Meridian Gold Announces First Quarter 2005 Exploration and Financial Results.RENO Reno (rē`nō), city (1990 pop. 133,850), seat of Washoe co., W Nev., on the Truckee River; inc. 1903. Tourism has been the major industry since gambling was legalized in Nevada in 1931. , Nev. -- (All dollar amounts in U.S. currency) Meridian Meridian (mərĭd`ēən), city (1990 pop. 41,036), seat of Lauderdale co., E Miss., near the Ala. line; settled 1831, inc. 1860. Gold Inc. ("Meridian Gold" or the "Company") (TSX TSX Toronto Stock Exchange (TSE before April, 2002) TSX Transfer from Stack Pointer to Index TSX True Space Extension :MNG MNG Multiple-image Network Graphics (PNG-like image format supporting multiple images, animation and transparency) MNG Mongolia (ISO Country code) MNG Multinodular Goiter MNG Meet 'n Greet )(NYSE NYSE See: New York Stock Exchange :MDG MDG Millennium Development Goals (UNDP) MDG Madagascar (ISO Country code) MDG Medical Group (USAF) MDG Air Madagascar (ICAO code) ) is pleased to announce results for the quarter ended March 31, 2005. Meridian Gold continues its commitment to organic growth, with a focus on returns and a dedication to responsible mining. HIGHLIGHTS: Financial and Operations - Net earnings of $9.8 million, or $0.10 per share - Gold production of 76,200 ounces at a net cash cost of $47 per ounce ounce, in zoology ounce, in zoology: see leopard. ounce, unit of measurement ounce: see English units of measurement. - Operating cash flows Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. of $19.2 million for the quarter increased cash and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investment balances to $244.3 million, including restricted cash - Purchased the remaining interest of the Gold Fields Gold Fields Limited is one of the world’s largest unhedged producers of gold, providing investors with maximum leverage to the gold price. The company was formed in 1998 with the amalgamation of the gold assets of Gold Fields of South Africa Limited and Gencor Limited. property including the Fortuna Fortuna (fôrt  `nə), in Roman religion, goddess of fortune. Worshiped under several forms, she appears to have originally been a goddess of fertility. Vein, west of El Penon for $7.5 millionExploration - At El Penon, extended ore-grade mineralization Mineralization The process by which the body uses minerals to build bone structure. Mentioned in: Rickets mineralization, n the bioprecipitation of an inorganic substance. in the Providencia Prov·i·den·ci·a n. A genus of motile, peritrichous, nonsporeforming, aerobic or facultatively anaerobic bacteria containing gram-negative rods; it includes the species that can occur in urinary tract infections. Structure to a strike length of 750 meters and a dip length of up to two hundred meters and remains open in all directions - Surface and underground drilling at the north end of Dorada confirm the connection with Cerro Martillo. The vein is still open to the south. Current strike length is 1.2 km with about a 200 meter dip. - In Nicaragua Nicaragua (nĭkärä`gwä), officially Republic of Nicaragua, republic (2005 est. pop. 5,465,000), 49,579 sq mi (128,410 sq km), Central America. , a drill program was initiated on the Natividad (formerly El Pavon Pa´von n. 1. A small triangular flag, esp. one attached to a knight's lance; a pennon. ) joint venture property - Meridian Gold is implementing a 10,000 meter reverse circulation drill campaign in northern Chile to evaluate high-priority targets Environmental and Safety - Meridian Gold's El Penon Mine received official ISO (1) See ISO speed. (2) (International Organization for Standardization, Geneva, Switzerland, www.iso.ch) An organization that sets international standards, founded in 1946. The U.S. member body is ANSI. 14001 Environmental Certification - El Penon employees completed working 1 million man hours as of January January: see month. 31st without a lost time accident and recently received an award from Consejo Consejo is a village in the north of Corozal District of the nation of Belize. Consejo is located on a point of land where the bays of Corozal and Chetumal meet. Consejo is about 8 miles from the district capital of Corozal Town, and two miles, across the water, from National de Seguridad de Chile for its safety excellence - In the community, Meridian Gold continued with its commitment to the support of education with a donation for the new Bio Leach Laboratory at a university in northern Chile - Meridian donated do·nate v. do·nat·ed, do·nat·ing, do·nates v.tr. To present as a gift to a fund or cause; contribute. v.intr. To make a contribution to a fund or cause. 50 trees from El Penon's plantation Plantation, city (1990 pop. 66,692), Broward co., SE Fla., a residential suburb of Fort Lauderdale; inc. 1953. The city has grown rapidly along with the development of S Florida. project to the children's burn rehabilitation rehabilitation: see physical therapy. center COANIQUEM COANIQUEM Corporación de Ayuda al Niño Quemado (Chilean Burnt Children Assistance Corporation) , in Antofagasta Antofagasta (äntōfägä`stä), city (1992 pop. 226,749), capital of Antofagasta region, N Chile, a port on the Pacific Ocean. through the El Penon Environmental Forestation Program - Housing benefits were granted to 5 Meridian Gold employees through El Penon's housing program - Twenty seven El Penon employees and 263 children of our employees received educational assistance - Twenty three college students benefited from the "Professional Practices" summer program at El Penon "This quarter, we cemented another key component into Meridian Gold's expansion strategy in Chile," commented Brian Kennedy There have been several notable people named Brian Kennedy:
adj. 1. Having the ability to originate, produce, or procreate. 2. Of or relating to the production of offspring. generative pertaining to reproduction. growth strategy is paying off. Meridian Gold's employees put in an outstanding effort to ensure another quarter of low cost production, strong cash flows and good exploration results. El Penon continues to provide superior returns making its mark as one of the best mines in the world producing over 1.6 million ounces of gold and 24 million ounces of silver at an average cash cost of $46 per ounce to date." Exploration Report Drilling recommenced at El Penon on February February: see month. 7th. Three surface drill-rigs are on site and continuing to evaluate the Providencia, Dorada and Fortuna structures. 1. Providencia: The Providencia vein system is located midway Midway, island group (2 sq mi/5.2 sq km), central Pacific, c.1,150 mi (1,850 km) NW of Honolulu, comprising Sand and Eastern islands with the surrounding atoll. Discovered by Americans in 1859, Midway was annexed in 1867. A cable station was opened in 1903. between Quebrada Colorada and Dorada. Mineral intercepts occur along a series en echelon NNW NNW abbr. north-northwest Noun 1. NNW - the compass point that is midway between north and northwest nor'-nor'-west, north northwest trending quartz quartz, one of the commonest of all rock-forming minerals and one of the most important constituents of the earth's crust. Chemically, it is silicon dioxide, SiO2. veins dipping 60 to 75 degrees east. At least four continuous vein structures have been identified with individual dimensions of up to 500 meters in length and up to 200 meters in dip. The system has been traced along 750 meters of strike length and remains open. Two drills remain on the Providencia structure to identify the limits of this new vein.
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PROVIDENCIA RC RESULTS
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HOLE LOCATION INTERCEPT(i) Au Ag
ID North From To Interval g/t(i) g/t(i)
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PX570 7301699 238 242 4 5.45 395
PX571 7301700 380 382 2 9.80 579
298 302 4 5.45 148
PV001 7301677 310 313 3 6.16 924
PV003 7301620 246 250 4 5.57 400
231 235 4 6.68 413
PV004 7301560 295 299 4 10.12 476
322 331 9 17.95 918
PV005 7301920 254 260 6 6.26 287
212 216 4 40.68 2247
240 249 9 6.68 305
287 288 1 8.29 260
PV006 7301560 201 206 5 4.04 184
PV007 7301920 186 187 1 5.66 240
PV008 7301980 294 297 3 4.64 301
PV009 7302039 275 276 1 7.00 255
242 243 1 7.52 198
PV010 7301980 216 217 1 3.35 200
PV011 7302042 392 392 1 2.52 120
PV012 7301859 269 272 3 4.90 312
PV013 7302039 314 317 3 4.60 172
301 305 4 4.23 268
PV014 7301499 199 200 1 7.69 531
PV015 7302098 274 278 4 23.11 708
PV017 7302160 238 240 2 2.50 128
PV019 7301500 342 344 2 4.75 333
PV021 7301380 273 278 5 8.35 180
PV022 7302040 222 224 2 5.15 58
PV023 7301440 300 308 8 5.59 226
PV024 7301740 315 317 2 3.67 176
209 210 1 4.38 158
PV025 7301380 226 230 4 3.86 335
231 234 3 16.50 1042
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(i) Intercept intervals are actual drill hole intercept lengths and
are not to be considered as true widths of the vein. Reported assays
values are provided by a laboratory that satisfies the certification
requirements contemplated by NI 43-101.
2. Dorada: Exploration and infill in·fill n. 1. The use of vacant land and property within a built-up area for further construction or development, especially as part of a neighborhood preservation or limited growth program. 2. drilling from both the surface and underground have extended the vein to section 7,303,900N; this effectively connects Dorada to the Cerro Martillo structure. Drilling will continue from both the surface and underground to include this mineralization in reserves and resources.
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DORADA RC AND DDH DRILL RESULTS
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HOLE LOCATION INTERCEPT(i) Au Ag
ID North From To Interval g/t(i) g/t(i)
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PX583 7303631 244 249 5 3.15 273
PX584 7303630 263 265 2 11.34 332
PX585 7303630 411 413 2 11.05 524
PX586 7303630 390 398 8 17.95 958
PX587 7303660 375 378 3 5.16 326
PX592 7303690 336 339 3 3.18 178
357 358 1 19.65 1875
PX597 7303842 236 238 2 4.17 296
ID0002 7303874 167.95 168.89 0.94 30.84 242
ID0003 7303869 155.50 156.00 0.50 6.8 133
ID0004 7303864 170.30 174.30 4.00 3.72 99
ID0005 7303860 183.50 184.35 0.85 7.66 182
ID0007 7303780 158.23 160.30 2.07 5.19 284
ID0008 7303838 169.40 172.50 3.10 14.45 407
ID0010 7303752 141.20 142.35 1.15 4.2 325
ID0011 7303754 151.83 152.50 0.67 11.3 998
ID0012 7303810 155.11 157.68 2.57 4.61 234
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(i) Intercept intervals are actual drill hole intercept lengths and
are not to be considered as true widths of the vein. Reported assays
values are provided by a laboratory that satisfies the certification
requirements contemplated by NI 43-101.
3. Fortuna: During the 1st Quarter, Meridian Gold bought Gold Field Chile's interest in the Angelina Angelina may refer to: People First name
n. 1. The middle of the calendar or academic year. 2. a. An examination given in the middle of a school year. b. midyears A series of such examinations. . Meridian Gold is continuing to invest in generative exploration in Chile and the Atacama Desert Atacama Desert (ätäkä`mä), arid region, c.600 mi (970 km) long, N Chile, extending south from the border of Peru. The desert itself, c. of northern Chile in particular. During the first quarter, approximately 500,000 hectares of claims were acquired in the Atacama Desert to leverage Meridian Gold's knowledge of the geology geology, science of the earth's history, composition, and structure, and the associated processes. It draws upon chemistry, biology, physics, astronomy, and mathematics (notably statistics) for support of its formulations. and metallogenesis of northern Chile. A drill program of approximately 10,000 meters commenced during March to evaluate high priority targets in this area and further drilling will be commenced as warranted. At the La Pepa property in Chile, the first phase of the drilling was initiated in January and completed in early April to break for the winter season. The assay results are currently being processed and evaluated. To date, while individual high-grade High-grade Credit quality of AAA or AA. high-grade Of, relating to, or being a bond with little risk of default on the part of the issuer. High-grade is usually reserved for bonds rated AAA or AA by the rating services. intercepts have been drilled, the continuity of the vein system needs further delineation. Phase II drilling is scheduled to begin in the third quarter of 2005. At the Natividad property in Nicaragua, a drill program was initiated in the first quarter of 2005. Meridian Gold can earn a 60% interest in the property by spending $3.5 million in exploration over the next two years and by making certain payments to Radius radius, in anatomy: see arm. (Remote Authentication Dial-In User Service) The de facto standard protocol for authentication servers (AAA servers). Gold Inc. Drilling is being completed by one diamond drill and a second drill will be added in the near future. Qualified Person William William, crown prince of Germany William or Frederick William, 1882–1951, crown prince of Germany, son of William II. In World War I he commanded (1914) an army on the Western Front and was nominal commander in the German attack H. Wulftange, P. Geo., Chief Geologist at the El Penon mine, has supervised su·per·vise tr.v. su·per·vised, su·per·vis·ing, su·per·vis·es To have the charge and direction of; superintend. [Middle English *supervisen, from Medieval Latin the preparation of the technical data contained within this release and serves as the "Qualified Person" as defined by National Instrument 43-101. MANAGEMENT'S DISCUSSION AND ANALYSIS Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial The following discussion is limited to matters that, in the opinion of Meridian Gold Inc., are material, and represents management's knowledge through the date of this press release, May 10, 2005. OPERATIONS El Penon In the areas of Safety and Environmental compliance, El Penon continues to make improvements with positive results. During the quarter, Meridian Gold employees and open pit mining contractor ICV ICV Integrity Check Value (IETF Authentication Header for IPV6 and V4) ICV Iniciativa per Catalunya Verds ICV Intracerebroventricular ICV Infantry Carrier Vehicle ICV Infantry Combat Vehicle , achieved 1,000,000 man hours without a lost time injury. Additionally, El Penon operations received official certification of the site's Environmental Management System under ISO 14001. During the first quarter of 2005, El Penon continued to deliver low-cost, profitable results that fuel the cash flows of the Company. The mine produced 76,200 ounces of gold and 1.3 million ounces of silver at a net cash cost of $47 per gold ounce versus 75,300 ounces of gold and 1.1 million ounces of silver at a net cash cost of $46 per gold ounce during the first quarter in 2004. Total production costs including depreciation, depletion depletion n. when a natural resource (particularly oil) is being used up. The annual amount of depletion may, ironically, provide a tax deduction for the company exploiting the resource because if the resource they are exploiting runs out, they will no longer be able and amortization were $101 per gold ounce for the quarter, compared to $97 per gold ounce in the first quarter of 2004. Total underground mining tonnage TONNAGE, mar. law. The capacity of a ship or vessel. 2. The act of congress of March 2, 1799, s. 64, 1 Story's L. U. S. 630, directs that to ascertain the tonnage of any ship or vessel, the surveyor, &c. rates including development waste have increased 25% over the 2004 rates to 4,500 tonnes per operating day. On a further positive note, mined dilution Dilution A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities. Notes: Adding to the number of shares outstanding reduces the value of holdings of existing shareholders. has decreased by 17%, from 0.83 meters to 0.69 meters, while average vein widths have decreased 9% from the first quarter of 2004. The underground mine produced 157,600 tonnes of ore at average grades of 14.5 g/tonne of gold and 227 g/tonne of silver. Open pit operations produced 57,000 tonnes of ore at average gold and silver grades of 5.1 g/tonne and 199 g/tonne, respectively. Access to the Dorada Vein is progressing ahead of schedule and access tunnels are anticipated to cross Dorada mid- mid- pref. Middle: midbrain. 2005. The decline from the existing underground haulage tunnel at Quebrada Colorada is 65% complete and the decline from surface at Cerro Martillo is 95% complete. Mill throughput The speed with which a computer processes data. It is a combination of internal processing speed, peripheral speeds (I/O) and the efficiency of the operating system and other system software all working together. 1. at El Penon increased 5% quarter over quarter to 2,278 tonnes per day despite a planned liner liner /lin·er/ (lin´er) material applied to the inside of the walls of a cavity or container for protection or insulation of the surface. liner see teat cup liner. change in January. In March of 2005, the mill achieved a new throughput record of 2,468 tonnes per day. Average mill head grade decreased during the quarter, to 12.0 g/tonne of gold and 218 g/tonne of silver in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with the mine plan versus 12.4 g/tonne of gold and 186 g/tonne of silver in the first quarter of 2004, in accordance with the life of mine plan for 2005. Meridian Gold will continue to invest in the processing facility during the year to sustain the current running rates. FINANCIAL RESULTS First Quarter 2005 vs. First Quarter 2004 Meridian Gold reported net earnings for the three months ended March 31, 2005 of $9.8 million ($0.10 per share), consistent with the earning amounts reported for the first quarter of 2004. Sales revenue of $32.2 million increased $2.3 million, or 8%, over the first quarter of 2004 due to higher realized gold prices and the slightly higher gold ounces sold. The average realized gold price increased 5% to $429 per ounce in the first quarter of 2005 from $410 per ounce in the first quarter of 2004. Cost of sales, which does not include depreciation, depletion or amortization, in the first quarter of 2005 of $3.7 million increased $0.3 million (9%) compared to cost of sales in the first quarter of 2004 of $3.4 million due to higher cash operating cost quarter-over-quarter primarily due to an increase in the number of tonnes mined and milled, an increase in costs for underground extraction services due to an increase in the ratio of drift drift, deposit of mixed clay, gravel, sand, and boulders transported and laid down by glaciers. Stratified, or glaciofluvial, drift is carried by waters flowing from the melting ice of a glacier. tonnes to bench tonnes, and a devaluation devaluation, decreasing the value of one nation's currency relative to gold or the currencies of other nations. It is usually undertaken as a means of correcting a deficit in the balance of payments. of the U.S. dollar against the Chilean Peso, offset in part by more silver ounces sold and from realized higher silver prices, as silver by-product by·prod·uct or by-prod·uct n. 1. Something produced in the making of something else. 2. A secondary result; a side effect. by-product Noun 1. revenue is applied as a credit to costs. At the end of 2004, the Company settled all outstanding silver forward contracts and as a result we were able to obtain the full benefit of current silver prices for silver sold in the quarter. The Company produced gold at $47 net cash cost per gold ounce in the first quarter of 2005 compared to $46 per ounce in the same period of 2004. Exploration expense in the first quarter of 2005 of $4.9 million was $1.1 million more than exploration expense in the first quarter of 2004 of $3.8 million, primarily because of the expansion of exploration activities in Chile. The Company plans to spend about $20 million for exploration during 2005. Operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: in the first quarter of 2005 of 51% decreased slightly compared to operating margins in the first quarter of 2004 of 54% primarily as a result of higher exploration costs. Tax expense in the first quarter of 2005 was $7.6 million or an effective rate of 44% compared to $6.8 million or an effective tax rate of 41% in the first quarter of 2004. The increase in the effective tax rate is due to a greater percentage of the Company's earnings for the quarter being earned and taxed in Chile as compared to other lower-tax rate jurisdictions. During the first quarter of 2005, the Company paid $2.8 million in cash taxes. Net margins in the first quarter of 2005 of 30% decreased from net margins in the first quarter of 2004 of 33%, primarily as a result of increased cost of sales, depreciation and exploration expenditures. LOOKING AHEAD For 2005, the Company expects to produce approximately 300,000 ounces of gold from El Penon at a cash cost of approximately $50 - $60 per ounce. Liquidity Cash balances, including restricted cash and short-term investments, increased to $244.3 million during the first quarter of 2005 due to strong cash flows fueled by higher gold prices and consistent operating performance at El Penon. Working capital increased to $226.6 million at March 31, 2005 from $215.3 million at December December: see month. 31, 2004, primarily due to the growth in cash and short-term investment balances. Cash to meet the Company's operating needs, to finance capital expenditures and to fund exploration activities during the quarter was provided from operations and from existing cash reserves Cash reserves See: Cash investments cash reserves Investment funds that are held in short-term assets such as Treasury bills and certificates of deposit until more permanent investment opportunities are available. . Cash provided by operating activities, including changes in non-cash working capital and other operating amounts, was $19.2 million in the first quarter of 2005 compared to $20.7 million in the first quarter of 2004. Capital Resources Remaining cash requirements for 2005 include approximately $16 million for planned capital expenditures at El Penon, which includes approximately $10 million in mine development primarily for the Dorada structure to prepare it for production by mid-2006. Exploration is the heart of Meridian Gold's growth strategy and will continue to be an important focus throughout the year. The Company plans to spend approximately $20 million this year to fund these efforts, building upon the success we enjoyed in 2004. It is expected that half of this budget will be dedicated to reserve and resource expansion at the Company's current projects. The remainder is allocated to our projects, aimed towards grassroots Adj. 1. grassroots - fundamental; "the grassroots factor in making the decision" basic - pertaining to or constituting a base or basis; "a basic fact"; "the basic ingredients"; "basic changes in public opinion occur because of changes in priorities" 2. exploration and acquisitions, initiated in North and South America South America, fourth largest continent (1991 est. pop. 299,150,000), c.6,880,000 sq mi (17,819,000 sq km), the southern of the two continents of the Western Hemisphere. . Pursuant to our policy, all of these exploration costs are expensed. We believe that planned capital requirements Capital requirements Financing required for the operation of a business, composed of long-term and working capital plus fixed assets. will be funded by existing operating cash flows, current cash and short-term and long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. investments. Should we decide to develop other exploration and development properties, additional capital may be required. If additional funds are necessary, management believes they may be borrowed from third parties or raised by issuing shares of the Company; however, no assurance can be given that such transactions will be available at terms and conditions acceptable to Meridian Gold, if at all. Changes in Accounting Policies Variable Interest Entities Effective January 1, 2005, the Company adopted the new CICA CICA Competition In Contracting Act of 1984 (USA) CICA Canadian Institute of Chartered Accountants CICA Competition In Contracting Act CICA Criminal Injuries Compensation Authority (UK) Accounting Guideline guideline Medtalk A series of recommendations by a body of experts in a particular discipline. See Cancer screening guidelines, Cardiac profile guidelines, Gatekeeper guidelines, Harvard guidelines, Transfusion guidelines. 15 "Consolidation of Variable Interest Entities" (AcG-15). The new guidance establishes when a company should consolidate a variable interest entity in its financial statements. AcG-15 provides the definition of a variable interest entity and requires a variable interest entity to be consolidated if a company is at risk of absorbing the variable interest entity's expected losses, or is entitled en·ti·tle tr.v. en·ti·tled, en·ti·tling, en·ti·tles 1. To give a name or title to. 2. To furnish with a right or claim to something: to receive a majority of the variable interest entity's residual returns Residual Return Return independent of the benchmark. The residual return is the return relative to beta times the benchmark return. To be exact, an asset's residual return equals its excess return minus beta times the benchmark excess return. , or both. The adoption of AcG-15 did not result in any changes to the Company's financial statements.
Summary of Quarterly Results
(Unaudited and expressed in millions of US dollars,
except per share data)
2005 2004 2003
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Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2
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Revenue $32.2 $32.8 $32.9 $31.5 $29.9 $30.4 $29.8 $36.5
Net
earnings (1) 9.8 7.5 9.6 9.7 9.8 10.3 6.1 9.5
Basic
earnings
per share (2) $0.10 $0.08 $0.10 $0.10 $0.10 $0.10 $0.06 $0.10
Diluted
earnings
per share 0.10 0.07 0.10 0.10 0.10 0.10 0.06 0.10
(1) Income before discontinued operations and extraordinary items is
equal to net earnings
(2) Quarterly amounts do not sum to full year amounts due to rounding
Outstanding Share Data As of March 31, 2005 and at the date of this MD&A, there were 99,657,326 (December 31, 2004 - 99,629,827) common shares outstanding and there were 1,906,151 stock options outstanding issued to directors and employees with exercise prices ranging between US$2.25 and US$18.58 per option, of which 1,284,815 were exercisable with expiry dates expiry date expire n → date f d'expiration; (on label) → à utiliser avant ... expiry date expire n → Ablauftermin m between July July: see month. 2006 and February 2014. Non-GAAP Measures Meridian Gold has included measures in this document called "total cash costs". Cash costs are determined according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. the Gold Institute Standard and consist of site costs for all mining (except deferred mining and deferred stripping costs), processing, administration, resource taxes and royalties, net of silver by-product credits, but do not include capital, exploration, depreciation and financing costs. Total cash costs per ounce are total cash costs divided by gold ounces produced. The Company believes that in addition to conventional measures, prepared in accordance with Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting ("GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). "), certain investors use this information to evaluate the Company's performance and its ability to generate cash flow. These non-GAAP performance measures do not have any standardized standardized pertaining to data that have been submitted to standardization procedures. standardized morbidity rate see morbidity rate. standardized mortality rate see mortality rate. meaning prescribed pre·scribe v. pre·scribed, pre·scrib·ing, pre·scribes v.tr. 1. To set down as a rule or guide; enjoin. See Synonyms at dictate. 2. To order the use of (a medicine or other treatment). by GAAP and, therefore, may not be comparable to similar measures presented by other companies. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The calculation for these non-GAAP measures is explained below.
(Unaudited and in millions of US dollars, except for Gold Production
in Ounces and Cash Costs per Ounce)
Three months ended March 31
2005 2004
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Cost of sales $3.7 $3.4
Other (0.2) 0.1
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Total cash costs 3.5 3.5
Gold production in ounces from active properties 76,212 75,316
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Total cash costs per ounce $47 $46
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CAUTIONARY STATEMENT Certain statements in this MD&A constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of the U.S. Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995 and Canadian securities legislation. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or other future events, including forecast production, earnings and cash flows, to be materially different from any future results, performance or achievements or other events expressly or implicitly predicted by such forward-looking statements. Such risks, uncertainties and other factors include those set forth in the Company's Annual Information Form and other periodic filings. Such risks, uncertainties and other factors include, but are not limited to, factors associated with fluctuations in the market price of precious metals Precious Metals Valuable metals such as gold, iridium, palladium, platinum, and silver. Notes: Investing in precious metals can be done either by purchasing the physical asset, or by purchasing futures contracts for the particular metal. , mining industry risks, uncertainty of title to properties, risk associated with foreign operations, environmental risks and hazards, proposed legislation affecting the mining industry, litigation An action brought in court to enforce a particular right. The act or process of bringing a lawsuit in and of itself; a judicial contest; any dispute. When a person begins a civil lawsuit, the person enters into a process called litigation. , governmental regulation of the mining industry, properties without known reserves, uncertainty as to calculations of reserves, mineral deposits and grades, requirement of additional financing, uninsured risks, risk of hedging strategies, competition, and dependence on key management personnel. Such information contained herein represents management's best judgment as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" based on information currently available. The Company does not intend to update this information and disclaims any legal liability to the contrary. The Company's filings with the securities regulatory authorities Noun 1. regulatory authority - a governmental agency that regulates businesses in the public interest regulatory agency administrative body, administrative unit - a unit with administrative responsibilities in Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of are available at www.sedar.com and its filings with the U.S. Securities and Exchange Commission are available at www.sec.gov See .gov and GovNet. (networking) gov - The top-level domain for US government bodies. through EDGAR Edgar or Eadgar (both: ĕd`gər), 943?–975, king of the English (959–75), son of Edmund, king of Wessex. In 957 the Mercians and Northumbrians rebelled against Edgar's brother Edwy and chose Edgar as their king. . 1st Quarter Conference Call Meridian Gold is hosting a simultaneous live webcast of its conference call on Thursday Thursday: see week. May 12, 2005, at 9:00 a.m. ET through Thomson/CCBN. If you would like to listen to our conference call on the web, go to the Company's home page at www.meridiangold.com and click on the link under Calendar of Events. There will be a slide show available in conjunction with the call, which will also be available for viewing on the Meridian Gold website. You will need to have Windows Media Player Digital jukebox software for Windows from Microsoft that plays a variety of audio, video and streaming formats including MP3, WMA, CD audio and MIDI. Starting with Version 6.2 in 1999, the Windows Media Rights Manager was added for securing copyrighted content. installed on your computer and you will also be required to complete a registration page in order to log on to the webcast. For those whose schedules do not permit participation during the call, or for those who would like to hear the discussion again, a replay will be available for one week following the call by dialing toll-free (888) 286-8010 or international (617) 801-6888 (passcode # 62886053). The webcast will be available for 3 months on Meridian Gold's website.
Meridian Gold Inc.
Operating Data
(Unaudited and dollar amounts expressed in U.S. currency)
Three Months Ended
March 31
2005 2004
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El Penon Mine
Gold production (ounces) 76,212 75,316
Silver production (ounces) 1,320,686 1,073,197
Tonnes ore mined (thousands) 215 202
Mill tonnes processed (thousands) 205 194
Avg. mill gold ore grade (g/tonne) 12.0 12.4
Avg. mill silver ore grade (g/tonne) 218 186
Mill gold recovery 97% 97%
Mill silver recovery 92% 93%
Cash cost of production per gold ounce $ 47 $ 46
Total production cost per gold ounce $ 101 $ 97
Beartrack Mine
Gold production - heap leach (ounces) 90 130
Company Totals
Ounces of gold produced 76,302 75,446
Ounces of gold sold 76,329 74,397
Ounces of silver sold 1,316,775 1,049,883
Avg. realized gold price per ounce $ 429 $ 410
Avg. realized silver price per ounce $ 7.05 $ 5.87
Cash cost of production per gold ounce $ 47 $ 46
Total cost of production per gold ounce $ 101 $ 97
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Average realized gold prices are revenues divided by gold ounces
sold.
Cash cost and total cost per gold ounce are net of silver by-product
credits.
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Capital Expenditures and Depreciation Detail
- Q1 2005 (in millions of US$)
Capital
Expenditures Depreciation
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El Penon $11.1 $4.2
Esquel 0.1 -
Other 0.3 0.1
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Total $11.5 $4.3
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Operating Cost Detail
- Q1 2005 ($/tonne ore) Underground Open pit Process G&A
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El Penon $45.16 $21.03 $14.48 $7.89
Meridian Gold Inc.
Interim Consolidated Balance Sheets
(Unaudited and expressed in millions of US dollars)
March 31 December 31
2005 2004
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Assets
Current assets
Cash and short-term investments $ 230.4 $ 217.8
Restricted cash 13.9 13.9
Trade and other receivables 3.0 2.3
Inventory 5.2 5.4
Deferred taxes - current 0.4 0.4
Other current assets 1.4 2.1
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Total current assets 254.3 241.9
Mineral property, plant and equipment, net 645.9 628.8
Deferred taxes - long-term 9.7 9.3
Other assets 7.0 12.1
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Total assets $ 916.9 $ 892.1
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Liabilities and Shareholders' Equity
Current liabilities
Accounts payable, trade and other $ 8.7 $ 8.1
Accrued and other liabilities 19.0 18.5
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Total current liabilities 27.7 26.6
Other long-term liabilities 45.5 42.3
Deferred taxes 191.5 188.3
Minority interest 1.0 1.0
Shareholders' equity (note 6) 651.2 633.9
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Total liabilities and shareholders' equity $ 916.9 $ 892.1
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See accompanying notes to interim consolidated financial statements.
Meridian Gold Inc.
Interim Consolidated Statements of Operations
(Unaudited and expressed in millions of US dollars,
except per share data)
Three months ended
March 31
2005 2004
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Revenue $ 32.2 $ 29.9
Costs and expenses
Cost of sales 3.7 3.4
Depreciation, depletion and amortization 4.3 4.0
Exploration 4.9 3.8
Selling, general and administrative 2.9 2.5
Other - 0.1
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15.8 13.8
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Earnings before the following 16.4 16.1
Interest income 1.0 0.5
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Earnings before taxes 17.4 16.6
Income taxes (7.6) (6.8)
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Net earnings $ 9.8 $ 9.8
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Earnings per share
Basic $ 0.10 $ 0.10
Diluted $ 0.10 $ 0.10
Weighted average shares outstanding (in millions)
Basic 99.6 99.2
Diluted 100.4 100.0
See accompanying notes to interim consolidated financial statements.
Meridian Gold Inc.
Interim Consolidated Statements of Retained Earnings
(Unaudited and expressed in millions of US dollars)
Three months ended
March 31
2005 2004
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Balance at beginning of period $ 180.0 $ 144.3
Adjustment on adoption of new accounting
standard for stock-based compensation - (0.9)
Net earnings 9.8 9.8
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Balance at end of period $ 189.8 $ 153.2
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See accompanying notes to interim consolidated financial statements.
Meridian Gold Inc.
Interim Consolidated Statements of Cash Flows
(Unaudited and expressed in millions of US dollars)
Three months ended
March 31
2005 2004
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Cash flow from operating activities
Net earnings $ 9.8 $ 9.8
Non-cash items:
Provision for depreciation, depletion and
amortization 4.3 4.3
Accretion of asset retirement obligations 0.1 0.1
Stock-based compensation 0.8 0.4
Provision for pension costs 0.1 0.1
Income taxes 5.4 3.2
Deferred revenue - (0.3)
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20.5 17.6
Changes in non-cash working capital and
other accounts:
Trade and other receivables (0.6) 1.4
Inventory 0.1 (0.6)
Other current assets 0.6 0.2
Other assets (1.7) 0.5
Accounts payable, trade and other 0.6 0.1
Accrued and other liabilities 0.5 2.4
Other long-term liabilities - (0.1)
Reclamation expenditures (0.8) (0.8)
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19.2 20.7
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Cash flow from (used in) investing activities
Capital expenditures (11.5) (3.3)
Short-term investments (47.4) -
Long-term investments 5.0 -
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(53.9) (3.3)
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Increase (decrease) in cash and cash equivalents (34.7) 17.4
Cash and cash equivalents, beginning of period 103.1 168.3
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Cash and cash equivalents, end of period $ 68.4 $ 185.7
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Cash and cash equivalents $ 68.4 $ 185.7
Short-term investments 162.0 -
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Cash and short-term investments $ 230.4 $ 185.7
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Cash paid for income taxes $ 2.8 $ 0.5
Cash paid for interest $ - $ -
See accompanying notes to interim consolidated financial statements.
Meridian Gold Inc.
Notes to Interim Consolidated Financial Statements (unaudited)
Three months ended March 31, 2005
1. Basis of Presentation These unaudited interim consolidated financial statements Consolidated Financial Statements The combined financial statements of a parent company and its subsidiaries. Notes: Because consolidated financial statements present an aggregated look at the financial position of a parent and its subsidiaries, they enable you to gauge have been prepared by the Company in accordance with Canadian generally accepted accounting principles ("GAAP"). The preparation of financial data is based on accounting policies and practices consistent with those used in the preparation of the audited annual consolidated financial statements, except as disclosed in note 2. The accompanying unaudited interim consolidated financial statements do not include all information and note disclosures required by Canadian GAAP for annual financial statements, and therefore should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2004. 2. Changes in Accounting Policies (a) Variable Interest Entities Effective January 1, 2005, the Company adopted the new CICA Accounting Guideline 15 "Consolidation of Variable Interest Entities" (AcG-15). The new guidance establishes when a company should consolidate a variable interest entity in its financial statements. AcG-15 provides the definition of a variable interest entity and requires a variable interest entity to be consolidated if a company is at risk of absorbing the variable interest entity's expected losses, or is entitled to receive a majority of the variable interest entity's residual returns, or both. The adoption of AcG-15 did not result in any changes to the Company's financial statements. (b) Stock-based compensation Effective January 1, 2002, the Company elected to use the settlement method of accounting for stock options granted to directors and employees under the Share Incentive Plan as allowed under the CICA standard for stock-based compensation. Effective January 1, 2004, the Company changed the method of application of its stock-based compensation accounting policy so as to measure stock options granted to directors and employees at fair value and recognize the compensation expense over the vesting Vesting The process by which employees accrue non-forfeitable rights over employer contributions that are made to the employee's qualified retirement plan account. Notes: period, with a corresponding credit to additional paid-in capital additional paid-in capital Stockholder contributions that are in excess of a stock's stated or par value. For example, if a firm issues stock with a par value of $1 per share but sells the stock to investors at $10 per share, the firm's financial statements , as required under the amendments to CICA handbook
This article is about reference works. For the subnotebook computer, see .
adj. Influencing or applying to a period prior to enactment: a retroactive pay increase. [French rétroactif, from Latin without restatement Restatement A revision in a company's earlier financial statements. Notes: The need for restating financial figures can result from fraud, misrepresentation, or a simple clerical error. of prior periods. The effect of the change in the method of accounting for stock-based compensation has resulted in a decrease of $0.9 million in retained earnings Retained Earnings The percentage of net earnings not paid out in dividends, but retained by the company to be reinvested in its core business or to pay debt. It is recorded under shareholders equity on the balance sheet. and an increase of $0.9 million in additional paid-in capital as of January 1, 2004. Restricted stock granted on or after January 1, 2000 and stock options granted to non-employees on or after January 1, 2002 under the Company's stock option plan are accounted for under the fair value method. 3. Property Valuation At each reporting period, the Company reviews the carrying value Carrying Value Also know as "book value," it is a company's total assets minus intangible assets and liabilities, such as debt. Notes: This is different than market value, as it can be higher or lower depending on the circumstances. of its mineral properties in accordance with Canadian GAAP. The reviews include an analysis of the expected future cash flows Expected future cash flows Projected future cash flows associated with an asset. to be generated by the project to determine if such cash flows exceed the project's current carrying value. The determination of future cash flows is dependent on a number of factors, including future prices for gold, the amount of reserves, the cost of bringing the project into production, production schedules, and estimates of production costs. For non-producing properties, the reviews are based on whether factors that may indicate the need for a write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. are present at each location. Additionally, the reviews take into account factors such as political, social, legal and environmental regulations. These factors may change due to changing economic conditions or the accuracy of certain assumptions. The Company used its best effort to fully understand all of the aforementioned a·fore·men·tioned adj. Mentioned previously. n. The one or ones mentioned previously. aforementioned Adjective mentioned before Adj. 1. to make an informed decision based upon historical and current facts surrounding sur·round tr.v. sur·round·ed, sur·round·ing, sur·rounds 1. To extend on all sides of simultaneously; encircle. 2. To enclose or confine on all sides so as to bar escape or outside communication. n. the projects. Based on this review, management determined an impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. was not necessary as of March 31, 2005. 4. Reclamation Reclamation A claim for the right to return or the right to demand the return of a security that has been previously accepted as a result of bad delivery or other irregularities in the delivery and settlement process. Liability The continuity of the reclamation liability for the three months ended March 31 would be as follows: Three months ended March 31, (in millions of US dollars) 2005 2004 --------------------------------------------------------------------- Balance, beginning of period $11.8 $18.5 Accretion 0.1 0.1 Expenditures (0.8) (0.9) --------------------------------------------------------------------- Balance, end of period $11.1 $17.7 --------------------------------------------------------------------- --------------------------------------------------------------------- 5. Forward Contracts To mitigate mit·i·gate v. To moderate in force or intensity. mit  i·ga tion n. the risk associated with the gold and silver markets
and to secure the loan with Standard Bank of London (which loan was
subsequently repaid), the Company previously entered into gold and
silver forward contracts. The Company closed out all of its gold
forward contracts during 1999. However, under applicable accounting
standards, the Company was required to defer de·fer 1 v. de·ferred, de·fer·ring, de·fers v.tr. 1. To put off; postpone. 2. To postpone the induction of (one eligible for the military draft). v.intr. recognition of the gains related to closing out these contracts in its financial statements until the original expiry date of the contracts, which period ended in 2004. During the three months ended March 31, 2004, the Company recognized $0.3 million of the deferred revenue on expiring ex·pire v. ex·pired, ex·pir·ing, ex·pires v.intr. 1. To come to an end; terminate: My membership in the club has expired. 2. gold forward contracts. At December 31, 2003, the Company had remaining forward sales forward sales npl → ventas fpl a término commitments for 2,000,000 ounces of silver at an average price of $5.34 per ounce for delivery during 2004 associated with the former Standard Bank loan. In addition, in 2003, with the sharp rise in silver price, the Company entered into silver contracts for delivery during 2004. At December 31, 2003, the Company had remaining a commitment of 2,200,000 ounces of silver relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc these contracts at an average price of $5.05 per ounce for delivery during 2004. In the first quarter of 2004, 0.5 million ounces of silver production were delivered against these contracts and the remaining contracts were delivered into or settled during 2004. As at December 31, 2004 and March 31, 2005, the Company is unhedged in gold and silver.
6. Share Capital
(a) Shareholders' equity
March 31, December 31,
(in millions of US dollars) 2005 2004
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Share capital $386.0 $385.8
Additional paid-in capital 6.3 5.8
Retained earnings 189.8 180.0
Cumulative translation adjustment 69.1 62.3
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Total shareholders' equity $651.2 $633.9
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(b) Outstanding share data As of March 31, 2005, there were 99,657,326 (December 31, 2004 - 99,629,827) common shares outstanding and there were 1,906,151 stock options outstanding issued to directors and employees with exercise prices ranging between US$ 2.25 and US$18.58 per option, of which 1,284,815 were exercisable with expiry dates between July 2006 and February 2014. (c) Stock options and restricted shares The stock option activity for the three months ended March 31 is illustrated in the table below:
Three months ended March 31
2005 2004
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Weighted Weighted
Number of Average Number of Average
Options Exercise Price Options Exercise Price
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Stock options
outstanding at
beginning of
period 1,932,151 $9.28 1,883,934 $7.54
Granted - - 12,500 12.79
Exercised (1,000) 4.95 - -
Expired and/or
canceled (25,000) 16.26 (12,184) 8.78
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Stock options
outstanding at
end of period 1,906,151 $9.19 1,884,250 $7.57
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Exercisable
stock options 1,284,815 $7.29 1,464,053 $6.13
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Stock options vest in equal annual amounts over 1 to 3 years and have
terms of 10 years.
The fair value of stock options granted was calculated using the Black-Scholes option pricing model option pricing model A mathematical formula for determining the price at which an option should trade. The model expresses the value of an option as a function of the value of the underlying asset, length of time until maturity, exercise price, yields on with the following weighted average assumptions used for grants in 2004; dividend yield 0%, expected volatility of 59.3 percent, risk free interest rates of 3.5 percent, and expected lives of 5 years. In the first quarter of 2005, the Company awarded 22,711 restricted shares that had a grant date fair value of $13.04 per share. In the first quarter of 2004, the Company did not award any restricted shares. Restricted shares vest one-third per year over 3 years. 7. Employee future benefits As a result of the amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. recommendations of CICA handbook section 3461, Employee Future Benefits ("HB 3461"), the Company has included additional disclosures about pension plans and other employee future benefit plans for periods ending on or after June 30, 2004 in this note. The amendments do not change any recognition or measurement requirements currently in HB 3461. The total net defined benefit expense of the Company's pension plan is $0.1 million for the three months ended March 31, 2005. Meridian Gold Inc. (TSX:MNG) (NYSE:MDG) |
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