Glamis Gold‘s (GLG-T) board of directors has formally given the go-ahead for the final design and construction phase at the Marlin gold-silver project in Guatemala.
Under a revised feasibility study, Marlin is expected to run through 4,000 tonnes of ore per day to annually produce 217,000 oz. of gold and 3.3 million oz. of silver over ten years. Total production costs are figured at US$210 per oz. of gold, total cash costs at US$93 per oz. Gold recovery is pegged at 91%, silver at 83%.
Beginning in early 2006, a proposed open-pit mine will target proven and probable reserves totalling 11.8 million tonnes running 3.18 grams gold per tonne. An underground operation would focus on probable reserves of 2.3 million tonnes grading 12.82 grams gold, with another 909,000 tonnes grading 10.64 grams classified as inferred resources. The deposit remains open to the west and at depth.
Based on a gold price of US$325 per oz. and a silver price of US$5 per oz., the project generates an internal rate of return of around 25%. The price tag rings in at US$120.3 million.
With an approved Environmental Impact Assessment in hand, Glamis expects to receive an Exploitation License for Marlin as early as mid December.
In all, the company expects to spend US$235 million over the next two years. The capital will go toward advancing its El Sauzal gold project in Mexico to commercial production, construction at Marlin, and doubling annual output at the Marigold project in Nevada to 180,000 oz. of gold.
Glamis expects to produce 260,000 oz. of gold at total cash costs of US$170-US$180 per oz. in 2004. By 2006, production is expected to soar to 600,000 oz. at less than US$150 apiece.
The company hopes to fund its growth plans with cash flow and the US$147.2 million in cash and equivalents on hand.
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