first majestic silver

Glamis Gold Ltd (Toronto: GLG & USA:GLG)

April 2, 2004


Business Summary

Since its incorporation in 1972, Glamis has established itself as an innovative, efficient and low-cost gold producer, as well as a pioneer of the heap leach process.

The company's initial flagship operation was the Picacho mine in southeastern California which was in production from 1981 to early 2000 and produced a total of 388,000 ounces before closure.

In 1998, the Picacho mine received the prestigious "Excellence in Reclamation Award" from the California Mining Association which solidified the company's reputation for responsible mining and excellence in environmental achievement. In 1986, gold production commenced at the Rand mine, also in California, approximately 100 miles northeast of Los Angeles in Kern County. Rand was a solid gold producer for many years until active mining ceased in the first quarter of 2003. By the time final leaching, pad rinsing and reclamation activities are completed in 2004, Rand will have produced just under one million ounces of gold.

In 1998, Glamis adopted a strategic plan to seek out growth opportunities in the Americas through the acquisition of low-cost gold assets that would be accretive to cash flow and earnings while significantly enhancing shareholder value. The first of these acquisitions was Mar-West Resources Ltd. in October of the same year. This led to the development and construction of the million-ounce San Martin property in Honduras shortly thereafter. The San Martin mine first entered commercial production in January 2001 on schedule and within budget. In short order, San Martin became the company's primary source of gold production and earnings. More importantly, it represented the first of a new generation of large, low-cost gold mines and has since exceeded all expectations.

Glamis subsequently acquired Rayrock Resources Inc. in 1999, which had three operating open pit mines, and immediately transformed Glamis from a junior to an intermediate gold producer. The most important of the former Rayrock properties was its two-thirds interest in the Marigold property near Winnemucca, Nevada. In conjunction with the discovery of new gold reserves and resources, Glamis conducted a stringent review of the operation to substantially reduce costs. A decision was made to significantly expand the mine and the company's share of gold production is forecast to rise to an estimated 110,000 ounces annually at a total cash cost of $ 150 per ounce as early as 2004. Recent discoveries in the promising Sections 7 and 8 area may one day lead to further expansions.

On July 16, 2002, the company completed its largest transaction to date, the merger with Francisco Gold Corp. of Vancouver, Canada. The merger was initially undertaken mainly for the El Sauzal property in Chihuahua State, Mexico which is expected to become Glamis' largest and lowest cost gold producer when it commences commercial production early in 2005. As a result of the Francisco Gold transaction, the company also acquired the Marlin gold property in Guatemala. In the due diligence review, the company outlined a low-grade gold equivalent resource of 1.4 million ounces.

Subsequent exploration and drilling has expanded the gold equivalent resource to 5.6 million ounces. In addition, a feasibility study has recently been completed at Marlin for a combined open-pit and underground mine of approximately two million ounces of gold alone. The Marlin project is rapidly becoming the company's most important gold asset, and there is excellent potential to further expand reserves and resources and for additional discoveries in the immediate area.

Glamis is now on track to meet and even surpass its medium-term goal of producing 500,000 ounces of gold at a total cash cost of less than $ 150 per ounce. Looking forward, Glamis will continue to employ its broadened skill sets to discover and acquire new low-cost gold production in the Americas.

The company will also continue its focus on maximizing shareholder value.

Recent News: Glamis Gold Discovers High-Grade Gold and Silver Mineralization at La Hamaca

Glamis Gold Ltd. has reported initial drilling results at the La Hamaca prospect, located approximately three kilometers north of its Marlin project in Guatemala. La Hamaca is the northern-most of five targets within a six-kilometer radius of Marlin.

Reverse circulation drilling has identified high-grade gold and silver mineralization similar in grade and character to the veins at Marlin. The first phase, 10-hole program has identified gold mineralization within an East-West trending high-angle vein, hosted within altered andesite. The quartz-calcite vein has been traced by drilling and surface outcrop sampling along a strike length of 280 meters within a gold-in-soil anomaly of 800 meters in length. Additional untested structures containing gold and silver mineralization have been identified by surface sampling within a 200 meter distance to the south.

The long section indicates four of the completed holes have intercepted the La Hamaca vein and the vein is open to the east, west and to depth. Another seven holes have been added to the first phase program and will be drilled to test the vein in these directions. The remainder of the program will be completed with core drilling. The potential of the parallel structures to the south will also be tested. Initial metallurgical testing indicates that the La Hamaca mineralization is similar to the Marlin ores and amenable to conventional processing technology. Further test work is planned.

One of the company's prime objectives is to look beyond the initial Marlin discovery and attempt to develop the area into a new gold producing district. Once the phase one drilling program is completed, Glamis expects to analyze and comment further on any potential impacts to the Marlin project development plans.

Exploration activities on the other targets near Marlin will proceed throughout 2004. These targets appear similar to La Hamaca in terms of geology, alteration and gold-in-soil geochemical signatures.

Other Exploration Elsewhere in Guatemala, regional work is underway on several targets. Glamis expects to drill test at least two of the regional targets (within 30 kilometers of Marlin) in 2004.

El Sauzal exploration efforts are focused on developing targets for resource expansion. Exploration drilling at El Sauzal awaits completion of mine construction which remains on schedule for initial gold production in the fourth quarter of this year.

Marigold drilling is focused on converting resources to reserves, with recent results showing promise for reserve additions during the year. In-fill drilling of the Section 30 and TZN areas is the top priority at present. Marigold mine production will be low in the first quarter as expansion activities proceed. The production forecast for 2004 remains unchanged at 170,000 ounces of gold on a 100 percent basis. At the San Martin mine in Honduras, operations continue to show improvement over last year.

Fundamental Considerations: Properties

Glamis Gold Ltd. is a premier intermediate gold producer with over 20 years of experience operating efficient heap-leach mines in California, Nevada, Mexico and Honduras. Glamis remains debt-free and unhedged, and continues to advance a pipeline of potential projects in various stages of development.

With more than 16 M ounces of reserves in all categories, Glamis still looks undervalued.

Technical Considerations

The strong, multi-year up-trend should lead to prices in excess of $ 450/ounce in the near future.

"The all-time high of CAD 20.53 should soon be exceeded while the up-trend-line pushes against resistance.", we wrote on November 17, 2003.

In the meantime, the share price touched CAD 24, and it is almost certain that we shall see prices of $ 30 or more during the remainder of the year.

Our recommendation: Buy!

Peter Zihlmann
[email protected]
[email protected]

Gold is found in nature in quartz veins
Top 5 Best Gold IRA Companies

Gold Eagle twitter                Like Gold Eagle on Facebook