Glamis completes sale of Cerro San Pedro project

Vancouver — Reno-based Glamis Gold (GLG-T) has completed the sale of its 50% interest in the Cerro San Pedro project in Mexico to Metallica Resources (MR-T).

Glamis has received $2 million of the total $18 million purchase price. The balance will be received in a series of payments that will consist of cash and or free trading common shares of Metallica. Glamis retains a sliding scale Net Return royalty on all production from the Cerro San Pedro property that ranges from 0.5-to-2.0%, depending on the gold price.

We are pleased to finally consolidate the ownership of the Cerro San Pedro project and believe it is a "win-win" transaction for both parties," said Kevin McArthur, President and CEO of Glamis. "Given the size of our share of the project and its priority relative to Glamis’ other development projects, Cerro San Pedro does not fit well in our intermediate-term planning and this agreement will allow us to focus our human and financial resources on the exciting El Sauzal and Marlin development projects."

If Metallica, which already holds 50% of the project, fails to make the next payment of $5 million, scheduled six months after the closing date, Glamis will keep the initial $2 million and Metallica will have to return 51% interest to Glamis.

The Cerro San Pedro project hosts proven and probable reserves of 49.4 million tonnes grading 0.57 gram gold and 23 grams silver, equivalent to 900,000 oz. gold and 36 million oz. silver. A proposed run-of-mine, heap-leach operation would produce 110,000 oz. gold-equivalent annually over an eight-year mine life at a projected cash cost of US$129 per oz. Capital costs are estimated at US$45 million.