<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2000
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________________ to ___________________
Commission file number 0-31986 (82-689)
--------------------
GLAMIS GOLD LTD.
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(Exact name of Registrant as specified in its charter)
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<S> <C>
British Columbia, Canada None.
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(Jurisdiction of incorporation or organization) (IRS Employer Identification No.)
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5190 Neil Road, Suite 310, Reno, Nevada, 89502
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(Address of Principal Executive Offices)
775-827-4600
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 180 days. Yes [X] No [ ].
The number of shares outstanding of the Registrant's common stock, as of August
4, 2000, was 70,025,432.
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GLAMIS GOLD LTD.
INDEX
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Page
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Part I Financial Information
Item 1. Financial Statements 3
Consolidated Balance Sheets as at June 30, 2000 and December 31, 1999 3
Consolidated Statements of Operations for the three months and the six
months ended June 30, 2000 and 1999 4
Consolidated Statements of Retained Earnings (Deficit) for the three months
and the six months ended June 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the three months and the six
months ended June 30, 2000 and 1999 5
Notes to Interim Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations 9
Item 3. Qualitative and Quantitative Disclosures About Market Risk 16
Part II Other Information 18
Item 1. Legal Proceedings 18
Item 2. Changes in Securities and Use of Proceeds 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
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2
<PAGE> 3
[Part I - Item 1]
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. dollars)
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<CAPTION>
June 30, December 31,
2000 1999
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<S> <C> <C>
ASSETS
Cash $ 29,684 $ 55,169
Other current assets (note 3) 14,183 14,084
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Current assets 43,867 69,253
Plant and equipment and mine development costs, net 113,878 88,900
Other assets 6,110 5,579
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$ 163,855 $ 163,732
=====================================================================================
LIABILITIES
Current liabilities $ 6,268 $ 7,622
Long term liabilities 22,728 17,906
SHAREHOLDERS' EQUITY
Share capital (note 4):
Authorized:
200,000,000 common shares without par value
5,000,000 preferred shares, $10 par value,
issuable in Series
Issued and fully paid:
70,024,632 common shares (1999-69,864,832) 158,947 158,717
Contributed surplus 63 63
Deficit (24,151) (20,576)
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134,859 138,204
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$ 163,855 $ 163,732
=====================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
Prepared by Management without audit
Approved by the Directors:
/s/ C. KEVIN McARTHUR /s/ A. DAN ROVIG
------------------------------ ---------------------------
C. Kevin McArthur A. Dan Rovig
Director Director
3
<PAGE> 4
CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of U.S. dollars, except per share amounts)
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<CAPTION>
Three months ended June 30, Six months ended June 30,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Revenue from production $ 15,754 $ 14,758 $ 31,118 $ 22,744
Cost of production 12,297 14,237 24,433 21,565
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3,457 521 6,685 1,179
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Expenses
Depreciation & depletion 3,199 2,318 6,217 4,425
Reclamation 213 159 412 388
Selling, general, administration 1,396 1,095 2,801 2,297
Exploration 870 1,314 1,716 1,961
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5,678 4,886 11,146 9,071
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Loss from operations (2,221) (4,365) (4,461) (7,892)
Interest expense 6 170 13 170
Other (income) expense (401) (1,730) (934) (1,647)
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Loss before taxes (1,826) (2,805) (3,540) (6,415)
Provision for (benefit from) taxes 72 (124) 35 (412)
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Loss for the period $ (1,898) $ (2,681) $ (3,575) $ (6,003)
==============================================================================================================
Loss per share $ (0.03) $ (0.03) $ (0.05) $ (0.10)
==============================================================================================================
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CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
(Expressed in thousand of U.S. dollars)
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<CAPTION>
Three months ended June 30, Six months ended June 30,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
Retained earnings (deficit) $(22,253) $ (2,613) $(20,576) $ 709
Beginning of period
Loss for the period (1,898) (2,681) (3,575) (6,003)
Dividends -- -- -- --
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Deficit, end of period $(24,151) $ (5,294) $(24,151) $ (5,294)
=======================================================================================================
</TABLE>
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousand of U.S. dollars)
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<CAPTION>
Three months ended June 30, Six months ended June 30,
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2000 1999 2000 1999
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<S> <C> <C> <C> <C>
CASH FLOWS FROM (USED IN) OPERATING ACTIVITIES
Loss for the period $ (1,898) $ (2,681) $ (3,575) $ (6,003)
Adjustment for items not 3,412 1,336 6,629 3,928
affecting working capital
Net changes in non-cash 163 (1,449) (1,273) 539
working capital
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NET CASH PROVIDED BY 1,677 (2,794) 1,781 (1,536)
(USED IN) OPERATIONS
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CASH FLOWS FROM (USED IN)
INVESTING ACTIVITIES
Capital expenditures (10,841) (5,796) (19,661) (8,763)
Business acquisitions (7,439) 3,623 (6,972) 10,769
Other assets (637) 1,812 (863) 3,289
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NET INVESTMENT ACTIVITIES (18,917) (361) (27,496) 5,295
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CASH FLOWS FROM (USED IN)
FINANCING ACTIVITIES
Stock issues 84 644 230 787
Notes payable -- (7,637) -- 991
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NET FINANCING ACTIVITIES 84 (6,993) 230 1,778
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Increase (decrease) in cash (17,156) (10,148) (25,485) 5,537
Cash, beginning of period 46,840 41,855 55,169 26,170
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Cash, end of period $ 29,684 $ 31,707 $ 29,684 $ 31,707
==========================================================================================================================
</TABLE>
5
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GLAMIS GOLD LTD.
Notes to Unaudited Interim Consolidated Financial Statements
(tables expressed in thousands of United States dollars)
Six months ended June 30, 2000
1. GENERAL
In the opinion of management, the accompanying unaudited consolidated balance
sheets and consolidated statements of operations, retained earnings (deficit)
and cash flows contain all adjustments, consisting only of normal recurring
accruals, necessary to present fairly, in all material respects, the financial
position of Glamis Gold Ltd. (the "Company") as of June 30, 2000 and December
31, 1999 and the results of its operations and its cash flows for the three
months and six months ended June 30, 2000 and 1999.
These unaudited interim consolidated financial statements should be read in
conjunction with the Company's audited consolidated financial statements and
related footnotes included in the Company's annual report filed on Form 10-K for
the year ended December 31, 1999. Certain of the comparative figures have been
reclassified to conform with the current period's presentation.
The financial statements are prepared in accordance with accounting principles
generally accepted in Canada which conform, in all material respects, with
accounting principles generally accepted in the United States, except as
described in note 7 hereof. All amounts are stated in U.S. dollars unless
otherwise specified.
2. BUSINESS ACQUISITIONS
a. Rayrock Resources Inc.
In March 1999, the Company completed the acquisition of 100% of the issued and
outstanding shares of Rayrock Resources Inc. ("Rayrock"), an Ontario
corporation. The Company issued 29,277,820 common shares and paid
Cdn.$52,883,007 (approximately U.S. $35.0 million) in connection with the
acquisition. The acquisition was accounted for as a purchase and accordingly the
1999 comparative financial information herein reflects the consolidated position
of the Company, including Rayrock, as at June 30, 1999 but only includes the
operating results and cash flows of the acquired operations for the four months
March through June 1999.
b. Cambior de Mexico S.A. de C.V.
Effective May 9, 2000, the Company acquired 100% of the issued and outstanding
shares of Cambior de Mexico S.A. de C.V. ("Cambior de Mexico") from Cambior Inc.
for $7.2 million in cash. The Company also acquired a crushing system from
Cambior for an additional $2.5 million in cash that was intended for use at the
Cerro San Pedro Project. Other cash transaction costs associated with this
acquisition totaled $0.3 million. In addition, in consideration for advisory
services rendered to the Company in
6
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connection with the acquisition, the Company granted to its advisor warrants to
purchase up to 300,000 shares of the Company's common stock at an exercise price
of U.S. $2.00 per share. The warrants are exercisable at any time until June 25,
2003, but are not transferable prior to June 26, 2001. Cambior de Mexico has
subsequently been renamed Glamis de Mexico S.A. de C.V. ("Glamis de Mexico").
Glamis de Mexico has interests in a number of mineral properties in Mexico, the
most advanced of which is the Cerro San Pedro Project in San Luis Potosi state.
3. OTHER CURRENT ASSETS
Included in other current assets are the following inventories:
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<CAPTION>
(in thousands of dollars)
June 30, 2000 December 31, 1999
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<S> <C> <C>
Finished goods $3,427 $4,411
Work-in-progress 7,888 6,754
Supplies and spare parts 993 1,017
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$12,308 $12,182
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4. SHARE CAPITAL
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<CAPTION>
Six months ended Six months ended
June 30, 2000 June 30, 1999
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# OF SHARES AMOUNT (IN 000's) # of Shares Amount (in 000's)
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<S> <C> <C> <C> <C>
Issued and fully paid:
Balance at beginning of period 69,864,832 $ 158,717 38,860,612 $ 109,587
Issued during the period:
For cash consideration
under the terms of
Directors' and Employee's
stock options 159,800 230 751,000 786
Issued upon acquisition of
Rayrock (see note 2) -- -- 29,277,820 46,919
---------- ---------- ---------- ----------
Balance at end of period 70,024,632 $ 158,947 68,889,432 $ 157,292
========== ========== ========== ==========
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7
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5. SEGMENT REPORTING
As at June 30, 2000 and for the six months ended June 30, 2000
(in thousands of dollars)
(a) Operating segments:
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Exploration and
Producing Mines Development
Gold Copper Properties Corporate Total
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<S> <C> <C> <C> <C> <C>
2000
Revenue $ 31,118 -- -- -- $ 31,118
Earnings (loss) from operations 190 -- $ (1,716) $ (2,935) (4,461)
Net earnings (loss) 177 -- (1,716) (2,036) (3,575)
Identifiable assets 54,560 -- 71,867 37,428 163,855
1999
Revenue $ 18,806 $ 3,716 $ 222 $ -- $ 22,744
Earnings (loss) from operations (1,950) (2,537) (1,063) (2,342) (7,892)
Net earnings (loss) (1,533) (2,543) (1,062) (865) (6,003)
Identifiable assets 65,931 29,398 48,315 42,333 185,977
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(b) Geographic Information:
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<CAPTION>
North America Central & South America Total
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2000
<S> <C> <C> <C>
Revenue $ 31,118 -- $ 31,118
Earnings (loss) from operations (3,631) $ (830) (4,461)
Net earnings (loss) (2,745) (830) (3,575)
Identifiable assets 105,914 $ 57,941 163,855
1999
Revenue $ 19,028 $ 3,716 $ 22,744
Earnings (loss) from operations (4,228) (3,664) (7,892)
Net earnings (loss) (2,339) (3,664) (6,003)
Identifiable assets 109,378 76,599 185,977
</TABLE>
6. INCOME TAXES
Effective January 1, 2000, the Canadian Institute of Chartered Accountants
changed the accounting standard relating to the accounting for income taxes. The
Company has adopted the new income tax accounting standard retroactively,
without restating the financial statements of any prior periods. As a result,
the Company has recorded an increase to plant and equipment and mine development
costs of $4.8 million to reflect the remaining net of tax adjustment on prior
years' purchase business combinations, and an increase to the future tax
liability, formerly the deferred tax liability, of $4.8 million as at January 1,
2000. As the mineral properties to which these adjustments relate are not yet in
production and accordingly, have not yet commenced being depleted, applying the
new income tax accounting standard had no effect on loss from operations in the
first six months ended June 30, 2000 as compared to that determined by applying
the previous standard.
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7. DIFFERENCES BETWEEN CANADIAN AND UNITED STATES GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES
Accounting in these interim consolidated financial statements under Canadian and
United States generally accepted accounting principles is substantially the same
except for accounting for investments in equity securities, development of
mineral properties and accounting for hedging transactions. However, these
differences have no material effect on the amounts presented in the consolidated
financial statements as at June 30, 2000 or December 31, 1999, or for the three
months and six months ended June 30, 2000 or 1999.
ITEM 2 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
FINANCIAL REVIEW
The Company produced a total of 107,763 ounces of gold in the six months ended
June 30, 2000 compared to 69,008 ounces of gold in the same period in 1999. The
Company's operations continue to improve as the Company's total cash cost of
production of $228 per ounce for the six months ended June 30, 2000 compares
favorably with the $243 cash cost per ounce recorded in the first six months of
1999.
Production for the second quarter 2000 also increased over the comparable
quarter of 1999. 54,984 ounces of gold were produced in the second quarter of
2000 compared to 44,451 ounces of gold produced in the second quarter of 1999.
The total cash cost per ounce dropped to $224 in the second quarter of 2000 from
$236 in the second quarter of 1999.
The Company continues to actively seek growth opportunities. Effective May 9,
2000 the Company acquired Cambior de Mexico S.A. de C.V. ("Cambior de Mexico")
from Cambior Inc. for $7.2 million in cash plus $0.3 million in transaction
costs. Cambior de Mexico has been subsequently renamed Glamis de Mexico S.A. de
C.V. The Company also acquired a crushing system from Cambior for an additional
$2.5 million in cash that was intended for use at the Cerro San Pedro Project.
See note 2 (b) of the notes to the consolidated financial statements.
As noted previously, the comparative financial statements of the Company reflect
the acquisition of Rayrock effective March 1999. Accordingly, the Company's
consolidated balance sheet included the assets and liabilities of Rayrock as at
December 31, 1999 and June 30, 2000. However, the Company's statement of
operations and cash flows for 1999 reflects a complete six months for the Glamis
operations, but only four months (March-June 1999) of the former Rayrock
operations. Certain of the information provided below is not reflected in the
financial statements, but is provided to inform readers of the performance of
the various properties both prior to and subsequent to the acquisition date.
9
<PAGE> 10
The Company reported a loss for the first six months of 2000 of $3.6 million
($0.05 per share) compared to a loss of $6.0 million ($0.10 per share) in the
first six months of 1999. The improvement is primarily attributable to increased
production at the Rand Mine ($2.9 million operating earnings in the first six
months of 2000 compared to a loss of $1.5 million in the first six months of
1999), offset by a $2.9 million loss at the Dee Mine ($0.1 million operating
earnings in 1999), as well as the fact that the 1999 results were negatively
impacted by the performance of the Ivan copper mine which generated a $2.5
million loss during the period March through June 1999 but which was sold in
October 1999. The other Nevada operations (the 66.7%-owned Marigold Mine and the
Daisy Mine) generated a profit of $0.4 million in 2000 versus a $1.6 million
profit in 1999. General and administrative expense increased by $0.5 million for
the first six months of 2000 due to slightly increased staff costs and
significant expenditures for tax and accounting work. Interest income decreased
$0.6 million compared to the first six months of 1999 as the Company utilized
its cash balances for development of the San Martin Mine and acquisition of the
Cambior de Mexico properties.
The net loss for the three months ended June 30, 2000 was $1.9 million compared
to a loss of $2.7 million for the second quarter of 1999. Several factors
account for the difference between the second quarter of 2000 and 1999. The
increased production of ounces of gold resulted in increased revenues of $0.7
million, while revenues per ounce of gold increased $19 over 1999, generating an
additional $1.0 million. Depreciation and depletion decreased profits by $0.9
million. Due to the sale of the Ivan mine in October 1999, the second quarter of
2000 did not contain any losses from Ivan, which lost $1.3 million in the second
quarter of 1999. Interest and investment income declined $1.3 million from 1999.
Decreased exploration expense in the second quarter of 2000 compared to the same
period in 1999 was offset by increases in general and administrative expense and
in the provision for taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $37.6 million at June 30, 2000, a decrease of
$24.0 million from December 31, 1999, primarily as a result of capital
expenditures incurred in the construction of San Martin and the acquisition of
Cambior de Mexico. Long-term liabilities, consisting of future reclamation
obligations and future income taxes, were $22.7 million at June 30, 2000,
compared to $17.9 million at December 31,1999. The increase is due almost
entirely to the change in the future tax liability balance (formerly deferred
taxes) as discussed in note 6 of the notes to the consolidated financial
statements. The Company continues to have no long-term debt.
Capital expenditures for the second quarter of 2000 were $18.3 million ($26.6
million for the first six months of the year). The major expenditures were $7.2
million spent for the construction at the San Martin Mine and $10.6 million for
the acquisition of Cambior de Mexico and the crushing system, and development of
the associated Cerro San Pedro project. The Company continues to fund all
capital expenditures from working capital and believes it will have sufficient
available resources to meet all currently planned capital needs.
10
<PAGE> 11
During the first six months of 2000 the Company's cash provided from operations
was $1.8 million compared to $1.5 million in cash used in operations during the
first six months of 1999. The Company's gold operations provided $6.0 million
during the first six months of 2000 compared to $4.2 million in 1999. The
average price per ounce received for gold improved from $276 in 1999 to $289 in
2000. The Ivan copper mine represented a use of $2.6 million during the period
March through June 1999.
Cash flow from operations during the second quarter of 2000 was $1.7 million
compared to a use of cash of $2.8 million during the same period in 1999. The
most significant difference is due to the elimination of the Ivan mine that used
$1.5 million in cash during the second quarter of 1999. An increase in ounces
produced, better realized prices ($286 per ounce in 2000 versus $267 in 1999)
and lower cash costs contributed an additional $2.8 million to cash flow in the
second quarter of 2000. Comparative production highlights of the first two
quarters of 2000 and 1999 respectively are as follows:
PRODUCTION/REVENUE DATA
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GLAMIS GOLD LTD.
Three months ended Six months ended
------------------------------- -------------------------------
JUNE 30, 2000 June 30, 1999 JUNE 30, 2000 June 30, 1999
(1)
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<S> <C> <C> <C> <C>
Gold ounces produced 54,984 44,451 107,763 69,008
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Average revenue per ounce $ 286 $ 267 $ 289 $ 276
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Average Market price per ounce $ 280 $ 273 $ 285 $ 280
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Total cash cost per ounce $ 224 $ 236 $ 228 $ 243
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Total cost per ounce $ 284 $ 304 $ 288 $ 305
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1) Includes the results of the Nevada properties' operations for four months only March - June 1999.
</TABLE>
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OPERATIONS REVIEW
MINE PRODUCTION
Note: The Marigold, Dee and Daisy properties were acquired in March 1999 as part
of the Company's acquisition of Rayrock (see note 2 (a)).
<TABLE>
<CAPTION>
THREE MONTHS ENDED Three months ended
------------------------------------------------------------------------------------------------
June 30, 2000 June 30, 2000 June 30, 1999 June 30, 1999
TOTAL CASH COST GOLD OUNCES Total Cash cost Gold ounces
Mine OF PRODUCTION PRODUCED of production produced
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Picacho -- 0 $ 200 1,462
------------------------------------------------------------------------------------------------
Rand $ 158 25,860 $ 236 15,375
------------------------------------------------------------------------------------------------
Marigold (1) $ 267 9,985 $ 256 9,628
------------------------------------------------------------------------------------------------
Daisy $ 243 1,981 $ 212 7,353
------------------------------------------------------------------------------------------------
Dee $ 296 17,158 $ 241 10,441
------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED Six months ended
------------------------------------------------------------------------------------------------
June 30, 2000 June 30, 2000 June 30, 1999 June 30, 1999
TOTAL CASH COST GOLD OUNCES Total Cash cost Gold ounces
Mine OF PRODUCTION PRODUCED of production produced
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Picacho $ 200 389 $ 191 3,700
------------------------------------------------------------------------------------------------
Rand $ 165 48,767 $ 248 27,275
------------------------------------------------------------------------------------------------
Marigold (2) $ 227 23,506 $ 252 25,535
------------------------------------------------------------------------------------------------
Daisy (2) $ 187 7,099 $ 254 11,016
------------------------------------------------------------------------------------------------
Dee (2) $ 348 28,002 $ 230 21,861
------------------------------------------------------------------------------------------------
</TABLE>
(1) Marigold is 66.7% owned by the Company.
(2) The Company's share of this production (March - June 1999) totals 13,970
ounces from Marigold, 8,658 ounces from Daisy and 14,571 ounces from Dee;
total cash costs are based on March - June 1999 only.
RAND MINE, CALIFORNIA
The Rand Mine produced 48,767 ounces for the six months ended June 30, 2000
compared to 27,275 ounces produced for a comparable period in 1999. The
unleached ore inventory on the Rand heap increased during the quarter and should
provide for steady production through the next few months. Power costs in the
plants have been higher than expected due to high temperatures and electricity
demand in the Los Angeles area negatively impacting rates. Plant operations have
been curtailed when possible to miss peak demand intervals. Drilling of the
final exploration holes at the Buckboard area was completed during June. No
additional ore grade intercepts were encountered.
MARIGOLD MINE, NEVADA
The 66.7%-owned Marigold Mine produced 23,506 ounces for the Company's account
during the first half of 2000. Cash costs were adversely affected by lower than
expected ore deliveries to the pad. As a result of public comments received on
the draft Environmental Impact Statement ("EIS"), more waste rock
characterization studies
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were initiated in June. Waste from future pit expansion areas and waste to be
used in pit back fill operations were collected and sent in for static and
column leach tests. The final EIS and Record of Decision are pending these
results.
DEE MINE, NEVADA
The Dee Mine production stabilized in the second quarter of 2000 with production
of 17,158 ounces of gold. Cash costs for the quarter were higher than expected
due to lower recovery from the mill and increased contract mining costs, but
have shown steady improvement. Test work continues to identify a cost-effective
method to improve recovery from the underground operations. Virtually all the
ounces produced at Dee have been from underground operations. Pit operations
concentrated on reclamation and construction activities which include mining
fill and capping material.
DAISY MINE, NEVADA
Daisy's production for the first six months of 2000 was 7,099 ounces of gold,
but only 1,981 ounces were produced during the second quarter. Daisy shipments
are expected to be bi-monthly or quarterly for the balance of the year.
Reclamation continues with 25% of the total mine-site disturbance having been
reclaimed to date.
PICACHO MINE, CALIFORNIA
Reclamation continues as well as final gold production. No ounces were produced
in the second quarter of 2000 and only 389 ounces of gold were produced in the
first quarter of 2000. It is anticipated that Picacho will produce a small
number of ounces of gold in the second half of 2000, as reclamation is
completed.
SAN MARTIN PROJECT, HONDURAS
Construction continues as the Company prepares for production at San Martin
later this year. Work continues on the leach pad, crushing and conveying
systems, the mine camp, and the ADR plant. The foundations for the crusher and
agglomerator were poured at the end of June. Most of the main overland conveyor
frames are bolted together and are in place. The power station concrete was
completed during June and generators were delivered in July. The Company
anticipates project commissioning late in the third quarter.
IMPERIAL PROJECT, CALIFORNIA
In April 2000, in conjunction with commencing legal proceedings challenging a
U.S. Department of the Interior directive changing the rules governing the
Company's development of the Imperial Project, the Company requested that the
Bureau of Land
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<PAGE> 14
Management ("BLM") temporarily suspend activities related to the Company's
permit pending the Court's review of the Interior Department's directive. The
BLM has advised the Company that it intends to complete the permitting process
despite the pending lawsuit. See Part II, Item 1 "Legal Proceedings".
CERRO BLANCO PROJECT, GUATEMALA
Drilling of three additional holes on the western side of the deposit started
June 16, 2000 and were completed in July. Assays are not yet available.
GLAMIS DE MEXICO (FORMERLY CAMBIOR DE MEXICO), MEXICO
Cambior de Mexico (now re-named Glamis de Mexico) has interests in several
exploration and development properties in Mexico. The most advanced of these,
the Cerro San Pedro Project in San Luis Potosi state has received its
exploitation permit. Glamis de Mexico can earn a 50% interest in this project by
spending approximately $4.0 million by the end of 2000. The Company estimates
that the project contains approximately 700,000 ounces of gold and 15,000,000
ounces of silver. The Company is preparing an updated feasibility study that is
expected to be completed during the fourth quarter of 2000.
EXPLORATION ACTIVITIES
Exploration expense was $0.8 million for the second quarter of 2000 and $0.9 for
the first quarter of 2000. This compares to $1.3 million expended during the
second quarter of 1999. These expenditures were spent primarily on exploration
at or near the Company's Nevada operations, as well as certain exploration
properties in Central and South America. The Company intends to spend
approximately $3.0 million on exploration during 2000.
OTHER MATTERS
The Company completed its in-house compliance and supplier assessment of the
Year 2000 issue in the fourth quarter of 1999. Limited Year 2000-specific costs
were incurred by the Company. Hardware and software upgrades were planned based
on business requirements. Additional expenditures were not significant. As of
August 4, 2000, no operational disruptions related to any Year 2000 systems
problems have been noted.
FORWARD-LOOKING STATEMENTS
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
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presented constitutes "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Such forward-looking
statements, including but not limited to those with respect to the price of
gold, the timing and amount of estimated future production, costs of production,
capital expenditures, reserve determination, costs and timing of the development
of new deposits, the Company's hedging practices, permitting time lines, and the
timing and possible outcome of pending litigation involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company 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, as well as those factors
discussed in the section entitled "Other Considerations" in the Company's Form
10-K. Although the Company has attempted to identify important factors that
could cause actual results to differ materially, there may be other factors that
cause results not to be as anticipated, estimated or intended. There can be no
assurance that such 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.
15
<PAGE> 16
ITEM 3. QUALITATIVE AND QUANTITATIVE DISCLOSURES ABOUT MARKET RISK
As noted in Item 7 "Other Risks" in the Company's annual report on Form 10-K for
the year ended December 31, 1999, the Company is subject to changes in metals
prices, which directly impact its profitability and cash flows. Because the
markets in which the Company sells its products set prices outside of the
Company's control, the Company has at times acted to reduce the impact of
negative price movements through hedging transactions. These hedging
transactions utilize so-called "derivatives", the value of which is "derived"
from movements in the prices or rates associated with the underlying product.
While the Company's hedging policy authorizes action to protect the Company's
cash flows from production by use of forward contracts, spot deferred contracts,
and options, in any combination, the Company is not currently engaging in new
hedging transactions. The Company continuously monitors its existing hedge
positions with respect to the unrealized gains and losses and to ensure
compliance with Company policy.
The Company also invests cash balances in short-term investments, which are
subject to interest rate fluctuations. Because these investments are in highly
liquid, short-term instruments, any impact of an interest rate change would not
be significant.
The table below sets forth the positions of the Company at June 30, 2000 and
December 31, 1999. Fair values are estimated based on market quotations of the
variables based on expected maturity date.
16
<PAGE> 17
Positions as at June 30, 2000
(in thousands of U.S. dollars, except for per ounce amounts)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Assets: Derivatives: Gold Put Gold Call Gold Call
Short-term Gold Forward Options Options Options
Investments Sales Purchased Sold Purchased
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Maturity 2000
Investments $ 26,740 -- -- -- --
Ounces -- 31,000 18,000 17,000 --
Average
price per
ounce -- $ 287 $ 275 $ 274 --
Fair Market
Value $ 26,740 $ (193) Nil $ (375) --
-----------------------------------------------------------------------------------------------------
Maturity 2001
Investments -- -- -- -- --
Ounces -- -- -- 60,000 --
Average
price per
ounce -- -- -- $ 295 --
Fair Market
Value -- -- -- $ (912) --
-----------------------------------------------------------------------------------------------------
</TABLE>
Positions as at December 31, 1999
(in thousands of U.S. dollars, except for per ounce amounts)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
Assets: Derivatives: Gold Put Gold Call Gold Call
Short-term Gold Forward Options Options Options
Investments Sales Purchased Sold Purchased
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Maturity 2000
Investments $ 46,252 -- -- -- --
Ounces -- 65,000 36,000 19,000 --
Average
price per
ounce -- $ 288 $ 275 $ 275 --
Fair Market
Value $ 46,252 $ (552) Nil $ (417) --
-----------------------------------------------------------------------------------------------------
Maturity 2001
Investments -- -- -- -- --
Ounces -- -- -- 60,000 --
Average
price per
ounce -- -- -- $ 295 --
Fair Market
Value -- -- -- $ (824) --
-----------------------------------------------------------------------------------------------------
</TABLE>
17
<PAGE> 18
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS:
1) On April 14, 2000, Glamis Imperial Corporation, a wholly-owned
subsidiary of the Company, commenced legal proceedings in the U.S.
District Court in Reno, Nevada challenging a U.S. Department of
the Interior directive that substantially changes the rules
governing the Company's development of the Imperial Project. The
Company alleged that the new directive is contrary to governing
federal statutes and contrary to past administrative practice.
Dispositive motions have been filed by both the Company and the
government and briefing on these motions continues at this time.
The Company cannot reasonably predict how long until the case will
be resolved or what will be its final outcome.
2) On June 16, 2000 the Company was served with a lawsuit commenced
by American Mine Services, Inc. ("AMS") in the Nevada State
District Court in Elko, Nevada. The suit involves a contract
between a subsidiary of the Company and AMS for underground
contract mining at the Dee Mine that was terminated by the Company
for non-performance in November 1999. AMS alleges damages of
$417,960 resulting from improper termination of the contract. The
Company believes the contract was properly terminated and will
vigorously defend the action and prosecute its counterclaim
against AMS for damages resulting from AMS' non-performance. The
Company cannot predict how long until the case will be resolved or
what will be its final outcome.
ITEM 2 CHANGES IN SECURITIES: None
ITEM 3 DEFAULTS UPON SENIOR SECURITIES: None
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS:
The Company held its Annual General Meeting of Shareholders on May
3, 2000. At the meeting, one shareholder holding 20,000 shares was
present in person and 812 shareholders holding 47,389,926 shares
were represented by proxy.
At the meeting, all shares present in person or by proxy voted in
favor of the following:
1) The election of Messrs. A. Dan Rovig, James R. Billingsley,
Ian S. Davidson, Jean Depatie, Leonard Harris, C. Kevin
McArthur and Kenneth F. Williamson to the Board of
Directors.
2) The appointment of KPMG LLP, Chartered Accountants, as
auditors of the Company.
3) Approval of a Shareholders' Rights Plan.
4) Approval of an amendment to the Incentive Share Purchase
Option Plan making an additional 2,016,800 shares available
for issuance under it.
ITEM 5 OTHER INFORMATION: None
18
<PAGE> 19
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K:
(a) Exhibits
Exhibit No. Exhibit Description
27 Financial Data Schedule
(b) Reports on Form 8-K
None
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLAMIS GOLD LTD.
---------------------------------------------
(registrant)
Date: August 4, 2000 /s/ CHERYL S. MAHER
---------------------------------------------
CHERYL S. MAHER
Chief Financial Officer & Treasurer
(Principal Accounting and Financial Officer)
20
