Political risks don't worry Glamis president

Historically minded investors remember that American mining interests in Central America occasionally have been grabbed by populist governments.

A Reno-based mining company with a big stake in Central America says, however, it's not seriously concerned about the potential impact should political upheaval arise.

High-flying Glamis Gold whose stock was the ninth-best performer on the New York Stock Exchange last year bases much of its future hope on its El Sauzal mine in Mexico and its Marlin Project in Guatemala.

And the company's biggest current production comes from its San Martin Mine in Honduras.

Talking with investors after the company reported its financial results last week, Glamis President and Chief Executive Officer Kevin McArthur said political risk isn't high on his list of worries.

Mexico appears to be stable politically, he said, and its participation in the North American Free Trade Agreement would discourage expropriation.

That's critical for Glamis, because the El Sauzal Mine is expected to be a big part of its future earnings.

Plans call for the mine to produce about 190,000 ounces of gold a year at a cash production cost of about $110 an ounce.

Production is scheduled to begin in 2005, although McArthur said Glamis is doing everything it can to push the schedule forward.

The company's larger political exposure, McArthur said, may be in Central America.

But he said the company has worked hard to build good relations with governments in both Honduras and Guatemala.

"I'm quite comfortable with where we are," he said.

Although studies are continuing at the Marlin project in Guatemala, the company has said the resource on the property appears to be more than 4 million ounces of gold .

McArthur noted, too, that Glamis' mines are a three-legged stool.

The legs in Mexico and Central America are supported by the company's U.S.

operations.

Glamis is the operator and two-thirds owner of the Marigold Mine 30 miles east of Winnemucca in Humboldt County.

The company's share of that mine's production last year totaled 55,550 ounces at an average cost of $180 ounce, and production is expected to rise with the completion of an expansion project.

The Nevada mine is the company's secondbiggest producer.

The company's financial results last year set records.

Its income of $13.7 million for the year compares with $4.8 million in 2001, and its gold production rose to nearly 252,000 ounces from 230,000 ounces a year earlier.

While the company creates its budgets on the assumption that the price of gold will be $300 an ounce, McArthur said he sees solid reasons for the price to stay well above that level.

(It was trading around $345 an ounce last week.) Reasons for optimism? The dollar has been strong, but is beginning to weaken.

Inflation worries are stirring.

The federal government is running big deficits.

In fact, McArthur told a national television audience a few weeks ago he wouldn't be surprised to see gold reach $400 sometime soon.

"There's still a very good chance that's where gold is headed," he said last week.