Glamis operates low-cost producer

Mining and processing are under way at Glamis Gold‘s (GLG-T) San Martin heap-leach mine in southern Honduras.

Situated 80 km north of Tegucigalpa, San Martin is the first mine to enter production under the country’s new mining law. The wholly owned operation will combine open-pit mining and heap-leaching to produce an estimated 80,000 oz. gold annually at a total cash operating cost of US$149 per oz. The anticipated mine life is 10 years.

“San Martin is a key component of Glamis’s future,” says President C.K. McArthur. “Its low-cost production is expected to return Glamis to profitability in 2001.”

Ground was broken in mid-January, and the project remains on schedule to produce 14,000 oz. this year. About 500,000 tonnes have been stacked on the leach pad to date.

The cornerstone of the project is the Rosa and Palo Alto hot-spring epithermal deposits, which have a combined proven and probable reserve of 39.3 million tonnes grading 0.86 gram gold per tonne, equivalent to 1.1 million contained ounces. A gold price of US$275 per oz. was used to calculate the reserves, and the waste-to-ore stripping ratio is a low 0.4-to-1.

Capital costs are pegged at US$27 million; total cash costs, at less than US$210 per oz. At a gold price of US$275 per oz., the project would have a 22% rate-of-return, whereas, at US$300, it would rise to 29%.

San Martin contains three distinct types of ore:

a blanket of highly altered schist, which represents 68% of the contained ounces and has a recovery rate of 73%;

an altered schist, which represents 29% of the contained ounces, with a recovery rate of 60%; and

an unoxidized schist, which represents only 3% of the contained ounces, with a recovery rate of 40%.

The Rosa deposit hosts proven and probable oxide reserves of 20.9 million tonnes grading 0.9 gram gold, equivalent to 600,000 contained ounces. The waste-to-ore stripping ratio is 0.18-to-1, while the pit area measures roughly 750 by 750 metres.

Palo Alto, 700 metres to the west, hosts proven and probable reserves of 18.4 million tonnes grading 0.82 gram gold, equivalent to 500,000 contained ounces. The waste-to-ore stripping ratio there is 0.66-to-1, with a pit area of 1,500 by 500 metres.

Since acquiring the project from Mar-West Resources in November 1998, Glamis has doubled the reserves and is encouraged about the possibility of further increases.

This year, the mid-tier gold producer will explore the Palo Alto deposit, which remains open to the west and southeast, and follow up five nearby gold geochemical anomalies.