U.S. REPORT Glamis takes option to buy Echo Bay’s Randsburg play

Rand Mining, an operating subsidiary of Glamis Gold Mines (TSE), recently acquired all of the Randsburg, Calif., properties owned by Echo Bay Mines (TSE). The 5,600-acre land package includes the Baltic deposit and the Lamont deposit which will become an extension of Rand Mining’s existing Lamont pit. Previous estimates by Echo Bay calculated minable reserves for the two deposits of 5.2 million tons grading 0.036 oz. gold per ton. An evaluation by Rand estimates that the reserve could be as large as 13 million tons grading 0.023 oz.

Glamis paid US$100,000 for a 60-day option with an additional US$4.9 million payable on closing a final deal. Echo Bay will retain a 1% net smelter return production royalty.

Lorne Anderson, chief financial officer for Glamis, said that the deal is essentially “done” and only requires final legal work before closing. He noted the acquisition would be financed out of the company’s cash position.

Rand Mining operates the Yellow Aster Mine which produced 13,224 oz. gold for the nine months ended March 31 at a cash cost of US$193 per oz. Gold is produced from three operations at the mine: from the main Yellow Aster orebody, from dump material at the Descarga and from the Lamont Pit.

The Lamont pit is near economic completion and mining was stopped earlier this year to allow operations to concentrate on the Yellow Aster.

With the acquisition of the Echo Bay’s Lamont and Baltic deposits, Glamis will be able to expand mining in the Lamont pit.

Anderson pointed out that environmental permitting would be required before mining could begin on the acquired ground although the operation would be an extension of the existing Lamont pit.

Company engineers conservatively estimate that from past experience the permitting will take about two years. Anderson noted permitting for the Yellow Aster took about 1.5 years, though it was flanked by the Lamont and Descarga operations.

The company also announces that further drilling at the Yellow Aster Pit has replaced ore mined to date in that area, leaving reserves at 11.4 million tons grading 0.022 oz.

Dan Rovig, president of Glamis, stated that the acquisition gives the company a significant opportunity to double minable ore reserves.