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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 6-K
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Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
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For the month of February 1997
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MERIDIAN GOLD INC.
(Translation of registrant's name into English)
5011 Meadowood Way
Reno, Nevada 89502
(Address of principal executive offices)
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Form 20-F X Form 40-F
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Yes X No
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Meridian Gold Inc. [LOGO OF MERIDIAN GOLD]
5011 Meadowood Way
Reno, Nevada 89502
Phone: (702) 827-3777
Fax: (702) 827-7133
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MERIDIAN GOLD REPORTS 34% PRODUCTION INCREASE IN 1996
(All dollar amounts in U.S. currency)
Reno, Nevada, February 20th, 1997 - In 1996, Meridian Gold Inc. realized a 33
percent year-over-year increase in revenue and a 34 percent increase in gold
production mainly reflecting the first full year of production at the Beartrack
mine in Idaho. The Company realized a loss for both the fourth quarter and full
year as a result of the emphasis on the exploration and development programs, as
well as reserves for one-time special charges.
In the fourth quarter, the Company reported a loss of $10.9 million or 15 cents
per share compared with earnings of $7.6 million or 10 cents per share in the
same quarter last year. The fourth quarter 1996 was impacted by one-time
charges of $7.6 million, while the prior year fourth quarter benefited from the
sale of Paradise Peak with a realized gain of $6.2 million. Production totaled
55,000 ounces in the quarter versus 63,000 ounces in the fourth quarter of 1995.
Gold production in 1996 totaled 202,000 ounces with Beartrack producing 109,000
ounces and the Jerritt Canyon mine, in Nevada, producing 93,000 ounces for the
Company. Beartrack's 1996 production represents the largest annual production
of any single gold mine in Idaho's history.
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 did not expect to
generate earnings in the short-term. Earnings for 1996 reflect these goals, as
the exploration program of $13.4 million and one-time special charges of $7.6
million contributed to losses of $15.9 million, or 22 cents per share versus
earnings of $2.3 million or 3 cents per share in 1995.
Late in the fourth quarter of 1996, a new closure cost estimate was developed by
an outside engineering firm to complete reclamation of the Royal Mountain King
mine in California. Based on the new estimate, the Company increased its
reclamation reserve by $5.6 million, reflecting increasingly stringent
environmental regulations, changing project conditions, and higher physical
works costs. In December 1996, Meridian Gold was notified that a $2 million
promissory note receivable, associated with the sale of the Paradise Peak mine,
in Nevada, would not be paid when due by Arimetco, Inc., which declared
bankruptcy under Chapter 11 in 1996.
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2
Meridian Gold's balance sheet remains strong, with cash resources of almost $83
million at year-end to support its growth plans. Cash flow from operations was
$14 million in 1996.
The aggressive exploration program in 1996 continued to improve the long-term
growth opportunities of Meridian Gold. At El Penon, in Region 3 of northern
Chile (see attached map) Meridian controls 230 square miles of exploration
concessions at an elevation of only 5,900 feet above sea level and 25 miles off
the Pan American Highway. As previously announced in November, Meridian Gold
outlined a geological resource of 1.2 million ounces of gold and 28.7 million
silver ounces in three separate deposits at Quebrada Orito, Discovery Wash, and
Cerro Martillo (see attached map). Exploration drilling in 1996 concentrated at
the 6200 foot long Quebrada Orito zone, the largest of the three deposits.
Late 1996 drilling continued to be successful in extending mineralization at
Quebrada Orito along strike to both the north and the south, where the new Orito
Norte and Orito Sur zones have been identified. The Orito Sur zone is a major
extension at least 3,280 feet in length and is still open to the south and at
depth. Within this continuous north-south structure, gold-silver mineralization
occurs in a major quartz vein and breccia zone that is similar to the previously
identified mineralization at Quebrada Orito. At Orito Sur, mineralization
occurs over true widths of 10 to 75 feet, with an approximate true width of 50
feet. The zone dips to the west at approximately 75 degrees and has a vertical
extent of at least 500 feet. Drilling has not yet defined the zones' ultimate
depth.
The attached map details the new Orito Sur zone with the surface projection of
mineralization, drill hole number, and surface projection of the drill hole
trace. Mineralized intervals listed on the drill hole summary below are not
true widths.
A full El Penon resource update is in progress and will be released later in
March. Current drilling on the property is supporting the ongoing Kvaerner Davy
feasibility study. Exploration drilling is slated to start in March.
Preliminary feasibility on the Quebrado Orito and Cerro Martillo zones indicates
that they could be mined by both open pit and underground methods, while
Discovery Wash and Orito Sur could be mined underground. Spending of $11
million is planned for El Penon in 1997. Six million dollars will be spent to
expand the resource, $3 million to complete the underground investigation of the
Quebrada Orito mineralized zone, and $2 million to complete the feasibility
study with the engineering firm of Kvaerner Davy. A production decision is
planned by year-end.
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3
<TABLE>
<CAPTION>
Hole # Angle Interval (feet) Intercept Gold (opt) Silver (opt)
- ------ ----- --------------- ---------- ---------- ------------
<S> (Degrees) <C> <C> (feet) <C> <C>
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PQ216 -55 610-630 20 0.180 0.70
PQ220 -50 538-597 59 0.176 1.30
PQ221 -65 669-781 112 0.135 0.70
PQ223 -50 558-590 32 0.134 2.30
PQ224 -70 210-223 13 0.101 0.80
PQ227 -70 610-682 72 0.140 1.10
PQ228 -70 682-787 105 0.190 1.10
PQ229 -55 518-538 20 0.170 1.20
PQ230 -75 518-636 118 0.220 6.60
PQ231 -75 682-787 105 0.198 2.50
PQ232 -70 630-643 13 0.150 2.10
PQ240 -75 518-545 27 0.200 5.80
617-663 46 0.116 2.60
PQ242 -75 518-643 125 0.630 18.00
669-735 66 0.140 3.30
PQ243 -65 373-446 73 0.090 1.60
PQ245 -70 446-492 46 0.180 5.30
PQ251 -75 905-958 53 0.520 4.90
PQ253 -75 899-1004 105 0.330 4.40
PQ254 -75 1030-1050 20 1.130 25.50
</TABLE>
Hole PQ254 was the last hole of the program.
Meridian Gold Inc. is a proven exploration oriented gold producer, well
financed and led by a strong management team committed to growth. Currently,
annual production is 200,000 ounces of gold from two producing properties:
Beartrack in Idaho (100% owned) and Jerritt Canyon (30% owned) in Nevada. At
year-end 1995, the Company had reserves of 1.5 million ounces of gold. In
addition, Meridian holds an active inventory of exploration properties in Chile
and the United States.
Meridian was formed in 1996 and is the successor to the business of FMC Gold
Company, formerly a 80% owned subsidiary of FMC Corporation. The common shares
of Meridian are traded on the Toronto Stock Exchange (MNG) and the New York
Stock Exchange (MDG).
Financial statements and a map of El Penon are attached.
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For further information:
Wayne M. Hubert
Investor Relations
Meridian Gold Inc.
Tel: (702) 827-7130
Fax: (702) 827-7133
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4
SPECIAL NOTE: In the bottom right hand corner, there is a map of Meridian Gold
Inc.'s El Penon exploration property, as well as a map showing the region where
El Penon is located within Chile. In the top right hand corner, there is a map
showing certain resource areas and certain fault and vein lines in the central
zone of El Penon, where most exploration is occurring; such map also shows the
location of the areas known as Quebrada Orito, Discovery Wash, Cerro Martillo,
Orito Norte and Orito Sur. To the left of this map is a graph detailing the new
Orito Sur zone which sets forth certain drill hole numbers and surface
projections of the drill hole trace.
[MAPS APPEAR BELOW]
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5
Meridian Gold Inc.
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Consolidated Statements of Operations
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(Unaudited and in millions, except per share data)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Twelve Months
Ended December 31 Ended December 31
------------------- --------------------
1996 1995 1996 1995
--------- -------- --------- ---------
<S> <C> <C> <C> <C>
Sales $ 20.0 $24.2 $ 76.2 $57.4
Costs and expenses
Operating expenses 17.6 9.4 56.1 29.9
Depreciation, depletion & amortization 5.3 8.0 21.1 21.3
Exploration costs 5.7 1.8 13.4 10.9
Selling, general and
administrative expenses 3.4 1.1 6.4 5.1
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Total costs and expenses 32.0 20.3 97.0 67.2
Income (loss) before interest and taxes (12.0) 3.9 (20.8) (9.8)
Gain on sale of assets - 1.7 - 1.7
Interest income 1.1 1.3 4.9 5.9
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Income (loss) before income taxes (10.9) 6.9 (15.9) (2.2)
Provision for income taxes -- (0.7) -- (4.5)
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Net income (loss) $(10.9) $ 7.6 $(15.9) $ 2.3
====== ===== ====== =====
Loss per common share $(0.15) $0.10 $(0.22) $0.03
====== ===== ====== =====
Number of common shares used in
earnings per share computations 73.6 73.5 73.6 73.5
====== ===== ====== =====
</TABLE>
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6
Meridian Gold Inc.
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Operating Data (Unaudited)
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<TABLE>
<CAPTION>
Three Months Twelve Months
Ended December 31 Ended December 31
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1996 1995 1996 1995
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<S> <C> <C> <C> <C>
Beartrack Mine
Gold production - Heap leach (ounces) 31,229 36,426 108,599 49,134
Tons mined (thousands):
Ore 760 1,688 4,324 4,150
Waste 1,175 1,899 4,394 3,753
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Total 1,935 3,587 8,718 7,903
Average heap leach grade (ounce/ton) 0.026 0.033 0.026 0.034
Total cost of production/ounce $249 $247 $285 $260
Cash cost of production/ounce $197 $151 $190 $166
Jerritt Canyon Joint Venture
Gold production (Meridian Gold 30% share
ounces):
Milling 23,641 26,493 92,429 96,823
Heap leach 122 257 565 1,096
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Total 23,763 26,750 92,994 97,919
Tons mined (thousands):
Ore 370 399 1,589 2,050
Waste 7,081 4,038 16,772 21,185
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Total 7,452 4,437 18,362 23,235
Mill tons processed (thousands) 698 780 2,668 2,947
Average mill ore grade (ounces/ton) 0.129 0.131 0.131 0.129
Mill recoveries 87.4% 86.3% 87.5% 86.1%
Total cost of production/ounce $377 $468 $425 $431
Cash cost of production/ounce $259 $284 $297 $250
Paradise Peak (Discontinued in 1995)
Gold production - Heap leach -- 125 -- 3,633
Total cost of production/ounce $ -- $ -- $ -- $155
Total
Ounces of gold produced 54,992 63,298 201,593 150,686
Ounces of gold sold 51,782 62,806 197,193 149,759
Average realized price/ounce $392 $396 $392 $389
Average cash cost of production/ounce sold $224 $206 $239 $221
</TABLE>
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SIGNATURE
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.
MERIDIAN GOLD INC.
Date: March 6, 1997 By: /s/ BRIAN J. KENNEDY
Its: Chief Executive Officer
