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Glamis Gold Ltd. has agreed to acquire Vancouver-based Francisco Gold Corp. for about $192-million, in a move Glamis expects will help double its gold production within five years.

Glamis wants Francisco Gold's El Sauzal project in Mexico and it is confident the Marlin property in Guatemala has significant exploration potential, Kevin McArthur, the president and chief executive officer of Glamis, told analysts yesterday.

He said Glamis plans to construct a $100-million (U.S.) mine at El Sauzal capable of producing 170,000 ounces of gold a year at a cash cost of less than $120 an ounce by 2005. Gold traded yesterday at $293.50 an ounce.

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Francisco Gold has focused its exploration activities during the past year on the Marlin site.

Glamis, a Canadian registered company based in Reno, Nev., plans to produce about 255,000 ounces of gold in 2002 from its mines in California, Nevada, Mexico and Honduras.

The shares of Francisco Gold rose $4.30 (Canadian) a share yesterday on the Canadian Venture Exchange to close at $12.80, putting a value on the company of $193.5-million.

"There's a scarcity of projects out there," said Glenn Brown, a mining analyst with Toronto investment dealer Haywood Securities Inc., who follows exploration-stage companies such as Francisco Gold. "Money is moving downstream in the gold business," he said.

It's a friendly takeover and the Glamis geologists are very familiar with the El Sauzal project, having first visited the site two years ago and continued on-and-off-again talks, executives of both companies said.

As part of the deal, shareholders of Francisco Gold will also receive common shares in a new exploration company, which will own properties in Nicaragua and hold cash of $25-million. That company will be run by a team headed by Randy Reifel, the president of Francisco Gold. The new exploration company expects to become publicly traded this summer, Mr. Reifel said. Glamis will have a right to acquire a 5-per-cent stake.

The cash held by the exploration company will be transferred from Francisco Gold.

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Glamis is offering 1.55 shares for each share of Francisco Gold along with one share of the new exploration company. Glamis shares fell 32 cents yesterday to $7.48 on the Toronto Stock Exchange.

Glamis will issue 25.7 million shares, increasing the total outstanding to 109.3 million.

If Francisco Gold terminates the transaction as a result of a superior offer, Glamis will receive a break fee of $8.6-million.

The company's financial adviser made other companies known to have had an interest in Francisco aware that there were developments, Mr. Reifel said.

"There was a great fit [with Glamis] but the question was whether we could agree on price and terms," Mr. Reifel said.

Report on Business Company Snapshots are available for:
GLAMIS GOLD LTD. FRANCISCO GOLD CORP.
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