Could you translate this news from Glamis Gold into English for us please koanhead? What will this do for the share price? Thanks.
Glamis Gold Ltd -
Glamis optimization program results; hedging program
Glamis Gold Ltd GLG
Shares issued 68,357,432 1999-10-12 close $3.75
Wednesday Oct 13 1999
Mr. Charles Jeannes reports
Glamis Gold Ltd. has completed a program to optimize operations at all of its gold mines, and has finalized new mine plans and budgets for the Marigold, Dee and Daisy mines acquired earlier this year in its merger with Rayrock Resources, Inc. Glamis now expects a total of 234,000 ounces of production in 2000 at average total cash costs of $200. These projections compare favourably to expected 1999 production for Glamis' account of 178,000 ounces at average total cash costs of $214.
Plan modifications at the mine sites include the following:
At Rand mine, Phase 2 stripping was completed during the third quarter with mining costs below plan (49 cents per ton against 56 cents year-to-date) due to improved mining rates, favorable haul distance and cost-cutting measures. Gold production in the fourth quarter will be below plan due to processing lag times in connection with the large volume of ore now being stacked on the leach pad. This lag time will cause current shortfalls to report as first quarter 2000 production. Year 2000 gold production is projected to be 93,573 ounces at total cash costs of $170 per ounce. The decision point for commencing stripping for the final phase of the Yellow Aster pit will be in early 2000.
Mining rates at Marigold mine have been increased to 14.3 million tons per year from 12 million tons per year to better use the surface mining fleet and to reduce unit mining costs. Mill operations have been suspended and all ore will report to the leach pads. Overhead costs have been reduced by the previous elimination of 18 positions through a combination of transfers and a reduction in force. Total cash costs for 2000 are projected at $203 per ounce.
At Dee mine, the Stage 1 pit that was previously planned for the mining of 78,000 contained ounces has been reduced in scope. Approximately 14,000 of these ounces will be mined with a smaller open pit, with 40,000 additional ounces to be recovered by way of a southern extension of the current underground mining program. This modification will reduce required waste stripping by 7.6 million tons. Underground development at the North Underground project continues. Because of delays to project startup and low initial development rates, production for the fourth quarter is expected to be approximately 4,000 ounces below plan. Management is working with the underground contractor to improve performance. Definition drilling continues to confirm reserves, which will be updated by year-end.
Mining of the Secret Pass pit at Daisy mine will be completed by the end of 1999. Leaching will continue during 2000 with rinsing scheduled to begin in the third quarter. Commencement of the nearby Reward project is on hold pending receipt of final permits and further study to improve project economics.
Optimizing the gold mines completes the last phase of the Rayrock consolidation program. Glamis' projected production for the second half of 1999 and 2000 is as follows:
Mine 1H 1999 1H 1999 2H 1999
Production Total Cash Production
Costs
(US$/ounce)
Rand 27,275 248 41,874
Marigold 13,970 252 21,687
Dee 14,571 230 19,703
Daisy 8,658 254 22,694
Picacho 3,700 191 2,947
San Martin -- -- --
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Totals 69,008 243 108,905
Mine 2H 1999 2000 2000
Total Production Total
Cash Cash
Costs Costs
US$/ounce US$/ounce
Rand 189 93,573 170
Marigold 207 46,962 203
Dee 262 69,188 251
Daisy 144 8,543 154
Picacho 182 1,333 300
San Martin -- 14,000 149
--------------------------------------
Totals 196 233,599 200
Note that 1H 1999 production excludes results in January and February, 1999, from the former Rayrock mines.
Hedging Program
In response to numerous recent inquiries concerning its hedge positions, the company reports that it currently has hedge positions on 4.3 per cent of its proven and probable reserves. During the recent low gold price environment, Glamis placed moderate floor protection for 2000 production in the event of continued low prices. To this end, put options on 36,000 ounces were purchased for 2000 delivery at an average price of $275. These contracts were financed with call options sold for delivery in 2001.
The company's total current hedge positions (excluding out-of-the-money put options) are as follows:
Year Forward Average Call
Ounces Price Option
($/oz) Ounces
----------------------------------
Remainder
of 1999 16,400 288 20,500
2000 63,000 288 19,000
2001 0 -- 60,000
2002 and
beyond 0 -- 0
----------------------------------
Year Average Total Estimated
Option Forward Gold
($/ounce) and Call Production
Ounces (ounces)
-------------------------------------
Remainder
of 1999 301 36,900 67,000
2000 275 82,000 228,000
2001 295 60,000 250,000
2002 and
beyond -- 0
-------------------------------------
Total 178,900 541,000
Approximately 36 per cent of projected 2000 production and 24 per cent of projected 2001 production is subject to hedge positions. The company has no positions that are subject to floating lease rates. All of the call options are spot deferrable at the company's election. Glamis has no intention to place additional hedge positions at current gold prices.
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. The company has recently approved development of the San Martin mine in Honduras, with initial gold production scheduled for the third quarter of 2000. With San Martin in full production, Glamis expects production of approximately 250,000 ounces in 2001.
WARNING: The company relies upon litigation protection for "forward-looking" statements. |
