www.medusamining.com.au
Medusa Mining, a public company listed on the ASX and LSE, is an Australian based gold producer, focused solely on the Philippines. Medusa's corporate strategy is to become a mid-tier, 400,000 ounce per year, low-cost gold producer.
The Company has completed the two-phase expansion of its high grade Co-O Mine operations to a production level of 100,000 annualised ounces. The Company has approved a Phase 3 expansion to build an expanded mill with capacity for 200,000 ounces of production.
Ongoing drilling is verifying and expanding the Bananghilig Deposit with the aim of defining one million ounces of reserves to initiate feasibility studies.
Further potential upside exists for the discovery of copper and additional gold deposits within the tenement holding of more than 800km2.
Medusa Mining posts record results in 2009/10 as gold prices and production rise
Increased production at its flagship Co-O mine and higher gold prices have helped Medusa Mining (LON:MML) to record-breaking results in the last financial year.
The company said that the adjusted and underlying results were “excellent” and set the benchmark for continued strong future earnings.
Revenues soared 121% to US$94.6 million, while EBITDA (earnings before interest, tax, depreciation and amortisation) reached US$73.7 million, marking a year on year improvement of 142%. Earnings per share rose 102% to US$0.378. The company has highlighted record net after tax profits (NPAT) of US$65.8 million. Adjusted underlying NPAT climbed 152% to US$71.7 million and adjusted underlying EBITDA rose 162% to US$79.6 million.
The debt-free company had total cash and bullion of US$55.8 million at year end.
During the year, the Co-O mine in the Philippines produced a record 89,679 oz (ounces) of gold, an increase of 87% from last year’s 47,869 oz, at an average recovered grade of 16.52 g/t (grammes per tonne) gold compared to 13.30 g/t in 2009. Cash costs have declined from last year’s US$213/oz to US$184/oz.
Meanwhile, gold reserves at Co-O increased from 580,000 oz to 603,000 oz in the indicated category and from 660,000 oz to 898,000 oz in the inferred category. This helped Medusa achieve its objective of increasing the global resources to 1.5 Moz (million ounces) and maintaining the mine’s reserve at 500,000 oz.
Medusa is looking at further increases, targeting production of 100,000 oz in the next fiscal year at costs of US$190/oz, while bring set to add more reserve and resources with an exploration budget of US$21 million, up from US$18.9 million in 2010.
A conceptual exploration target for the Co-O Mine was estimated during the year at between 3 million and 7 million oz over the life of the mine, which medusa said indicated that Co-O could be a “long-lived asset providing funding for future growth”.
The exploration work carried out at Co-O during the year has resulted in the discovery of new veins and extensions to known veins as well as extensions along strike and across strike. In addition to that, it was demonstrated that mineralisation extended to over 500 metres below the mine’s adit entrance.
Drilling has commenced at the Bananghilig disseminated gold deposit prior to establishing reserves as a basis for a feasibility study, while drilling at the Lingig copper prospect has identified a coherent body of basalt-hosted mineralisation requiring further drilling.
Scout drilling is being planned at the newly discovered Usa copper-gold porphyry target, while drilling at Saugon is currently in progress.
Medusa said its landholding within one of the most prospective mineralised regions in the Philippines could enable it to achieve organic growth to a mid tier producer with an annual production of 300,000 to 400,000 oz.
“To achieve our stated objective, we have commenced work at the large Bananghilig Deposit with the aim of completing mining studies towards the end of 2011.
“Other prospects will also be examined over time as the company's landholdings have the potential for the discovery of additional gold and copper mineralisation,” said managing Director of Medusa Mining Geoff Davis.
Fairfax issued a note on the company following the release of the results, noting that the company’s earnings met its forecasts, or ahead considering underlying earnings. The broker has modelled 120,000 oz produced this year at a cash cost of US$200/oz, rising to 130,000 ozpa thereafter.
According to Fairfax, the Co-O mine has an NPV (net present value) of US$513 million, assuming a conservative forecast for the gold price of US$1,100/oz this year, which would decline to US$900/oz by 2013 with production rising from 90,000oz in the year to June, reaching 130,000ozpa by 2012 at a cash cost of US$200/oz.
“Following on from the company’s quarterly report, clearly Medusa is achieving its goals and generating significant amounts of cash benefiting both from near record gold prices and a particularly low operating cost.
“We look forward to ongoing developments that could outline a production base of 300-400kozpa of gold. The extensive exploration potential could also see further value from copper porphyry targets within the tenement package,” commented Fairfax.
