With second-quarter net income of US$10 million on revenue of US$27.8 million,
El Peon paid back its initial capital investment of US$77 million in less than 15 months, which relieved the company of its requirement to maintain a forward hedging program. The termination of these contracts generated US$4.7 million in cash. The sale was booked as deferred revenue and will be reflected in income.
Meridian expects to produce 400,000 oz. gold this year at a cash cost of US$100 per oz. El Peon will contribute 300,000 oz. of that total at a cash cost of US$50 per oz. Meridian holds a 30% interest in the Jerritt Canyon mine in Nevada, which is expected to produce 100,000 oz. at US$215 per oz. The company’s share of production in the latest quarter was 25,000 oz. gold at a cash cost of US$212 per oz.
The Beartrack mine in Idaho is nearing the end of its mine life, though leaching will produce recoverable gold over the next year. Beartrack contributed 3,000 oz. in the company’s latest quarter.
On the exploration front, Meridian is focusing its efforts on El Peon and the surrounding land package. During the last quarter, exploration continued to test a newly discovered high-grade zone dubbed Diablada. The zone has a strike length of at least 600 metres, a true width of 2.3 metres, and average gold grades exceeding 23 grams per tonne. The discovery hole hit 2 metres of 103.7 grams gold and 2,635 grams silver.
Meridian also is carrying out an underground exploration program to boost existing reserves, and drilling other properties, including Mercedes in Mexico. The best hole drilled at Mercedes intercepted two zones and returned 2.3 metres of 32.5 grams gold and 386 grams silver and 0.8 metre of 20.9 grams gold and 263 grams silver.
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