Glamis Gold Ltd (TSX / NYSE: GLG): Follow-Up No 14 / January 24, 2006

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A PREMIER INTERMEDIATE GOLD PRODUCER IN THE AMERICAS

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 stewardship.

On July 16, 2002 , the Company completed its largest transaction to date with the merger with Francisco Gold Corp. of Vancouver , Canada. The merger was initially undertaken mainly to acquire the two-million ounce El Sauzal gold property in Chihuahua State, Mexico which in 2005 has become Glamis' largest and lowest cost source of gold production. El Sauzal commenced commercial production in the fourth quarter of 2004 as scheduled and produced over 25,000 ounces of gold before year end. Gold production for 2005 was projected at 170,000 ounces.

As a result of the Francisco merger, Glamis also acquired the Marlin gold and silver property in Guatemala. Initial due diligence studies indicated that Marlin could be developed into a modest open pit, heap leach operation. However, with the discovery and delineation of a substantial underground deposit, Marlin has evolved into the Company's most important gold asset. Current proven and probable reserves stand at 2.3 million ounces of gold and 36 million ounces of silver. Construction at Marlin is completed and commercial production is commenced in the fourth quarter of 2005 with estimated production of 10,000 ounces of gold for the year. Over a projected ten-year mine life, the feasibility called for average annual production at Marlin of 217,000 ounces of gold and 3.5 million ounces of silver.

Glamis is projecting an increase to 600,000 ounces in 2006 and a further increase to 700,000 ounces in 2007 while reducing total cash costs to below $150 per ounce.

Properties

Marigold, Nevada (66.67% owned)

Location: The Marigold mine is located in Humboldt County in central Nevada approximately 30 miles east of the town of Winnemucca and five miles south of Interstate 80. The property comprises 29 square miles in total and is two-thirds owned by Glamis Gold Ltd. and one-third owned by Barrick Gold Corp. Glamis is the operator.

Project Description: Glamis first acquired its interest in the property in 1999 as part of the Rayrock Resources Inc. acquisition. After a comprehensive optimization study of the Marigold mine, Glamis transformed the property into a conventional run of mine heap leaching operation and completely suspended milling operations. With the discovery of additional oxide ore zones, the joint venture partners made a decision to proceed with the Marigold expansion project that is now well underway.

Once the Marigold expansion program is fully implemented, the company's share of gold production is forecast to rise to an average of 110,000 ounces annually at a total cash cost of $150 per ounce.

Exploration: Exploration has been very successful at Marigold in the last few years and Glamis is confident that additional oxide mineralization will be discovered. Current work is focused mainly on the promising Section 7 area where the Company has encountered drill intercepts of up to 120 feet at grades of 0.035 ounces of gold per ton. The oxide mineralization is fairly deep, but with the substantial cost savings achieved in the past few years, this new zone could well play an important role in the mine's future.

El Sauzal Mine, Mexico

Location: The El Sauzal mine is located in Chihuahua, Mexico approximately 155 miles southwest of the state capital, Chihuahua City, and some 40 miles northeast of the city of Chiox, Sinaloa, which is the nearest population center. The property lies within the Batopilas and Urique mining districts in the southwestern part of the state, and is 100 percent owned by Glamis Gold.

Project Description: The El Sauzal mine is Glamis Gold's newest and largest gold mine. Acquired through the Francisco Gold Corp. merger, construction began in mid 2003 and mill start-up occurred in October 2004, months ahead of the original schedule. More than 25,000 ounces of gold were produced in 2004, and the mine is on track to produce 170,000 ounces in 2005.

El Sauzal is an open pit conventional oxide-milling project. Mill capacity was optimized at 5,500 tonnes per day and annual production is projected to average 190,000 ounces of gold at an estimated total cash cost of $110 per ounce over a 10-year mine life. The project internal rate of return, based on a $300 per ounce gold price, exceeds 25 percent. The timely and successful development of the El Sauzal project was a top priority for Glamis, and a key step in achieving the Company's production goal of 700,000 gold ounces per year at total cash cost below $150 per ounce.

Exploration: To date, a proven and probable gold reserve of nearly two million ounces has been defined at the El Sauzal property. Initially, the opportunity to substantially increase reserves appeared limited. However, recent work indicates the potential to extend mineralization away from the existing pits and in the Trini, East Extension, and other target areas is increasing. Glamis is actively exploring around the deposits and on the rest of its concession area. Glamis controls a total of 12 concessions covering an area of more than 36,000 hectares surrounding the El Sauzal deposit.

The Cerro Blance Property, Guatemala

Location: The Cerro Blanco property is located in southwestern Guatemala near the town of Asuncion Mita, a community of approximately 15,000 people. The 100% owned property was acquired by Glamis in 1998 as part of the Mar-West Resources Inc. acquisition. Cerro Blanco is considered to be a classic hot springs gold deposit with typical bonanza-type gold mineralization.

Initial exploration work and much of the 3,700 meters of drilling was geared to defining a heap leach open pit deposit. However, subsequent drilling identified a number of narrower high-grade intercepts and Glamis has since changed its focus to potential development as an underground deposit with possible operating synergies with the Marlin project to the northwest.

Depending on the results of the latest program, Glamis will continue to test for potential expansions of the underground mineralization and, if successful, will study potential operating synergies with the Marlin project.

Marlín, Guatemala (100% owned)

Location: The Marlin Project is located in the western highlands of Guatemala, 48 kilometers southwest of the city of Huehuetenango, which in turn, is approximately 300 kilometers by road north-west of the capital, Guatemala City. The project lies within a highly prospective land package of approximately 100,000 hectares in Western Guatemala.

Project Description: The Marlin deposit was first discovered in 1998, and Glamis Gold acquired its 100% interest in the property through the merger with Francisco Gold Corp in July 2002. During its due diligence review, Glamis established an initial gold equivalent resource of 1.4 million ounces. Upon completing the acquisition, a drill program was initiated to extend the Main zone, which also led to the discovery of major extensions to the south and southeast. The ore body is still open along strike to the west and down-dip to the south.

Based on the subsequent feasibility study, Glamis commenced construction of a combined open pit and underground operation in the first quarter of 2004. Construction is currently ahead of schedule and commercial production is expected in the fourth quarter of 2005. Mill capacity has been expanded to 5,000 tonnes per day to accommodate additional high grade feed recently found in the La Hamaca Zone and other satellite properties. The project is fully permitted and enjoys strong local support, as well as backing by the Guatemalan Government and the World Bank.

San Martín, Honduras (100% owned)

Location: Located in Central Honduras in the Department of Francisco Morazan, 79 miles north of the capital city of Tegucigalpa. The concession controlled by the Company comprises 14,100 hectares, or 54.4 square miles.

Description: The San Martin mine was the key component of the Mar-West Resources acquisition in 1998. The mine, considered a classic epithermal gold deposit, is 100 percent owned by Glamis. At the time of acquisition, a 600,000 ounce gold resource had been established at San Martin. The company expanded this to a proven and probable reserve of approximately 1.1 million ounces prior to the start up of the mine.

Following the approval of the feasibility study by the Board of Directors in October 1999, the mine was permitted and constructed on a fast track. Internal cash provided the entire investment required to build the mine, which was slightly under budget at $28 million.

Mining commenced in the summer of 2000 and the first gold shipment was made on December 12th of that year. Gold production in 2001 was 114,216 ounces and rose to 129,435 ounces in 2002. 2004 production totaled 101,835 and the company is forecasting approximately 85,000 ounces for 2005.

Exploration: Current exploration at the San Martin mine is being carved out and between the Rosa and Palo Alto pits. A drill program is also planned for the nearby Minitas property as soon as final permits are received.

Resent News: Glamis Gold Production Increases 85 Percent; Continued Production Growth Projected for 2006

Glamis Gold Ltd announced that it produced 434,010 ounces of gold in 2005, an increase of 85 percent compared to 234,433 ounces in 2004. Unaudited total cash costs in 2005 were $195 per ounce of gold produced.

The 2005 results were driven by a strong first year of commercial production at El Sauzal Mine in Mexico-which exceeded plan by 13 percent-as well as strong performance at Marigold Mine in Nevada.

Marlin Mine in Guatemala commenced commercial production in late 2005 and concluded a successful year by contributing nearly 24,000 ounces of gold to the Company's total production.

Looking ahead, the first full year of production at Marlin and continued growth at El Sauzal are expected to drive total 2006 production to approximately 670,000 gold ounces, an increase of 54 percent over 2005.

Total cash costs for 2006 are expected to decrease significantly, to between $160 and $170 per ounce of gold.

Exploration expenditures are forecast at approximately $25 million, including nearly $15 million for feasibility and exploration costs at the Cerro Blanco project in Guatemala.

Fundamental Considerations

Achievements in 2005

Decreasing Cash Cost

TECHNICAL CONSIDERATIONS

From November 2004 to May 2005, investors ignored very positive fundamental developments, may be as a result of the failed bid for Goldcorp. Nevertheless, Glamis will remain a core holding for many institutional investors who seek solid growth in the gold industry.

 

Peter Zihlmann

 

www.pzim.com

[email protected]

 

January 24, 2006

 

Disclosure: The author has not been paid to write this article, nor has he received any other inducement to do so. The author is a shareholder in the company and will benefit from any increase in the company's share price. Disclaimer: The author's objective in writing this article is to invoke an interest on the part of potential investors in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock.