Edgar Filing: GLAMIS GOLD LTD

Intrusives

Sedimentary

Technical Report Dated July 31, 2006

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

Report of Foreign Private Issuer

Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934

For the month of August, 2006

Commission File Number 001-11648

Glamis Gold Ltd.

(Translation of registrant’s name into English)

5190 Neil Rd., Suite 310, Reno, Nevada 89502

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.


Form 20-F o		Form 40-F þ

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): o

Note: Regulation S-T Rule 101(b)(1) only permits the submission in paper of a Form 6-K if submitted solely to provide an attached annual report to security holders.

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): o

Note: Regulation S-T Rule 101(b)(7) only permits the submission in paper of a Form 6-K if submitted to furnish a report or other document that the registrant foreign private issuer must furnish and make public under the laws of the jurisdiction in which the registrant is incorporated, domiciled or legally organized (the registrant’s “home country”), or under the rules of the home country exchange on which the registrant’s securities are traded, as long as the report or other document is not a press release, is not required to be and has not been distributed to the registrant’s security holders, and, if discussing a material event, has already been the subject of a Form 6-K submission or other Commission filing on EDGAR.

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.


Yes o		No þ

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82-

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 2, 2006	By:	/s/ Cheryl A. Sedestrom
		Cheryl A. Sedestrom
		Chief Financial Officer

GLAMIS GOLD LTD.
100,000 mtpd Minera Peñasquito Feasibility Study
Volume I

TABLE OF CONTENTS


SECTION				PAGE

			VOLUME I: FEASIBILITY STUDY

1	EXECUTIVE SUMMARY				1-1
	1.1	Title Page			1-1
	1.2	Table Of Contents			1-1
	1.3	Summary (Synopsis)			1-2
		1.3.1	Abstract of Base Case		1-2
		1.3.2	Scope		1-4
		1.3.3	Base Case Definition		1-4
		1.3.4	Capital Cost Estimate Cases		1-5
		1.3.5	Mining Reserves Metrics		1-5
		1.3.6	Resources		1-5
		1.3.7	Metallurgical Recoveries for Sulphide Ores		1-6
		1.3.8	Oxide Recoveries		1-6
		1.3.9	Ore Grades		1-6
		1.3.10	Capital Cost Estimate Summaries		1-7
		1.3.11	Operating Cost Estimate		1-7
		1.3.12	Schedule		1-8
		1.3.13	Financial Model Metrics and Sensitivities		1-9
		1.3.14	Sensitivities		1-9
		1.3.15	Peñasquito Project Operating and Production Cost		1-10
		1.3.16	Property Description and Location		1-10
		1.3.17	Development Plan		1-11
		1.3.18	Resources Tabulation		1-11
		1.3.19	Reserves Tabulation		1-16
		1.3.20	Facilities		1-20
		1.3.21	Utilities		1-21
		1.3.22	Infrastructure		1-21
		1.3.23	Metallurgy Test Program		1-22
		1.3.24	Smelters and Refineries		1-22
		1.3.25	Conclusions		1-22
	1.4	Introduction & Terms Of Reference			1-23
	1.5	Disclaimer			1-25
	1.6	Property Description & Location			1-26
	1.7	Accessibility, Climate, Local Resources, Infrastructure And Physiography			1-27
		1.7.1	Physiography		1-27
		1.7.2	Infrastructure		1-27
		1.7.3	Climate		1-28
		1.7.4	Surface Rights		1-28
		1.7.5	Water		1-29
	1.8	History			1-30

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GLAMIS GOLD LTD.
100,000 mtpd Minera Peñasquito Feasibility Study
Volume I


SECTION				PAGE
	1.9	Geological Setting			1-31
	1.10	Deposit Types And Mineralization			1-32
	1.11	Mineralization			1-32
	1.12	Exploration			1-33
	1.13	Drilling			1-34
	1.14	Sampling Method And Approach			1-36
	1.15	Sample Preparation And Analyses And Security			1-36
	1.16	Data Verification			1-37
	1.17	Adjacent Properties			1-38
	1.18	Mineral Processing And Metallurgical Testing			1-38
		1.18.1	Sulphide Metallurgical Testing		1-39
		1.18.2	Sulphide Process Plant		1-42
		1.18.3	Oxide Metallurgical Testing		1-43
		1.18.4	Oxide Process Plant		1-44
	1.19	Mineral Resource And Mineral Reserve Estimates			1-44
	1.20	Other Relevant Data And Information			1-49
		1.20.1	Geotechnical		1-49
		1.20.2	Tailings Design		1-51
		1.20.3	Rock Piles		1-52
		1.20.4	Leach Pad		1-52
	1.21	Interpretation And Conclusions			1-52
	1.22	Recommendations			1-52
	1.23	References			1-53
	1.24	Date			1-56
	1.25	Additional Requirements For Technical Reports On Development Properties And Production Properties			1-56
		1.25.1	Mine Operations		1-57
		1.25.2	Recoveries		1-67
		1.25.3	Markets		1-67
		1.25.4	Contracts		1-68
		1.25.5	Environmental Considerations		1-68
		1.25.6	Taxes		1-72
		1.25.7	Reclamation Costs		1-72
		1.25.8	Economics		1-72
	1.26	Illustrations			1-83

GLAMIS GOLD LTD.
100,000 mtpd Minera Peñasquito Feasibility Study
Volume I

LIST OF TABLES


TABLE NO.		DESCRIPTION
Table 1-1		Peñasquito Mineral Resources Summary Data – June 21, 2006
Table 1-2a		Peñasquito Project Mineral Resources — Measured Category
Table 1-2b		Peñasquito Project Mineral Resources – Indicated Category
Table 1-2c		Peñasquito Project Mineral Resources – Inferred Category
Table 1-3		Peñasquito Proven and Probable Reserves Summary Data – June 21, 2006
Table 1-4a		Peñasquito Project Reserves – Proven Category
Table 1-4b		Peñasquito Project Reserves – Probable Category
Table 1-4c		Peñasquito Project Reserves – Proven + Probable Totals
Table 1-5		Major Mine Equipment
Table 1-6		Mine Support Equipment
Table 1-7		List of Pertinent Claims
Table 1-8		Summary of Project Drilling at Peñasquito — Through Campaign 17
Table 1-9		Summary of Exploration Drilling Campaigns at Peñasquito*
Table 1-10		Summary of Drilling Activity at the Peñasquito Property
Table 1-11		Summary of Metallurgical Testing
Table 1-12		Projections of Concentrate Grades and Recoveries
Table 1-13		Estimated Measured Plus Indicated Resources by Open Pit
Table 1-14		Estimated Inferred Resources
Table 1-15		Peñasquito Project Open Pit Reserve Summary
Table 1-16		Mine Production Schedule
Table 1-17		Mine Production Schedule
Table 1-18		Mine Production Schedule
Table 1-19		Mine Plan Basis
Table 1-20		Mining Equipment Selection*
Table 1-21		Summary Manpower Requirements
Table 1-22		Key Permits For 50,000 MTPD Plant⁶
Table 1-23		Smelter Payable and Deducts
Table 1-24		Pilot Plant Concentrate Production
Table 1-25		Summary of Historical and Future Commodity Prices — June 30, 2006
Table 1-26		Mine Costs Summary
Table 1-27		Average Operating Margin ($/tonne ore)
Table 1-28		Cash Flow Summary
Table 1-29		Key Financial Metrics
Table 1-30		IRR and NPV Factors
Table 1-31		Financial Model Summary

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GLAMIS GOLD LTD.
100,000 mtpd Minera Peñasquito Feasibility Study
Volume I

LIST OF FIGURES


FIGURE		DESCRIPTION
1-1		National Transportation Corridors
1-2		Project State Plan
1-3		Project Region Plan
1-4		Project Vicinity Plan
1-5		Project Facilities Plan
1-6		Sulphide Mill
1-7		Peñasquito Mineral Concessions
1-8		Private and Ejido Surface Ownership
1-9		Local Geology
1-10A		Peñasco Drill Hole Traces
1-10B		Chile Colorado Drill Hole Traces
1-11		Peñasco and Chile Colorado Pit Plan
1-12		North-South Cross Section — Peñasco Pit
1-13		East-West Cross Section — Chile Colorado Pit
1-14		Peñasco Open Pit Phases 1-7
1-15		Chile Colorado Open Pit Phases 1-3
1-16		Project Schedule
1-17		Project Perspective
1-18		Mill Area Perspective
1-19		Grinding Area Elevation
1-20		Financial Sensitivities
1-21		Annual Payable Gold Metal
1-22		Silver Metal Production
1-23		Lead Metal Production
1-24		Zinc Metal Production
1-25		Mining Production
1-26		Cash Flow Summary
1-27		Operating Cost

GLAMIS GOLD LTD.
100,000 mtpd Minera Peñasquito Feasibility Study
Volume I

LIST OF APPENDICES


APPENDIX		DESCRIPTION
A		Professional Qualifications
		• Certificate of Qualified Person and Consent of Author
		• Résumés of Principal Authors


Responsibility	Qualified Person	Registration	Company
Resource Modeling	James S. Voorhees	P.E.	Glamis
Mine Planning	James S. Voorhees	P.E.	Glamis
Reserves	James S. Voorhees	P.E.	Glamis
Geology	Charlie Ronkos	Corporate	Glamis
Metallurgical Testing	Jerry Hanks	P.E.	Independent
Flow Sheets	Tom Drielick	P.E.	M3 Engineering
Pit Geotechnical	Tom Wythes	P.E.	Golder Assoc.
Process Plant and Costing	Conrad Huss	P.E.	M3 Engineering
Foundation Design	Michael Pegnam	P.E.	Golder Assoc.
Tailings	Jim Johnson	P.E.	Golder Assoc.

GLAMIS GOLD LTD.
100,000 mtpd Minera Peñasquito Feasibility Study
Volume I

EXECUTIVE SUMMARY

	1.1		Title Page

			This report is prepared in accordance with the Canadian Standard NI 43-101. The first two items of this 26-item outline are the Title Page and Table of Contents. For ease of cross-referencing during review, the first two subsections of this report (1.1 and 1.2) are incorporated into the format for this report.

	1.2		Table Of Contents

			See discussion in subsection 1.1.

1-1

GLAMIS GOLD LTD.
100,000 mtpd Minera Peñasquito Feasibility Study
Volume I

1.3

Summary (Synopsis)

	1.3.1		Abstract of Base Case

			The following metrics outline the polymetallic project into various gold equivalencies context. These metrics provide a reference framework for comparison to other Glamis Gold Ltd. (Glamis) properties. A more conventional polymetallic summary follows this abstract.


Mine life (years)		17
Mill throughput (tonnes per day)		100,000	(50,000 initial)
Initial capital cost ($US millions)	$	882
Sustaining capital ($US millions)	$	327

Average Annual Payable Metal:
Gold (troy ounces)		387,500
Silver (troy ounces)		22,846,000
Lead (tonnes)		71,125
Zinc (tonnes)		137,400
Total production as gold equivalent (troy ounces):		1,339,300	(for scale comparison only)

Unit operating costs:
Mining cost per total tonne	$	0.81
Milling cost per ore tonne	$	2.98
G&A cost per ore tonne	$	0.22

Average total cash costs per unit (lead as by-product):
Gold (per ounce)	$	125
Silver (per ounce)	$	4.91
Zinc (per pound)	$	0.44
Total cash cost per ounce gold production (utilizing all other metals as by-products)	$	(378	)


Metals price assumptions:	Base case			Low Case			High Case
Gold (per ounce)	$	532.74		$	450		$	650
Silver (per ounce)	$	8.84		$	7.00		$	10.00
Zinc (per pound)	$	0.787		$	0.60		$	0.86
Lead (per pound)	$	0.424		$	0.30		$	0.43

Project IRR (after tax)		18.7	%		10.2	%		23.4	%
After Tax NPV 0% Discount ($US millions)	$	3,256		$	1,560		$	4,334
After Tax NPV 5% Discount ($US millions)	$	1,521		$	514		$	2,161
Payback (years)		5.6			7.6			4.8

The following page highlights information used to develop the preceding summary.

1-2

GLAMIS GOLD LTD.
100,000 mtpd Minera Peñasquito Feasibility Study
Volume I

Abstract of Key Financials


	Life of Mine
	Total			2006			2007			2008			2009			2010			2011			2012			2013			2014			2015
Ore Tonnes (kt)		564,016			—			—			10,514			24,397			39,148			22,918			43,077			40,779			38,284			36,772
Total Tonnes (kt)		2,121,342			—			—			36,000			99,000			99,000			139,000			179,000			179,000			179,000			179,000
Stripping Ratio		2.76			—			—			2.42			3.06			1.53			5.07			3.16			3.39			3.68			3.87
Payable Metals
Gold Ounces (000’s)		6,239			—			—			38			107			203			132			369			331			405			575
Silver Ounces (000’s)		368,083			—			—			2,546			8,104			14,657			10,105			23,136			21,226			23,089			26,747
Lead Tonnes (000’s)		1,138			—			—			—			13			40			39			74			69			70			82
Zinc Tonnes (000’s)		2,199			—			—			—			23			65			61			150			127			124			140
Equiv. Gold Ounces Produced (000’s)		21,496			—			—			67			295			660			590			1,236			1,245			1,298			1,565

Revenue (000’s)	$	11,451,521			—			—		$	35,545		$	173,183		$	384,513		$	312,209		$	728,533		$	650,063		$	701,639		$	862,783
Operating Cost (000’s)	$	5,772,843			—		$	50		$	62,803		$	139,366		$	229,800		$	233,696		$	406,777		$	394,318		$	408,797		$	429,833
Initial Capital Cost (000’s)	$	881,844		$	82,131		$	209,476		$	254,358		$	94,768		$	120,156		$	120,955			—			—			—			—
Sustaining Capital Cost (000’s)	$	327,438			—			—			—		$	46,279		$	40,892		$	62,007		$	66,302		$	57,600		$	2		$	2,988
Income Tax (000’s)	$	870,654			—			—			—			—			—			—			—			—			—		$	87,851
Cash Flow (000’s)	$	3,256,200		$	(82,131	)	$	(209,526	)	$	(256,775	)	$	(111,373	)	$	(49,833	)	$	(100,449	)	$	171,454		$	210,145		$	281,840		$	307,111
Cumulative Cash Flow (000’s)				$	(82,131	)	$	(291,657	)	$	(548,432	)	$	(659,805	)	$	(709,638	)	$	(810,087	)	$	(638,633	)	$	(428,489	)	$	(146,648	)	$	160,463

Mining Cost $/total tonne	$	0.81			—			—		$	1.14		$	0.65		$	0.69		$	0.69		$	0.70		$	0.74		$	0.84		$	0.85
Processing Cost $/ore tonne	$	2.98			—			—		$	1.13		$	1.67		$	2.13		$	2.88		$	2.93		$	3.03		$	3.16		$	3.24
G&A Cost $/ore tonne	$	0.22			—			—		$	0.70		$	0.30		$	0.18		$	0.31		$	0.17		$	0.18		$	0.19		$	0.20

Total Cash Cost $/Gold Oz (net of lead)	$	125.41			—			—		$	784		$	318		$	157		$	219		$	139		$	163		$	181		$	159
Total Cash Cost $/Silver Oz	$	4.91			—			—		$	13.02		$	7.37		$	5.84		$	7.92		$	5.43		$	5.98		$	5.69		$	4.84
Total Cash Cost $/Zinc lb	$	0.44			—			—			—		$	0.68		$	0.52		$	0.66		$	0.49		$	0.53		$	0.51		$	0.43
Total Cash Cost $/Gold Oz (net of all metals)	$	(377.90	)		—			—		$	1,165		$	181		$	(244	)	$	(14	)	$	(344	)	$	(239	)	$	(189	)	$	(219	)

				2016			2017			2018			2019			2020			2021			2022			2023			2024			2025
Ore Tonnes (kt)					36,753			36,500			36,500			38,584			39,806			42,884			40,645			29,216			7,239			—
Total Tonnes (kt)					179,000			179,000			179,000			162,300			97,200			74,800			95,024			58,047			7,971			—
Stripping Ratio					3.87			3.90			3.90			3.21			1.44			0.74			1.34			0.99			0.10
Payable Metals
Gold Ounces (000’s)					677			640			687			464			629			554			357			49			24
Silver Ounces (000’s)					25,433			23,302			26,167			27,342			28,766			33,950			30,976			33,719			8,819
Lead Tonnes (000’s)					79			77			84			98			107			101			75			110			20
Zinc Tonnes (000’s)					156			152			179			193			225			251			155			153			46			—
Equiv. Gold Ounces Produced (000’s)					1,724			1,672			1,817			1,741			1,976			2,097			1,606			1,337			512			58

Revenue (000’s)				$	929,338		$	883,564		$	985,000		$	914,495		$	1,079,929		$	1,123,178		$	801,463		$	697,083		$	189,003
Operating Cost (000’s)				$	440,192		$	444,069		$	449,995		$	451,731		$	438,752		$	431,090		$	374,493		$	342,900		$	89,593		$	4,587
Initial Capital Cost (000’s)
Sustaining Capital Cost (000’s)				$	26,758		$	11,755		$	3,695		$	9,160
Income Tax (000’s)				$	129,618		$	170,247		$	191,205		$	134,031		$	103,371		$	50,515		$	3,816
Cash Flow (000’s)				$	320,621		$	313,627		$	369,432		$	337,987		$	438,930		$	491,883		$	357,939		$	271,811		$	164,695		$	28,813
Cumulative Cash Flow (000’s)				$	481,084		$	794,711		$	1,164,143		$	1,502,129		$	1,941,059		$	2,432,942		$	2,790,881		$	3,062,692		$	3,227,387		$	3,256,200

Mining Cost $/total tonne				$	0.85		$	0.90		$	0.81		$	0.79		$	0.89		$	0.80		$	0.93		$	1.09		$	1.17
Processing Cost $/ore tonne				$	3.24		$	3.24		$	3.24		$	3.14		$	3.08		$	2.94		$	3.05		$	3.82		$	4.04
G&A Cost $/ore tonne				$	0.20		$	0.20		$	0.20		$	0.19		$	0.18		$	0.17		$	0.18		$	0.25		$	0.99

Total Cash Cost $/Gold Oz (net of lead)				$	166		$	179		$	151		$	93		$	80		$	53		$	75		$	(1,769	)	$	(506	)
Total Cash Cost $/Silver Oz				$	4.54		$	4.84		$	4.38		$	4.85		$	3.95		$	3.69		$	4.53		$	5.13		$	4.66
Total Cash Cost $/Zinc lb				$	0.41		$	0.43		$	0.39		$	0.43		$	0.35		$	0.33		$	0.40		$	0.45		$	0.41
Total Cash Cost $/Gold Oz (net of all metals)				$	(190	)	$	(153	)	$	(246	)	$	(467	)	$	(487	)	$	(718	)	$	(666	)	$	(6,651	)	$	(3,600	)

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GLAMIS GOLD LTD.
100,000 mtpd Minera Peñasquito Feasibility Study
Volume I

	1.3.2		Scope

			This feasibility study has been prepared by M3 Engineering & Technology Corporation (M3) to: a) summarize the work performed to date on the Glamis Minera Peñasquito project, and b) evaluate the economics of the plant operating at 100,000 MTPD versus the previously envisioned 50,000 MTPD. The ore body is polymetallic with the precious metals of silver and gold providing over one-half the revenue and the base metals of lead and zinc providing the remainder. The study sets forth conclusions and recommendations, based on M3’s experience and professional opinion, which result from their analysis of work and data collected. Glamis has provided all information for the resource model and mining, as well as reviewing and determining more conservative metallurgical recovery rates than established in prior studies. M3 concurs with this approach.

			Minera Peñasquito, S.A. de C.V. is a wholly owned subsidiary of Glamis Gold Ltd. (Glamis). The project is located in the state of Zacatecas, Mexico.

	1.3.3		Base Case Definition

			The financials for this project are based on the following:

	•		Oxide plant in full production July 1, 2008. (Initially 30,000 MTPD run-of-mine, peaking at 50,000 MTPD, and averaging 25,000 MTPD for the first seven years; thereafter, only a nominal amount.)

	•		Sulphide SAG Line 1 start up July 1, 2009, with two-thirds production (33,300 MTPD) for the last six months of 2009. Thereafter, SAG Line 1 will operate at 50,000 MTPD.

	•		Sulphide SAG Line 2 starts up October 1, 2011, with full production of 50,000 MTPD starting January 1, 2012. Thereafter, between SAG Lines 1 and 2, the sulphide plant will operate at 100,000 MTPD.

	•		Metal pricing for determining resources are as follows:


		Gold		$650.00/ounce
		Silver		$10.00/ounce
		Zinc		$0.86/pound
		Lead		$0.43/pound

•

Metals pricing for determining reserves approximates a 36 month historical average, i.e., the geometry for the pit and ore blocks within the geometry were based on the following:


		Gold		$450.00/ounce

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GLAMIS GOLD LTD.
100,000 mtpd Minera Peñasquito Feasibility Study
Volume I


		Silver		$7.00/ounce
		Zinc		$0.60/pound
		Lead		$0.30/pound

•

Metals pricing for the financial model is based on a 60/40 blend of three years’ historical and two years’ future, i.e., the following were applied to the geometry as determined above:


		Gold		$532.74/ounce
		Silver		$8.84/ounce
		Zinc		$0.787/pound
		Lead		$0.424/pound

•

Unless otherwise stated, metals revenue and associated metrics (unit costs, average annual payable metal, etc.) are based on payable units after smelter deductions.

	1.3.4		Capital Cost Estimate Cases

			As part of this effort, M3 has developed process plant capital cost estimates for the following main two cases.


		Case 1:		100,000 MTPD plant July 2006 costing.

				This is the Base Case for this report.

		Case 2:		50,000 MTPD plant modifiable to 100,000 MTPD July 2006 costing.

			Owner’s costs have been outlined by Glamis and are included.

	1.3.5		Mining Reserves Metrics

			The following life-of-mine tonnages have been identified


		Oxide Ore		87,000,000 tonnes
		Sulphide Ore		477,000,000 tonnes
		Waste		1,557,000,000 tonnes

		Total		2,121,000,000 tonnes

1.3.6

Resources


		Measured and Indicated Resources		872,500,000 tonnes
		Inferred Resources		2,576,600,000 tonnes

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1.3.7

Metallurgical Recoveries for Sulphide Ores


	Lead Concentrate									Zinc Concentrate
	Breccia			Intrusive			Sedimentary			Breccia			Intrusive			Sedimentary
Peñasco Mill Recoveries
Lead		75.0	%		72.0	%		60.0	%		0.0	%		0.0	%		0.0	%
Zinc		0.0	%		0.0	%		0.0	%		78.0	%		60.0	%		50.0	%
Silver		65.0	%		63.0	%		40.0	%		16.0	%		16.0	%		10.0	%
Gold		66.0	%		65.0	%		25.0	%		14.0	%		12.0	%		10.0	%
Concentrate Grade		52.0	%		51.0	%		45.0	%		50.0	%		50.0	%		50.0	%
Chile Colorado Mill Recoveries
Lead								63.0	%								0.0	%
Zinc								0.0	%								60.0	%
Silver								58.0	%								13.0	%
Gold								20.0	%								7.0	%
Concentrate Grade								50.0	%								55.0	%

Composition of Sulphide Ore in Peñasco:

1.3.8

Oxide Recoveries


	Gold			Silver
Peñasco		50	%		28	%
Chile Colorado		50	%		22	%

	1.3.9		Ore Grades

			Oxide Ore:


		Gold		0.28 grams/tonne
		Silver		23.8 grams/tonne

Sulphide Ore:

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	1.3.10		Capital Cost Estimate Summaries

			The total project capital cost for the base case is estimated as follows:

CAPITAL COST ESTIMATE SUMMARY – 100,000 MTPD


	Initial			Sustaining
Camp and Roads	$	25	million
Mine Equipment	$	131	million	$327 million
Pre-Stripping	$	55	million
Power Setup	$	48	million
SAG Line #1 and Infrastructure	$	270	million
Tailing Dam and Reclaim	$	28	million
Merrill-Crowe Plant and Pad	$	26	million
SAG Line #2	$	217	million
Port	$	28	million
Owner’s Costs	$	54	million
	$	882	million	$327 million

CAPITAL COST ESTIMATE SUMMARY – 50,000 MTPD


Camp and Roads	$	25	million
Mine Equipment	$	84	million	$312 million
Pre-Stripping	$	55	million
Power Setup	$	48	million
SAG Line #1 and Infrastructure	$	270	million
Tailing Dam and Reclaim	$	28	million
Merrill-Crowe Plant and Pad	$	26	million
Port	$	28	million
Owner’s Costs	$	44	million
	$	608	million	$312 million

	1.3.11		Operating Cost Estimate

			The following life-of-mine costs are anticipated where ore is defined as the combination of oxide and sulphide ore:


Mining Costs	=	$3.05/tonne ore
Sulphide Process Costs	=	2.80/tonne ore
Oxide Process Costs	=	0.18/tonne ore
G&A Costs	=	0.22/tonne ore
Lead Concentrate Shipping and Smelting	=	1.13/tonne ore
Zinc Concentrate Shipping and Smelting	=	2.50/tonne ore
Doré Shipping and Refining	=	0.02/tonne ore

Total		$9.90/tonne ore

The above listing indicates the significance of shipping and smelter charges.



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The following indicates costing on a different per unit basis:


Chile Colorado Process Costs	=	$3.81/tonne CC sulphide ore
Peñasco Process Costs	=	$3.24/tonne PN sulphide ore
Mine Costs	=	$0.81/tonne mined
Heap Leach Process Costs	=	$1.18/tonne of oxide ore

	1.3.12		Schedule

			Engineering and procurement activities began immediately following issuance of the November 2005 Feasibility Study. Starting in the second quarter 2006, critical purchase orders were placed for major, schedule critical process equipment. Mine equipment has not yet been ordered.

			Preconstruction activities including roads, camps, and air strip will occur during the last two quarters of 2006 and the first quarter of 2007.

			Permits, surface rights negotiations, and financing are assumed to be in place by the first quarter of 2007, leading to full release of the project (NTP). At this time all purchase orders will be released for full fabrication and delivery.

			Mobilization to the field for the process facilities will commence at NTP and early field work will be comprised of stripping, roads, leach pad, ponds, power supply and the Merrill-Crowe plant.

			Schedule on Which Financials Are Based

			Mobile mine equipment (e.g., shovels and trucks) will arrive for assembly in the 4th quarter of 2007. Stripping of mine overburden will begin in the first quarter of 2008. Placement of crushed overliner material will commence in the second quarter of 2008 and continue throughout 2009.

			The Merrill-Crowe plant will be completed by the second quarter of 2008 leading to full doré production in the last half of 2008.

			The sulphide concentrator (SAG Line No. 1) pre-operational testing will be completed at the end of June 2009. Mill start up and commissioning will commence in July 2009, with ramp up through the remainder of 2009.

			SAG Line No. 2 will be engineered in 2009 and built in 2010/2011. Start up begins October 1, 2011. Full production starts January 1, 2012.

			Figure 1-16 is the Project Development Summary Schedule.



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1.3.13

Financial Model Metrics and Sensitivities
Metrics for Base Case


IRR		=	18.7% after Mexican income taxes
NPV (at 0% discount rate)		=	$3,256,200,000
NPV (at 5% discount rate)		=	$1,521,378,000
Payback		=	5.6 years

Revenue:	Gold	=	28%
	Silver	=	28%
	Lead	=	9%
	Zinc	=	35%

			100%
NSR (Life-of-Mine)		=	$18.95 / tonne of ore
Gross Margin		=	$9.05 / tonne of ore

	1.3.14		Sensitivities

			See Figure 1-20 for a graphical representation of the following table.


				NPV @ 5%		Pay Back
Sensitivity	Variance	IRR (%)		($000s)		(Years)
Metal Prices	Increase 20%		25.5		2,477,072		4.0
	Increase 10%		22.2		2,000,231		5.8
	Decrease 10%		14.9		1,045,275		6.3
	Decrease 20%		10.6		562,892		8.3

Metal Recoveries	Increase 20%		24.3		2,304,027		4.3
	Increase 10%		21.6		1,915,894		5.3
	Decrease 10%		15.6		1,133,202		5.8
	Decrease 20%		12.2		736,683		7.1

Operating Costs	Increase 20%		15.8		1,209,764		5.9
	Increase 10%		17.3		1,365,572		6.2
	Decrease 10%		20.1		1,676,586		5.6
	Decrease 20%		21.5		1,831,266		5.2

Capital Costs	Increase 20%		16.1		1,366,719		6.5
	Increase 10%		17.3		1,444,357		6.0
	Decrease 10%		20.2		1,597,296		4.9
	Decrease 20%		22.0		1,672,991		5.3

Compressed Schedule	SAG #1 starts 1/1/09		20.7		1,616,726		4.8
	SAG #2 starts 1/1/11

Base Case Ref	—		18.7		1,521,378		5.6

			Total Metal Production

			Over the 17 year mine life, the sulphide ore mill is expected to produce approximately 5.12 million tonnes of zinc concentrate and 2.36 million tonnes of lead concentrate containing a total of 387.6 million ounces of



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			silver, 6.60 million ounces of gold, 1.2 million tonnes of lead and 2.59 million tonnes of zinc. The oxide ore leach plant is expected to produce a further 17.9 million ounces of silver and 396,000 ounces of gold.

			Total Metal Production

			The metals contained in concentrate are subject to smelter deductions, resulting in a payable metals quantity slightly lower than metals produced in concentrate. Figures 1-21 through 1-24 illustrate payable metals by year.

	1.3.15		Peñasquito Project Operating and Production Cost

Co-Product Accounting

Gold

($/ounce)

Silver

Zinc

Net of Lead

($/ounce)

($/pound)

Unit Total Cash Cost
(Includes taxes and royalty)

125.41

4.91

0.44

Unit Total Cost
(Also includes reclamation and depreciation)

185.36

5.91

0.53

			The unit total cash cost of payable gold ounces is $(378), treating all other metals as by products.

	1.3.16		Property Description and Location

			Glamis owns 100% of the mineral rights to a large area covering approximately 39,000 hectares located in the north-eastern portion of the State of Zacatecas (Figures 1-1 and 1-2) in north-central Mexico. As shown on Figures 1-3 and 1-4, the portion of this area referred to as the Peñasquito property lies approximately 27 km west of the town of Concepción del Oro in a wide, generally flat valley covered by coarse grasses and cacti.

			Investigations on this property have identified several major sulphide mineralization zones with significant values of silver, gold, zinc and lead (Figure 1-9). This study considers the economic development of two zones, the Peñasco and the Chile Colorado, which have been the subject of most of the geological and metallurgical investigations to date. Preliminary resource investigation has been performed on two additional zones, Azul Breccia and El Sotol, but no development plan has yet been evaluated. In addition to the sulphide mineralization, the Peñasco and the Chile Colorado zones also have substantial oxide ore and mixed ore (oxide/sulphide transition material) caps which contain recoverable gold



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and silver. The gold and silver recovered from the oxide and mixed ores have been included in the project economic evaluation.

	1.3.17		Development Plan

			The sulphide ore bodies will be developed in sequence beginning with the Peñasco pit followed by the Chile Colorado pit. Overburden and oxide ore will be stripped to allow access to the sulphide ore. Oxide ore, as it is encountered during the stripping, will be placed on a leach pad. The run-of-mine oxide material will be leached with sodium cyanide solution and gold and silver will be recovered through a Merrill-Crowe processing facility. The rate at which oxide ore is placed on the leach pad varies from about 10,000 metric tonnes per day (MTPD) to 50,000 MTPD during the first seven years of operation and at a diminished rate over an additional nine years.

			The sulphide ore will be mined as follows:

	a)		Peñasco Pit (50,000 MTPD nominal) operating Years 1 through 2.

	b)		Peñasco Pit (100,000 MTPD nominal) operating Years 3 through 12.

	c)		Peñasco Pit (50,000 MTPD) and Chile Colorado Pit (40,000 MTPD) operating Years 13 and 14.

	d)		Chile Colorado Pit (80,000 MTPD nominal) operating Years 15 through 16.

			As indicated above, during Years 13 and 14, both pits will be mined simultaneously.

			The Azul zone is contiguous with the northern edge of the Chile Colorado pit. For this report, the Azul resources are not included in any technical or financial analyses. El Sotol is a zone of mineralization to the west of Peñasco. Like Azul, its tabulated resources are not included in any technical or financial evaluation.

	1.3.18		Resources Tabulation

			Glamis with Independent Mining Consultants (IMC) developed block models for both the Peñasco (including El Sotol) and Chile Colorado (including Azul) deposits based on exploration drilling performed by Glamis and predecessor companies. Data through Drilling Campaign 17 in March 2006 was used.

			Reported resources are based on a floating cone geometry that used reasonably foreseeable long term metals prices. These prices are: $650/oz gold, $10/oz silver, $0.43/lb lead and $0.86/lb zinc. This defines a



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			resource that has the potential of being mined by open pit methods and is not the total block model contained mineralization, i.e., higher metal prices would define a still larger resource than reported herein.

			An explanation of Net Smelter Return (NSR) is included here for reference. For mineral deposits whose value is tied up in one commodity, mining ore cut-offs are customarily defined in terms of the grade of that commodity, e.g., less than 0.2 grams/tonne gold defined as waste, greater than or equal to 0.2 grams/tonne gold defined as ore. In the case of mineral deposits containing two economic metals, such as gold-silver deposits, it is common to report mineral resources at a cut-off grade in equivalent gold or equivalent silver, depending on which metal has greater financial contribution. In polymetallic deposits, such as lead-zinc-silver-gold deposits, the definition of ore is commonly described in terms of Net Smelter Return (NSR), the difference between revenues for the summation of the metals minus the costs downstream from the mining property.

			Definitions bear repeating here.

	1.		NET SMELTER RETURN (NSR) equals the amount paid by the smelter and is calculated as the value of metals content minus the summation of smelter and refinery charges (including penalty elements) plus shipping costs (including inland transportation, port handling fees, etc.) plus any broker transaction costs. Glamis is paying Kennecott a royalty based on this definition. A mine’s gross NSR must be higher than the mining property’s operating and maintenance costs plus a prudent profit margin.

	2.		The BREAKEVEN CUT-OFF for pit configuration is determined by cone economics using an algorithm that takes into account NSR, mining costs, lift costs, stripping costs, royalties, G&A and mill process costs. This will be a higher number than the Internal NSR Cut-off.

	3.		The INTERNAL NSR CUT-OFF grade is equal to the G&A plus mill processing costs. Any material that is mined and hauled to the rim of the pit (and as such the costs can be considered to be sunk), will be directed to the mill if its NSR exceeds the G&A plus mill processing costs or to a waste dump if its value is less than G&A plus mill processing costs. The INTERNAL NSR CUT-OFF would imply mining marginal material at a loss, but it would be less of a loss than sending the material to a waste dump. Obviously, enough high Internal NSR material must be present to offset the marginal material.



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			An NSR value for the sulphide, mixed and oxide materials was calculated using input data on operating costs, metallurgical recoveries, metal pricing and smelter terms effective the end of the second quarter of 2006. A flotation milling process has been defined for the sulphide material with an Internal NSR Cut-Off of $3.60 for Peñasco and a $4.18 NSR for Chile Colorado. A run-of-mine, heap leach process for gold and silver has been defined for the oxide and mixed materials with an Internal NSR Cut-Off calculated at $1.30 for both pits.

			The mineral resources inventory has increased significantly since the late 2005 report, and continued drilling to convert these resources is expected to provide the basis for future reserve growth. The current mineral resources are summarized in the following Tables 1-1 and 1-2:

Table 1-1 — Peñasquito Mineral Resources Summary Data – June 21, 2006


	Feasibility		Update		%
	November 2005		June 2006		Change
Measured & Indicated Resource (inclusive of proven and probable reserves)
Tonnes (millions)		671.3		872.5		30	%
Contained Metals
Gold (troy ounces — millions)		8.7		12.8		47	%
Silver (troy ounces — millions)		614		822		34	%
Lead (tonnes — millions)		1.8		2.4		33	%
Zinc (tonnes — millions)		4.1		5.3		29	%
Inferred Resource
Tonnes (millions)		246.7		2,577.0		945	%
Contained Metals
Gold (troy ounces – millions)		2.8		14.3		411	%
Silver (troy ounces – million)		192		882		359	%
Lead (tonnes – million)		0.6		2.4		300	%
Zinc (tonnes – millions)		1.4		7.1		407	%

In accordance with NI 43-101 guidelines, only material in the measured and indicated categories has been used in the economic evaluation of these deposits. In addition, only the Peñasco and Chile Colorado deposits have been used.



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Table 1-2a — Peñasquito Project Mineral Resources — Measured Category


	Tonnes		Gold Grade		Gold		Silver Grade		Silver		Lead Grade		Lead Tonnes		Zinc Grade		Zinc Tonnes
MEASURED CATEGORY	(Millions)		(gpt)		(Ounces)		(gpt)		(Ounces)		(%)		(Millions)		(%)		(Millions)
Peñasco Oxide Resource		53.9		0.28		480,000		24.9		43,101,000
Peñasco Sulfide Resource		242.6		0.65		5,095,000		31.1		242,693,000		0.33		0.8		0.74		1.8
Chile Colorado Oxide Resource		30.4		0.18		176,000		17.3		16,950,000
Chile Colorado Sulfide Resource		139.6		0.28		1,258,000		35.6		159,592,000		0.37		0.5		0.80		1.1
Combined Oxide Measured Resources		84.3		0.24		656,000		22.2		60,051,000
Combined Sulfide Measured Resources		382.3		0.52		6,353,000		32.7		402,285,000		0.34		1.3		0.76		2.9

Combined Measured Resources		466.6		0.47		7,009,000		30.8		462,336,000

Table 1-2b — Peñasquito Project Mineral Resources — Indicated Category


	Tonnes		Gold Grade		Gold		Silver Grade		Silver		Lead Grade		Lead Tonnes		Zinc Grade		Zinc Tonnes
INDICATED CATEGORY	(Millions)		(gpt)		(Ounces)		(gpt)		(Ounces)		(%)		(Millions)		(%)		(Millions)
Peñasco Oxide Resource		20.8		0.31		208,000		21.8		14,569,000
Peñasco Sulfide Resource		263.3		0.58		4,941,000		29.2		246,957,000		0.29		0.8		0.67		1.8
Chile Colorado Oxide Resource		19.1		0.14		89,000		17.5		10,776,000
Chile Colorado Sulfide Resource		102.7		0.16		517,000		26.4		87,233,000		0.32		0.3		0.64		0.7
Combined Oxide Indicated Resources		39.9		0.23		297,000		19.7		25,345,000
Combined Sulfide Indicated Resources		366.0		0.46		5,458,000		28.4		334,190,000		0.30		1.1		0.66		2.4

Combined Indicated Resources		405.9		0.44		5,755,000		27.5		359,535,000

Table 1-2c — Peñasquito Project Mineral Resources — Inferred Category


	Tonnes		Gold Grade		Gold		Silver Grade		Silver		Lead Grade		Lead Tonnes		Zinc Grade		Zinc Tonnes
INFERRED CATEGORY	(Millions)		(gpt)		(Ounces)		(gpt)		(Ounces)		(%)		(Millions)		(%)		(Millions)
Peñasco Oxide Resource		22.9		0.14		101,000		10.7		7,900,000
Peñasco Sulfide Resource		1,041.7		0.28		9,365,000		14.5		485,522,000		0.13		1.4		0.38		4.0
Chile Colorado Oxide Resource		149.1		0.06		287,000		5.0		23,793,000
Chile Colorado Sulfide Resource		1,362.9		0.10		4,514,000		8.3		364,539,000		0.08		1.0		0.23		3.1
Combined Oxide Inferred Resources		172.0		0.07		388,000		5.7		31,693,000
Combined Sulfide Inferred Resources		2,404.6		0.18		13,879,000		11.0		850,061,000		0.10		2.4		0.29		7.1

Combined Inferred Resources		2,576.6		0.17		14,267,000		10.6		881,754,000


Notes:

1)		The terms Mineral Resource and Reserves as used herein conform to the definitions contained in the National Instrument 43-101 which adopts those published by the Canadian Institute of Mining, Metallurgy, & Petroleum (CIM). These resource and reserves estimates have been prepared under the supervision of James S. Voorhees, Executive Vice President and Chief Operating Officer of Glamis Gold Ltd., who is a Qualified Person as defined in National Instrument 43-101.

2)		Reserves have been calculated using assumed long-term metals prices as follows: Gold — $450 per ounce; Silver — $7.00 per ounce; Zinc — $0.60 per pound and Lead — $0.30 per pound. Mineral Resources have been calculated using assumed long-term metals

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		prices as follows: Gold — $650 per ounce; Silver — $10.00 per ounce; Zinc — $0.86 per pound and Lead — $0.43 per pound.

3)		Measured plus Indicated (M&I) Resources are defined as being inside an optimized floating cone geometry that was developed using the Mineral Resource metal prices set forth above and all classifications of material. This defines a resource that has the potential of being mined by open pit methods and is not the total block model contained mineralization. In the Peñasco deposit, Measured Resources are defined as any block within the reasonably foreseeable open pit that is within 35 meters of two or more drill holes. In the Peñasco deposit, Indicated Resources are defined as any block within the reasonably foreseeable open pit not defined as Measured that is within 70 meters of two or more drill holes. In the Chile Colorado deposit, Measured Resources are defined as any block within the reasonably foreseeable open pit that has five or more holes within 135 meters of the block with the closest hole no more than 50 meters distance. In the Chile Colorado deposit, Indicated Resources are defined as any block within the reasonably foreseeable open pit not defined as Measured that has two or more holes within 135 meters of the block with the closest hole no more than 70 meters distance

4)		The M&I Resources have been calculated using NSR (Net Smelter Return) cut-off grades and assuming the long-term Mineral Resource metals prices set forth above. For oxide M&I resources, an NSR cut-off grade of $1.30 was applied. For sulfide M&I Resources, an NSR cut-off grade of $3.60 was applied.

5)		In the Peñasco deposit, Inferred Resources are defined as any block within the computer model not defined as Measured or Indicated that is located within a manually defined mineralized grade domain. The grade domain was developed using geologic interpretation of drill hole assays, lithology and alteration data. In the Chile Colorado deposit, Inferred Resources are defined as any block within the computer model not defined as Measured or Indicated that is located within 135 meters of a drill hole.

6)		The Inferred Resources have been stated using NSR cut-off grades and assuming the long-term Mineral Resource metals prices set forth above. For oxide Inferred Resources, an NSR cut-off grade of $0.70 was applied and for sulfide Inferred Resources, an NSR cut-off grade of $1.60 was applied, with both cut-off grades being based on reserve metal prices.

7)		Reserves are a subset of Measured and Indicated Resources.

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Exploration drilling at Peñasquito is currently underway, concentrating on three key areas:

Conversion of In-Pit Resources — Within the two open pits, 75 million tonnes of mineralization contained in the inferred resource category are currently classified as waste rock for the purposes of the economic analysis. In-fill drilling is expected to increase confidence in these areas and should result in a conversion of a portion of the resource into reserves and a corresponding reduction in the stripping ratio.

Extension of Mineralized Zones — The known mineralization remains open, both at the southern end of the Peñasco deposit and the northern end of the Chile Colorado deposit, toward and including the Azul target. Step-out drilling will continue in an effort to extend the deposits and ultimately join the currently separate open pits.

Underground Opportunity — In the Peñasco deposit, intersections of high grade mineralization have been identified beneath the designed pit. A portion of the drilling program in 2006 will test deeper targets to investigate the possibility of future bulk underground mining.

1.3.19 Reserves Tabulation

A Net Smelter Return (NSR) value for the sulphide, mixed and oxide materials was calculated using input data on operating costs, metallurgical recoveries, metal pricing and smelter terms effective the end of the second quarter of 2006. A flotation milling process has been defined for the sulphide material with an Internal NSR Cut-Off calculated at $3.60 for Peñasco and a $4.18 for Chile Colorado. A run-of-mine, heap leach process for gold and silver has been defined for the oxide and mixed materials with an Internal NSR Cut-Off calculated at $1.30 for both pits.

The proven and probable reserves for the deposits are contained within engineered pit designs based on a floating cone analysis of the resource block models using only the measured and indicated sulphide, mixed and oxide resources. Inferred resources are not included in the reserve estimations. Tables 1-3 and 1-4 summarize the data.

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Table 1-3 — Peñasquito Proven and Probable Reserves Summary Data — June 21, 2006


	Feasibility		Update		%
	November 2005		June 2006		Change
Ore Tonnes (millions)
Oxide (heap leach)		77.3		87.1		13	%
Sulfide (flotation)		257.8		476.9		85	%
Total Ore Tonnes (millions)		335.1		564.0		68	%
Oxide Ore Grade
Gold (grams per tonne)		0.29		0.28		-3	%
Silver (grams per tonne)		24.0		23.8		-1	%
Sulfide Ore Grade
Gold (grams per tonne)		0.51		0.60		18	%
Silver (grams per tonne)		30.2		33.2		10	%
Lead (%)		0.31		0.35		13	%
Zinc (%)		0.69		0.76		10	%
Contained Metals
Gold (troy ounces — millions)		4.93		9.98		102	%
Silver (troy ounces — millions)		310		575		86	%
Lead (tonnes — millions)		0.79		1.67		111	%
Zinc (tonnes — millions)		1.78		3.62		103	%
Stripping Ratio (tonnes waste: oxide ore plus sulfide ore)		1.95		2.76		42	%

The pit shell geometry was designed using the following metal prices: gold at $450/ounce, silver at $7.00/ounce, lead at $0.30/pound, and zinc at $0.60/pound. Having developed a conservative geometry, end of June 2006 M3 prices were then used in the economic evaluation.

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Table 1-4a — Peñasquito Project Reserves — Proven Category


	Ore Tonnes		Gold Grade		Gold		Silver Grade		Silver		Lead Grade		Lead Tonnes		Zinc Grade		Zinc Tonnes
PROVEN CATEGORY	(Millions)		(gpt)		Ounces		(gpt)		Ounces		(%)		(Millions)		(%)		(Millions)
Peñasco Pit Oxide		51.6		0.28		471,000		25.4		42,136,000
Peñasco Pit Sulfide		221.2		0.67		4,733,000		32.2		228,967,000		0.35		0.8		0.77		1.7
Chile Colorado Pit Oxide		16.7		0.22		120,000		20.3		10,878,000
Chile Colorado Pit Sulfide		46.7		0.29		442,000		50.9		76,372,000		0.56		0.3		0.97		0.5
Combined Pits Oxide Proven Reserves		68.2		0.27		591,000		24.2		53,014,000
Combined Pits Sulfide Proven Reserves		267.9		0.60		5,175,000		35.4		305,339,000		0.38		1.0		0.81		2.2

Combined Pits Proven Reserves		336.2		0.53		5,766,000		33.2		358,353,000

Table 1-4b — Peñasquito Project Reserves — Probable Category


	Ore Tonnes		Gold Grade		Gold		Silver Grade		Silver		Lead Grade		Lead Tonnes		Zinc Grade		Zinc Tonnes
PROBABLE CATEGORY	(Millions)		(gpt)		Ounces		(gpt)		Ounces		(%)		(Millions)		(%)		(Millions)
Peñasco Pit Oxide		16.6		0.35		186,000		23.4		12,465,000
Peñasco Pit Sulfide		207.3		0.60		3,999,000		30.2		201,405,000		0.31		0.6		0.70		1.5
Chile Colorado Pit Oxide		2.2		0.22		16,000		14.7		1,060,000
Chile Colorado Pit Sulfide		1.7		0.25		14,000		28.9		1,578,000		0.34		0.0		0.65		0.0
Combined Pits Oxide Probable Reserves		18.8		0.33		202,000		22.4		13,525,000
Combined Pits Sulfide Probable Reserves		209.0		0.60		4,013,000		30.2		202,983,000		0.31		0.6		0.70		1.5

Combined Pits Probable Reserves		227.8		0.58		4,215,000		29.6		216,508,000

Table 1-4c — Peñasquito Project Reserves — Proven + Probable Totals


	Ore Tonnes		Gold Grade		Gold		Silver Grade		Silver		Lead Grade		Lead Tonnes		Zinc Grade		Zinc Tonnes
PROVEN + PROBABLE TOTALS	(Millions)		(gpt)		Ounces		(gpt)		Ounces		(%)		(Millions)		(%)		(Millions)
Peñasco Pit Oxide		68.2		0.30		657,000		24.9		54,601,000
Peñasco Pit Sulfide		428.5		0.63		8,732,000		31.2		430,372,000		0.33		1.4		0.74		3.2
Chile Colorado Pit Oxide		18.9		0.22		136,000		19.6		11,938,000
Chile Colorado Pit Sulfide		48.4		0.29		456,000		50.1		77,950,000		0.55		0.3		0.96		0.5
Combined Pits Oxide P+ P Reserves		87.1		0.28		793,000		23.8		66,539,000
Combined Pits Sulfide P+ P Reserves		476.9		0.60		9,188,000		33.2		508,322,000		0.35		1.7		0.76		3.6

Combined Pits P+ P Reserves		564.0		0.55		9,981,000		31.7		574,861,000

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The combined life-of-mine stripping ratio is 2.76 if oxide, mixed, and sulphide ores are taken into account. The stripping ratio is 3.44 if only the sulphide ore is used, i.e., the oxide and mixed ore is considered waste.

Major and support mine equipment are tabulated in Tables 1-5 and 1-6.

Table 1-5 — Major Mine Equipment


	**Units
P&H 250XP Diesel Blast Hole Drill **		8
P&H 4100 Shovel, 41 Cum Bucket		4
LeTourneau L-1850 Hi Lift, 25 Cum Bucket**		2
Komatsu 930E Series III Haul Truck**		75
Cat D9T Track Dozer (Stockpile/Tailing Pond)		2
Cat D10T Track Dozer**		6
Cat 854G Wheel Dozer		2
Cat 16H Motor Grader**		5
Cat 777D Water Truck**		5
Cat 988H Wheel Loader, Concentrate Loading		1
IR ECM 590/YH Rock Drill		1
Cat 325BL Excavator (W-hammer)		3
Subtotal Major Equipment		114


**		Replacement units not included in totals

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Table 1-6 — Mine Support Equipment


	Units
Fuel/Lube Truck (18,500 ltr.)		2
Blast Hole Stemmer		3
Blasters Flatbed Truck (2 T)		2
ANFO/Slurry Truck (18mt)		3
Cable Reeler		2
Crane Truck (25T)		1
Shop Forklift (Hyster H100XM)		2
R T Forklift (Sellick SD-100)		2
Mechanics Truck		3
Welding Truck		3
Grove 120 Crane		1
CAT 160H Motor Grader, Road Crew		1
CAT 420 Backhoe, Road Crew		1
4000 gal Water Truck, Road Crew		1
2660 Trailer for Backhoe, Road Crew		1
Dump Truck, 10 yd, Road Crew		1
Skidsteer Loader		1
Cat IT38 IT with Tire Handler		2
Crew Bus		6
Pickup Truck (4x4)		40
Portable Light Towers		14
Mine Communications System		1
Mine Radios		173
Water Pipe-Dewatering		8
Mine Pumps		5
Mine Dispatch System		2
Generator on Trailer (Shovel Movement)		1
Subtotal Mine Support Equipment		282

1.3.20 Facilities

Ore and waste will be mined using four electric shovels and two large front end loaders, and a fleet of diesel/electric haul trucks; the number of haulage units will vary from 15 in Year 1 (2007) to 75 in Year 11 (2017) depending on the phase of the development.

Run-of-mine oxide and mixed ore will be hauled for placement on the leach pad. The heap leach system will treat the ore with sodium cyanide solution to produce a pregnant solution bearing the precious metals. A Merrill-Crowe zinc precipitation process will be used to recover gold and silver from pregnant solution. Precipitate containing precious metals will be de-watered with plate-and-frame filter presses, treated in a retort furnace, and poured into doré molds.

The sulphide ore will be processed through a conventional crushing, milling and flotation facility. Haul trucks will deliver ore to a primary crusher; crushed ore will be conveyed to a SAG mill, dual ball mill setup,

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and pebble crusher facility. Ground and classified sulphide ore will be piped to the flotation circuit where the ore will be processed to produce a lead concentrate and zinc concentrate. In the later years of the Chile Colorado development, carbonaceous materials must be floated prior to lead flotation. The concentrate slurries will first be thickened and then dewatered using pressure filters. The dewatered concentrates will be stockpiled before loading onto highway road vehicles for transport to in-country smelters or to the ports for export to foreign smelters.

1.3.21 Utilities

Process water will be initially obtained from wells to be developed on site and supplemented during later development from pit dewatering. Process design will highlight water conservation. Section 1.7 includes further discussion on water rights.

As a result of several productive meetings with Comisión Federal de Electricidad (CFE), the federal government utility company, the Feasibility Study assumes that power will be available from a 400kV power line tapped in reasonable proximity to the site. (Figure 1-4). From this location, power will be transmitted at 400kV from the 400kV/400kV switchyard tap in via a new overhead power line to the mine site main 400kV/69kV substation. The power rate of $0.06/kWhr used in the feasibility study is based on CFE’s published interruptible power rates with limited power shedding during peak hours (approximately 15 hours on average per week). Power shedding is accomplished mainly by operating only one of the two ball mills during these peak hours and performing scheduled maintenance on the off-line unit.

1.3.22 Infrastructure

The mine site is located 27 km west of Concepción del Oro (Figures 1-3 and 1-4) which is situated on Highway 54, a well maintained, major highway. A new road is being constructed by the State of Zacatecas from just east of the mine site to Highway 54 which will provide good road access for the mine. Currently, construction is stymied for lack of state funds. The road is completed to both sides of a pass. This pass needs to be completed prior to the start of construction. Glamis has allowed $2.5 million for this road construction.

A rail head is located some 100 km west of the mine site at Estación Camacho. This sparsely populated area is easily accessed by a gravel road directly from the site. The rail line represents an opportunity for transportation, but this study is based on truck haulage to ocean ports or domestic smelters.

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1.3.23 Metallurgy Test Program

Three hundred and sixty-eight development metallurgical tests were undertaken on sulphide ore, and a further 99 were undertaken on oxide ore. Locked cycle tests on ore from both the Peñasco and Chile Colorado deposits were performed as part of the flotation test program in order to provide a basis for the projected plant recoveries. These tests revealed that recoveries in the Peñasco Pit correlated with three basic lithologic categories: breccia, intrusive and sedimentary. Recoveries in the Chile Colorado tests have not yet revealed an obvious correlation. Work is ongoing to provide additional data for prediction of metal recoveries. Based on the most recent results, the metallurgical recoveries reported in Section 1.3.7 were determined.

1.3.24 Smelters and Refineries

Concentrates from the plant are expected to be custom processed at both local and overseas smelters. For the purpose of this study it has been assumed that the lead concentrate sales will be largely processed locally within Mexico. Alternatively, lead concentrate could be smelted in Canada, Asia or Europe. Such alternatives may provide for competition in the negotiation of smelter terms. Zinc concentrate treatment will most probably be split between Mexican and overseas markets in Canada, Asia or Europe. Concentrate destined for overseas markets will be hauled to the appropriate port; on the west coast for Asian and Canadian sales and the east coast for European and Canadian sales.

Smelter terms and transportation costs assumed for the project are considered typical and are not the result of negotiations with any particular smelter. The terms and cost assumptions are based on payable metals, deductions and payment terms.

Doré will likely be shipped to either Salt Lake City, Utah or Torreon, Mexico for refining.

1.3.25 Conclusions

This project has a number of favorable characteristics:

	•		Established threshold for NPV and IRR with economics that withstand sensitivity tests.

	•		Recoveries used for financial analysis are less than those achieved in laboratory testing for Peñasco and Chile Colorado ores. The likelihood exists that laboratory recoveries will eventually be realized by operations.

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	•		Minimum mine life of 17 years. This life significantly exceeds metal pricing cycles. The payback period is 5.6 years.

	•		Opportunity to improve financials by compressing project schedule.

	•		High daily tonnage production.

	•		Early revenue from leaching oxide ore to produce silver/gold doré.

	•		Favorable site with relatively low earthwork costs.

	•		Potential for more conversion of waste to ore with infill drilling, i.e., reduced stripping ratio.

	•		Significant opportunity to develop the Azul deposit as a connector of Chile Colorado and Peñasco pits.

	•		Reasonable opportunity to develop underground deposits.

	•		Reasonable opportunity to improve the threshold Chile Colorado recoveries that have already been established by laboratory testing.

	•		Favorable business atmosphere in the setting of long established mining district heritage.

	•		Ideal technical power provider situation, i.e., tap off of 400 kV national grid.

1.4

Introduction & Terms Of Reference

In 1998 Western Silver acquired the entire Peñasquito property from Kennecott. Glamis acquired Western Silver on May 3, 2006. Since 2002 Western Silver and Glamis have undertaken a continuous series of drilling campaigns on the property. Initially, attention focused on Chile Colorado but more recently attention shifted to Peñasco. Figure 1-7 shows the claims in the immediate area affected by this development.

In March of 2003 Western Silver completed an internal scoping study on the development of the Chile Colorado deposit. Western Silver requested that M3 review this document and produce a scoping level document of its own. This led to the production in March 2004 of a Pre-feasibility Study which also focused on the development of Chile Colorado.

In April 2004 following the encouraging results of the Pre-feasibility Study, Western Silver requested M3 continue to work on the Peñasquito Project to produce a comprehensive Feasibility Study suitable for financing purposes. With the exception of geology, drilling and assay data, which Western Silver would provide, M3 was assigned full responsibility for all other aspects of the study. The Feasibility Study would consider the development of both the Chile Colorado and

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Peñasco deposits including the oxide caps that had not been evaluated in the Pre-feasibility Study.

During the course of their work on the Peñasquito Project, M3 has authored the following previous studies for the Peñasquito site:

	•		In July 2003 M3 Engineering and Technology Corporation completed and issued a Scoping Study and Capital Cost Estimate for the Chile Colorado ore body on behalf of Western Silver. The study was based upon a Preliminary Mineral Resource Estimate prepared by SNC-Lavalin Engineers and Constructors, Inc. The study demonstrated that the project was economically viable at the prevailing metal prices, but approximately 20% of the material in the pit at the time was still categorized as inferred.

	•		In September of 2003, Western Silver authorized M3 to commence work on a Pre-Feasibility Study for the project. At the same time, Western Silver commenced work on an in-fill drilling program on the Chile Colorado deposit with a view to upgrading the confidence level of the material in the pit to the point where it could all be reported in the measured and indicated category as required by NI 43-101.

			In March 2004, M3 completed and issued this Pre-feasibility Study for the Chile Colorado deposit. This study confirmed the apparent economic viability of the project and the report summary was made public by Western Silver.

	•		In October of 2004, M3 produced a confidential Scoping Study for Western Silver’s internal use only. The purpose of the Scoping Study was to consider the impact of mining the Peñasco and Chile Colorado ore bodies in combination. It was based on the pre-feasibility resource model of Chile Colorado and an early version of the Peñasco resource model developed by Western Silver. Various financial analyses were developed for different pit development scenarios. The study also looked at heap leaching oxide ore from both the Chile Colorado and the Peñasco deposits. This study concluded that mining both ore bodies potentially yielded a higher IRR and NPV than the March 2004 Pre-feasibility Study and warranted further study.

	•		In November 2004, M3 Engineering completed a confidential Heap Leach Study for the Peñasquito Project for Western Silver’s internal planning use. This study concluded that the oxide ore bodies were not sufficient on their own to justify a project, but that processing oxide ore in concert with the development of the sulphide ore could add value.

	•		As part of these ongoing earlier efforts, SNC-Lavalin Engineers and Constructors, Inc. (SNC) prepared a report entitled, “Peñasquito Deposit - Mineral Resource Estimate for the Chile Colorado Zone,” March 2004, which was an update to the Minera Peñasquito S.A. de C.V. Peñasquito Preliminary

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			Mineral Resource Estimate, March 2003. In addition, SNC prepared a report outlining the mineral resource estimate for the Peñasco zone. In an independent effort during the last quarter of 2004, and to provide further assurance, M3 reviewed the base data and validated and accepted the SNC findings in M3’s Amended and Restated Peñasquito Pre-Feasibility Study, December 10, 2004.

	•		In February 2005, M3 Engineering completed a confidential Capital Cost Update for the Heap Leach Study, which included a mine fleet cost analysis. This study further substantiated the findings of the November 2004 study, and verified the potential financial worthiness of processing oxide ore given the facilities already being in place for sulphide ores.

	•		In March 2005, M3 completed an Interim Feasibility Study for internal use, based on developing both the Peñasco and Chile Colorado pits. This report concluded that if Peñasco inferred resources could be advanced to the measured and indicated categories, the project NPV would increase. Accordingly, an infill drilling campaign was initiated by Glamis.

	•		In November 2005, M3 completed the Feasibility Study for the 50,000 MTPD plant and recommended that the project go forward.

The study at hand was authorized by the prospective new owner, Glamis, on April 2, 2006. Glamis and its consultants have developed all resource and reserve models, i.e., qualifying persons for this Feasibility Study are Glamis personnel.

Other data and information used in the study has been collected independently by M3 and is explained and/or referenced in further detail in the subsequent sections.

Personnel from the M3 Tucson office and M3 sub-consultants (Huss, Gonzalez, Austin, Nacif, Teyechea, Oliver, Hanks, Welhener, Ayala, A. Bennett, J. Bennett, Gomez, Griego, Hensley, and Wythes) have made visits to the site for the purpose of collecting information and gaining an understanding of the local conditions. In addition, several Glamis personnel have visited the site.

1.5

Disclaimer

All resource modeling, metallurgy, process development, environmental program, initial groundwater investigations, archaeological reviews, mine design, metals pricing, and plant design have been directed by Glamis, M3, or under their direction by one of their consultants.

Glamis has provided information on Land Position & Status and Geology.

Glamis has taken the lead role in environmental, water, resources, and mine planning.

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Information on underground potential has been generated by Wardrop Engineering, Inc. of Vancouver, B.C. and provided to M3 by Glamis.

1.5

Property Description & Location

Peñasquito is situated in the western half of the Concepción del Oro district in the northeast corner of Zacatecas State, Mexico, approximately 200 km northeast of the city of Zacatecas, approximately 24°45¢ N latitude/101°30¢W longitude. Figure 1-1 shows the general location in Mexico. The closest major town is Concepción del Oro which lies on Mexican highway 54, a well maintained, paved highway which links the major cities of Zacatecas (in the state of Zacatecas), approximately 250 km to the southwest with Saltillo (in the state of Coahuila) approximately 125 km to the northeast. Figure 1-2 shows its location in the state.

Some 20 km to the northeast, on the north side of Sierra el Mascaron, is the Tayahua Mine at Terminal and Concepción del Oro is the site of the Macocozac Mine. The following table lists claims affected by the development of the Peñasquito Project. This table is not a complete list of Glamis claims in the area.

Table 1-7 — List of Pertinent Claims


					AREA		DATE	EXP.
CLAIM	TYPE	TITLE		FILE NO.	HECTARES		ISSUED	DATE
EL PEÑASQUITO	EXPLOIT.		196289	43/885		2.000	1993-07-16	2011-07-11
LA PEÑA	EXPLOIT.		203264	07/1.3/547		58.000	1996-06-28	2046-06-27
LAS PEÑAS	EXPLOIT.		212290	8/1.3/00983		40.000	2000-09-29	2050-09-28
ALFA	EXPLOIT.		201997	7/1.3/485		1100.000	1995-10-11	2045-10-10
BETA	EXPLOIT.		211970	8/1.3/01137		2054.761	2000-08-18	2050-08-17
SEGUNDA RED. CONCHA	EXPLOR.		218920	8/2/00018		23304.691	2000-11-07	2006-11-06
MAZAPIL 3 F. I	EXPLOR.		217001	007/13852		1950.702	2002-06-14	2008-06-13
MAZAPIL 10	EXPLOR		223327	93/26975		1073.555	2004-10-02	2010-10-01

M3 has not verified Glamis’ title to the mineral rights covered by the Chile Colorado and Peñasco deposits. However, a qualified Mexican attorney, Dr. Francisco Heiras Mancera, has issued an opinion dated December 23, 2004, stating that Glamis legally owns the mineral rights and is in full compliance with its legal obligations.

Based on Glamis’ acquisition agreement, a 2% NSR royalty is owed to Kennecott on production from both the Chile Colorado and Peñasco locations. A further 3% NSR royalty is owed to Grupo Industrial de Coahuila S.A. de C.V. as assignee from Minera Catasillas, S.A. de C.V., on the El Peñasquito, Las Peñas, La Peña,

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Mazapil and Mazapil 2 concessions. This obligation has been purchased by Glamis.

In addition to the Chile Colorado, Peñasco Azul, and El Sotol deposits, further mineralization is known to exist in areas known as Las Palmas, Chamisal, and Northeast Azul targets, some of which are also shown on Figure 1-9. Limited information has been obtained on these latter deposits.

There is no previous mine development of any form in the immediate area of Chile Colorado or Peñasco deposits and as such no environmental liabilities are attached to the property. All drilling pads are cleaned and rehabilitated on an ongoing basis.

Glamis is currently in possession of valid exploration permits for the drill work being performed in the area. The development of a mine at this location will require additional permits from state and federal authorities. These permits are listed in detail in Volume II of the Feasibility Study and are addressed in the EIA.

1.7

Accessibility, Climate, Local Resources, Infrastructure And Physiography

1.7.1

Physiography

The deposits occur in a wide valley bounded to the north by the Sierra El Mascaron and the south by the Sierra Las Bocas. Except for one small outcrop, the area is covered by up to 30 meters of alluvium. The terrain is generally flat, rolling hills; vegetation is mostly scrub, with cactus and coarse grasses. The prevailing elevation of the property is approximately 1900 m above sea level.

1.7.2

Infrastructure

An adequate network of road and rail services exists in the region. Road access to the site is presently gained west out of Concepción del Oro approximately 15 km to the town of Mazapil and then a further 12 km west from Mazapil. The road is very steep immediately west of Concepción del Oro with numerous tight switch-backs. It is either paved or cobbled and maintained to approximately 6 km west of Mazapil. After that, the road is gravel but well maintained. The Chile Colorado deposit is within 2 km of this main road and the Peñasco deposit lies directly beneath the road. Figures 1-4 and 1-5 show the project site plan. A system of gravel roads to the east connects to Cedros and eventually to Torreon and the Torreon/Fresnillo highway.

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Additionally there is one railhead close to the site approximately 100 km to the west. Figure 1-3 shows some of the regional corridors.

The State of Zacatecas is in the process of building a new road east from Mazapil to join Highway 54 approximately 25km south of Concepción del Oro. The road is approximately 70% complete with only about 3.5 km yet to be completed over the mountain pass north of La Laja. This road will provide superior grade and alignment to the old road from Concepción del Oro. However, some minor improvements to this road will be needed on sections already completed to accommodate large construction loads. Use of this new road will eliminate the rather steep switchback sections of cobblestone road just west of Concepción del Oro and the town of Concepción del Oro itself. Final work completion is characterized by 400,000 cubic meters of ripped and blasted rock.

1.7.3

Climate

The climate is generally dry with precipitation being limited for the most part to a rainy season in the months of June and July. Annual precipitation for the area is approximately 700 mm, most of which falls in the rainy season. Temperatures range between 30 deg C and 20 deg C in the summer and 15 deg C to 0 deg C in the winter. Minera Peñasquito has maintained an automatic weather station in the area since August 2003; however, some data has been lost due to power supply problems.

1.7.4

Surface Rights

Surface rights in the vicinity of the Chile Colorado and Peñasco pits are held by one private individual and three Ejidos. Signatures indicating agreement have been obtained for two of the Ejidos and the private owner.

Glamis currently is in negotiations to finalize surface rights to the land required for the project, assisted by a Mexican legal firm.

An Ejido is a communal ownership of land recognized by the Federal laws in Mexico. While mineral rights are administered by the Federal government through federally issued mining concessions, an Ejido controls surface rights over communal property through a Board of Directors which is headed by a president. An Ejido may also allow individual members of the Ejido to obtain title to specific parcels of land and thus the right to rent or sell the land.

Relations with the Ejidos through the exploration process have been positive.

Negotiations for the high voltage power line right-of-way are in progress.

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			The project site is generally flat with a gradual fall of 1.5 – 2.5% to the west. There is adequate space for development of the process facilities and the tailings and waste areas. The tailings disposal will be constructed as a four-sided containment area using mine waste for a starter dam and tailings for raising the embankment. In general, this is a very favorable site for development.

			Given the mining experience in the area and the high unemployment rate, there is expected to be an adequate pool of mining personnel available.

	1.7.5		Water

			By Mexican federal law, water encountered as the result of mining operations (e.g., open pits or underground workings) is available to the mining operation without subscription so long as mining continues. Such water must be purchased in accordance with published Federal rates that are updated annually. Again, although this water must be metered and purchased, it is casual water and as such does not credit against any subscribed amount.

			The pits will intercept both the upper alluvial portion of the aquifer and the more massive lower fragmented rock portion of the aquifer.

			A study has been conducted to confirm the presence of adequate capacity. Reportedly, such a general study was not previously carried out and as such, by Mexican regulations, the general report was the first step in process. This summary report was prepared for M3 entitled, “Study for an Integral Hydrogeological Evaluation of Cedro’s Aquifer and Adjoining Basins, Mazapil County, Zacatecas”. Its analysis concludes that the unsubscribed water availability from the Cedros aquifer is 17.3 million m3/year, evaluated according to NOM-011-CNA-2000 which is more than adequate for the project.

			This report was submitted to CNA authorities on December 15, 2004 in regional offices of Torreon Coahuila. Within this report Western Silver indicated its intent to apply for water rights. Typically, the multi-department CNA review takes between 8 to 12 months. Upon completion of the review, the report and associated CNA findings are published in the official Diary of the Federation (DOF). During the CNA review for this report, a letter of intent was prepared for a concession to pump up to 10 million m3/year to be used for the operation of Peñasquito. This letter was initially transmitted to CNA in April 2005. In subsequent communications, CNA has indicated that it will post the report in 2006. CNA has given preliminary indication that it will permit an allocation of 5 million m3/year from this upper portion of the aquifer. Additional drilling is ongoing to support an application for the remaining 5 million m3/year to

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support the 50,000 MTPD first line. Additional work will continue to secure rights for the full 100,000 MTPD throughput.

	1.8		History

			The region has a strong tradition of mining going back to the mid 1500’s when silver mining first started in the region and the city of Zacatecas was founded. On a historical note, up until the 19th century, 20% of all silver mined in the world was reportedly mined from the City of Zacatecas Region.

			Mining remains active in the State of Zacatecas. M3 has provided Engineering & Procurement and Start Up services for the recent Peñoles Fresnillo expansion as well as the greenfields Peñoles F.Y. Madero project. Both of these ongoing operations have polymetallic ore bodies.

			Perhaps of greater interest is the recently mined out Real de Angeles property near the city of Zacatecas. This open pit mine operated from June 1982 to November 1998, averaged 17,000 MTPD ore, and had life-of-mine ore grades of 0.58% lead, 0.9% zinc, 70 grams/tonne of silver and no appreciable gold. Life-of-mine stripping ratio was approximately 5 to 1. Values of metal contained are similar to the Peñasquito deposit, taking into account the gold prevalent at Peñasquito.

			Focusing on the Peñasquito project under consideration, some limited exploration of the project area had taken place previously with a short shaft and two shallow drill holes in the 1950’s. However, it was not until 1994 when Kennecott initiated a comprehensive exploration program that the size and potential of the mineralized system were recognized.

			Beginning in 1994, Kennecott consolidated the land position and completed extensive geochemical, geophysical and drilling programs to evaluate the area, primarily for large tonnage porphyry copper/skarn deposits.

			During 1996, drilling along the southern edge of the Azul pipe resulted in the discovery of the Chile Colorado silver-lead-zinc-gold zone, which was not of interest to Kennecott on a stand-alone basis.

			Western Silver acquired 100% of the Peñasquito project from Kennecott in March 1998. The acquisition was driven by the large size of the alteration-mineralization system (in excess of 9 km sq), the two large breccia pipes, the zone of probable economic Ag-Pb-Zn-Au mineralization at Chile Colorado, and numerous untested targets with potential similar to Chile Colorado. During 1998 Western Silver completed nine core holes (3,185 meters) and 13.4 line kilometers of Tensor CSAMT. Most of the work was focused on Chile Colorado and the adjacent Azul breccia pipe.

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			During the fourth quarter of 2000, Hochschild completed a 14 hole, 4,601 meter drill program, with 11 holes drilled in the Chile Colorado area. However, they returned Peñasquito to Western Silver after spending more than $1 million on drilling and land payments. Hochschild decided not to tackle a bulk tonnage target with potentially large capital costs.

			In 2002, Western Silver began actively drilling the Peñasquito property. In 2006, Glamis acquired the Peñasquito property from Western Silver.

			Section 1.13 has summaries of the drilling effort.

	1.9		Geological Setting

			Figure 1-9 shows the local geology.

			The regional geology of the area is well understood and has been extensively mapped. Concepción del Oro lies within the Mexico Geosyncline, a 2.5 km thick series of marine sediments deposited during the Jurassic and Cretaceous Periods and consisting of a 2000 meter thick sequence of carbonaceous and calcareous turbidic siltstones and interbedded sandstones underlain by a 1200 meter thick limestone sequence.

			The two sierras in the area are separated in the western half of the district by the Mazapil Valley which is a synclinal valley underlain by the Upper Cretaceous Caracol Formation. The Caracol siltstone-sandstone section is generally flat lying in the valley with occasional small parasitic anticlines and drag folds along faults.

			The local geology is dominated almost entirely by the rocks of the Mexico Geosyncline. The oldest rocks in the area are the Upper Jurassic aged limestones and cherts of the Zuloaga Limestone.

			These rocks are overlain by the La Caja Formation, a series of thinly bedded phosphatic cherts and silty to sandy limestones that may be fossiliferous.

			The La Caja Formation is overlain by the limestones and argillaceous limestones of the Taraises Formation, which in turn are overlain by the limestones of the Cupido Formation, one of the more favorable host rock units for much of the mineralization previously mined in the area.

			The Cupido limestones are overlain by the cherty limestones of the La Pena Formation, deposited during the Lower Cretaceous Period. These rocks are in turn overlain by the Cuesta del Cura limestone.

			The Indidura Formation, a series of shales, calcareous siltstones and argillaceous limestones, overlies the Cuesta del Cura limestone.

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			Upper Cretaceous Period rocks of the Caracol Formation, consisting primarily of interbedded shales and sandstones, overlie the Indidura Formation. These rocks dominate the geology in the Peñasquito Project area and are overlain by the Tertiary aged Mazapil Conglomerate.

			A large granodiorite stock is believed to underlie the entire area and the sediments described above are cut by numerous intrusive dykes, sills and stocks of intermediate to felsic composition. The intrusives are interpreted to have been emplaced from the late Eocene to mid-Oligocene Epochs and have been dated at 30-40 million years in age.

	1.10		Deposit Types And Mineralization

			Both the Caracol sediments and the granodiorite are believed to have been intruded along the western and southern margins of the granodiorite by one or two quartz-feldspar porphyry stocks. The porphyry stocks did not reach surface but are at depth. They are represented at the bedrock surface by two hydrothermal diatreme breccia pipes, the Azul and Outcrop breccia pipes. There is a single outcrop of silicified breccia of the Outcrop breccia, the Peñasco. It is the only outcrop on the property.

			Both breccia pipes are believed to have erupted and breached the surface. Their eruption craters and ejecta aprons have since been eroded away, and the current bedrock surface at Peñasquito is estimated to be on the order of 50-75 meters below the paleo-eruption surface. Both of the breccia pipes sit within a hydrothermal alteration shell of propylitic alteration that has largely been overprinted by weak phyllic alteration that intensifies at depth.

	1.11		Mineralization

			Sulphide mineralization occurs in the Chile Colorado deposit, in the Peñasco deposit hosted in the Outcrop breccia, in the Luna Azul and Azul NE deposits hosted in the Azul Breccia, and at other smaller targets on the Peñasquito project. Exploration drilling has recently focused on the large Peñasco deposit.

			The Peñasco deposit is in the east half of the Outcrop breccia directly above the projected throat of the breccia pipe. In plan view, it is ovoid in shape, at least 500 meters wide in an east direction and 1000 meters long in a north direction, and has formed around a complex series of small quartz-porphyry stocks and dikes with some felsite dikes. It is composed of disseminations and veinlets of medium to coarse-grained sphalerite-galena-argentite, other unidentified silver sulfosalts, minor tetrahedrite-polybasite and common gangue of calcite-rhodochrosite-quartz-fluorite.

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			The intrusive rocks themselves are also often mineralized. Mineralization also extends upwards along the north and south contacts of the Outcrop breccia. At the south contract, it extends upwards in the mixed clast breccia adjacent to the northwest faults that cut the breccia pipe.

			The most common mineral host is the intrusive hydrothermal breccia. This breccia is the dominant rock below the 1,600-meter level. It also is widely distributed as a halo around the porphyry stocks and dikes. The porphyry often appears to brecciate into the intrusive hydrothermal breccia as it passes upwards. Mineralization is present in the upper mixed clast breccia along the south contact, the quartz-feldspar porphyry intrusive breccia and, to a lesser extent, the quartz-porphyry dikes. The felsite dikes are at times also good mineral hosts.

			The Chile Colorado Ag-Zn-Pb mineralization normally occurs as both veining and narrow fracture filling, hosted in weakly silicified sandstone, siltstone or shale. The mineralization has been interpreted to represent stockworks, localized by a north-south trending fracture zone, extending south from the Azul diatreme.

			Sphalerite and galena associated with carbonate and pyrite occur as massive veins. Pyrite, sphalerite and galena have also been observed as discrete crystals and disseminations within sandstone units. Late state carbonates and pyrite fracture fillings occur throughout the sediments.

	1.12		Exploration

			Kennecott completed numerous air and ground based geophysical surveys on the Peñasquito claim groups between 1994 and 1997. The aeromagnetic survey of the region defined an 8 km x 4 km, N-S trending magnetic high centered roughly on the Outcrop Breccia. These surveys provided coverage of the area including the Peñasco zone and confirmed the area as a suitable target for drilling.

			In 2004, Western Silver initiated additional CSAMT and IP surveys that extended coverage on the older lines, and extended coverage to the east of the pre-existing coverage. The geophysical database for the Peñasquito project area now provides a detailed electric cross-section that images changes in geology, and appears to identify specific targets of interest.

			Kennecott completed an extensive rapid air blast (“RAB”) drilling campaign across much the Peñasquito project area after the discovery of the Chile Colorado deposit. This program, designed to systematically test the entire project area, consisted of 250 holes. The holes penetrated the extensive overburden cover and collected chip samples from anomalies, which had been discovered during the numerous geophysical surveys as well as outlining other, previously unknown anomalies. Twenty-eight of the RAB holes in this campaign by Kennecott were drilled within and immediately adjacent to the Peñasco zone breccia pipe. The

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			geochemical survey results indicated that further exploration was warranted in this area. Exploration drilling results have subsequently confirmed significant mineralization in the Peñasco zone.

	1.13		Drilling

			Drilling at the Peñasquito property has focused on the exploration of three principal areas: Chile Colorado, Azul (Azul Breccia, Azul NE and Luna Azul) and Peñasco including El Sotol adjacent to Peñasco (Figures 1-10A and 1-10B). Work is presently concentrated on both in-fill and step-out exploration drilling of the Peñasco zone.

			The Peñasquito property has been drilled by different operators over several campaigns and phases beginning in 1995 under Minera Kennecott S.A. de C.V.

			The following tables summarize exploration drilling performed and assayed to date on the Peñasquito property. This data has been used in the preparation of the resource estimates used in this report.

			The summaries of the drilling through Campaign 17 are in Tables 1-8, 1-9, and 1-10. Additional extensive drilling is ongoing.

Table 1-8 — Summary of Project Drilling at Peñasquito — Through Campaign 17


	TOTAL DRILL HOLES
HOLE PURPOSE	Number		Meters
Resource Estimate – Peñasco & El Sotol		328		175,500
Resource Estimate – Chile Colorado & Azul		122		48,900
Subtotal – Holes Used for Resource Estimate ⁽¹⁾		450		224,400

Chile Colorado – Hochschild Holes Excluded for Resource Estimate		14		4,601
Condemnation		11		4,559
Metallurgy		13		4,016
Pit Geotechnical		11		4,126
Outside Exploration		29		7,721
Total		528		249,423


⁽¹⁾		15,135 meters are reverse circulation drilling; the balance is core.

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Table 1-9 — Summary of Exploration Drilling Campaigns at Peñasquito*


				Number		Meters
				of		of		Average Hole
Campaign	Period	Drilling Type	Hole IDs	Drill Holes		Drilling		Length (m)
Kennecott	1994-1997	Reverse Circulation & Diamond Drilling	PN01 - PN71		71		23,929		337
Western Copper	1998	Diamond Drilling	WC01 - WC09		9		3,185		354
Mauricio Hochschild	2000	Diamond Drilling	MHC01 - MHC14		14		4,601		329
Western Copper	2002	Diamond Drilling	WC10 - WC54		45		19,795		440
Western Copper	2003	Reverse Circulation	S01 - S57		51		12,090		237
		Diamond Drilling	S09Ext,S24Ext,S30Ext*
Western Copper	2003	Diamond Drilling	WC55 - WC100		48		14,605		304
			WC67A, PN26Ext*
			WC53Ext**
Western Silver — Phase 9	2004	Diamond Drilling	WC101 - WC130		31		14,842		479
			WC119A
Western Silver — Phase 10	2004	Diamond Drilling	WC131 - WC179		56		20,241		361
			WC131A,WC137A
			WC138A,WC146A
			WC150A,WC154A
			WC156A
Western Silver — Phase 11	2004	Diamond Drilling	WC180 - WC211		33		21,968		666
			WC99Ext**, WC189A
Western Silver — Phase 12	2005	Diamond Drilling	WC212 - WC227		16		11,460		716
Western Silver — Phase 13	2005	Diamond Drilling	WC228 - WC256		32		21,005		656
Western Silver — Phase 14	2005	Diamond Drilling	WC257 - WC278		22		14,226		647
Western Silver — Phase 15	2005	Diamond Drilling	WC279 – WC309		31		19,601		632
Western Silver — Phase 16	2005	Diamond Drilling	WC310 – WC346		37		24,928		674
Western Silver — Phase 17	2006	Diamond Drilling	WC347 – WC377		32		22,944		717
Totals					528		249,420		472


*		- Feasibility Study grade modeling excludes all MHC drilling, WC277, the latter part of WC276.

		Ext*- diamond drill extension of reverse circulation hole

		Ext**- diamond drill extension of diamond drill hole

Table 1-10 Summary of Drilling Activity at the Peñasquito Property


	Number of		Meters of		Average Hole
Calendar Year	Drill Holes		Drilling		Length (m)
1994-1997 Drilling		71		23,929		337
1998 Drilling		9		3,185		354
2000 Drilling		14		4,601		329
2002 Drilling		45		19,795		440
2003 Drilling		99		26,695		270
2004 Drilling		120		57,051		475
2005 Drilling		138		91,220		661
2006 Drilling to June 30		32		22,944		717
Drilling Total		528		249,420		473

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	1.14		Sampling Method And Approach

			Due to the alluvial cover at Peñasquito, the vast majority of resource sampling has been done using either reverse circulation or diamond core drilling. All drilling in 2004 and most other drilling has been primarily HQ size core drilling, but narrowing to NQ diameter at depth in the longer holes.

			Minera Peñasquito reports that it samples drill holes from bedrock to final depth. The standard sample interval is 2.0 meters. Some samples are limited to geological boundaries and are less than 2.0 meters in length. A senior geologist examines the core, defines the primary sample contacts, and designates the axis along which to cut the core. Special attention in veined areas is taken to ensure representative splits are made perpendicular and not parallel to veins.

			Geological logging is very detailed and follows the geological legend on a regional scale. Once the core has been measured, marked, photographed, and logged geotechnically and geologically the core boxes are brought to the diamond saw cutting stations. The core is sawed in half. One-half of every sample is placed into a heavy plastic bag. The Splitter’s Helper has previously marked the drill hole and sample number on the plastic bag and inserted the relative sample tag in the plastic bag.

			Standard Reference Material samples and blanks are inserted into the sample stream going to the assay laboratory in a documented sequence on a frequency of approximately 1 in 20 samples.

			A Minera Peñasquito truck transports the sacks to the ALS Chemex laboratories in Guadalajara approximately once per week, where the samples are prepped and pulped. Pulps are sent to ALS Chemex labs in Vancouver where they are assayed and checked. At present ALS Chemex is Minera Peñasquito’s primary assay lab. Check samples are sent to Acme Labs of Vancouver.

			The sample preparation procedures on site prior to shipment to the laboratory have been independently reviewed and deemed secure and adequate.

			An independent sampling, preparation and assaying audit has not been performed.

	1.15		Sample Preparation And Analyses And Security

			The quality assurance and quality control procedures employed by Minera Peñasquito (“QA/QC”) have been independently reviewed and no significant concerns noted. Approximately 90% of the data base assays were run on Minera Peñasquito samples, and Minera Peñasquito generally used ALS Chemex as the primary lab and Acme as the check lab. Both Chemex and Acme are ISO9002-certified. Both labs use industry standard sample preparation procedures.

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			No independent samples have been taken and assayed, but comparisons between Minera Peñasquito and Kennecott drilling results show no biases (see Section 1.16).

			The samples assayed are under the control of Minera Peñasquito or either ALS Chemex or Acme as described in Section 1.14.

	1.16		Data Verification

			Based on a review of Minera Peñasquito’s sample preparation, analysis, security, and QA/QC procedures to date with respect to database verification, the database used for the resource estimates is deemed to be accurately compiled and maintained, and is suitable for use in mineral resource estimation.

			No significant problems were identified during reviews of the drilling data. The holes appear to have been properly located and downhole-surveyed and to have recovered an adequate sample (core recovery during the later Minera Peñasquito campaigns averaged 97.8%).

			Almost all of the drilled intervals are assayed for gold, silver, lead and zinc. The average assay interval is slightly over 2 m. Approximately 90% of the data base assays were run on Minera Peñasquito samples, and Minera Peñasquito generally used ALS Chemex as the primary lab and Acme as the check lab. Both Chemex and Acme are ISO9002-certified. Data entry errors should be minimal because IMC re-compiled the bulk of the assay data base directly from the original lab’s electronic files of assay certificates.

			Several thousand gold, silver, lead and zinc check assays run by a check laboratory (usually Acme) on pulps prepared by the primary laboratory that ran the data base assays (usually Chemex) are available for the Kennecott campaign and for Minera Peñasquito Phases 1, 2, 3, 5, 6, 7, 8, 9, 10 and 11. These assays act as a check on the analytical procedures used by the primary lab. A few hundred gold, silver, lead and zinc assays run by a check lab (Acme, M3/Hazen Research or Davis Metallurgical Laboratories) on fresh pulps prepared by the check lab are available for Minera Peñasquito Phases 1, 2, 3, 7, 8, 9, 10, 11, 12, 13, and 14. These assays act as a check on both the analytical and the sample preparation procedures used by the primary lab. No check assays are available for the Hochschild, 1998 and Minera Peñasquito Phase 4 campaigns, and as of the time of writing the check assaying for Minera Peñasquito Phases 15, 16, and 17 was in progress.

			The check assay comparisons show generally acceptable overall agreement between the primary and check labs for all of the campaigns/phases for which check assays are available. Standard and blank assaying results also appear to be generally acceptable. There are indications that some of the data base silver

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			assays run by Chemex during the later Minera Peñasquito phases may be biased 5-15% low as a result of analytical factors, but this bias cannot presently be confirmed, and the errors introduced into NSR value estimates would be minimal even if it did exist.

			IMC supplemented the check assay data by performing numerous paired comparisons of grades from different drilling and assaying campaigns, including those for which no check assays are available. The results show no evidence to indicate that any of the Minera Peñasquito and Kennecott data base assays are affected by large analytical or sample preparation biases. However, they do suggest that the Hochschild grades are quite heavily high-biased relative to the Kennecott and Minera Peñasquito grades for gold, silver, and zinc. No Hochschild samples were available for re-assay, so the precautionary decision was taken not to use the Hochschild assays when estimating grades in the model.

			The paired-comparison reviews did not detect any biases between core and reverse circulation drilling. (About 10% of the exploration drilling is RC.)

			No significant problems were identified with other data supplied to IMC, which included sulfur assays (used to define oxidized zones) and lithology, alteration, and oxidation data base codings. Drill logs were of excellent quality. Density data were obtained from core sample measurements and the values are reasonable relative to sample lithology.

	1.17		Adjacent Properties

			There are no adjacent properties from which exploration and/or mining activities would lead to better understanding of the Chile Colorado or Peñasco open pit deposits.

			The Tayahua underground mine operates in the foothills to the northeast of the Peñasquito property. This is a polymetallic zoned Cu-Pb-Zn-Ag-Au skarn ore body hosted in carbonates adjacent to a quartz monzonite intrusion. As such, it might become of interest as Glamis pursues its potential underground deposit beneath the Peñasco Pit.

	1.18		Mineral Processing And Metallurgical Testing

			Metallurgical test work initiated since the 2004 Pre-feasibility Study was completed includes: comminution testing, flotation testing, modal analyses, and gravity testing, all for the sulphide process. For the oxide process, bottle roll and column leach tests have been performed. Additional work is in progress for both the sulphide and oxide mineralization. Samples from both Chile Colorado and the Peñasco areas are being tested. Most of the work now in progress and planned for

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			the near future utilizes metallurgical diamond drill hole (DDH) samples produced in late 2004 and early 2005. A program consisting of 13 DDHs was completed in February 2005. The program produced approximately 3,400 meters of PQ (83 mm) and 600 meters of HQ (64 mm diameter). The core from the sulphide zone was shrink-wrapped to prevent oxidation. Crushed sulphide samples are also being stored in freezers until they can be tested. Additionally, bulk samples for run-of-mine testing of the oxide ore were extracted from four hand-dug wells in the Peñasco deposit.

			The following tests have been run on Chile Colorado and Peñasco ores. This program has been used to determine the recoveries employed in this study.

Table 1-11 — Summary of Metallurgical Testing


Peñasquito Process Development Tests 2004-2006
Sulphide Tests		Oxide Tests
Flotation Tests	280
Comminution Tests	73	Bottle Rolls	47
Process Mineralogy	13	Column	46
Leach	5	Small Column	42
Settling	27	Intermediate Column	1
Pulp Rheology	8	Large Column	3
Filtration	4	Miscellaneous	6
Analyses	2
Pilot Plant	1
Tailing Cyclone Test	2
Total Number of Tests	368	Total Number of Tests	99	=>	467

	1.18.1		Sulphide Metallurgical Testing

			Comminution test work was performed on 19 samples from the Chile Colorado deposit and 24 samples from the Peñasco deposit. During the first quarter of 2006 an additional 49 samples from Peñasco were tested, making a total of 73 Peñasco samples tested. The tests were performed by Minnovex of Toronto, and included the SAG Power Index (SPI), Crusher Index (CI), and the Minnovex Modified Bond Work Index (WI). Three full Bond Work Index determinations were also performed to calibrate the modified procedure, Progressive Grinding Circuit Design for the Western Silver – Peñasquito Project, Minnovex Technologies, Inc., June 2005. Using data from these tests and additional input parameters provided by M3, Minnovex used their proprietary grinding circuit simulation program, CEET, to estimate mill sizes. The CEET data were used by mill vendors to recommend sizing as follows:

•

SAG mill: One mill @ 18,690 kW, 11.6 m x 6.1 m (38' x 20')

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	•		Ball Mill: Two mills @ 14,317 kW each, 7.6 m x 10.4 m (25' x 34.5')

	•		Pebble Crusher: One @ 600 kW, 2.4 m (8’) (For this report M3 has selected one MP800 crusher.)

			Tests were also performed by SGS Lakefield using the JK Tech drop-weight test method. The JKSimMet simulation method was used to estimate mill sizing, which generally agreed with the Minnovex results.

			The primary crusher was sized from the 2004 test work and the required capacity of 100,000 MTPD of Peñasco ore. The crusher is a gyratory type, 1524 mm x 2870 mm (60“x113”) in size.

			Following completion of the pre-feasibility test work, a new campaign of flotation test work was performed in two laboratories, Dawson Metallurgical Laboratories in Salt Lake City and G&T Laboratories in Kamloops BC. In total these test programs resulted in 24 variability scheme tests on Chile Colorado and 34 tests on Peñasco ore. A further 40 tests, approximately, were performed to examine the grind-grade-recovery relationship and to improve the reagent scheme from that developed for the 2004 Pre-Feasibility Study.

			Since the Feasibility Study work, five flotation tests have been conducted on Chile Colorado ore including one locked cycle test, and four tests in which dextrin was tested as a carbon depressant. The Peñasco ore has had an additional fifty-six flotation tests, which include 51 variability tests, four locked cycle tests on specific lithology composites, and a large scale locked cycle test to produce concentrates for dewatering tests.

			Locked cycle tests on ore from both deposits were performed as part of the flotation test program in order to provide a basis for the projected plant recoveries. These tests revealed that recoveries in the Peñasco Pit correlated with three basic ore categories: breccia, intrusive and sedimentary. Recoveries in the Chile Colorado tests have not yet revealed an obvious correlation. Work is ongoing to determine if any correlation exists and to improve recoveries. Based on the most recent results, the following metallurgical data has been used for flow sheet development.

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Table 1-12 — Projections of Concentrate Grades and Recoveries


MINE HEAD GRADES
Resource Category	Tonnes		Au		Ag		Pb			Zn
Peñasco Intrusive		42,147,000		0.78 g/t		25.1 g/t		0.24	%		0.54	%
Peñasco Breccia		328,260,000		0.64		32.7		0.34			0.77
Peñasco Sedimentary		58,141,000		0.56		27.3		0.30			0.70
Chile Colorado		48,414,000		0.29		50.1		0.56			0.96


LEAD CONCENTRATES	Grades										Recoveries
Resource Category	Au		Ag		Pb			Zn			Au			Ag			Pb			Zn
Peñasco Breccia		40 g/t		3,250 g/t		52	%		5	%		66	%		65	%		75	%		4	%
Peñasco Intrusive		72		2,600		51			8			65			63			72			5
Peñasco Sedimentary		15		2,500		45			15			25			40			60			10
Chile Colorado		8		3,050		50			5			20			58			63			4


ZINC CONCENTRATES	Grades										Recoveries
Resource Category	Au		Ag		Pb			Zn			Au			Ag			Pb			Zn
Peñasco Breccia		5 g/t		220 g/t		2	%		50	%		14	%		16	%		4	%		78	%
Peñasco Intrusive		7		350		4			50			12			16			10			60
Peñasco Sedimentary		3		450		4			50			10			10			12			50
Chile Colorado		0.8		360		1			55			7			13			4			60

			In the first part of 2006 more tests have been carried out on the Peñasco ore. There have been nine new settling, eight Pulp Rheology, and four filtration tests. All of these tests are described in the report, Flocculant Screening, Gravity Sedimentation, Pulp Rheology, Pressure Filtration, and Vacuum Filtration, prepared by Pocock Industrial, Inc., Salt Lake City, dated May 2006.

			A small scale pilot plant test was performed on samples of the Peñasco ore. The plant capacity was approximately 100 kg/hr and was run intermittently over a period of four days. The purpose of the run was to provide concentrate samples for smelter testing as well as tailing samples for geotechnical and environmental testing. Due to the low grade of the ore relative to the size of the pilot plant equipment and the short duration of the test it was not possible to optimize test conditions. The lead first and second cleaners were operated in a locked cycle mode and the zinc concentrate was re-cleaned in the laboratory after the pilot plant run. The pilot plant generally confirmed that the recoveries predicted by locked cycle testing were achievable at larger scale and yielded approximately 9 kg of zinc concentrate and 7 kg of lead concentrate.

			Modal analyses and liberation analyses were also performed to support the test work through a better understanding of the mineralogy and liberation characteristics of the samples.

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			One small scale gravity test was performed on a sample from Peñasco, high in gold and silver. The test products were assayed and evaluated using an Automated Digital Imaging System (ADIS.) The results indicated that any free gold occurs as particles finer than about 10 microns, meaning gravity recovery of gold is not likely to be successful.

			An ADIS analysis of the occurrence of gold in the rougher and cleaner tailing from a locked cycle test on a sample from the Peñasco deposit revealed very little visible gold in either product. In the rougher tailing 275 slides, approximately 30 x 10⁶particles, were examined, and only four gold particles were found at an average mean diameter of 7.2 microns. In the cleaner tailing examination of 75 slides, 11 x 10⁶particles, found 3 particles with an average mean diameter of 15.4 microns.

			A gold model was constructed using multiple regression techniques on the locked cycle test products. These results suggest that, for Peñasco the gold and silver track galena in the flotation process. A small amount of the silver tracks sphalerite. For Chile Colorado most of the gold tends to track pyrite, with a small fraction behaving like copper sulphide and galena. Most of the silver tends to track copper sulphide and galena.

	1.18.2		Sulphide Process Plant

			The process plant selected for the project is conventional. Figure 1-6 outlines the plant. The following is a simplified process description for the sulphide ore process:

	•		Run-of-mine ore is discharged from haul trucks into the crusher pocket.

	•		The crusher is a single 60” x 113” (1524 x 2870 mm) gyratory crusher.

	•		Crusher product is conveyed to a 91,700 tonne live capacity stockpile (45,850 tonne per line).

	•		Crushed ore from the stockpile will be reclaimed via five variable speed belt feeders per line located in the reclaim tunnel.

	•		Ore from the stockpile will be conveyed to a one SAG mill/two ball mill circuit designed to produce an average of 50,000 MTPD of Peñasco ore or 40,000 MTPD of Chile Colorado ore at 80% passing 125 micron.

	•		One pebble crusher in closed circuit with the SAG mill will crush pebbles to minus 19 mm and return the material to the SAG mill feed conveyor.

	•		The slurry from the grinding circuit will first pass to the lead flotation circuit.

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	•		Lead flotation consists of two banks of five each rougher flotation cells in parallel followed by regrinding and three stages of cleaner flotation cells.

	•		The first cell of each row in the lead flotation circuit may be used for carbon pre-float when treating carbonaceous ore from Chile Colorado. Space will be provided to install carbon cleaner flotation cell when needed.

	•		The zinc flotation circuit consists of two banks of five each rougher flotation cells in parallel followed by regrinding and three stages of cleaner cells.

	•		Concentrate from the lead and zinc circuits will be pumped to respective thickeners followed by pressure filters.

	•		Concentrate filter cake from the pressure filters will be discharged to stockpiles from which the material will be reclaimed by loader and loaded onto highway trucks for transport to rail, port, or smelter.

	1.18.3		Oxide Metallurgical Testing

			Preliminary metallurgical testing of oxide ore has been performed. Process flow sheets were developed based on results of the test work. All test work on oxide ore to date has been completed by METCON, Research located in Tucson, Arizona.

			Initial testing of the oxide ore was performed by means of bottle roll tests. A total of 13 bottle roll tests, of 72 hour duration, were performed using coarse reject material supplied from the Chemex sample preparation facilities in Guadalajara. The samples originated from the Peñasco Deposit diamond drill samples (DDH WC-102 from 16 to 68 m and DDH WC-108, Intervals from 16 to 80 m, downhole.) Test results indicated that the ore leached well with expected reagent consumptions.

			Based on the results of the bottle roll tests two column leach tests were performed using the same original samples, but composited into shallow and deep fractions. The tests were performed by agglomerating the ore and curing with cyanide, lime, and Portland cement. These tests are described in Peñasquito Project Preliminary Cyanide Leach Tests, METCON Research Inc., December 2004.

			A second series of bottle roll and column leach tests was completed on six trench samples taken from old dump sites in the Peñasco ore. One bottle roll test was done on each sample (six total). Two column leach tests were done on each sample at different crush sizes (P80=38 mm & P80=9.5 mm) to determine affect of size on recovery and reagent consumption. One bottle roll and one column leach test was completed on a seventh dump

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			sample. This column test was run at ‘as received’ size to determine impact to recovery with no crushing.

			A third series of 21 bottle roll and 17 column leach tests were completed using the metallurgical DDH samples. Four of the column tests were run on Chile Colorado ore and 13 of the column tests were run on Peñasco ore. All columns were run on ore that was crushed to 38 mm.

			A fourth series of tests, six bottle roll and six column leach, were completed on bulk samples taken from three wells in the Peñasco area. Two column leach tests were done on each sample, one at estimated run-of-mine (ROM) size and one at 38 mm. Results from these tests were used to develop the flow sheets, as well as estimates of extraction and cyanide and lime consumption for this study.

			Because of the extremely high ratio of Ag to Au, the Merrill-Crowe (zinc precipitation) process was selected over the carbon adsorption method of recovering the precious metals from solution.

			The recoveries for silver and gold from the heap leach are presently estimated for: 1) Peñasco oxide and mixed ores, gold 50%, silver 28%; and 2) Chile Colorado oxide and mixed ores, gold 50%, silver 22%.

	1.18.4		Oxide Process Plant

			The following is a simplified process description for the oxide ore:

	•		ROM ore is discharged from haul trucks onto a heap leach pile.

	•		Lime is added to the ROM ore prior to being placed on the pad. The ore is placed in 10 m lifts.

	•		The ore is leached with cyanide solution.

	•		The pregnant leach solution is clarified, filtered, and de-aerated, then treated with zinc dust to precipitate the precious metals.

	•		The precipitated metals are then pressure filtered.

	•		The resulting filter cake is smelted to doré.

	1.19		Mineral Resource And Mineral Reserve Estimates

			Mineral Resource Estimate

			Mineral resources for Chile Colorado and the Peñasco zones were calculated by Glamis and were classified according to the “CIM Standards on Mineral Resources and Reserves, Definitions and Guidelines” prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council November 14, 2004. A number of elements that represent the confidence in the

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			geological interpretation, the database integrity, the spatial continuity of mineralization and the quality of estimation were utilized in the classification.

			The model used for the Chile Colorado and Azul deposits in this report is the IMC March 2005 model based on drill hole information through the Phase 12 drilling completed in early 2005. No significant additional drilling has been done in this area after Phase 12. Thirteen Hochschild holes in the Chile Colorado area were not used in the modeling process as the assay values from these holes are inexplicably biased high. In addition, five Phase 13 and 14 holes (WC254, 261, 267, 272 and 275) and ten Phases 15 and 16 holes (WC281, 283, 287,291, 295, 299, 302, 307, and 311), drilled after the model was completed in March 2005 were not used in the modeling process simply due to time constraints.

			Since no additional drilling data or geologic interpretation of the Chile Colorado – Azul deposit was considered, Glamis continued use of the IMC March 2005 model data for Chile Colorado resource and reserve calculations. However, it was not used directly as it was a 10 m bench based model. The 10 m model was mathematically converted from a 10 m bench to a 15 m bench height with every other bench being split and its values combined with the adjoining 10 m bench. Glamis then calculated updated Chile Colorado NSR values using more recent metal prices and metallurgical recovery factors.

			The Chile Colorado – Azul resource is based on a computer block model with a block size of 20 m by 20 m in plan and 15 m high. The silver, gold, lead and zinc grade are estimated into the model from 10 m composites of the drill data using ordinary kriging with a 135 m maximum spherical search. Geologic information (lithology, alteration and oxidization) are assigned to the model using a nearest neighbor approach from the drill hole composite data. Density values are based on test work on core samples and are assigned to the model based on the oxidization and lithology assignments: overburden, 2.20; oxide (all lithologies), 2.40; mixed (all lithologies), 2.475; sulphide, Caracol sediments, 2.60; sulphide, Azul breccia units, 2.50.

			The model used for the Peñasco deposit is a Glamis June 2006 model developed from drill hole information through drill Phase 17. The Peñasco computer block model has a block size of 20 m by 20 m in plan and 15 m high. The silver, gold, lead and zinc grade are estimated into the model from 15 m composites of the drill data using ordinary kriging. The spherical search kriging used composites and blocks contained within a geologically defined mineralized grade domain. The grade domain and geologic information (lithology, alteration and oxidization) are assigned to the model using cross sectional based 3-Dimensional solids. Density values are based on test work on core samples and are assigned to the model based on the oxidization and lithology assignments: overburden, 2.20; oxide (all lithologies), 2.30; mixed (all lithologies), 2.40; sulphide, Caracol sediments, 2.60; sulphide, breccia units, 2.50.

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For both deposits, an NSR value for the sulphide, mixed and oxide materials was calculated using input data on costs and recoveries updated as of June 2006. A flotation mill process is assumed for the sulphide material with an Internal NSR Cut-Off calculated at $3.60 for Peñasco and $4.18 for Chile Colorado. A run-of-mine (ROM) heap leach for gold and silver is assumed for the oxide and mixed materials with an internal cut-off calculated at $1.30 NSR.

The classification of the resources is based on the following criteria:


Chile Colorado – Azul Deposits
Within 135 m of 5 or more holes and within 40 m of closest hole:		Measured
Within 135 m of 2 to 4 holes and within 50 m of the closest hole:		Indicated
Within 135 m of one hole:		Inferred


Peñasco Deposit
Within 35 m of 2 or more holes:		Measured
Within 36 m to 70 m of 2 or more holes:		Indicated
Greater than 70 m of one hole:		Inferred

In addition, Measured and Inferred Resources are further constrained to be only those blocks of the model that are within an optimized open pit geometry defined by reasonable long term metals prices.

Constraints are much tighter at Peñasco because primary variogram ranges here are much shorter than at Chile Colorado/Azul (70 m versus 210 m), indicating lower grade continuity in the Peñasco deposit.

The grade of the block was not used as a determinant in resource classification.

Table 1-13 summarizes the Peñasquito resources by measured plus indicated (M&I) classifications. The M&I resource is within a geometry defined by reasonably foreseeable metal prices of: $650 per ounce gold; $10.00 per ounce silver; $0.86 per pound zinc and $0.43 per pound lead. This geometry bounds an M & I resource with reasonable expectation of potential extraction by open pit mining. In addition, the M & I resources meet the distance and sample density requirements stated above. The tabulation of M & I resources used NSR values based on the stated long-term metal prices.

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Table 1-13 — Estimated Measured Plus Indicated Resources by Open Pit


	Internal
	NSR		Million		Silver		Gold,		Lead		Zinc
	Cut-off		Tonnes		g/t		g/t		%		%
Sulphide, Peñasco	$	3.60		505.9		30.1		0.62		0.31		0.71
Sulphide, Chile Colorado	$	3.60		242.3		31.7		0.23		0.35		0.73
Combined Sulphide				748.2		30.6		0.49		0.32		0.71

Oxide/Mixed, Peñasco	$	1.30		74.7		24.0		0.29		—		—
Oxide/Mixed, Chile Colorado	$	1.30		49.6		17.4		0.17		—		—
Combined Oxide/Mixed				124.3		21.4		0.24		—		—

Combined Types Peñasco				580.5		29.3		0.57		0.31		0.71
Combined Types Chile Colorado				291.9		29.3		0.22		0.35		0.73
Combined Types All Deposits				872.5		29.3		0.46		0.32		0.71

Table 1-14 summarizes the Peñasquito resources by inferred classification. These inferred resources are outside any defined pit geometry and are within the geologically defined mineralized grade domain.

Table 1-14 — Estimated Inferred Resources


	Internal
	NSR		Million		Silver		Gold,		Lead		Zinc
	Cut off		Tonnes		g/t		g/t		%		%
Sulphide, Peñasco	$	1.60		1,041.7		14.5		0.28		0.13		0.38
Sulphide, Chile Colorado	$	1.60		1,362.9		8.3		0.10		0.08		0.23
Combined Sulphide				2,404.6		11.0		0.18		0.10		0.29

Oxide/Mixed, Peñasco	$	0.70		22.9		10.7		0.14		0.13		0.38
Oxide/Mixed, Chile Colorado	$	0.70		149.1		5.0		0.06
Combined Oxide/Mixed				172.0		5.7		0.07

Combined Types Peñasco				1,064.6		14.4		0.28		0.13		0.38
Combined Types Chile Colorado				1,512.0		8.0		0.10		0.08		0.23
Combined Types All Deposits				2,576.6		10.6		0.17		0.10		0.29

Mineral Reserve Estimate (for Sulphides, Mixed and Oxides)

The proven and probable reserves for the Chile Colorado and Peñasco deposit are contained within an engineered pit design based on a floating cone analysis of the resource block model using the measured and indicated resources. Proven and probable reserves are derived from measured and indicated resources respectively that fall within the pit boundary. The figures obtained for metallurgical recovery, revenue and costs were combined to assign NSR figures for each block in the resource model. The NSR values assigned to the block models for the purpose of developing the reserve pit geometry are based on lower metal prices than those used to tabulate the resources described above. The prices used for the

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			development of the reserve pit geometry were $450/oz Au, $7.00/oz Ag, $0.30/lb Pb and $0.60/lb Zn.

			Based on the calculated operating costs from previous studies and an overall pit slope angles based on earlier pit designs and geotechnical studies, a number of theoretical pit shell runs were calculated. The “final” pit shell in both deposits was based on a $0.80/tonne mining cost for rock and overburden, an additional mine cost of $0.01 per bench of depth below the 1980 elevation to both ore and waste and a discount rate of 1% per bench. Overall slope angles ranged from 39^o to 46^o in Peñasco and 37^o to 44^o in Chile Colorado – Azul. The floating cone runs did generate a pit shell in the Azul and El Sotol deposits, but for this study they were not included in the reserve or mine production schedule.

			The reserve summary is the sum of a mine production schedule using the proven and probable tonnages from the two ultimate pit designs. The sulphide material reports to a flotation mill and the oxide plus mixed material reports to a run-of-mine, heap leach. The NSR values used to tabulate the reserves within the final pits are based on metal prices of: $450/oz Au, $7.00/oz Ag, $0.30/lb Pb and $0.60/lb Zn

Table 1-15 Peñasquito Project Open Pit Reserve Summary


						Grades
		Ktonnes		Au, g/t		Ag, g/t		Pb,%		Zn,%
Sulphides: Mill Ore (1)
Chile Colorado	Proven		46,700		0.29		50.9		0.56		0.97
Peñasco	Proven		221,200		0.67		32.2		0.35		0.77
Total, Proven Pit Reserve			267,900		0.60		35.4		0.38		0.81
Chile Colorado	Probable		1,700		0.25		28.9		0.34		0.65
Peñasco	Probable		207,300		0.60		30.2		0.31		0.70
Total, Probable Pit Reserve			209,000		0.60		30.2		0.31		0.70
Mill Ore, Combined Proven and Probable			476,900		0.60		33.2		0.35		0.76
Oxides + Mixed: Leach ore (2)
Chile Colorado	Proven		16,700		0.22		20.3
Peñasco	Proven		51,600		0.28		25.4
Total, Proven Pit Reserve			68,200		0.27		24.2
Chile Colorado	Probable		2,200		0.22		14.7
Peñasco	Probable		16,600		0.35		23.4
Total, Probable Pit Reserve			18,800		0.33		22.4
Leach Ore, Combined Proven and Probable 87,100					0.28		23.8


1)		Sulphides are reported at a U.S. $3.60/tonne Internal NSR Cut-off for Peñasco and $4.18/tonne for Chile Colorado.

2)		Leach tonnage is reported at a U.S. $1.30/tonne NSR Cut-off.

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1.20

Other Relevant Data And Information

1.20.1

Geotechnical

	a)		Geotechnical Drilling and Sampling Program for Foundation Design

			Initial geotechnical field investigation was performed by Golder Associates to collect the geotechnical data required to support the design of the heap leach facility, waste rock piles, tailings impoundment and process plant. The field investigation was performed from March 2, 2005 to March 23, 2005.

			The first-portion of the field investigation included the drilling of thirty-four boreholes within the project site area. The second-portion of the field investigation included excavation of test pits to characterize the superficial foundation and construction materials. This work was performed during late May and early June 2005.

			The drilling contractor utilized was Estudios Especializados de Mecánica de Suelos, S.A. de C.V. (EEMSSA) from Monterrey, Nuevo León, Mexico. The contractor used a Foremost Mobil Drill Model B-59 and a CME-55 to perform the drilling.

			1.5 m long, 4.50-inch outside diameter (OD) continuous flight augers were used to advance the borehole through the alluvial soil. Standard Penetration Tests (SPT) were performed in each borehole. The SPT used a standard split-spoon sampler with a 2-inch OD; applicable American Society for Testing and Materials (ASTM) D1586 procedures were followed during the testing. Rock coring techniques were also performed with 1.5 m long, NQ size double barrel equipment to collect samples of the rock materials.

			The boreholes were logged by geotechnical field technicians. Borehole logs associated with the field investigation, including sample descriptions, SPT blow counts, sample numbers and visual classifications according to the United Soil Classification System (USCS) were prepared.

			Additional geotechnical data collection and analysis will be performed at the site as the project advances to final design, e.g., boreholes drilled at final locations of heavy equipment such as mills and crushers.

	b)		Geotechnical Oriented Core Drilling Summary for Pit Slope Stability

			Pit slope angles are based on a progression of geotechnical analysis of the Peñasco and Chile Colorado deposits. Several phases of oriented

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			core drilling, geotechnical logging and geotechnical modeling have occurred in support of pit slope recommendations over the last several years. This analysis has been detailed in the following 2 reports:

			Peñasquito Project, Feasibility Pit Slope Design, prepared by Golder Associates dated July 2005.

			Addendum to Peñasquito Project, Feasibility Pit Slope Design, prepared by Golder Associates, dated 24
			August 2005.

			In June 2006, Golder Associates was asked to review the updated design pits and assess whether the pit slope recommendations that were provided in the 2005 pit slope design reports remain valid for the new designs. The conclusions and recommendations of this recent work were:

	•		The recommendations of pit slope angle for the Chile Colorado Pit are considered to be appropriate.

	•		The recommendations for the Peñasco Pit are unreliable, particularly for the upper bench slopes; four additional oriented core holes are recommended and additional characterization be completed; for purposes of preliminary pit planning, an inter-ramp slope angle in the bedrock units of the Peñasco Pit be limited to 47 degrees for slopes above the 1700 meter elevation.

			The June 2006 Golder report was not received in time to incorporate their recommendations into the new pit design. Therefore, the July 2006 Peñasco Pit design incorporates the recommendations of the July 2005 Golder report. However, a review of the design as compared to the June 2006 Golder review indicates inter-ramp slope angles in the bedrock units above the 1700 meter elevation vary from 47 to 50 degrees. Glamis estimates reducing these slope angles in the areas above the 1700 meter elevation that are greater than 47 degrees would add 38.5 million tonnes of waste to the design. This represents an increase of 2.7% to the total waste tonnes of the Peñasco pit. This quantity is not felt significant enough to impact the pit optimization as it now stands.

			The oriented core drilling was performed by Major Drilling Co. A geologist was present at the drill rig full-time during drilling. A total 4,126 m of oriented core drilling was completed in eight core holes in the Chile Colorado pit and three core holes in the Peñasco pit. Core hole diameters were typically HQ3 (61 mm ID) but were telescoped down to NQ3 (45 mm ID) if difficult drilling conditions were encountered. Core was recovered in a triple tube core barrel assembly.

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			The holes were oriented at an angle of 60 degrees to the horizontal and were sited to intersect the November 2005 design basis pit wall one-third of the ultimate wall height above the base of the final pit level. Core orientation was accomplished using two independent methods: clay impression and a mechanical down hole system referred to as Corientor™. Field point load tests were completed for each core run to estimate the unconfined compressive strength of the intact rock. Core runs and geotechnical logging were typically completed at 3 m intervals. A total of 20 samples were collected from the geotechnical core holes for laboratory testing.

			An extensive geotechnical database was developed from the oriented core data as well as from exploration logging data (up to hole WC-250).

1.20.2 Tailings Design

The tailings impoundment is designed as a zero discharge facility with the capacity to store temporarily excess water from mill operations and expected climatic events including the design storm. Water will be reclaimed as needed from the tailings facility for use in the mill. The base of the dam and impoundment will rest on native alluvial soils including layers of caliche, silty sand and gravel, sandy silt and sandy clay. Fine tailings will be placed over the alluvial soils to reduce the potential for downward seepage from the tailings pool.

The starter dam will be constructed as an earthfill structure using Peñasco Pit overburden materials. The dam will be raised in a centerline or downstream configuration using cyclone underflow sand tailings. Underdrains will be placed to collect seepage from the sand placement operations and direct it to a seepage collection pond.

Physical properties of the pilot plant tailings have been determined and a subsequent phase of testing has been authorized.

Monitoring wells will be provided downstream from the dam seepage pond.

A tailings storage facility design report was published in June 2006. This recent tailings storage facility design will be finalized based on mine planning. Size, location, and operation of the facility will be updated as required. A future cell will likely be required and has been accounted for financially as an operating cost.

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1.20.3 Rock Piles

Rock piles will be placed close to the pit to minimize haulage costs. The lower layer of all piles will be constructed from benign overburden and oxide buffering material.

1.20.4 Leach Pad

The leach pad will be composite-lined in accordance with Mexican regulations. The pregnant solution pond will be designed and constructed with a double-geomembrane liner separated by a leak collection and recovery system. The emergency overflow pond, which would be used intermittently to contain dilute solution during a storm event, will be designed and constructed with a single geomembrane liner placed over a liner bedding layer. Monitoring wells will be provided downgradient from the leach facility. The design concepts proposed herein, are consistent with Mexican regulations and international design standards for heap leach facilities.

	1.21		Interpretation And Conclusions

			This project has considerable upsides as far as resources, reserves, and recoveries.

			The availability of high voltage power is ideal.

			Additional water must be secured.

			Although negotiations with private owner and the Ejidos have involved the usual individual challenges, in general the area is socially stable with an available work force with hard rock mining heritage. The business climate is favorable.

			This project will be good for both Glamis and the state’s economy.

	1.22		Recommendations

			M3 recommends development of the Peñasquito project based on 100,000 MTPD.

			Given current metal prices, M3 recommends that this project be placed into production as quickly as practical.

			With the considerable expertise developed in the Mexico mining industry, M3 recommends that construction be by local and national contractors.

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	1.23		References

			The Feasibility Study is based in part on the findings of others as listed below:

	•		“Addendum to the Final Report (Issued September 30, 2005) on Flotation Test Work Conduction on Individual (Variability Tests) and Master,” dated 20 March 2006, prepared by Dawson Metallurgical Laboratories.

	•		“Addendum to Peñasquito Project, Feasibility Pit Slope Design,” dated 24 August 2005, prepared by Golder Associates.

	•		“An Assessment of Metallurgical Performance, Concepción del Oro District, Zacatecas State, Mexico, Western Silver, KM1652,” dated October 2005, prepared by G&T Metallurgical Services, Ltd.

	•		“An Evaluation of Locked Cycle Test Data, Concepción del Oro District, Zacatecas State, Mexico, KM1816,” dated 11 May 2006, prepared by G&T Metallurgical Services Ltd.

	•		“An Investigation into the Grindability Characteristics of Peñasquito Samples, Project 10044-163, Report 1,” dated 21 March 2006, prepared by SGS Lakefield Research Ltd.

	•		“Analysis of Carbon Concentrate Peñasquito Project M3 Engineering KM1528,” dated 24 July 2004, prepared by G&T Metallurgical Services Ltd.

	•		“Cyanide Leach of Peñasco Tailing Products, KM1774,” dated 24 January 2006, prepared by G&T Metallurgical Services Ltd.

	•		“Comminution Testing,” dated 5 May 2006, prepared by Hazen Research.

	•		“Chile Colorado and Peñasco Areas, Open Cycle Column Leach on Drill Core Samples, Document No. Q653-04-028.01,” dated December 2005, prepared by METCON Research, Inc.

	•		“Environmental Impact Assessment”, dated November 2005, prepared by M3 Engineering & Technology Corporation.

	•		“Estudio Regional De Evaluación Hidrogeológica del Acuífero Cedros, En El Municipio de Mazapil, En El Estado De Zacatecas,” dated Diciembre del 2004, prepared by Universidad de Sonora, Departamento de Geología.

	•		“Estudio Regional De Evaluación Hidrogeológica del Acuífero Cedros, En El Municipio de Mazapil, En El Estado De Zacatecas, Informe Que Presenta,” dated Diciembre del 2004, Revisión Febrero de 2006, prepared by Universidad de Sonora, Departamento de Geología.

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	•		“Feasibility Study Heap Leach Facility, Waste Rock Pile, Tailings Impoundment, and plant Site Foundation Recommendations,” dated 22 September 2005, prepared by Golder Associates.

	•		“Final Report on Flotation Test Work Conducted on Individual (Variability Tests) and Master Composite Samples from the Chile Colorado and Peñasco Deposits within the Peñasquitos Property in Mexico,” dated 30 September 2005, prepared by Dawson Metallurgical Laboratories, Inc.

	•		“Final Report on Percent Moisture, Bulk Density and Assays Results on Individual Samples from the Chile Colorado and Peñasco Deposits within the Peñasquitos Property in Mexico,” dated 7 September 2005, prepared by Dawson Metallurgical.

	•		“Flocculant Screening, Gravity Sedimentation, Pulp Rheology, Pressure Filtration, And Vacuum Filtration Studies Conducted For Dawson Metallurgical Laboratories, Inc.,” dated May 2006, prepared by Pocock Industrial, Inc.

	•		“Flora and Fauna Study,” dated November 2004, prepared by M3 Engineering & Technology Corporation.

	•		“Gold Occurrences in Peñasco Tailings Products,” dated 2 November 2005, prepared by G&T Metallurgical Services, Ltd.

	•		“Grinding Circuit Design for the Western Silver — Peñasquito Project, Peñasco Orebody, Based on Geostatistical Distribution of Hardness,” dated March 2006, prepared by Minnovex Technologies, Inc.

	•		“Locked Cycle Column Cyanide Leach Oxide Bulk Samples, Document No. Q653-05-028,” dated December 2005, prepared by METCON Research, Inc.

	•		“Marketing Input into Pre-Feasibility Study for the Peñasquito Project,” dated February 2004, prepared by Neil S. Seldon and Associates.

	•		“Minera Peñasquito S.A. de C.V., Peñasquito Project Mineral Resource Estimate for Chile Colorado Zone,” dated March 2004, prepared by SNC-Lavalin Engineers and Constructors.

	•		“Modal Analysis of Test Products, Peñasquito Project, Mexico, M3 Engineering, KM1445,” dated 27 January 2004, prepared by G&T Metallurgical Services, Ltd.

	•		“Modal Analysis of Test Products, Peñasquito Project, Mexico, M3 Engineering, KM1483,” dated 26 February 2004, prepared by G&T Metallurgical Services, Ltd.

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	•		“Mineral Liberation Assessments, Peñasquito Project, KM1808,” dated 17 March 2006, prepared by G&T Metallurgical Services Ltd.

	•		“Mineral Liberation Assessments, KM1732,” dated 14 October 2005, prepared by G&T Metallurgical Services, Ltd.

	•		“Open Cycle Column Leach Test on Oxide Dump Sample No.,” dated 7 January 2006, prepared by METCON Research, Inc.

	•		“Outstanding Work on Peñasquito Samples, Peñasquito Project, KM 1780,” dated 10 February 2006, prepared by G&T Metallurgical Services Ltd.

	•		“Peñasquito Feasibility Study, Volumes 1, II and III,” dated December 2005, prepared by M3 Engineering & Technology Corporation.

	•		“Peñasquito Grindability Evaluation,” dated 19 January 2004, prepared by Hazen Research, Inc.

	•		“Peñasquito Pb/Zn/Au/Ag Project, Projected Metal Recoveries and Concentrate Grades Prepared for Glamis Gold Ltd.,” dated 13 July 2006, prepared by T. P. McNulty and Associates, Inc.

	•		“Peñasquito Project Crush Size Study Open Cycle Column Leach Oxide Dump Samples,” dated July 2005, prepared by METCON Research.

	•		“Peñasquito Project, Feasibility Pit Slope Design,” dated July 2005, prepared by Golder Associates.

	•		“Peñasquito Project – Mineral Resource Estimate for the Chile Colorado Zone,” dated March 2004, prepared by SNC-Lavalin Engineers and Constructors, Inc.

	•		“Peñasquito Project Preliminary Cyanide Leach Tests,” dated December 2004, prepared by METCON Research, Inc.

	•		“Phase 1 Pit Slope Stability Evaluation Chile Colorado and Peñasco Pits,” dated 3 November 2004, prepared by Golder Associates.

	•		“Phase II Pilot Plant Testing Program from the Peñasquito Deposit,” dated 20 January 2004, prepared by Mountain States R&D International, Inc.

	•		“Progressive Grinding Circuit Design for the Glamis Gold – Peñasquito Project,” dated June 2005, prepared by Minnovex Technologies, Inc.

	•		“Proposed Grinding System for the Peñasquito Project Using Small-scale Data,” dated 8 July 2005, prepared by SGS Lakefield Research Ltd.

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	•		“Report on Metallurgical Testwork Conducted on Composite Samples from the Peñasquito Property in Mexico,” dated 15 March 2004, prepared by Dawson Metallurgical, Inc.

	•		“Report on Metallurgical Testwork Conducted on a Master Composite (HG + MF) Sample from the Chile Colorado Deposit Located on the Peñasquito Property,” dated 26 August 2004, prepared by Dawson Metallurgical Laboratories, Inc.

	•		“Report on the Use of Cyanide in Milling and Leaching,” dated February 2006, prepared by M3 Engineering & Technology Corporation.

	•		“Summaries of Variability Flotation Testing of 50 Samples and Testing of Selected Samples for Gold Recovery from the Peñasquito Project,” dated 3 May 2004, prepared by Dawson Metallurgical, Inc.

	•		“Summary Report, Metallurgical Review,” dated November 2005, prepared by M3 Engineering & Technology Corporation.

	•		“Tailings Storage Facility Conceptual Design Report (First Draft), Peñasquito Project, Zacatecas State, Mexico,” dated 20 April 2006, prepared by Golder Associates.

	•		“Tailings Storage Facility Conceptual Design Report, Peñasquito Project, M3 Engineering & Technology Group, Zacatecas State, Mexico,” (Golder has combined the finalized TSF conceptual design report with the geochemical characterization of tailings letter to form a single report.) dated June 2006, prepared by Golder Associates.

	•		“Tailings Storage Facility, Geochemical Characterization of Tailings Materials, Peñasquito Project, Zacatecas State, Mexico,” dated 25 April 2006, prepared by Golder Associates.

	•		“Tailings Testing Information” dated June, July and October 2005 prepared by Krebs Engineers.

	1.24		Date

			The information in this report is current as of July 2006.

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1.25

Additional Requirements For Technical Reports On Development Properties And Production Properties

	1.25.1		Mine Operations

			The Chile Colorado and Peñasco mine plan will provide sulphide ore to a mill – flotation plant that will produce two concentrates for sale: a lead concentrate and a zinc concentrate. Both concentrates will have gold and silver credits. Likewise, the mine plan will provide oxide and mixed ores to a heap leaching facility that will produce a silver and gold doré.

			Table 1-16 shows the combined production schedule for both sulphide and oxide ores from both the Peñasco and Chile Colorado deposits. The calendar year 2008, the start of mining operations, is taken as Year 0 in the mining schedule. Half way through Year 1, sufficient sulphide ore is available such that the mill operation can begin under a 6-month startup and commissioning mode. Commercial mill production begins in Year 2 and continues through Year 3 at an annual mining rate of 18.2 million tonnes of sulphide ore per year. Starting in Year 4, production of sulphide mill ore increases to a rate of 36.5 million tonnes per year. The total material mined per year increases over the first 5 years to peak at 179.0 million (511,430 TPD). The production rate increases correspond to significant increases in the equipment quantities of the mining fleet.

			The current ore reserves are 476.9 million tonnes of sulphide ore, 87.1 million tones of leach ore with a life of mine waste to ore ratio of 2.76:1. Commercial sulphide production is scheduled for 17 years.

			Mining begins in the Peñasco pit, which provides the only sulphide mill feed through Year 12, and continues to provide mill feed through Year 14. Waste stripping begins in Chile Colorado in Year 13 and sulphide ore is mined during Years 13 through 16. The sulphide mill feed is from both pits during Years 13 and 14.

			Table 1-19 shows the parameters used to determine the mine equipment fleet requirements.

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Table 1-16 — Mine Production Schedule

Glamis Gold — Penasquito Project
Penasco and Chile Colorado Combined Mine Production Schedule at 50,000 tpd Sulphide Ore Feed, Expand to 100,000 tpd in Year 4


		MILL ORE, SULPHIDE												LEACH ORE								WASTE														STRIP RATIO
YEAR	CLASS OF					Gold		Silver		Lead		Zinc						Gold		Silver														TOTAL		WASTE:
(0 = 2008)	ORE	kt		NSR, $		g/t		g/t		%		%		kt		NSR, $		g/t		g/t		Ovbrdn		Oxide		Mixed		Sulphide		Undef.		Total		kt		MILL+LEACH

0	Prov&Prb		12		13.31		0.21		28.9		0.23		1.61		10,502		3.26		0.23		27.1		18,111		7,155		127		93		0		25,486		36,000		2.42
1	Prov&Prb		5,475		9.47		0.22		27.9		0.34		0.62		18,922		3.47		0.27		25.9		48,570		21,345		1,036		3,645		7		74,603		99,000		3.06
2	Prov&Prb		18,250		8.73		0.26		23.7		0.31		0.54		20,898		3.65		0.30		25.2		2,243		30,090		643		26,876		0		59,852		99,000		1.53
3	Prov&Prb		18,250		8.47		0.28		21.7		0.30		0.52		4,668		3.42		0.27		24.7		40,806		47,750		1,181		26,247		98		116,082		139,000		5.07
4	Prov&Prb		36,500		10.77		0.42		26.3		0.30		0.65		6,577		3.43		0.30		21.0		2,248		51,001		578		82,096		0		135,923		179,000		3.16
5	Prov&Prb		36,500		9.55		0.38		24.6		0.27		0.56		4,279		4.23		0.42		19.8		10,673		28,726		4		98,567		251		138,221		179,000		3.39
6	Prov&Prb		36,500		10.77		0.49		27.8		0.27		0.55		1,784		6.14		0.64		25.5		14,578		38,053		0		88,085		0		140,716		179,000		3.68
7	Prov&Prb		36,500		14.00		0.71		32.1		0.31		0.63		272		8.70		1.03		21.2		8,337		38,910		0		91,123		3,858		142,228		179,000		3.87
8	Prov&Prb		36,500		15.06		0.85		30.9		0.31		0.69		253		11.84		1.34		36.5		4,084		60,596		751		76,816		0		142,247		179,000		3.87
9	Prov&Prb		36,500		14.12		0.80		28.5		0.31		0.68		0								0		6,502		1,492		134,506		0		142,500		179,000		3.90
10	Prov&Prb		36,500		15.76		0.86		31.9		0.32		0.78		0								0		0		0		142,500		0		142,500		179,000		3.90
11	Prov&Prb		36,500		13.66		0.67		35.5		0.40		0.89		2,084		2.60		0.27		14.0		29,901		3,992		0		89,772		51		123,716		162,300		3.21
12	Prov&Prb		36,500		16.05		0.86		36.6		0.43		1.01		3,306		2.32		0.23		14.8		26,721		9,864		0		20,552		257		57,394		97,200		1.44
13	Prov&Prb		36,366		16.55		0.72		40.7		0.39		1.10		6,518		2.26		0.20		18.8		41		18,039		1,391		12,445		0		31,916		74,800		0.74
14	Prov&Prb		33,670		13.16		0.49		39.0		0.34		0.75		6,975		2.77		0.23		24.5		0		4,741		7,319		42,319		0		54,379		95,024		1.34
15	Prov&Prb		29,200		12.00		0.28		55.2		0.63		1.03		16		2.33		0.24		14.0		0		0		29		28,802		0		28,831		58,047		0.99
16	Prov&Prb		7,239		13.34		0.49		58.2		0.46		1.25		0								0		0		0		732		0		732		7,971		0.10

Total			476,962		13.06		0.60		33.2		0.35		0.76		87,054		3.40		0.28		23.8		206,313		366,764		14,551		965,176		4,522		1,557,326		2,121,342		2.76

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Table 1-17 — Mine Production Schedule

Glamis Gold — Penasquito Project
Penasco Pit Only Mine Production Schedule at 50,000 tpd Sulphide Ore Feed, Expand to 100,000 tpd in Year 4


		MILL ORE, SULPHIDE												LEACH ORE								WASTE														STRIP RATIO
YEAR	CLASS OF					Gold		Silver		Lead		Zinc						Gold		Silver														TOTAL		WASTE:
(0 = 2008)	ORE	kt		NSR, $		g/t		g/t		%		%		kt		NSR, $		g/t		g/t		Ovbrdn		Oxide		Mixed		Sulphide		Undef.		Total		kt		MILL+LEACH

0	Prov&Prb		12		13.31		0.21		28.9		0.23		1.61		10,502		3.26		0.23		27.1		18,111		7,155		127		93		0		25,486		36,000		2.42
1	Prov&Prb		5,475		9.47		0.22		27.9		0.34		0.62		18,922		3.47		0.27		25.9		48,570		21,345		1,036		3,645		7		74,603		99,000		3.06
2	Prov&Prb		18,250		8.73		0.26		23.7		0.31		0.54		20,898		3.65		0.30		25.2		2,243		30,090		643		26,876		0		59,852		99,000		1.53
3	Prov&Prb		18,250		8.47		0.28		21.7		0.30		0.52		4,668		3.42		0.27		24.7		40,806		47,750		1,181		26,247		98		116,082		139,000		5.07
4	Prov&Prb		36,500		10.77		0.42		26.3		0.30		0.65		6,577		3.43		0.30		21.0		2,248		51,001		578		82,096		0		135,923		179,000		3.16
5	Prov&Prb		36,500		9.55		0.38		24.6		0.27		0.56		4,279		4.23		0.42		19.8		10,673		28,726		4		98,567		251		138,221		179,000		3.39
6	Prov&Prb		36,500		10.77		0.49		27.8		0.27		0.55		1,784		6.14		0.64		25.5		14,578		38,053		0		88,085		0		140,716		179,000		3.68
7	Prov&Prb		36,500		14.00		0.71		32.1		0.31		0.63		272		8.70		1.03		21.2		8,337		38,910		0		91,123		3,858		142,228		179,000		3.87
8	Prov&Prb		36,500		15.06		0.85		30.9		0.31		0.69		253		11.84		1.34		36.5		4,084		60,596		751		76,816		0		142,247		179,000		3.87
9	Prov&Prb		36,500		14.12		0.80		28.5		0.31		0.68		0								0		6,502		1,492		134,506		0		142,500		179,000		3.90
10	Prov&Prb		36,500		15.76		0.86		31.9		0.32		0.78		0								0		0		0		142,500		0		142,500		179,000		3.90
11	Prov&Prb		36,500		13.66		0.67		35.5		0.40		0.89		0								0		0		0		89,772		0		89,772		126,272		2.46
12	Prov&Prb		36,500		16.05		0.86		36.6		0.43		1.01		0								0		0		0		20,465		0		20,465		56,965		0.56
13	Prov&Prb		35,716		16.71		0.73		40.9		0.39		1.11		0								0		0		0		10,139		0		10,139		45,855		0.28
14	Prov&Prb		22,345		16.03		0.64		42.1		0.29		0.82		0								0		0		0		7,151		0		7,151		29,496		0.32
15	Prov&Prb														0
16	Prov&Prb														0

Total			428,548		13.28		0.63		31.2		0.33		0.74		68,155		3.66		0.30		24.9		149,650		330,128		5,812		898,081		4,214		1,387,885		1,884,588		2.79

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Table 1-18 — Mine Production Schedule

Glamis Gold — Penasquito Project
Chile Colorado Pit Only Mine Production Schedule at 50,000 tpd Sulphide Ore Feed, Expand to 100,000 tpd in Year 4


		MILL ORE, SULPHIDE												LEACH ORE								WASTE														STRIP RATIO
YEAR	CLASS OF					Gold		Silver		Lead		Zinc						Gold		Silver														TOTAL		WASTE:
(0 = 2008)	ORE	kt		NSR, $		g/t		g/t		%		%		kt		NSR, $		g/t		g/t		Ovbrdn		Oxide		Mixed		Sulphide		Undef.		Total		kt		MILL+LEACH

0	Prov&Prb														0														0				0		0
1	Prov&Prb														0														0				0		0
2	Prov&Prb														0														0				0		0
3	Prov&Prb														0														0				0		0
4	Prov&Prb														0														0				0		0
5	Prov&Prb														0														0				0		0
6	Prov&Prb														0														0				0		0
7	Prov&Prb														0														0				0		0
8	Prov&Prb														0														0				0		0
9	Prov&Prb														0														0				0		0
10	Prov&Prb														0														0				0		0
11	Prov&Prb		0												2,084		2.60		0.27		14.0		29,901		3,992		0		0		51		33,944		36,028		16.29
12	Prov&Prb		0												3,306		2.32		0.23		14.8		26,721		9,864		0		87		257		36,929		40,235		11.17
13	Prov&Prb		650		7.64		0.41		28.6		0.34		0.67		6,518		2.26		0.20		18.8		41		18,039		1,391		2,306		0		21,777		28,945		3.04
14	Prov&Prb		11,325		7.50		0.20		32.9		0.43		0.63		6,975		2.77		0.23		24.5		0		4,741		7,319		35,168		0		47,228		65,528		2.58
15	Prov&Prb		29,200		12.00		0.28		55.2		0.63		1.03		16		2.33		0.24		14.0		0		0		29		28,802		0		28,831		58,047		0.99
16	Prov&Prb		7,239		13.34		0.49		58.2		0.46		1.25		0								0		0		0		732		0		732		7,971		0.10

Total			48,414		11.09		0.29		50.1		0.56		0.96		18,899		2.50		0.22		19.6		56,663		36,636		8,739		67,095		308		169,441		236,754		2.52

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Table 1-19 — Mine Plan Basis


Available Days per Year		d	365
Available Shifts per Day	shifts / d		2
Available Shifts per Year	shifts / yr		730
Scheduled Operating Days / Year		d	350
Scheduled Operating Shifts / Year	shifts		700

Shift Duration	hrs		12
Available Time per Shift	min		720
Lunch & Breaks Duration	min		60
Equipment Inspection Duration	min		10
Shift Change Duration	min		10
Fuel, Lube and Service Duration	min		10
Operating Delays per Operating Hour	min / op hr		10
Operating Delays per Shift	min / shift		105
Effective Minutes per Shift	min		525

Sulphide Ore and Waste Rock
Material — Average In Place Density	kg / bcm		2,570
Swell %		%	40.0	%
Swell Factor		*	0.71
Material Bulk Density, Dry	kg / lcm		1,836
Moisture Content		%	5	%

Oxide & Mixed Ore and Waste Rock
Material — Average In Place Density	kg / bcm		2,400
Swell %		%	40.0	%
Swell Factor		*	0.71
Material Bulk Density, Dry	kg / lcm		1,714
Moisture Content		%	5	%

Overburden
Material — In Place Density	kg / bcm		2,200
Swell %		%	40.0	%
Swell Factor		*	0.71
Material Bulk Density, Dry	kg / lcm		1,570
Moisture Content		%	5	%

The mine plan incorporates a conventional shovel (55 cubic meter) –truck (290 tonne) open pit mining operation with the basic parameters shown on Table 1-19.

a)		Equipment Selection

		The mining equipment sized to accommodate the mine plan at a production rate peaking at 511,429 MTPD of total material (assuming 350 operating days per year) during Years 4 through 10 consists of large sized primary

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		mining equipment and a selection of matched pit/dump support and maintenance equipment.

		For the purpose of capacity and cost calculations, it has been assumed that the major mining equipment will be the equivalent of P & H 4100 shovels, Le Tourneau 1850 Loaders, P & H 250XP Diesel blast hole drills and Komatsu 950E haul trucks. Support equipment including track dozers, rubber tire dozers, excavator, and graders are assumed to be equivalent to the Caterpillar models.

		Drilling for all materials except the heap leach ore will be carried out with crawler mounted, diesel powered, blast hole drills on 15 m benches drilled with 1.5 m of sub-grade. It is assumed that 20% of the overburden will be drilled and blasted using a wider hole pattern. The heap leach ore drill pattern will be adjusted as needed to assure rock fragmentation of about 127 to 152 mm for leaching. This may require a smaller drill than what is presently included in the mine capital cost estimate.

		It is assumed that blasting will be carried out primarily with conventional ANFO explosive, supplied by an explosives contractor. The blast holes will be loaded by mine personnel and initiated by the blasting supervisor. A powder factor of 0.20 kg / tonne has been used for explosives consumption estimation in rock, 0.12 kg / tonne for overburden and 0.40 kg / tonne for the heap leach ore.

		The primary loading units will be the P&H 4100 shovels equipped with a 55 cubic meter bucket. An L-1850 LeTourneau front-end loader (25 cubic meter bucket) will be used for selective mining at ore/ waste contacts, low mining faces and in the tighter mining geometries. The loader will also be used for general and utility work around the mine property.

		The 290 tonne class haul trucks will be the primary hauling unit for ore and waste.

b)		Equipment Requirements

		Major mining equipment requirements have been determined on the basis of a two shift per day basis for seven days per week to a total of 350 days per year (assuming 10 holidays and 5 shut down days for weather or other reasons). The mine will operate a total of 700 shifts per year with four mining crews working on a 4 on and 4 off rotation.

		A stockpile will allow the mill to operate 365 days per year.

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		Table 1-20 lists the mining and support equipment that has been selected, sized and evaluated for this plan. The list also includes estimated support equipment requirements.

		Haul truck productivities over the life-of-mine were calculated on the basis of the fixed and variable components of the hauling cycle and travel distances to the primary crusher truck dump pocket at the 1,968 m elevation, to the run of mine heap leach and to the waste dumps. For this study, the waste material has been segregated into separate dumps for overburden, oxide plus mixed material and sulphide material.

Table 1-20 — Mining Equipment Selection*


	Initial		Maximum
Equipment	No. Reqd		No. Reqd		General Specification
Rotary Blast Hole Drill		2		8	P & H 250XP, 311 mm Diesel
Electric Shovel		2		4	P&H 4100XBP, 41 cu m, Electric
Wheel Loader		2		2	L-1850 LeTourneau Loader
Haul Truck		15		75	Komatsu 930E, Series III 320, End Dump
Track Dozer		6		8	6 ea – D10 T, 10SU, 18.5 cu m, Ripper, 2 ea – D9T for Stockpile & Tailings
Rubber Tire Dozer		0		2	Cat 854G, Universal Blade
Grader		3		5	Cat 16H, 4.9 m
Water Truck		3		5	Cat 777, 70,000 liter
Wheel Loader		1		1	Cat 988H
Auxiliary Rock Drill		1		1	IR ECM 590/YH Rock Drill,
Backhoe / Excavator		1		3	Cat 325, 2.2 cu m, with Hammer
Fuel / Lube Truck		2		2	18,500 liter
Blast Hole Stemmer		2		3	Cat 416C
Flatbed Truck		1		2	2 tonne
ANFO/Slurry Truck		2		3	18 tonne
Cable Reeler		1		2	Cat 966G
Crane Truck		1		1	25 tonne
Forklift		1		2	Hyster H100XM
Forklift		1		2	Sellick SD-100
Mobile Crane		1		1	120 tonne Grove
Service / Welder / Steam Truck		6		6	25,000 kg GVW
Grader		1		1	Cat 160H
Backhoe		1		1	Cat 420
Water Truck		1		1	4000 gallon
Trailer		1		1	2660 trailer
Dump Truck		1		1	10 yard
Loader		1		1	Skidsteer
Integrated Tool carrier		1		2	Cat IT-62G, Tire Service / Maintenance
Crew Bus		2		6	20 man
Pick-Up Truck		20		40	4 x 4
Light Plant		8		14	Diesel Generator
Mine Communications System		1		1
Mine Radios		70		173
Pumps		2		5	Submersible, Pit Dewatering
Mine Dispatch System		1		2	19 high precision GPS units
Generator		1		1	Mounted on trailer
Engineering Computers & Software		1		1	Drafting, Plotting, Engineering
Surveying Equipment		1		1	GPS Surveying System
Mine Maintenance Computers & Software		1		1	Inventory Control, Planning


*		Selection assumes fire truck and ambulance are to the account of G&A area.

*		Selection assumes existence of on site diesel / gasoline fuel storage with dispensing capability to fuel haul trucks.

*		Selection provides for full field fuel service to dozers, loaders, excavator and portable generators only. Trucks refueled at tank farm.

*		Selection does not include step down transformers, switchgear and cabling for pit power.

*		Selection does not include mobile equipment maintenance shop equipped with small tools, power tools, welders, hoists, lube dispensing

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	c)		Manpower

			All personnel in the mine department will be Mexican nationals with the exception of an expatriate mine superintendent, the mine and maintenance general foremen, the mine and maintenance trainers and a maintenance planner for the initial years (Years 1- 3) of production. It is expected that based on the unemployment levels in the area and the regional experience in mining, that there will be no difficulty staffing the project.

			Mine operations and mine maintenance manpower complement has been estimated based on a two 12 hour shift per day, four-on-four-off, seven day per week operation for all unit operations. Supervision, engineering personnel and the blasting crews are scheduled to work on an eight hour day, five day per week rotation.

			In general one operator has been assigned to each equipment unit on each shift. For instance, in drilling operations four operators are assigned to each drill during high utilization years and reduced during low drill utilization years. Some manpower reductions have been made where opportunities to use operators on several equipment types exist, such as in mining support equipment.

			Maintenance personnel requirements have been estimated on the basis of equipment requirements and utilization with adjustments to reflect an average mine-life ratio of about 0.65:1 mine maintenance personnel to mine operating personnel.

			A summary life of mine manpower schedule is shown on Table 1-21.

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Table 1-21 Summary Manpower Requirements


Area	Position	Number

General Management
	General Manager		1
	Executive Secretary		1
	Receptionist		1
	Sub-Total			3

Mine
	Mine Manager		1
	Mine Clerk		1
	Mine Superintendent		1
	Mine General Foreman		1
	Senior Shift Foreman		3
	Shift Foreman		9
	Equipment Trainer		1
	Shovel/Loader Operators		21
	Support Equipment Operators		60
	Truck Operators		225
	D&B General Foreman		1
	Blasting Supervisor		2
	Blasting Crew		9
	Drillers		36
	Dewatering & Cable Crew		12
	Laborers		9
	VS&A Allowance		14
	Mine Maintenance Superintendent		1
	Maintenance Planner		4
	Maintenance Supervisors		3
	Mechanics		12
	Welders		12
	Lubemen		9
	Mechanic Helpers		6
	Laborers		3
	VS&A Allowance		10
	Technical Services Manager		1
	Chief Engineer		1
	Mine Engineers		6
	Ore Control Engineers		6
	Lead Surveyor		3
	Survey Assistant		12
	Chief Geologist		1
	Mine Geologist		9
	Sub-Total			505

Process
	Process Manager		1
	Process Clerk/Assistant		1
	Mill Superintendent		1
	Grinding/Crusher Supervisors		3
	Grinding Operators		6
	Grinding Helpers		6
	Lime Circuit Operators		3
	Lime Circuit Reagents		2
	Crusher Operators		3
	Crusher Helpers		3
	Flotations Supervisors		3
	Pb Flotation Operators		6
	Pb Flotation Helpers		9
	Zn Flotation Operators		6
	Zn Flotation Helpers		9
	Tailings Operators		3
	Tailings Helpers		6
	Pb/Zn Concentrate Supervisors		3
	Pb Concentrate Operators		3
	Pb Concentrates Helpers		3
	Zn Concentrate Operators		3
	Zn Concentrate Helpers		3
	Scale Operator		3
	Leach Superintendent		1
	HL Supervisors		3
	Merrill-Crowe Operators		3
	Merrill-Crowe Helpers		3
	Refinery Operators		2
	Refinery Helpers		1
	HL Helpers		2
	Metallurgist Superintendent		1
	Chief Metallurgist		1
	Metallurgists		3
	Chief Chemist		1
	Mill Lab Supervisors		3
	Sample Prep Helpers		9
	Fire Assay Operators		9
	Wet Lab Operators		9
	HL Lab Supervisor		1
	HL Samplers		3
	HL AA assayers		3
	HL Environmental Operator		1
	Maintenance Superintendent		1
	Maintenance Planner		1
	Plant Mechanics		27
	Plant Electrical/Instrumentation		6
	Sub-Total			183

Administration
	Administrative Manager		1
	Environmental Coordinator		1
	Environmental Technicians		3
	Environmental Laborers		6
	Safety & Health Coordinator		1
	Safety Technicians		3
	Doctors		2
	Paramedics		1
	Nurses		1
	Community Relations Coordinator		1
	Community Relations Supervisor		1
	Community Relations Technicians		3
	Sub-Total			24

Human Resources
	HR Manager		1
	HR Secretary		1
	HR Supervisor		2
	HR Specialist		3
	Payroll Administrator		4
	Security		3
	Camp Administrator		1
	Janitorial Service		0
	Sub-Total			15

Accounting
	Controller		1
	Senior Mine Accountant		1
	Accounting Clerk		1
	Cost Accounting Supervisor		1
	Cost Accounting Assistant		1
	Tax Accountant		1
	Sr. Accounts Payable		1
	Accounts Payable Assistants		3
	IT Supervisor		1
	IT Assistants		5
	Sub-Total			16

Purchasing and Warehousing
	Purchasing &Warehouse Manager		1
	Purchasing Coordinator		1
	Buyers		4
	Warehouse Supervisor		1
	Warehouse Assistant		1
	Warehouse Attendants		3
	Drivers		4
	Sub-Total			15
	TOTAL			761

Peñasquito — Manpower Summary


General Manager			3
Mine			505
Process			183
Administration			24
Human Resources			15
Accounting			16
Purchasing and Warehousing			15
TOTAL			761

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	d)		Mine Maintenance and Dry Facilities

			A mine service complex will be provided adjacent to the plant site which will include truck and support equipment repair and maintenance bays, a steam bay, a tire service bay and a welding bay. Fuelling facilities for haul trucks and small mobile equipment will be constructed. A mine dry which includes clean and dirty change areas, storage lockers and washroom/shower facilities will be constructed.

	e)		Explosive Magazines and AN Storage

			Explosives supplies, office/shop facilities and AN storage facilities for mining operations will be supplied by an explosives contractor. High explosives will be stored in magazines, and AN will be stored in dispensing silos. The magazines will be fenced and located within the property boundary and situated to meet the legal required distances from the mine facilities, roads or populated areas.

			Service roads connecting the magazine area, the AN storage silo, and the office/shop facilities will be constructed. Fuel oil for blasting will be supplied by the owner.

	f)		Pit Power

			The electrical power to operate in-pit submersible sump pumps for mine dewatering and the electric loading shovels will be distributed from the main site substation to in-pit and pit perimeter transformers and switchgear.

	g)		Mine Dewatering

			The groundwater inflow into the pits has been assumed to be minimal for purposes of this study. It is anticipated that groundwater inflow and pit runoff will be carried by drainage ditches along haul roads and sumped in the pit floor for pumping out of the pit. Additional pumping capacity for flood control will be required for periods of intense precipitation during the wet season. A requirement for peak inflow pumping capacity has been assumed.

			Simple ditches along pit rim perimeters will prevent runoff water from entering the pit. A mining support excavator will be available to provide ongoing road/runoff ditching and pit sump excavation capacity.

	h)		Engineering and Grade Control

			The mine department personnel complement will include engineers, a surveyor, a geologist, a draftsman, grade control technicians, and a mine clerk that will carry out required mine engineering, surveying, geology,

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grade control, production planning, and production tracking tasks. The mine engineering department will be equipped with office computers, mine planning software, GPS surveying equipment, and CAD drafting stations and software. A truck dispatching system has not been included.

			Sulphide mill ore, oxide plus mixed heap leach ore and ore/waste contacts will be marked in the field to guide the ore loading operations to allow for selective mining with a minimum of dilution. Grade contacts will be defined with aid of sampled and assayed blast hole cuttings.

			The maintenance clerk will schedule equipment maintenance, monitor repair parts inventories and track maintenance performance with the aid of maintenance scheduling software.

	1.25.2		Recoveries This is discussed in Section 1.18. 1.25.3 Markets

			At the time of this report no agreements have been made with any smelters and no discussions have been entered into with a view to concluding any agreements. Not withstanding this, several smelter operators have expressed interest in entering into discussions. Samples of the concentrates have been provided to those requesting it.

			Market research has been performed by a specialist consultant, Neil S. Seldon and Associates Limited. The following is a summary of the findings:

			The markets for the lead and zinc concentrates from Peñasquito fall into two categories, smelters within Mexico and smelters overseas. The overseas smelters are further divided into Asian, North American and European markets.

			For the purpose of the study, it is assumed that all lead concentrate will be smelted in Mexico but it is also recognized that some will be smelted in overseas smelters. The smelter terms recommended in the consultant’s report for the lead concentrate represent “typical” terms for the market. They represent a forecast of terms based on historical averages with due consideration for projected supply and demand over the foreseeable future.

			It is possible that there may be a market for zinc concentrate in Mexico. The report assumes that zinc will be split between local and overseas either Europe or Asia. Again the smelter terms used in the calculations in this

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			report represent an average of the typical terms deduced from the market research.

			Transportation cost and port charges in-country have been determined based on a survey of transportation companies and other users. They represent current costs. Ocean freight charges recommended by the consultant are projected future costs based on historical averages and projected supply and demand.

			Actual smelter terms and freight costs used in the report are set out in Section 1.25.8.

	1.25.4		Contracts

			Mining and mill operating costs as discussed later are derived from engineering estimates based on the current level of information available. They are not based on contract prices obtained from third parties. The rates used are viewed as being within the typical range for operations of this size.

			As noted in the previous section, no smelting, refining or transportation contracts have yet been entered into, nor have any such discussions been initiated.

	1.25.5		Environmental Considerations

			The Peñasquito mining Project is located in a rural area of mining tradition, since its geological characteristics embody a mineral ore body able to be exploited with the best available technology.

			The site is not within protected natural areas, and the mining work is not considered a risk to the environmental system integrity since it will take the required environmental control measures for the flora and fauna species identified in the site.

			Other identified impacts will be drainage and the site soils, but the site impact will be lessened by mitigation and control measures to be implemented in the different project phases.

			Summing up, there are no inconveniences for the mining project to be authorized on environmental impact because the ideal conditions are in place to comply with the present Mexican environmental codes.

			Federal laws primarily regulate mining in Mexico, however there are several permit programs subject to state and local jurisdiction. The key permits required are shown in Table 1-22. The chart shows the government agencies involved as well as the status and the estimated approval time for each permit. The Secretary of Environment and Natural Resources

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			(SEMARNAT)is the chief agency regulating environmental matters in Mexico. The CNA has authority over all matters concerning water rights and activities that affect ground and surface water supplies, including activities in the floodplains.

			The SEMARNAT permit programs that are mandatory for the construction stage are the Environmental Impact Manifest (MIA), Risk Study and the Land Use Change Study. An endorsement must also be obtained at the municipal level to start the mine construction. A release letter from National Institure of Anthropology and History (INAH) must be obtained prior to any actions that could disturb the identified cultural resources at the site. Glamis has obtained a release letter from INAH.

			The explosives use permit must be secured before any explosives can be brought into the storage area. The National Secretary of Defense (SEDENA) has authority over all explosives permits.

			The preparation of a full MIA for the mine and processing plant is complete in accordance with Mexican requirements. The MIA will comprise the following volumes:

	•		Environmental Impact Assessment

	•		Risk Analysis

	•		Land Use Change

	•		EIA has been prepared with data of 50,000 TPD. In the future a change to EIA needs to be done to 100,000 TPD or SEMARNAT could request a new EIA.

A separate MIA must be prepared for the power line once the final alignment is established. This MIA does not require a risk analysis.

A third MIA and CUS is being prepared for associated work like camp, landing strip, mine by pass and aggregate crushing plant.

The Aquifer Study and Flora and Fauna Study are both complete. The Aquifer Study has identified adequate water for the project and work is in progress to secure this water. The Flora and Fauna Study identified no obstacles to the project.

First phase of granular Aquifer Study is finished. Currently the study of bedrock aquifer is in progress to define the quantity of water required by the mine project.

Key elements of reclamation will be accomplished during the course of mining.

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	•		Rock pile will be placed at a 2.5 horizontal to 1 vertical average side slope.

	•		Leach piles will be placed at a 2.5 horizontal to 1 vertical average side slope.

	•		Tailings will be placed by centerline spigot (or cyclone) construction and have a minimum average side slope of 4 horizontal to 1 vertical.

	•		Rock pile foundations will be caliche or silty-clay grade surface. A suitable thickness of pit oxide overburden (10 meters minimum) will be placed on this benign strata. Sulphide or oxide waste rock will be placed over the oxide overburden layer. During the last placements of material, surveying will be employed to ensure proper slopes and suitable grades for drainage of the top surface. At the end-of-mine life, a top cover layer will be placed on the sides and top of each rock pile unit, in effect “bagging” the sulphide material in an oxide envelope. In the case of the Peñasco rock piles, overburden for the Chile Colorado pit will likely be largely used as it is scheduled to be mined after Peñasco. For Chile Colorado waste rock, topcover will come from previously stockpiled topsoil. The possibility also exists that Chile Colorado waste rock may be deposited in the Peñasco Pit.

	•		Leach pile foundations will be caliche or silty-clay scarified surface. On this surface a double liner will be placed (clay and LLDPE geomembrane). On top of this a cushioning sand layer will be followed by a crushed and screened drainage layer.

	•		Tailings foundation will be caliche or silty-clay grade surface. The caliche/silty-clay will be overlain by consolidated tails to form a sufficient barrier for tails confinement.

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Table 1-22 — Key Permits For 50,000 MTPD Plant⁶


REQUIRED			ESTIMATED	ACTUAL STATUS
PERMIT	MINING STAGE	AGENCY	RESPONSE TIME	(June 2006)
Environmental Impact Manifest-mine¹	Construction/operation/ abandonment	SEMARNAT- Federal Offices Mexico DF)	0-120 works days.	Complete by August 2006

Land use change study-mine¹	Construction/ operation	SEMARNAT- DGGFS²-Federal offices.		90% complete by August 2006

Risk analysis study-mine¹	Construction/ operation	SEMARNAT-(Mexico City office)	0-120 works days.	75% complete by August 2006

Environmental Impact Manifest-power line¹	Construction/operation/ abandonment	SEMARNAT-State offices	0-120 works days.	50% complete by August 2006

Land use change study-power line¹	Construction/ operation	SEMARNAT-DGGFS²-State offices.	0-120 works days.	50% complete by August 2006

Land use license¹	Construction	Mazapil municipality	2 months	Discussions underway

Explosive handling and storage permits	Construction/- operation	SEDENA³ (Also requires state and local approvals)	4 months	Application to be submitted when final design is complete Environmental Impact authorization required.

Archaeological release letter¹	Construction	INAH⁴ (State offices)	3 to 4 months	The mine authorization is in place but not so for the power line, we’re working to get it. Complete

Water use concession title	Construction/ operation	CNA⁵ (State offices)	60 work days	Approx. 1 year to obtain permit of 10 million cubic meters of water.

Water discharge permit	Operation	CNA (State offices)	60 work days s	Application to be submitted when final design is complete

Unique license	Operation	SEMARNAT-State offices	3 to 12 months	Not required for construction and start-up, application will be submitted once mine is in operation

Accident prevention plan	Operation	SEMARNAT-State offices	Not defined	Not required for construction and start-up; to be submitted once mine is in operation

¹Mandatory to start construction activities.

²DGGFS (General Department of Permitting for Forestry and Soils)

³SEDENA (National Secretary of Defense)

⁴INAH (National Institute of Anthropology and History)

⁵CNA (National Water Commission)

⁶All studies based on 50,000 MTPD plant. An amendment will be required for 100,000 MTPD plant.

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	1.25.6		Taxes

			Taxes have been calculated on a project basis in accordance with published Mexican taxation legislation. Additional details of how taxes have been applied can be found in Volume II of the Feasibility Study. Specialist taxation advice has not been solicited at this stage and no tax planning strategies have been assumed.

			IVA (Impuesto Valor Agregado) is a value-added sales tax at the Federal level. This tax has not been included in the estimates.

			PITEX (Programa de Importacion Temporal para Producir Articulos de Exportacion) is a federal program allowing a waiver of import duties on imported items that will exported at the end of the project. The cost of administrating this program has been included in the estimate.

			Income tax has been applied at a rate of 28% of taxable income after 2007 and an allowance for employee profit sharing has been included.

			Total federal income tax paid over the life of the mine is $1.3 billion.

	1.25.7		Reclamation Costs

			Site Reclamation Costs at end of Mine Life are $15,784,000.

			SEMARNAT Change of Land Use Fee will be a sunk cost and not available for reclaiming but negates the requirement for bonding.

			It is noted that in addition to the reclamation costs indicated above, additional operating costs are incurred during the course of mining to accomplish reclamation as a continual process, e.g., rock piles and leach piles are placed to final average side slopes (instead of angle of repose) needed for reclamation, as described in 1.25.5. Annual haulage costs reflect this accordingly.

	1.25.8		Economics

	a)		Key Parameters

			The following unit costs significantly affect the financial model.

	•		Mechanical and electrical equipment costs are in late second quarter 2006 dollars, based on recent hard money vendor quotations.

	•		Electricity power costs are based on published second quarter 2006 CFE rates.

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