San Martin blesses Glamis with profit

Denver — The successful commissioning of the new San Martin mine in Honduras propelled Glamis Gold (GLG-N) to a first-quarter profit despite difficult times in the gold market.

The company posted net earnings of US$387,000 (or 1 per share), compared with a net loss of US$1.8 million (2 per share) for the first three months of 2000.

San Martin, which began commercial production at the beginning of the year, operated above design capacity, producing 22,391 oz. gold at US$122 per oz. Capital costs for the open-pit mine were US$44 million, which the company funded internally.

During the first quarter, mining transitioned from the early run-of-mine operation to crushing and agglomerating. The company is already adding to the leach pads to handle the increased throughput, which should generate 110,000 oz. for the year. Total cash costs should fall to US$113 per oz.

Glamis is drill-testing several surface anomalies surrounding the mine.

San Martin’s contribution pushed the company’s quarterly production to 49,089 oz., down from the first quarter of 2000. Total cash costs fell 25% to US$174 per oz.

Production at the Rand mine in California dropped to 13,901 oz., reflecting a shift in production to the Lamont pit. Stripping continues for the next phase of mining at the Yellow Aster pit. Total cash costs were US$228 per oz., down from US$173 per oz. a year ago.

At the 66.7%-owned Marigold mine in northern Nevada, Glamis’ share of production was 12,797 oz., down 5% from a year ago. Cash costs were up to US$208 per oz.

Glamis has resumed exploration at the Millennium deposit, south of the main pit. After more than 90,000 ft. of drilling, the company has outlined a measured and indicated resource of 19.8 million tons averaging 0.03 oz. per ton (for 588,000 oz. gold).

Glamis intends to advance the project toward feasibility. Initial permitting should begin in the second or third quarter.

The operations provided US$1.8 million in cash flow for the company in the first quarter, up from US$100,000 a year ago. Revenues slipped 9% to US$14.4 million as the company’s realized price of gold fell to US$262 per oz., down from US$290 per oz. a year ago.

Glamis finished the first quarter with working capital of US$19.5 million. The company remains debt-free.