Glamis counts on El Sauzal to brighten production picture

Vancouver – Glamis Gold (GLG-T) expects the recent start of mining and processing at its newly constructed El Sauzal mine in Mexico will brighten its gold production picture for the rest of the year. The Renobased miner is also stepping up its exploration efforts in southeastern Guatemala through a new joint venture struck with Radius Gold (RDU-T) on that company’s Banderas project.

Glamis reported third quarter gold production of 50,899 oz. at a total cash cost of US$205 per oz. This compares with 51,707 oz. gold produced at a cash cost of US$201 per oz. for the same quarter a year ago.

Higher realized gold prices helped to offset a downturn in Glamis’ net earnings for the third quarter this year. The company reported third quarter net income of US$2.8 million or 2 a share, on revenue of US$21 million compared with US$3.4 million or 2 a share, on revenue of US$19 million in the same quarter last year.

Higher gold production at San Martin in the latest quarter was offset by lower production at Rand and Marigold.

Glamis’ share of gold production from Marigold was 23,899 for the third quarter at a total cash cost of US$198 an oz., down from the previous quarter which saw production of 25,270 oz. at a cash cost of US$173 per oz.

Higher cash costs in the latest quarter are owing to mining of lower grade ore, higher fuel costs and lower gold production due to the delay in the expansion which means production for the year should be about 100,000 oz.The first phase of the new leach pad has been constructed and ore is being processed, while the new mining fleet was fully commissioned.

Higher gold production at the company’s wholly-owned San Martin will see that mine’s production for the year account for 100,000 oz. for Glamis. Higher fuel costs, and the lower grade ore from Palo Alto have led to higher than expected cash costs of around US$207 for the latest quarter.

At the company’s wholly-owned Rand mine situated some 100 miles northeast of Los Angeles, California, just over 3,000 oz were produced from a heap leach operation at cash costs of US$255 per oz. Reclamation is under way at the mine that started out in 1987 as an open pit.

Drilling is underway at the company’s wholly-controlled Cerro Blanco project in southeastern Guatemala to test the high grade vein system. Results may advance the underground project to the feasibility stage by year-end.

The company is increasing its exploration efforts in this part of Guatemala through an option to explore and develop Radius’ Banderas and Marimba epithermal gold properties which lie 40 km north of its Cerro Blanco project.

The new deal allows Glamis to acquire a 51% interest in the properties by spending US$4-million over a four year period and earn another 24% for a total of 75%, by funding and completing a positive feasibility study for a mine at Banderas within five years.