-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Uk5bXLvZLUkdnoIHuARCZkXn+FWsNGy2dpphi5KW99JWThKjCyRcibMFGEoH6GKJ hrMixw/hk4W+QQ6f/UN/cA== 0000950131-96-003964.txt : 19960816 0000950131-96-003964.hdr.sgml : 19960816 ACCESSION NUMBER: 0000950131-96-003964 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: FMC GOLD CO CENTRAL INDEX KEY: 0000814429 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 880226676 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-09569 FILM NUMBER: 96614221 BUSINESS ADDRESS: STREET 1: 5911 MEADOWOOD WAY STREET 2: STE 200 CITY: RENO STATE: NV ZIP: 89502 BUSINESS PHONE: 7028273777 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (x) Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 1996 or ( ) Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ---- ---- Commission File Number 1-9569 Meridian Gold Company (as successor to FMC Gold Company) --------------------------------------------------------- (Exact name of registrant as specified in its charter) Delaware 88-0226676 ---------------------------------- -------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5011 Meadowood Way, Reno, Nevada 89502 ------------------------------------------------------ (Address of principal executive offices) (Zip Code) (702) 827-3777 ------------------------------- Registrant's telephone number, including area code Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ----- ------ Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding at June 30, 1996 - --------------------------------------- ----------------------------------- Common Stock, par value $0.01 per share 73,597,495 Page 2 PART 1 - FINANCIAL INFORMATION ------------------------------ ITEM 1. FINANCIAL STATEMENTS - ----------------------------- FMC Gold Company - ---------------- Consolidated Statements of Operations (Unaudited) - ------------------------------------------------- (In thousands, except per share data)
Three Months Six Months Ended June 30 Ended June 30 ----------------- ------------------ 1996 1995 1996 1995 ------- ------- ------- ------- Sales $18,297 $ 9,704 $36,102 $18,842 Costs and expenses Cost of sales 18,299 10,979 35,589 19,988 Exploration costs 1,907 2,401 3,366 6,409 Selling, general and administrative expenses 1,045 1,092 2,412 2,414 ------- ------- ------- ------- Total costs and expenses 21,251 14,472 41,367 28,811 Loss before interest and income taxes (2,954) (4,768) (5,265) (9,969) Interest income 1,160 1,604 2,401 3,245 ------- ------- ------- ------- Loss before income taxes (1,794) (3,164) (2,864) (6,724) Provision for income taxes - - - - ------- ------- ------- ------- Net loss $(1,794) $(3,164) $(2,864) $(6,724) ======= ======= ======= ======= Loss per common share $ (0.02) $ (0.04) $ (0.04) $ (0.09) ======= ======= ======= ======= Number of common shares used in loss per common share computations 73,569 73,484 73,528 73,484 ======= ======= ======= =======
See accompanying notes to consolidated financial statements. Page 3 FMC Gold Company - ---------------- Consolidated Balance Sheets - --------------------------- (Dollars in thousands)
June 30 December 31 Assets 1996 1995 - ------ --------- --------- (Unaudited) Current assets: Cash $ 886 $ - Loans due from FMC Corporation 75,000 80,826 Trade receivables, net 1,469 4,859 Inventories (Note 3) 16,547 14,792 Other current assets 4,542 4,096 --------- --------- Total current assets 98,444 104,573 --------- --------- Property, plant and equipment, at cost 231,120 226,149 Less accumulated depreciation (121,763) (112,157) --------- --------- Net property, plant and equipment 109,357 113,992 Other assets 4,613 6,612 --------- --------- Total assets $ 212,414 $ 225,177 ========= ========= Liabilities and Stockholders' Equity - ------------------------------------ Current liabilities: Outstanding checks in excess of bank balances $ - $ 1,651 Accounts payable, trade and other 2,847 7,108 Accrued and other liabilities 4,542 7,309 Amounts due to FMC Corporation 1,145 2,275 Income taxes payable 1,990 2,270 --------- --------- Total current liabilities 10,524 20,613 --------- --------- Other long-term liabilities 9,474 9,843 Stockholders' equity: Preferred stock, $1.00 par value, authorized 100,000 shares; none issued or outstanding - - Common stock, $0.01 par value, authorized 150,000,000 shares; issued and outstanding 73,597,495 shares and 73,484,395 shares at June 30, 1996 and December 31, 1995, respectively 736 735 Capital in excess of par value 69,167 68,609 Retained earnings 122,513 125,377 --------- --------- Total stockholders' equity 192,416 194,721 --------- --------- Total liabilities and stockholders' equity $ 212,414 $ 225,177 ========= =========
See accompanying notes to consolidated financial statements. Page 4 FMC Gold Company - ---------------- Consolidated Statements of Cash Flows (Unaudited) - ------------------------------------------------- (Dollars in thousands)
Six Months Ended June 30 ------------------ 1996 1995 ------- ------- Cash flows from operating activities: Net loss $(2,864) $(6,724) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Provision for depreciation 10,912 8,158 (Increase) decrease in assets: Trade receivables, net 3,390 (290) Inventories (1,755) (6,634) Other current assets (446) 305 (Decrease) increase in liabilities: Accounts payable, trade and other (4,261) 267 Accrued and other liabilities (2,767) (1,123) Amounts due to FMC Corporation (1,130) 922 Income taxes payable (280) (28) Other long-term liabilities (369) (2,015) ------- ------- Net cash provided by (used in) operating activities 430 (7,162) ------- ------- Cash flows used in investing activities: Capital spending (6,292) (25,071) Disposal of property, plant and equipment, net 15 517 (Increase) decrease in other assets 1,999 (226) ------- ------- Net cash used in investing activities (4,278) (24,780) ------- ------- Cash flows from financing activities: Proceeds from sale of common stock 559 - ------- ------- Decrease in cash and cash equivalents (3,289) (31,942) Cash and cash equivalents, beginning of period 79,175 118,386 ------- ------- Cash and cash equivalents, end of period $75,886 $86,444 ======= =======
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: - ------------------------------------------------ Cash and cash equivalents consists of cash less outstanding checks in excess of bank balances, and loans due from FMC Corporation. Cash paid for income taxes, net of refunds, was $200,000 and zero during the six-month periods ended June 30, 1996 and 1995, respectively. See accompanying notes to consolidated financial statements. Page 5 FMC Gold Company - ---------------- Notes to Consolidated Financial Statements (Unaudited) - ------------------------------------------------------ Note 1: Reincorporation Merger and Sale of Company - Subsequent Events - ----------------------------------------------------------------------- On July 15, 1996, FMC Corporation's ("FMC") management approved a plan to dispose of shares of FMC Gold Company and its subsidiaries ("FMC Gold" or the "company") through a secondary offering in Canada of substantially all of FMC's 80% interest. On July 23, 1996, the stockholders of FMC Gold Company approved a merger agreement by which the company would reincorporate in Canada through a merger with a subsidiary of Meridian Gold Inc., a company incorporated in February 1996 under the Canada Business Corporations Act. The reincorporation and secondary offering were completed on July 31, 1996. Under the reincorporation ("Reincorporation"), which occurred immediately prior to the secondary offering, (i) a newly formed, indirect subsidiary of Meridian Gold Inc., merged with and into FMC Gold Company, to form Meridian Gold Company, the surviving corporation and wholly-owned indirect subsidiary of Meridian Gold Inc., and (ii) the existing shareholders of FMC Gold Company became entitled to receive one common share of Meridian Gold Inc. and US$0.02 in exchange for each share of common stock of FMC Gold held. FMC sold 100% of its shares of FMC Gold Company through a combination of the secondary offering on July 31, 1996, the exercise of an overallotment option by the underwriters on August 9, 1996 and sales at the market of a small number of remaining shares. After the offering, FMC no longer owns any common shares of the company. The consolidated assets and liabilities of Meridian Gold Inc. and its subsidiaries immediately after the Reincorporation were the same in all material respects as the consolidated assets and liabilities of FMC Gold Company and its subsidiaries prior to the Reincorporation except for the effect of US$0.02 per share cash merger consideration ($1,471,950 in the aggregate) paid by Meridian Gold Inc. in the Reincorporation, and the repayment by FMC of intercompany loans plus accrued interest and other amounts aggregating $79.1 million at July 31, 1996. The Reincorporation, together with the secondary offering, will result in a "step-up" in the historical tax basis of FMC Gold Company assets. For accounting purposes, the Reincorporation and the adoption of Canadian generally accepted accounting principles will not result in any material change to the carrying value of the net assets of FMC Gold Company reflected in the company's financial statements. The company will contract for or establish its own stand-alone capabilities in the areas of Treasury, Finance, Human Resources, Cash Management and Information Services within six months of the Reincorporation. During the transition period, FMC has agreed to continue to provide services as requested. The costs associated with these functions will be funded as part of the normal operating expenses of the company and, in the aggregate, are not expected to significantly differ from the average annual amounts that have been charged by FMC to the company to provide similiar services in recent years. Note 2: Financial Information - ------------------------------ The consolidated balance sheet of FMC Gold Company and its subsidiaries as of June 30, 1996, and the related consolidated statements of operations and of cash flows for the three month periods ended June 30, 1996 and 1995, have been reviewed by the company's independent accountants. The review is discussed more fully in their report included herein. In the opinion of management, such financial statements have been prepared in conformity with generally accepted accounting principles and reflect all adjustments necessary for a fair statement of the results of operations for the interim periods. All such adjustments are of a normal recurring nature. The results of operations for the three-month periods ended June 30, 1996 and 1995 are not necessarily indicative of the results of operations for the full year. Page 6 The accounting policies followed by the company are set forth in Note 1 to the FMC Gold Company financial statements included in the FMC Gold Company 1995 Annual Report on Form 10-K. Note 3: Inventories - -------------------- Inventories (at cost) consist of the following:
(In thousands) June 30 December 31 1996 1995 ------- ----------- Gold and silver dore $ 1,849 $ 638 Work in process 12,614 11,368 Materials and supplies 2,084 2,786 ------- ------- $16,547 $14,792 ======= =======
Gold and silver inventories are in the form of dore which is suitable for delivery to precious metal treatment facilities. These inventories are generally sold to and further processed by these facilities into forms suitable for end uses. Heap leach pad ore increased to $12.6 million at June 30, 1996, from $11.4 million at December 31, 1995. The increase represents the cost of loading ore on the heap leach pads at the Beartrack mine, and includes labor, materials and other production costs. Mining at the Beartrack operation commenced in August 1994, and at June 30, 1996, there were approximately 6.6 million tons of ore under leach containing approximately 116,000 ounces of gold. Note 4: Acquisitions and Divestitures - -------------------------------------- On November 30, 1995, the company's 100 percent interest in FMC Paradise Peak Corporation was sold to Arimetco, Inc. for $4 million in the form of cash and a note receivable. The company ceased production at the Paradise Peak mine in early 1995 and all remaining reclamation liability was assumed by Arimetco, Inc. as of the date of sale. In conjunction with the company's purchase of the remaining 14 percent interest in the Beartrack joint venture from MINEX in 1994, installment payments are due to MINEX in the amounts of $1.0 million in 1997 and $0.5 million in 1998 and 1999. Note 5: Commitments and Contingent Liabilities - ----------------------------------------------- See Part II, Item 1 - "Legal Proceedings" for details regarding ongoing litigation affecting the company. In order to minimize exposure to decreasing prices for portions of its gold production, the company has periodically hedged future gold production by entering into contracts, such as fixed forward sales contracts and put options. Costs associated with the purchase of certain hedge instruments for open put options included in other assets were $2.9 million as of June 30, 1996 and $3.4 million as of December 31, 1995. These costs were deferred and are recognized in the period the revenues related to the hedged production are recorded. In October 1995, the Department of Taxation of the State of Nevada filed a claim against the company for Net Proceeds of Mine Tax of $1.5 million related to Paradise Peak operations. In November 1995, the company entered into discussions with the State of Nevada regarding the basis for the State's claim and ultimately filed a petition for redetermination and requested an appearance before a hearing officer of Page 7 the State of Nevada Department of Taxation. A hearing took place on March 14, 1996 at which the company presented its case. On April 8, 1996, the company was notified that the State of Nevada had denied the company's request for redetermination. The company is appealing the State's decision. The company is unable to predict the outcome of the appeal process, but has paid the State's claim under protest. Page 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS - -------------------------------------------------------------------------------- OF OPERATIONS - ------------- LIQUIDITY AND FINANCIAL CONDITION --------------------------------- Cash to meet the company's operating needs, finance capital expenditures and fund exploration activities was provided from existing cash reserves, including loans due from FMC Corporation ("FMC"). Any cash generated in excess of these requirements is loaned to FMC at varying maturities, repayable on demand. As of June 30, 1996, loans to FMC totaled $75.0 million. In conjunction with the Reincorporation and sale of FMC's interest in Meridian Gold Inc., FMC repaid all outstanding loans in full on July 31, 1996. Known cash requirements for the remainder of 1996 are approximately $10.7 million for planned capital expenditures, approximately $5.8 million for exploration costs and $3.7 million for dividends (if declared), based on the current dividend rate. The company expects to fund these requirements from existing cash and cash equivalents (including loans repaid by FMC) and cash flows from operations. On March 31, 1994, FMC increased its ownership interest in the company to 80 percent. Thereafter, and through the sale of FMC's interest in the company on July 31, 1996, the company has been included in FMC's consolidated federal tax return. Under a tax-sharing agreement, the company pays to FMC amounts generally equal to the tax the company would have been required to pay had it filed a separate return, and FMC pays to the company amounts generally equal to any tax benefits realized through carryover on a separate return basis. During the quarter ended June 30, 1996, the company issued 70,600 shares of its common stock at $4.25 per share in conjunction with the exercise of common stock options. Second Quarter of 1996 Compared with Second Quarter of 1995 - ----------------------------------------------------------- Sales in the second quarter of 1996 were $18.3 million, $8.6 million higher than last year's quarter, reflecting the addition of production from the Beartrack mine. Realized gold prices increased to $393 per ounce from $387 per ounce in 1995. Net loss was $1.8 million, or $0.02 per share, compared with a net loss of $3.2 million, or $0.04 per share in 1995. Second quarter gold production was 49,000 gold equivalent ounces compared with 24,000 gold equivalent ounces in the second quarter of 1995, reflecting the start-up of the Beartrack mine. At the Beartrack mine, which began full scale production in July 1995, second quarter 1996 production was 23,000 ounces. Extended winter weather and the impact of heavy spring runoff had a negative effect on solution grades in the second quarter. Solution grades began to recover near the end of the quarter with warmer, dryer weather, and production is expected to increase throughout the remainder of the year. The company's 30 percent share of production from the Jerritt Canyon mine was 26,000 ounces in the second quarter of 1996, up 2,000 ounces from the second quarter of 1995 due to higher grades and recoveries. Cost of sales increased $7.3 million to $18.3 million for the period, reflecting $6.9 million of incremental costs from the Beartrack mine. Cost of sales of $11.4 million at the Jerritt Canyon mine were higher compared with the prior year by $1.3 million due to a shift in production from open pit to underground mining, compounded by temporary mechanical difficulties at both processing facilities. Page 9 Average cash production costs of $256 per gold equivalent ounce in the second quarter of 1996 increased from $221 per gold equivalent ounce in the second quarter of 1995. Cash costs at Beartrack were affected by difficult weather conditions, averaging $195 per gold equivalent ounce in the second quarter, up from $183 in the first quarter of 1996. Cash costs at Jerritt Canyon increased from $221 per gold equivalent ounce in the second quarter of 1995 to $311 per gold equivalent ounce in the comparable 1996 quarter due to a shift in production from open pit to underground resources, and temporary mechanical difficulties at both processing facilities early in the quarter. Exploration costs in the second quarter of 1996 were $1.9 million compared to prior year expense of $2.4 million. The lower level of expense reflected timing of programs as well as scaled-back activities pending the outcome of the strategic review process that is resulting in the sale of FMC's interest in FMC Gold. The majority of the exploration spending in the current quarter was focused on the company's El Penon project in Chile, the Rossi project on the Carlin Trend in Nevada and continuing work at the Beartrack and Jerritt Canyon operations. Exploration spending is expected to accelerate over the balance of the year, with a significant portion of the projected spending directed at activities in Chile and at the Rossi project. Selling, general and administrative expenses were level with the prior year, due to ongoing cost reduction efforts and lower allocations from FMC. For the second quarter of 1996, the company recorded interest income of $1.2 million earned on cash loaned to FMC. Interest income was $0.4 million lower than in the 1995 quarter due to lower loan balances. The company did not record a tax benefit in the current quarter on the pre-tax loss as it cannot utilize the benefit on a stand-alone basis. The current quarter's results are not necessarily indicative of the expected full year results. Subsequent to the Reincorporation there will be no tax attributes such as net operating loss carryforwards available to the company. Six Months of 1996 Compared With Six Months of 1995 - --------------------------------------------------- Sales in the first six months of 1996 were $36.1 million compared with $18.8 million for the first six months of 1995. Net loss was $2.9 million or $0.04 per share, versus 1995 net loss of $6.7 million or $0.09 per share. Sales were $17.3 million higher than in 1995 reflecting the addition of production from the Beartrack mine. Production at Beartrack was 50,000 ounces. The company's 30 percent share of production from the Jerritt Canyon mine was level with the prior year as lower throughput in the current year was offset by improved mill ore grades and recoveries. Production from the Paradise Peak mine ceased in the first quarter of 1995 and the company sold all the stock of FMC Paradise Peak Corporation to Arimetco, Inc. on November 30, 1995. Exploration expense was $3.4 million, $3.0 million below 1995 expense due to timing of spending on the El Penon and Rossi projects as well as scaled-back activities pending the outcome of the strategic review process that is resulting in the sale of FMC's interest in FMC Gold. Selling, general and administrative expenses were level with 1995. The company did not record a tax benefit on losses in the first half of 1996 or 1995. Page 10 Following is a summary of key operating data for the company for the three-month and six-month periods ended June 30, 1996 and 1995: Operating Data (Unaudited) --------------------------
Three Months Six Months Ended June 30 Ended June 30 -------------------- ------------------- 1996 1995 1996 1995 ------ ------ ------ ------ Heap leach operation (Beartrack) Tons of ore mined (thousands) 1,240 1,007 1,921 1,566 Ore grade (ounces per ton mined) 0.029 0.034 0.029 0.033 Milling operation (Jerritt Canyon - FMC Gold share) Tons of ore processed (thousands) 196 221 394 427 Ore grade (ounces per ton milled) 0.140 0.123 0.132 0.127 Mill recoveries 88.0% 86.8% 87.7% 85.8% Production (thousands of ounces) Gold Beartrack 23 -- 50 -- Jerritt Canyon 26 24 46 46 Paradise Peak -- -- -- 2 ---- ---- ---- ---- Total 49 24 96 48 Silver -- 4 -- 12 Cash cost of production ($ per gold equivalent ounce) Beartrack $195 $ -- $189 $ -- Jerritt Canyon $311 $221 $326 $225 Paradise Peak $ -- $ -- $ -- $244 Average cash cost of production ($ per gold equivalent ounce) $256 $221 $254 $226
INDEPENDENT ACCOUNTANTS' REPORT ------------------------------- A report by KPMG Peat Marwick LLP, the company's independent accountants, on the financial statements included in Form 10-Q for the quarter ended June 30, 1996 is included on page 11. Page 11 Independent Accountants' Report ------------------------------- The Board of Directors FMC Gold Company: We have reviewed the accompanying condensed consolidated balance sheet of FMC Gold Company and consolidated subsidiaries as of June 30, 1996, and the related condensed consolidated statements of operations for the three-month and six- month periods ended June 30, 1996 and 1995 and the related condensed consolidated statements of cash flows for the six-month periods ended June 30, 1996 and 1995. These condensed consolidated financial statements are the responsibility of the company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of FMC Gold Company and consolidated subsidiaries as of December 31, 1995, and the related consolidated statements of operations, cash flows and changes in stockholders' equity for the year then ended (not presented herein); and in our report dated January 18, 1996, except as to Note 14 which is as of February 16, 1996, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1995 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. KPMG Peat Marwick LLP Salt Lake City, Utah July 10, 1996 Page 12 PART II - OTHER INFORMATION --------------------------- ITEM 1 LEGAL PROCEEDINGS - ------------------------ During the third quarter of 1994, the Pacific Rivers Council and the Wilderness Society (collectively the "PRC"), in a lawsuit filed in Federal District Court in Idaho (Pacific Rivers Council v. Thomas), sought an injunction against all ongoing and future forest activities which may affect endangered salmon, including mining, within various national forests in Idaho including the Salmon National Forest in which the Beartrack property is located. In that lawsuit, the PRC sought to require the U.S. Forest Service to consult under the Endangered Species Act (the "Act") with the National Marine Fisheries Service ("NMFS") regarding existing land resource management plans for the subject forests and their potential impacts on endangered Snake River salmon. On January 12, 1995, the court in the PRC lawsuit entered an order enjoining, among other things, all logging and announced mining activities in the Idaho national forests (in which the Beartrack project is located). On January 25, 1995, the court entered an order staying until March 15, 1995, the effectiveness of the injunction in order to give the Forest Service time in which to complete consultation with NMFS on the Land and Resource Management Plans for the national forests in Idaho. On March 8, 1995, the Court entered an order dissolving the injunction in recognition of the completion of that consultation. The government defendants and the plaintiffs have subsequently negotiated a stipulated dismissal of most of the lawsuit. Under the terms of the stipulation, the parties stipulated to dismiss from this litigation all projects which have undergone site-specific consultation. The company's Beartrack mine was identified by the government defendants as a project for which consultation has been completed. The court issued an Order on Pending Claims on December 11, 1995 regarding the remaining specified projects (not including the Beartrack mine) which have not yet completed consultation. Under the terms of that Order, the court has retained jurisdiction in this lawsuit for further proceedings regarding those projects. The Beartrack mine is not subject to or a part of the court's order. On October 12, 1994, the Sierra Club Legal Defense Fund, Inc., ("Sierra") on behalf of certain other organizations, filed a lawsuit in Federal District Court for the Western District of Washington at Seattle against NMFS and other federal agencies for violation of the Act alleging the NMFS' biological opinion failed to satisfy the requirements of the Act. Sierra, the federal agencies and the company, as intervenor, each filed a motion for summary judgment. On November 9, 1995, the court ordered the federal agencies to reinitiate consultation under Section 7 of the Act on the potential environmental impacts of the Beartrack mine project on endangered salmon or the designated critical habitat for salmon. The plaintiffs did not seek, and the court did not impose, any injunction or other restriction on the operation of the Beartrack mine pending completion of such consultation. If, upon remand, the Forest Service were to determine that an activity associated with Beartrack mine operations could preclude the development of reasonable and prudent alternatives to the project pending completion of the reinitiated consultation, such activities could be required to cease pending completion of consultation. Under the Act's regulations, consultation must be completed within 135 days of the date consultation is initiated. An extension of 60 days can be imposed by the agencies. Under the relevant statutory and regulatory authorities, the results of a consultation can range from no impact on the activities under review on the one hand to modest to significant impacts on the other. In an extreme situation, a consultation could result in the cessation of activities altogether, a potential result the company believes to be remote in the case of the Beartrack mine, which has been in operation and production since mid-1995. The company believes that the ongoing operation of the Beartrack mine will not jeopardize endangered salmon or adversely modify or destroy designated critical habitat, and that upon completion of consultation the mine will be permitted to continue operation. Page 13 The company sought and obtained from the U.S. Army Corps of Engineers (the "Corps") a permit authorizing dredging and filling of wetlands in connection with construction of the Beartrack mine under Section 404 of the Clean Water Act. That permit was set to expire on October 11, 1994. On June 16, 1994, the company sought an extension of the permit under applicable regulations. Under those regulations, the filing of a request for extension operates to extend the permit until the agency acts upon the request for extension. As of this time, the Corps has not taken action upon the company's request. On October 19, 1995 Dee Gold Mining Co., a Nevada General Partnership ("Dee") filed an action against Baroid Drilling Fluids, Inc. a Delaware corporation ("Baroid") and FMC Minerals Corporation, a Delaware corporation ("FMC Minerals"). Baroid and FMC Minerals jointly own certain mining property known as the Rossi property. FMC Minerals owns the gold and precious minerals, Baroid owns other minerals located on the property and the two share use of the surface. Dee operates the Dee Gold Mine, which shares a common boundary with the Rossi property. Dee's action seeks to condemn a portion of the Rossi property for the purpose of excavating a layback so that gold, located on Dee's side of the property line, can be mined from an open pit. The area sought to be condemned contains a significant portion of the gold resource which FMC Minerals located through its exploration activities on the Rossi property. Dee contends that the condemnation for a layback is permitted by Nevada law which allows private condemnation for mining purposes. FMC Minerals and Baroid deny this and assert that the proposed activity by Dee will interfere with the exploration, development and mining of the Rossi property. The case is set for trial to commence October 22, 1996. The company and Dee Gold Mining Co. have met in a series of settlement conferences in an attempt to resolve the suit prior to the trial date. The company believes progress has been made in the settlement conferences towards resolving the claim, but is continuing to prepare for trial. Because of an indemnity agreement, FMC Minerals' counsel represents Baroid and FMC Minerals pays all defense costs. These costs will not increase significantly as a result of the Baroid representation. ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS - ---------------------------------------------------------- Registrant's Annual Meeting of Stockholders was held on May 1, 1996. At the meeting, stockholders voted on (i) the election of five directors; and (ii) ratification of the appointment of KPMG Peat Marwick LLP as the Registrant's independent auditors for 1996. Voting on each such matter was as follows:
Votes Votes Withheld/ Broker For Against Abstentions Non-Votes ---------- ------- ----------- --------- 1. Election of Directors: L.B. Brady 72,082,174 - 229,503 - R.N. Burt 71,963,109 - 348,568 - P.L. Davies, Jr. 72,036,079 - 225,598 - B.J. Kennedy 71,975,222 - 336,455 - E.W. Littlefield 72,085,779 - 225,898 - 2. Ratification of Auditors 72,280,652 22,965 8,060 -
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K - ------------------------------------------ (b) Reports on Form 8-K ------------------- One Form 8-K was filed on May 3, 1996 pertaining to FMC Gold Company Board of Director's authorizing (i) the filing of documents with securities regulators in the United States relating to the possible reincorporation of FMC Gold into Canada, and (ii) the filing of documents with securities regulators in Canada relating to a possible secondary offering of FMC Corporation's 80 percent equity interest in FMC Gold. Page 14 SIGNATURES ---------- Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. FMC GOLD COMPANY -------------------------- (Registrant) Date: August 14, 1996 /s/ Alan L. Lowe ____________________________ __________________________ Alan L. Lowe Chief Financial Officer Page 15 Exhibit Index Number in Exhibit Table Description - ------------- ----------- 15 Letter re: unaudited interim financial information (KPMG Peat Marwick LLP) 27 Financial Data Schedule EX-15 2 LETTER RE: UNAUDITED INTERIM FINANCIAL INFO Page 16 Exhibit 15 Letter re: Unaudited Interim Financial Information --------------------------------------- FMC Gold Company Chicago, Illinois Re: Registration Statements No. 33-35804 and No. 33-35805 on Form S-3 and No. 33-65327 on Form S-8. With respect to the subject registration statements, we acknowledge our awareness of the incorporation by reference of our report dated July 10, 1996 related to our review of interim financial information. Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not considered a part of a registration statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of the Act. Very truly yours, KPMG Peat Marwick LLP Salt Lake City, Utah July 10, 1996 EX-27 3 FINANCIAL DATA SCHEDULE
5 This schedule contains summary financial information extracted from Meridian Gold Company (as successor to FMC Gold Company) Form 10Q for the Quarterly Period Ended June 30, 1996 and is qualified in its entirety by reference to such financial statements. 1,000 6-MOS DEC-31-1996 JAN-01-1996 JUN-30-1996 75,886 0 1,469 0 16,547 98,444 231,120 121,763 212,414 10,524 0 736 0 0 191,680 212,414 36,102 36,102 35,589 41,367 0 0 0 (2,864) 0 (2,864) 0 0 0 (2,864) (.04) (.04)
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