Meridian secures funds for El Peon — Current production rate expected to double (January 11, 1999)

Reno-based Meridian Gold (MDG-N) has secured funding for construction and development of the El Pe~non mine, near Antofagasta in northern Chile.Standard Bank of New York and Standard Bank London will provide a total of US$50 million in debt financing. The fully underwritten facility has a term of six years with no payments in the first year.”The US$50 million in financing will help us more than double El Pe~non’s current production rate,” says Meridian President Brian Kennedy. “More importantly, it will enhance the cash flow and profitability of the company into the next century.”By 2000, when El Pe~non is scheduled to come on-stream, Meridian’s total annual production is expected to reach 400,000 oz.In the meantime, construction continues apace: contractors have poured the foundation for the primary crusher; earthworks for the processing facility are nearly complete; leach tanks for the Merrill-Crowe circuit are being erected; and all major equipment has been ordered.The first gold pour is scheduled for the fourth quarter of 1999.Meridian’s underground contractor has completed more than 2,000 metres of underground drifting in the past two months. The drift from the Quebrada Orito zone to the Quebrada Colorada zone is in progress, and ore is expected to report to the mill by the first quarter of 2000.Total construction costs are pegged at US$77 million.Drilling to the north of Quebrada Colorada has extended mineralization another 120 metres in that direction, piercing the structure in four places. Hole PP312 intersected a 4-metre interval grading 9.6 grams gold and 339 grams silver per tonne, wherreas hole PP330 hit 4 metres grading 10.8 grams gold and 296 grams silver. This northern extension, which remains open beyond hole PP330, is a considered a high-priority target.Drilling has also encountered ore-grade values at the Playa and Vista Norte areas. At Playa, which lies within 200 metres of the main Quebrada Orito structure, Meridian has tested 180 metres of strike on a geophysical anomaly. Hole PC35 hit 4 metres grading 86.8 grams gold and 3,009 grams silver starting at a depth of 122 metres, followed by another 2 metres of 47.8 grams gold plus negligible silver.At Vista Norte, geologists discovered a north-south structure which has been mapped over a strike of 500 metres. Drilling has intercepted the structure twice, including 8 metres grading 1.2 grams gold and 28 grams silver, and another 10-metre interval grading 7.4 grams gold and 36 grams silver.Recent exploration is expected to increase proven and probable reserves at the 439-sq.-km property. At the end of 1997, the property contained an estimated 1.1 million oz. gold and 17.9 million oz. silver. An updated estimate will be announced in March.In other news, Meridian will take a non-recurring charge of US$20 million against earnings in the recent fourth quarter. The charge is related to the carrying value of the Beartrack mine project in Idaho.