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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
Report of Foreign Issuer
Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934
For the month of July, 1998 Commission File Number: 001-12003
MERIDIAN GOLD INC.
(Name of Registrant)
9670 Gateway Drive
Reno, Nevada 89511
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover of Form 20-F or Form 40-F.
Form 20-F [X] Form 40-F [ ]
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the SEC
pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes [X] No [ ]
Meridian Gold Inc. [LOGO OF MERIDIAN GOLD INC.
9670 Gateway Drive APPEARS HERE]
Reno, Nevada 89511
Phone: 702-850-3777
Fax: 702-850-3733
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MERIDIAN GOLD INC.
9670 GATEWAY DRIVE
RENO, NEVADA 89511
PHONE: (702) 850-3777
FAX: (702) 850-3733
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MERIDIAN GOLD ANNOUNCES A POSITIVE PRODUCTION DECISION ON EL PENON
(All dollar amounts in U.S. currency)
RENO, NEVADA, JULY 10, 1998 - Meridian Gold is pleased to announce a positive
production decision on its El Penon project in northern Chile. The decision
comes after reviewing the final feasibility study, which was based on lump sum
bids for the processing plant facilities and unit price bids for the underground
mine development.
Once fully operational, El Penon is expected to produce approximately 130,000
ounces of gold and 1.9 million ounces of silver per year over a
currently-estimated mine life of 8 1/2 years. Using a constant gold price of
$300/ounce and a constant silver price of $5.00/ounce, the project generates a
double digit internal rate of return with a cash cost of production below $180
per ounce.
The major capital components include the processing facilities, which are based
on lump sum bids, and the underground mine development costs, which are based on
fixed unit price bids. Meridian has entered into final negotiations with two
international engineering firms to complete EPC Contracts for the processing
facility, and with two Chilean mining contractors to finalize a mine development
contract.
The proven, probable and possible reserves of 1,143,000 ounces of gold and 17.9
million ounces of silver have been audited by Kvaerner Metals. In addition, the
reserves have been independently reviewed by Pincock Allen & Holt and Micon
International.
Meridian plans to use contract mining initially for both the underground and
open pits. The underground reserves of 4.3 million tonnes have an average grade
of 7 g/tonne gold and 102 g/tonne silver, and represent approximately 85% of the
contained ounces.
The environmental impact statement for El Penon was approved by Chilean
authorities in June.
The permanent power contract will be signed this month, which will provide low
cost power from a Chilean utility. Final engineering will be undertaken during
the third quarter and construction will commence in the fourth quarter of this
year. The first gold pour is scheduled for the fourth quarter of 1999, with full
commercial production to be achieved in the first quarter of 2000.
SBC Warburg Dillon Read has been retained as Meridian's financial advisor for
the project's financing. Meridian plans to fund the construction of the project
with about $40 million in debt and with internal cash. Meridian plans to secure
the debt financing during the third quarter of this year while funding the
ongoing work from its cash balances.
Meridian is extremely pleased with the work that has been achieved at El Penon
and with the economic viability of the project at current low gold prices. The
recent discovery of the new high-grade Quebrada Colorada zone is very important
in that it may significantly alter the current mine plan and improve returns as
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these much higher grade ores are processed. The El Penon Project should provide
Meridian with a significant, low-cost, long-life base for future growth and
profitability.
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).
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Safe Harbor Statement under the United States Private Securities Litigation
Reform 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 and 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) 850-3730 or 1-800-572-4519
Investor Relations Fax: (702) 850-3733
Meridian Gold Inc. E-mail: [email protected]
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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.
Date: July 15, 1998 MERIDIAN GOLD INC.
By: /s/ Brian J. Kennedy
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Brian J. Kennedy
President and Chief Executive Officer
