<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 September 30, 2000
------------------
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)
British Columbia, Canada None.
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(Jurisdiction of incorporation or organization) (IRS Employer
Identification No.)
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
November 9, 2000, was 70,097,382.
<PAGE> 2
GLAMIS GOLD LTD.
INDEX
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C> <C>
Part I Financial Information
Item 1. Financial Statements 3
Consolidated Balance Sheets as at September 30, 2000
and December 31, 1999 3
Consolidated Statements of Operations for the three
months and the nine months ended September 30, 2000
and 1999 4
Consolidated Statements of Retained Earnings (Deficit)
for the three months and the nine months ended
September 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the three
months and the nine months ended September 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 15
Part II Other Information 17
Item 1. Legal Proceedings 17
Item 2. Changes in Securities and Use of Proceeds 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
Signatures 18
</TABLE>
2
<PAGE> 3
[Part I - Item 1]
CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of U.S. dollars, except for share amounts)
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
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<S> <C> <C>
Assets
Cash $ 18,742 $ 55,169
Other current assets 14,282 14,084
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Current assets 33,024 69,253
Plant and equipment and mine development costs, net 117,622 88,900
Other assets 6,069 5,579
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$156,715 $163,732
=======================================================================================
Liabilities
Current liabilities $ 6,836 $ 7,622
Long term liabilities 22,496 17,906
Shareholders' equity
Share capital:
Authorized:
200,000,000 common shares without par value
5,000,000 preferred shares, $10 par value,
issuable in Series
Issued and fully paid:
70,097,382 common shares (1999 - 69,864,832) 159,045 158,717
Contributed surplus 63 63
Deficit (31,725) (20,576)
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127,383 138,204
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$156,715 $163,732
=======================================================================================
</TABLE>
See accompanying notes to consolidated financial statements
Prepared by Management without audit
Approved by the Directors:
"signed" "signed"
------------------------- -------------------------
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)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue from production $14,694 $15,683 $ 45,812 $ 38,427
Cost of production 12,587 12,303 37,020 33,867
------------------------------------------------------------------------------------
2,107 3,380 8,792 4,560
------------------------------------------------------------------------------------
Expenses
Depreciation & depletion 3,340 4,625 9,557 9,050
Reclamation 258 321 670 711
Exploration 767 143 2,483 2,104
Selling, general, administration 1,402 2,317 4,203 4,614
Write-down of investments and 4,345 -- 4,345 --
properties
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10,112 7,406 21,258 16,479
------------------------------------------------------------------------------------
Loss from operations (8,005) (4,026) (12,466) (11,919)
Interest expense 5 96 18 266
Other (income) expense (481) (271) (1,415) (1,919)
------------------------------------------------------------------------------------
Loss before taxes (7,529) (3,851) (11,069) (10,266)
Provision for (benefit from) taxes 45 (890) 80 (1,302)
------------------------------------------------------------------------------------
Loss for the period $(7,574) $(2,961) $(11,149) $ (8,964)
====================================================================================
Loss per share $(0.11) $(0.04) $(0.16) $(0.14)
====================================================================================
</TABLE>
CONSOLIDATED STATEMENTS OF RETAINED EARNINGS (DEFICIT)
(Expressed in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Retained earnings (deficit) $(24,151) $(5,294) $(20,576) $ 709
Beginning of period
Loss for the period (7,574) (2,961) (11,149) (8,964)
Dividends -- -- -- --
------------------------------------------------------------------------------------
Deficit, end of period $(31,725) $(8,255) $(31,725) $(8,255)
====================================================================================
</TABLE>
4
<PAGE> 5
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in thousands of U.S. dollars)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
2000 1999 2000 1999
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cash flows from (used in)
Operating activities
Loss for the period $ (7,574) $(2,961) $(11,149) $(8,964)
Adjustment for items 7,634 5,473 14,263 12,340
not affecting working capital
Net changes in non-cash 475 (4,282) (798) (6,682)
working capital
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Net cash provided by 535 (1,770) 2,316 (3,306)
(used in) operations
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Cash flows from (used in)
investing activities
Capital expenditures (10,874) 2,931 (30,535) (5,830)
Business acquisitions (181) (2,861) (7,153) 7,908
Other assets (520) (42) (1,383) 3,247
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Net investment activities (11,575) 28 (39,071) 5,325
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Cash flows from (used in)
financing activities
Stock issues 98 347 328 1,134
Notes payable -- (70) -- 919
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Net financing activities 98 277 328 2,053
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Increase (decrease) in cash (10,942) (1,465) (36,427) 4,072
Cash, beginning of period 29,684 31,707 55,169 26,170
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Cash, end of period $ 18,742 $30,242 $ 18,742 $30,242
====================================================================================
</TABLE>
5
<PAGE> 6
GLAMIS GOLD LTD.
Notes to Unaudited Interim Consolidated Financial Statements
(tables expressed in thousands of United States dollars)
Nine months ended September 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 September 30, 2000 and
December 31, 1999 and the results of its operations and its cash flows for the
three months and nine months ended September 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 September 30, 1999 but only includes
the operating results and cash flows of the acquired operations for the seven
months March through September 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
<PAGE> 7
connection with the acquisition, the Company granted to its investment 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:
<TABLE>
<CAPTION>
(in thousands of dollars)
September 30, December 31,
2000 1999
-----------------------------
<S> <C> <C>
Finished goods $4,052 $4,411
Work-in-progress 7,979 6,754
Supplies and spare parts 1,001 1,017
-----------------------------
$13,032 $12,182
======= =======
</TABLE>
4. SHARE CAPITAL
<TABLE>
<CAPTION>
Nine months ended Nine months ended
September 30, 2000 September 30, 1999
------------------------------------------------------------------------------------------
# OF SHARES AMOUNT (IN # of Shares Amount (in
000'S) 000's)
------------------------------------------------------------------------------------------
<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 232,550 328 1,012,200 1,133
stock options
Issued upon acquisition of
Rayrock (see note 2) -- -- 29,277,820 46,919
Balance at end of period 70,097,382 $159,045 69,150,632 $157,639
========== ======== ========== ========
</TABLE>
7
<PAGE> 8
5. SEGMENT REPORTING
As at September 30, 2000 and for the nine months ended September 30, 2000
(in thousands of dollars)
(a) Operating segments:
<TABLE>
<CAPTION>
Exploration and
Producing Mines Development
Gold Copper Properties Corporate Total
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
2000
Revenue $45,812 -- $ 0 $ 0 $ 45,812
Earnings (loss) from operations (6,476) -- (1,612) (4,378) (12,466)
Net earnings (loss) (7,460) -- (1,612) (2,077) (11,149)
Identifiable assets 47,209 -- 86,024 23,482 156,715
1999
Revenue $31,293 $ 6,912 $ 222 $ 0 $ 38,427
Earnings (loss) from operations (2,085) (4,371) (849) (4,614) (11,919)
Net earnings (loss) (773) (4,382) (849) (2,960) (8,964)
Identifiable assets 70,177 28,184 41,188 36,431 175,980
</TABLE>
(b) Geographic Information:
<TABLE>
<CAPTION>
North America Central & South America Total
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<S> <C> <C> <C>
2000
Revenue $ 45,812 $ 0 $ 45,812
Earnings (loss) from operations (11,502) (964) (12,466)
Net earnings (loss) (10,185) (964) (11,149)
Identifiable assets 95,595 61,120 156,715
1999
Revenue $ 31,515 $ 6,912 $ 38,427
Earnings (loss) from operations (7,374) (4,545) (11,919)
Identifiable assets 121,013 54,967 175,980
</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
nine months ended September 30, 2000 as compared to that determined by applying
the previous standard.
8
<PAGE> 9
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 September 30, 2000 or December 31, 1999, or for the
three months and nine months ended September 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 160,433 ounces of gold in the nine months ended
September 30, 2000 compared to 110,582 ounces of gold in the same period of
1999. Despite disappointing cash costs at the Dee and Marigold mines, the
Company's total cash cost of production continued to improve to $231 per ounce
of gold for the nine months ended September 30, 2000 compared to the $233 total
cash cost per ounce recorded in the first nine months of 1999.
Production for the third quarter 2000 also increased over the comparable quarter
of 1999. 52,670 ounces of gold were produced in the third quarter of 2000
compared to 41,574 ounces of gold produced in the third quarter of 1999.
Unfortunately, the total cash cost per ounce rose to $240 in the third quarter
of 2000 from $207 in the third quarter of 1999. The rise in the total cash cost
per ounce at Marigold to $325 per ounce of gold for the period (compared to $180
for the third quarter of 1999) was the single largest factor in the increase.
Cash costs were adversely affected by lower than expected ore deliveries to the
pad. The third quarter this year was also negatively impacted due to clean-up
efforts relating to a pit-wall failure in one of the operating areas. The
clean-up was completed late in the third quarter and full production was
resumed.
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.
9
<PAGE> 10
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 September 30, 2000. However, the Company's statement of
operations and cash flows for 1999 reflects a complete nine months for the
Glamis operations, but only seven months (March-September 1999) of the former
Rayrock operations. Certain 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.
The Company reported a loss for the first nine months of 2000 of $11.1 million
($0.16 per share) compared to a loss of $9.0 million ($0.14 per share) in the
first nine months of 1999. The loss in 2000 includes a $4.3 million provision in
the third quarter for the closure of the Dee Mine at the end of 2000. The loss
in 1999 included a restructuring charge of $0.9 million related to the Rayrock
acquisition. The relative improvement in performance in 2000 compared to 1999 is
attributable to increased production and profits at the Rand Mine ($2.4 million
operating earnings in the first nine months of 2000 compared to a loss of $1.7
million in the first nine months of 1999). Rand's performance was offset by a
$3.6 million operating loss at the Dee Mine (in addition to the $4.3 million
write-off noted above). Dee generated a small profit ($46,000) for the nine
months ended September 30, 1999. The 66.7%-owned Marigold Mine generated a loss
of $0.7 million in the first three quarters of 2000 versus a $0.3 million loss
in 1999. The 1999 results were also negatively impacted by the performance of
the Ivan copper mine, which generated a $4.4 million loss during the period
March through September 1999 but which was sold in October 1999. General and
administrative expense increased slightly (by $0.5 million for the first nine
months of 2000) due to slightly increased staff costs and significant
expenditures for tax and accounting work. The 1999 general and administrative
expense contained $0.9 million in restructuring charges. Interest and other
income decreased $0.5 million compared to the first nine months of 1999 as the
Company utilized its cash balances for development of the San Martin Mine and
acquisition and development of the Glamis de Mexico properties.
The net loss for the three months ended September 30, 2000 was $7.6 million
compared to a loss of $3.0 million for the third quarter of 1999. The third
quarter results in 2000 include the $4.3 million write-off at the Dee Mine. The
1999 results for the same period include $1.3 million in losses from the Ivan
mine in October 1999 as well as a restructuring charge of $0.9 million included
in general and administrative expense. Excluding these items, the difference in
losses from operations between the third quarter of 2000 and the same period in
1999 is $2.3 million. This difference is directly attributable to increased
losses at Dee ($0.7 million loss in 2000 compared to a loss of $0.1 million in
1999), increased losses at Marigold ($0.9 million in 2000 compared to a profit
of $0.1 million in 1999), increased exploration expenditures ($0.1 million in
1999, $0.8 million in 2000), and a decline in revenues of $1.0 million as the
realized price of gold decreased $21 per ounce. These losses were partially
offset by $0.4 million profits contributed by the Rand mine during the third
quarter of 2000 compared to losses of $0.7 million during the same period in
1999.
10
<PAGE> 11
LIQUIDITY AND CAPITAL RESOURCES
The Company had working capital of $26.2 million at September 30, 2000, a
decrease of $35.4 million from December 31, 1999. This is primarily a result of
capital expenditures incurred in the construction of San Martin and the
acquisition and development of the Glamis de Mexico properties, notably the
Cerro San Pedro project. Long-term liabilities, consisting of future reclamation
obligations and future income taxes, were $22.5 million at September 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 third quarter of 2000 were $10.9 million ($38.0
million for the first nine months of the year). The major expenditures were $9.7
million spent for the construction at the San Martin Mine and $1.0 million for
the development of the 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.
During the first nine months of 2000 the Company's cash provided from operations
was $2.3 million compared to $3.3 million in cash used in operations during the
first nine months of 1999. The Company's gold operations provided $6.2 million
during the first nine months of 2000 compared to $4.6 million in 1999. The Ivan
copper mine represented a use of cash of $2.5 million during the period March
through September 1999.
Cash flow from operations during the third quarter of 2000 was $0.5 million
compared to a use of cash of $1.8 million during the same period in 1999. Cash
flow from the gold operations was virtually the same ($0.5 million in 2000, $0.4
million in 1999). The difference was a result of a net positive change across
all non-cash working capital accounts. Comparative production highlights of the
first three quarters of 2000 and 1999 respectively are as follows:
PRODUCTION/REVENUE DATA
<TABLE>
<CAPTION>
GLAMIS GOLD LTD.
Three months ended Nine months ended
------------------------------ ------------------------------
SEPTEMBER 30, September 30, SEPTEMBER 30, September 30,
2000 1999 2000 1999(1)
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Gold ounces produced 52,670 41,574 160,433 110,582
Average revenue per ounce $279 $300 $286 $285
Average Market price per ounce $276 $259 $282 $273
Total cash cost per ounce $240 $207 $231 $233
Total cost per ounce $306 $287 $293 $307
</TABLE>
(1) Includes the results of the Nevada properties' operations for seven months
only March - September 1999.
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<PAGE> 12
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
--------------------------------- ---------------------------------
SEPTEMBER 30, SEPTEMBER 30, September 30, September 30,
2000 2000 1999 1999
TOTAL CASH COST GOLD OUNCES Total cash cost Gold ounces
MINE OF PRODUCTION PRODUCED of production produced
-------------- --------------- ------------- --------------- -------------
<S> <C> <C> <C> <C>
Picacho -- -- $135 1,797
Rand $182 25,629 $251 11,874
Marigold (1) $325 8,189 $180 9,681
Daisy $352 1,142 $120 9,762
Dee $279 17,710 $292 8,460
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED Nine months ended
--------------------------------- ---------------------------------
SEPTEMBER 30, SEPTEMBER 30, September 30, September 30,
2000 2000 1999 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 $173 5,497
Rand $170 74,396 $248 39,149
Marigold (2) $252 31,695 $224 35,208
Daisy (2) $210 8,241 $204 20,778
Dee (2) $321 45,712 $253 30,321
</TABLE>
(1) Marigold is 66.7% owned by the Company.
(2) The Company's share of this production (March - September 1999) totals
23,651 ounces from Marigold, 18,420 ounces from Daisy and 23,031 ounces
from Dee; total cash costs are based on March - September 1999 only.
RAND MINE, CALIFORNIA
The Rand Mine produced 25,629 ounces during the third quarter 2000 bringing
total production to 74,396 ounces of gold for the nine months ended September
30, 2000. This compares to 11,874 ounces produced during the third quarter of
1999 and 39,149 ounces produced for the nine months ended September 30, 1999.
Due to increased production in 2000, Rand's total cash cost per ounce of gold
has dropped to $170 per ounce of gold for the nine months ended September 30,
2000 from $248 per ounce of gold in the same period in 1999. However, higher
fuel and electricity costs continue to adversely impact operating costs with
results for the third quarter 2000 showing increased cash costs of $182 per
ounce of gold.
MARIGOLD MINE, NEVADA
The 66.7%-owned Marigold Mine produced 31,695 ounces of gold for the Company's
account during the first three quarters of 2000 and 8,189 ounces of gold during
the third
12
<PAGE> 13
quarter 2000. Cash costs continue to be materially and adversely affected by
lower than expected ore deliveries to the pad. The third quarter was also
negatively impacted due to clean-up efforts relating to a pit-wall failure in
one of the operating areas. The clean-up was completed late in the third quarter
and full production was resumed.
DEE MINE, NEVADA
The Dee Mine produced 17,710 ounces of gold during the third quarter of 2000 at
a total cash cost per ounce of $279. Due to continued high costs, the Company
announced plans to discontinue operations by the end of 2000 at the Dee Mine.
Low ore grades and depressed gold prices made sustained operations impractical.
The Company has taken a third quarter charge of $4.3 million to account for the
closure of the Dee Mine. Reclamation and remediation activities will continue
into 2001.
DAISY MINE, NEVADA
Daisy's production for the first nine months of 2000 was 8,241 ounces of gold,
but only 1,142 ounces were produced during the third quarter. Reclamation work
in the mine pits and waste dumps is expected to be completed in the fourth
quarter of this year.
PICACHO MINE, CALIFORNIA
Reclamation continues as well as final gold production. No ounces were produced
in the second or third 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 fourth quarter of 2000, as reclamation is
completed.
SAN MARTIN PROJECT, HONDURAS
Construction and mine development activities are on schedule. Stacking of ore on
the leach pad commenced late in the third quarter. To date, 450,737 tons of
run-of-mine ore, with an average grade of 0.024 ounces of gold per ton have been
mined and stacked. Recovery of gold from the stacked ore is expected during the
fourth quarter.
IMPERIAL PROJECT, CALIFORNIA
On November 1, 2000 the Company's lawsuit against the Department of Interior and
Bureau of Land Management concerning the Imperial Project was dismissed by the
U.S. District Court for the Southern District of California. This suit was
brought in April and challenged a Department of Interior Solicitor's Opinion
that substantially modified the rules applicable to BLM's consideration of the
Company's Imperial Project permit application. The Court decided that the suit
was premature and that the Company must await the completion of final agency
action on the Imperial permit application. The
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<PAGE> 14
Company currently expects a final decision by the BLM by mid-November and the
Company believes that the BLM will deny the Imperial permit application. The
dismissal of the earlier lawsuit will have no impact on Glamis' right and
ability to appeal a negative BLM decision, which the Company would vigorously
pursue. The Company cannot predict whether it will ultimately be successful in
the litigation.
CERRO BLANCO PROJECT, GUATEMALA
Exploration drilling and project assessment continues at Cerro Blanco. The
February 2000 study has been updated with this year's drilling results. The
preliminary analysis indicates the mine would produce approximately 180,000
ounces of gold per year over an 8 year mine life. The Company plans to continue
investigating ways to improve the economics of this project during 2001,
including conducting additional drilling, as well as optimizing and refining
capital and operating costs.
GLAMIS DE MEXICO, MEXICO
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 of which $1.3 million had been spent as at September 30, 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 which is scheduled to be presented to the Board of during the fourth
quarter of 2000.
EXPLORATION ACTIVITIES
Exploration expense was $0.8 million for the third quarter of 2000 and $2.5
million for the nine months ended September 30, 2000. 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 primarily in
Honduras and Guatemala. 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; expenditures were not significant. As of November 9,
2000, no operational disruptions related to any Year 2000 systems problems have
been noted.
14
<PAGE> 15
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 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.
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.
15
<PAGE> 16
The table below sets forth the positions of the Company at September 30, 2000
and December 31, 1999. Fair values are estimated based on market quotations of
the variables based on expected maturity date.
<TABLE>
<CAPTION>
Positions as at September 30, 2000
(in thousands of U.S. dollars, except for per ounce amounts)
--------------------------------------------------------------------------------
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 $18,002 -- -- -- --
Ounces -- 13,500 9,000 3,000 --
Average
price per ounce -- $283 $275 $280 --
Fair Market
Value $18,002 $90 -Nil- -Nil- --
Maturity 2001
Investments -- -- -- -- --
Ounces -- -- -- 60,000 --
Average
price per ounce -- -- -- $295 --
Fair Market
Value -- -- -- -Nil- --
</TABLE>
<TABLE>
<CAPTION>
Positions as at December 31, 1999
(in thousands of U.S. dollars, except for per ounce amounts)
--------------------------------------------------------------------------------
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>
16
<PAGE> 17
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS:
(1) On November 1, 2000 the Company's lawsuit against the Department of
Interior and Bureau of Land Management concerning the Imperial
Project was dismissed by the U.S. District Court for the Southern
District of California. This suit was brought in April and
challenged a Department of Interior Solicitor's Opinion that
substantially modified the rules applicable to BLM's consideration
of the Company's Imperial Project permit application. The Court
decided that the suit was premature and that the Company must await
the completion of final agency action on the Imperial permit
application. The Company currently expects a final decision by the
BLM by mid-November and the Company believes that the BLM will deny
the Imperial permit application. The dismissal of the earlier
lawsuit will have no impact on Glamis' right and ability to appeal
a negative BLM decision, which the Company would vigorously pursue.
The Company cannot predict whether it will ultimately be successful
in the litigation.
(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 involved 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. On October 15, 2000 the suit was
dismissed. The Company cannot predict whether AMS will attempt to
refile the suit, or if refiled, what will be the ultimate 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: None
ITEM 5 OTHER INFORMATION: None
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
17
<PAGE> 18
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: November 10, 2000 "signed"
------------------------------
CHERYL S. MAHER
Chief Financial Officer & Treasurer
(Principal Accounting and Financial Officer)
18
