Meridian hammered by local Esquel vote

Locals living near Meridian Gold‘s (MNG-T) Esquel gold project in southern Argentina have voted overwhelmingly against its development.

The Esquel project is 10 km northeast of the city of the same name (pop. 30,000), in the Chubut province of the country’s Patagonia region.

About 75% of eligible voters participated in the non-binding referendum, and results show that roughly 80% are opposed to the mine. (Earlier this year, Meridian CEO Brian Kennedy had estimated that only “about 10% of the people in Esquel do not want mining.” [T.N.M., March 10-16/03])

A prominent member of the local population is millionaire clothing magnate Douglas Tompkins, founder of the North Face and Esprit lines and a devout environmentalist.

Meridian contends the referendum was a “gauge of the negative false information disseminated to the local community by organizations opposed to mining” and that, had it been scheduled for April, after the publishing of a water study (as recommended by the provincial legislature), residents would have been “more informed [and] therefore supportive.”

The water study, which assesses the impact of the mine on the city of Esquel’s water sources, will be audited by the Argentine National Institute of Water. After the study is released, a public hearing will be held and the provincial government will rule on the issuance of mining permits.

Says Kennedy: “We believe that over the next several months, with increased interaction with the community on critical issues like the water study, the Esquel community will be convinced of the environmental safeguards and the benefit of the mine for the local, provincial and Argentine economy.”

Meridian says it will continue its exploration program as scheduled and complete the permitting process.

Meridian has already submitted an environmental impact study to authorities in Chubut province.

Meridian acquired the 3-million-oz., high-grade Esquel gold deposit in mid-2002 through the takeover of London-based Brancote Holdings.

Esquel is believed capable of producing 300,000 oz. per year from open pits at a cash cost of US$100 per oz. The capital cost of building the mine would be about US$100 million.

Meridian’s stock was hammered on March 24, the first day of trading following the referendum, dropping 14.6% to $13.45 in Toronto and 16.6% to US$9.05 in New York. This compares with 52-week highs of $32.98 and US$20, respectively, achieved less than six months ago.