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Mutual funds still buy Meridian

John Seelmeyer

Meredian Gold’s stalled project in Argentina has some analysts worrying that Meridian is a one-mine company for the moment.

Their worries haven’t stopped mutual funds from continuing big purchases of the common stock of Reno-based Meridian.

In the six months from October through March, mutual funds bought 6.78 million shares of Meridian and sold only 1.57 million shares, reported Morningstar Inc., the Chicago-based research firm.

And that’s important because the 71 mutual funds who own Meridian stock account for about a third of the company’s outstanding shares.

Big shareholders adding to their positions in Meridian were Fidelity Advisor Mid Cap Fund, which bought 2.3 million shares and now holds 3.08 percent of Meridian’s outstanding shares and Royce Low-Priced Stock Fund, which added 1.09 million shares and now holds 3.12 percent of Meridian’s stock.

And analysts followed by Morningstar continue to like Meridian.

Of 20 analysts who follow Meridian, four rate the company a “buy,” five rank it “outperform” and nine rate it a “hold.” Two analysts rate the stock as “underperform.” Still, analysts who questioned Meridian’s top executives after the company reported its most recent earnings were eager to hear when the company believes it will get its stalled Esquel project in Argentina back on track.

Without that project, Meridian is heavily dependent on one mine the El Penon in northern Chile, which produced 85,000 ounces of gold during the first quarter.

The company’s total production was 108,000 ounces, and 22,000 of those ounces came from the Jerritt Canyon property 57 miles northwest of Elko which Meridian has been trying to sell.

With those sales, Meridian reported net income of $8.8 million on revenues of $35.9 million for the quarter.

That compares with net of $10.3 million on sales of $31.1 million in the comparable period last year.

The decline was largely due to higher tax rates.

Meridian executives, however, aren’t about to be rushed by analysts or anyone else on the Esquel project, which was given a resounding thumbs-down by nearby residents during March.

For instance, one analyst asked the Ed Colt, the Meridian executive vice president with responsibility for the Esquel project, whether the company might open the mine as an underground facility rather than an open pit.

“Right now, from the technical side, we’re not having thoughts about anything,” Colt responded.

Instead, Colt and Meridian President Brian Kennedy said the company and its San Francisco-based consultant, Business for Social Responsibility, are listening to the worries of Esquel residents.

“They have a lot of good, legitimate concerns,” Colt acknowledged.


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