Chicago- based FMC Gold (NYSE) has moved to acquire 100% of Meridian Gold, a unit of Burlington Resources which controls the Royal Mountain King gold mine in California and the advanced Beartrack gold property in central Idaho. Observers have speculated for some time that FMC Gold planned to acquire advanced projects to provide more opportunities for long- term growth. In addition to the new Royal Mountain King mine and the Beartrack deposit, FMC Gold Chairman Robert Burt said the company would be acquiring Meridian Gold’s exploration property portfolio. This includes the Lincoln gold property in California, which is nearing underground development, and other properties in California, Idaho and Montana.
“The Meridian Gold properties offer us an excellent opportunity to expand our reserves and to capitalize on our proven exploration and development expertise,” Burt stated.
FMC Gold is already one of the largest gold producers in North America, with 1989 production totalling 329,000 oz. gold and 5.2 million oz. silver.
Under the terms of the definitive agreement, still subject to various conditions, a subsidiary of FMC Gold will merge with Meridian Gold. In return for the 100% interest, FMC Gold will issue eight million new shares of its common stock to Meridian Minerals.
The transaction will provide FMC Gold with a new 2,750-ton- per-day mine and mill at Royal Mountain King, an open pit mine that is expected to produce 60,000- 80,000 oz. gold per year for about 8-10 years. FMC Gold hopes to improve operating costs at the mine which produced 40,000 oz. gold last year at break-even levels during the startup phase.
The acquisition will also give FMC Gold a 71% interest in the Beartrack project in Lehmi Cty., Idaho, a heap leach prospect where geological reserves were last reported as 37 million tons grading 0.055 oz. gold per ton.
According to FMC, Meridian has now outlined a proven and probable deposit within this geologic resource. The deposit is relatively shallow and minable by open pit methods at a strip ratio estimated to be less than 2-to-1 waste-to-ore.
Feasibility studies are continuing, with work focused on metallurgical studies and completion of the required permitting process. The Beartrack property and adjoining properties held by Meridian cover about 70 square miles.
FMC’s first-quarter earnings totalled $13.3 million (0.20 cents per share), compared with $13.4 million (21 cents per share) for the first quarter of 1989. The slight drop was attributed to higher production costs caused by lower gold grades. Revenue from sales remained unchanged at $37 million.006 0508,0206,0304,0008 FMC Gold (NYSE) $000s except per-share items* Quarter ended Mar. 31 1990 1989 Revenue $37,000 $37,000 Net earnings 13,300 13,400
per share 0.20 0.21 *US dollars004
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