Glamis balances gold, politics

Even as Glamis Gold drills one exploratory hole after another on a hot prospect in Guatemala, the Reno-based company is working equally hard to make sure its plans are politically acceptable.

The stakes are high as Glamis continues to work on the Marlin Project.

The company estimates the property could produce 200,000 ounces of gold a year for the next decade that's annual revenues of about $66 million at current prices.

The gold that today would sell at about $330 an ounce would be produced for a cash cost of $100 an ounce.

"Economically, this project is a real winner," Steven Bauman, the Glamis vice president for its Latin American operations told shareholders and analysts last week.

But Bauman noted that the company is careful to build political support for the proposed Marlin mine.

Glamis is helping to provide health clinics and improved water supplies in the Central American nation.

It meets regularly with local residents and conducts polls to make sure public opinion isn't slipping away.

"This process is not always rapid, but it is one that has been proven to work," Bauman said.

The company doesn't expect government approval for the mine until 2004, and it probably won't sell any gold from Marlin until late 2005.

The mine is expected to combine an open pit with underground operations.

"Marlin is quickly becoming our most important asset," said Kevin McArthur, president and chief executive officer.

That's demonstrated in the company's willingness to give up current income to invest in the property.

Glamis last week reported it earned $1.9 million, or 2 cents a share, in the first quarter.

That compares with earnings of $3.2 million, or 4 cents a share, in the same period last year.

A big reason for the earnings decline was the company's big investment in the exploration of the Marlin property.

The company's other significant development project its El Sauzal property in Mexico is on schedule to begin production in the first quarter of 2005.

That mine is projected to produce 190,000 ounces of gold a year at a cash cost of $110 an ounce.

Jim Voorhees, the company's chief operating officer, the proposal has strong support from the Mexican public and local officials.