<PAGE>
[LOGO OF MERIDIAN GOLD APPEARS HERE]
MERIDIAN GOLD INC.
5011 MEADOWOOD WAY
RENO, NEVADA 89502
PHONE: (702) 827-3777
FAX: (702) 827-7133
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MERIDIAN GOLD REPORTS THIRD QUARTER 1997 RESULTS
(All dollar amounts in U.S. currency)
RENO, NEVADA, OCTOBER 14, 1997--Meridian Gold Inc. today reported a third
quarter loss of $10.5 million, or $0.14 per share, before unusual items. This
compares to a loss of $2.1 million or $0.03 per share in the third quarter of
1996. The Company also reported a $36.4 million non-cash provision in
connection with a one-time, non-recurring adjustment following a prudent review
of the Company's balance sheet based on the current low gold price environment.
The third quarter loss after unusual items is $46.9 million, or $0.64 per share.
The impact of the adjustment on the Company's proven and probable reserves is
estimated to be minimal.
The unusual items reflect: a write-down of the carrying value of Meridian's 30%
interest in the Jerritt Canyon Joint Venture mine by $26.2 million; a $4.0
million acceleration in the closure reserve accrual for Jerritt Canyon; a $3.5
million adjustment as a result of additional changes at Beartrack related to
depreciation and the leach pad inventory; and a $2.7 million increase in the
closure reserve at Beartrack as a result of lower gold credits from residual
ounces due to lower gold prices.
In addition to the third quarter results, the Company is pleased to provide a
resource estimate on its Rossi project on the Carlin Trend in Nevada and a
review of the underground program at its El Penon project in Chile.
THIRD QUARTER RESULTS
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Sales for the quarter were $17.5 million, versus $20.1 million in the third
quarter of 1996, reflecting lower realized gold prices which more than offset
slightly higher production. The average realized price of gold decreased to
$323 per ounce from $383 per ounce in the third quarter of 1996. Gold
production for the quarter increased to 56,415 ounces from 51,081 ounces in
1996, while cash production costs improved to $194 per ounce from $227 per
ounce.
At Beartrack, gold production was 29,114 ounces, with cash costs of $208 per
ounce. This compares to third quarter 1996 production of 27,595 ounces at a
cash cost of $184 per ounce. The increase in cash costs over 1996 is the result
of lower ore production due to the major pad expansion taking place at Beartrack
this year. During the third quarter the mine moved 1.0 million tonnes of ore,
and the average cyanide soluble heap leach grade was 0.86 grams per tonne.
At Jerritt Canyon, the Company's share of gold production in the third quarter
was 27,301 ounces at a cash cost of $180 per ounce. Production for the quarter
was up 16% from third quarter 1996 production of 23,486 ounces, due primarily to
higher grade ores from the underground Murray Mine and the Dash open pit, which
combined to more than offset the lower throughput associated with the shutdown
of the wet mill. The cash costs represent a 35% reduction from third quarter
1996. Higher ore grades are the primary factor in the cash cost improvement.
<PAGE>
Exploration spending in the third quarter, primarily at El Penon, was $9.9
million, compared to $4.3 million in the third quarter of 1996.
At the end of the third quarter, Meridian Gold's balance sheet remained strong,
with cash resources of approximately $60 million to support the Company's growth
plans.
RESULTS FOR THE NINE MONTHS ENDING SEPTEMBER 30
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For the first three quarters of 1997, the Company has recorded a loss before
unusual items of $24.3 million, or $0.33 per share, compared to a loss of $5.0
million or $0.07 per share for the first three quarters of 1996. After unusual
items, the Company's loss was $60.7 million, or $0.83 per share.
Sales were $48.3 million, versus $56.2 million in the same period last year.
Exploration spending, primarily at El Penon, was $23.1 million, significantly
higher than the $7.7 million spent in the same period last year. The average
realized price of gold for the first three quarters of 1997 was $348 per ounce,
compared to $392 in 1996.
Gold production for the first three quarters declined slightly from 1996 levels,
to 142,222 ounces from 146,601 ounces. Cash production costs improved to $215
per ounce from $245 per ounce.
Meridian Gold stated at the time of the secondary offering in July 1996 that its
emphasis would be on generating significant long-term growth through an
aggressive exploration and development program. The Company's 1997 operating
results reflect this program, which is generating significant opportunities that
will benefit the Company in the long term.
ROSSI -- INFERRED RESOURCE ESTIMATE
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At the Company's wholly owned Rossi project, a geologically inferred resource
has been estimated for the deep mineralization that has been explored northwest
of Barrick Gold Corp's Meikle mine. This high-grade gold mineralization is
refractory and starts at a depth of approximately 700 feet below the surface.
The resource estimate is based on a three dimensional model constructed from
cross-sections using 78 drill holes. The mineralization was extended half the
distance to the nearest hole, up to maximum distance of 160 or 120 feet,
depending on the orientation. In addition, strong structural and stratigraphic
control was placed on the mineralization.
At a cut-off grade of 6.8 grams/tonne, the Company is pleased to announce an
inferred resource of 1,069,000 ounces of gold, contained in 2.8 million tonnes
averaging 12.7 grams/tonne.
"This resource estimate represents the results of deep drilling on only a small
portion of the property, and the resource is open to expansion. Presently,
Meridian is reviewing all of its options regarding the property", said Brian J.
Kennedy, President and CEO.
EL PENON UPDATE
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The underground program from the decline in Quebrada Orito has been completed.
Due to the variability inherent in most vein type gold deposits, six cross-cuts
totaling 341 meters, 44 underground core holes, and 55 meters of drifts in ore
were completed to confirm the continuity of mineralization. The following
results are based on the average of chip samples along both the right and left
sides of the cross-cuts and the average of muck samples for the drifts in ore:
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<TABLE>
<CAPTION>
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Sample Description and Location Interval (m) Gold grade Silver grade
- ------------------------------- -------- ---------- ------------
(grid is in meters) (g/tonne) (g/tonne)
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Cross-cut
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<S> <C> <C> <C>
Cross-cut 1 (1300 N (north of portal)) 6.5 3.2 47
2 (1330 N) 4.3 10.2 258
3 (1360 N) 12.8 4.3 142
4 (1390 N) 13.3 12.3 197
5 (1420 N) 23.5 12.7 184
6 (1450 N) 13.9 6.5 147
Drifts in Ore
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Drift in ore A (1390-1420 N) 24.0 29.3 300
B (1420-1450 N) 21.4 10.2 195
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</TABLE>
The cross-cuts are 3.0 x 3.5 meters and are numbered based on their distance in
meters from the decline portal. The drifts, which are entirely within the
mineralization, are also 3.0 x 3.5 meters and connect the three northernmost
cross-cuts.
The sampling program has been successful in confirming the continuity and tenor
of the mineralization within the deposit. The ranges of grades encountered in
the underground program are comparable to those encountered in the reverse
circulation surface drilling, and all of the data are being incorporated into
the geologic model for the feasibility study. The feasibility study is
continuing and the results are expected to be released during the first quarter
of 1998.
Surface drilling at El Penon during the first nine months of 1997 totaled 223
reverse circulation and 43 core holes, and has been concentrated on better
defining the resource area for feasibility estimates. Fourth quarter drilling
will focus on new exploration targets on the property.
Meridian Gold is also pleased to announce the hiring of Mr. Gonzalo F. Tufino as
the Chilean-based Project Manager for its El Penon project. Mr. Tufino returns
to the gold industry after having successfully constructed and commissioned the
large Fenix Lithium Project in Argentina. He was President and General Manager,
Minera del Altiplano S.A., a wholly-owned subsidiary of FMC Corporation. Said
Donald L. Beckwith, Vice President of Operations, "We are pleased to add someone
with Gonzalo's experience. He brings proven South American construction and
operating expertise, in addition to broad gold experience in the western
hemisphere, to our team."
OTHER EXPLORATION UPDATES
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Chile -- An additional drill program is planned for the Las Tinajas property in
the northern part of the Maricunga District. This drilling is planned to start
as soon as weather permits. Recent field work has detected a new zone of
surface mineralization with more than 3 grams per tonne gold. At the Company's
nearby Agua de la Piedra property, surface sampling and mapping will resume
later this year.
Nevada -- The Company has recently acquired two new properties in Nevada as a
result of its continuing grassroots exploration program. Both of these
properties are epithermal quartz-adularia vein systems with similarities to El
Penon. Additional field work is in progress on both properties.
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Meridian Gold Inc. is a proven exploration-oriented gold producer, well financed
and led by a strong management team committed to growth. In 1996, annual
production was 202,000 ounces of gold from two producing properties: Beartrack
in Idaho (100% owned) and Jerritt Canyon (30% owned) in Nevada. At year-end
1996, the Company had reserves of 1.4 million ounces of gold. In addition,
Meridian Gold holds an inventory of active exploration properties in Chile and
the United States. The common shares of Meridian are traded on The Toronto
Stock Exchange (MNG) and the New York Stock Exchange (MDG).
Safe Harbor Statement under the United States Private Securities Litigation Act
of 1995: Statements in this release that are forward-looking statements are
subject to various risks and uncertainties concerning the specific factors
identified above and in the corporation's periodic filings with the Ontario
Securities Commission and the U.S. Securities Exchange Commission. Such
information contained herein represents management's best judgment as of the
date hereof based on information currently available. The corporation does not
intend to update this information and disclaims any legal liability to the
contrary.
For further information, please visit our website at www.meridiangold.com, or
contact:
Wayne M. Hubert
Investor Relations
Meridian Gold Inc.
Tel: (702) 827-7130
Fax: (702) 827-7133
E-mail: [email protected]
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.
Date: October 16, 1997
MERIDIAN GOLD, INC.
By: /s/ Brian J. Kennedy
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President and Chief Executive Officer
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Meridian Gold Inc.
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Consolidated Condensed Statements of Operations
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(Unaudited and in millions, except per share data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
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1997 1996 1997 1996
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<S> <C> <C> <C> <C>
Sales $ 17.5 $ 20.1 $ 48.3 $ 56.2
Costs and expenses
Operating expenses 19.5 13.6 40.8 38.5
Depreciation, depletion & amortization 8.3 5.0 17.6 15.8
Exploration costs 9.9 4.3 23.1 7.7
Selling, general and
administrative expenses 1.8 0.7 4.7 3.0
------ ------ ------ ------
Total costs and expenses 39.5 23.6 86.2 65.0
Impairment of mineral properties 26.2 -- 26.2 --
Loss before interest and taxes (48.2) (3.5) (64.1) (8.8)
Gain on disposal of assets 0.4 --- 0.4 ---
Interest income 0.9 1.4 3.0 3.8
------ ------ ------ ------
Loss before income taxes (46.9) (2.1) (60.7) (5.0)
Provision for income taxes --- --- --- ---
------ ------ ------ ------
Net loss $(46.9) $ (2.1) $(60.7) $ (5.0)
====== ====== ====== ======
Loss per common share $(0.64) $(0.03) $(0.83) $(0.07)
====== ====== ====== ======
Number of common shares used in
loss per share computations 73.6 73.6 73.6 73.6
====== ====== ====== ======
</TABLE>
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Meridian Gold Inc.
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Operating Data (Unaudited)
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<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
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1997 1996 1997 1996
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<S> <C> <C> <C> <C>
BEARTRACK MINE
Gold production - Heap leach (ounces) 29,114 27,595 77,095 77,370
Tonnes mined (thousands):
Ore 971 1,491 2,701 3,233
Waste 1,469 705 3,237 2,920
------- ------- ------- -------
Total 2,440 2,196 5,938 6,153
Average heap leach grade (grams / tonne) 0.86 0.86 0.89 0.93
Cash cost of production / ounce $ 208 $ 184 $ 202 $ 187
</TABLE>
JERRITT CANYON JOINT VENTURE
Gold production (Meridian Gold 30 % share ounces):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Milling 27,301 23,333 64,914 68,789
Heap leach 0 153 213 442
------- ------- -------- --------
Total 27,301 23,486 65,127 69,231
Tonnes mined (thousands):
Ore 334 354 762 1,106
Waste 5,236 3,498 19,716 8,792
------- ------- -------- --------
Total 5,570 3,852 20,478 9,898
Mill tonnes processed (thousands) 337 595 1,052 1,787
Average mill ore grade (grams / tonne) 9.05 4.53 6.92 4.53
Mill recoveries 92.9% 87.2% 92.6% 87.6%
Cash cost of production / ounce $ 180 $ 278 $ 229 $ 309
TOTAL
Ounces of gold produced 56,415 51,081 142,222 146,601
Ounces of gold sold 53,983 53,179 140,639 145,410
Average realized price / ounce $ 323 $ 383 $ 348 $ 392
Cash cost of production / ounce $ 194 $ 227 $ 215 $ 245
</TABLE>
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Meridian Gold Inc.
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Consolidated Condensed Balance Sheets
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(Unaudited and in millions)
<TABLE>
<CAPTION>
September 30 December 31
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1997 1996
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<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 59.6 $ 82.6
Trade receivables 0.5 1.8
Inventories 14.0 16.8
Other current assets 3.3 2.7
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Total current assets 77.4 103.9
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Property, plant and equipment, net 76.8 106.6
Other assets 3.4 4.1
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Total Assets $157.6 $214.6
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade $ 7.9 $ 7.6
Accrued and other liabilities 5.1 10.7
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Total current liabilities 13.0 18.3
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Other long-term liabilities 23.5 14.6
Shareholders' equity 121.1 181.7
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Total liabilities and shareholders' equity $157.6 $214.6
====== ======
</TABLE>
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Meridian Gold Inc.
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Consolidated Condensed Statement of Cash Flows
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(Unaudited and in millions)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
-------------------- --------------------
1997 1996 1997 1996
---------- -------- ---------- --------
<S> <C> <C> <C> <C>
Net income (loss) $(46.9) $ (2.1) $(60.7) $ (5.0)
Provision for depreciation, depletion
and amortization 8.3 4.9 17.6 15.8
Impairment of mineral properties 26.2 --- 26.2 ---
Change in assets and liabilities, net 13.0 5.6 7.7 ---
------ ----- ------ -----
Net cash provided by (used in) op. activities 0.6 8.4 (9.2) 10.8
Cash flows from investing activities:
Capital spending (7.0) (2.5) (14.3) (8.8)
Disposal of PP&E 0.5 --- 0.5 ---
------ ----- ------ -----
Net cash used in investing activities (6.5) (2.5) (13.8) (8.8)
Cash flows from financing activities:
Proceeds from sale of common stock --- 2.2 --- 2.8
------ ----- ------ -----
Decrease in cash and cash equivalents (5.9) 8.1 (23.0) 4.8
------ ------ -----
Cash and cash equivalents, beginning
of period 65.5 75.9 82.6 79.2
----- ---- ------ ----
Cash and cash equivalents, end of period $ 59.6 $ 84.0 $ 59.6 $ 84.0
----- ---- ------ ----
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