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 of
the Securities Exchange Act of 1934
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For the Month of June, 1999 Commission File Number: 001-12003
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MERIDIAN GOLD INC.
(Translation of Registrant's Name into English)
9670 Gateway Drive, 2nd Floor
Reno, Nevada 89511
(Address of Principal Executive Offices)
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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 [ ] Form 40-F [X]
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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 [ ]
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<PAGE>
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 REPORTS SECOND QUARTER 1999 RESULTS
(All dollar amounts in U.S. currency)
Reno, Nevada, July 21, 1998 - Meridian Gold Inc. today reported second quarter
gold production of 59,111 ounces at a cash cost of $178 per ounce. Gold
production was more than 13% higher than in the second quarter of 1998 due to
strong production from the Beartrack mine. Cash costs, driven by Beartrack's
performance, improved by 11% versus last year's second quarter. Gold price
continues to be disappointing, but despite realizing only $272 per ounce on gold
sales for the quarter, operating cash flow was positive at $4.0 million. Cash
balances increased to $38.1 million at the end of the quarter.
Meridian continued to operate under the bridge credit facility with Standard
Bank. Loan documents for the $50 million long-term facility were signed on June
30, 1999. All of the short-term borrowings are scheduled to be converted under
the terms of the long-term facility during the third quarter.
The Company realized a net loss for the second quarter of $5.5 million, or $0.07
per share. This matches the loss of $5.5 million or $0.07 per share in the
second quarter of 1998, when the realized gold price was significantly higher at
$301 per ounce.
SECOND QUARTER RESULTS
Sales for the quarter were $16.8 million versus $15.9 million in the second
quarter of 1998 due to the increase in production which was partially offset by
the lower realized gold price. Exploration costs were about the same as in the
second quarter of 1998 at $3.2 million versus $3.0 million. General and
Administrative costs declined to $1.5 million from $1.9 million.
At Beartrack, gold production in the second quarter was 32,959 ounces with cash
costs of $157 per ounce. This compares to second quarter 1998 production of
23,680 ounces at a cash cost of $234 per ounce. Higher grades and ore tonnage
largely accounted for the increased production and the reduced cash costs.
At 30%-owned Jerritt Canyon, production decreased slightly from 28,497 ounces in
the second quarter of 1998, to 26,152 ounces due to expected lower mill head
grades and a 4-1/2 day mill shutdown in June for routine care and maintenance.
Cash costs increased to $205 per ounce from $176 per ounce due largely to the
slightly lower grades.
FIRST HALF RESULTS
For the first half of 1999, the Company recorded a loss of $8.5 million or $0.12
per share, compared to a loss of $10.5 million or $0.14 per share for the first
half of 1998.
Sales for the first half were $29.0 million versus $30.2 million in the same
period last year. Gold production was nearly 5% higher at 108,258 ounces versus
103,154 ounces, while cash costs improved by over 8% to $188 per ounce from $205
per ounce. The average realized price of gold fell to $278 per ounce from $298
<PAGE>
per ounce. Exploration spending for the first six months was $5.1 million,
slightly lower than the $5.3 million spent in the same period last year.
Meridian's exploration program during the first half of the year encompassed
additional drilling at El Penon plus extensive field work in Mexico, Peru and
Argentina. The Company's work in Mexico has resulted in an agreement with
International Northair Mines Ltd. on the Venturina property in the state of
Chihuahua. Please see the "What's New" section of Meridian Gold's website
(www.meridiangold.com) for further information.
At Rossi, joint venture partner Barrick Gold Corporation continues to advance
the underground decline into the STORM Resource and is scheduled to begin
delineation drilling in the fourth quarter. In addition, Barrick began a surface
drilling program in the second quarter to test projected extensions of the
Post-Betze fault onto the Rossi property.
EL PENON UPDATE
During the second quarter, Meridian spent $17.6 million building the El Penon
mine. At June 30, capital expenditures to date at the mine totaled $52 million
of the $77 million budget. The $52 million spent has been financed with $30
million of debt and with Meridian's cash resources. Remaining capital
requirements will be financed from Meridian's operating cash flow and from
current cash balances of $38 million. After drawing down $30 million of the $50
million long-term debt facility, which closed during the second quarter, the
Company will retain $20 million in borrowing capacity to fund further growth
opportunities.
Construction and development activities at El Penon are on schedule and on
budget for startup in the latter half of the third quarter. At the end of the
second quarter, the construction of the plant and facilities was 90% complete.
Pre-stripping of three open pits began during the second quarter and the first
ore benches were mined and stockpiled in front of the primary crusher. As
planned, the open pits are expected to feed the mill in the third and fourth
quarters during startup. With approximately 9 kilometers of underground
development completed, the underground mines are on schedule to provide ore to
the mill in the first quarter of 2000.
QUEBRADA COLORADA
The one-kilometer drift from Quebrada Orito to Quebrada Colorada was completed
at the end of May. During the remainder of the quarter, an additional 1.3
kilometers of underground mine development was completed, including the partial
construction of a second access ramp. The second ramp will improve operating
flexibility and mining productivity.
In June, a crosscut into the southern ore shoot at Quebrada Colorada yielded
channel samples averaging 31.7 g/tonne gold and 596 g/tonne silver over 2.1
meters. The vein consisted of near vertical banded quartz, strongly oxidized
with manganese oxides, and contained abundant fine-grained disseminated gold.
The wall rock is extremely competent and required no wall or roof support.
In addition to the cross-cut, Meridian drilled 16 holes to help further define
the upper limits of mineralization in the southern ore shoot. Additional
ore-grade mineralization was encountered on four sections, and was extended up
dip on three sections as much as 45 meters. Results ranged from 4 meters of 5.5
g/tonne gold and 280 g/tonne silver to 9 meters of 269 g/tonne gold and 1,751
g/tonne silver.*
<PAGE>
Late last year, the exploration team determined that Quebrada Colorada extended
southward from the previously defined southernmost extent. During 1999, 17 holes
have been drilled to follow up on this extension. Recently, eight holes have
encountered ore-grade mineralization over a strike length of at least 210
meters, with three of the southernmost holes containing high grades.
<TABLE>
- ----------------- ------ --------------- ---------- ----------- ---------- ----------- --------------- --------------
QUEBRADA
COLORADA Elev. From To Interval* Gold grade Silver Grade
Hole Incl Section (m) (m) (m) (m) (g/tonne) (g/tonne)
- ----------------- ------ --------------- ---------- ----------- ---------- ----------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
PP407 -55 7301660N 1605 294 300 6 8.8 379
PP424 -54 7301660N 1580 296 298 2 3.7 125
PP413 -55 7301600N 1590 288 294 6 4.6 356
PP428 -55 7301600N 1605 264 266 2 4.8 433
PP446 -55 7301600N 1635 224 228 4 5.8 306
PP442 -55 7301540N 1715 144 148 4 29.7 263
PP435 -55 7301540N 1620 230 234 4 84.2 471
PP447 -55 7301480N 1610 250 256 6 24.6 650
- ----------------- ------ --------------- ---------- ----------- ---------- ----------- --------------- --------------
* All true widths are approximately 50% of the reported interval
</TABLE>
True width of the vein is approximately 1-3 meters, and the extension is open to
the south. Drilling is continuing and a core rig is expected to be added to the
program.
During 1999, exploration drilling has also followed Quebrada Colorada to the
north. Ore grade mineralization has been extended 120 meters northward with best
intercepts of 4 meters of 19.8 g/tonne gold and 324 g/tonne silver and 4 meters
of 13.6 g/tonne gold and 141 g/tonne silver. Beyond these 120 meters, both the
structure and veining continue for at least another 90 meters to the north, but
so far no ore grade intercepts have been encountered. Additional drilling will
continue to follow the zone to the north.
Of the other targets at El Penon, the mineralization at Playa has proven to be
the most significant. After having tested a strike length of 570 meters,
significant mineralization has been encountered along a strike length of 300
meters. The best new holes drilled this year were 4 meters of 13.3 g/tonne gold
and 547 g/tonne silver and 8 meters of 7.2 g/tonne gold and 363 g/tonne silver.
However, at Playa ore grade mineralization may be more restricted vertically
than is typical on the property. Since the Playa structure is open along strike,
more drilling is planned.
Y2K UPDATE
Meridian has been actively engaged in the year 2000 issue since early 1997 when
the Company implemented its plans to address the potential impacts of the year
2000. The Company has inventoried all hardware, software and equipment control
systems at all locations and expects to confirm compliance or reprogram or
replace equipment where necessary by September 1999.
To date, the cost of testing and compliance or upgrade measures has been less
than $50,000. Future spending is not expected to increase significantly,
although subsequent testing may lead to discovery of material issues.
<PAGE>
Meridian has contacted key refiners and suppliers to determine whether they are
actively managing their year 2000 risk and working toward compliance by the end
of 1999. The Company has contacted alternate sources where existing ones have
not confirmed expected compliance.
It is currently believed that the Company's critical operating and financial
systems are all year 2000 compliant. In the event that year 2000 issues are
either not detected or are not resolved, all of the Company's mission-critical
functions are capable of being performed manually. However, it is not possible
to be certain that all aspects of the year 2000 issue affecting the Company,
including those relating to the efforts of customers, suppliers or third
parties, will be fully resolved. Failures may materially and adversely affect
the Company's results of operations, liquidity and financial condition. The
completion of the Company's year 2000 action plan is expected to significantly
reduce these uncertainties.
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
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: (775) 850-3730
Investor Relations Fax: (775) 850-3733
Meridian Gold Inc. E-mail: [email protected]
<PAGE>
<TABLE>
Meridian Gold Inc.
Consolidated Condensed Statement of Operations
(Unaudited and in US$ millions, except per share data)
Three Months Six Months
Ended June 30 Ended June 30
-------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Sales $ 16.8 $ 15.9 $ 29.0 $ 30.2
Costs and expenses
Operating expenses 13.6 12.0 22.5 22.6
Depreciation, depletion & amortization 4.5 5.2 8.3 10.9
Exploration costs 3.2 3.0 5.1 5.3
Selling, general and administrative
expenses 1.5 1.9 2.6 3.4
------- ------- ------- -------
Total costs and expenses 22.8 22.1 38.5 42.2
------- ------- ------- -------
Operating loss (6.0) (6.2) (9.5) (12.0)
Interest income 0.5 0.7 1.0 1.5
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Net loss $ (5.5) $ (5.5) $ (8.5) $(10.5)
======= ======= ======= =======
Loss per common share $(0.07) $(0.07) $(0.12) $(0.14)
======= ======= ======= =======
Weighted average common shares outstanding 73.7 73.6 73.7 73.6
======= ======= ======= =======
</TABLE>
<PAGE>
<TABLE>
Meridian Gold Inc.
Operating Data (Unaudited)
Three Months Six Months
Ended June 30 Ended June 30
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1999 1998 1999 1998
<S> <C> <C> <C> <C>
BEARTRACK MINE
Gold production - heap leach (ounces) 32,959 23,680 56,487 52,177
Tonnes mined (thousands)
Ore 1,213 1,025 2,290 1,836
Waste 865 1,698 1,773 3,214
------ ------ ------ ------
Total 2,078 2,723 4,063 5,050
Average heap leach grade (grams/tonne) 0.96 0.65 0.93 0.65
Cash cost of production/ounce $ 157 $ 234 $ 178 $ 228
JERRITT CANYON JOINT VENTURE
Gold production (Meridian Gold's 30% share)
Milling (ounces) 26,152 28,497 51,771 50,977
Tonnes mined (100%, thousands)
Ore 252 205 562 343
Waste 2,069 3,563 5,017 7,668
------ ------ ------ ------
Total 2,321 3,768 5,579 8,011
Mill tonnes processed (100%, thousands) 351 346 703 668
Average mill ore grade (grams/tonne) 8.78 9.32 8.57 8.98
Mill recoveries 90.8% 90.9% 91.0% 90.7%
Cash cost of production/ounce $ 205 $ 176 $ 200 $ 185
TOTALS
Ounces of gold produced 59,111 52,177 108,258 103,154
Ounces of gold sold 61,216 52,750 103,238 101,035
Average realized price/ounce $ 272 $ 301 $ 278 $ 298
Cash cost of production/ounce $ 178 $ 201 $ 188 $ 205
</TABLE>
<PAGE>
Meridian Gold Inc.
Consolidated Condensed Balance Sheets
(In US$ millions)
June 30 December 31
1999 1998
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ASSETS
Current Assets
Cash and cash equivalents $ 38.1 $34.1
Trade & other receivables 3.3 8.1
Inventories 6.0 6.3
Other current assets 0.7 1.5
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Total current assets 48.1 50.0
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Property, plant and equipment, net 89.3 57.5
Other assets 2.4 2.6
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Total Assets $ 139.8 $ 110.1
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts payable, trade and other $ 5.1 $ 3.9
Short-term debt 30.6 --
Accrued and other liabilities 10.7 9.6
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Total current liabilities 46.4 13.5
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Other long-term liabilities 28.4 23.1
Shareholders' equity 65.0 73.5
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Total liabilities and shareholders' equity $ 139.8 $ 110.1
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<TABLE>
Meridian Gold Inc.
Consolidated Condensed Statement of Cash Flows
(Unaudited and in US$ millions)
Three Months Six Months
Ended June 30 Ended June 30
------------------------------------------------
1999 1998 1999 1998
<S> <C> <C> <C> <C>
NET LOSS $ (5.5) $ (5.5) $ (8.5) $(10.5)
Provision for depreciation, depletion and
amortization 4.5 5.2 8.3 10.9
Changes in assets and liabilities, net 5.0 4.6 14.2 3.0
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Net cash provided by (used in) operations 4.0 4.3 14.0 3.4
------- ------- ------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Capital spending (19.3) (3.2) (40.1) (6.2)
------- ------- ------- -------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from short-term borrowings 18.1 -- 30.6 --
Repayment of current portion of long-term
debt (0.5) -- (0.5) --
Proceeds from sale of common stock -- -- 0.1 --
Redemption of preferred shares (0.1) -- (0.1) --
------- -------
Net cash provided by (used in) financing
activities 17.5 -- 30.1 --
------- ------- ------- -------
Increase (decrease) in cash and cash
equivalents 2.2 1.1 4.0 (2.8)
Cash and cash equivalents, beginning
of period 35.9 50.4 34.1 54.3
------- ------- ------- -------
Cash and cash equivalents, end of period $ 38.1 $ 51.5 $ 38.1 $ 51.5
------- ------- ------- -------
</TABLE>
