Meridian Gold increases resource at El Peon

Exploration by Meridian Gold (MNG-T) has doubled the gold resource at El Peon, a property in northern Chile.

Last year, the company spent US$6 million exploring the property in a program that included 266 drill holes. As a result, the resource has risen by 127% to 8.8 million tons grading 0.21 oz. gold and 4.1 oz. silver per ton, based on a cutoff grade of 0.1 oz. This new estimate is equivalent to 1.8 million contained ounces of gold and 35 million contained ounces of silver.

Drilling expanded mineralization in all areas and identified a new extension, the Orito Sur.

Meridian has also completed 370 metres of a 590-metre-long decline into the Quebrada Orito zone. Richard Lorson, Meridian’s vice-president of exploration, says the company expects to complete this and other underground exploration by the end of August.

He says the Quebrada Orito zone is potentially amenable to open-pit mining, in which case the company could lower its current 0.1-oz.-per-ton cutoff to around 0.03-0.04 oz. per ton, thereby increasing recoverable ounces.

The Cerro Martillo zone is also believed to have open-pit potential, whereas the Orito Sur and Discovery Wash are primarily underground targets.

Meridian has drilled more than 570 holes into the property, and the total strike length of the system is 3.5 miles.

For the year, Meridian realized a 36% increase in revenue to US$76.2 million, compared with US$57.4 million in the previous year. Gold production last year topped 201,593 oz., compared with 150,686 oz. in 1995. The Beartrack mine in Idaho contributed 109,000 oz. to production, while the company’s interest in Nevada’s Jerritt Canyon mine made up the balance.