Glamis to Commence Mine Construction at San Martin
Glamis Gold (GLG)
Wednesday Oct 6 1999
Mr. Charles Jeannes reports
Glamis Gold has completed a positive final feasibility study for its San Martin project and the board of directors has approved the commencement of construction. San Martin is located in Honduras, 40 miles north of the capital city of Tegucigalpa. The mine will be an open pit, heap leach operation producing 80,000 ounces of gold per year at total cash operating costs of $149 per ounce.
The operating and financial parameters of the project are as follows:
Proven and probable reserves total 39,282,600 tonnes at an average grade of 0.86 grams per tonne for a total of 1,082,920 contained ounces of gold. Reserves were calculated using a gold price of $275 per ounce. The strip ratio is 0.4 tonnes of waste per tonne of ore.
At full operation, the annual ore mining rate will be approximately four million tonnes per year. In 2000, production is estimated at 14,000 ounces, with an average of 80,000 ounces per year thereafter throughout the 10 year mine life. The average total cash cost for the project is $149 per ounce.
The majority of the ore will be crushed to minus six inches, agglomerated and stacked on the leach pad via conveyors. Some ore will be dump leached. Recovery rates are estimated as follows:
Highly-altered schist, 692,823 contained ounces, 73-per-cent recovery rate, treatment -- six-inch crush, agglomerate
Altered schist, 357,225 contained ounces, 60-per-cent recovery rate, treatment -- dump leach
Unoxidized schist, 32,872 contained ounces, 40-per-cent recovery rate, treatment -- dump leach
Initial capital expenditures for the project are $27-million, with approximately $7-million in capital expenditures scheduled for 1999. The development will be financed using the company's existing cash reserves.
Total costs for the mine amount to $210 per ounce, including $12-million in acquisition costs. At a $275 gold price, the project produces a 22-per-cent rate of return. At $300 gold, the ROR increases to 29 per cent.
Additional reserves potential is present to the west of the Palo Alto pit, in the newly discovered Palo Ralo zone, through future regional exploration and through possible pit expansion at higher gold prices. The process facilities are designed to be easily expandable to increase throughput if additional reserves are developed.
Based on the feasibility study results, the board of directors has approved development of the San Martin project. Construction will commence upon receipt of necessary permits, expected by late this year. The company does not anticipate any problems in the issuance of permits, and on this basis will proceed with site preparation and the ordering of equipment in the next few weeks.
Glamis president and chief executive officer Kevin McArthur said: "We are very pleased with the results of the feasibility study and receipt of the board's approval to proceed with development of the San Martin mine. With its very low cash and total costs, San Martin is a robust project even at recent low gold prices. At $300 gold, it is expected to provide strong earnings and outstanding returns to our shareholders."
In less than one year, San Martin has advanced from an exploration-stage project to an approved mine with a 1.5 million ounce resource, nearly 1.1 million ounces of which are now in reserves. San Martin represents an important step in Glamis' strategy to grow annual production while reducing average cash costs. It also provides a strong base for the company's growth efforts in Central America, as Glamis continues to explore several additional concessions it holds in Honduras, Guatemala, Panama and El Salvador.
Glamis Gold Ltd. is an intermediate gold producer operating the Rand and Picacho mines in California, as well as the Marigold, Dee and Daisy mines in Nevada. Glamis expects in excess of 200,000 ounces of production in 2000, climbing to over 250,000 in 2001.
WARNING: The company relies upon litigation protection for "forward-looking" statements.
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