Glamis' Second Quarter Results Show Improvement
RENO, Nev.--(BUSINESS WIRE)--Aug. 11, 1999--Glamis Gold Ltd.(TSE:GLG. - news; NYSE:GLG - news) Glamis Gold Ltd. lost $0.03 per share in the second quarter of 1999, a significant improvement over the loss of $0.07 per share reported for the first quarter. This loss compares unfavorably to the quarter ended June 30, 1998, in which the company reported nil earnings per share. On a year to date basis, the Company realized a loss of $0.10 per share for the six month period ended June 30, 1999, compared to earnings of $0.01 per share for the same period of 1998.
Cash flows used in operations totaled $2.8 million and $1.5 million in the quarter and six months ended June 30, 1999, respectively. These cash flows were used to fund operations as there was a $5.7 million increase in finished goods inventory reflecting unsold gold ounces held by the Company at the end of the quarter. In addition, the Ivan Mine in Chile used $1.5 million in operations to mine and place copper ore on the leach pad in an effort to build the operation to profitability.
``Gold operations, including corporate overheads and exploration expenses, generated a slight loss of $0.01 per share during the second quarter, which is an important improvement over the first quarter' said C. Kevin McArthur, President and CEO. ``We also incurred some significant one-time costs during the quarter. These included the relocation of several management team members following closure of several offices, and continued costs attributable to the recent mergers. With the appointment of Charles A. Jeannes as Senior Vice President of Administration and James S. Voorhees as Vice President and Chief Operating Officer, Glamis has taken important steps to provide the leadership to continue the Company's growth.'
ô The reported loss also includes $1.2 million from copper operations, which is an improvement over the first quarter when the Ivan Mine lost $1.3 million in March alone. Also affecting earnings were $1.3 million in exploration expense in Nevada and Central America. The realized price per ounce of gold during the second quarter of 1999 at $267 per ounce was $30 per ounce less than the amount realized in the same period of last year. Selling, general and administrative charges increased approximately $0.4 million in the quarter ended June 30, 1999 compared to a year earlier, due to staffing changes as a result of the acquisitions of Mar-West Resources Ltd. in late 1998 and Rayrock Resources Inc. in the first quarter of 1999.
The Company had working capital at June 30, 1999 of $37.4 million, including cash of $31.7 million.
The Company expended $5.8 million on capital programs during the quarter, including on-going feasibility and permitting of the San Martin Project in Honduras, the underground development at the Dee Mine in Nevada and the stripping of the overburden on the second phase of the Yellow Aster pit at the Rand Mine. OPERATIONS REPORT
At the Picacho Mine, leach-down of the pads explains the decrease in production of nearly 3,300 ounces when comparing the quarter ended June 30, 1999 to the quarter ended June 30, 1998. The decrease year over year was approximately 6,700 ounces of gold. Rinsing of the heap began in August and concurrent reclamation programs have been very successful. The current leach pad, as well as the plant, office, lab and maintenance sites are all that remain to be reclaimed.
Total cash cost per ounce of production improved at the Rand Mine during the quarter to $236 per ounce compared to $256 in the first quarter, as a result of the almost 3,500 ounce increase in gold production over the first quarter. However, as compared to the same period of the prior year, gold production is down 31 percent, due to increased stripping during the first half of the year. The benefits of this program are beginning to be realized with new ore in the Yellow Aster pit becoming available during the third quarter of 1999. The results of this effort should be apparent in increased production during the fourth quarter of this year.
At the Marigold Mine, the exploration program continues with planned expenditures totaling in excess of $2.0 million (Glamis' share is approximately $1.5 million). Management is encouraged by the results of the program and continues to be optimistic about the long-term future of Marigold. The Marigold mill has been placed on standby, and all ore is currently being processed through the heap leach circuit. During the three months ended June 30, 1999, Marigold produced 9,628 ounces of gold at a total cash cost of $256 per ounce. This compares to 12,116 ounces of gold produced at total cash cost of $239 for the three months ended June 30, 1998, as lower ore grades were experienced during the quarter.
The Dee Mine underground decline development began during the second quarter. There has been minor ore production from development work, although full-scale production is not scheduled until the fourth quarter of this year. Open pit operations provided 10,441 ounces of gold production, at a total cash cost per ounce of $241 for the three months ended June 30, 1999, compared to 8,289 ounces of gold, at total cash cost per ounce of $276, produced during the three months ended June 30, 1998.
The Daisy Mine production improved during the second quarter as stripping in the Secret Pass area is essentially complete. The mine poured 7,353 ounces of gold during the quarter which is 4,592 ounces more than in the same period of last year. The increase in production lowered the total cash cost per ounce of production to $212 in the second quarter of 1999 versus $254 per ounce in the same quarter of 1998. Gold production for the remainder of the year is expected to show continued improvement. Permitting and feasibility of the nearby Reward Project continues, with a production decision expected in the fourth quarter.
In addition to producing gold at its four active mines in Nevada and California, Glamis expects to commence construction at the low-cost San Martin gold project in Central Honduras in late 1999 or early 2000. The Company is also actively exploring additional prospects in Honduras, Guatemala, El Salvador and Panama, as well as in Nevada.
Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995: Except for the statements of historical fact contained herein, the information presented constitutes ``forward-looking statements' within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements, including but not limited to those with respect to the price of gold, estimated future production, costs of production, the Company's hedging policy and permitting time lines, involve known and unknown risks, uncertainties, and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the factual results of current exploration activities, conclusions of feasibility studies now underway, changes in project parameters as plans continue to be refined, future prices of gold, as well as those factors discussed in the section entitled ``Other Considerations' in the Company's Annual Report on Form 10-K. On behalf of the Board C. Kevin McArthur, President
Consolidated Statements of Earnings and Retained Earnings
(Expressed in thousands of U.S. dollars)
(Except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Revenue from
production $ 14,758 $ 8,189 $ 22,744 $ 17,144
Cost of production 13,522 5,434 20,712 10,620
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1,236 2,755 2,032 6,524
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Expenses
Depreciation and
depletion 2,318 2,228 4,425 4,530
Royalties 874 454 1,241 1,094
Selling, general
and administrative 1,095 658 2,297 1,346
Exploration 1,314 2 1,961 7
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5,601 3,342 9,924 6,977
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Earnings (loss)
from operations (4,365) (587) (7,892) (453)
Interest expense 170 97 170 97
Other (income)
expense (1,730) (542) (1,647) (893)
--------------------------------------------
Earnings (loss)
before income taxes (2,805) (142) (6,415) 343
Provision for
income taxes (124) (11) (412) 140
--------------------------------------------
Net earnings (loss) (2,681) (131) (6,003) 203
Retained earnings
(deficit),
beginning of period (2,613) 3,050 709 2,716
--------------------------------------------
Retained earnings
(deficit), end
of period $ (5,294) $ 2,919 $ (5,294) $ 2,919
--------------------------------------------
Earnings (loss)
per share $ (0.03) $ (0.00) $ (0.10) $ 0.01
--------------------------------------------
Consolidated Statements of Cash Flows
(Expressed in thousands of U.S. dollars)
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Operating activities
Net earnings
(loss) $ (2,681) $ (131) $ (6,003) $ 203
Adjustment for
items not affecting
working capital 1,336 2,348 3,928 4,720
Net changes in
non-cash working
capital (1,449) 666 539 2,030
--------------------------------------------
Net cash provided by
(used in) operations (2,794) 2,883 (1,536) 6,953
Cash flows from
(used in) investing
activities(x)
Capital expenditures (5,796) (3,307) (8,763) (5,569)
Business acquisition 3,623 - 10,769 -
Other assets 1,812 - 3,289 350
--------------------------------------------
Net investment
activities (361) (3,307) 5,295 (5,219)
--------------------------------------------
Cash flows from
(used in) financing
activities
Stock issues 644 - 787 74
Cumulative
Translation
Adjustment 97 (61) 97 (61)
Note Payable (7,734) - 894 -
--------------------------------------------
Net financing
activities (6,993) (61) 1,778 13
--------------------------------------------
Increase (decrease)
in cash (10,148) (485) 5,537 1,747
Cash, beginning
of period 41,855 29,145 26,170 26,913
--------------------------------------------
Cash, end of
period $ 31,707 $ 28,660 $ 31,707 $ 28,660
--------------------------------------------
Consolidated Balance Sheets
(Expressed in thousands of U.S. dollars)
June 30, December 31,
1999 1998
Assets
Cash $ 31,707 $ 26,170
Other current assets 21,554 12,048
------------------------
Current assets 53,261 38,218
Plant and equipment and
mine development costs 124,130 79,655
Other assets 8,586 1,288
------------------------
$ 185,977 $ 119,161
------------------------
Liabilities
Current liabilities $ 15,844 $ 4,062
Long term liabilities 17,975 4,740
Shareholders' equity
Share capital:
Authorized:
200,000,000 common shares
without par value 5,000,000
preferred shares, $10
par value, issuable in
Series Issued and fully
paid: 68,889,432 common
shares (1998 - 38,860,612) 157,292 109,587
Contributed surplus 63 63
Cumulative translation
adjustment 97 -
Retained earnings (deficit) (5,294) 709
------------------------
152,158 110,359
------------------------
$ 185,977 $ 119,161
------------------------
Financial Highlights
Three Months Ended Six Months Ended
June 30, June 30,
1999 1998 1999 1998
Gold production -- ounces
Picacho Mine 1,462 4,753 3,700 10,442
Rand Mine 15,375 22,192 27,275 43,401
Daisy Mine(x) 7,353 - 8,658 -
Dee Mine(x) 10,441 - 14,571 -
Marigold Mine(x) 9,628 - 13,970 -
Cieneguita 192 651 834 1,090
--------------------------------------------
TOTAL 44,451 27,596 69,008 54,933
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Revenue realized
per ounce $ 267 $ 297 $ 276 $ 312
--------------------------------------------
Cash cost per ounce of production
Picacho Mine $ 168 $ 128 $ 163 $ 120
Rand Mine $ 224 $ 213 $ 238 $ 211
Daisy Mine(x) $ 204 $ - $ 246 $ -
Dee Mine(x) $ 229 $ - $ 218 $ -
Marigold Mine(x)$ 236 $ - $ 238 $ -
Company Average $ 223 $ 197 $ 231 $ 193
--------------------------------------------
Royalty cost per ounce of production
Picacho Mine $ 32 $ 31 $ 28 $ 30
Rand Mine $ 12 $ 22 $ 10 $ 18
Daisy Mine(x) $ 8 $ - $ 8 $ -
Dee Mine(x) $ 12 $ - $ 12 $ -
Marigold Mine(x) $ 20 $ - $ 14 $ -
Company Average $ 14 $ 24 $ 12 $ 20
--------------------------------------------
Total cash cost per ounce of production
Picacho Mine $ 200 $ 159 $ 191 $ 150
Rand Mine $ 236 $ 235 $ 248 $ 229
Daisy Mine(x) $ 212 $ - $ 254 $ -
Dee Mine(x) $ 241 $ - $ 230 $ -
Marigold Mine(x) $ 256 $ - $ 252 $ -
Company Average $ 236 $ 222 $ 243 $ 214
--------------------------------------------
Total cost per ounce of production
Picacho Mine $ 405 $ 242 $ 281 $ 243
Rand Mine $ 332 $ 317 $ 334 $ 311
Daisy Mine(x) $ 255 $ - $ 296 $ -
Dee Mine(x) $ 287 $ - $ 272 $ -
Marigold Mine(x) $ 299 $ - $ 294 $ -
Company Average $ 304 $ 304 $ 305 $ 298
--------------------------------------------
Working capital
(thousands) $ 37,417 $ 36,147 $ 37,417 $ 36,147
--------------------------------------------
Net cash provided
by (used in)
operations
(thousands) $ (2,794) $ 2,883 $ (1,536) $ 6,953
--------------------------------------------
Net earnings
(loss) for the
period
(thousands) $ (2,681) $ (364) $ (6,003) $ 203
--------------------------------------------
Net cash provided
by (used in)
operations per
share $ (0.04) $ 0.09 $ (0.03) $ 0.22
--------------------------------------------
Earnings (loss)
per share $ (0.03) $ (0.00) $ (0.10) $ 0.01
--------------------------------------------
Average shares
outstanding 68,732,932 31,245,707 58,780,909 31,245,707
--------------------------------------------
(x) Glamis share of production and costs are for the ownership
period only (March 1, 1999 through June 30, 1999).
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Contact:
Glamis Gold Ltd.
Charles A. Jeannes, 775/827-4600, ext. 3107
Fax, 775/827-5044
Website: www.glamis.com
Emails: info@glamis.com charlesj@glamis.com |
