RE: read the news carefullyIndeed, we have revised out outlook twice since the annual. What I should point out is that neither revision resulted from any re-estimation of our reserves, and so the production will come albeit further out than we thought. The largest reason for the recent reduction, as explained in our press release, is the unavoidable delays due to the heavy rainfall in Costa Rica during construction. Limon production is now estimated at 45,000 oz, 49,000 oz and 58,000 oz in the years 2005-7 respectively. Total cash costs are expected to be $271, $268 and $270 in those years. At Bellavista, production is expected to be 29,000 oz, 63,000 oz and 68,000 oz in each of those years. Total cash costs at Bellavista are expected to be $321, $216 and $202 in those years. Other than the fact that 2005 will only see partial production from Bellavista, the variances in ounces each year reflect the grades of ore we expect to be mining in those years, as the tonnage mined will remain fairly consistent. As I'm sure you know, these Total Cash Costs are different from the Operating Costs mentioned elsewhere in some of our materials.
Kerry Knoll
President and CEO
Glencairn Gold Corporation
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The higher costs at Limon are due to a number of factors, and on a per tonne basis are essentially based on our costs year to date. Fuel is certainly one of them (going forward, we have based fuel costs a the average of what we have been paying year to date). Another is a larger than planned workforce. We have learned that as we get to the edges of the Talavera orebody, mining has become more labor intensive than it was in the past. Finally, we have reduced the tonnes we plan to mine in each of the next two years, before increasing throughput again in 2007 when the Santa Pancha deposit goes into full production. Santa Pancha is lower grade than Talavera. We do plan a number of improvements to costs at the mine, but as a company have decided to stay with the more conservative projections until the benefits of these improvements are actually realized. We have, incidentally, replaced both the Mine Superintendent (who left to go work for RNC) and the General Manager recently, and are very pleased with the replacements.
The costs at Bellavista have gone up mainly because we have opted to use a contractor for the mining, which saved us about $5 million in captial costs. Another reason the costs have gone up is that we have an NPI to pay on the property,and when we redid the numbers at $375 gold (up from $325 in the feasibility), the cost to us of that royalty went up. While Gold Institute rules do not require us to put NPI obligations into the Total Cash Cost, we have elected to do so anyway. Also, we increased the estimated fuel costs there as well. There were a number of other, ancillary items that also added a few dollars. We have not given out a long term mining contract, and will consider taking the mining on ourselves after a couple of years.
It's not so much that we ignore RNC in our comparisions, its that the brokerage firms that prepare these for us (Orion with help from Nesbitt) don't cover RNC, and so don't have the figures to include.
I hope this answers your questions.
Kerry