<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------------------------------
FORM 6-K
-----------------------------------------------
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 or
the Securities Exchange Act of 1934
-----------------------------------------------
For the month of February 1997
-----------------------------------------------
MERIDIAN GOLD INC.
(Translation of registrant's name into English)
5011 Meadowood Way
Reno, Nevada 89502
(Address of principal executive offices
-----------------------------------------------
Form 20-F X Form 40-F
----- -----
Yes X No
----- -----
Meridian Gold Inc. [LOGO OF MERIDIAN GOLD INC.
5011 Meadowood Way APPEARS HERE]
Reno, Nevada 89502
Phone: (702) 827-3777
Fax: (702) 827-7133
<PAGE>
MERIDIAN GOLD INC.
5011 Meadowood Way
RENO, NEVADA 89502
PHONE: (702) 827-3777 [______]
FAX: (702) 827-7133
- --------------------------------------------------------------------------------
MERIDIAN GOLD REPORTS 1997 FOURTH QUARTER AND FULL YEAR RESULTS
(All dollar amounts in U.S. currency)
RENO, NEVADA, FEBRUARY 19/th/, 1998 - Meridian Gold Inc. today is pleased to
report 1997 gold production of 203,000 ounces at an average cash cost of $205
per ounce. When compared to 1996, gold production was essentially level, but
cash costs improved 14% from $239 per ounce. This places Meridian in the lowest
quartile of cash costs of gold production in the western world.
In addition, the Company expensed a record $31 million in exploration during the
year. This news release will provide an update on some of the more significant
results from that spending, including a recent discovery of a new mineralized
zone at El Penon. During March, the Company will provide further information on
the ongoing El Penon feasibility work, which is nearing completion.
At year-end, Meridian's financial position remained strong, with about $54
million in cash and no debt. However, due to the low gold price environment,
several adjustments were made during the year, including the recording in the
third quarter of $36.4 million in non-cash charges for impairment and
reclamation costs, the consolidating of all headquarters operations to the Reno
office, and the changing of some of the operating parameters at the mines. All
of the Company's reserves and resources will be restated using a $350 long-term
gold price, and a sensitivity analysis at lower gold prices will also be
provided in early March.
While Meridian Gold recorded a significant loss of $69 million for 1997,
primarily as a result of an aggressive exploration program ($31 million) and
non-cash charges due to lower gold prices ($36 million), the Company has focused
its efforts to forward its two advanced stage projects at El Penon in Chile and
Rossi on the Carlin Trend in Nevada. These efforts and their corresponding
negative impact on short-term earnings were completely consistent with our
stated intentions at the time of our secondary offering in July 1996.
FOURTH QUARTER RESULTS
- ----------------------
Sales for the quarter were $20.4 million, versus $20.0 million in the fourth
quarter of 1996, reflecting higher production offsetting lower realized gold
prices. The average realized price of gold decreased to $306 per ounce from
$392 per ounce in the fourth quarter of 1996. Gold production for the quarter
increased to 61,000 ounces from 55,000 ounces in 1996, while cash production
costs improved to $183 per ounce from $224 per ounce.
At Beartrack, gold production was 30,000 ounces, with cash costs of $202 per
ounce. This compares to fourth quarter 1996 production of 31,000 ounces at a
cash cost of $197 per ounce.
At Jerritt Canyon, the Company's share of gold production in the fourth quarter
was 31,000 ounces at a cash cost of $165 per ounce. Production for the quarter
was up 29% from fourth quarter 1996 production of 24,000 ounces, due primarily
to higher grade ores from the underground Murray Mine and the Dash open pit more
than offsetting the lower planned throughput. The cash costs represent a 36%
reduction from fourth quarter 1996, due mainly to the higher production.
<PAGE>
Exploration spending in the fourth quarter, primarily at El Penon, was $8.0
million, compared to $5.7 million in the fourth quarter of 1996.
FULL YEAR 1997 RESULTS
- ----------------------
For the full year 1997, sales were $68.7 million, 10% lower than in 1996 and
primarily reflecting lower gold prices. The average realized price of gold in
1997 was $334 per ounce, compared to $392 in 1996. Exploration spending was
$31.1 million, significantly higher than the $13.4 million spent in 1996 and
attributable largely to the feasibility work at El Penon, which was all
expensed.
1997 gold production was 203,000 ounces, up slightly from 1996 production of
202,000 ounces. Cash production costs improved to $205 per ounce from $239 per
ounce, due primarily to the major improvement in cash costs at Jerritt Canyon.
At Beartrack, 1997 gold production was 107,000 ounces, at a cash cost of $202
per ounce. This compares to 1996 production of 109,000 ounces at a cash cost of
$190. Slightly lower throughput as a result of construction activities on the
heap leach pad in 1997 explains the differences. During 1997 the major pad
expansion project was completed, which will carry Beartrack through its
remaining life.
Beartrack has completed a full year without a lost-time accident. In addition,
the Idaho Land Board awarded the mine with a Special Project Award during 1997
for the reclamation work done on Napias Creek.
Jerritt Canyon produced 96,000 ounces of gold for Meridian's account at a cash
cost of $209 per ounce in 1997, versus 93,000 ounces at $297 per ounce in 1996.
The 30% reduction in cash costs reflects a 65% increase in grade more than
offsetting a 42% decline in throughput which resulted from the shutting down of
the wet mill early in the year.
1997 EL PENON EXPLORATION REPORT
- --------------------------------
Significant progress was made in major areas of the project:
1. DELINEATION DRILLING FOR THE FEASIBILITY STUDY -- Surface drilling started
at El Penon in February and continued until mid-December. For the year, 356
holes were drilled, including 48 core holes with an emphasis on reserve
definition or development drilling. There were as many as seven drill rigs
active on the property at any one time, and nearly $12 million was spent on
surface drilling.
Early in the year, 51 `condemnation' holes were drilled to confirm that
areas tentatively planned for future facilities and mine dumps were not
located above potential mineralization. This work was completed by March and
was followed by extensive development drilling at the known resource areas.
Our initial resource estimates included gold and silver resources at areas
named Quebrada Orito, Orito Sur, Orito Norte, Cerro Martillo, and Discovery
Wash. With continued drilling in 1997, it was confirmed that the first three
areas are actually connected and are a contiguous part of the original
Quebrada Orito zone localized by the same mineralized fault zone. This zone
was where a majority of the surface and all of the underground exploration
work was conducted for most of the year.
At this expanded Quebrada Orito zone, the surface drilling included 38
diamond core and 148 reverse circulation holes, and most of this work was
completed on the southern end of the resource where it is covered by gravel
and unmineralized rocks. At the end of the year, exploration drilling was
modified
<PAGE>
again to concentrate additional drilling within inferred resources at the
southern portion of the Quebrada Orito zone (Orito Sur). The table below
shows the more significant drill results in that program:
================================================================================
ORITO SUR PROGRAM From To Interval Gold grade Silver grade
---- --- -------- ---------- ------------
Hole (m) (m) (m) (g/tonne) (g/tonne )
- --------------------------------------------------------------------------------
PO065 318 324 6 15.7 910.0
PO066 190 194 4 5.1 79.3
238 242 4 8.3 105.2
PO067 274 280 6 106.4 688.6
PO068 286 296 10 114.0 574.5
PO069 232 242 10 10.0 226.0
PO070 258 276 18 11.8 298.7
PO071 Abandoned due to deviation
PO072 284 290 6 3.8 186.8
PO073 252 258 6 7.2 76.0
PO074 222 236 14 8.1 55.1
PO075 310 312 2 4.0 167.4
320 324 4 13.9 383.7
PO076 274 282 8 17.5 88.6
PO077 332 336 4 5.0 123.9
Note: True widths are approximately 60-70% of the interval distance.
- --------------------------------------------------------------------------------
2.) UNDERGROUND PROGRAM -- The underground program in Quebrada Orito was
successful in verifying the tenor and style of mineralization encountered
in the earlier reverse circulation drilling. Six cross-cuts intersected the
ore zone with an average true width of 12.4 meters. The average gold grade
was 9 g/tonne, and the average silver grade was 164 g/tonne. In order to
determine the continuity of the ore zone along strike, a drift of 45 meters
in the ore zone was developed, and mineralization was encountered along the
entire strike length with an average grade of 20 g/tonne gold and 251
g/tonne silver.
3.) ENGINEERING - Meridian contracted Kvaerner Metals to complete the necessary
metallurgical and engineering work for the bidding of a lump-sum
Engineering, Procurement, and Construction Management (EPCM) contract.
Meridian intends to solicit fixed-price bids based upon Kvaerner's design
during the first quarter, and to review those bids during the second
quarter. This process will be used to facilitate the Company's economic
evaluation of the project.
4.) PERMITTING - All permitting to enable development of a possible mining
project has been initiated with the proper Chilean authorities. This
process is proceeding on schedule.
5.) EXPLORATION - Because of the emphasis on converting our resources to proven
and probable mineable reserves, only 63 true exploration holes were drilled
out of a total of 356 holes. However, this limited work was successful at a
new, nearby prospect called Doncella. At this target, a new zone of
significant mineralization, with many similarities to the known resources,
was discovered. This mineralization occurs along a large geophysical
anomaly starting at depths of 125 meters. Doncella has been encountered
with only limited drilling, but several holes have confirmed a zone of ore
grade mineralization up to 12 meters wide containing 5.2 g/t gold and 125
g/t silver over a strike length of at least 60 meters. The core of this
zone is higher grade with up to 6 meters true width of 8 g/t gold and 264
g/t silver. The Doncella zone remains open in both directions along strike
and at depth. Further defining and exploring this zone will be a high
priority when 1998 exploration drilling begins. The results of the five
mineralized holes on three different sections are shown below:
<PAGE>
================================================================================
DONCELLA From To Interval Gold grade Silver grade Location
PROGRAM ---- --- -------- ----------- ------------ --------
Hole (m) (m) (m) (g/tonne) (g/tonne)
- --------------------------------------------------------------------------------
PX009 170 180 10 2.8 53.7 2200 N
PX036 190 208 18 4.3 75.1 2200 N
PX045 256 274 18 5.2 37.5 2200 N
PX056 268 296 28 5.2 125.2 2170 N
Incl. 282 294 12 8.0 264.2
PX057 268 294 26 4.0 98.0 2140 N
Incl. 286 294 8 10.2 308.3
================================================================================
1998 OUTLOOK
- ------------
The Company expects to produce approximately 200,000 ounces of gold in 1998 --
100,000 ounces each from Beartrack and Jerritt Canyon. Cash costs are expected
to be $225 per ounce, with Beartrack producing for $230 per ounce and Jerritt
Canyon producing for $220 per ounce.
Exploration expenses of approximately $9 million are budgeted, with more than
75% of the monies to be spent in South America. The majority of this 75% will
be spent at El Penon, where major exploration work will continue, and the
remainder will be spent on grass roots exploration. Capital expenditures are
expected to be about $10 million, with eighty percent slated for the development
of the high-grade SSX mine at Jerritt Canyon.
Meridian Gold Inc. is a proven, exploration-oriented gold producer, led by a
strong management team committed to growth and possessing a healthy balance
sheet. The common shares of Meridian are traded on The Toronto Stock Exchange
(MNG) and the New York Stock Exchange (MDG).
- ------------------------------------
Safe Harbor Statement under the United States Private Securities Litigation Act
of 1995: Statements in this release that are forward-looking statements are
subject to various risks and uncertainties concerning the specific factors
identified above and in the corporation's periodic filings with the Ontario
Securities Commission and the U.S. Securities Exchange Commission. Such
information contained herein represents management's best judgment as of the
date hereof based on information currently available. The corporation does not
intend to update this information and disclaims any legal liability to the
contrary.
For further information, please visit our website at www.meridiangold.com, or
contact:
Wayne M. Hubert Tel: (702) 827-7130
Investor Relations Fax: (702) 827-7133
Meridian Gold Inc. E-mail: [email protected]
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 27, 1998
MERIDIAN GOLD INC.
By: /s/ Brian J. Kennedy
---------------------
President and Chief Executive Officer
<PAGE>
Meridian Gold Inc.
------------------
Consolidated Condensed Statement of Operations
----------------------------------------------
(Unaudited and in US$ millions, except per share data)
Three Months
Ended December 31 Full Year
----------------- ---------------
1997 1996 1997 1996
------- ------- ------ ------
Sales $ 20.4 $ 20.0 $ 68.7 $ 76.2
Costs and expenses
Operating expenses 14.2 17.7 55.0 56.2
Depreciation, depletion & amortization 5.7 5.2 23.3 21.0
Exploration costs 8.0 5.7 31.1 13.4
Selling, general and
administrative expenses 1.5 3.4 6.2 6.4
Provision for impairment of mining
properties -- -- 26.2 --
------ ------ ------ ------
Total costs and expenses 29.4 32.0 141.8 97.0
Operating loss (9.0) (12.0) (73.1) (20.8)
Interest income 0.7 1.1 3.7 4.9
Gain (loss) on sale of assets (0.2) -- 0.2 --
------ ------ ------ ------
Net loss $ (8.5) $(10.9) $(69.2) $(15.9)
====== ====== ====== ======
Loss per common share $(0.12) $(0.15) $(0.94) $(0.22)
====== ====== ====== ======
Weighted average common shares
outstanding 73.6 73.6 73.6 73.6
====== ====== ====== ======
<PAGE>
Meridian Gold Inc.
------------------
Operating Data (Unaudited)
--------------------------
<TABLE>
<CAPTION>
Three Months
Ended December 31 Full Year
----------------- ------------------
1997 1996 1997 1996
------ ------ ------- -------
<S> <C> <C> <C> <C>
BEARTRACK MINE
Gold production - Heap leach (ounces) 30,135 31,229 107,229 108,599
Tonnes mined (thousands):
Ore 1,063 689 3,764 3,923
Waste 1,049 1,066 4,286 3,986
------ ------ ------- -------
Total 2,112 1,755 8,050 7,909
Average heap leach grade (grams / tonne) 0.73 0.89 0.89 0.89
Cash cost of production / ounce $ 202 $ 197 $ 202 $ 190
JERRITT CANYON JOINT VENTURE
Gold production (Meridian Gold 30 % share ounces):
Milling 30,414 23,641 95,328 92,429
Heap leach 0 122 213 565
------ ------ ------- -------
Total 30,414 23,763 95,541 92,994
Tonnes mined (100%, thousands):
Ore 427 336 1,189 1,442
Waste 4,058 6,424 23,776 15,215
------ ------ ------- -------
Total 4,485 6,760 24,965 16,657
Mill tonnes processed (100%, thousands) 344 633 1,396 2,420
Average mill ore grade (grams / tonne) 8.96 4.41 7.39 4.49
Mill recoveries 96.8% 87.4% 90.8% 87.5%
Cash cost of production / ounce $ 165 $ 259 $ 209 $ 297
TOTAL
Ounces of gold produced 60,549 54,992 202,770 201,593
Ounces of gold sold 66,643 51,782 207,282 197,193
Average realized price / ounce $ 306 $ 392 $ 334 $ 392
Cash cost of production / ounce $ 183 $ 224 $ 205 $ 239
</TABLE>
<PAGE>
Meridian Gold Inc.
------------------
Consolidated Condensed Balance Sheets
-------------------------------------
(In US$ millions)
December 31 December 31
----------- -----------
1997 1996
------ ------
ASSETS
Current Assets:
Cash and cash equivalents $ 54.3 $ 82.6
Trade receivables 1.2 1.8
Inventories 10.0 16.8
Other current assets 3.4 2.7
------ ------
Total current assets 68.9 103.9
------ ------
Property, plant and equipment, net 75.7 106.6
Other assets 3.3 4.1
------ ------
Total Assets $147.9 $214.6
====== ======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable, trade and other $ 5.3 $ 7.6
Accrued and other liabilities 8.9 10.7
------ ------
Total current liabilities 14.2 18.3
------ ------
Other long-term liabilities 21.2 14.6
Shareholders' equity 112.5 181.7
------ ------
Total liabilities and shareholders' equity $147.9 $214.6
====== ======
<PAGE>
Meridian Gold Inc.
--------------------
Consolidated Condensed Statement of Cash Flows
----------------------------------------------
(Unaudited and in US$ millions)
<TABLE>
<CAPTION>
Three Months
Ended December 31 Full Year
----------------- -----------------
1997 1996 1997 1996
------ ------- ------- -------
<S> <C> <C> <C> <C>
Net income (loss) $ (8.5) $ (10.9) $ (69.2) $ (15.9)
Provision for depreciation, depletion and amortization 5.7 5.2 23.3 21.0
Provision for reclamation, net of spending (0.5) 6.2 5.5 7.3
Impairment of mining properties --- --- 26.2 ---
Other changes in assets and liabilities, net 2.7 3.1 6.9 3.0
------ ------- ------- -------
Net cash provided by (used in) operating activities (0.6) 3.6 (7.3) 15.4
Cash flows from investing activities:
Capital spending (4.7) (5.1) (19.0) (13.9)
Disposal of property, plant and equipment --- 0.2 0.5 0.2
------ ------- ------- -------
Net cash used in investing activities (4.7) (4.9) (18.5) (13.7)
Cash flows from financing activities:
Proceeds from sale of common stock --- --- --- 0.5
Capital contributions/return of capital related to reincorporation --- (0.1) --- 2.2
Repayment of long-term debt --- --- (2.5) (1.0)
------ ------- ------- -------
Net cash provided by (used in) financing activities --- (0.1) (2.5) 1.7
Increase (decrease) in cash and cash equivalents (5.3) (1.4) (28.3) 3.4
------ ------- ------- -------
Cash and cash equivalents, beginning of period 59.6 84.0 82.6 79.2
------ ------- ------- -------
Cash and cash equivalents, end of period $54.3 $ 82.6 $ 54.3 $ 82.6
------ ------- ------- -------
</TABLE>
