Reno-based
The high-grade, gold-silver mine is Meridian’s core asset, and its sole producer since the company sold a 30% stake in the Jerritt Canyon mine in Nevada last summer. As a result of that transaction, Meridian’s 2003 net profit was 11% lower than in 2003, when US$41.5 million was earned.
The company’s total production between the two years also fell, to 370,651 oz. from 436,346 oz. Cash costs in 2003 were US$82 per oz., while total costs came in at $140, little changed from the previous year.
El Peon was a star performer in 2003, churning out 321,000 oz. gold at a cash cost of a mere US$54 per oz., compared with 328,061 oz. at US$35 per oz. in 2002. Total costs rose to US$110 from US$84 per oz. The company says it does not hedge gold production but that it may sell silver production forward, depending on market conditions.
Jerritt Canyon contributed 45,604 oz. to Meridian’s account last year, down from 99,632 oz. in 2002. Meridian also produced 543 oz. gold from residual leaching at the Beartrack mine in Idaho; however, these ounces were credited against reclamation and closure costs.
In the last quarter of 2003, Meridian earned US$10.4 million (or US11 per share), down slightly from US$10.7 million a year earlier. The company produced 77,500 oz. gold in the quarter, exclusively from El Peon.
Looking ahead, the company expects to produce 310,000 oz. gold this year at a cash cost of US$50-60 per oz., again solely from El Peon.
Capital improvements at El Peon in recent years have enabled the mill to operate above its design capacity of 2,000 tonnes per day, with improved recovery rates. A new pebble crusher was installed in the last quarter of 2003, and gold and silver recoveries improved 1%, to 96% and 93%, respectively.
During the last quarter of 2003, the underground portion of El Peon produced 151,000 tonnes grading 16.6 grams gold and 232 grams silver per tonne, whereas the open-pit portion produced 56,000 tonnes at 7.7 grams gold and 60.9 grams silver.
El Peon was a grassroots discovery made by company geologists in a region not known to have mineral occurrences. Since commercial production began in early 2000, exploration programs have allowed Meridian to replace reserves each year.
Proven and probable reserves at El Peon stand at 6 million tonnes grading 9.1 grams gold and 176 grams silver per tonne. The mine also has a measured and indicated resource of 2.7 million tonnes at 10 grams gold and 192 grams silver, plus an inferred resource of 0.6 million tonne at 8 grams gold and 213 grams silver.
Meridian’s total reserves between 2002 and 2003 fell to 4.1 million from 4.3 million contained ounces, largely because of the sale of its interest in Jerritt Canyon.
Meridian had been advancing its Esquel gold project near the town of the same name in Argentina’s Chubut province, but those efforts were put on hold last year after a non-binding referendum showed that most citizens were opposed to the mine’s development. The company then hired a consultant to examine the community’s concerns. With that report now in hand, Merdian is trying to address those concerns before resuming development.
Esquel is a low-sulphidation, epithermal vein deposit with proven and probable reserves of 7.5 million tonnes grading 9.7 grams gold and 16 grams silver per tonne. Measured and indicated resources stand at 3 million tonnes grading 3.5 grams gold and 7 grams silver per tonne, and there are 2.9 million tonnes at 4.7 grams gold and 11 grams silver in the inferred category.
Early this year, Meridian gained rights to earn up to a 70% interest in the Golden Summit gold project near Fairbanks, Alaska. To earn this interest from
Golden Summit lies 8 Km north of the producing Fort Knox gold mine and encompasses several small, past-producing, high-grade mines.
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