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 September, 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
MERIDIAN GOLD REPORTS THIRD QUARTER 1999 RESULTS
(All dollar amounts in U.S. currency)
Reno, Nevada, October 21, 1999 - Meridian Gold Inc. today reported third quarter
gold production of 63,300 ounces at a cash cost of $153 per ounce. Good
performance continued at Jerritt Canyon with higher grades and efficiencies.
Beartrack also had a strong third quarter with higher production versus last
year. Based on year-to-date gold production of 172,000 ounces at an average cash
cost of $175 per ounce, Meridian is expected to meet or exceed its 1999
projections of 250,000 ounces of gold production at an average cash cost of $200
per ounce. The above-stated production for the third quarter does not include
any production from El Penon, which shipped its first gold and silver on October
6, 1999.
For the third quarter, the Company realized a loss of $3.8 million, or $0.05 per
share. This compares to a loss in last year's third quarter of $8.2 million, or
$0.11 per share.
On October 18, 1999, Meridian converted the El Penon financing with Standard
Bank to the long-term facility. Meridian has borrowed $30 million from Standard
with a 5-year term and an interest rate of LIBOR + 2.25% converting to LIBOR +
2.0% after completion tests are achieved. Meridian also has $20 million
additional undrawn credit, which can be used by the Company for corporate
purposes.
At the end of the quarter, Meridian's hedge position, which was put in place as
a requirement of the El Penon loan financing, was as follows:
<TABLE>
Gold Fixed Forwards Silver Forwards
Year Ounces Avg Price Ounces Avg Price
---- ------ --------- ------ ---------
<S> <C> <C> <C> <C>
1999 -- -- 400,000 $5.34
2000 88,440 $305 1,430,000 $5.34
2001 91,800 $309 1,700,000 $5.34
2002 103,310 $313 1,800,000 $5.34
2003 107,680 $317 2,000,000 $5.34
2004 93,770 $321 2,000,000 $5.34
Gold Puts
Year Ounces Strike Price
1999 8,000 $285
2000 32,000 $285
2001 27,000 $285
</TABLE>
Because the majority of Meridian's expected gold production is unhedged (only
10% of the gold reserves and resources are hedged), Meridian is in a position to
benefit from the recent increases in the price of gold. Meridian's hedging was
done to facilitate the borrowing capability of the Company and to minimize the
loan risk while allowing gold price upside for its investors. The gold forwards
<PAGE>
contracted contain no lease-rate swap risk. The only lease rates that have not
been fixed are for silver forwards in the years 2003 and 2004.
Meridian Gold's balance sheet remained strong at the end of the third quarter,
with cash resources of $25.1 million to support additional growth.
THIRD QUARTER RESULTS
Sales for the quarter were $17.3 million, versus $14.2 million in the third
quarter of 1998, due to increased production at the Beartrack mine. Realized
gold prices averaged $261 per ounce in the third quarter, versus $285 per ounce
in the prior year's quarter. Cash production costs in the third quarter were
$153 per ounce, versus $199 per ounce in 1998.
At Beartrack, gold production in the third quarter was 37,600 ounces, with cash
costs of $121 per ounce. This compares to third quarter 1998 production of
26,500 ounces at a cash cost of $219 per ounce. Beartrack is expected to produce
120,000 ounces of gold at an average cash cost of $165 per ounce for the full
year 1999.
At Jerritt Canyon, the Company's share of production in the third quarter was
25,700 ounces of gold, versus 26,100 in the prior year's quarter. Cash costs
were $199 per ounce versus $181 per ounce, as head grades decreased due to the
cessation of open pit mine production and the resultant increase in the amount
of low-grade stockpile material fed to the mill. Jerritt Canyon continues to
perform well, however, having year-to-date gold production of 77,500 ounces of
gold at an average cash cost of $199 per ounce. Jerritt Canyon is expected to
meet its 1999 full year target of 100,000 ounces of production (Meridian's
share) at a cash cost of $210 per ounce.
Exploration spending in the third quarter, primarily at El Penon, was $2.9
million, compared to $4.0 million in the third quarter of 1998.
RESULTS FOR THE FIRST NINE MONTHS
For the first nine months of 1999, the Company recorded a loss of $12.4 million,
or $0.17 per share, compared to a loss of $18.7 million or $0.25 per share for
the first nine months of 1998.
Sales for the first nine months were $46.2 million, versus $44.4 million in the
same period last year. Gold production was higher, at 171,600 ounces versus
157,300 ounces, while the average realized price of gold fell to $272 per ounce
from $294 per ounce. Exploration spending for the first nine months, primarily
at El Penon, was $8.0 million, slightly lower than the $9.3 million spent in the
same period last year.
EL PENON UPDATE
The El Penon mine in northern Chile commenced milling operations on September 2
and poured its first gold on September 20. The plant has undergone a smooth
commissioning process and is, at the time of this release, operating at
approximately 75% of its design capacity of 2,000 tonnes per day. Over the
fourth quarter, the Company expects to continue the orderly increase toward
design rates. Open pit ore is currently being sourced to feed the mill, with
underground ore production scheduled to feed the mill beginning the first of
next year.
<PAGE>
Two shipments containing 5,700 ounces of gold and 78,300 ounces of silver have
been shipped from El Penon during the month of October.
EXPLORATION UPDATE
El Penon - Exploration drilling has continued, and since March 22, reverse
circulation holes totaling 49,403 meters have been drilled. In the third
quarter, surface exploration drilling was concentrated at the proposed Amatista
pit dump, Quebrada Colorada, and El Valle. At El Valle, 38 holes were drilled to
expand and better define a northeast trending resource zone between Quebrada
Orito and Discovery Wash. This drilling was concentrated along 500 meters of
strike length. The El Valle zone will be remodeled with an updated resource
estimate completed in early 2000.
At Quebrada Colorada Sur, a 38 hole step-out and subsequent in-fill drilling
program was concentrated along a 270 meter strike length starting approximately
200 meters south of the existing resource. Nearly continuous ore-grade
mineralization was encountered along a strike length of approximately 120
meters. High-grade mineralization, comparable to the main Quebrada Colorada
resource, appears to be hosted in a narrow package of sub-parallel quartz veins
with a steep easterly dip. An updated resource estimate for the entire Quebrada
Colorada zone will be made in early 2000 once drilling is completed for this
year.
Rossi - Barrick's surface exploration and development of the decline to access
the 49'er Zone in the STORM Resource have continued on schedule. A second
surface drilling program was started in September in the vicinity of the STORM
resource and to test new targets elsewhere on the property. Funding for these
activities is provided by Barrick under the terms of the Meridian-Barrick joint
venture.
The decline (portaled in the Dee Pit) has advanced to over 3,000 feet and is
approximately at the Rossi property boundary. To date, all of the rocks
encountered have been Bootstrap Limestone and breccia, and rock conditions have
been as expected. The decline is planned to be completed late in the fourth
quarter, and underground drilling of the 49'er Zone will follow its completion.
Other Exploration Activities - In Mexico, fieldwork has started on the Venturina
Project (a Joint Venture with International Northair Mines). This work consists
of mapping, trenching, sampling, road building, and rehabilitation of historic
underground workings. These workings are being accessed to allow detailed
mapping and sampling and to confirm historic records of high-grade underground
mineralization. Drilling is scheduled for the first quarter next year.
Additional reconnaissance activities are continuing in Mexico, as well as Peru,
where a new exploration office was opened in Lima last quarter.
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 as of September 30, 1999 no significant problems
have been found. Monitoring and minor testing will continue throughout the
fourth quarter to ensure completeness of these results.
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 Nine Months
Ended September 30 Ended September 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Sales $17.3 $14.2 $46.2 $44.4
Costs and expenses
Operating expenses 12.1 11.1 34.6 33.6
Depreciation, depletion and amortization 5.2 6.6 13.5 17.4
Exploration costs 2.9 4.0 8.0 9.3
Selling, general and administrative
expenses 1.4 1.4 4.0 4.8
--- --- --- ---
Total costs and expenses 21.6 23.1 60.1 65.1
Operating loss (4.3) (8.9) (13.9) (20.7)
Interest income 0.5 0.7 1.6 2.2
Gain / (Loss) on Disposal of Assets 0.0 0.0 (0.1) 0.2
--- --- ----- -----
Net loss $(3.8) $(8.2) $(12.4) $(18.7)
====== ====== ======= =======
Loss per common share $(0.05) $(0.11) $(0.17) $(0.25)
======= ======= ======= =======
Weighted average common shares outstanding 73.7 73.6 73.7 73.6
==== ==== ==== ====
(millions)
</TABLE>
<PAGE>
<TABLE>
Meridian Gold Inc.
Operating Data (Unaudited)
Three Months Nine Months
Ended September 30 Ended September 30
1999 1998 1999 1998
Beartrack Mine
<S> <C> <C> <C> <C>
Gold production - heap leach (ounces) 37,571 26,518 94,059 78,695
Tonnes mined (thousands)
Ore 1,424 1,255 3,948 3,092
Waste 1,083 2,271 3,038 5,484
----- ----- ----- -----
Total 2,507 3,526 6,986 8,576
Average heap leach grade (grams / tonne) 1.03 0.89 0.90 0.72
Cash cost of production / ounce $ 121 $ 219 $ 155 $ 225
Jerritt Canyon Joint Venture
Gold production (ounces) 25,745 26,102 77,516 78,646
Tonnes mined (100%, thousands)
Ore 350 252 970 594
Waste 2,341 3,015 7,871 10,684
----- ----- ----- ------
Total 2,691 3,267 8,841 11,278
Mill tonnes processed (100%, thousands) 415 328 1,189 995
Average mill ore grade (grams / tonne) 7.09 9.02 7.56 8.98
Mill recoveries 91.1% 90.1% 91.1% 90.6%
Cash cost of production / ounce $ 199 $ 181 $ 199 $ 180
Totals
Ounces of gold produced 63,316 52,620 171,575 157,341
Ounces of gold sold 63,366 49,709 168,069 150,743
Average realized price / ounce $ 261 $ 285 $ 272 $ 294
Cash cost of production / ounce $ 153 $ 199 $ 175 $ 201
</TABLE>
<PAGE>
<TABLE>
Meridian Gold Inc.
Consolidated Condensed Balance Sheets
(Unaudited and in US$ millions)
September 30 December 31
------------ -----------
1999 1998
<S> <C> <C>
Assets
Current Assets
Cash and cash equivalents $ 25.1 $ 34.1
Trade receivables 2.6 8.1
Inventories 5.4 6.3
Other current assets 1.5 1.5
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Total current assets 34.6 50.0
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Property, plant and equipment, net 101.9 57.5
Other assets 2.3 2.6
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Total Assets $ 138.8 $ 110.1
======= =======
Liabilities and Shareholders' Equity
Current Liabilities
Accounts payable, trade and other $ 4.1 $ 3.9
Accrued and other liabilities 12.5 9.6
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Total current liabilities 16.6 13.5
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Long-term debt 30.0 0.0
Other long-term liabilities 31.0 23.1
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Total liabilities 77.6 36.6
Shareholders' equity 61.2 73.5
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Total liabilities and shareholders' equity $ 138.8 $ 110.1
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</TABLE>
<PAGE>
<TABLE>
Meridian Gold Inc.
Consolidated Condensed Statement of Cash Flows
(Unaudited and in US$ millions)
Three Months Nine Months
Ended September 30 Ended September 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net loss $ (3.8) $ (8.2) $ (12.4) $ (18.7)
Provision for depreciation, depletion and
amortization 5.2 6.6 13.5 17.4
Changes in assets and liabilities, net 3.4 3.5 17.9 6.6
--- --- ---- ----
Net cash provided by operating
activities 4.8 1.9 19.0 5.3
Cash flows from investing activities
Capital spending (17.9) (2.6) (58.2) (8.8)
Disposal of assets -- -- 0.1 --
--- --- --- ---
Net cash used in investing activities (17.9) (2.6) (58.1) (8.8)
Cash flows from financing activities
Proceeds from borrowings -- -- 30.5 --
Repayment of long- term borrowings -- -- (0.5) --
Redemption of preferred shares -- -- (0.1) --
Proceeds from sale of common stock 0.1 -- 0.2 --
--- --- --- ---
Net cash provided by financing activities 0.1 -- 30.1 --
--- --- ---- ---
Decrease in cash and cash
equivalents (13.0) (0.7) (9.0) (3.5)
Cash and cash equivalents, beginning
of period 38.1 51.5 34.1 54.3
---- ---- ---- ----
Cash and cash equivalents, end of period $25.1 $ 50.8 $25.1 $ 50.8
===== ====== ===== ======
</TABLE>
<PAGE>
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 21, 1999 MERIDIAN GOLD INC.
By: /s/ Brian J. Kennedy
--------------------
Brian J. Kennedy
President and Chief Executive Officer
