If you hear Kevin McArthur whistling ahappy tune, you can't blame him.McArthur, president and chief executiveof Reno-based Glamis Gold Co., reportedlast week that new studies of a major newmine planned by his company was moreoptimistic than earlier studies on almostevery score.Specifically, the new studies of the proposedEl Sauzal mine in the Mexican stateof Chihuahua estimated:* Capital expenditures will run about $91million, compared with estimates of$102 million in a feasibility study completedin June.* Cash costs of producing an ounce of goldfrom the mine will be $110 rather than the$114 estimated in the earlier report.* The mine will produce 190,000 ounces ofgold a year rather than the 173,000 earlierestimate.* The pre-tax internal rate of return will be25 percent rather than the 20 percent estimatedby the earlier study.* The mine can be operating by the firstquarter of 2005 rather than the earlierstudy's estimate, which pegged the start ofproduction for the fourth quarter of 2005.About the only negative is that the higherproduction rate means that the mine hasan expected life of only 10 years rather thanthe 11 years predicted earlier.Glamis has a long-term goal of producing500,000 ounces of gold a year at a totalcash cost of less than $150 an ounce. Thenews from El Sauzal, McArthur said, createsconfidence the company will reachthose goals sooner than it expected.The company's production costs were$161 an ounce in the second quarter, and itexpects to produce about 250,000 ounces ofgold this year.While El Sauzal accounts for a big shareof Glamis' future production, it's alsoexpanding its Marigold Mine 35 milessoutheast of Winnemucca.Glamis, which owns a two-thirds interestin the mine, said the expansion is expectedto increase production to 120,000 ouncesa year from the current 50,000 ounces. Cashcosts are projected to be $145 an ounce.Homestake Mining owns the other third ofthe open-pit mine; Glamis is the operatingpartner.Glamis also is conducting tests at twoadvanced-stage prospects in Guatemala.
