Meridian Gold Inc.
TSX : MNG
NYSE : MDG

Meridian Gold Inc.

October 25, 2005 16:00 ET

Meridian Gold Announces Third Quarter 2005 Results

RENO, NEVADA--(CCNMatthews - Oct. 25, 2005) - (All dollar amounts in U.S. currency)

Meridian Gold Inc. ("Meridian Gold" or the "Company") (TSX:MNG)(NYSE:MDG) is pleased to announce results for the quarter ended September 30, 2005. Meridian Gold continues its commitment to organic growth through exploration, with a focus on returns and a dedication to responsible mining which are reflected in the third quarter highlights as follows:

HIGHLIGHTS:

Financial and Operations

- Net earnings of $9.0 million, or $0.09 per share

- Operating cash flow of $17.1 million

- Gold production of 75,400 ounces at a net cash cost of $44 per ounce of gold

- Average unhedged gold prices of $441 per ounce and consistent operating performance have increased cash and short-term investment balances to $265.2 million (including restricted cash) while remaining debt free

Exploration

- At El Penon West, the Fortuna vein is estimated to contain a measured and indicated resource of 189,000 ounces of gold and 10.2 million ounces of silver and an additional inferred resource of 36,000 ounces of gold and 2.2 million ounces of silver based on drill results through July 31, 2005

- Exploration drilling of the Fortuna structure has identified additional mineral intercepts over a 1.7 kilometer strike length which, based on the current geologic model, has the possibility to extend up to 2.4 kilometers

- Drill testing of the newly discovered Dominador vein that parallels and is located 600 meters west of Fortuna has outlined high-grade near-surface gold and silver values and remains open along strike

- The Providencia vein, situated between the Quebrada Colorada and Dorada veins, has been extended 1.1 kilometers in strike length and remains open along strike and at depth

- A new north-south tunnel is being developed to complete infill drilling and deep exploration drilling on the southern part of Dorada and on the Providencia structure

- The Dorada access tunnel from Quebrada Colorada passed through the Dorada vein at 730,2950N and averaged 9.1 grams/tonne of gold and 478 grams/tonne of silver over 3.8 meters

Environmental and Safety

- El Penon received the annual Benjamin Teplizky Lijavetzky Award in Chile for excellence in safety, environmental practices and community involvement. Meridian Gold is the first mid-tier gold mining company to achieve this award

- Meridian Gold received recognition from SERNATUR (the Chilean government agency for developing tourism) for support of El Tatio and La Portada national landmarks

- El Penon received the John T. Ryan Honorable Mention Award sponsored by the Canadian Mining Institute and the Chilean Mining Engineers Institute

Exploration Report

El Penon

Surface exploration activities at El Penon focused on infill and exploration drilling in three newly discovered vein systems and testing newly developed targets within the El Penon claim block utilizing drill fence technique. Three reverse circulation (RC) and one multipurpose (RC/DDH) drill rigs completed 46,530 meters of drill testing in 190 holes during the quarter, with 107,842 meters in 526 holes completed year-to-date.

1. Fortuna: During the quarter, an interim resource estimate was developed for this zone. Meridian Gold estimates Fortuna to contain a measured and indicated resource of 509,000 tonnes at 11.5 grams/tonne of gold and 624 grams/tonne of silver, resulting in 189,000 ounces of gold and 10.2 ounces of silver. In addition, Fortuna includes an inferred resource estimate of 133,500 tonnes at 8.5 grams/tonne of gold and 506 grams/tonne of silver resulting in 36,000 ounces of gold and 2.2 million ounces of silver. Additional infill drilling was completed after the resource calculation and will be used to update the resource in the Company's year-end 2005 press release. The Fortuna vein forms sub-vertical moderate to steeply plunging high-grade ore shoots that trend north-northwest hosted by volcanic tuff and flows similar in age to those found at El Penon mine site. The third quarter results including infill drilling are reflected on the Fortuna long-section which can be located on the Company's website. The significant drill results not previously released are shown below:



------------------------------------------------------------------
FORTUNA SIGNIFICANT DRILL RESULTS
------------------------------------------------------------------
Gold
From To Intercept Gold Silver Equivalent
Hole Northing (m) (m) (m) g/t g/t g/t
(a) (a) (a) (a)
------------------------------------------------------------------
DT204 7299880 171 172 1 6.2 333 11.32
DT207 7299311 157 159 2 7.5 1109 24.51
DT207 7299311 166 167 1 3.2 438 9.92
DT208 7299311 209 211 2 20.1 1143 37.68
DT209 7299371 141 143 2 2.2 304 6.87
DT211 7299826 220 221 1 45.0 995 60.28
DT211 7299826 223 226 3 5.7 166 8.22
DT213 7299821 119 120 1 8.0 984 23.07
DT214 7299519 210 212 2 1.8 203 4.91
DT218 7299520 69 70 1 32.5 3930 92.87
DT220 7299725 46 47 1 6.7 730 17.93
DT223 7299581 76 78 2 8.5 583 17.44
DT224 7299521 34 36 2 4.7 535 12.87
DT226C 7299184 142 146 4 8.9 707 19.74
DT227 7299670 260 262 2 78.0 124 79.88
DT228 7300030 108 111 3 3.5 513 11.42
DT231 7299971 216 217 1 31.5 3180 80.35
DT231 7299971 272 273 1 11.5 138 13.57
DT233 7300091 216 217 1 13.3 1155 30.99
DT234 7299728 79 80 1 19.7 5740 107.82
DT237C 7299548 125 126 1 25.9 9315 268.97
DT248 7299764 185 186 1 17.0 607 26.27
DT250 7299970 62 63 1 15.8 41 16.43
DT252 7300271 46 48 2 6.1 206 9.27
DT253 7300331 107 109 2 3.1 439 9.81
DT253 7300331 116 117 1 3.8 451 10.69
DT254 7300390 126 127 1 10.1 575 18.93
DT256 7300450 243 244 1 8.1 662 18.22
DT270 7299340 161 163 2 2.9 885 16.49
DT271 7299310 216 217 1 17.3 789 29.42
DT272 7299260 150 158 8 19.6 2916 64.42
DT275 7299517 164 165 1 19.1 1150 36.77
DT276 7299222 144 146 2 1.9 194 4.84
DT277 7299579 90 93 3 43.5 4840 117.85
DT279 7299579 119 121 2 37.9 2637 78.38
DT280 7299151 150 152 2 4.8 80 6.01
DT282 7299130 135 137 2 10.4 344 15.66
DT285 7299639 200 201 1 9.4 630 19.12
DT286 7298911 102 103 1 21.5 441 28.27
DT288 7298911 124 127 3 8.0 783 20.06
DT289 7298971 45 46 1 8.1 30 8.55
DT292 7299671 144 147 3 22.0 849 35.04
DT293 7298970 140 154 14 24.2 1440 46.31
DT296 7299790 91 92 1 16.7 1250 35.90
------------------------------------------------------------------


(a) Intercept widths do not reflect true widths, all measurements in meters, all assays in grams per tonne and uncut. Gold equivalent calculated using 65 to 1 Ag to Au ratio.

2. Dominador: The Dominador structure is a new vein which has been discovered 600 meters west of Fortuna and has yielded encouraging results. The Dominador vein trends north, steeply dips west and can be traced along 500 meters of drill intercepts. The vein is located close to the surface and is at least 100 meters in vertical depth. The significant Dominador drill results not previously released are shown below:



--------------------------------------------------------------------
DOMINADOR SIGNIFICANT DRILL RESULTS
--------------------------------------------------------------------
Gold
From To Intercept Gold Silver Equivalent
Hole Northing (m) (m) (m) g/t g/t g/t
(a) (a) (a) (a)
--------------------------------------------------------------------
DT107 7299040 158 161 3 57.8 3132 105.91
DT122 7298860 164 166 2 3.8 376 9.61
DT094 7299090 153 156 3 12.4 952 26.98
DT092 7299090 118 120 2 3.4 108 5.01
DT098 7299220 87 89 2 9.2 327 14.18
DT033 7299150 82 88 6 8.1 366 13.69
DT263 7299221 38 41 3 39.4 453 46.34
DT265 7299341 59 61 2 50.5 166 53.00
------------------------------------------------------------------


(a) Intercept widths do not reflect true widths, all measurements in meters, all assays in grams per tonne and uncut. Gold equivalent calculated using 65 to 1 Ag to Au ratio.

3. Providencia: Located in between the Quebrada Colorada and Dorada veins, the Providencia vein has been extended to over 1.1 kilometers along strike length and over 250 meters down dip through RC and DDH drill testing, with still much of the vein remaining open at depth and along strike. On-going 3-D modeling of the mineral system has identified one main structure that trends north-northwest and dips steeply to the east. Significant mineral intercepts are located in a parallel footwall and hanging wall veins both adjacent to the main structure. Significant Providencia assay results not previously released are presented in the following table:



-------------------------------------------------------------------
PROVIDENCIA SIGNIFICANT DRILL RESULTS
-------------------------------------------------------------------
Gold
From To Intercept Gold Silver Equivalent
Hole Northing (m) (m) (m) g/t g/t g/t
(a) (a) (a) (a)
-------------------------------------------------------------------
PV071 7301620 192 194 2 4.6 279 8.83
PV074 7301621.4 406 408 2 3.7 261 7.67
PV076 7301559.4 419 422 3 6.3 393 12.36
PV077 7301440.5 421 426 5 16.8 1215 35.47
PV078 7301499.6 340 350 10 3.5 202 6.63
PV079 7301676.6 431 433 2 33.1 1960 63.16
PV082 7302039.7 147 148 1 6.1 68 7.14
PV083 7302101.7 151 152 1 8.5 202 11.57
PV084 7301558.8 254 260 6 2.7 218 6.01
PV084C 7301558.8 280 286 6 14.1 576 22.92
PV085 7302219.9 352 354 2 5.2 257 9.11
PV086C 7301678.6 261 268 7 27.8 1837 56.00
PV087 7302162.1 264 265 1 15.7 625 25.25
PV091 7302097.8 306 309 3 9.5 353 14.92
PV093 7301500.4 409 421 12 67.2 5177 146.71
PV096 7301378.9 217 219 2 3.4 133 5.46
PV097 7301373.8 240 244 4 8.0 571 16.72
PV099 7301439.8 259 262 3 3.2 234 6.77
PV101 7301440.7 371 377 6 2.5 288 6.95
PV103 7301915.9 269 273 5 4.4 255 8.29
PV104 7301373.1 323 334 11 6.5 313 11.27
PV105 7301379.8 442 444 2 11.2 666 21.41
PV106 7301410 211 214 3 2.0 206 5.14
PV107 7301312 386 388 2 4.0 429 10.58
PV108 7301260.7 433 439 6 7.3 624 16.84
PV111 7301081.2 463 465 2 4.4 214 7.68
PV114 7301410.4 241 245 4 1.8 197 4.77
PV115 7301409.6 294 304 10 3.6 188 6.50
PV116 7301409.9 445 449 4 8.0 626 17.66
PV120 7301408 434 435 1 10.7 667 20.95
PV121 7301407.9 327 337 10 7.5 184 10.29
------------------------------------------------------------------


(a) Intercept widths do not reflect true widths, all measurements in meters, all assays in grams per tonne and uncut. Gold equivalent calculated using 65 to 1 Ag to Au ratio.

Darcy Marud, Meridian Gold's Vice President of Exploration commented, "I am proud of the exploration teams who have discovered the Fortuna and Dominador vein systems which define a new and under-explored trend of mineralization. This new trend appears to be of similar age and mineralization style to El Penon and provides an excellent opportunity to discover new deposits that will expand the boundaries of the El Penon mineral district."

Other Exploration

Meridian Gold continues to evaluate exploration opportunities throughout the Americas. During the quarter, exploration activities continued on properties in Chile, Peru, Nicaragua and Mexico.

- Alhue, Chile

In Chile, underground development and drilling commenced on the Alhue project in which Meridian Gold has a right to acquire a 100% interest for US $100 million. Currently, four underground core drill rigs are on site and a fifth underground core drill rig will be added shortly. Drilling is ongoing to confirm and expand current reserves and resources.

- Mercedes, Mexico

At the 100% owned Mercedes project in Sonora, Mexico, a 3,400 meter core and reverse circulation drill program was completed and drill-hole results are expected early in the fourth quarter of 2005.

- Rossi, Nevada

The known mineralization at Rossi is contained in three zones: the 49er zone, the End zone, and the Discovery zone. Over the past two years, infill drilling on the 49er zone was completed. Infill drilling of the End zone is on-going; there are indications that mineralization is of slightly less thickness but higher grade than was expected from the surface drilling.

Infill drilling of the Discovery zone has commenced with assays from three drill holes showing early indications of greater thicknesses and potentially higher grades than were expected from the surface drilling. Drilling is planned to continue on this zone until February, when a new resource estimate will commence. This resource will then be incorporated into the ongoing feasibility study being completed by Barrick Gold.

- Winnemucca Mountain, Nevada

Meridian Gold has signed a Letter of Intent with Evolving Gold Corporation to earn a 70% interest in the Winnemucca Mountain gold project located near the northern end of the Battle Mountain-Eureka gold trend in Humboldt County, Nevada. Drilling at this location is expected to commence in the second quarter of 2006.

Qualified Person

William H. Wulftange, P. Geo., Chief Geologist at the El Penon mine, has supervised the preparation of the technical data contained within this release and serves as the "Qualified Person" as defined by National Instrument 43-101. See Qualifying Statement at the end of the Management's Discussion and Analysis.

MANAGEMENT'S DISCUSSION AND ANALYSIS

The following discussion is limited to matters that, in the opinion of management of Meridian Gold, are material, and represents management's knowledge through the date of this press release, October 25, 2005.

OPERATIONS

El Penon

During the third quarter of 2005, El Penon continued to deliver low-cost, profitable results that fuel the cash flow of Meridian Gold. The mine produced 75,400 ounces of gold and 1.4 million ounces of silver at a net cash cost of $44 per gold ounce versus 79,700 ounces of gold and 1.3 million ounces of silver at a net cash cost of $47 per gold ounce during the third quarter of 2004. Total net production costs including depreciation, depletion and amortization were $91 per gold ounce for the quarter, compared to $107 per gold ounce in the third quarter of 2004.

Production from the underground mine continues to increase to a rate of 4,550 tonnes per day including ore, development and non-mineralized material, an increase of 29% compared to the third quarter of 2004, which produced an average of 3,520 tonnes per day. We continue to focus on development of the underground mine to improve mine flexibility to support the milling rate.

The underground mine produced 189,900 tonnes of ore at average grades of 13.5 grams/tonne of gold and 240 grams/tonne of silver during the third quarter of 2005. Open pit operations produced 33,200 tonnes of ore at average gold and silver grades of 4.9 grams/tonne and 59 grams/tonne, respectively, during the quarter, which completed production from the open pits.

During the quarter, the access tunnel from Cerro Martillo reached the Dorada structure. The decline from Quebrada Colorada is on schedule to intercept the tunnel from Cerro Martillo early in the fourth quarter. The access to the Dorada vein from the Cerro Martillo decline at the 1686 meter level was completed and drifting on the vein commenced during July of 2005. To date, nearly 15,000 tonnes have been mined with grades averaging over 16 grams/tonne of gold and 650 grams/tonne of silver, confirming early results as to the potential of this new mine.

Mill throughput at El Penon increased 5% third quarter of 2005 over third quarter of 2004, to 2,397 tonnes per day. Average gold mill head grades decreased during the quarter to 11.0 grams/tonne versus 12.2 grams/tonne in the third quarter of 2004 and average silver mill head grades increased to 210 grams/tonne from 208 grams/tonne in the third quarter of 2004. Capital improvements in the processing facility are currently underway and on schedule to sustain and possibly increase these milling rates.

FINANCIAL RESULTS

Third quarter 2005 vs. Third quarter 2004

Net earnings for the three months ended September 30, 2005 were $9.0 million ($0.09 per share) compared to net earnings of $9.6 million ($0.10 per share) for the third quarter of 2004.

Sales revenue of $32.1 million decreased $0.8 million, or 2%, over the third quarter of 2004 due to lower gold ounces sold offset by higher realized gold prices. The average realized gold price increased 9% to $441 per ounce in the third quarter of 2005 from $406 per ounce in the third quarter of 2004. The gold ounces sold decreased by 10% to 74,000 ounces in the third quarter of 2005 compared to the same period in 2004. The decrease in ounces produced and sold was due to an expected 10% decrease in the gold grade from 12.2 grams/tonne of gold in the third quarter of 2004 to 11.0 grams/tonne of gold in the same period of 2005, partially offset by an increase in throughput level.

Cost of sales, which does not include depreciation, depletion or amortization, in the third quarter of 2005 of $3.4 million decreased $0.8 million (19%) compared to cost of sales in the third quarter of 2004 of $4.2 million. Cost of sales includes a silver by-product credit of $9.6 million in the third quarter of 2005, as revenue from silver sales is applied as a credit to costs, compared to a silver by-product credit of $7.5 million in the third quarter of 2004. The change in silver credits from the third quarter of 2004 to the same period of 2005 is due to a 25% increase in realized silver prices ($7.07 per ounce in the third quarter of 2005 compared to $5.65 per ounce of silver for the same period in 2004) coupled with an increase of 30,000 (2%) silver ounces sold. The additional change in cost of sales from the third quarter of 2005 compared to the same period in 2004 is primarily due to an increase in tonnes mined and processed coupled with an increase in prices of commodities and reagents used in the plant and increases in labor cost due to the strengthening of the Chilean Peso against the U.S. dollar.

Exploration expense in the third quarter of 2005 of $6.2 million was in line with exploration expense in the third quarter of 2004 of $6.3 million, because of the level of exploration activities in Chile and Nicaragua.

Tax expense in the third quarter of 2005 was $8.3 million or an effective rate of 48% compared to $7.1 million or an effective tax rate of 43% in the third quarter of 2004. The increase in the effective tax rate is due to higher proportional costs incurred in tax jurisdictions where no tax benefit can be obtained from the spending. During the third quarter of 2005, the Company paid $3.7 million in cash taxes.

Net margins in the third quarter of 2005 were 28% compared to net margins in the third quarter of 2004 of 29%, primarily as a result of the increased effective tax rate.

First nine months of 2005 vs. First nine months of 2004

Net earnings for the nine months ended September 30, 2005 were $27.9 million ($0.28 per share) compared to net earnings of $29.1 million ($0.29 per share) for the same period of 2004.

Sales revenue of $96.2 million increased $1.9 million, or 2%, over the same period of 2004 due to higher realized gold prices offset in part by fewer gold ounces sold. The average realized gold price increased 7% to $432 per ounce in the first nine months of 2005 from $404 per ounce in the same period of 2004. The gold ounces sold decreased by 5% or 10,900 ounces to 226,500 ounces in the first nine months of 2005 compared to the same period in 2004. The decrease in ounces produced and sold was due to a 9% decrease in the gold grade from 12.4 grams/tonne of gold in the first nine months of 2004 to 11.3 grams/tonne of gold in the same period of 2005.

Cost of sales, which does not include depreciation, depletion or amortization, in the first nine months of 2005 of $10.8 million decreased by $0.8 million or 7% compared with the cost of sales in the same period of 2004. Cost of sales includes a silver by-product credit of $27.5 million in the first nine months of 2005 compared to a silver by-product credit of $20.5 million in the same period of 2004. The change in silver credits from the first nine months of 2004 compared to the same period of 2005 is due to a 24% increase in realized silver prices ($7.05 per ounce in the first nine months of 2005 compared to $5.68 for the same period in 2004) and a 281,000 ounce (8%) increase in silver ounces sold. The additional change in cost of sales for the first nine months of 2005 compared to the same period in 2004 is primarily due to an increase in tonnes mined and processed, coupled with an increase in prices of commodities and reagents used in the plant and increases in labor cost due to the strengthening of the Chilean Peso against the U.S. dollar. The Company produced gold at $46 net cash cost per gold ounce in the first nine months of 2005 compared to $48 per ounce in the same period of 2004.

Exploration expense in the first nine months of 2005 of $18.8 million was $3.9 million more than exploration expense in the same period of 2004 of $14.9 million, primarily because of the expansion of exploration activities in Chile and Nicaragua.

Tax expense in the first nine months of 2005 was $22.6 million or an effective rate of 45% compared to $21.1 million or an effective tax rate of 42% in the first nine months of 2004. The increase in the effective tax rate is due to higher proportional costs incurred in tax jurisdictions where no tax benefit can be obtained from the spending. During the first nine months of 2005, the Company paid $15.8 million in cash taxes.

Net margins in the first nine months of 2005 were 29% compared to net margins in the same period of 2004 of 31%, primarily as a result of increased exploration expenses and a higher effective tax rate.

LOOKING AHEAD

For 2005, the Company expects to produce approximately 300,000 ounces of gold from El Penon at a net cash cost of approximately $50 per ounce.

As our development activities on the Esquel project have been interrupted and the delay in development activities approaches three years, we may be required to write-down the Esquel project assets because of accounting guidelines. These guidelines require that if there is a delay in development activity that extends beyond three years, there is a presumption that a write-down of capitalized costs, deferred development and pre-operating costs will be necessary. During 2003, Meridian Gold paused its permitting and development efforts following a non-binding referendum wherein the majority of the citizens of the City of Esquel voted not to support the development of an open pit mine. The Company has focused its efforts on identifying and addressing the community's concerns. Activities have culminated in the development of a new underground mining plan and a re-engineered processing facility addressing the local concerns, which include social, environmental and technical aspects of the project. The eventual timing of the project cannot be determined at this time and may exceed the three-year window under applicable accounting guidelines. Therefore, the Company may be required to write-down these long-lived assets to their estimated fair value. The net carrying value of the Esquel mineral properties is approximately $350 million as of September 30, 2005. In spite of the accounting treatment mentioned above, the Company remains confident in the long-term economic, environmental and technical aspects of the Esquel project and is committed to building trust with the community of Esquel and Argentina, through Meridian Gold's demonstrated history and current practice of responsible mining.

Liquidity

Cash balances, including restricted cash and short-term investments, increased to $265.2 million during the third quarter of 2005 due to strong cash flows fueled by consistent operating performance at El Penon and higher gold prices. Working capital increased to $251.7 million at September 30, 2005 from $215.3 million at December 31, 2004, primarily due to the growth in cash and short-term investment balances.

Cash to meet the Company's operating needs, to finance capital expenditures and to fund exploration activities during the quarter was provided from operations and from existing cash reserves. Cash provided by operating activities, including changes in non-cash working capital and other operating amounts, was $17.1 million in the third quarter of 2005 compared to $18.2 million in the third quarter of 2004.

Capital Resources

Remaining capital expenditures for 2005 include approximately $8 million mainly for mine development and plant expansion at El Penon.

Exploration is the heart of Meridian Gold's growth strategy and will continue to be an important focus throughout the year. The Company plans to spend approximately $23 million this year to fund these efforts. During the third quarter of 2005, the Company entered into an agreement to explore property situated in the Alhue District of Chile. Under the agreement, Meridian Gold will fund up to $5 million in exploration costs over 18 months in order to arrive at a purchase decision to acquire 100% of the outstanding capital stock of Minera Florida for $100 million in cash.

We believe that planned capital requirements will be funded by existing operating cash flows, current cash and investments. Should we decide to develop other exploration and development properties, additional capital may be required. If additional funds are necessary, management believes they may be borrowed from third parties or raised by issuing shares of the Company; however, no assurance can be given that such transactions will be available at terms and conditions acceptable to Meridian Gold, if at all.

Changes in Accounting Policies

Variable Interest Entities

Effective January 1, 2005, the Company adopted the new CICA Accounting Guideline 15 "Consolidation of Variable Interest Entities" (AcG-15). The new guidance establishes when a company should consolidate a variable interest entity in its financial statements. AcG-15 provides the definition of a variable interest entity and requires a variable interest entity to be consolidated if a company is at risk of absorbing the variable interest entity's expected losses, or is entitled to receive a majority of the variable interest entity's residual returns, or both. The adoption of AcG-15 did not result in any changes to the Company's financial statements.

Cash Equivalents and Short-term Investments

Certain prior period amounts have been reclassified to conform to the current-period presentation, including the reclassification of auction rate securities (ARS) as short-term investments instead of cash and equivalents in accordance with guidance recently issued by the U.S. Securities and Exchange Commission. We reclassified $55.8 million of investments in ARS as of December 31, 2004 that were previously included in cash and equivalents to short-term investments. As a result of this reclassification, we have included purchases and sales of ARS in our statements of cash flows as a component of investing activities. These reclassifications had no impact on our results of operations or changes in shareholders' equity.

Summary of Quarterly Results

(Unaudited and expressed in millions of US dollars,
except per share data)



2005 2004 2003
----------------- --------------------------- ----
Q3 Q2 Q1 Q4 Q3 Q2 Q1 Q3
----------------- --------------------------- -----
Revenue $32.1 $31.9 $32.2 $32.8 $32.9 $31.5 $29.9 $30.4
Net earnings (1) 9.0 9.1 9.8 7.5 9.6 9.7 9.8 10.3


Basic earnings
per share (2) $0.09 $0.09 $0.10 $0.08 $0.10 $0.10 $0.10 $0.10
Diluted earnings
per share 0.09 0.09 0.10 0.07 0.10 0.10 0.10 0.10

(1) Income before discontinued operations and extraordinary items is
equal to net earnings
(2) Quarterly amounts do not sum to full year amounts due to rounding


Outstanding Share Data

As of September 30, 2005 and at the date of this MD&A, there were 100,240,210 (December 31, 2004 - 99,629,827) common shares outstanding and there were 1,569,491 stock options outstanding issued to directors and employees with exercise prices ranging between US$2.25 and US$18.58 per share, of which 970,445 are currently exercisable, with expiry dates between May 2006 and July 2015.

Non-GAAP Measures

Meridian Gold has included measures in this document called "total cash costs". Cash costs are determined according to the Gold Institute Standard and consist of site costs for all mining (except deferred mining and deferred stripping costs), processing, administration, resource taxes and royalties, net of silver by-product credits, but do not include capital, exploration, depreciation and financing costs. Total cash costs per ounce are total cash costs divided by gold ounces produced.

The Company believes that in addition to conventional measures, prepared in accordance with Canadian generally accepted accounting principles ("GAAP"), certain investors use this information to evaluate the Company's performance and its ability to generate cash flow. These non-GAAP performance measures do not have any standardized meaning prescribed by GAAP and, therefore, may not be comparable to similar measures presented by other companies. Accordingly, they are intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. The calculation for these non-GAAP measures is explained below.

(Unaudited and in millions of US dollars, except for Gold Production in Ounces and Cash Costs per Ounce)



Three months Nine months
ended September 30 ended September 30
2005 2004 2005 2004
--------------------------------------------------------------------

Cost of sales $3.4 $4.2 $10.8 $11.6
Other (0.1) (0.5) (0.4) (0.3)
--------------------------------------------------------------------
Total net cash costs 3.3 3.7 10.4 11.3
Gold production in ounces
from active properties 75,416 79,565 227,916 236,912
--------------------------------------------------------------------
Total net cash costs per
ounce $44 $47 $46 $48
--------------------------------------------------------------------
--------------------------------------------------------------------


CAUTIONARY STATEMENT

Certain statements in this MD&A constitute "forward-looking statements" within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities legislation. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or other future events, including forecast production, earnings and cash flows, to be materially different from any future results, performance or achievements or other events expressly or implicitly predicted by such forward-looking statements. Such risks, uncertainties and other factors include those set forth in the Company's Annual Information Form and other periodic filings. Such risks, uncertainties and other factors include, but are not limited to, factors associated with fluctuations in the market price of precious metals, mining industry risks, uncertainty of title to properties, risk associated with foreign operations, environmental risks and hazards, proposed legislation affecting the mining industry, litigation, governmental regulation of the mining industry, properties without known reserves, uncertainty as to calculations of reserves, mineral deposits and grades, requirement of additional financing, uninsured risks, risk of impairment of assets, risk of hedging strategies, competition, and dependence on key management personnel. Such information contained herein represents management's best judgment as of the date hereof based on information currently available. The Company does not intend to update this information and disclaims any legal liability to the contrary.

The Company's filings with the securities regulatory authorities in Canada are available at www.sedar.com and its filings with the U.S. Securities and Exchange Commission are available at www.sec.gov through EDGAR.

Qualified Statement

All drill samples sent for assay at El Penon are subject to rigorous Quality Assurance and a Quality Control Program that conforms to NI 43-101 standards. Duplicate reverse circulation drill samples are collected at 2 or 1 meter intervals, depending on type of drill target. One sample is sent for assay, and the duplicate is stored on site for verification and/or metallurgical purposes. Round Robin verified blind standards are inserted into the sample stream along with barren, duplicate and unmineralized samples that test sample preparation procedures, accuracy and precision of results and check for sample contamination at the lab. All core or diamond drill samples are mechanically split with one half of the sample stored on site and the second half sent for assay utilizing the QA/QC procedures. ALS Chemex operates an on site sample preparation lab that is closely monitored by the El Penon QA/QC Management. Sample pulps produced on site are sent to ALS Chemex in La Serena, Chile for analysis. All samples are assayed using standard Fire/AA procedures (AuAA22, AgAA45). Gold results greater than 5 ppm(i) are re-analyzed using a gravimetric finish(ii) (Au-GRA22). Silver results greater than 100 ppm are re-analyzed using a complete acid digestion (Ag-AA62) with silver assays greater than 300 ppm being re-analyzed using a gravimetric finish(ii) (Ag-GRA22). Any assay results that are not deemed statistically acceptable are not entered into the database.

(i)parts per million

(ii)results reported in grams/tonne

3rd Quarter Conference Call

Meridian Gold is hosting a simultaneous live webcast of its conference call on Wednesday October 26, 2005, at 9:00 a.m. ET through Thomson/CCBN. If you would like to listen to our conference call on the web, go to the Company's home page at www.meridiangold.com and click on the link under Calendar of Events. There will be a slide show available in conjunction with the call, which will also be available for viewing on the Meridian Gold website. You will need to have Windows Media Player installed on your computer and you will also be required to complete a registration page in order to log on to the webcast. For those whose schedules do not permit participation during the call, or for those who would like to hear the discussion again, a replay will be available for one week following the call by dialing toll-free (888) 286-8010 or internationally (617) 801-6888 (passcode # 37298464). The webcast will be available for three months on Meridian Gold's website.



Meridian Gold Inc.
Operating Data
(Unaudited and dollar amounts expressed in U.S. currency)

Three Months Ended Nine Months Ended
September 30 September 30
2005 2004 2005 2004
--------------------------------------------

El Penon Mine
Gold production (ounces) 75,416 79,565 227,916 236,912
Silver production
(ounces) 1,381,090 1,296,965 3,925,478 3,623,566
Tonnes ore mined
(thousands) 223 199 693 577
Mill tonnes processed
(thousands) 221 211 648 619
Avg. mill gold ore
grade (grams/tonne) 11.0 12.2 11.3 12.4
Avg. mill silver ore
grade (grams/tonne) 210 208 204 198
Mill gold recovery 97% 96% 97% 97%
Mill silver recovery 93% 92% 92% 92%
Net cash cost of
production per gold ounce $ 44 $ 47 $ 46 $ 48
Total net production cost
per gold ounce $ 91 $ 107 $ 97 $ 100
Beartrack Mine
Gold production - heap
leach (ounces) - 130 200 419
Company Totals
Ounces of gold produced 75,416 79,695 228,116 237,331
Ounces of gold sold 74,047 81,896 226,474 237,398
Ounces of silver sold 1,357,006 1,326,934 3,893,803 3,613,226
Avg. realized gold
price per ounce $ 441 $ 406 $ 432 $ 404
Avg. realized silver
price per ounce $ 7.07 $ 5.65 $ 7.05 $ 5.68
Net cash cost of
production per gold ounce $ 44 $ 47 $ 46 $ 48
Total net cost of
production per gold ounce $ 91 $ 107 $ 97 $ 100
Average realized gold prices are revenues divided by gold ounces
sold.
Cash cost and total cost per gold ounce are net of silver by-product
credits.
---------------------------------------------------------------------
---------------------------------------------------------------------
Capital Expenditures and Depreciation Capital
Detail - Q2 2005 (in millions of US$) expenditures DD&A
-------------------------------
El Penon $4.9 $3.6
Esquel 0.2 -
Rossi and other 0.4 0.1
-------------------------------
Total $5.5 $3.7
-------------------------------
-------------------------------

Operating Cost Detail-
Q3 2005
($/tonne ore) Open
Underground pit Process G&A
-------------------------------------------
El Penon $39.92 $23.02 $13.61 $8.62



Meridian Gold Inc.
Interim Consolidated Balance Sheets
(Unaudited and expressed in millions of US dollars)

September 30 December 31
2005 2004
------------------------

Assets
Current assets
Cash and short-term investments $ 251.3 $ 217.8
Restricted cash 13.9 13.9
Trade and other receivables 2.0 2.3
Inventory 6.9 5.4
Deferred taxes - current 0.6 0.4
Other current assets 1.9 2.1
------------------------
Total current assets 276.6 241.9

Mineral property, plant and equipment, net 650.8 628.8
Deferred taxes - long-term 10.0 9.3
Other assets 7.0 12.1
------------------------

Total assets $ 944.4 $ 892.1
------------------------
------------------------

Liabilities and Shareholders' Equity
Current liabilities
Accounts payable, trade and other $ 9.6 $ 8.1
Accrued and other liabilities 15.3 18.5
------------------------
Total current liabilities 24.9 26.6

Other long-term liabilities 50.9 42.3
Deferred taxes 192.9 188.3
Minority interest 1.0 1.0
Shareholders' equity (note 6) 674.7 633.9
------------------------

Total liabilities and shareholders' equity $ 944.4 $ 892.1
------------------------
------------------------

See accompanying notes to interim consolidated financial statements



Meridian Gold Inc.
Consolidated Statements of Operations
(Unaudited and expressed in millions of US dollars,
except per share data)


Three Months Ended Nine Months Ended
September 30 September 30
2005 2004 2005 2004
--------------------------------------------

Revenue $ 32.1 $ 32.9 $ 96.2 $ 94.3

Costs and expenses
Cost of sales 3.4 4.2 10.8 11.6
Depreciation, depletion
and amortization 3.7 5.0 12.0 12.9
Exploration 6.2 6.3 18.8 14.9
Selling, general and
administrative 3.1 2.6 8.8 7.7
Other 0.3 (0.2) - (0.3)
--------------------------------------------
16.7 17.9 50.4 46.8
--------------------------------------------

Earnings before the
following 15.4 15.0 45.8 47.5

Interest income 1.9 0.9 4.6 1.8
Gain (loss) on sale
of assets - 0.8 0.1 0.9
--------------------------------------------
Earnings before taxes 17.3 16.7 50.5 50.2

Income tax (8.3) (7.1) (22.6) (21.1)
--------------------------------------------

Net earnings $ 9.0 $ 9.6 $ 27.9 $ 29.1
--------------------------------------------
--------------------------------------------

Earnings per share
Basic $ 0.09 $ 0.10 $ 0.28 $ 0.29
Diluted $ 0.09 $ 0.10 $ 0.28 $ 0.29

Weighted average shares
outstanding (in millions)
Basic 100.2 99.3 99.9 99.2
Diluted 100.7 100.0 100.5 99.9

See accompanying notes to interim consolidated financial statements



Meridian Gold Inc.
Interim Consolidated Statements of Retained Earnings
(Unaudited and expressed in millions of US dollars)


Three months ended Nine months ended
September 30 September 30
2005 2004 2005 2004
---------------------------------------
Balance at beginning of
period $ 198.9 $ 162.9 $ 180.0 $ 144.3
Adjustment on adoption of new
accounting standard for
stock-based compensation - - - (0.9)
Net earnings 9.0 9.6 27.9 29.1

---------------------------------------
Balance at end of period $ 207.9 $ 172.5 $ 207.9 $ 172.5
---------------------------------------
---------------------------------------

See accompanying notes to interim consolidated financial statements



Meridian Gold Inc.
Interim Consolidated Statements of Cash Flows
(Unaudited and expressed in millions of US dollars)

Three Months Ended Nine Months Ended
September 30 September 30
2005 2004 2005 2004
--------------------------------------------
(Restated - (Restated -
note 2(c)) note 2(c))

Cash flow from operating
activities
Net earnings $ 9.0 $ 9.6 $ 27.9 $ 29.1
Non-cash items:
Provision for depreciation,
depletion and amortization 3.7 5.0 12.0 12.9
Gain on sale of assets, net - (0.9) - (0.9)
Accretion of asset
retirement obligations 0.1 0.1 0.3 0.3
Stock-based compensation 0.7 0.6 2.3 1.5
Provision for pension costs 0.1 0.1 0.2 0.2
Income taxes 4.0 3.1 11.8 9.7
Deferred revenue - (0.3) - (0.9)

Changes in non-cash
working capital and
other accounts:
Trade and other receivables 1.1 (2.2) 0.4 (1.3)
Inventory (0.4) 0.7 (1.5) 1.1
Other current assets (1.2) 1.0 (0.3) 3.5
Other assets (1.2) 1.3 (1.5) 2.6
Accounts payable,
trade and other 0.9 2.0 1.5 3.4
Accrued and other
liabilities 1.6 1.3 (2.6) (1.9)
Reclamation expenditures (1.3) (2.6) (3.1) (4.9)
Pension contributions - (0.6) (0.6) (0.6)
--------------------------------------------
17.1 18.2 46.8 53.8
--------------------------------------------
Cash flow from (used in)
investing activities
Capital expenditures (5.5) (4.8) (23.3) (12.6)
Proceeds from sale
of assets 0.1 1.0 0.2 1.1
Short-term investments (69.2) 8.2 (21.0) 40.6
Long-term investments 1.5 - 6.5 -
--------------------------------------------
(73.1) 4.4 (37.6) 29.1
--------------------------------------------

Cash flow from
financing activities
Proceeds from issuance
of share capital 0.6 0.2 3.3 0.2
--------------------------------------------
0.6 0.2 3.3 0.2
--------------------------------------------

Increase (decrease) in
cash and cash equivalents (55.4) 22.8 12.5 83.1
Cash and cash equivalents,
beginning of period 115.2 107.3 47.3 47.0
--------------------------------------------
Cash and cash equivalents,
end of period $ 59.8 $ 130.1 $ 59.8 $ 130.1
--------------------------------------------
--------------------------------------------
Cash and cash equivalents $ 59.8 $ 130.1 $ 59.8 $ 130.1
Short-term investments 191.5 80.7 191.5 80.7
--------------------------------------------
Cash and short-term
investments $ 251.3 $ 210.8 $ 251.3 $ 210.8
--------------------------------------------
--------------------------------------------
Cash paid for income taxes $ 3.7 $ 1.5 $ 15.8 $ 10.2
Cash paid for interest $ - $ - $ - $ -

See accompanying notes to interim consolidated financial statements


Meridian Gold Inc.
Notes to Interim Consolidated Financial Statements (unaudited)
Three months and nine months ended September 30, 2005


1. Basis of Presentation

These unaudited interim consolidated financial statements have been prepared by the Company in accordance with Canadian generally accepted accounting principles ("GAAP"). The preparation of financial data is based on accounting policies and practices consistent with those used in the preparation of the audited annual consolidated financial statements, except as disclosed in note 2. The accompanying unaudited interim consolidated financial statements do not include all information and note disclosures required by Canadian GAAP for annual financial statements, and therefore should be read in conjunction with the Company's audited consolidated financial statements for the year ended December 31, 2004.

2. Changes in Accounting Policies and Presentation

(a) Variable Interest Entities

Effective January 1, 2005, the Company adopted the new CICA Accounting Guideline 15 "Consolidation of Variable Interest Entities" (AcG-15). The new guidance establishes when a company should consolidate a variable interest entity in its financial statements. AcG-15 provides the definition of a variable interest entity and requires a variable interest entity to be consolidated if a company is at risk of absorbing the variable interest entity's expected losses, or is entitled to receive a majority of the variable interest entity's residual returns, or both. The adoption of AcG-15 did not result in any changes to the Company's financial statements.

(b) Stock-based compensation

Effective January 1, 2002, the Company elected to use the settlement method of accounting for stock options granted to directors and employees under the Share Incentive Plan as allowed under the CICA standard for stock-based compensation. Effective January 1, 2004, the Company changed the method of application of its stock-based compensation accounting policy so as to measure stock options granted to directors and employees at fair value and recognize the compensation expense over the vesting period, with a corresponding credit to additional paid-in capital, as required under the amendments to CICA handbook section 3870, Stock-based Compensation and Other Stock-based Payments. This change has been applied retroactively without restatement of prior periods. The effect of the change in the method of accounting for stock-based compensation has resulted in a decrease of $0.9 million in retained earnings and an increase of $0.9 million in additional paid-in capital as of January 1, 2004.

Restricted stock granted on or after January 1, 2000 and stock options granted to non-employees on or after January 1, 2002 under the Company's stock option plan are accounted for under the fair value method.

(c) Cash equivalents and short-term investments

During the three months ended June 30, 2005, the Company retroactively reclassified its auction rate securities held from cash equivalents to short-term investments. Auction rate securities are variable rate bonds that have interest rate resets through a modified Dutch auction, at pre-determined short-term intervals, usually every 7, 28 or 35 days, although they may exceed 90 days. Auction rate securities are callable at par on any interest payment date at the option of the issuer. The Company historically classified these instruments as cash equivalents if the period between interest rate resets was 90 days or less, based on the Company's ability to either liquidate its holdings or roll its investment over to the next reset period.

Based upon a re-evaluation of these securities, the Company has reclassified its auction rate securities, from cash equivalents to short-term investments for each of the periods presented in the accompanying consolidated balance sheets and consolidated statements of cash flows. Auction rate securities totaled $50.8 million at September 30, 2005, $38.0 million at June 30, 2005, $73.7 million December 31, 2004 and $80.7 million at September 30, 2004. At December 31, 2004, auction rates securities of $17.9 million were previously classified as short-term investments because the next auction dates for these securities were scheduled for more than 90 days into the future. Purchases of investments and sales of investments, included in the accompanying consolidated statements of cash flows, have been revised to reflect the purchase and sale of auction rate securities in cash flows from investing activities during each of the periods presented.

3. Property Valuation

At each reporting period, the Company reviews the carrying value of its mineral properties in accordance with Canadian GAAP. The reviews include an analysis of the expected future cash flows to be generated by the project to determine if such cash flows exceed the project's current carrying value. The determination of future cash flows is dependent on a number of factors, including future prices for gold, the amount of reserves, the cost of bringing the project into production, production schedules, and estimates of production costs. For non-producing properties, the reviews are based on whether factors that may indicate the need for a write-down are present at each location. Additionally, the reviews take into account factors such as political, social, legal and environmental regulations. These factors may change due to changing economic conditions or the accuracy of certain assumptions. The Company used its best effort to fully understand all of the aforementioned to make an informed decision based upon historical and current facts surrounding the projects. Based on this review, management determined an impairment write-down was not necessary as of September 30, 2005.

We evaluate each reporting period whether we may be required under accounting guidelines to impair the Esquel project assets. Meridian Gold's development activities on the Esquel project have been interrupted and the delay in development activities is approaching three years. Canada's accounting guideline 11: Enterprises in the Development Stage states, "when there has been a delay in development activity that extends beyond three years, there is a presumption that a write-down of capitalized costs and deferred development and pre-operating costs is necessary. The presumption can be rebutted only by persuasive evidence to the contrary." The Company may be required to write-down the long-lived assets to their estimated fair value based on this accounting guideline. The net carrying value of the Esquel mineral properties as of September 30, 2005 is approximately $350 million. In spite of the accounting treatment, our management remains confident in the long-term economics, environmental and technical aspects of this project and is committed to building trust with the community of Esquel and Argentina, through Meridian Gold's demonstrated history and current practice of responsible mining.

4. Reclamation Liability

The continuity of the reclamation liability for the three months and nine months ended September 30 is as follows:



Three months Nine months
ended September 30, ended September 30,
(in millions of US dollars) 2005 2004 2005 2004
---------------------------------------------------------------------
Balance, beginning of period $10.2 $16.4 $11.8 $18.5
Accretion 0.1 0.1 0.3 0.3
Expenditures (1.3) (2.6) (3.1) (4.9)
---------------------------------------------------------------------
Balance, end of period $9.0 $13.9 $9.0 $13.9
---------------------------------------------------------------------
---------------------------------------------------------------------


5. Forward Contracts

To mitigate the risk associated with the gold and silver markets and to secure the loan with Standard Bank of London (which loan was subsequently repaid), the Company previously entered into gold and silver forward contracts. The Company closed out all of its gold forward contracts during 1999. However, under applicable accounting standards, the Company was required to defer recognition of the gains related to closing out these contracts in its financial statements until the original expiry date of the contracts, which period ended in 2004. During the three months and nine months ended September 30, 2004, the Company recognized $0.3 million and $0.9 million of the deferred revenue on expiring gold forward contracts.

At December 31, 2003, the Company had remaining forward sales commitments for 2,000,000 ounces of silver at an average price of $5.34 per ounce for delivery during 2004 associated with the former Standard Bank loan. In addition, in 2003, with the sharp rise in silver price, the Company entered into silver contracts for delivery during 2004. At December 31, 2003, the Company had remaining a commitment of 2,200,000 ounces of silver relating to these contracts at an average price of $5.05 per ounce for delivery during 2004. During the three months and nine months ended September 30, 2004, 0.9 million and 2.2 million ounces, respectively, of silver production were delivered against these contracts and the remaining contracts were delivered into or settled during 2004.

In the third quarter of 2005, the Company purchased European style put option contracts for 250,000 ounces of silver with a strike price of $7.00 and an expiration date of January 27, 2006. These puts guarantee the Company the right to sell the specified silver ounces for no less than the strike price on the expiration date. The option premium paid of $62,000 has been accounted as a prepaid expense and will be charged to operations over the contract period. Management believes the fair value of these puts at September 30, 2005 is not significantly different from their carrying cost.

As at December 31, 2004 and September 30, 2005, the Company is unhedged in gold.

6. Share Capital

(a) Shareholders' equity



September 30, December 31,
(in millions of US dollars) 2005 2004
---------------------------------------------------------------------
Share capital $390.4 $385.8
Additional paid-in capital 6.9 5.8
Retained earnings 207.9 180.0
Cumulative translation adjustment 69.5 62.3
---------------------------------------------------------------------
Total shareholders' equity $674.7 $633.9
---------------------------------------------------------------------
---------------------------------------------------------------------


(b) Outstanding share data

As of September 30, 2005 and October 25, 2005, there were 100,240,210 (December 31, 2004 - 99,629,827) common shares outstanding and there were 1,569,491 stock options outstanding issued to directors and employees with exercise prices ranging between US$2.25 and US$18.58 per option, of which 970,445 were exercisable with expiry dates between May 2008 and July 2015.

(c) Stock options and restricted shares

The stock option activity for the three months and nine months ended September 30 are illustrated in the tables below:



Three months ended September 30
2005 2004
---------------------------------------------------------------------
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Options Price Options Price
-------------------------------------------
Stock options outstanding
at beginning of period 1,506,517 $10.54 2,028,950 $7.81
Granted 172,300 18.21 213,937 13.04
Exercised (72,326) 9.35 (168,393) 5.77
Expired and/or canceled (37,000) 16.76 (3,800) 17.00
---------------------------------------------------------------------
Stock options outstanding
at end of period 1,569,491 $11.34 2,070,694 $8.50
---------------------------------------------------------------------
---------------------------------------------------------------------



Nine months ended September 30
2005 2004
---------------------------------------------------------------------
Weighted Weighted
Average Average
Number of Exercise Number of Exercise
Options Price Options Price
-------------------------------------------
Stock options outstanding
at beginning of period 1,932,151 $9.28 1,888,634 $7.54
Granted 249,800 17.26 373,137 12.21
Exercised (545,359) 6.25 (170,393) 5.77
Expired and/or canceled (67,101) 16.51 (20,684) 10.88
---------------------------------------------------------------------
Stock options outstanding
at end of period 1,569,491 $11.34 2,070,694 $8.50
---------------------------------------------------------------------
---------------------------------------------------------------------
Exercisable stock options 970,445 $9.23 1,481,639 $6.88
---------------------------------------------------------------------
---------------------------------------------------------------------
Stock options vest in equal annual amounts over 1 to 3 years and have
terms of 10 years


The fair value of stock options granted was calculated using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in 2005: dividend yield 0%, expected volatility of 56.3 percent, risk free interest rate of 3.6 percent, and expected lives of 5 years and with the following weighted average assumptions used for grants in 2004: dividend yield 0%, expected volatility of 59.3 percent, risk free interest rate of 3.5 percent, and expected lives of 5 years.

During the third quarter of 2005, 43,509 stock options were exercised that had a grant date after January 1, 2002, the effective date the Company was required to use the fair value method of accounting for stock options granted. Under CICA handbook section 3870, Stock-based Compensation and Other Stock-based Payments guidelines, the Company transferred $0.3 million in the third quarter of 2005 and $0.5 million for the first nine months of 2005 from additional paid-in capital to common stock for the amount previously recorded as additional paid-in capital for the fair value of this stock-based compensation.

In the third quarter of 2005, the Company awarded 39,325 restricted shares that had a grant date fair value of $18.21 per share. During the first nine months of 2005, the Company awarded 62,036 restricted shares that had a grant date fair value of $16.32 per share. In the third quarter of 2004 and for the nine months, the Company awarded 49,735 restricted shares that had a grant date fair value of $13.04 per share. Restricted shares issued to management vest one-third per year over 3 years, and restricted shares issued to non-executive directors are immediately vested and remain restricted until the board member retires or ceases to be a member of the Board.

7. Employee future benefits

As a result of the amended recommendations of CICA handbook section 3461, Employee Future Benefits ("HB 3461"), the Company has included additional disclosures about pension plans and other employee future benefit plans for periods ending on or after June 30, 2004 in this note. The amendments do not change any recognition or measurement requirements currently in HB 3461. The total net defined benefit expense of the Company's pension plan is $0.1 million for the three months and $0.2 million for the nine months ended September 30, 2005. During the first nine months of 2005, the Company contributed $0.6 million to the defined benefit pension plan.

8. New Contractual Commitments

During the third quarter of 2005, the Company entered into an agreement to explore property situated in the Alhue District of Chile. Under the agreement, Meridian Gold will fund up to $5 million in exploration costs over 18 months in order to arrive at a purchase decision to acquire 100% of the outstanding capital stock of Minera Florida for $100 million in cash.

Contact Information