Vancouver — A production shortfall at its flagship San Martin mine in Honduras resulted in relatively flat profits for
The Reno-based company posted net income of US$3.9 million (or US3 per share) in the 3-month period, compared with US$3.4 million (US4 per share) in the corresponding period of 2002.
Glamis produced 60,583 oz. at total cash cost of US$172 per oz., whereas a year earlier it had turned out 63,929 oz. at US$156 per oz. Operating cash flow increased to US$9.1 million from US$8.9 million.
Gold sales totalled US$21.7 million, compared with US$20.3 million in the second quarter of 2002. Driving the increase was a strong bullion price, which averaged US$353 per oz., up from US$313 per oz. a year earlier.
The San Martin mine produced 29,159 oz. gold, compared with 33,772 oz. a year earlier. The total cash cost of producing an ounce of gold was US$165, compared with US$112 a year earlier — a rise that’s being attributed to a delay in recovering gold from the leach pads.
“We had some difficulties with solution management and ph issues,” says CEO Kevin McArthur. “We’re confident the problem has been corrected, but because of the lower production, we have reduced our yearly target to a hundred and twenty-thousand ounces from a hundred and twenty-five thousand.”
Glamis’s 66.7%-owned Marigold operation in Nevada added 21,446 oz. of gold at a total cash cost of US$154 per oz., compared with 10,968 oz. at US$197 in the second quarter of 2002.
“We made excellent progress in advancing the Marigold expansion project, which will result in substantially higher gold production and reduced total cash costs in subsequent years,” states McArthur. “And recently Glamis made what could be an important new discovery, in the Section 7 area.”
The new find, dubbed TZN, occurs where drilling has cut significant widths of oxide mineralization. The mineralization appears to be amenable to run-of-mine heap leaching.
With three reverse-circulation drills turning on the target, Glamis is considering expanding the Marigold operation further, to beyond 200,000 oz. gold per year.
At the nearly depleted Rand mine, in California, production increased to 9,958 oz. gold at a total cash cost of US$232 per oz., compared with 19,189 oz. gold at total cash cost of US$228 per oz. in 2001. Active mining was completed in January, but leaching operations will continue through to 2004.
On the development front, Glamis completed a feasibility study on its El Sauzal project in Mexico. The study envisions a 190,000-oz.-per-year operation with a mine life of more than 10 years. The final environmental review is under way, as is permitting. El Sauzal holds reserves of 20.5 million tonnes grading 3.05 grams gold per tonne.
“We have permitted the El Sauzal project in Mexico, and construction is now under way,” adds McArthur. “With all of these positive developments, we are moving rapidly toward our near-term objective of doubling gold production to 500,000 oz. annually at a total cash cost of less than US$150 per oz.”
At the Marlin project, in Guatemala, the company tabled a measured and indicated resource of 53.9 million tonnes grading 1.7 grams gold and 24.4 grams silver, equivalent to almost 3 million oz. gold and 42.1 million oz. silver, or 3.6 million oz. gold-equivalent. An additional 1.7 million oz. gold and 27.4 million oz. silver are contained in an inferred 37.9 million tonnes grading 1.4 grams gold and 22.5 grams silver.
“In May, we completed a feasibility study at our Marlin property, which is quickly developing into our largest and potentially most profitable gold asset.”
Since then, the Main zone of mineralization has been extended to the west. A new resource calculation and updated feasibility study are expected by November.
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