Meridian falls slightly in Q3 (October 28, 2002)

Reno, Nev.-based Meridian Gold (MDG-T) has chalked up another profitable quarter, pocketing US$9.2 million for the three months ended Sept. 30 as revenue soared to US$33.6 million.

The US10-per-share profit compares with net income of US$10.1 million (14 per share) on US$29.4 million in the corresponding period of 2001. Then, Meridian realized less for its production but spent less to produce it, and the company did not record a tax expense, all of which explains the year-over-year difference.

Gold production rang in at 103,918 oz. in the recent period, while cash costs totalled US$101 per oz. Meridian sold 106,283 oz. to realize an average US$320 per oz.

The flagship El Peon mine in Chile contributed 77,976 oz., plus 1.16 million oz. silver, at a cost of US$43 per oz. The mine performed better a year earlier, reflecting the higher grades then being mined.

Attributable production from the 30%-owned Jerritt Canyon mine in Nevada topped 24,322 oz., and cash costs rang in at US$284 per oz. Operating costs are up 44% over last year, when higher head grades and throughput rates saw 26,752 oz. produced.

In Idaho, Meridian squeezed 1,620 oz. from the depleted Beartrack heap-leach mine. Sales from the mine are being written against reclamation and closure accruals, and residual leaching should last two more quarters.

For the nine months ended Sept. 30, Meridian raked in US$30.8 million (37 per share) on revenue of US$99 million, compared with US$26.4 million (35 per share) on US$83.5 million in the first nine months of 2001. Higher production at El Penon and higher realized gold prices account for the increase.

Production in the recent 9-month period rang in at 328,933 oz., while cash costs amounted to US$85 per oz. The company realized US$311 per oz. for its production.

By year-end, Meridian expects to have poured 420,000 oz.

The company began the current quarter with US$115.6 million in working capital, of which US$12 million will be spent before year-end. About US$5 million is earmarked for the advanced Esquel project in Argentina, which the company acquired several months back through the takeover of Brancote Holdings.

Construction at Esquel is to begin early in the new year and cost US$90 million to complete. The project is expected to add 300,000 oz. to Meridian’s annual production rate at a cash cost of less than US$100 per oz.