Glamis pins hopes on El Sauzal

Vancouver — Glamis Gold (GLG-T) says the recent start of mining and processing at its newly built El Sauzal mine in Mexico will lead to higher overall gold production at lower costs.

Higher realized gold prices helped offset a downturn in Glamis’s net earnings for the third quarter. Profits totalled US$2.8 million, on revenue of US$21 million, compared with US$3.4 million on revenue of US$19 million in the corresponding 3-month period in 2003.

The Reno-based company produced 50,899 oz. in the recent quarter at a total cash cost of US$205 per oz., compared with 51,707 oz. at US$201 per oz. a year earlier.

A rise in gold output at the San Martin mine, in Honduras, was offset by lower production at the Rand and Marigold operations, in California and Nevada, respectively.

El Sauzal reached commercial production levels in October and is now the company’s lowest-cost producer. The mine is expected to produce 35,000 oz. before year-end. Glamis acquired the project through its merger with Francisco Gold in July 2002 and has already mined and stockpiled ore from the East and West pits. In 2005, El Sauzal is expected to produce 170,000 oz. gold at a cash cost of US$110 per oz.

The mine, an open-pit operation with a conventional oxide mill, has proven and probable reserves of 20.5 million tons grading 0.098 oz. gold per ton, or more than 2 million oz., based on a gold price of US$300 per oz. The mill has a daily capacity of 5,500 tonnes.

Exploratory drilling at the Trini zone, which is within 0.43 miles of the current mine area, yielded consistent high grades of gold over significant widths near surface in all four holes drilled recently. Hole 189 graded 0.10 oz. gold over 90 feet.

The company has a two-thirds interest in the Marigold mine, with the remainder held by Barrick Gold (ABX-T). In the third quarter, Glamis’s share of gold production at Marigold was 23,899 oz. at a cash cost of US$198 per oz., compared with 25,270 oz. at US$173 a year earlier.

The higher costs reflect the mining of lower-grade ore, as well as higher fuel costs and lower production (owing to a delay in expansion). For the year, production from Marigold has been adjusted down to 100,000 oz.

At San Martin, gold production for 2004 is projected to be 100,000 oz. Higher fuel costs combined with lower-grade ore pushed cash costs up to US$207 per oz.

The Rand mine, where reclamation is now under way, produced 3,000 oz. by means of heap leaching at a cash cost of US$255 per oz.

Meanwhile, construction of the Marlin gold-silver mine in Guatemala continues, and startup has been bumped ahead to the fourth quarter of 2005. So far, 500 metres of an 800-metre underground access ramp have been completed.

Glamis is drill-testing the high-grade vein system at its Cerro Blanco project, also in Guatemala, in an effort to reach the feasibility stage by year-end.

Through a deal with Vancouver-based Radius Gold (RDU-T), Glamis is intensifying its exploration programs in Guatemala. Radius owns the Banderas and Marimba epithermal gold properties, 40 km north of Cerro Blanco. The new deal allows Glamis to acquire a 51% interest in these properties by spending US$4 million over four years, and another 24% by funding and completing a positive feasibility study within five years.

Banded quartz veins yielded initial high gold grades, which were followed up by core drilling results of up to 0.52 oz. gold over 4.9 ft. and 9.68 oz. silver over 5.2 ft.