operations of $147 million during 2006 have transformed our
balance sheet, giving us the financial capacity to move forward with our
internal development projects and the ability to take advantage of other
growth opportunities that we could not have considered even one year ago. And
the ride is far from over. In 2007, our Kemess South mine is poised to deliver
another strong year of cash flow and earnings. We also look forward to adding
to the existing mine-life within the Kemess camp and moving the Young-Davidson
project closer to production by further expanding the existing 2.1 million
ounce gold resource base, pursuing our underground development program and
completing the necessary engineering and environmental studies. By executing
these plans and delivering another accretive corporate transaction like the
Young-Davidson acquisition, I fully expect that 2007 will be another excellent
year for our shareholders."

    RESULTS OF OPERATIONS

    Northgate recorded net earnings of $19,790,000 or $0.09 per diluted share
in the fourth quarter of 2006 compared with net earnings of $44,527,000 or
$0.21 per diluted share during the corresponding quarter of 2005. For the full
year 2006, net earnings were $106,742,000 or $0.48 per diluted share compared
with $39,557,000 or $0.20 in 2005. Earnings for the fourth quarter and the
full year of 2006 included a non-cash future income tax expense of $18,443,000
and $11,447,000, respectively. Cash flow from operations, after changes in
working capital and other items, was $43,884,000 or $0.20 per diluted share in
the fourth quarter of 2006 compared with cash flow of $35,843,000 or $0.17 per
diluted share during the same quarter last year. For the full year 2006, cash
flow from operations after changes in working capital and other items was
$146,612,000 or $0.66 per diluted share compared with $49,039,000 or $0.24 in
2005. Per share data is based on the weighted average diluted number of shares
outstanding of 224,674,332 and 222,892,929 in the fourth quarter and full year
of 2006. The weighted average diluted number of shares outstanding in the
corresponding periods of 2005 was 209,533,541 and 202,858,866.

    Kemess South Mine Performance

    The Kemess South mine produced 81,747 ounces of gold and 21.3 million
pounds of copper during the fourth quarter of 2006. Mill throughput during the
quarter averaged 49,645 metric tonnes (mt) per day and consisted exclusively
of hypogene ore with an average grade of 0.772 gr/mt gold and 0.243% copper.
Over the course of 2006, quarterly metal production was relatively steady as
mining was concentrated in the heart of the Kemess South ore body in the
western end of the open pit. For the full year, Kemess posted record gold and
copper production of 310,296 ounces and 81.2 million pounds, respectively.
    During the fourth quarter of 2006, approximately 11.0 million tonnes of
ore and waste were removed from the open pit compared to 12.9 million tonnes
during the corresponding quarter of 2005. Unit mining costs during the current
quarter were Cdn$1.64 per tonne compared with Cdn$1.19 per tonne in the same
period of 2005. The higher unit mining cost in the most recent quarter
resulted from expenses related to the pushback of the north wall and the
escalation in unit costs that occurs naturally as the pit deepens and fewer
tonnes are moved using the same complement of mobile equipment. For the total
2006 year, mining costs averaged Cdn$1.49 per tonne compared with Cdn$1.20 per
tonne in 2005.
    Mill availability during the fourth quarter of 2006 averaged 91% and
throughput averaged 49,645 tonnes per day (tpd), compared with 90%
availability and throughput of 50,738 tpd in the fourth quarter of 2005. For
the full year 2006, mill availability and throughput averaged 91% and 49,956
tpd, respectively, compared with 90% and 49,302 tpd in 2005.
    Gold and copper recoveries averaged 72% and 87%, respectively, in the
fourth quarter of 2006 compared with 72% and 85% in the fourth quarter of
2005. The 2% increase in copper recovery actually understates the significant
improvement of metallurgical performance in the Kemess mill. In the most
recent quarter, the ore milled was 15% lower-grade than it was one year ago,
which in the absence of process improvements made in the flotation circuit,
would have yielded lower recoveries than those reported one year ago. For the
full year, gold and copper recoveries were 69% and 83%, respectively, compared
with 67% and 81% in 2005.
    Metal concentrate inventory increased by 2,000 wet metric tonnes (wmt) to
approximately 10,000 wmt during the fourth quarter of 2006 as a result of high
copper concentrate production during the quarter. Concentrate inventory is
expected to remain high during the first half of 2007 and decline to a more
normal level of 5,000 wmt by the middle of 2007.
    The total unit cost of production during the fourth quarter of 2006 was
Cdn$9.10 per tonne milled, which was higher than the Cdn$8.18 per tonne milled
recorded in the corresponding period of 2005.  The increase in unit cost in
the most recent quarter was due primarily to the higher unit mining costs. 
Total site operating costs in the fourth quarter of 2006 were Cdn$41.6 million
compared with Cdn$38.1 million in the fourth quarter of 2005.  The site
operating costs in the fourth quarter of 2006 were higher than the period one
year ago as a result of the extra drilling and blasting costs associated with
the north wall pushback.  The net cash cost of production at Kemess in the
fourth quarter was negative $89 per ounce bringing the average 2006 cash cost
to negative $56 per ounce.  The net cash cost of gold production in both
periods is negative due to the large by-product credit derived from copper
production, which is credited against site operating costs for purposes of
calculating cash costs.
    The following table provides a summary of operations for the fourth
quarter and full year of 2006 and the comparable periods of 2005.

    
    2006 Kemess Mine Production

                                4Q 06        4Q 05         2006         2005
    -------------------------------------------------------------------------
    Ore plus waste mined
     (tonnes)              11,018,461   12,907,609   43,045,348   51,233,842
    Ore mined (tonnes)      4,746,251    6,663,925   17,219,143   19,523,319
    Stripping ratio
     (waste/ore)                 1.32         0.94         1.50         1.62

    Tonnes milled (ore)     4,567,332    4,667,874   18,233,978   17,995,159
    Average mill operating
     rate (tpd)                49,645       50,738       49,956       49,302

    Gold grade (gr/mt)          0.772        0.875        0.763        0.723
    Copper grade (%)            0.243        0.283        0.244        0.229

    Gold recovery (%)              72           72           69           67
    Copper recovery (%)            87           85           83           81

    Gold production (ounces)   81,747       94,405      310,296      279,962
    Copper production
     (000's pounds)            21,255       24,700       81,209       73,722

    Productivity measures:
      Tonnes mined per
       shift worked               645          788          693          785
      Tonnes milled per
       shift worked               267          285          277          276

    Cash cost of production
     ($/ounce)                    (89)          59          (56)         205
    -------------------------------------------------------------------------
    

    Safety performance at Kemess in the fourth quarter continued to be good
although one lost time incident was recorded.  On an annual basis, 2006 showed
significant improvements across six of the ten safety performance parameters
measured at the mine, with continued reductions in first aid, incidents and
reportable injury frequency.

    Financial Performance

    Northgate changed its accounting policy with respect to stockpiled ore
and concentrate inventories during the quarter to incorporate a full costing
method and also to value additional components of inventory created during the
mining process. This change in accounting policy has been applied
retroactively and is reflected in prior year comparative figures.
    Northgate's revenue in the fourth quarter of 2006 was $118,239,000
compared with $95,651,000 in the corresponding period of 2005. For the full
year, revenues in 2006 were $411,313,000 compared with $257,302,000 in the
previous year. Metal sales in the fourth quarter of 2006 consisted of 77,443
ounces of gold and 20.4 million pounds of copper, compared with 91,033 ounces
of gold and 23.7 million pounds of copper in the fourth quarter of 2005. The
net realized metal prices received on sales in the fourth quarter of 2006 were
approximately $533 per ounce of gold and $3.00 per pound of copper compared
with $453 per ounce and $1.98 per pound, respectively, in the fourth quarter
of 2005. In the fourth quarter of 2006, Northgate reduced its gold forward
sales position by 6,000 ounces by settling forward contracts for cash
consideration of $1,572,000 compared with nil ounces during the same period of
2005. A total of $6,348,000 in deferred gold hedging losses were amortized in
the fourth quarter of 2006 and at December 31, 2006, an unamortized deferred
hedging loss of $8,583,000 remained recorded on the balance sheet for certain
gold forward sales contracts that were closed out prior to their original
settlement dates. This deferred hedging loss will be amortized over the period
in which the related forward sales contracts were originally scheduled for
settlement. Northgate's gold hedging activities reduced the realized price of
gold sold during the most recent quarter by $82 per ounce compared to a
reduction of $32 per ounce in the corresponding period one year ago. In the
fourth quarter of 2006, Northgate entered into forward sales and purchase
contracts with a major financial institution to fix the price of copper
delivered prior to December 31, 2006 for which final settlement has not
occurred. Also during the quarter, Northgate entered into forward sales and
purchase contracts with the same financial institution to fix the price of
15,000 metric tonnes of its 2007 copper production. The total quantity of
18,750 metric tones of copper was sold forward during the quarter using London
Metal Exchange (LME) contracts maturing from March 2007 through April 2008 at
an average forward price of $3.15 per pound.
    The cost of sales in the fourth quarter of 2006 was $60,461,000 compared
with the corresponding period of 2005 when the cost of sales was $47,682,000.
For the full year, the cost of sales was $224,584,000 compared with
$178,411,000 in 2005. Cost of sales were substantially higher in the current
quarter and year-to-date ended 2006 than they were in the corresponding
periods of 2005 due to higher treatment, refining and price participation
charges for processing concentrate, higher concentrate production, the
strengthening Canadian dollar and increased Canadian dollar denominated
production costs.
    Administrative and general expenses of $1,543,000 in the fourth quarter
of 2006 were higher than the $1,518,000 figure recorded in the comparable
period of 2005. The higher expense in the current quarter was the result of
additional corporate office salaries in support of the exploration activities
at Young-Davidson, increased spending on regulatory and legislative compliance
costs related to Northgate's Sarbanes-Oxley 404 compliance project and higher
stock based compensation expense. For the full year, administrative and
general costs were $8,209,000 compared with $6,128,000 in 2005.
    Depreciation and depletion expenses in the fourth quarter were
$10,122,000 compared to $13,810,000 during the corresponding period of 2005.
The depreciation and depletion expense for the most recent quarter was
substantially lower than the same quarter one year ago, primarily due to a 29%
decrease in the amount of ore mined from the open pit. Total depreciation and
depletion expenses during 2006 were $35,591,000 compared with $38,009,000 in
2005. This expense was unusually high in 2005 due to the large quantity of ore
that was mined from the open pit and stockpiled for processing in the 2006
supergene campaign. Amortization of Northgate's mineral property, plant and
equipment is based on the unit-of-production method as ore is mined, even
though the economic benefit of this stockpiled ore will not be realized until
future quarters.
    Northgate recorded net interest income of $2,156,000 for the three months
ended December 31, 2006 compared to a net interest expense of $700,000 in the
corresponding quarter of 2005. Since Northgate repaid its credit facility on
February 15, 2006, its cash balances have grown substantially and interest
income has begun to exceed the small interest expense arising from capital
leases for mobile equipment at Kemess. For the full year, net interest income
was $4,013,000 compared to an expense of $2,391,000 in 2005. Net interest
income is expected to increase to over $3 million per quarter during 2007 as a
result of Northgate's higher cash balances.
    Exploration expenses in the fourth quarter of 2006 were $4,953,000
compared with $686,000 in the comparable period of 2005. The higher
exploration expense in the most recent quarter was the result of the
continuation of the surface based diamond drilling program at the
Young-Davidson property and the commencement of the underground exploration
program at the same property. Exploration expenses for the full year totalled
$11,449,000 compared to $3,915,000 in 2005.
    Capital expenditures during the fourth quarter of 2006 totalled
$6,115,000 compared to $2,126,000 in the corresponding period of 2005. Capital
expenditures in the most recent quarter included $1,751,000 for ongoing
construction of the Kemess tailings dam, $1,695,000 for the purchase of three
small drills for the north wall push back in the Kemess South pit and
$2,495,000 related to permitting activities for the Kemess North project. In
the fourth quarter of 2005, capital expenditures were primarily related to the
ongoing tailings dam construction. Total capital expenditures during 2006
amounted to $15,199,000 compared with $14,044,000 in 2005.

    Non-GAAP Measure

    Northgate has included net cash costs of production per ounce of gold in
the discussion of its results from operations, because it believes that these
figures are a useful indicator to investors and management of a mine's
performance as they provide: (i) a measure of the mine's cash margin per
ounce, by comparison of the cash operating costs per ounce to the price of
gold; (ii) the trend in costs as the mine matures; and, (iii) an internal
benchmark of performance to allow for comparison against other mines. However,
cash costs of production should not be considered as an alternative to
operating profit or net profit attributable to shareholders, or as an
alternative to other Canadian GAAP measures and they may not be comparable to
other similarly titled measures of other companies.
    A reconciliation of net cash costs per ounce of production to amounts
reported in the statement of operations is shown below.

    
    (Expressed in thousands
     of US$, except per
     ounce amounts)           4Q 2006      4Q 2005      YE 2006      YE 2005
    -------------------------------------------------------------------------
    Gold production
     (ounces)                  81,747       94,405      310,296      279,962
    -------------------------------------------------------------------------
    Cost of sales         $    60,461  $    47,682  $   224,584  $   178,411
    Change in inventories
     & other                    1,944          557        7,836        6,769
    Gross copper & silver
     revenue                  (69,735)     (49,366)    (249,699)    (127,787)
    -------------------------------------------------------------------------
    Total cash cost            (7,330)       5,539      (17,279)      57,393
    -------------------------------------------------------------------------
    Cash cost per ounce   $       (89) $        59  $       (56) $       205
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    

    YOUNG-DAVIDSON EXPLORATION UPDATE

    During the fourth quarter of 2006, Northgate completed a NI 43-101
compliant technical report outlining an increased resource at the
Young-Davidson project near Matachewan, Ontario. The report which was filed on
SEDAR on January, 29, 2007, showed an overall increase in contained gold
ounces of just over 600,000 ounces of gold. All of these additional ounces are
underground. Overall resources on the property now stand at 1,063,060 ounces
in the measured and indicated category, with an additional inferred resource
of 1,071,270 ounces (please refer to Northgate's press release dated December
18, 2006 for more information).
    The surface drilling program recommenced in early January with four
drills and the contractor has committed to providing two additional drills as
they become available in March and April. All permits for the underground work
have now been obtained and work on the underground development has been
ongoing since mid-December. The ramp portal has now been collared and almost
all surface infrastructure is now in place.

    KEMESS NORTH UPDATE

    The public hearing phase of the joint Federal-Provincial Environmental
Review process concluded on December 15, 2006. On December 4, 2006, the
federal and provincial governments announced that the review process would be
extended for 90 days to give the two levels of government additional time to
negotiate funding agreements that would enhance the involvement of several
First Nations groups in the panel review process. In February 2007, the
governments reached agreement with two First Nations groups to provide
additional funding and a revised timetable for the completion of the panel
review process is expected to be announced later in the first quarter of 2007.

    
    -------------------------------------------------------------------------
                      Selected Quarterly Financial Data
        (expressed in thousands of US dollars, except per share data)
    -------------------------------------------------------------------------
                                             2006 Quarter Ended
    -------------------------------------------------------------------------
                               Dec 31       Sep 30       Jun 30       Mar 31

    Revenue(1)            $   118,239  $   102,667  $   105,348  $    85,059
    Earnings (loss)       $    19,790  $    14,902  $    50,315  $    21,735

    Earnings (loss)
     per share
      Basic               $      0.09  $      0.07  $      0.23  $      0.10
      Diluted             $      0.09  $      0.07  $      0.22  $      0.10
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                             2005 Quarter Ended
    -------------------------------------------------------------------------
                               Dec 31       Sep 30       Jun 30       Mar 31

    Revenue(1)            $    95,651  $    64,631  $    54,461  $    42,559
    Earnings (loss)       $    44,527  $     8,765  $    (3,342) $   (10,393)

    Earnings (loss)
     per share
      Basic               $      0.21  $      0.04  $     (0.02) $     (0.05)
      Diluted             $      0.21  $      0.04  $     (0.02) $     (0.05)
    -------------------------------------------------------------------------
    (1) Consistent with the presentation adopted in the fourth quarter of
        2005, revenue figures for 2005 have been adjusted to reflect the
        reclassification into cost of sales of a variety of costs that were
        previously netted against revenues.
    (2) The figures in the table reflect the Corporation's change in
        accounting policy for metal inventories.
    

    Conference Call and Webcast of Year End Financial Results

    You are invited to participate in the Northgate Minerals Corporation
(TSX:NGX) (AMEX:  NXG) live conference call and webcast discussing our 2006 year
end financial results. The call and webcast will take place on Friday,
March 2, 2007, at 10:00 a.m. ET.
    You may participate in the Northgate Conference Call by calling
416-644-3415 or toll free in North America at 1-800-732-9307. To ensure your
participation, please call five minutes prior to the scheduled start of the
call. For those unable to participate in the conference call at the scheduled
time, a replay of the conference call will be available beginning on March 2
at 12:00 P.M. ET until March 16 at 11:59 PM ET.

    
    Replay Access No. 416-640-1917    Passcode: 21219271 followed by the
                                                number sign.
    Replay Access No. 877-289-8525    Passcode: 21219271 followed by the
                                                number sign.
    

    A live and archive Webcast of this call, which includes our presentation
package, will also be made available on our website at
www.northgateminerals.com.

    Northgate Minerals Corporation is a gold and copper mining company
focused on operations and opportunities in the Americas. The Corporation's
principal assets are the Kemess South mine in north-central British Columbia,
the adjacent Kemess North deposit, which contains a proven and probable
reserve of 4.1 million ounces of gold and the Young-Davidson property in
northern Ontario with a total resource base of 2.1 million ounces of gold.
Northgate is listed on the Toronto Stock Exchange under the symbol NGX and on
the American Stock Exchange under the symbol NXG.

    Forward-Looking Statements
    This news release includes certain "forward-looking statements" within
the meaning of section 21E of the United States Securities Exchange Act of
1934, as amended. These forward-looking statements include estimates,
forecasts, and statements as to management's expectations with respect to,
among other things, future metal production and production costs, potential
mineralization and reserves, exploration results, progress in the development
of mineral properties, demand and market outlook for commodities and future
plans and objectives of Northgate Minerals Corporation (Northgate).
Forward-looking statements generally can be identified by the use of
forward-looking terminology such as "may," "will," "expect," "intend,"
"estimate," "anticipate," "believe," or "continue" or the negative thereof or
variations thereon or similar terminology. Forward-looking statements are
necessarily based upon a number of estimates and assumptions that, while
considered reasonable by management are inherently subject to significant
business, economic and competitive uncertainties and contingencies. There can
be no assurance that such statements will prove to be accurate and actual
results and future events could differ materially from those anticipated in
such statements. Important factors that could cause actual results to differ
materially from Northgate's expectations are disclosed under the heading "Risk
and Uncertainties" in Northgate's 2005 Annual Report and under the heading
"Risk Factors" in Northgate's 2005 Annual Information Form (AIF) both of which
are filed with Canadian regulators on SEDAR (www.sedar.com) and with the
United States Securities and Exchange Commission (www.sec.gov). Northgate
expressly disclaims any intention or obligation to update or revise any
forward-looking statements whether as a result of new information, future
events or otherwise.


    
    NORTHGATE MINERALS CORPORATION
    INTERIM CONSOLIDATED BALANCE SHEETS
    (Expressed in thousands of United States dollars)

                                                    December 31  December 31
                                                           2006       2005(1)
    -------------------------------------------------------------------------
                                                     (unaudited)
    ASSETS
    Current assets
      Cash and cash equivalents                     $   262,199  $    50,639
      Concentrate settlements and other
       receivables                                       17,960       18,885
      Inventory                                          24,999       28,901
      Future income tax asset                             7,469            -
      Deferred hedging loss                               8,583        4,561
    -------------------------------------------------------------------------
                                                        321,210      102,986

    Other assets                                         28,831       14,117
    Future income tax asset                               6,291       13,937
    Mineral property, plant and equipment               159,299      177,966
    -------------------------------------------------------------------------
                                                    $   515,631  $   309,006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    LIABILITIES AND SHAREHOLDERS' EQUITY
    Current liabilities
      Accounts payable and accrued liabilities      $    22,023  $    19,556
      Current portion of capital lease obligations        2,439        4,215
      Current portion of long-term debt                       -       13,700
    -------------------------------------------------------------------------
                                                         24,462       37,471

    Capital lease obligations                             2,586        7,680
    Provision for site closure and reclamation
     obligations                                         28,197       26,193
    Future income tax liability                          12,638        1,229
    -------------------------------------------------------------------------
                                                         67,883       72,573
    -------------------------------------------------------------------------

    SHAREHOLDERS' EQUITY (Note 3)
    Common shares                                       307,914      195,565
    Warrants                                                  -        8,715
    Contributed surplus                                   2,596        1,657
    Retained earnings                                   137,238       30,496
    -------------------------------------------------------------------------
                                                        447,748      236,433
    -------------------------------------------------------------------------
                                                    $   515,631  $   309,006
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Adjusted (note 2)
    The accompanying notes form an integral part of these financial
    statements.


    INTERIM CONSOLIDATED STATEMENTS OF OPERATIONS
    (Expressed in thousands of United States dollars,
     except per share amounts)

                                Three months ended       Twelve months ended
                                    December 31              December 31
    (Unaudited)                  2006       2005(1)        2006       2005(1)
    -------------------------------------------------------------------------
    Revenue               $   118,239  $    95,651  $   411,313  $   257,302
    -------------------------------------------------------------------------
    Cost of sales              60,461       47,682      224,584      178,411
    Administrative and
     general                    1,543        1,518        8,209        6,128
    Depreciation and
     depletion                 10,122       13,810       35,591       38,009
    Interest expense
     (income)                  (2,156)         700       (4,013)       2,391
    Exploration                 4,953          686       11,449        3,915
    Currency translation
     losses (gains)             3,726         (573)       1,922         (962)
    Accretion of site
     closure and reclamation
     costs                        406          306        1,553        1,183
    Other expense (income)          -          (50)       8,423          496
    -------------------------------------------------------------------------
                               79,055       64,079      287,718      229,571
    -------------------------------------------------------------------------
    Earnings before
     income taxes              39,184       31,572      123,595       27,731
    Income tax recovery
     (expense)
      Current                    (951)        (982)      (5,406)      (2,111)
      Future (note 5)         (18,443)      13,937      (11,447)      13,937
    -------------------------------------------------------------------------
                              (19,394)      12,955      (16,853)      11,826
    -------------------------------------------------------------------------
    Net earnings for
     the period           $    19,790  $    44,527  $   106,742  $    39,557
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    Net earnings per
     share
      Basic               $      0.09  $      0.21  $      0.50  $      0.20
      Diluted             $      0.09  $      0.21  $      0.48  $      0.20

    Weighted average
     shares outstanding
      Basic               217,165,384  209,195,152  215,609,932  202,789,310
      Diluted             224,674,332  209,533,541  222,892,929  202,858,866
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------


    INTERIM CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
    (Expressed in thousands of United States dollars)

                                Three months ended       Twelve months ended
                                    December 31              December 31
    (Unaudited)                  2006         2005         2006         2005
    -------------------------------------------------------------------------
    Retained earnings
     (deficit) at beginning
     of period

    As previously
     reported             $   117,448  $   (20,180) $    30,496  $   (15,210)
    Adjustment for
     retroactive change
     in accounting for
     inventory (note 2)             -        6,149            -        6,149
    -------------------------------------------------------------------------
    As adjusted (note 2)      117,448      (14,031)      30,496       (9,061)

    Net earnings for
     the period                19,790       44,527      106,742       39,557
    -------------------------------------------------------------------------

    Retained earnings at
     end of period        $   137,238  $    30,496  $   137,238  $    30,496
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
    (1) Adjusted (note 2)
    The accompanying notes form an integral part of these financial
    statements.


    INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
    (Expressed in thousands of United States dollars)

                                Three months ended       Twelve months ended
                                    December 31              December 31
    (Unaudited)                  2006       2005(1)        2006       2005(1)
    -------------------------------------------------------------------------
    CASH PROVIDED BY
     (USED IN)
    Operations
    Earnings for the
     period               $    19,790  $    44,527  $   106,742  $    39,557
    Non-cash items
      Depreciation and
       depletion               10,122       13,810       35,591       38,009
      Unrealized currency
       translation losses       1,335        1,006        1,047        1,251
      Accretion of site
       closure and
       reclamation costs          406          306        1,553        1,183
      Amortization of
       deferred hedging loss    6,348        5,585       21,375        5,585
      Amortization of
       deferred charges            73       (2,208)         562        1,305
      Stock-based
       compensation               290           38        2,014          845
      Future income tax
       expense (recovery)      18,443      (13,937)      11,447      (13,937)
      Change in fair value
       of forward contracts   (17,975)         755      (16,619)         755
    Other expenses (income)         -         (277)           -         (299)
    -------------------------------------------------------------------------

    Changes in non-cash
     operating working
     capital and other
      Concentrate
       settlements and
       other receivables       11,949       (6,391)      13,909       (7,558)
      Inventory                (1,526)      (7,734)      (5,730)      (9,846)
      Accounts payable and
       accrued liabilities     (3,685)         751        2,467        2,723
      Settlement of
       forward contracts       (1,572)           -      (25,397)     (10,146)
      Reclamation costs paid     (114)        (388)      (2,349)        (388)
    -------------------------------------------------------------------------
                               43,884       35,843      146,612       49,039
    -------------------------------------------------------------------------

    Investments
    Purchase of other assets   (1,714)        (852)      (1,845)        (852)
    Purchase of mineral
     property, plant and
     equipment                 (6,115)      (2,126)     (15,199)     (12,697)
    Proceeds on sale of
     property                       -            -            -          171
    Net cash acquired on
     acquisition of
     Young-Davidson Mines,
     Limited                        -          123            -          123
    -------------------------------------------------------------------------
                               (7,829)      (2,855)     (17,044)     (13,255)
    -------------------------------------------------------------------------

    Financing
    Repayment of capital
     lease obligation            (708)      (1,316)      (6,870)      (4,959)
    Repayment of long-term
     debt                           -      (14,050)     (13,700)     (29,800)
    Issuance of common
     shares                    99,998          177      102,562          357
    -------------------------------------------------------------------------
                               99,290      (15,189)      81,992      (34,402)
    -------------------------------------------------------------------------

    Increase in cash and
     cash equivalents         135,345       17,799      211,560        1,382
    Cash and cash
     equivalents at
     beginning of period      126,854       32,840       50,639       49,257
    -------------------------------------------------------------------------
    Cash and cash
     equivalents at end
     of period            $   262,199  $    50,639  $   262,199  $    50,639
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------

    Supplementary Information
    Cash paid during the
     period for
      Interest                    111        1,363        1,006        4,204
      Income taxes                484            -          484            -
    Non-cash financing
     activities
      Issuance of common
       shares and other
       securities on Young-
       Davidson Mines,
       Limited purchase             -       17,990            -       17,990
      Purchase of mineral
       property, plant
       and equipment by
       assumption of capital
       lease obligations            -            -            -        1,347
    -------------------------------------------------------------------------
    (1) Adjusted (note 2)
    The accompanying notes form an integral part of these financial
    statements.



    NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
    Three and Twelve months ended December 31, 2006 and 2005
    (Dollar amounts in tables are expressed in thousands of United States
     dollars unless indicated) (Unaudited)

    1.  Basis of Presentation

        The accompanying unaudited interim consolidated financial statements
        have been prepared in accordance with generally accepted accounting
        principles in Canada ("Canadian GAAP"). They do not include all the
        disclosures required by generally accepted accounting principles for
        annual financial statements and should be read in conjunction with
        the Corporation's consolidated financial statements and the notes
        thereto included in the Corporation's Annual Report for the year
        ended December 31, 2005. In the opinion of management, all
        adjustments considered necessary for fair presentation have been
        included in these financial statements.

        These financial statements are prepared using the same accounting
        policies and methods of application as those disclosed in Note 2 to
        the Corporation's consolidated financial statements for the year
        ended December 31, 2005.

    2.  Accounting Changes

        During the quarter ended December 31, 2006, the Corporation changed
        its accounting policy with respect to metal inventories to
        incorporate a full costing method and also to value additional
        components of inventory created during the mining process. This
        change in accounting policy has been applied retroactively for all
        years presented. Net earnings for the year ended December 31, 2005
        increased by $6,670,000 (2004 - $1,541,000) or $0.04 per share
        (2004 - nil). Additionally, as at December 31, 2005, inventory
        increased by $13,882,000 and the future income tax asset decreased by
        $1,063,000.

    3.  Shareholders' Equity

    (a) Common shares

        ---------------------------------------------------------------------
                                               Number of shares       Amount
        ---------------------------------------------------------------------

        Balance, December 31, 2005                  214,011,246  $   195,565

        Issued in Q1 2006:
          Pursuant to Employee Share Purchase Plan       45,027          102
          On exercise of warrants                       314,523          480
          On exercise of options                        386,800          490
        Issued in Q2 2006:
          Pursuant to Employee Share Purchase Plan       30,269          113
          On exercise of warrants                        10,202           27
          On exercise of options                        810,880        2,247
        Issued in Q3 2006:
          Pursuant to Employee Share Purchase Plan       30,955          109
          On exercise of warrants                         2,778            8
          On exercise of options                         22,800           84
        Issued in Q4 2006:
          Pursuant to Employee Share Purchase Plan       39,300          130
          On exercise of warrants                    37,895,253      108,383
          On exercise of options                        100,000          176
        ---------------------------------------------------------------------
        Balance, December 31, 2006 (unaudited)      253,700,033  $   307,914
        ---------------------------------------------------------------------
        ---------------------------------------------------------------------

        On or before December 28, 2006 holders of Northgate publicly traded
        common share purchase warrants (CUSIP numbers 666416169 and
        666416177) exercised a total of 37,895,253 warrants. 274,105 warrants
        expired unexercised. As a consequence of the warrants exercise, the
        Corporation received a total of $99,785,000. As of March 1, 2007, the
        Corporation had 254,115,058 issued and outstanding common shares.

    (b) Stock-based compensation

        During the three months ended December 31, 2006, the Corporation
        granted a total of 75,000 options (2005 - 20,000) to employees with a
        term of seven years, exercisable at Cdn$3.85. Twenty percent (15,000)
        of these options vested immediately and the balance will vest in
        equal amounts on the anniversary of the grant over the next four
        years. During the three months ended December 31, 2006, $246,000
        (2005 - $2,000) was recognized for options that vested during the
        quarter. The fair value of the options granted for the quarter ended
        December 31, 2006 was $145,000 (2005 - $10,000).

        During the three months ended December 31, 2006, 100,000 options were
        exercised and 11,000 options were either cancelled or expired.

        At December 31, 2006, there were 4,655,340 options outstanding of
        which 2,097,340 were exercisable.

        There were no options granted during the three months ended
        September 30, 2006 (2005 - nil). During the three months ended
        September 30, 2006, $244,001 (2005 - $16,133) of stock-based
        compensation was recognized for options that vested during the
        quarter.

        During the three months ended September 30, 2006, 22,800 options were
        exercised and 18,200 options were either cancelled or expired.

        There were no options granted during the three months ended June 30,
        2006 (2005 - 50,000). During the three months ended June 30, 2006,
        $240,000 (2005 - $85,000) of stock-based compensation was recognized
        for options that vested during the quarter.

        During the three months ended June 30, 2006, 810,880 options were
        exercised and 56,500 options were either cancelled or expired.

        During the three months ended March 31, 2006, the Corporation granted
        a total of 1,352,000 (2005 - 1,205,000) options to employees, with a
        term of seven years. 1,217,000 of these options are exercisable at
        Cdn$2.60, 100,000 are exercisable at Cdn$2.52 and 35,000 are
        exercisable at Cdn$2.65. Twenty percent (242,000) of these options
        vested immediately and the balance will vest in equal amounts on the
        anniversary date of the grant over the next four years. The fair
        value of the options granted for the quarter ended March 31, 2006 was
        $1,480,000 (2005 - $604,000). During the three months ended March 31,
        2006, $1,131,000 (2005 - $578,000) of stock-based compensation was
        recognized for options that vested during the quarter.

        During the three months ended March 31, 2006, a total of 86,800
        options were cancelled and 386,800 options were exercised.

        The fair value of the share options granted during 2006 was estimated
        using the Black-Scholes pricing model with the following assumptions
        (there were no options granted in Q3 2006 or Q3 2005):

        ---------------------------------------------------------------------
                                       For Options Granted in
        ---------------------------------------------------------------------
                                  2006                        2005
        ---------------------------------------------------------------------
                         Q4     Q3     Q2     Q1     Q4     Q3     Q2     Q1
        ---------------------------------------------------------------------
        Risk-free
         interest
         rate          4.53%     -      -    4.1%   2.5%     -    2.5%   2.5%
        ---------------------------------------------------------------------
        Annual
         dividends        -      -      -      -      -      -      -      -
        ---------------------------------------------------------------------
        Expected
         stock price
         volatility      50%     -      -     60%    51%     -     55%    56%
        ---------------------------------------------------------------------
        Expected
         option         5.0                  5.0    3.5           3.5    3.5
         life         years      -      -  years  years      -  years  years
        ---------------------------------------------------------------------
        Per share
         fair value
         of options
         granted
         (Cdn$)       $2.20      -      -  $0.62  $0.59      -  $0.62  $0.76
        ---------------------------------------------------------------------

    4.  Financial Instruments

        During the three months ended December 31, 2006, the Corporation
        reduced its gold forward sales position by 6,000 (2005 - nil) ounces
        at a cost of $1,572,000 (2005 - $nil). For the full year ended
        December 31, 2006, 79,000 ounces were settled at a cost of
        $25,397,000. In accordance with Accounting Guideline 13, "Hedging
        Relationships", the losses associated with the early settlement of
        these contracts were deferred and are being amortized over the same
        period as the forward sales contracts were originally scheduled to be
        closed out. As at December 31, 2006, $8,583,000 of the deferred
        hedging loss from early settlement of contracts remained deferred and
        will be amortized over the period that the forward sales contracts
        were originally scheduled to settle (January 2007 - December 2007).

        At December 31, 2006, Northgate had remaining gold forward sales
        commitments with a major financial institution to deliver 60,000
        ounces of gold at an average accumulated price of $307 per ounce.
        These commitments are in the form of forward sales contracts maturing
        at various dates between March 30, 2007 and December 31, 2007. The
        unrealized loss on these forward contracts at December 31, 2006 was
        approximately $20,265,000, and has not been recognized in these
        financial statements.

        At December 31, 2006, the Corporation had forward sales contracts
        with a major financial institution to fix the price of delivered
        copper for which final settlement has not occurred. A total of
        21,650 metric tonnes of copper were sold forward using LME contracts
        maturing from January 2007 through May 2008 at an average forward
        price of $3.19 per pound. The Corporation also entered into separate
        forward purchase contracts with the same institution to repurchase
        its forward sales position at monthly average cash LME prices over
        the same period. The volume of forward sales and purchases in each
        future contract month match the expected future pricing periods for
        copper in concentrate delivered to Xstrata (formerly Falconbridge)
        under a multi-year concentrate sales agreement. The copper forward
        sales and purchase contracts are being recognized on a mark-to-market
        basis. The fair value of these contracts at December 31, 2006 was a
        net gain of $15,488,000.

    5.  Future Income Taxes

        During the fourth quarter, the Company recognized future income tax
        expense of $18,443,000 to reflect the utilization of tax losses and
        other tax deductions to offset taxable income.

    6.  Commitments and Contingencies

        In the second quarter of 2006, the Corporation entered into a
        Cooperation Agreement with the Tse Keh Nay (3 Nations) related to the
        operation of Northgate's existing Kemess South mine. The Corporation
        paid Cdn$500,000 on signing of the agreement and the Corporation will
        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.

        Also in the second quarter, Northgate launched an unsolicited offer
        to purchase all the outstanding common shares of Aurizon Mines Ltd
        ("Aurizon"). On July 7, 2006, the Corporation withdrew its offer
        after the British Columbia Court of Appeal upheld a previous lower
        court injunction against Northgate's offer. As a result of this
        ruling, Aurizon was awarded its costs and damages that are yet to be
        determined. The Corporation accrued an estimate of these costs and
        damages as a charge against earnings in the second quarter of 2006.

        In the third quarter of 2006, the Corporation entered into a fixed-
        price agreement to purchase a total of 12,000,000 litres of low-
        sulphur diesel fuel (approximately 50% of expected 2007 consumption)
        from a supplier for delivery during 2007.

    7.  Subsequent Events

        In January of 2007 the Corporation repurchased 30,000 ounces of its
        gold forward sales position at a cost of $9,325,800. As of March 1,
        2007 the remaining gold forward sales position is 30,000 ounces at an
        average accumulated price of $307 per ounce.
    



    %CIK: 0000072931




For further information:

For further information: Ms. Keren R. Yun, Manager, Investor Relations,
(416) 216-2781, kyun@northgateminerals.com

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Northgate Minerals Corporation

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