Vancouver — Despite lower earnings in the second quarter,
The Reno, Nev.-based company predicts annual gold production will double to more than 600,000 oz. by 2006 at a total cash cost of less than US$150 per oz.
The recent quarter saw Glamis earn US$2.9 million (or US2 a share) on revenue of US$7.7 million, compared with US$3.8 million (US3 a share) on US$9.8 million in the corresponding period last year.
The unhedged producer reported a decline in revenue from lower gold sales to US$18.6 million, compared with US$21.7 million a year earlier, though the decrease was partially offset by higher realized gold prices of US$394 per oz., compared with US$353 per oz. in the second quarter of 2003.
The company lowered its gold production forecast for 2004 to 250,000-260,000 oz. from 265,000 oz. The revision was necessary because the expansion of Marigold was running about two months behind schedule.
Lower production at the San Martin and Rand mines in Honduras and California, respectively, led to the reduction in gold production for the recent quarter: 48,109 oz. at a cash cost of US$183 per oz., compared with 61,757 oz. at US$172 a year earlier.
San Martin, a classic epithermal gold deposit, was fast-tracked to production in late 2000. The mine produced 22,418 oz. in the recent quarter at a total cash cost of US$192 per oz., compared with 29,159 oz. at US$165 a year earlier. The rise in costs reflects lower-than-expected grades and recoveries from the Palo Alto pit. San Martin is on track to produce more than 100,000 oz. gold in 2004.
At the Rand mine, 100 miles northeast of Los Angeles, 15,000 oz. gold are expected from the leaching operation this year.
The mine dribbled out 3,503 oz. at a cash cost of US$268 per oz. in the second quarter, compared with 9,958 oz. at US$232 a year earlier.
Rand started up in 1987 as a conventional open-pit, heap-leach operation, but production has ceased and reclamation is under way. Large-scale mining equipment was transferred to the Marigold mine.
Glamis has a two-thirds stake in Marigold, which it operates; the remaining third is held by
In the second quarter, Glamis’s share of gold production from Marigold increased to 22,188 oz. at a total cash cost of US$160 per oz. — a big improvement from the previous 3-month period. Commissioning of the larger mining fleet was behind schedule by two months but is now complete.
The company is awaiting final permits for construction of a new leach pad and processing facility. Gold output should rise sharply for the rest of the year. Glamis’s share of 2004 production from Marigold is pegged at 100,000-110,000 oz.
Testing of targets on the property and further extensions to mineralization from 329 holes drilled this year should replace gold reserves mined during 2004.
In the fourth quarter, Glamis expects to start up what will be its lowest-cost producer, El Sauzal, which it acquired through its merger with
Construction is 83% complete, including roads, a bridge, a power line, and process facilities.
The mine will be an open pit with a conventional oxide mill. Proven and probable reserves stand at 20.5 million tons grading 0.098 oz. gold per ton, equivalent to slightly more than 2 million oz. gold. The estimate is based on a gold price of US$300 per oz. The mill’s daily capacity is 5,500 tonnes, and average annual production is forecast at 190,000 oz. at a cash cost of US$110 per oz.
The total capital cost is expected to be within 10% of the 2002 feasibility estimate of US$101 million.
Meanwhile, production at the Marlin gold-silver deposit in Guatemala is expected to begin in the first quarter of 2006. An expansion to 5,000 tonnes per day from the 4,100 tonnes proposed at the feasibility stage pushed up expected capital costs to US$140 million from US$120 million. An additional US$45 million was arranged through an International Finance Corp. loan for construction at Marlin.
The capacity was expanded because a high-grade zone was discovered through drilling at the La Hamaca deposit, 2-3 km from the Main zone. Glamis is looking at La Hamaca as a supplement to Marlin production in the near term. However, a shortage of drills has hampered exploration of La Hamaca. The vein system remains open along strike in both directions and at depth.
So far, 8,000 metres in 31 holes have resulted in an inferred resource of 357,000 tonnes grading 10.7 grams gold and 316 grams silver per tonne, or 184,000 oz. gold-equivalent, assuming a minimum 3-metre mining width and a cutoff grade of 5 grams gold-equivalent.
Drilling is also under way at the Cerro Blanco project in Guatemala. Crews are testing the high-grade vein system in an attempt to advance the project to the feasibility stage by year-end.
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