Glamis Gold Ltd.
TSX : GLG
NYSE : GLG

Glamis Gold Ltd.

August 04, 2005 08:45 ET

Glamis Gold Reports Record Gold Production in Second Quarter 2005

RENO, NEVADA--(CCNMatthews - Aug. 4, 2005) - All amounts in United States Dollars

Glamis Gold Ltd. (TSX:GLG)(NYSE:GLG) today reported net income of $8.2 million or $0.06 per share for the second quarter of 2005 compared to net income of $2.9 million or $0.02 per share in the second quarter of 2004. The Company also announced a new quarterly production record of more than 109,000 ounces of gold during the quarter and substantial construction progress at the Marlin gold and silver project in Guatemala.

Second Quarter Highlights

- Produced 109,377 ounces of gold at a total cash cost of $191 per ounce, more than double the 48,109 ounces of gold produced in the second quarter in 2004.

- Generated cash flow from operations of $22.1 million compared to $7.7 million recorded in the second quarter of the prior year.

- Posted excellent results for the second full quarter of production at the El Sauzal mine in Mexico. The mine remains on track to produce 170,000 ounces of gold for 2005.

- Commenced pre-stripping of the Basalt and Antler pits at the southern portion of the Marigold property to fully implement the latest expansion phase.

- Advanced construction of the Company's wholly-owned Marlin project in Guatemala to 90 percent completion.

Kevin McArthur, President and Chief Executive Officer of Glamis Gold said, "Glamis continues to make excellent progress towards its target of producing 400,000 ounces of gold in 2005 at a total cash cost of $185 per ounce. We set a new quarterly gold production record of more than 109,000 ounces in the latest quarter as our El Sauzal mine continues to meet feasibility expectations and we see the impact of implementation of the latest expansion phase at Marigold."

"This outstanding performance for the quarter and the first half of this year provides confidence in meeting our 2005 targets. We anticipate gold output returning to forecast levels of approximately 90,000 ounces in the third quarter before seeing a significant increase in the fourth quarter of the year."

"We look forward to the commencement of production later this year at the Marlin project. Construction is running ahead of schedule and we remain confident of meeting or exceeding our production target of 10,000 ounces of gold in the current year. Recent exploration results at our Cerro Blanco property in southeastern Guatemala have also been encouraging. We are serious about our commitments to the people and government of Guatemala. It is critical that we act in a responsible manner that benefits the local communities and the Guatemalan people as well as the shareholders of Glamis."

Financial Review

Revenue from gold sales in the second quarter of 2005 increased to $48.7 million, more than double the $18.6 million recorded in the second quarter of the previous year. The increase in revenue was attributable to record gold production, and to a lesser extent, higher realized gold prices. Glamis sold 112,810 ounces of gold in the latest quarter at an average realized price of $430 per ounce compared to the sale of 47,037 ounces in the corresponding period of 2004 at an average realized price of $394 per ounce.

Glamis reported net income of $8.2 million or $0.06 per share for the second quarter of 2005 compared to net income of $2.9 million or $0.02 per share in the second quarter of the prior year. The increase in net income in the second quarter of 2005 was primarily due to increased gold production and higher realized gold prices, partially offset by increased depreciation and depletion charges, increased exploration expenditures, a $1.2 million non-cash charge related to stock-based employee compensation and an increase in income taxes. Net income before the stock-based employee compensation charge would have been $9.4 million or $0.07 per share for the quarter.

Cash flow generated from operations in the second quarter of 2005 (before working capital changes and reclamation expenditures) was $22.1 million compared to $7.7 million in the second quarter of the prior year. As of June 30, 2005, the company reported cash and equivalents of $24.8 million and working capital of $29.3 million. The Company drew down $20 million of a $50 million credit facility with the Bank of Nova Scotia during the quarter to fund the accelerated construction schedule at the Marlin project. With its increasing cash flows and Marlin construction nearing completion, the Company does not anticipate needing any further financing in the near term. Glamis' gold production remains totally unhedged.

Operations Review

Gold production for the second quarter of 2005 was 109,377 ounces at a total cash cost of $191 per ounce compared to 48,109 ounces of gold at a total cash cost of $183 per ounce in the second quarter of the prior year. The substantial increase in production was essentially due to the successful commissioning of the El Sauzal mine in the fourth quarter of 2004 and implementation of the latest expansion at Marigold mine in Nevada. Detailed production statistics for the latest quarter are presented on page six.

El Sauzal Mine (100%)

In its second full quarter of operation, gold production at El Sauzal was on track at 44,502 ounces. As a result of lower ore grades and seasonal increases in power costs, total cash costs increased from the first quarter of the year to $151 per ounce. The Company is currently processing lower grade ore as part of the planned mining sequence before returning to higher grade ore later in the third quarter. Through the first half of 2005, El Sauzal has produced over 88,000 of gold at a total cash cost of $138 per ounce. Glamis anticipates the mine reaching its 2005 production target of 170,000 ounces of gold.

Marigold Mine (66.7%)

Glamis' two-thirds share of gold production from Marigold mine was 41,120 ounces in the most recent quarter at a total cash cost of $187 per ounce. This compares to production of 22,188 ounces of gold in the second quarter of 2004 at a total cash cost of $160 per ounce. The near doubling of gold production in the second quarter of 2005 reflects the implementation of the latest expansion phase at Marigold that will substantially increase annual gold production in 2005 and in future years. The increase in total cash costs was the result of higher fuel and equipment maintenance costs.

Marigold mine is on track to meet its production target of 135,000 ounces (Glamis' two-thirds share) for 2005, although the Company does anticipate lower production in the third quarter due to pre-stripping of the Basalt and Antler pits in the southern portion of the property where ore mining will accelerate in the fourth quarter.

San Martin Mine (100%)

At San Martin mine, gold production rose slightly to 23,755 ounces in the latest quarter at a total cash cost of $273 per ounce. This compares to production of 22,418 ounces of gold at a total cash cost of $192 per ounce in the corresponding period of 2004. Total cash costs were projected to rise with the transition from the Rosa pit to the Palo Alto pit where ore grades and recoveries are somewhat lower. Compounding this are recent increases in fuel costs that have impacted both the cost of operating the mining equipment and generating power at the mine site.

Gold production in the third quarter is projected to decline as the result of heavy precipitation in the second quarter. However, San Martin has met expectations to date and Glamis is comfortable with its production target of 85,000 ounces of gold for 2005.

Development Projects

Marlin Project (100%)

Construction of the Company's Marlin project in Guatemala reached 90 percent completion at the end of the quarter. Final installation of piping and electrical connections is well underway. Testing of the emergency power generators and the initial test run of the crushing circuit is complete as is the substation and power line to the property where energizing awaits final agency approval. The open pit has been developed to the ready stage as has the underground access ramp and ventilation incline. Underground crews are currently establishing operating levels and setting up drill stations. The first year's production will be largely from the open pit with the underground coming on stream mid 2006.

The Marlin project has been constructed to World Bank standards and is expected to be completed by the fourth quarter of this year, ahead of the original schedule. The Company is committed to collaborating with local communities, government authorities and NGOs on issues associated with the development and operation of the mine. The Company is confident that Marlin will meet or exceed its commercial production target for 2005. Projected production for 2006 is approximately 250,000 ounces of gold and over 3 million ounces of silver.

Cerro Blanco Project (100%)

The latest drill program at Cerro Blanco has succeeded in extending the high-grade quartz vein systems by identifying a new fault offset of these vein systems to the north. Glamis believes that there is an opportunity to substantially expand the existing gold resource at Cerro Blanco (currently 870,000 ounces of gold). Three drill rigs are presently employed in further defining this extension. In addition to the latest drill program, the Company is conducting baseline environmental work, permitting, hydrology studies and metallurgical testing. A feasibility study for this project is expected to be completed in 2006.

Exploration

At Marlin, two new mineralized veins have been discovered in close proximity to the mine. The Rosa vein was discovered in the footwall of the main Marlin zone during underground development work. Drilling from underground is presently providing ore grade intercepts of adequate mining widths. In addition, an initial drill program has been completed at the West Vero zone leading to another new mineralized vein discovery. West Vero is approximately 700 meters south and parallel to the Marlin vein. While results are being evaluated at West Vero, surface drills have moved to the La Hamaca zone to provide in-fill data and to expand the existing resource. The success of these programs continues to confirm Marlin's exploration potential.

The exploration program at El Sauzal is presently focused on drilling out the Trini zone, adjacent to the West pit. Further regional work is also underway with emphasis on the Guayacan gold/copper porphyry system located approximately four kilometres south of the El Sauzal mine.

At Marigold, the exploration program for the first half of the year consisted of extensional and definition drilling around current operations, including the Basalt and Antler pits. The program will now concentrate on drill testing the Section 30 area and other prospective targets previously identified on the property.

On Monday, August 8, 2005, Kevin McArthur, President and Chief Executive Officer of the Company, will host a conference call at 12:00 noon PDT (3:00 pm EDT) to discuss the latest operating and financial results and progress at the Company's Marlin development project in Guatemala. You may join the call by dialing 1-800-901-5259 in the United States and Canada or 1-617-786-4514 for calls outside the United States and Canada and entering the Conference ID # 37863581. To view the simultaneous webcast presentation, participants should go to the Glamis Gold Ltd. website at www.glamis.com and click onto the link on the main page.

A replay of the call will be available from approximately two hours after the call's completion until August 19, 2005 by dialing 1-888-286-8010 for the United States and Canada and 1-617-801-6888 outside the United States and Canada and quoting Conference ID # 36661034. The webcast presentation will be available as well and slides may also be downloaded from the Glamis Gold Ltd. website.

Glamis Gold Ltd. is a premier intermediate gold producer with low-cost gold mines and development projects in Nevada, Mexico and Central America. Plans call for growth from 400,000 ounces of gold production in 2005 to over 700,000 ounces in 2007. The Company remains 100 percent unhedged.

Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995: Except for the statements of historical fact contained herein, the information presented constitutes "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, include, but are not limited to those with respect to, the price of gold, the estimation of mineral reserves and resources, the realization of mineral reserves estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, success of exploration activities, Glamis' hedging practices, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of mining operations, environmental risks, unanticipated reclamation expenses, title disputes or claims limitations on insurance coverage and the timing and possible outcome of pending litigation. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", or "does not expect", "is expected", "budget", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variation of such words and phrases or state that certain actions, events or results, "may", "could", "would", "might" or "will" be taken, occur or be achieved. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Glamis to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the actual results of current exploration activities, actual results of current reclamation activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, future prices of gold, possible variations in ore grade or recovery rates, failure of plant, equipment or processes to operate as anticipated, accidents, labor disputes and other risks of the mining industry, delays in obtaining governmental approvals or financing or in the completion of development or construction activities, as well as those factors discussed in the section entitled "Other Considerations" in the Glamis Annual Information Form. Although Glamis has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

email requests for investor packets to: info@glamis.com

email questions/correspondence to: michaels@glamis.com



GLAMIS GOLD LTD.
SECOND QUARTER 2005 REPORT
Financial Highlights
(in millions of U.S. dollars, except per share and per ounce amounts)

Three Months Ended Six Months Ended
June 30, June 30,
2005 2004 2005 2004
--------------------------------------------------------------------
Gold ounces
produced 109,377 48,109 203,098 99,028
Gold ounces sold 112,810 47,037 210,927 99,700
Average revenue
realized per gold
ounce $ 430 $ 394 $ 429 $ 404
Average market
price per gold
ounce $ 427 $ 393 $ 427 $ 401
Total cash cost
per gold ounce
produced $ 191 $ 183 $ 190 $ 194
Total production
cost per gold
ounce $ 295 $ 268 $ 294 $ 279
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Production Data:
El Sauzal Mine:
Ore tonnes
milled 429,578 - 732,555 -
Waste tonnes
mined 1,191,273 - 1,773,751 -
Grade (grams per
tonne) 3.473 - 3.380 -
Gold ounces
produced 44,502 - 88,037 -
Total cash cost
per ounce $ 151 - $ 138 -
Total production
cost per
ounce $ 267 - $ 252 -
San Martin Mine:
Ore tonnes
processed 1,432,564 1,342,471 2,891,640 2,792,147
Waste tonnes
mined 883,619 607,984 2,074,135 1,470,906
Grade (grams
per tonne) 0.647 0.891 0.639 0.789
Gold ounces
produced 23,755 22,418 45,722 51,344
Total cash cost
per ounce $ 273 $ 192 $ 268 $ 182
Total production
cost per
ounce $ 379 $ 289 $ 373 $ 278
Marigold Mine
(66.7%):
Ore tonnes
mined 1,115,333 1,892,571 2,649,486 3,057,149
Waste tonnes
mined 6,340,946 4,092,732 11,663,416 9,623,281
Grade (grams
per tonne) 1.041 0.960 0.858 0.857
Gold ounces
produced 41,120 22,188 69,339 39,394
Total cash cost
per ounce $ 187 $ 160 $ 204 $ 198
Total production
cost per
ounce $ 275 $ 240 $ 295 $ 277
Rand Mine (in
reclamation):
Gold ounces
produced - 3,503 - 8,290
Total cash cost
per ounce - $ 268 - $ 248
Total production
cost per ounce - $ 311 - $ 292

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Financial Data:
Working capital $ 29.3 $ 73.0 $ 29.3 $ 73.0
Cash provided
from operations $ 22.1 $ 7.7 $ 38.6 $ 15.4
Net earnings $ 8.2 $ 2.9 $ 10.4 $ 12.0
Basic earnings per
share $ 0.06 $ 0.02 $ 0.08 $ 0.09
Average shares
outstanding 131,002,303 130,513,678 130,951,724 130,369,235
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Glamis Gold Ltd.
Consolidated Balance Sheets
(Expressed in millions of U.S. dollars, except per share amounts)

June 30, December 31,
2005 2004
(unaudited)
--------------------------------------------------------------------

Assets
Current assets:
Cash and cash equivalents $ 24.8 $ 27.0
Accounts and interest receivable 1.8 2.8
Inventories 26.0 25.7
Prepaid expenses and other 1.5 1.3
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54.1 56.8

Mineral property, plant and
equipment, net 593.3 542.3
Other assets 12.3 14.2
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$ 659.7 $ 613.3
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Liabilities
Current liabilities:
Accounts payable and accrued
liabilities $ 22.3 $ 24.8
Site closure and reclamation
costs, current 0.8 0.9
Taxes payable 1.7 3.7
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24.8 29.4

Site closure and reclamation costs 8.9 7.6
Long-term debt 65.0 30.0
Future income taxes 88.2 86.0
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186.9 153.0
Shareholders' equity
Share capital:
Authorized:
Unlimited (2004 - 200,000,000)
common shares without par value
5,000,000 preferred shares, Cdn$10
per share par value,
issuable in series
Issued and fully paid:
131,018,953 (2004-130,863,953)
common shares 474.2 472.7
Contributed surplus 17.1 16.5
Deficit (18.5) (28.9)
--------------------------------------------------------------------
472.8 460.3
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$ 659.7 $ 613.3
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Prepared by management without audit


Glamis Gold Ltd.
Consolidated Statements of Operations
(Expressed in millions of U.S. dollars, except per share amounts)

Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
(unaudited) (unaudited)
--------------------------------------------------------------------
Revenue $ 48.7 $ 18.6 $ 90.8 $ 40.3

Costs and expenses:
Cost of sales 21.4 8.5 39.2 19.2
Depreciation and
depletion 12.5 4.0 23.2 8.4
Exploration 1.4 0.8 2.5 1.9
General and
administrative 2.0 1.6 8.1 4.0
Stock-based
compensation 1.2 - 1.8 0.1
Other operating
expenses 0.6 0.3 0.9 0.4
--------------------------------------------------------------------
39.1 15.1 75.7 34.0
--------------------------------------------------------------------
Earnings from
operations 9.6 3.4 15.1 6.3
Interest and other
income 0.4 0.1 0.6 8.4
--------------------------------------------------------------------
Earnings before
income taxes 10.0 3.5 15.7 14.7
Provision for
income taxes:
Current 2.0 - 3.1 1.2
Future (0.2) 0.6 2.2 1.5
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1.8 0.6 5.3 2.7
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Net earnings $ 8.2 $ 2.9 $ 10.4 $ 12.0
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--------------------------------------------------------------------

Earnings per
share:
Basic $ 0.06 $ 0.02 $ 0.08 $ 0.09
Diluted $ 0.06 $ 0.02 $ 0.08 $ 0.09
Weighted average
common shares
outstanding:
Basic 131,002,303 130,513,678 130,951,724 130,369,235
Diluted 132,278,716 132,104,099 132,266,792 131,948,374
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Consolidated Statements of Deficit
(Expressed in millions of U.S. dollars)

Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
(unaudited) (unaudited)
--------------------------------------------------------------------
Deficit, beginning
of period $ (26.7) $ (40.7) $ (28.9) $ (36.7)
Adjustment for
stock-based
compensation - - - (13.1)
Net earnings 8.2 2.9 10.4 12.0
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Deficit, end of
period $ (18.5) $ (37.8) $ (18.5) $ (37.8)
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Prepared by management without audit


Glamis Gold Ltd.
Consolidated Statements of Cash Flows
(Expressed in millions of U.S. dollars)

Three months ended Six months ended
June 30, June 30,
2005 2004 2005 2004
(unaudited) (unaudited)
--------------------------------------------------------------------
Cash flows from
operating
activities
Net earnings $ 8.2 $ 2.9 $ 10.4 $ 12.0
Non-cash items:
Depreciation and
depletion 12.5 4.0 23.2 8.4
Future income
taxes (0.2) 0.6 2.2 1.5
Loss (gain) on
sale of
properties and
investments (0.2) 0.1 (0.3) (6.9)
Stock-based
compensation 1.2 - 1.8 0.1
Other 0.6 0.1 1.3 0.3
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22.1 7.7 38.6 15.4
Changes in
non-cash operating
working capital:
Accounts and
interest
receivable 1.0 (1.6) 1.1 (2.3)
Taxes
recoverable/
payable (2.7) - (2.1) -
Inventories 0.6 (3.4) (0.5) (3.1)
Prepaid expenses
and other 0.5 2.5 (0.2) (0.7)
Accounts payable
and accrued
liabilities (3.2) 16.4 (3.1) 19.7
Site closure and
reclamation
expenditures (0.8) (0.5) (1.3) (1.1)
--------------------------------------------------------------------
Net cash provided
by operating
activities 17.5 21.1 32.5 27.9
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Cash flows from
(used in)
investing
activities
Purchase of
mineral property,
plant and
equipment, net of
disposals (38.6) (58.8) (72.1) (93.2)
Net proceeds from
sale of
investments and
properties 0.5 - 0.5 13.3
Other assets 0.7 - 1.3 -
--------------------------------------------------------------------
Net cash used in
investing
activities (37.4) (58.8) (70.3) (79.9)
--------------------------------------------------------------------

Cash flows from
financing activities
Proceeds from
long-term debt 20.0 - 35.0 -
Proceeds from
issuance of common
shares 0.4 1.2 0.6 3.1
--------------------------------------------------------------------
Net cash provided
by financing
activities 20.4 1.2 35.6 3.1
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Increase
(decrease) in
cash and cash
equivalents 0.5 (36.5) (2.2) (48.9)
Cash and cash
equivalents,
beginning of
period 24.3 113.7 27.0 126.1
--------------------------------------------------------------------
Cash and cash
equivalents, end
of period $ 24.8 $ 77.2 $ 24.8 $ 77.2
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Supplemental
disclosure of
cash flow
information:
Cash paid
(received) during
the period for:
Interest, net of
interest amounts
paid and
capitalized $ (0.2) $ (0.3) $ (0.3) $ (0.7)
Taxes $ 4.7 - $ 4.8 -
Non-cash
financing
activities:
Shares received
on sale of
mineral
property
rights - - - $ 0.7
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Prepared by management without audit


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