Although they're still months away from making a final decision, executives at Reno-based Meridian Gold remain optimistic about a potential underground mine in northern Nevada.
The Rossi prospect is about 26 miles northwest of Carlin, and Meridian has been involved in exploration of the property since 1986.
Today, Barrick Gold holds a 60 percent stake in the property in a joint venture with Meridian, and Barrick may have conclusive exploration results by the middle of this year, Meridian President and CEO Brian Kennedy told analysts last week.
If the companies decide to go ahead, Kennedy said mining might begin as early as 2006.
Regulatory approvals should be fairly straightforward, he said, because the proposed underground mine wouldn't have much effect on the environment.
At the same time that it's waiting to see what Barrick finds at Rossi, Meridian is starting to poke around on a new property near Fairbanks, Alaska.
In late January, Meridian signed an option and joint venture agreement with Freegold Ventures Ltd., which owns the 18,000-acre Golden Summit project.
"We see high-grade veins.We like that," Kennedy said.
Although the property was mined in the early 1900s, the mines were closed with the advent of World War II.
Little work has taken place in the area since then.
Meridian can earn a 70 percent interest in the property if it spends $5 million in exploration, prepares a feasibility study and gets a mine into commercial production.
The new projects are important for Meridian because the Argentine property that it expected to be its crown jewel remains in limbo.
Meridian put the Esquel project on hold about a year ago after neighboring residents voted against development of the mine in a non-binding referendum.
Since then, Meridian has been working with the community to resolve its concerns.
Kennedy said the work continues, and the company doesn't know when if ever it will resume development of the property.
But he said the company is heartened that the government of Argentina continues to emphasize the importance of mining in strengthening the country's economy.
With Esquel on hold and its other projects still over the horizon, Meridian relies almost exclusively on production from its El Penon mine in northern Chile.
During 2003, the company reported last week, that mine produced 321,000 ounces of gold at a cash cost of $54 an ounce.
That compares with production of about 328,000 ounces at an average cash cost of $35 an ounce in 2002.
Next year, Meridian projects El Penon will produce 310,000 ounces an average cash cost of $50 to $60 an ounce.
The company noted, too, that El Penon's silver production becomes more important as silver prices have run up in recent weeks.
The mine produced about 4.23 million ounces of silver last year compared with 5.1 million ounces a year earlier.
Although Meridian doesn't use the futures market to hedge the price it receives for gold, Kennedy said the company has used futures to protect the price it receives for silver.
It's hedged about 4.2 million ounces at $5.19 an ounce, he said.
For the fourth quarter of last year, Meridian earned $10.4 million on revenues of $30.4 million compared with earnings of $10.7 million on revenues of $34.6 million in fourth quarter of 2002.
For the year, the company reported earnings of $36.8 million on revenues of $132.6 million.
This compares with income of $41.5 million on revenues of $133.6 million in 2002.
