Goldcorp bid eats into Glamis’s profit

Vancouver — Although the new El Sauzal mine in Mexico enabled Glamis Gold (GLG-T) to produce a record amount of gold in the first quarter, the company’s failed bid for Goldcorp (G-T) wiped out much of the financial gain.

Glamis doubled its quarterly revenue to US$42.1 million, compared with US$21.7 million a year earlier, on the back of greater gold production combined with a higher realized gold price.

But earnings amounted to only US$2.2 million (or 2 per share), compared with US$9.1 million (7 per share) in the first three months of 2004.

The decline is a consequence of Glamis spending US$4 million to bid for Goldcorp, a move designed to thwart the latter’s merger with Wheaton River Minerals (wrm-t).

With El Sauzal up and running, and the Marigold mine in Nevada expanding, the company was able to boost gold production to 93,721 oz. at a cash cost of US$187 per oz. That’s nearly double the 50,919 oz. produced a year earlier at US$205 per oz.

The company produced 43,535 oz. at a cash cost of US$124 per oz. from El Sauzal in the first quarter and is on track to produce 170,000 oz. gold from the mine in all of 2005 at around US$145 per oz.

Glamis’s two-thirds share of gold production from Marigold was up to 28,219 oz. at a cash cost of US$227 per oz., from 17,206 oz. at US$248 in the first quarter of 2004.

Marigold is expected to crank out 135,000 oz. this year. Production is expected to increase further as the expansion is completed and mining starts at the Basalt pit.

Despite opposition from local Mayans fearful of displacement, construction of the Marlin deposit in Guatemala is 70% complete and on track to produce 10,000 oz. by year-end. Glamis says it is working with stakeholders on the environmental and social ramifications of the project.

At the nearby Cerro Blanco project, Glamis is extending the high-grade quartz vein systems and drilling infill holes. The work is geared towards expanding the gold resource, which is pegged at 900,000 oz. averaging 22 grams gold per tonne.

Overall, Glamis is on schedule to produce 400,000 oz. gold in 2005 at an estimated cash cost of US$185 per oz. and sees production increasing beyond 700,000 oz. in 2007 at a projected cash cost of less than US$150 per oz.