logo-loader

UPDATE: Medusa Mining confident about 100,000 ounce year-end gold production target

Published: 16:01 24 Oct 2011 BST

no_picture_pai

Adds broker comments.....

Medusa Mining (LON:MML, ASX:MML, TSE:MLL) repeated today it was confident of reaching its year-end production target of 100,000 ounces of gold as it revealed results for its first quarter.

The firm said it was committed to developing its Co-O mine in the Philippines to produce more ore more efficiently than it does now.

Although production was reduced for the September quarter due to refurbishment at the Agsao shaft, the company said it was confident of achieving its overall year-end goal.

In the three months to September 30, the company produced 10,510 ounces at a recovered grade of 8.33 g/t gold at cash costs of US$291 per ounce. In the comparative quarter in 2010, the firm produced 25,004 ounces at 15.77 g/t at costs of US$187 per ounce.

Medusa also said it spent US$5.36 million on capital works, associated sustaining capital at the mine, and also costs for the new mill construction and infrastructure in the three months to September 30 this year.

It also paid out US$6.74 million on general and accelerated mine development, including shaft sinking costs compared to US$4.5 mln in the June quarter this year.

The Agsao Shaft at the Co-O mine was shut down for extensive refurbishment in July and August with a consequent reduction in production for the period.

At the same time, a larger winder and skip were installed, increasing the haulage capacity of the shaft to more than 400 tonnes per day and commissioning began on 01 September 2011.

Permitting of the Co-O mill expansion - part of plans for a new Co-O plant- has been delayed due to typhoons in September and October, the firm revealed.

In today's statement, managing director Peter Hepburn-Brown said: "Now that we know the layout of approximately two million resource ounces in the mine, the mine is undergoing major renovations to modernise it."

He pointed out that, as with any renovations, there were inconveniences and altered work practices in the process.

"Despite these short term hiccups, on completion we will have a modern efficient underground mine serviced by efficient shafts and underground haulage systems," he said.

This quarter, the sinking of the Saga shaft went smoothly and is expected to be hauling ore in the June 2012 quarter after reaching Level 6 late in the December 2011 quarter, he said.

Hepburn- Brown added: "I urge all shareholders to focus on our long term objectives of developing a profitable long term asset and not to be influenced by short term production volatility".

Analyst Kate Craig, of broker Oriel Securities, described the results as "a departure" from the company’s usual production of 25,000 ounces at cash costs of less than US$200 per ounce but added:

"This does not alter our full year production estimate of 100,000 ounces at US$206 per ounce. We maintain our 'buy' recommendation and 584 pence target price."

Broker Fairfax said in a note: "Medusa hit record production of 101,474 ounces in the year to end-June 2011 and should raise production levels next year to potentially exceed this target.  

"We forecast Medusa should produce around 105,000 ounces for FY 2012 and expect gold production to ramp up in the second half to make up for lower production in FY H1."

Fairfax rates the stock a 'buy' targeting a price of 573 pence (current price: 425.25 pence).

In today's report the firm also updated investors about current drilling at the Co-O mine, where six surface and five underground rigs are in action.

The results include 1.40 metres at 28.02 grammes per tonne (g/t) gold, 1.45 metres at 56.23 g/t gold, 2.50 metres at 72.80 g/t gold and 1 metre at 21.53 g/t gold.

Oriole Resources outlines 2023 achievements and future exploration plans

Oriole Resources PLC (AIM:ORR) CEO Tim Livesey and chief financial officer Bob Smeeton join Proactive's Stephen Gunnion with details of the company's 2023 financial and operational performance. Livesey highlighted successful exploration programs in Cameroon, at the Bibemi and Mbe projects,...

1 hour, 42 minutes ago