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 March, 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 FIRST QUARTER 1999 RESULTS
(All dollar amounts in U.S. currency)
RENO, NEVADA, APRIL 21, 1999 -Meridian Gold Inc. is pleased to report first
quarter 1999 gold production of 49,147 ounces at an average cash cost of $200
per ounce. The Company expects to achieve its 1999 full-year production target
of 250,000 ounces of gold at a cash operating cost of $200 per ounce, as the El
Penon mine is scheduled to start up in the fourth quarter of the year.
The Company recorded a loss of $3.1 million or $0.04 per share in the first
quarter of 1999, compared with a loss of $5.1 million or $0.07 per share in the
first quarter of last year. Sales for the first quarter were $12.2 million
compared with $14.3 million last year as a result of slightly lower production
and a lower realized gold price of $287 per ounce. During the first quarter, the
Company closed out its remaining put option positions on gold, for a net gain of
$6.7 million to be allocated as follows: $2.8 million in 1999; $2.3 million in
2000; and $1.6 million in 2001. These gains will be recognized in the respective
fourth quarters of the years in which the options would have expired.
At Beartrack, gold production was 23,528 ounces versus 1998 first quarter
production of 28,497 ounces, despite a higher ore grade and more tonnes mined,
due to longer percolation times because of higher average heap heights, and the
affect of normal spring runoff on solution grades in the latter part of the
quarter. Cash costs were lower this quarter than in last year's quarter, at $206
versus $224 per ounce of gold, largely due to the higher grade. For 1999,
Beartrack is expected to produce 110,000 ounces of gold at a cash cost of $205
per ounce.
At Jerritt Canyon, the Company's share of gold production was 25,619 ounces,
higher than 1998's first quarter total of 24,133 ounces as a result of increased
throughput and higher mill recoveries which more than offset a slightly lower
average mill grade. Cash costs at Jerritt Canyon remained below $200 per ounce,
at $194 versus the prior year quarter's $183. For 1999, Jerritt Canyon is
expected to produce 100,000 ounces of gold at a cash cost of $210 per ounce.
Operating cash flow from Beartrack and Jerritt Canyon, including the liquidation
of the Company's remaining put options on gold, was again positive, and despite
the $21 million of capital spending (primarily at El Penon and funded partly by
short-term bridge loans), cash and cash equivalents increased by $1.8 million
from the end of 1998. At the end of the first quarter, Meridian had $35.9
million in cash and cash equivalents.
EL PENON CONSTRUCTION
At El Penon, construction and development are on schedule and on budget for the
startup later this year. Mechanical completion of the processing plant is
expected late in the third quarter with open pit ore providing the initial feed
for the mill during the fourth quarter. With approximately 6 kilometers of
underground development completed, the underground mines are on schedule to
provide ore to the mill in the first quarter of 2000. The one kilometer drift
from Quebrada Orito to Quebrada Colorada is more than two-thirds complete, and
underground mine development of the high-grade Quebrada Colorada deposit is
expected to start in late May.
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EL PENON FINANCING AND HEDGING
Meridian is waiting for the final routine Chilean loan approvals for its $50
million debt facility through Standard Bank, which approvals are expected soon.
To facilitate this process and the El Penon construction schedule, Meridian and
Standard Bank have arranged a $30 million bridge credit facility, at the same
interest rate terms as the debt facility, to fund the project until the Chilean
approvals are granted. At the end of the quarter, Meridian had drawn $12.6
million against this facility.
Meridian has also completed a hedge program covering El Penon operating costs
and debt service through the life of the debt facility. Hedging contracts have
been entered into for approximately 485,000 ounces of gold and 9.3 million
ounces of silver, representing about a third of projected annual gold production
and half of expected annual silver production at El Penon. The silver hedges
have been entered into as flat forward contracts at a price of $5.34 per ounce
in each year, with a lease rate swap agreement in place during the last three
years of the contracts. The gold hedges are in the form of flat forwards and
graduating forwards. Average prices by year are as follows:
Gold Silver
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Year Ounces Avg Price Ounces Avg Price
---- ------ --------- ------ ---------
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
EXPLORATION
The Company's exploration efforts are being focused in three areas. The first is
El Penon, where drilling started near the end of the quarter on several
high-quality targets, including Vista Norte, Playa, and Quebrada Colorada. The
second area is the Rossi property, where Barrick Gold Corporation, which is
earning a 60% interest in the property, initiated the construction of an
underground decline into the STORM deposit with a first blast on March 10th.
Initial results from Barrick's underground program should be available later
this year. In addition, Barrick will also conduct a surface drilling program to
test projected extensions of the Post-Betze fault onto the Rossi property.
During the next two years, per the joint venture agreement on Rossi, Barrick is
committed to spending $5 million on underground development and $5 million on
grass-roots exploration at Rossi. An additional $5 million must be spent by
Barrick over four years in order to earn a 60% interest in the project.
The third area of exploration is a grass roots program covering parts of Peru,
Argentina and Mexico. Because of past successes in grass roots exploration,
Meridian is excited to refocus some attention on this area of its business.
Meridian Gold Inc. is a growth gold business with its common shares traded on
The Toronto Stock Exchange (MNG) and the New York Stock Exchange (MDG).
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Safe Harbor Statement under the United States Private Securities Litigation
Reform Act of 1995: Statements in this release that are forward-looking
statements are subject to various risks and uncertainties concerning the
specific factors identified above and in the corporation's periodic filings with
the Ontario Securities Commission and the U.S. Securities Exchange Commission.
Such information contained herein represents management's best judgment as of
the date hereof based on information currently available. The corporation does
not intend to update this information and disclaims any legal liability to the
contrary.
<PAGE>
For further information, please visit our website at www.meridiangold.com, or
contact:
Wayne M. Hubert Tel: (800) 572-4519
Investor Relations Fax: (775) 850-3733
Meridian Gold Inc. E-mail: [email protected]
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<TABLE>
Meridian Gold Inc.
Consolidated Condensed Statement of Operations
(Unaudited and in US$ millions, except per share data)
Three Months
Ended March 31
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1999 1998
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<S> <C> <C>
Sales $ 12.2 $ 14.3
Costs and expenses
Cost of sales 9.0 10.5
Depreciation, depletion & amortization 3.8 5.6
Exploration costs 1.8 2.4
Selling, general and administrative
expenses 1.1 1.7
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Total costs and expenses 15.7 20.2
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Operating loss (3.5) (5.9)
Interest income 0.4 0.8
Loss on sale of assets (0.1) --
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Income (loss) before income taxes (3.2) (5.1)
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Provision for income taxes 0.1 --
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Net income (loss) $ (3.1) $ (5.1)
======= =======
Loss per common share $ (0.04) $ (0.07)
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Number of common shares used in earnings
per share computations 73.6 73.6
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</TABLE>
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<TABLE>
Meridian Gold Inc.
Operating Data (Unaudited)
Three Months
Ended March 31
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1999 1998
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<S> <C> <C>
Beartrack Mine
Gold production - heap leach (ounces) 23,528 28,497
Tonnes mined (thousands)
Ore 1,077 811
Waste 909 1,516
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Total 1,986 2,327
Average heap leach grade (grams / tonne) 0.9 0.6
Cash cost of production / ounce $206 $224
Jerritt Canyon Joint Venture
Gold production (Meridian Gold 30% share ounces):
Milling 25,619 24,133
Tonnes mined (thousands)
Ore 310 138
Waste 2,948 4,106
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Total 3,258 4,244
Mill tonnes processed (thousands) 351 322
Average mill ore grade (grams / tonne) 8.4 8.6
Mill recoveries 91.3% 90.6%
Cash cost of production / ounce $194 $183
Totals
Ounces of gold produced 49,147 52,630
Ounces of gold sold 42,022 48,285
Average realized price / ounce $287 $293
Cash cost of production / ounce $200 $206
</TABLE>
Note: The calculation of cash costs of production conforms to the standards
recommended by the Gold Institute.
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<TABLE>
Meridian Gold Inc.
Consolidated Condensed Balance Sheets
(In US$ millions)
March 31 December 31
1999 1998
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<S> <C> <C>
Assets
Current Assets:
Cash and cash equivalents $ 35.9 $ 34.1
Trade and other receivables 2.7 8.1
Inventories 7.9 6.3
Other current assets 1.3 1.5
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Total current assets 47.8 50.0
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Property, plant and equipment, net 74.5 57.5
Other assets 2.0 2.6
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Total Assets $ 124.3 $ 110.1
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Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable, trade and other 3.6 3.9
Short-term debt 12.5 --
Accrued and other liabilities 15.0 9.6
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Total current liabilities 31.1 13.5
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Long-term liabilities 22.7 23.1
Shareholders' equity 70.5 73.5
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Total liabilities and shareholders' equity $ 124.3 $ 110.1
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</TABLE>
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<TABLE>
Meridian Gold Inc.
Statement of Cash Flows
(Unaudited and in US$ millions)
Three Months
Ended March 31
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1999 1998
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<S> <C> <C>
Net loss $(3.1) $(5.1)
Provision for depreciation, depletion and
amortization 3.8 5.6
Change in assets and liabilities, net 9.5 (1.4)
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Net cash provided by (used in) operations 10.2 (0.9)
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Cash flows from investing activities:
Capital spending (21.0) (3.0)
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Cash flows from financing activities:
Proceeds from short term borrowings 12.5 --
Proceeds from sale of common stock 0.1 --
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Net cash provided by (used in) financing
activities 12.6 --
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Increase (decrease) in cash and cash equivalents 1.8 (3.9)
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Cash and cash equivalents, beginning of
period 34.1 54.3
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Cash and cash equivalents, end of period $35.9 $50.4
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</TABLE>
