Glamis boosts profits, completes Western Silver transaction

Vancouver The strong performance of the newly commissioned Marlin mine has allowed Glamis Gold (GLG-T, GLG-N) to dramatically boost its first quarter net income to US$16.9 million, or 13 per share, from US$2.2 million, or 2 per share, a year earlier.

The Marlin mine in Guatemala is a combined underground and open-pit operation that produced 25,000 oz. gold at total cash costs below US$100 per oz. in March, and 43,269 oz. gold and 321,196 oz. silver for the full quarter at total costs averaging US$175 per oz. gold.

The Marlin mill reached its targeted throughput rate of 4,000 tonnes per day during the quarter, despite down-time related to the initial start-up phase. By the end of the quarter, the underground mine had reached half its 1,000-tonne-per-day production target, with the balance coming from the open pit. Marlin is expected to produce about 245,000 oz. gold and 3 million oz. silver this year.

Glamis’ portfolio of mines in Nevada, Mexico and Central America collectively are expected to produce 670,000 oz. gold this year, up from 434,000 oz. in 2005, and rising to 700,000 oz. in 2007.

During the latest quarter, the company’s overall production reached a record 147,781 oz. gold at a total cash cost of US$182 per oz. This boosted revenue to US$81.4 million, almost double revenue a year earlier.

The El Sauzal mine in Mexico produced 62,311 oz. gold at a total cash cost of US$111 per oz. in the first quarter. The company’s two-thirds share of production from the Marigold mine in Nevada was 27,220 oz. gold at total costs of US$278 per oz., while the San Martin mine in Honduras contributed 14,981 oz. at total cash costs of US$329 per oz.

Glamis is looking to dramatic growth in the years ahead with today’s closing of a merger transaction with Western Silver, valued at US$1 billion. Western Silver shareholders have overwhelmingly approved the transaction, and under its terms, each Western Silver shareholder will receive 0.688 of a Glamis common share, and one share of a new exploration company, for each issued Western Silver share.

The spin-off exploration company will hold about $38 million in cash, an early-stage exploration project in Mexico, and an interest in the Carmacks copper project in the Yukon Territory.

Glamis will retain Western Silver’s core asset, the Penasquito project in Mexico’s Zacatecas State. A 2005 independent feasibility study (scheduled to be updated this year) has concluded that oxide and sulphide resources are sufficient for 17-year, open-pit mine life.

Based on the study, a sulphide mill could produce about 2.6 million tonnes of zinc concentrate and 1.1 million tonnes of lead concentrate containing 205.9 million oz. silver, 2.9 million oz. gold, 631,000 tonnes of lead and 1.36 million tonnes of zinc over that period. An oxide leach plant could produce a further 14 million oz. silver and 389,000 oz. gold. Capital costs are estimated at US$300 million.