Glamis sets sights on expansion

Vancouver — Striving to profit, even with a historically low gold price, mid-tier producer Glamis Gold (GLG-T) is aiming to lower operating costs at its Marigold mine in Nevada by doubling the production rate.

So far this year, the company has completed 88,000 ft. of drilling, 1 mile south of the main Marigold pit. An updated mineral resource and reserve estimate, tabled by Glamis, supports the proposed expansion of the operation.

Dubbed the Millennium project, the latest round of drilling has upped the proven and probable reserves to 49.9 million tons grading 0.033 oz. gold per ton, equivalent to 1.67 million oz., from 29.5 million tons averaging 0.035 oz. gold, or 1.04 million oz. The measured and indicated resource climbs to 71.6 million tons averaging 0.03 oz. from 49.5 million tons grading 0.03 oz.

Based on the updated reserve calculations, the preliminary feasibility study envisions that the operation could crank out 150,000 oz. gold annually at a total cash cost of US$228 per oz. The initial capital costs to expand the mine are slated at US$45 million and would generate an incremental rate of return of 30%. The company expects to begin the expansion next year.

In the quarter ended June 30, Marigold produced a record 17,879 oz. at a total cash cost of US$146 per oz. The operation is expected to contribute 48,000 oz. gold to Glamis’ account in 2001 at cash costs of US$200 per oz. At the beginning of the year, reserves at the open-pit operation were 20.2 million tons averaging 0.035 oz. per ton.

Glamis owns a 66.7% interest in Marigold. The remainder is held by Homestake Mining, which recently merged with Barrick Gold (ABX-T).

In Honduras, the company’s newly minted San Martin mine produced 19,911 oz. gold at a total cash cost of US$150 per oz. The heap-leach operation is expected to produce 110,000 oz. this year, with total cash costs falling to US$113 per oz.Meanwhile, production at the Rand mine in California continued to drop, hitting 13,579 oz. in the most recent quarter, down from 13,901 oz. in the first quarter. Total cash costs to produce 1 oz. gold came in at US$233.Overall, Glamis has produced 100,458 oz. this year, with total cash cost averaging US$173 per oz.