Report sharply critical of Meridian's approach

When Reno's Meridian Gold asked Business for Social Responsibility to look at what went wrong with Meridian's plans in Argentina, it told the consultants to undertake a hard-nosed, independent investigation.

Meridian got its wish.

A report from San Francisco-based Business for Social Responsibility issued last week sharply criticizes Meridian's failures to communicate with residents of the Argentine town of Esquel, neighbors to a proposed mine that is a key part of Meridian's future.

"In short, a real partnership (with the community) was needed and, for good or for ill, the company never attempted this partnership," the nonprofit Business for Social Responsibility BSR, for short said in its report to Meridian.

Meridian's proposed mine drew an 81 percent negative vote from Esquel residents in late March, and the company's top executives have acknowledged they made many mistakes in their relations with the community.

Peter Dougherty, the company's chief financial officer, said last week that Meridian officials were studying the BSR report.

The Esquel mining project has been on hold since the residents' negative vote.

The company bought the 543-acre site through a merger with Brancote Holdings PLC last year.

It estimates the property contains 3 million ounces of gold more than $1 billion worth at current prices.

The BSR report, based on conversations with about 100 residents of Esquel, found numerous complaints with the way Meridian approached the mining project:

* Public presentations were highly technical and not easily understood by nontechnical people.

"There seemed to have been remarkably little identification of how communication in a town like Esquel is best facilitated," the consultants wrote.

* Residents felt that Meridian dismissed their concerns about the mine's environmental effects and were distant from the community.

Graffiti painted on walls included the names of employees, and told them to go home.

Company people became unwelcome in stores and restaurants, and some of their children were the subjects of protests against the mine when they attended school.

* The company had a bad image in town.

It rented the biggest building in town for an office, then tinted windows so no one could see inside.

Company employees brought big new vehicles into town, creating an image of ostentation, and they drove up rental prices when they leased six or seven of the biggest houses in Esquel.

* A public relations firm hired by Meridian did as much bad as good.

A pamphlet mailed to residents, for instance, printed a photo of the town in reverse.

"This made it appear to residents as if the company knew very little about the town of Esquel," the BSR report said.

* Although the town had developed a plan for its future economic development a plan which included mining and although a university in Argentina had conducted extensive research on the community's thoughts about mining, Meridian ignored the reports.

Esquel, a town of about 31,000 at the foot of the Andes about 1,200 miles south of Buenos Aires, relies on tourism for a portion of its economic well-being.

The BSR researchers said Meridian early in the process might have had a chance to win community support for its proposal.

"There were many people who originally were neutral regarding the possibility of a mine, but changed their minds due to the company's lack of engagement with the community," the researchers wrote.

BSR said Meridian's woes in Esquel illustrate the changing relationship of mining companies to neighboring communities throughout the world.

"Local communities must be integrally involved as an essential partner from the outset, and throughout the life of the mine," the group said.

"A failure to do so can result in a loss of a social license to operate."