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 or
the Securities Exchange Act of 1934
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For the Month of February, 1999
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MERIDIAN GOLD INC.
(Translation of registrant's name into English)
9670 Gateway Drive, 2nd Floor
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 INC.
9670 Gateway Drive, 2nd Floor APPEARS HERE]
Reno, Nevada 89511
Phone: 775-850-3777
Fax: 775-850-3733
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MERIDIAN GOLD INC.
9670 GATEWAY DRIVE, 2ND FLOOR
RENO, NEVADA 89511
PHONE: (775) 850-3777
FAX: (775) 850-3733
MERIDIAN GOLD REPORTS FOURTH QUARTER AND FULL YEAR 1998 RESULTS
(All dollar amounts in U.S. currency)
RENO, NEVADA, FEBRUARY 18, 1999 - Meridian Gold Inc. today reported fourth
quarter gold production of 57,229 ounces at a cash cost of $210 per ounce. For
the full year, the Company produced 214,640 ounces of gold at an average cash
cost of $204 per ounce, outperforming budget expectations as both Jerritt Canyon
and Beartrack improved their efficiency.
The Company recognized a fourth quarter loss of $20.7 million, or $0.28 per
share, including a non-cash charge of $19.8 million taken as an impairment of
the Beartrack mine based on the continuing depressed gold market. This compares
to last year's fourth quarter loss of $8.5 million, or $0.12 per share.
During the quarter, the Company recognized $2.8 million of its put option
hedging gains.
At the end of the year, Meridian Gold's cash balance was $34.1 million. In
addition, the Company had agreed in principle to the terms of a fully
underwritten $50 million loan facility to support the continuing development and
construction of El Penon, and to further the Company's other growth plans.
FOURTH QUARTER RESULTS
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Sales for the quarter were $21.3 million, versus $20.4 million in the fourth
quarter of 1997, due to an increase in hedging gains in 1998. Realized gold
prices, including hedging gains, averaged $340 per ounce in the fourth quarter,
versus $306 per ounce in the prior year's quarter. Cash production costs in the
fourth quarter were $210 per ounce, versus $183 per ounce in 1997.
At Beartrack, gold production in the fourth quarter was 31,594 ounces, with cash
costs of $209 per ounce. This compares to fourth quarter 1997 production of
30,135 ounces at a cash cost of $202 per ounce. The higher 1998 costs reflected
a higher stripping ratio than in the fourth quarter of 1997. Future cash costs
at Beartrack are expected to decline as mining shifts to the higher grade South
Pit.
At Jerritt Canyon, the Company's share of production in the fourth quarter was
25,705 ounces of gold, versus 30,414 in the prior year's quarter. Cash costs
were higher, at $211 per ounce versus $165 per ounce, as a result of higher open
pit mining costs.
Exploration spending in the fourth quarter, primarily at El Penon, was $3.8
million, compared to $8.0 million in the fourth quarter of 1997. Several
high-profile targets now exist on the El Penon property, and will be the subject
of 1999 exploration work.
RESULTS FOR THE FULL YEAR
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For the full year 1998, the Company recorded a loss of $39.2 million, or $0.53
per share, compared to a loss of $69.2 million or $0.94 per share for the full
year 1997. The 1998 results include a non-cash impairment of the Beartrack
property of $19.8 million, while the 1997 results included asset impairments and
<PAGE>
other non-cash charges of $36.4 million. In both cases, the charges taken
reflected the low gold price environment.
Sales for the full year, including put option hedging gains, were $65.7 million
versus $68.7 million in 1997. Gold production was higher, at 214,640 ounces
versus 202,770 ounces, while the average realized gold price including put
option hedging gains fell to $307 per ounce from $334 per ounce. Exploration
spending for the full year decreased to $13.1 million from $31.1 million in 1997
as the focus at El Penon shifted from the feasibility phase into mine
development.
EL PENON CONSTRUCTION UPDATE
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Construction and development activities at El Penon continue to progress well.
The SAG mill has arrived on site, and the leach tanks have been placed on their
foundations. Most of the various site foundations have been poured. Underground
development, including test mining and Quebrada Colorada development, is
projected to be completed on time to meet mill feed requirements in the fourth
quarter of 1999. "We are very pleased with the professional staff that have
joined Meridian Gold in Chile," remarked Brian Kennedy, President and CEO.
"These employees, and the contractors we have hired, are quickly transforming El
Penon into a producing mine."
1999 OUTLOOK
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Meridian expects to produce approximately 250,000 ounces from its operations in
1999, at an average cash cost of $200 per ounce. Exploration spending of $9
million has been budgeted for 1999, with approximately $4 million of this
earmarked for El Penon.
DATE OF ANNUAL AND SPECIAL MEETING
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Meridian Gold's Annual and Special Meeting of Shareholders will be held on
Wednesday, April 21, 1999 at 4:00 pm EST in the Main Dining Room of The National
Club, 303 Bay Street, Toronto, Ontario.
The Record Date has been set at March 3, 1999. The Company's 1998 Annual Report
and Proxy Circular will be mailed to shareholders on or about March 15, 1999.
BOARD CHANGES
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Today, Mr. Patrick J. Mars resigned from the board to accept a position in
London as the Chairman of First Marathon Securities (U.K.) Limited, an
investment banking concern. Meridian thanks Patrick for his significant
contributions.
Meridian also welcomed two new members to its board today. Mr. Christopher R.
Lattanzi is President of Micon International Limited, a mineral industry
consulting firm. Mr. Robert G. Matthews is a private investor, who retired in
1990 as Vice President and Director, Corporate Finance with RBC Dominion
Securities, where he specialized in mine financing and mergers and acquisitions.
Both Mr. Lattanzi and Mr. Matthews bring valuable experience and insight to our
board, and Meridian looks forward to the benefits of their participation.
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).
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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
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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
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contact:
Wayne M. Hubert Tel: (775) 850-3730
Investor Relations Fax: (775) 850-3733
Meridian Gold Inc. E-mail: [email protected]
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Meridian Gold Inc.
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Consolidated Condensed Statement of Operations
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(in US$ millions, except per share data)
Three Months
Ended December 31 Full Year
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1998 1997 1998 1997
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Sales $ 21.3 $ 20.4 $ 65.7 $ 68.7
Costs and expenses
Cost of sales 15.4 14.2 49.0 55.0
Depreciation, depletion
& amortization 4.7 5.7 22.1 23.3
Exploration costs 3.8 8.0 13.1 31.1
Selling, general and
administrative expenses 2.4 1.5 7.2 6.2
Other operating income (3.6) -- (3.6) --
Impairment of mineral
properties 19.8 -- 19.8 26.2
------- ------- ------- -------
Total costs and expenses 42.5 29.4 107.6 115.6
------- ------- ------- -------
Operating loss (21.2) (9.0) (41.9) (73.1)
Interest income 0.5 0.7 2.7 3.7
Gain (loss) on sale of assets -- (0.2) -- 0.2
------- ------- ------- -------
Net loss (1) $(20.7) $(8.5) $(39.2) $(69.2)
======= ======= ======= =======
Loss per common share $(0.28) $(0.12) $(0.53) $(0.94)
======= ======= ======= =======
Weighted average common shares 73.6 73.6 73.6 73.6
outstanding ======= ======= ======= =======
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(1)In the fourth quarter of 1998, the Company recognized a $19.8 million
non-cash charge relating to the Beartrack mine, reflecting the continued
depressed gold market. In the third quarter of 1997, the Company recognized
non-cash charges of $36.4 million relating to the Jerritt Canyon and Beartrack
mines, based on the prevailing low gold price environment.
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Meridian Gold Inc.
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Operating Data
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<TABLE>
Three Months
Ended December 31 Full Year
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1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Beartrack Mine
Gold production--
heap leach (ounces) 31,594 30,135 110,289 107,229
Tonnes mined (thousands)
Ore 996 1,063 4,088 3,764
Waste 1,679 1,049 7,163 4,286
----- ------ ------ -----
Total 2,675 2 ,112 11,251 8,050
Average heap leach grade
(grams/tonne) 0.86 0.73 0.80 0.89
Cash cost of production/ounce $ 209 $ 202 $ 220 $ 202
Jerritt Canyon Joint Venture
Gold production (Meridian
Gold's 30% share, ounces)
Milling 25,705 30,414 104,351 95,328
Heap leach -- -- -- 213
------ ------ ------- ------
Total 25,705 30,414 104,351 95,541
Tonnes mined (100%, thousands)
Ore 303 427 897 1,189
Waste 3,270 4,058 13,954 23,776
------ ------ ------- ------
Total 3,573 4,485 14,851 24,965
Mill tonnes processed
(100%, thousands) 352 344 1,348 1,396
Average mill ore grade
(grams/tonne) 7.95 8.96 8.71 7.39
Mill recoveries 94.1% 96.8% 90.9% 90.8%
Cash cost of production/ounce $ 211 $ 165 $ 187 $ 209
Totals
Ounces of gold produced 57,299 60,549 214,640 202,770
Ounces of gold sold 62,203 66,643 212,947 207,282
Average realized price/ounce $ 340 $ 306 $ 307 $ 334
Cash cost of production/ounce $ 210 $ 183 $ 204 $ 205
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The calculation of cash costs of production conforms to the standards
recommended by the Gold Institute.
</TABLE>
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Meridian Gold Inc.
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Consolidated Condensed Balance Sheets
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(in US$ millions)
<TABLE>
December 31 December 31
1998 1997
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<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 34.1 $ 54.3
Trade and other receivables 8.1 1.2
Inventories 6.3 10.0
Other current assets 1.5 3.4
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Total current assets 50.0 68.9
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Property, plant and equipment, net 57.5 75.7
Other assets 2.6 3.3
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Total assets $ 110.1 $ 147.9
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Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable, trade and other $ 3.9 $ 5.3
Accrued and other liabilities 9.6 8.9
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Total current liabilities 13.5 14.2
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Other long-term liabilities 23.1 21.2
Shareholders' equity 73.5 112.5
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Total liabilities and
shareholders' equity $ 110.1 $ 147.9
======= =======
</TABLE>
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Meridian Gold Inc.
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Consolidated Condensed Statement of Cash Flows
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(in US$ millions)
<TABLE>
<CAPTION>
Three Months
Ended December 31 Full Year
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1998 1997 1998 1997
-------- ------- -------- --------
<S> <C> <C> <C> <C>
Net loss $ (20.7) $ (8.5) $ (39.2) $ (69.2)
Provision for depreciation, depletion and 4.8 5.7 22.2 23.3
amortization
Impairment of mineral properties 19.8 -- 19.8 26.2
Changes in assets and liabilities, net (5.9) 2.7 1.0 12.4
------ ------ ------ ------
Net cash provided by (used in) operating (2.0) (0.6) 3.8 (7.3)
activities ------ ------ ------ ------
Cash flows from investing activities
Capital spending (14.9) (4.7) (23.7) (19.0)
Disposal of PP&E 0.1 -- 0.1 0.5
------ ------ ------ ------
Net cash used in investing activities (14.8) (4.7) (23.6) (18.5)
------ ------ ------ ------
Cash flows from financing activities
Proceeds from sale of common stock 0.1 -- 0.1 --
Repayment of long-term debt -- -- (0.5) (2.5)
------ ------ ------ ------
Net cash provided by (used in) financing 0.1 -- (0.4) (2.5)
activities ------ ------ ------ ------
Increase (decrease) in cash and cash (16.7) (5.3) (20.2) (28.3)
equivalents
Cash and cash equivalents, beginning 50.8 59.6 54.3 82.6
of period ------ ------ ------ ------
Cash and cash equivalents, end of period $ 34.1 $ 54.3 $ 34.1 $ 54.3
====== ====== ====== ======
</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: February 18, 1999 MERIDIAN GOLD INC.
By: /s/ Brian J. Kennedy
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Brian J. Kennedy
President and Chief Executive Officer
