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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 October, 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 THIRD QUARTER 1998 RESULTS
(All dollar amounts in U.S. currency)
RENO, NEVADA, OCTOBER 21, 1998 - Meridian Gold Inc. today reported third quarter
gold production of 52,620 ounces at a cash cost of $199 per ounce. Good
performance continued at Jerritt Canyon with better grades and higher
efficiencies than budgeted, and Beartrack had a stronger than expected third
quarter as mining began on the higher grade South Pit. Based on year-to-date
gold production of 157,000 ounces at a average cash cost of $201 per ounce,
Meridian is expected to meet or exceed its 1998 projections of 200,000 ounces of
gold production at an average cash cost of $215 per ounce.
For the third quarter, the Company realized a loss of $8.2 million, or $0.11 per
share. This compares to a year earlier loss of $46.9 million, or $0.64 per
share, which included a non-cash provision of $36.4 million.
During the quarter the Company liquidated put option contracts, exercisable at
$400 per ounce in December 1998, covering 8,250 ounces of gold and representing
one-quarter of the beginning 1998 hedge position. A gain of $755,700 realized on
the liquidation has been deferred and will be recognized as revenue in the
fourth quarter as the hedged production is sold.
Meridian Gold's balance sheet remained strong at the end of the third quarter,
with cash resources of $50.8 million to support the development of El Penon and
the Company's other growth plans.
THIRD QUARTER RESULTS
Sales for the quarter were $14.2 million, versus $17.5 million in the third
quarter of 1997, due to slightly lower production and lower realized gold
prices. Realized gold prices averaged $285 per ounce in the third quarter,
versus $323 per ounce in the prior year's quarter. Cash production costs in the
third quarter were $199 per ounce, versus $194 per ounce in 1997.
At Beartrack, gold production in the third quarter was 26,518 ounces, with cash
costs of $219 per ounce. This compares to third quarter 1997 production of
29,114 ounces at a cash cost of $208 per ounce. Since mining at Beartrack has
now shifted to the higher grade South Pit, future cash costs at Beartrack are
expected to decline. Beartrack is still expected to produce 100,000 ounces of
gold at an average cash cost of less than $230 per ounce for the full year 1998.
At Jerritt Canyon, the Company's share of production in the third quarter was
26,102 ounces of gold, versus 27,301 in the prior year's quarter. Cash costs
were about even, at $181 per ounce versus $180 per ounce. Jerritt Canyon
continues to perform well, having year-to-date gold production of 79,000 ounces
of gold at an average cash cost of $180 per ounce. Jerritt Canyon is expected to
meet or exceed its 1998 full year target of 100,000 ounces of production at a
cash cost of $200 per ounce.
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Exploration spending in the third quarter, primarily at El Penon, was $4.0
million, compared to $9.9 million in the third quarter of 1997. The new,
high-grade Quebrada Colorada zone continues to show strong results, and will
remain the primary focus of exploration work at El Penon in the near future.
RESULTS FOR THE FIRST NINE MONTHS
For the first nine months of 1998, the Company recorded a loss of $18.7 million,
or $0.25 per share, compared to a loss of $60.7 million or $0.83 per share for
the first nine months of 1997.
Sales for the first nine months were $44.4 million, versus $48.3 million in the
same period last year. Gold production was higher, at 157,341 ounces versus
142,222 ounces, while the average realized price of gold fell to $294 per ounce
from $348 per ounce. Exploration spending for the first nine months, primarily
at El Penon, was $9.3 million, significantly lower than the $23.1 million spent
in the same period last year when the decline was being developed into Quebrada
Orito and the feasibility study was ongoing.
EL PENON UPDATE
At El Penon, underground development work began in the third quarter, and the
EPC contract for the plant facilities was awarded to Fluor Signet, which began
detailed engineering work. Meridian's cash balances are sufficient to fund
continuing exploration and development work at El Penon until debt financing is
obtained. This debt financing is anticipated to be closed by the end of this
year.
Drilling at Quebrada Colorada continues to meet with success, both in better
understanding the structure hosting the mineralization and in extending the
strike length of the zone. Ore-grade mineralization on Quebrada Colorada has now
been extended by 300 meters to 1.4 kilometers in strike length. In-fill drilling
with both core and reverse circulation holes has confirmed and enhanced the gold
and silver grades of the three major ore-shoots. The zone still remains open in
strike length.
Underground development on four headings in Quebrada Orito is on schedule. The
extension of the underground decline from Quebrada Orito should reach Quebrada
Colorada in the first quarter of 1999, at which time mine development and
detailed underground drilling will commence.
Meridian Gold Inc. is a growth gold business with its common shares 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 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
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 Nine Months
Ended September 30 Ended September 30
---------------------- ----------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
Sales $ 14.2 $ 17.5 $ 44.4 $ 48.3
Costs and expenses
Operating expenses 11.1 19.5 33.6 40.8
Depreciation, depletion & amortization 6.6 8.3 17.4 17.6
Exploration costs 4.0 9.9 9.3 23.1
Selling, general and administrative expenses 1.4 1.8 4.8 4.7
-------- -------- -------- --------
Total costs and expenses 23.1 39.5 65.1 86.2
Impairment of mineral properties -- 26.2 -- 26.2
Operating loss (8.9) (48.2) (20.7) (64.1)
Gain on disposal of assets (0.0) 0.4 0.2 0.4
Interest income 0.7 0.9 2.2 3.0
Provision for income taxes (0.0) -- 0.0 --
-------- -------- -------- --------
Net loss (1) $ (8.2) $ (46.9) $ (18.7) $ (60.7)
======== ======== ======== ========
Loss per common share $ (0.11) $ (0.64) $ (0.25) $ (0.83)
======== ======== ======== ========
Weighted average common shares outstanding 73.6 73.6 73.6 73.6
</TABLE>
- -----------------------------------
(1)In 1997, the Company reported a $36.4 million non-cash provision in
connection with an adjustment following a prudent review of the Company's
balance sheet based on the then current low gold price environment. The third
quarter 1997 loss was $46.9 million, or $0.64 per share. The loss reflected: 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.
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Meridian Gold Inc.
Operating Data (Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30 Ended September 30
---------------------- ----------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
BEARTRACK MINE
Gold production - heap leach (ounces) 26,518 29,114 78,695 77,095
Tonnes mined (thousands)
Ore 1,255 971 3,092 2,701
Waste 2,271 1,469 5,484 3,237
-------- -------- -------- --------
Total 3,526 2,440 8,576 5,938
Average heap leach grade (grams / tonne) 0.89 0.86 0.72 0.89
Cash cost of production / ounce $ 219 $ 208 $ 225 $ 202
JERRITT CANYON JOINT VENTURE
Gold production (Meridian Gold's 30% share, ounces)
Milling 26,102 27,301 78,646 64,914
Heap leach 0 0 0 213
-------- -------- -------- --------
Total 26,102 27,301 78,646 65,127
Tonnes mined (100%, thousands)
Ore 252 334 594 762
Waste 3,015 5,236 10,684 19,716
-------- -------- -------- --------
Total 3,267 5,570 11,278 20,478
Mill tonnes processed (100%, thousands) 328 337 995 1,052
Average mill ore grade (grams / tonne) 9.02 9.05 8.98 6.92
Mill recoveries 90.1% 92.9% 90.6% 92.6%
Cash cost of production / ounce $ 181 $ 180 $ 180 $ 229
TOTALS
Ounces of gold produced 52,620 56,415 157,341 142,222
Ounces of gold sold 49,709 53,983 150,743 140,639
Average realized price / ounce $ 285 $ 323 $ 294 $ 348
Cash cost of production / ounce $ 199 $ 194 $ 201 $ 215
</TABLE>
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Meridian Gold Inc.
Consolidated Condensed Balance Sheets
(In US$ millions)
<TABLE>
<CAPTION>
September 30 December 31
1998 1997
<S> <C> <C>
ASSETS
Current Assets
Cash and cash equivalents $ 50.8 $ 54.3
Trade receivables 0.3 1.2
Inventories 8.9 10.0
Other current assets 1.9 3.4
------- -------
Total current assets 61.9 68.9
------- -------
Property, plant and equipment, net 67.1 75.7
Other assets 2.8 3.3
------- -------
Total Assets $ 131.8 $ 147.9
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade and other $ 4.3 $ 5.3
Accrued and other liabilities 10.3 8.9
------- -------
Total current liabilities 14.6 14.2
------- -------
Other long-term liabilities 23.3 21.2
Shareholders' equity 93.9 112.5
------- -------
Total liabilities and shareholders' equity $ 131.8 $ 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 Nine Months
Ended September 30 Ended September 30
-------------------- --------------------
1998 1997 1998 1997
<S> <C> <C> <C> <C>
NET LOSS $ (8.2) $ (46.9) $ (18.7) $ (60.7)
Provision for depreciation, depletion and 6.6 8.3 17.4 17.6
amortization
Impairment of mineral properties -- 26.2 -- 26.2
Changes in assets and liabilities, net 3.5 13.0 6.6 7.7
------- ------- ------- -------
Net cash provided by (used in) operating 1.9 0.6 5.3 (9.2)
activities
CASH FLOWS FROM INVESTING ACTIVITIES
Capital spending (2.6) (7.0) (8.8) (14.3)
Disposal of PP&E -- 0.5 -- 0.5
------- ------- ------- -------
Net cash used in investing activities (2.6) (6.5) (8.8) (13.8)
Increase (decrease) in cash and cash (0.7) (5.9) (3.5) (23.0)
equivalents
Cash and cash equivalents, beginning 51.5 65.5 54.3 82.6
------- ------- ------- -------
of period
Cash and cash equivalents, end of period $ 50.8 $ 59.6 $ 50.8 $ 59.6
------- ------- ------- -------
</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: October 27, 1998 MERIDIAN GOLD INC.
By: /s/ Brian J. Kennedy
-------------------------------------
Brian J. Kennedy
President and Chief Executive Officer
