Glamis net rises despite troubles

Here's how you can tell things are going well: Net income rises 45 percent even though one of the company's biggest operations is struggling.

That was the story in the last 90 days at Reno-based Glamis Gold Ltd.

The company reported last week that its net for the third quarter totaled $3.5 million compared with $2.4 million in the same period a year ago.

The healthy growth came despite ongoing problems at the company's San Martin Mine in Honduras.

Production from that mine was 20,344 ounces of gold during the third quarter, down from 34,895 ounces a year earlier.

And cash production costs of $211 an ounce at the mine were up sharply from $103 a year earlier.

The mine's problems stem from difficulties with the chemistry used to recover gold, problems that were exacerbated by a drought in Central America.

Kevin McArthur, Glamis' president and chief executive officer, said the drought appears to be breaking and the company thinks it has the chemistry problems resolved.

Booming production at a Nevada mine, however, helped Glamis overcome the problems in Honduras.

The Marigold Mine, which is twothirds owned by Glamis (Barrick Gold owns the other third), produced 25,270 ounces of gold for Glamis during the third quarter compared with 10,089 ounces a year earlier.

Cash production costs, meanwhile, dropped to $173 an ounce at the mine compared with $247 a year earlier.

Glamis is aggressively working to expand production at Marigold, which is about 35 miles southeast of Winnemucca.

"We've done a lot of drilling there," McArthur told investors last week.

"We are finding more resource in and around the current resource area."

The company's other big exploration effort is under way at its Marlin project in Guatemala.

That mine is expected to produce 200,000 ounces of gold at a cost of $100 an ounce once it comes on line.

McArthur said the project is moving through the process of government approvals in Guatemala and might win a permit as early as December to begin operation.

Early next year, meanwhile, Glamis plans to begin a major exploration on all its holdings in Guatemala.

McArthur said the company believes it's generating enough cash flow $7.5 million in the most recent quarter to pay for the exploration and development programs.