Meridian starts up El Pe-on in Chile

Reno, Nev.-based Meridian Gold (MDG-N) has begun mining its El Pe-on gold-silver deposit in northern Chile.

The 2,000-tonne-per-day operation, constructed in 10 months, will combine open-pit and underground mining. Meridian expects to reach full capacity by year-end.

Most of the 20,000 oz. gold targetted for 1999 will come from lower-grade material in the Quebrada Orito pit. The higher-grade, underground ore is found in the Quebrada Colorada and Quebrada Orito veins, which will be fed into the processing plant beginning in the first quarter of 2000.

Constructions costs totalled about US$77 million, including US$31 million for the mill and US$30 million for underground development.

The mine and Merrill-Crowe plant are operated by local contractor Constructora Gardilcic.

Situated 160 km south of Antofagasta, El Pe-on is Meridian’s fourth grassroots discovery to reach production, and its first in Chile.

The company has a 30% interest in the Jerritt Canyon mine in northern Nevada, operated by a subsidiary of Anglogold (AU-N). Its other mines include Paradise in southern Nevada and Austin in the state’s central region.

El Pe-on is expected to produce 250,000 oz. gold per year at cash operating costs of US$100 per oz., doubling Meridian’s overall annual gold production to 400,000 oz. Silver production at the new mine is projected to reach as much as 4 million oz. per year.

Meanwhile, Meridian continues to explore Nevada’s Rossi property, 3 miles north of the Goldstrike mine of Barrick Gold (ABX-N). The major, which is earning a 60% interest in Rossi, has been constructing an exploration decline into the Storm deposit.

In addition, Meridian has optioned the Venturina gold property in Mexico from International Northair Mines (INM-V). The former can earn a 65% stake in the property by paying US$1 million in cash and spending US$2 million on exploration.

Meridian is also evaluating grassroots properties in Peru.