<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
(x) Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
or
( ) Transition Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the transition period from to
---- ----
Commission File Number 1-9569
Meridian Gold Company
(as successor to FMC Gold Company)
---------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 88-0226676
---------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
5011 Meadowood Way, Reno, Nevada 89502
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
(702) 827-3777
-------------------------------
Registrant's telephone number,
including area code
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- ------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at June 30, 1996
- --------------------------------------- -----------------------------------
Common Stock, par value $0.01 per share 73,597,495
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PART 1 - FINANCIAL INFORMATION
------------------------------
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
FMC Gold Company
- ----------------
Consolidated Statements of Operations (Unaudited)
- -------------------------------------------------
(In thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
----------------- ------------------
1996 1995 1996 1995
------- ------- ------- -------
<S> <C> <C> <C> <C>
Sales $18,297 $ 9,704 $36,102 $18,842
Costs and expenses
Cost of sales 18,299 10,979 35,589 19,988
Exploration costs 1,907 2,401 3,366 6,409
Selling, general and
administrative expenses 1,045 1,092 2,412 2,414
------- ------- ------- -------
Total costs and expenses 21,251 14,472 41,367 28,811
Loss before interest
and income taxes (2,954) (4,768) (5,265) (9,969)
Interest income 1,160 1,604 2,401 3,245
------- ------- ------- -------
Loss before income taxes (1,794) (3,164) (2,864) (6,724)
Provision for income taxes - - - -
------- ------- ------- -------
Net loss $(1,794) $(3,164) $(2,864) $(6,724)
======= ======= ======= =======
Loss per common share $ (0.02) $ (0.04) $ (0.04) $ (0.09)
======= ======= ======= =======
Number of common shares used in
loss per common share computations 73,569 73,484 73,528 73,484
======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
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Page 3
FMC Gold Company
- ----------------
Consolidated Balance Sheets
- ---------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30 December 31
Assets 1996 1995
- ------ --------- ---------
<S> <C> <C>
(Unaudited)
Current assets:
Cash $ 886 $ -
Loans due from FMC Corporation 75,000 80,826
Trade receivables, net 1,469 4,859
Inventories (Note 3) 16,547 14,792
Other current assets 4,542 4,096
--------- ---------
Total current assets 98,444 104,573
--------- ---------
Property, plant and equipment, at cost 231,120 226,149
Less accumulated depreciation (121,763) (112,157)
--------- ---------
Net property, plant and equipment 109,357 113,992
Other assets 4,613 6,612
--------- ---------
Total assets $ 212,414 $ 225,177
========= =========
Liabilities and Stockholders' Equity
- ------------------------------------
Current liabilities:
Outstanding checks in excess of bank balances $ - $ 1,651
Accounts payable, trade and other 2,847 7,108
Accrued and other liabilities 4,542 7,309
Amounts due to FMC Corporation 1,145 2,275
Income taxes payable 1,990 2,270
--------- ---------
Total current liabilities 10,524 20,613
--------- ---------
Other long-term liabilities 9,474 9,843
Stockholders' equity:
Preferred stock, $1.00 par value, authorized
100,000 shares; none issued or outstanding - -
Common stock, $0.01 par value, authorized
150,000,000 shares; issued and outstanding
73,597,495 shares and 73,484,395 shares at
June 30, 1996 and December 31, 1995,
respectively 736 735
Capital in excess of par value 69,167 68,609
Retained earnings 122,513 125,377
--------- ---------
Total stockholders' equity 192,416 194,721
--------- ---------
Total liabilities and stockholders' equity $ 212,414 $ 225,177
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
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Page 4
FMC Gold Company
- ----------------
Consolidated Statements of Cash Flows (Unaudited)
- -------------------------------------------------
(Dollars in thousands)
<TABLE>
<CAPTION>
Six Months
Ended June 30
------------------
1996 1995
------- -------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(2,864) $(6,724)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Provision for depreciation 10,912 8,158
(Increase) decrease in assets:
Trade receivables, net 3,390 (290)
Inventories (1,755) (6,634)
Other current assets (446) 305
(Decrease) increase in liabilities:
Accounts payable, trade and other (4,261) 267
Accrued and other liabilities (2,767) (1,123)
Amounts due to FMC Corporation (1,130) 922
Income taxes payable (280) (28)
Other long-term liabilities (369) (2,015)
------- -------
Net cash provided by (used in) operating activities 430 (7,162)
------- -------
Cash flows used in investing activities:
Capital spending (6,292) (25,071)
Disposal of property, plant and equipment, net 15 517
(Increase) decrease in other assets 1,999 (226)
------- -------
Net cash used in investing activities (4,278) (24,780)
------- -------
Cash flows from financing activities:
Proceeds from sale of common stock 559 -
------- -------
Decrease in cash and cash equivalents (3,289) (31,942)
Cash and cash equivalents, beginning of period 79,175 118,386
------- -------
Cash and cash equivalents, end of period $75,886 $86,444
======= =======
</TABLE>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
- ------------------------------------------------
Cash and cash equivalents consists of cash less outstanding checks in excess of
bank balances, and loans due from FMC Corporation.
Cash paid for income taxes, net of refunds, was $200,000 and zero during the
six-month periods ended June 30, 1996 and 1995, respectively.
See accompanying notes to consolidated financial statements.
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Page 5
FMC Gold Company
- ----------------
Notes to Consolidated Financial Statements (Unaudited)
- ------------------------------------------------------
Note 1: Reincorporation Merger and Sale of Company - Subsequent Events
- -----------------------------------------------------------------------
On July 15, 1996, FMC Corporation's ("FMC") management approved a plan to
dispose of shares of FMC Gold Company and its subsidiaries ("FMC Gold" or the
"company") through a secondary offering in Canada of substantially all of FMC's
80% interest.
On July 23, 1996, the stockholders of FMC Gold Company approved a merger
agreement by which the company would reincorporate in Canada through a merger
with a subsidiary of Meridian Gold Inc., a company incorporated in February 1996
under the Canada Business Corporations Act.
The reincorporation and secondary offering were completed on July 31, 1996.
Under the reincorporation ("Reincorporation"), which occurred immediately prior
to the secondary offering, (i) a newly formed, indirect subsidiary of Meridian
Gold Inc., merged with and into FMC Gold Company, to form Meridian Gold Company,
the surviving corporation and wholly-owned indirect subsidiary of Meridian Gold
Inc., and (ii) the existing shareholders of FMC Gold Company became entitled to
receive one common share of Meridian Gold Inc. and US$0.02 in exchange for each
share of common stock of FMC Gold held.
FMC sold 100% of its shares of FMC Gold Company through a combination of the
secondary offering on July 31, 1996, the exercise of an overallotment option by
the underwriters on August 9, 1996 and sales at the market of a small number of
remaining shares. After the offering, FMC no longer owns any common shares of
the company.
The consolidated assets and liabilities of Meridian Gold Inc. and its
subsidiaries immediately after the Reincorporation were the same in all material
respects as the consolidated assets and liabilities of FMC Gold Company and its
subsidiaries prior to the Reincorporation except for the effect of US$0.02 per
share cash merger consideration ($1,471,950 in the aggregate) paid by Meridian
Gold Inc. in the Reincorporation, and the repayment by FMC of intercompany loans
plus accrued interest and other amounts aggregating $79.1 million at July 31,
1996.
The Reincorporation, together with the secondary offering, will result in a
"step-up" in the historical tax basis of FMC Gold Company assets. For
accounting purposes, the Reincorporation and the adoption of Canadian generally
accepted accounting principles will not result in any material change to the
carrying value of the net assets of FMC Gold Company reflected in the company's
financial statements.
The company will contract for or establish its own stand-alone capabilities in
the areas of Treasury, Finance, Human Resources, Cash Management and Information
Services within six months of the Reincorporation. During the transition period,
FMC has agreed to continue to provide services as requested. The costs
associated with these functions will be funded as part of the normal operating
expenses of the company and, in the aggregate, are not expected to significantly
differ from the average annual amounts that have been charged by FMC to the
company to provide similiar services in recent years.
Note 2: Financial Information
- ------------------------------
The consolidated balance sheet of FMC Gold Company and its subsidiaries as of
June 30, 1996, and the related consolidated statements of operations and of cash
flows for the three month periods ended June 30, 1996 and 1995, have been
reviewed by the company's independent accountants. The review is discussed more
fully in their report included herein. In the opinion of management, such
financial statements have been prepared in conformity with generally accepted
accounting principles and reflect all adjustments necessary for a fair statement
of the results of operations for the interim periods. All such adjustments are
of a normal recurring nature. The results of operations for the three-month
periods ended June 30, 1996 and 1995 are not necessarily indicative of the
results of operations for the full year.
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Page 6
The accounting policies followed by the company are set forth in Note 1 to the
FMC Gold Company financial statements included in the FMC Gold Company 1995
Annual Report on Form 10-K.
Note 3: Inventories
- --------------------
Inventories (at cost) consist of the following:
<TABLE>
<CAPTION>
(In thousands)
June 30 December 31
1996 1995
------- -----------
<S> <C> <C>
Gold and silver dore $ 1,849 $ 638
Work in process 12,614 11,368
Materials and supplies 2,084 2,786
------- -------
$16,547 $14,792
======= =======
</TABLE>
Gold and silver inventories are in the form of dore which is suitable for
delivery to precious metal treatment facilities. These inventories are
generally sold to and further processed by these facilities into forms suitable
for end uses.
Heap leach pad ore increased to $12.6 million at June 30, 1996, from $11.4
million at December 31, 1995. The increase represents the cost of loading ore on
the heap leach pads at the Beartrack mine, and includes labor, materials and
other production costs. Mining at the Beartrack operation commenced in August
1994, and at June 30, 1996, there were approximately 6.6 million tons of ore
under leach containing approximately 116,000 ounces of gold.
Note 4: Acquisitions and Divestitures
- --------------------------------------
On November 30, 1995, the company's 100 percent interest in FMC Paradise Peak
Corporation was sold to Arimetco, Inc. for $4 million in the form of cash and a
note receivable. The company ceased production at the Paradise Peak mine in
early 1995 and all remaining reclamation liability was assumed by Arimetco, Inc.
as of the date of sale.
In conjunction with the company's purchase of the remaining 14 percent interest
in the Beartrack joint venture from MINEX in 1994, installment payments are due
to MINEX in the amounts of $1.0 million in 1997 and $0.5 million in 1998 and
1999.
Note 5: Commitments and Contingent Liabilities
- -----------------------------------------------
See Part II, Item 1 - "Legal Proceedings" for details regarding ongoing
litigation affecting the company.
In order to minimize exposure to decreasing prices for portions of its gold
production, the company has periodically hedged future gold production by
entering into contracts, such as fixed forward sales contracts and put options.
Costs associated with the purchase of certain hedge instruments for open put
options included in other assets were $2.9 million as of June 30, 1996 and $3.4
million as of December 31, 1995. These costs were deferred and are recognized in
the period the revenues related to the hedged production are recorded.
In October 1995, the Department of Taxation of the State of Nevada filed a claim
against the company for Net Proceeds of Mine Tax of $1.5 million related to
Paradise Peak operations. In November 1995, the company entered into discussions
with the State of Nevada regarding the basis for the State's claim and
ultimately filed a petition for redetermination and requested an appearance
before a hearing officer of
<PAGE>
Page 7
the State of Nevada Department of Taxation. A hearing took place on March 14,
1996 at which the company presented its case. On April 8, 1996, the company was
notified that the State of Nevada had denied the company's request for
redetermination. The company is appealing the State's decision. The company is
unable to predict the outcome of the appeal process, but has paid the State's
claim under protest.
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Page 8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
- --------------------------------------------------------------------------------
OF OPERATIONS
- -------------
LIQUIDITY AND FINANCIAL CONDITION
---------------------------------
Cash to meet the company's operating needs, finance capital expenditures and
fund exploration activities was provided from existing cash reserves, including
loans due from FMC Corporation ("FMC"). Any cash generated in excess of these
requirements is loaned to FMC at varying maturities, repayable on demand. As of
June 30, 1996, loans to FMC totaled $75.0 million. In conjunction with the
Reincorporation and sale of FMC's interest in Meridian Gold Inc., FMC
repaid all outstanding loans in full on July 31, 1996.
Known cash requirements for the remainder of 1996 are approximately $10.7
million for planned capital expenditures, approximately $5.8 million for
exploration costs and $3.7 million for dividends (if declared), based on the
current dividend rate. The company expects to fund these requirements from
existing cash and cash equivalents (including loans repaid by FMC) and cash
flows from operations.
On March 31, 1994, FMC increased its ownership interest in the company to 80
percent. Thereafter, and through the sale of FMC's interest in the company on
July 31, 1996, the company has been included in FMC's consolidated federal tax
return. Under a tax-sharing agreement, the company pays to FMC amounts generally
equal to the tax the company would have been required to pay had it filed a
separate return, and FMC pays to the company amounts generally equal to any tax
benefits realized through carryover on a separate return basis.
During the quarter ended June 30, 1996, the company issued 70,600 shares of its
common stock at $4.25 per share in conjunction with the exercise of common stock
options.
Second Quarter of 1996 Compared with Second Quarter of 1995
- -----------------------------------------------------------
Sales in the second quarter of 1996 were $18.3 million, $8.6 million higher than
last year's quarter, reflecting the addition of production from the Beartrack
mine. Realized gold prices increased to $393 per ounce from $387 per ounce in
1995. Net loss was $1.8 million, or $0.02 per share, compared with a net loss of
$3.2 million, or $0.04 per share in 1995.
Second quarter gold production was 49,000 gold equivalent ounces compared with
24,000 gold equivalent ounces in the second quarter of 1995, reflecting the
start-up of the Beartrack mine. At the Beartrack mine, which began full scale
production in July 1995, second quarter 1996 production was 23,000 ounces.
Extended winter weather and the impact of heavy spring runoff had a negative
effect on solution grades in the second quarter. Solution grades began to
recover near the end of the quarter with warmer, dryer weather, and production
is expected to increase throughout the remainder of the year.
The company's 30 percent share of production from the Jerritt Canyon mine was
26,000 ounces in the second quarter of 1996, up 2,000 ounces from the second
quarter of 1995 due to higher grades and recoveries.
Cost of sales increased $7.3 million to $18.3 million for the period, reflecting
$6.9 million of incremental costs from the Beartrack mine. Cost of sales of
$11.4 million at the Jerritt Canyon mine were higher compared with the prior
year by $1.3 million due to a shift in production from open pit to underground
mining, compounded by temporary mechanical difficulties at both processing
facilities.
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Page 9
Average cash production costs of $256 per gold equivalent ounce in the second
quarter of 1996 increased from $221 per gold equivalent ounce in the second
quarter of 1995. Cash costs at Beartrack were affected by difficult weather
conditions, averaging $195 per gold equivalent ounce in the second quarter, up
from $183 in the first quarter of 1996. Cash costs at Jerritt Canyon increased
from $221 per gold equivalent ounce in the second quarter of 1995 to $311 per
gold equivalent ounce in the comparable 1996 quarter due to a shift in
production from open pit to underground resources, and temporary mechanical
difficulties at both processing facilities early in the quarter.
Exploration costs in the second quarter of 1996 were $1.9 million compared to
prior year expense of $2.4 million. The lower level of expense reflected timing
of programs as well as scaled-back activities pending the outcome of the
strategic review process that is resulting in the sale of FMC's interest in FMC
Gold. The majority of the exploration spending in the current quarter was
focused on the company's El Penon project in Chile, the Rossi project on the
Carlin Trend in Nevada and continuing work at the Beartrack and Jerritt Canyon
operations. Exploration spending is expected to accelerate over the balance of
the year, with a significant portion of the projected spending directed at
activities in Chile and at the Rossi project.
Selling, general and administrative expenses were level with the prior year, due
to ongoing cost reduction efforts and lower allocations from FMC. For the second
quarter of 1996, the company recorded interest income of $1.2 million earned on
cash loaned to FMC. Interest income was $0.4 million lower than in the 1995
quarter due to lower loan balances.
The company did not record a tax benefit in the current quarter on the pre-tax
loss as it cannot utilize the benefit on a stand-alone basis. The current
quarter's results are not necessarily indicative of the expected full year
results. Subsequent to the Reincorporation there will be no tax attributes
such as net operating loss carryforwards available to the company.
Six Months of 1996 Compared With Six Months of 1995
- ---------------------------------------------------
Sales in the first six months of 1996 were $36.1 million compared with $18.8
million for the first six months of 1995. Net loss was $2.9 million or $0.04
per share, versus 1995 net loss of $6.7 million or $0.09 per share.
Sales were $17.3 million higher than in 1995 reflecting the addition of
production from the Beartrack mine. Production at Beartrack was 50,000 ounces.
The company's 30 percent share of production from the Jerritt Canyon mine was
level with the prior year as lower throughput in the current year was offset by
improved mill ore grades and recoveries. Production from the Paradise Peak mine
ceased in the first quarter of 1995 and the company sold all the stock of FMC
Paradise Peak Corporation to Arimetco, Inc. on November 30, 1995.
Exploration expense was $3.4 million, $3.0 million below 1995 expense due to
timing of spending on the El Penon and Rossi projects as well as scaled-back
activities pending the outcome of the strategic review process that is resulting
in the sale of FMC's interest in FMC Gold. Selling, general and administrative
expenses were level with 1995.
The company did not record a tax benefit on losses in the first half of 1996 or
1995.
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Page 10
Following is a summary of key operating data for the company for the three-month
and six-month periods ended June 30, 1996 and 1995:
Operating Data (Unaudited)
--------------------------
<TABLE>
<CAPTION>
Three Months Six Months
Ended June 30 Ended June 30
-------------------- -------------------
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Heap leach operation (Beartrack)
Tons of ore mined (thousands) 1,240 1,007 1,921 1,566
Ore grade (ounces per ton mined) 0.029 0.034 0.029 0.033
Milling operation (Jerritt Canyon - FMC Gold share)
Tons of ore processed (thousands) 196 221 394 427
Ore grade (ounces per ton milled) 0.140 0.123 0.132 0.127
Mill recoveries 88.0% 86.8% 87.7% 85.8%
Production (thousands of ounces)
Gold
Beartrack 23 -- 50 --
Jerritt Canyon 26 24 46 46
Paradise Peak -- -- -- 2
---- ---- ---- ----
Total 49 24 96 48
Silver -- 4 -- 12
Cash cost of production
($ per gold equivalent ounce)
Beartrack $195 $ -- $189 $ --
Jerritt Canyon $311 $221 $326 $225
Paradise Peak $ -- $ -- $ -- $244
Average cash cost of production
($ per gold equivalent ounce) $256 $221 $254 $226
</TABLE>
INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------
A report by KPMG Peat Marwick LLP, the company's independent accountants, on the
financial statements included in Form 10-Q for the quarter ended June 30, 1996
is included on page 11.
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Page 11
Independent Accountants' Report
-------------------------------
The Board of Directors
FMC Gold Company:
We have reviewed the accompanying condensed consolidated balance sheet of FMC
Gold Company and consolidated subsidiaries as of June 30, 1996, and the related
condensed consolidated statements of operations for the three-month and six-
month periods ended June 30, 1996 and 1995 and the related condensed
consolidated statements of cash flows for the six-month periods ended June 30,
1996 and 1995. These condensed consolidated financial statements are the
responsibility of the company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to the condensed consolidated financial statements referred to above for
them to be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of FMC Gold Company and consolidated
subsidiaries as of December 31, 1995, and the related consolidated statements of
operations, cash flows and changes in stockholders' equity for the year then
ended (not presented herein); and in our report dated January 18, 1996, except
as to Note 14 which is as of February 16, 1996, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of December 31, 1995 is fairly stated, in all material respects, in relation
to the consolidated balance sheet from which it has been derived.
KPMG Peat Marwick LLP
Salt Lake City, Utah
July 10, 1996
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Page 12
PART II - OTHER INFORMATION
---------------------------
ITEM 1 LEGAL PROCEEDINGS
- ------------------------
During the third quarter of 1994, the Pacific Rivers Council and the Wilderness
Society (collectively the "PRC"), in a lawsuit filed in Federal District Court
in Idaho (Pacific Rivers Council v. Thomas), sought an injunction against all
ongoing and future forest activities which may affect endangered salmon,
including mining, within various national forests in Idaho including the Salmon
National Forest in which the Beartrack property is located. In that lawsuit,
the PRC sought to require the U.S. Forest Service to consult under the
Endangered Species Act (the "Act") with the National Marine Fisheries Service
("NMFS") regarding existing land resource management plans for the subject
forests and their potential impacts on endangered Snake River salmon. On
January 12, 1995, the court in the PRC lawsuit entered an order enjoining, among
other things, all logging and announced mining activities in the Idaho national
forests (in which the Beartrack project is located). On January 25, 1995, the
court entered an order staying until March 15, 1995, the effectiveness of the
injunction in order to give the Forest Service time in which to complete
consultation with NMFS on the Land and Resource Management Plans for the
national forests in Idaho. On March 8, 1995, the Court entered an order
dissolving the injunction in recognition of the completion of that consultation.
The government defendants and the plaintiffs have subsequently negotiated a
stipulated dismissal of most of the lawsuit. Under the terms of the
stipulation, the parties stipulated to dismiss from this litigation all projects
which have undergone site-specific consultation. The company's Beartrack mine
was identified by the government defendants as a project for which consultation
has been completed. The court issued an Order on Pending Claims on December 11,
1995 regarding the remaining specified projects (not including the Beartrack
mine) which have not yet completed consultation. Under the terms of that Order,
the court has retained jurisdiction in this lawsuit for further proceedings
regarding those projects. The Beartrack mine is not subject to or a part of the
court's order.
On October 12, 1994, the Sierra Club Legal Defense Fund, Inc., ("Sierra") on
behalf of certain other organizations, filed a lawsuit in Federal District Court
for the Western District of Washington at Seattle against NMFS and other federal
agencies for violation of the Act alleging the NMFS' biological opinion failed
to satisfy the requirements of the Act. Sierra, the federal agencies and the
company, as intervenor, each filed a motion for summary judgment. On November
9, 1995, the court ordered the federal agencies to reinitiate consultation under
Section 7 of the Act on the potential environmental impacts of the Beartrack
mine project on endangered salmon or the designated critical habitat for salmon.
The plaintiffs did not seek, and the court did not impose, any injunction or
other restriction on the operation of the Beartrack mine pending completion of
such consultation. If, upon remand, the Forest Service were to determine that
an activity associated with Beartrack mine operations could preclude the
development of reasonable and prudent alternatives to the project pending
completion of the reinitiated consultation, such activities could be required to
cease pending completion of consultation. Under the Act's regulations,
consultation must be completed within 135 days of the date consultation is
initiated. An extension of 60 days can be imposed by the agencies. Under the
relevant statutory and regulatory authorities, the results of a consultation can
range from no impact on the activities under review on the one hand to modest to
significant impacts on the other. In an extreme situation, a consultation could
result in the cessation of activities altogether, a potential result the company
believes to be remote in the case of the Beartrack mine, which has been in
operation and production since mid-1995. The company believes that the ongoing
operation of the Beartrack mine will not jeopardize endangered salmon or
adversely modify or destroy designated critical habitat, and that upon
completion of consultation the mine will be permitted to continue operation.
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Page 13
The company sought and obtained from the U.S. Army Corps of Engineers (the
"Corps") a permit authorizing dredging and filling of wetlands in connection
with construction of the Beartrack mine under Section 404 of the Clean Water
Act. That permit was set to expire on October 11, 1994. On June 16, 1994, the
company sought an extension of the permit under applicable regulations. Under
those regulations, the filing of a request for extension operates to extend the
permit until the agency acts upon the request for extension. As of this time,
the Corps has not taken action upon the company's request.
On October 19, 1995 Dee Gold Mining Co., a Nevada General Partnership ("Dee")
filed an action against Baroid Drilling Fluids, Inc. a Delaware corporation
("Baroid") and FMC Minerals Corporation, a Delaware corporation ("FMC
Minerals"). Baroid and FMC Minerals jointly own certain mining property known
as the Rossi property. FMC Minerals owns the gold and precious minerals, Baroid
owns other minerals located on the property and the two share use of the
surface. Dee operates the Dee Gold Mine, which shares a common boundary with the
Rossi property. Dee's action seeks to condemn a portion of the Rossi property
for the purpose of excavating a layback so that gold, located on Dee's side of
the property line, can be mined from an open pit. The area sought to be
condemned contains a significant portion of the gold resource which FMC Minerals
located through its exploration activities on the Rossi property. Dee contends
that the condemnation for a layback is permitted by Nevada law which allows
private condemnation for mining purposes. FMC Minerals and Baroid deny this and
assert that the proposed activity by Dee will interfere with the exploration,
development and mining of the Rossi property.
The case is set for trial to commence October 22, 1996. The company and Dee Gold
Mining Co. have met in a series of settlement conferences in an attempt to
resolve the suit prior to the trial date. The company believes progress has been
made in the settlement conferences towards resolving the claim, but is
continuing to prepare for trial. Because of an indemnity agreement, FMC
Minerals' counsel represents Baroid and FMC Minerals pays all defense costs.
These costs will not increase significantly as a result of the Baroid
representation.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ----------------------------------------------------------
Registrant's Annual Meeting of Stockholders was held on May 1, 1996. At the
meeting, stockholders voted on (i) the election of five directors; and (ii)
ratification of the appointment of KPMG Peat Marwick LLP as the Registrant's
independent auditors for 1996. Voting on each such matter was as follows:
<TABLE>
<CAPTION>
Votes Votes Withheld/ Broker
For Against Abstentions Non-Votes
---------- ------- ----------- ---------
<S> <C> <C> <C> <C>
1. Election of Directors:
L.B. Brady 72,082,174 - 229,503 -
R.N. Burt 71,963,109 - 348,568 -
P.L. Davies, Jr. 72,036,079 - 225,598 -
B.J. Kennedy 71,975,222 - 336,455 -
E.W. Littlefield 72,085,779 - 225,898 -
2. Ratification of Auditors 72,280,652 22,965 8,060 -
</TABLE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
- ------------------------------------------
(b) Reports on Form 8-K
-------------------
One Form 8-K was filed on May 3, 1996 pertaining to FMC Gold Company Board
of Director's authorizing (i) the filing of documents with securities
regulators in the United States relating to the possible reincorporation of
FMC Gold into Canada, and (ii) the filing of documents with securities
regulators in Canada relating to a possible secondary offering of FMC
Corporation's 80 percent equity interest in FMC Gold.
<PAGE>
Page 14
SIGNATURES
----------
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.
FMC GOLD COMPANY
--------------------------
(Registrant)
Date: August 14, 1996 /s/ Alan L. Lowe
____________________________ __________________________
Alan L. Lowe
Chief Financial Officer
<PAGE>
Page 15
Exhibit Index
Number in
Exhibit Table Description
- ------------- -----------
15 Letter re: unaudited
interim financial
information
(KPMG Peat Marwick LLP)
27 Financial Data Schedule
<PAGE>
Page 16
Exhibit 15 Letter re: Unaudited Interim Financial Information
---------------------------------------
FMC Gold Company
Chicago, Illinois
Re: Registration Statements No. 33-35804 and No. 33-35805 on Form S-3 and
No. 33-65327 on Form S-8.
With respect to the subject registration statements, we acknowledge our
awareness of the incorporation by reference of our report dated July 10, 1996
related to our review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered a part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of Sections 7 and 11 of the Act.
Very truly yours,
KPMG Peat Marwick LLP
Salt Lake City, Utah
July 10, 1996
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> This schedule contains summary financial information extracted from
Meridian Gold Company (as successor to FMC Gold Company) Form 10Q for the
Quarterly Period Ended June 30, 1996 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 75,886
<SECURITIES> 0
<RECEIVABLES> 1,469
<ALLOWANCES> 0
<INVENTORY> 16,547
<CURRENT-ASSETS> 98,444
<PP&E> 231,120
<DEPRECIATION> 121,763
<TOTAL-ASSETS> 212,414
<CURRENT-LIABILITIES> 10,524
<BONDS> 0
<COMMON> 736
0
0
<OTHER-SE> 191,680
<TOTAL-LIABILITY-AND-EQUITY> 212,414
<SALES> 36,102
<TOTAL-REVENUES> 36,102
<CGS> 35,589
<TOTAL-COSTS> 41,367
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (2,864)
<INCOME-TAX> 0
<INCOME-CONTINUING> (2,864)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (2,864)
<EPS-PRIMARY> (.04)
<EPS-DILUTED> (.04)
</TABLE>
