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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
- --------------------------------------------------------------------------------
MERIDIAN GOLD REPORTS SECOND QUARTER 1998 RESULTS
(All dollar amounts in U.S. currency)
RENO, NEVADA, JULY 10, 1998 - Meridian Gold Inc. today reported second quarter
gold production of 52,177 ounces at a cash cost of $201 per ounce. Gold
production increased 18% versus the previous second quarter mainly as a result
of improved performance at Jerritt Canyon. The second quarter cash costs of $176
per ounce at Jerritt Canyon versus $245 per ounce for the same period in 1997,
highlight the significant strides the mine has made to improve its
profitability. The underground Murray mine has reached its full production rate
of 1,200 tons per day with an average head grade exceeding 13.5 g/tonne.
Underground mining costs have improved measurably reflecting significant
improvements in mine productivity and the use of a hybrid bulk mining method.
For the second quarter, the Company realized a loss of $5.5 million, or $0.07
per share. This compares to a loss of $7.8 million, or $0.11 per share in the
second quarter of 1997. Significantly lower exploration costs in 1998
contributed to the improvement, but were largely offset by lower realized gold
prices.
Meridian's net cash flow was positive for the quarter, resulting in a quarter
over quarter increase in the Company's cash balances to $51.5 million. During
the quarter the Company liquidated put option contracts, exercisable at $400 per
ounce in December 1998, covering 16,500 ounces of gold and representing one-half
of the 1998 hedge position. A gain of $1.4 million realized on the liquidation
has been deferred and will be recognized as revenue in the fourth quarter as the
hedged production is sold.
SECOND QUARTER RESULTS
Sales for the quarter were $15.9 million, versus $16.9 million in the second
quarter of 1997, despite an increase in production to 52,177 ounces of gold from
44,203 ounces. This was a reflection of lower realized gold prices, which
averaged $301 per ounce versus $376 per ounce in the prior year's quarter. Cash
production costs improved in the second quarter to $201 per ounce from $211 per
ounce in 1997.
At Beartrack, gold production in the second quarter was 23,680 ounces, with cash
costs of $234 per ounce. This compares to second quarter 1997 production of
24,836 ounces at a cash cost of $185 per ounce. The higher cash costs reflect
the expected decline in grades in the North Pit for 1998. The remaining ore
grade in the North Pit is significantly lower than the average reserve grade. In
the future as mining shifts to the higher grade South Pit, the cash costs at
Beartrack will decline significantly. Beartrack is expected, as stated in the
Company's 1997 annual report, to produce 100,000 ounces of gold at an average
cash cost of $230 per ounce during 1998.
At Jerritt Canyon, production increased 47% from the second quarter of 1997,
with cash costs declining by 28%. The Company's share of gold production in the
second quarter of 1998 was 28,497 ounces at an average cash cost of $176 per
ounce, versus second quarter 1997 production of 19,367 ounces at $254 per ounce.
To date, Jerritt Canyon is performing better than expected, due to higher than
budgeted underground grades and higher productivities.
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Exploration spending in the second quarter, primarily at El Penon, was $3.0
million, compared to $8.6 million in the second quarter of 1997. As released on
July 6, 1998, exploration drilling at El Penon has uncovered a new, high-grade
zone of mineralization. This zone, named Quebrada Colorada, will be a major
focus for exploration work during the remainder of 1998. Meridian is currently
conducting step-out drilling to determine the strike length of the zone. This
information will help determine the amount of drilling that will be required to
further define the zone.
At the end of the second quarter, Meridian Gold's balance sheet remained strong,
with cash resources of $51.5 million to support the development of El Penon and
the Company's other growth plans.
FIRST HALF RESULTS
For the first half of 1998, the Company recorded a loss of $10.5 million, or
$0.14 per share, compared to a loss of $13.8 million or $0.19 per share for the
first half of 1997.
Sales for the first half were $30.2 million, versus $30.9 million in the same
period last year. Gold production was higher, at 103,154 ounces versus 85,807
ounces, while the average realized price of gold fell to $298 per ounce from
$363. Exploration spending for the first six months, primarily at El Penon, was
$5.3 million, significantly lower than the $13.2 million spent in the same
period last year.
OUTLOOK FOR 1998
Gold production for the first half was 103,154 ounces at a cash cost of $205 per
ounce. Based on these results, Meridian is on target to achieving its forecast
of 200,000 ounces of gold in 1998 at a cash cost of $225 per ounce. In fact,
based on the sustainability of improved productivities at Jerritt Canyon, the
Company is lowering its cash cost target for the mine from $220 per ounce to
about $200 per ounce. This will, in turn, lower the overall Meridian Gold cash
cost for the year from $225 per ounce to about $215 per ounce.
The fourth quarter will be slightly better than the third quarter as the Jerritt
Canyon mill will be shutting down for a week in July to change-out liners.
With the earlier announced new high-grade Quebrada Colorada discovery at El
Penon in Chile, the Company expects higher exploration spending during the
second half of the year.
ORGANIZATIONAL CHANGES
Because of the expanding nature of the El Penon project, Meridian has made the
following organizational changes:
Mr. Don Beckwith, formerly Vice President of Operations, has been named Vice
President of Development in order to devote full time to the development of the
El Penon project.
Mr. Edgar Smith, most recently Vice President and General Manager at Coeur
Rochester, Inc., has been hired as Vice President of Operations, North America.
Mr. Gonzalo Tufino, previously General Manager of the El Penon project, has been
named Vice President and General Manager of the El Penon project.
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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
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 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
Investor Relations Fax: (702) 850-3733
Meridian Gold Inc. E-mail: [email protected]
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Meridian Gold Inc.
Consolidated Condensed Statement of Operations
(Unaudited and in US$ millions, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
-------------------- --------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Sales $ 15.9 $ 16.9 $ 30.2 $ 30.9
Costs and expenses
Operating expenses 12.0 10.8 22.6 21.4
Depreciation, depletion & amortization 5.2 4.8 10.9 9.3
Exploration costs 3.0 8.6 5.3 13.2
Selling, general and administrative 1.9 1.6 3.4 2.9
-------- -------- -------- --------
expenses
Total costs and expenses 22.1 25.8 42.2 46.8
Operating loss (6.2) (8.8) (12.0) (15.9)
Interest income 0.7 1.0 1.5 2.1
-------- -------- -------- --------
Net loss $ (5.5) $ (7.8) $ (10.5) $ (13.8)
======== ======== ======== ========
Loss per common share $ (0.07) $ (0.11) $ (0.14) $ (0.19)
======== ======== ======== ========
Weighted average common shares outstanding 73.6 73.6 73.6 73.6
======== ======== ======== ========
</TABLE>
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Meridian Gold Inc.
Operating Data (Unaudited)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
---------------------- ----------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
BEARTRACK MINE
Gold production - heap leach (ounces) 23,680 24,836 52,177 47,981
Tonnes mined (thousands)
Ore 1,025 1,005 1,836 1,731
Waste 1,698 906 3,214 1,768
-------- -------- -------- --------
Total 2,723 1,911 5,050 3,499
Average heap leach grade (grams/tonne) 0.65 0.89 0.65 0.89
Cash cost of production/ounce $ 234 $ 185 $ 228 $ 199
JERRITT CANYON JOINT VENTURE
Gold production (Meridian Gold's 30% share, ounces)
Milling 28,497 19,367 50,977 37,613
Heap leach 0 0 0 213
-------- -------- -------- --------
Total 28,497 19,367 50,977 37,826
Tonnes mined (100%, thousands)
Ore 205 211 343 428
Waste 3,563 8,082 7,668 14,480
-------- -------- -------- --------
Total 3,768 8,293 8,011 14,908
Mill tonnes processed (100%, thousands) 346 313 668 715
Average mill ore grade (grams/tonne) 9.32 6.89 8.98 5.93
Mill recoveries 90.9% 92.9% 90.7% 88.9%
Cash cost of production/ounce $ 176 $ 245 $ 185 $ 265
TOTALS
Ounces of gold produced 52,177 44,203 103,154 85,807
Ounces of gold sold 52,750 46,207 101,035 86,656
Average realized price/ounce $ 301 $ 376 $ 298 $ 363
Cash cost of production/ounce $ 201 $ 211 $ 205 $ 228
</TABLE>
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Meridian Gold Inc.
Consolidated Condensed Balance Sheets
(In US$ millions)
<TABLE>
<CAPTION>
June 30 December 31
1998 1997
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 51.5 $ 54.3
Trade receivables 2.5 1.2
Inventories 8.9 10.0
Other current assets 1.1 3.4
-------- --------
Total current assets 64.0 68.9
-------- --------
Property, plant and equipment, net 71.0 75.7
Other assets 3.0 3.3
-------- --------
Total Assets $ 138.0 $ 147.9
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade and other $ 4.0 $ 5.3
Accrued and other liabilities 9.9 8.9
-------- --------
Total current liabilities 13.9 14.2
-------- --------
Other long-term liabilities 22.1 21.2
Shareholders' equity 102.0 112.5
-------- --------
Total liabilities and shareholders' equity $ 138.0 $ 147.9
======== ========
</TABLE>
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Meridian Gold Inc.
Consolidated Condensed Statement of Cash Flows
(Unaudited and in US$ millions)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
------------------- -------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
NET LOSS $ (5.5) $ (7.8) $ (10.5) $ (13.8)
Provision for depreciation, depletion and 5.2 4.8 10.9 9.3
amortization
Changes in assets and liabilities, net 4.6 (3.9) 3.0 (5.2)
------- ------- ------- -------
Net cash provided by (used in) operating 4.3 (6.9) 3.4 (9.7)
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital spending (3.2) (3.4) (6.2) (7.4)
------- ------- ------- -------
Increase (decrease) in cash and cash 1.1 (10.3) (2.8) (17.1)
equivalents
Cash and cash equivalents, beginning 50.4 75.8 54.3 82.6
------- ------- ------- -------
of period
Cash and cash equivalents, end of period $ 51.5 $ 65.5 $ 51.5 $ 65.5
------- ------- ------- -------
</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.
Date: July 17, 1998 MERIDIAN GOLD INC.
By:/s/ Brian J. Kennedy
----------------------------
Brian J. Kennedy
President and Chief Executive Officer
