Glamis Gold Ltd.
TSX : GLG
NYSE : GLG

Glamis Gold Ltd.

November 01, 2005 09:00 ET

Glamis Gold Reports Third Quarter Results and Startup of Marlin Mine

RENO, NEVADA--(CCNMatthews - Nov. 1, 2005) - Glamis Gold Ltd. (TSX:GLG)(NYSE:GLG) today reported net income of $1.6 million or $0.01 per share for the third quarter of 2005 compared to net income of $2.8 million or $0.02 per share in the third quarter of 2004. The Company also announced the successful start-up of the Marlin Mine in Guatemala.

Third Quarter Highlights

- Produced 90,535 ounces of gold at a total cash cost of $233 per ounce compared to 50,899 ounces of gold produced in the third quarter of 2004 at a total cash cost of $205 per ounce.

- Generated cash flow from operations of $14.8 million compared to $8.1 million recorded in the third quarter of the prior year.

- Completed the third full quarter of commercial production at the El Sauzal Mine in Mexico and met or exceeded all initial forecast production parameters.

- Announced the discovery of a new high grade mineralized zone at the Cerro Blanco Project in Guatemala.

- Successfully initiated operations at the Marlin Mine despite difficult weather conditions. Commercial production is expected in the fourth quarter with estimated production of over 20,000 ounces of gold in the remainder of 2005.

Kevin McArthur, President and Chief Executive Officer of Glamis Gold said, "We have now inaugurated two remarkable mines in a twelve month period - both of which will be significant low cost producers for many years. Glamis continues to exhibit the best growth profile in the sector."

"We communicated all year that the third quarter would be our weakest quarter. However, the Company expects to produce over 130,000 ounces of gold in the fourth quarter. Consistent with our previous guidance, we expect that gold production for the full year will be approximately 425,000 ounces at total cash costs in the $190 to $200 per ounce range."

"I want to add that as pleased as we are with the progress at Marlin, I am equally proud of the role our people played during the recent flooding in Guatemala caused by Hurricane Stan. We behaved as good neighbors should by assisting with evacuations, delivering food and medicine, opening roads and bridges and providing logistical support to the Red Cross. We will continue to work cooperatively with the surrounding communities for many years to come."

Financial Review

Revenue from gold sales in the third quarter of 2005 increased to $41 million, nearly double the $21 million recorded in the third quarter of the previous year. Glamis sold 91,625 ounces of gold in the latest quarter at an average realized price of $446 per ounce compared to the sale of 51,631 ounces in the corresponding period of 2004 at an average realized price of $406 per ounce.

Glamis reported net income of $1.6 million or $0.01 per share for the third quarter of 2005 compared to net income of $2.8 million or $0.02 per share in the third quarter of the prior year. Net income in the third quarter of 2005 was impacted by anticipated lower quarterly gold production combined with higher fuel costs and commodity prices. Increased exploration expense ($2.9 million) and the ongoing non-cash accounting effects of stock-based compensation ($1.8 million) also impacted net income in the quarter.

Cash flow generated from operations in the third quarter of 2005 (before working capital changes and reclamation expenditures) was $14.8 million compared to $8.1 million in the third quarter of the prior year. As of September 30, 2005, the company reported cash and equivalents of $20.1 million and working capital of $25.7 million. In addition to $20 million previously drawn, the Company drew down an additional $15 million of a $50 million credit facility with the Bank of Nova Scotia during the quarter to complete Marlin construction funding. Glamis' gold production remains totally unhedged.

Operations Review

Gold production for the third quarter of 2005 was 90,535 ounces at a total cash cost of $233 per ounce compared to 50,899 ounces of gold at a total cash cost of $205 per ounce in the third quarter of the prior year. The increase in production was attributable to full production at the El Sauzal Mine. Detailed production statistics for the latest quarter are presented on page 6.

El Sauzal Mine (100%)

In its third full quarter of operation, gold production at El Sauzal totaled 42,185 ounces. As a result of higher fuel, maintenance and power charges, total cash costs increased from the previous quarter to $168 per ounce. The Company expects costs to return to less than $150 per ounce level in the fourth quarter as a result of increased production Through the three quarters of 2005, El Sauzal has produced over 130,000 ounces of gold at a total cash cost of $148 per ounce. Glamis anticipates the mine will exceed 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 29,035 ounces in the most recent quarter at total cash cost of $276 per ounce. This compares to production of 23,889 ounces of gold in the third quarter of 2004 at a total cash cost of $198 per ounce. Increased fuel and commodity prices continue to impact costs. In addition, long haulage distances to the leach pad resulted in high fuel usage.

Definition drilling in near-term production areas continued during the quarter and results are currently being reviewed by the mine planning department. Preliminary indications are that Marigold production in 2006 may be reduced by as much as 10-20% from this year's total. Mine rescheduling is ongoing to minimize the impact of these changes.

The Marigold Mine continues to project approximately 135,000 ounces of gold production in 2005 (Glamis' 2/3rds share).

San Martin Mine (100%)

At the San Martin Mine, gold production was 19,315 ounces in the latest quarter at a total cash cost of $309 per ounce. This compares to production of 23,985 ounces of gold at a total cash cost of $207 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 lower. Compounding this are recent increases in fuel costs that have impacted both the cost of operating the mobile equipment and power generation at the mine site.

In response to cost increases, San Martin has transitioned throughout the quarter to a run-of-mine operation. This will control operating costs by shutting down the crusher, reducing diesel power generation requirements and simplifying material handling. These actions have raised labor issues leading to a recent unauthorized work stoppage. The Company expects to restart operations soon and is moving to address employee concerns about reconfigured operations. Meanwhile processing operations are continuing.

San Martin is expected to meet its production target of approximately 85,000 ounces of gold for 2005.

Marlin Mine (100%)

Construction of the Company's Marlin Mine in Guatemala is complete. The open pit is in full production and underground crews are currently establishing operating levels and drill stations. The first year's production will be largely from the open pit with the underground contributing to a greater degree by mid 2006. Authorization to obtain full electrical power from the grid is awaiting final agency approval; in the meantime diesel generators are providing power for the mill.

Mining operations are well underway, providing a large ore stockpile to the crusher. Crushing and grinding operations have been thoroughly tested with only minor feeder and chute modifications required (mainly due to excessively wet material during recent hurricane activity). The gravity, leach, CCD and Merrill Crowe circuits are currently being fine tuned, and commercial production is expected soon.

Production for 2005 is expected at over 20,000 ounces of gold. Production in 2006 is expected to be approximately 250,000 ounces of gold and over 3 million ounces of silver. The Marlin Mine was constructed to World Bank standards. The Company is committed to full collaboration with local communities, government authorities and NGOs.

Cerro Blanco Project (100%)

Cerro Blanco remains the Company's highest priority development project. Drilling has confirmed the discovery of a new high-grade mineralized zone immediately north of the original resource (currently 870,000 ounces of gold). Given recent drilling results the Company expects a meaningful increase in the existing gold resource, with plans to complete a new resource calculation in early December.

The Company is conducting baseline environmental work, permitting, hydrology studies and metallurgical testing with the intent of developing an underground mine. A feasibility study for this project is expected to be completed in late 2006.

Exploration

Glamis is currently engaged in the largest overall exploration program in Company history. Seventeen exploration drill rigs are active at various projects. The Company spent $4.5 million on exploration in the third quarter which is almost half of the $9.6 million exploration expenditure for the first nine months of the year. Much of the focus remains on the two Guatemala projects (Marlin and Cerro Blanco - $5.2 million) however, significant attention is also being given to El Sauzal, Marigold and Dee targets.

On Tuesday, November 1, 2005, Kevin McArthur, President and Chief Executive Officer of the Company, will host a conference call at 12:00 noon PST (3:00 pm EST) to discuss the latest operating and financial results. You may join the call by dialing 1-800-435-1398 in the United States and Canada or 1-617-614-4078 for calls outside the United States and Canada and entering the Conference ID # 55791071. 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 November 11, 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 # 34241409. The webcast presentation will also be available 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 over 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: joed@glamis.com



GLAMIS GOLD LTD.
THIRD QUARTER 2005 REPORT

Financial Highlights
(in millions of U.S.
dollars, except Three Months Ended Nine Months Ended
per share and per September 30, September 30,
ounce amounts) 2005 2004 2005 2004
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Gold ounces produced 90,535 50,899 293,633 149,927
Gold ounces sold 91,625 51,631 302,552 151,331
Average revenue
realized per
gold ounce $ 446 $ 406 $ 434 $ 404
Average market
price per gold
ounce $ 440 $ 401 $ 432 $ 401
Total cash cost
per gold ounce
produced $ 233 $ 205 $ 203 $ 198
Total production
cost per gold
ounce $ 341 $ 292 $ 308 $ 284
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Production Data:
El Sauzal Mine:
Ore tonnes
milled 445,368 - 1,177,923 -
Waste tonnes
mined 1,467,228 - 3,240,979 -
Grade (grams
per tonne) 3.227 - 3.47 -
Gold ounces
produced 42,185 - 130,222 -
Total cash cost
per ounce $ 168 - $ 148 -
Total production
cost per ounce $ 286 - $ 263 -
San Martin Mine:
Ore tones
processed 1,331,611 1,435,348 4,223,261 4,227,495
Waste tonnes
mined 967,202 651,284 3,041,337 2,122,190
Grade (grams
per tonne) 0.733 0.822 0.669 0.788
Gold ounces
produced 19,315 23,985 65,037 75,329
Total cash cost
per ounce $ 309 $ 207 $ 280 $ 190
Total production
cost per ounce $ 414 $ 303 $ 385 $ 287
Marigold Mine
(66.7%):
Ore tonnes mined 1,164,996 1,508,192 3,814,481 4,565,341
Waste tonnes
mined 6,222,070 5,951,472 17,885,668 15,574,754
Grade (grams
per tonne) 0.873 0.617 0.872 0.789
Gold ounces
produced 29,035 23,889 98,374 63,283
Total cash cost
per ounce $ 276 $ 198 $ 225 $ 198
Total
production
cost per ounce $ 372 $ 280 $ 318 $ 278
Rand Mine
(in reclamation):
Gold ounces
produced - 3,025 - 11,315
Total cash cost
per ounce - $ 255 - $ 250
Total production
cost per ounce - $ 300 - $ 294

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Financial Data:

Working capital $ 25.7 $ 27.4 $ 25.7 $ 27.4
Cash provided
from operations $ 14.8 $ 8.1 $ 53.5 $ 23.5
Net earnings $ 1.6 $ 2.8 $ 12.0 $ 14.8
Basic earnings
per share $ 0.01 $ 0.02 $ 0.09 $ 0.11
Average shares
outstanding 131,536,071 130,654,678 131,178,760 130,457,868
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Glamis Gold Ltd.
Consolidated Balance Sheets
(Expressed in millions of U.S. dollars, except per share amounts)

September 30, December 31,
2005 2004
(unaudited)
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Assets
Current assets:
Cash and cash equivalents $ 20.1 $ 27.0
Accounts and interest receivable 3.4 2.8
Inventories 27.6 25.7
Prepaid expenses and other 1.8 1.3
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52.9 56.8

Mineral property, plant and equipment, net 624.2 542.3
Other assets 14.0 14.2
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$ 691.1 $ 613.3
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Liabilities
Current liabilities:
Accounts payable and accrued liabilities $ 24.5 $ 24.8
Site closure and reclamation
costs, current 0.7 0.9
Taxes payable 2.0 3.7
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27.2 29.4

Site closure and reclamation costs 10.4 7.6
Long-term debt 80.0 30.0
Future income taxes 88.7 86.0
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206.3 153.0
Shareholders' equity
Share capital
Authorized:
Unlimited (2004 - 200,000,000)
common shares without par value
5,000,000 preferred shares,
Cdn$10 per share par value,
issuable in series
Issued and fully paid:
132,259,344 (130,863,953)
common shares 490.5 472.7
Contributed surplus 11.2 16.5
Deficit (16.9) (28.9)
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484.8 460.3
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$ 691.1 $ 613.3
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Glamis Gold Ltd.
Consolidated Statements of Operations
(Expressed in millions of U.S. dollars, except per share amounts)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
(unaudited) (unaudited)
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Revenue $ 41.1 $ 21.0 $ 131.9 $ 61.3

Costs and expenses:
Cost of sales 21.3 10.6 60.5 29.8
Depreciation and
depletion 11.0 4.5 34.2 12.9
Exploration 2.9 0.7 5.4 2.6
General and
administrative 1.8 1.5 9.9 5.5
Stock-based
compensation 1.8 - 3.6 0.1
Other operating
expenses 0.9 0.2 1.8 0.6
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39.7 17.5 115.4 51.5
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Earnings from
operations 1.4 3.5 16.5 9.8
Interest and
other income 1.4 0.1 2.0 8.5
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Earnings before
income taxes 2.8 3.6 18.5 18.3
Provision for
income taxes:
Current 0.7 - 3.8 1.2
Future 0.5 0.8 2.7 2.3
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1.2 0.8 6.5 3.5
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Net earnings $ 1.6 $ 2.8 $ 12.0 $ 14.8
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Earnings per share:
Basic $ 0.01 $ 0.02 $ 0.09 $ 0.11
Diluted $ 0.01 $ 0.02 $ 0.09 $ 0.11
Weighted average
common shares
outstanding:
Basic 131,536,071 130,654,678 131,178,760 130,457,868
Diluted 132,299,338 132,195,173 131,799,632 131,987,315
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Consolidated Statements of Deficit
(Expressed in millions of U.S. dollars)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
(unaudited) (unaudited)
--------------------------------------------------------------------
Deficit, beginning
of period $ (18.5) $ (37.8) $ (28.9) $ (36.7)
Adjustment for
stock-based
compensation - - - (13.1)
Net earnings 1.6 2.8 12.0 14.8
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Deficit, end of
period $ (16.9) $ (35.0) $ (16.9) $ (35.0)
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Glamis Gold Ltd.
Consolidated Statements of Cash Flows
(Expressed in millions of U.S. dollars)
Three months ended Nine months ended
September 30, September 30,
2005 2004 2005 2004
(unaudited) (unaudited)
--------------------------------------------------------------------
Cash flows from
operating
activities
Net earnings $ 1.6 $ 2.8 $ 12.0 $ 14.8
Non-cash items:
Depreciation and
depletion 11.0 4.5 34.2 12.9
Future income
taxes 0.5 0.8 2.7 2.3
Loss (gain) on
sale of
properties
and investments (0.9) - (1.2) (6.9)
Stock-based
compensation 1.8 - 3.6 0.1
Other 0.8 - 2.2 0.3
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14.8 8.1 53.5 23.5
Changes in non-cash
operating working
capital:
Accounts and
interest receivable (1.6) (1.2) (0.5) (3.5)
Taxes recoverable/
payable (0.3) - (2.4) -
Inventories (1.8) (2.9) (2.3) (6.0)
Prepaid expenses
and other (0.2) (1.8) (0.4) (2.5)
Accounts payable
and accrued
liabilities 3.6 (4.4) 0.5 15.3
Site closure and
reclamation
expenditures (1.3) (0.5) (2.7) (1.6)
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Net cash provided by
operating activities 13.2 (2.7) 45.7 25.2
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Cash flows from
(used in)
investing activities
Purchase of mineral
property, plant and
equipment,
net of disposals (39.9) (51.1) (112.0) (144.3)
Net proceeds from
(used in) sale
(purchase) of
investments and
properties (0.2) - 0.4 13.3
Other assets (0.7) (1.3) 0.5 (1.3)
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Net cash used in
investing
activities (40.8) (52.4) (111.1) (132.3)
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Cash flows from
financing
activities
Proceeds from
long-term debt 15.0 - 50.0 -
Proceeds from
issuance of
common shares 7.9 0.3 8.5 3.4
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Net cash provided
by financing
activities 22.9 0.3 58.5 3.4
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Increase (decrease)
in cash and cash
equivalents (4.7) (54.8) (6.9) (103.7)
Cash and cash
equivalents,
beginning of
period 24.8 77.2 27.0 126.1
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Cash and cash
equivalents,
end of period $ 20.1 $ 22.4 $ 20.1 $ 22.4
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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
(note 3) $ (0.2) $ (0.2) $ (0.2) $ (0.9)
Taxes $ 1.0 - $ 5.8 $ 0.1
Non-cash financing
activities:
Shares received
on sale of
mineral property
rights - - - $ 0.7
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