Meridian Gold expands Chilean discovery

Meridian Gold (MDG-N) has expanded a zone of high-grade gold-silver mineralization at the El Penon project in northern Chile.

In July, the company discovered the Quebrada Colorada zone, and new high-grade intersections in this zone have extended its length by 150 metres.

Ten holes were recently drilled into the zone, which parallels the main Quebrada Orito deposit to the east. Eight of the holes encountered continued mineralization, including hole 227 which hit

a true width of 5 metres grading

46.6 grams gold and 186 grams silver per tonne. Meanwhile, hole 235, drilled 60 metres to the south, hit a true width of 2.5 metres

grading 37.4 grams gold and 318 grams silver.

So far, the company has drilled 38 reverse-circulation and four core holes, outlining 360 metres of mineralization on the new vein. Typically, the true width of the oreshoot varies from 2 to 7 metres, and the structure is surrounded by a halo of lower grade mineralization. The north-south-trending shoot remains open to the south, where further drilling is planned.

As soon as it raises US$40 million, the company plans to construct an open-pit/underground operation capable of cranking out 130,000 oz. gold and 1.9 million oz. silver for more than eight years. Cash production costs are expected to be less than US$180 per oz.

Construction could begin as early as September, with initial production slated for late 1999. Capital costs are pegged at US$66 million.