MINING MARKETS & INVESTMENT NEWS — Glamis Gold advances Central American gold projects

With feasibility work continuing, construction at the San Martin gold project in central Honduras is targeted to begin by November of this year.

Glamis Gold (GLG-T) plans to develop the project as a 50,000-oz.-per-year open-pit/heap-leach operation, with an initial mine life of eight years. Production cash costs are expected to fall below US$150 per oz.

The Rosa (formerly Sinter) zone is a hot spring epithermal deposit that blankets a low-lying domal hill. Recent drilling has defined a minable proven and probable oxide ore reserve of 20.9 million tonnes grading 0.9 gram gold per tonne, equivalent to 605,000 contained ounces. The stripping ratio is low, at 0.18-to-1, and the reserve was calculated on the basis of a gold price of US$300 per oz.

Given the results of column-leach tests on bulk samples, which indicate an average gold recovery to date of 78% on minus 6-inch material, Glamis intends to develop Rosa as a run-of-mine operation.

The Nevada-based producer expects capital costs will be about US$15 million. Glamis hopes to economize by transferring mining equipment and miscellaneous infrastructure from its depleted Picacho mine in California. All known economic reserves were exhausted there in January 1998, though gold continues to be recovered from the last ore heap. The Picacho mine is expected to have produced more than 16,000 oz. last year.

At San Martin, the consulting firm Hallam Knight Piesold is conducting geotechnical studies, while at the same time performing design work on the leach pad facility and co-ordinating permitting efforts.

Further drilling was recently carried out on the Palo Alto zone, 1 mile from the Rosa deposit. Palo Alto is now estimated to contain an oxidized resource of 20.7 million tonnes grading 0.64 gram, equivalent to 427,900 oz. As at Rosa, mineralization at Palo Alto lies close to surface, exhibiting a low stripping ratio. Drilling, aimed at expanding this resource, is under way.

In neighboring Guatemala, Glamis has just completed a geophysical survey on the Cerro Blanco project, which is also a hot spring epithermal gold target. In the summer, reverse-circulation drilling encountered a wide interval of gold mineralization associated with a large breccia diatreme system. One of the holes intersected 158.5 metres averaging a cut 1.5 grams (including a 74.7-metre interval grading a cut 2.4 grams).

The system is traced on surface for a distance of 3 km and is associated with a thick sequence of hot spring sinter and breccia bodies. An induced-polarization survey traced the zone for 1,100 metres, indicating that the main target could be up to 300 metres wide. Diamond drilling is currently under way at Cerro Blanco.