Reno-based
Through its Mexican subsidiary, Cambior controls several companies with exploration and development projects, the most advanced of which is the Cerro San Pedro gold-silver property, near San Juan Potosi.
Cambior had spent US$15.5 million of the US$20 million it was required to pay to earn a half-interest in the property. The remainder is held by
As part of its purchase, Glamis paid US$2.5 million for a crusher system, which Cambior acquired for use at Cerro San Pedro.
Glamis also gains:
– the early-stage Santo Nino prospect, in Chihuahua state;
– a half-interest in the large Metates gold resource in Durango state;
– assorted joint ventures with
– all the regional and project data generated by Cambior in the past seven years, plus various tax losses associated with these activities.
Cambior will use the proceeds from the transaction to pay its creditors. The Montreal-based company has been selling assets in the wake of troubles caused by a failed hedging program. Earlier this year, it sold the Bouchard-Hbert and Langlois mines in Quebec for US$48 million.
The Cerro San Pedro project has already received an environmental impact statement and land-use licence from the state and federal governments. The deposit contains proven and probable reserves of 64 million tonnes averaging 0.62 gram gold and 24.5 grams silver, equivalent to 1.3 million oz. gold and 50 million oz. silver.
With capital costs estimated at US$68 million, the operation is expected to produce 110,000 oz. gold and 2.6 million oz. silver annually over an 8-year mine life. Cash operating costs, including royalties, are pegged at US$190 per oz. gold-equivalent.
Closer to home, at the Dee gold mine in Nevada’s Carlin trend, Glamis experienced slower-than-anticipated startup for underground mining, resulting in a net loss of US$2 million in the first quarter. Cash operating costs during the period were US$431 per oz. (though, by March, these had been reduced to US$246 per oz.) Gold production totalled 10,844 oz.
Overall, Glamis reported a net loss of US$1.7 million (or 2 per share) for the 3-month period, compared with a loss of US$3.3 million (7 per share) in the first quarter of 1999.
The company produced 52,779 oz. during the recent quarter, substantially better than a year ago, when production included only one month’s contribution from mines acquired through the merger with Rayrock Resources.
Total cash costs averaged US$231 per oz., compared with US$252 in the year-ago period. Were it not for the delays at the Dee mine, cash costs for the recent quarter would have been US$180 per oz.
Revenue of US$15.4 million was nearly double that of a year ago, the increase being a direct result of the Rayrock merger. The company realized a gold price of US$292 per oz.
The problems at Dee cut also into cash flow for the quarter, which totalled US$104,000, compared with US$1.3 million a year ago.
Glamis laid out US$8.9 million in capital expenditures during the quarter, including US$7.7 million for construction of the San Martin gold mine in Honduras. That project, which began in mid-January, remains on schedule and on budget for initial production in the fourth quarter. The company is currently installing plastic liners for the heap-leach pad, while earthwork is under way for plant construction. Glamis expects San Martin to crank out 14,000 oz. in the fourth quarter, rising to 85,000 oz. in the next full year.
At the Rand mine, in California, production between the two first quarters increased to 22,907 from 11,900 oz., though this was still short of the record 31,829 oz. produced in the final three months of 1999. Cash costs were US$173 per oz. The mine remains on target to contribute 100,000 oz. for the year.
The company’s 66.7%-held Marigold mine in northern Nevada produced 13,521 oz. to its account, at cash costs of US$196 per oz. An environmental impact statement is expected by the third quarter, which will enable Glamis to expand operations.
At the southern end of the state, the Daisy mine produced 5,118 oz. gold at US$165 per oz. Mining has now ceased (though production is ongoing), and Glamis is considering proceeding with production at the Reward deposit.
Glamis spent a total of US$846,000 on exploration in the first quarter, with two drill rigs active at the Marigold mine. Early indications suggest that the Terry zone continues to the south, though at a greater depth. The company expects to resume drilling at San Martin soon, while drilling is still in the early stages at the Cerro Blanco project in Guatemala.
Glamis recently filed suit against Interior Secretary Bruce Babbitt and the U.S. Bureau of Land Management concerning the Imperial gold project, adjacent to the Picacho mine in southern California. The company spent the past six years securing permits for the project.
Working capital at the end of the first quarter was US$54.8 million, including US$46.8 million in cash.
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