Meridian continues its push for new sources of production

The word "sustainable" shows up commonly as Edward Dowling talks about his plans for the future of Reno's Meridian Gold Inc., where he became president and chief executive officer a couple of months ago.

It's not just a buzzword for Dowling as Meridian continues to push hard to diversify beyond its heavy reliance on a Chilean mine, El Penon, that accounted for 74 percent of the 67,000 ounces of gold produced by Meridian during the fourth quarter.

But production at the mine slid during the quarter 50,400 ounces of gold compared with 75,600 ounces a year earlier. At an average price of $614 an ounce, that's a $15 million hit to Meridian's revenues.

Much of the decline in production, Meridian executives say, reflects the move of mining at El Penon from high-grade deposits into less-attractive area. That trend will reverse, the company says, as miners move into new deposits.

But Dowling tells security analysts that Meridian also is stepping up its search for new gold deposits throughout the Western Hemisphere including the boardrooms where merger and acquisition candidates might be found.

The company began to boost its production last year with the acquisition of a privately held company that owned a mine in central Chile, Minera Florida. That mine produced 17,500 ounces of gold and 75,400 ounces of silver during the fourth quarter.

Closer to home, Meridian expects to begin recording production from the new Rossi Mine about 26 miles northwest of Carlin.

That mine, which is 60 percent owned by Barrick Gold Exploration and will be operated by Barrick, is expected to come on line during the second quarter. Dowling says it's projected to produce 80,000 ounces of gold a year with Meridian's 40 percent share amounting to about 32,000 ounces.

Meridian also is increasing its exploration budget including work on a Nevada project that may be promising. During the fourth quarter, Dowling says, Meridian invested $8.6 million into exploration compared with $6.2 million a year earlier.

Among the projects in the pipeline is Winnemucca Mountain, a northern Nevada property that's under exploration by Meridian and Evolving Gold Corp. of Vancouver.

Other areas of interest for the company's exploration team include the deserts of Chile and areas of Peru, Brazil and Mexico.

Meridian, which is publicly held, reported earnings of $6 million for the fourth quarter compared with earnings of $12 million a year earlier. A one-time, non-cash charge of $379 million was levied against the 2005 earnings, however, as the company wrote down the value of a stalled mining project in Argentina.

Fourth-quarter revenues for Meridian totaled $65 million, a $15.7 million increase from a year ago.