Glamis tables Marigold expansion final feasibility

Glamis Gold (GLG-T) has released results of the final feasibility study of an expanded Marigold Millennium project in Nevada’s Battle Mountain trend.

Based on an economic cutoff of US$275 per oz. of gold, the study pegs minable resources (proven and probable reserves, plus inferred resources) at 78 million tonnes averaging 0.93 gram gold per tonne, equivalent to 2.4 million oz. gold. Of that, 60.6 million tonnes running 0.99 gram gold, for 1.95 million contained oz., are classified as proven and probable reserves. The new reserve figure is more than double that at the beginning of the year (27.4 million tonnes averaging 1.2 grams gold, or 1.1 million contained oz.), although the average grade has slipped due to the dilutive effect of 40-ft. mining benches. Glamis expects cost savings associated with larger mining equipment to more than offset the effect of lower grades.

When the assumed long-term gold price is increased to US$300 per oz., contained gold ounces climb by 15%. Glamis expects to convert much of the inferred in-pit resources to reserves by early 2002 via ongoing infill drilling.

Mining at an annual rate of about 22.7 million tonnes in early 2002, and hitting about 36 million tonnes by 2003, annual gold production is pegged at 82,000 oz. in 2002; by 2008 production will top 200,000 oz. Through 2013, total production is pegged at just more than 1.6 million oz.

During the recent third quarter, Marigold poured 14,249 oz. gold (Glamis’s share), up from 8,189 oz. a year earlier. The increase is attributed to an improved leach cycle. Total cash costs were more than halved to US$160 per oz. Glamis has a 66.7% stake in the mine, which it operates. Homestake Mining (HM-N) holds the remaining 33.3% interest.

The mine plan adds to the existing Marigold operations the Millennium project’s Terry Zone and Section 30 and 31 orebodies to the south. The stripping ratio for an expanded pit is pegged at 3.1:1.

All ore, including the Millennium resource, which is still open along strike to the north and south, will be processed by the run-of-mine heap leach method. The entire resource is well oxidized, and metallurgical testwork indicates recoveries similar to ongoing operations. Recovery rates for ore from the Terry zone expansion is 75% and for the 70% for the Section 31 and Section 30 deposits.

On the financial front, initial capital expenditures under the feasibility study are pegged at US$55 million over the first two years, US$18 million is for deferred stripping. Sustaining capital over the life of the project comes in at US$43 million. Total cash costs are US$143 per oz. and total unit costs ring in at US$216 per oz. The project offers a rate of return of at least 20%.

Glamis will fund its share of the project capital via a cross-border equity offering of 10 million shares completed in late October for gross proceeds of C$50 million. The financing comprised 8 million shares at C$5 apiece; the underwriters also exercised an option to acquire an additional 2 million shares at the same price.

With permits in hand, Glamis has the expansion of the Terry zone underway. Planning for a southern expansion to cover the Section 31 and Section 30 deposits has begun with final permitting expected within eighteen months.

Glamis has budgeted US$1.5 million for exploration and development drilling at Marigold during 2002. The holes will target along strike of sections 30 and 31, to the west of Section 31 and other unexplored areas on the property. Drilling will also seek to condemn the proposed sites for waste dumps and leach pads.