$51-million in hand, Glamis
Gold prowls for acquisitions
Promising projects rare: Miner in
discussions with two partners in Latin
America
Keith Damsell
Financial Post
Armed with $51-million in cash, Glamis Gold Ltd. is on the hunt for
acquisitions.
"There's a sense of urgency to grow," said Kevin McArthur, chief
executive of the Reno, Nevada-based company. "We want to
leverage the use of our cash and we don't mind using our shares if
necessary."
Glamis is in preliminary discussions with at least two partners in
Central and South America.
Ideally, the company would like to acquire an early-stage
development at least the size of its recently licensed San Martin
property in Honduras.
San Martin has about 1 million ounces of gold reserves and a 10-year
mine life. The $27-million (all figures in US dollars) project will begin
production in the fourth quarter.
A friendly deal is the preferred route. "We're not sharks lurking in the
water," Mr. McArthur said.
The ambitious production target is 500,000 ounces within five years.
The company expects to produce 238,000 ounces of gold this year at
a cost of about $200 (all figures in US dollars) per ounce. Glamis
owns the Rand and Picacha gold mines in California, as well as the
Marigold, Dee and Daisy mines in Nevada.
Bay Street views Glamis as a good operator and likes the company's
strong cash position. Unfortunately, promising gold projects are rare
and analysts expect the company may find it difficult wrestling low
cost assets away from acquisition-minded senior producers.
"The question is what to buy?" said one Toronto analyst who asked
not to be identified. "The company will be judged by the next deal
they're able to put together."
The Toronto Stock Exchange-listed company is perhaps best known
for a $131.3-million (Cdn.) cash-and-stock takeover of Toronto's
Rayrock Resources Inc. in February last year. The deal, almost a
year in the making, doubled Glamis' annual production and left the
company with about $100-million in cash and securities.
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