Glamis breaks ground at El Sauzal in Mexico

Full-scale construction is under way at Glamis Gold‘s (GLG-T) El Sauzal project in Mexico’s Chihuahua state.

The change-of-land-use permit authorizing construction and operation of El Sauzal followed the recent completion of an environmental impact statement.

Glamis is expanding camp facilities, preparing the mill site and setting up workshop and administration buildings. Ongoing construction and upgrading of a 92-km-long access road are on schedule.

Mill commissioning and initial gold production from the open-pit, conventional oxide milling operation are slated for late 2004; commercial production should begin in 2005.

El Sauzal is expected to produce 190,000 oz. gold per year for 10 years at a cash cost of US$110 per oz., based on a mill capacity of 5,500 tonnes per day. Based on an estimated capital cost of US$101 million (including US$10 million in contingencies) and a gold price of US$300 per oz., the project’s internal rate of return is 25%.

Proven and probable reserves stand at 18.5 million tonnes grading 3.37 grams per tonne, or 2 million oz. gold. The calculation is based on a cutoff grade of 0.8 gram per tonne.

Glamis’s other major development project is the Marlin gold project in Guatemala. Last month, the company completed a feasibility study there that examined two mining scenarios: an open pit; and a combined open-pit and underground operation.

Overall, Glamis’s goal is to boost its annual gold production to 500,000 oz. annually.