Reno's Meridian Gold would like to fuel
some of its growth with an acquisition, but it
can't find a suitable partner.
Part of the problem, President Edward
Dowling acknowledged, is that Meridian is
picky.
Potential acquisition targets, he told securities
analysts last week,would need to generate
returns of 15 percent to 20 percent.Meridian
figures its internal cost of capital basically,
its opportunity cost at 10 percent.
Companies on Meridian' radar screen need
to be operating in regions with low political
risk,Dowling said.
Meridian also looks for the chance to
increase production, either through discovery
of new deposits or operational improvements,
in acquisition targets.
The combination, Dowling said, is tough to
find particularly at a reasonable price when
the mining industry is booming.
Publicly traded mining companies, he said,
appear to be richly priced.
"We continue the search for value-creating
transactions," he said."The fact that we haven't
pulled the trigger tells you that we haven't
found something that meets our criteria."
Meridian could grow quickly if it were able
to re-start its stalled Esquel project in southern
Argentina. Meridian stopped work in 2003
after 80 percent of voters near the mine property
expressed opposition, and The Supreme
Court of Argentina last month ruled against an
appeal by the Reno company.
But Meridian hasn't entirely given up hope.
"We are not sitting on our hands in regard
to Esquel,"Dowling said. "It remains one of the
best undeveloped gold mines on Planet Earth."
He wouldn't talk much more about the
company's work to get the project re-started,
saying Meridian doesn't want to stir the political
pot in Argentina.
In the meantime,Meridian works at a
pipeline of easier if smaller projects.
In Nevada, production started at the end of
the first quarter from the Rossi/Storm mine
about 25 miles northwest of Carlin.Meridian
owns a 40 percent interest in that mine; Barrick
Gold owns the rest.Meridian's share of the production
from the Rossi/Storm property is projected
to total 25,000 ounces of gold this year.
That helps offset the continued slow
decline of production from Meridian's flagship
mine, El Penon in northern Chile. That mine
produced 55,600 ounces of gold in the first
quarter compared with 68,300 ounces a year
earlier.
And the company spent $6 million during
the first quarter on exploration in Chile, Peru,
Brazil,Mexico and Nevada.
Meridian said it sold gold at an average
price of $630 an ounce during the first quarter
compared with $559 a year earlier.
The company earned $18.9 million on revenues
of $66.4 million in the first quarter.A
year earlier, it earned $17.6 million on revenues
of $55.5 million.
