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 revises gold production forecasts after storm disruptions
Medusa Mining (LON:MML, ASX:MML) told investors that it is now forecasting gold production of 75,000 ounces in 2012 due to disruptions caused by stormy weather in December.
Tropical storm Sendong and continued bad weather over Christmas and New Year had caused disruptions to the operations at the Co-O mine in the Philippines. This has adversely impacted gold production, the company said.
The firm now expects to produce 75,000 ounces of gold, rather than the previously estimated 90-100,000 ounces. Consequently, cash costs per ounce are expected to be higher at US$242 rather than US$230.
The disruption was said to be a short term setback and managing director Peter Hepburn said that Medusa remains in a healthy financial position and investors should focus on the group’s long term objectives.
In that respect Hepburn told investors that the mine expansion is ‘picking up pace’ and building work starts on the mill this month.
The current expansion programme aims to increase annual gold production to the 200,000 ounce mark. Beyond that the firm is targeting 400,000 ounces per year by the end of 2015 or early 2016.
The company also confirmed that during the three months ended December, it sold 10,000 ounces of gold at an average price of US$1,761 per ounce. The company is debt free and has US$80 million in cash and cash equivalents.
“While the short term decline in performance is frustrating we believe that the long term outlook for Medusa and the Co-O mine remains positive,” said Asa Bridle, analyst at broker Seymour Pierce.
“The investment argument for Medusa remains strong with a robust mine margin being maintained at the same time that the company is moving on with its development plan.”
Bridle’s view was echoed by fellow mining analyst John Meyer, of Fairfax Securities.
In a note today, Meyer said that today’s news may disappoint some investors in the short term but he continues to believe that Medusa offers investors a good growth profile.
He also believes that cash costs per ounce will come down to US$230 for the full year as production increases in the second half of the year.
“The cash cost is still very low compared to industry standards,” Meyer said.
“Importantly the company continues to benefit from strong cash flows which can fund their ongoing development programme.”
