Glamis reports lower Q2 gold production

Vancouver – Reno-based Glamis Gold (GLG-T) had lower gold production that led to a downturn in earnings for the second quarter but is expecting a turn around in the second half of the year when El Sauzal starts production and Marigold’s expansion is completed. Glamis is counting on annual gold production to double to more than 600,000 ounces by 2006 at a total cash cost below US$150 per ounce.

For the second quarter, Glamis reported net earnings of US$2.9 million or 2 a share on revenues of US$7.7 million compared with US$3.8 million or 3 a share on US$9.8 million for the same period a year earlier.

The unhedged producer reported a decline in revenue from lower gold sales for the quarter, from US$18.6 million compared with US$21.7 million in the same period a year ago. These were partially offset by higher realized gold prices of US$394 per ounce compared with US$353 per oz. last year.

The company lowered its gold production forecast for 2004 to between 250,000 and 260,000 oz. from the 265,000 oz. it had set out to produce. The revision was necessary because the expansion of Marigold is running about two months behind schedule.

Lower production at the company’s San Martin and Rand mines led to a decline in gold production for the second quarter – 48,109 ounces at a total cash cost of US$183 per oz. of gold, compared with 61,757 oz. at a total cash cost of US$172 per oz. in the same quarter a year ago.

The company’s wholly-owned San Martin mine, a classic epithermal gold deposit situated in central Honduras was fast-tracked to production by late 2000. Gold production in the second quarter was 22,418 oz. at a total cash cost of US$192 an oz. compared with 29,159 oz. in the second quarter of 2003 at a US$165 an oz. Lower than expected ore grades and recoveries from the Palo Alto pit led to the higher cash costs. San Martin is on track to produce over 100,000 oz. gold in 2004.

At the company’s wholly-owned Rand mine situated some 100 miles northeast of Los Angeles, California, about 15,000 oz. of gold are expected from the leaching operation this year.

Second quarter gold production at Rand was 3,503 oz. at a total cash cost of US$268 per oz. compared with 9,958 oz. at US$232 per oz. in previous year. Production has ceased and reclamation is well underway. The large scale mining equipment was transferred to the Marigold mine.