Glamis: Strike near Winnemucca significant

Here's a mining company's dream a big new deposit that can be mined with minimal additional investment.

That may be the developing story for Reno's Glamis Gold, where executives are excited about a potentially significant extension to the Marigold Mine some 35 miles southeast of Winnemucca.

Glamis just put another $1 million in a drilling program at the mine, and the company said the newly discovered deposits could boost the mine's production to about 200,000 ounces of gold a year.

That would boost production by about a third from the 135,000 ounces expected from the mine this year.

"We believe this is an important discovery," said Kevin McArthur, the president and chief executive officer of Glamis.

Best of all, executives told analysts last week, expansion of the Marigold Mine wouldn't require a heavy investment.

Glamis, which owns two-thirds of the mine, and Barrick Gold Corp., which owns the other third, already have completed some of the environmental work that would be necessary.

While no feasibility studies of the mine expansion have been completed, Glamis executives said their capital investment probably would be limited to the purchase of trucks and mining equipment.

The new discovery at the Nevada property comes as Glamis moves closer to bringing its El Sauzal project in Mexico into production.

That mine, which is projected to produce 190,000 ounces of gold a year at a cash cost of $110 an ounce, is scheduled to reach commercial production in early 2005.

In recent months, roads and buildings at the property have been under construction.

At the same time, however, McArthur acknowledged that the company's San Martin Mine in Honduras struggled during the second quarter.

Production at the mine was 29,159 ounces compared with 33,772 in the same period a year ago.

And cash costs at the mine rose to $165 an ounce compared with $112 a year earlier.

The problem, McArthur said, resulted from changes in the chemistry of the leach pad at the mine.

He said the company is confident it's resolved the problems, but the company still has cut its forecasts for full-year production at the mine.

Glamis produced 60,583 ounces during the quarter, down from 63,929 a year earlier.

Its cash production costs company-wide rose to $172 an ounce compared with $156 a year earlier.

At the same time, its exploration costs grew by about $1 million from the previous year.

Most of that came at a Guatemala prospect.

Rising gold prices, however, kept the company's earnings afloat.

Glamis earned $3.9 million in the second quarter compared with $3.4 million a year earlier.

The company said the price for which it sold gold averaged $353 during the second quarter compared with $313 a year earlier.