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On 22 December 2004 the Company announced it had completed a Heads of Agreement to merge with Philsaga Mining Corporation ("Philsaga") which owned the high grade, underground, narrow vein Co-O Gold Mine. Philsaga was a privately owned Filipino corporation.

On 4 December 2006 the merger was completed, and the Company commenced redeveloping the Co-O Mine with an initial production target of 40,000 ounces per year.

In September 2007 the Company decided to expand the production capacity by commencing a Phase I expansion to increase production to 60,000 ounces annualised by the third quarter of 2009. Phase I was completed ahead of schedule by 30 June 2009 with annualised production of approximately 65,000 ounces in the quarter.

A Phase II expansion independent of Phase I is well advanced to take production to an annualised rate of 100,000 ounces in early 2010. At the 100,000 ounces per year production rate it is anticipated that long term cash costs will be circa US$200/ounce.

Elsewhere in the Company's large tenement holding, work is progressing on a number of other gold prospects as well as the Lingig copper prospect.

The Co-O Mine
The Co-O underground mine is developed on a series of low sulphide, epithermal quartz veins and to date have been worked to approximately 370 metres below surface. When the mine was originally developed in the late 1980s, the vein system had only been discovered on the west side of the Oriental Fault (despite exploration drilling on the east side) and all mine development was carried out on the west side over approximately 600 metres of strike length. The mine is accessed through an adit for nearly 300 metres before encountering the mineralised veins. The height above sea level of the adit is 150 metres but for convenience this is now designated as Level I (previously 3150 metre level).

Kamarangan Project
Kamarangan Porphyry Copper Target
The Kamarangan prospect is centrally located in a large aeromagnetic anomaly approximately ten kilometres in diameter.

The area is underlain by a well-banded calcareous sequence that appears to be at least 1,600 metres wide. The calcareous sequence has been intruded by a complex of fine- to coarser-grained diorites and some andesite bodies. The intrusives have changed the calcareous rocks to skarn rocks over an approximate area of 1,600 metres by 1,400 metres (Figure 1). The skarn area is open to the east under the younger overlying limestone. The surface geology outcrops are limited mainly to magnetite-rich horizons with secondary hematite.
Some of the skarn rocks may contain variable amounts of garnet, diopside, epidote and pyrite. Areas of siliceous hornfels and unaltered massive limestone were also intersected in the drilling.

Bananghilig Gold Deposit
In the 1980s and 1990s a large amount of diamond and reverse circulation drilling totalling 29,477 metres in 344 holes was undertaken by various explorers to investigate a large area of known mineralisation. In 2005 to 2007, Philsaga undertook underground exploration through a 50 metre deep shaft and development, adits, and underground and surface drilling totalling 7,715.50 metres in 31 holes.

Lingig (Das-Agan) Project
The Lingig copper discovery is within the Das-Agan project which consists of MPSA application number 000024-XIII situated in Surigao del Sur province in east Mindanao as shown on Figure 1. The APSA covers approximately 80 km² (8,019 hectares) in two blocks. The Lingig copper discovery is contained within the eastern most tenement block on Figure 1. Permits for drilling were granted in June 2008.
The Lingig discovery was located by an aid programme between Filipino and Japanese geologists and technicians in 1972 to 1974 over eastern Mindanao. An initial 3000 km² prospective area was located by geological and geochemical surveys and was subjected to additional geological mapping and geochemistry, followed by drilling of five diamond drill holes, each to 250 metres vertical depth.

Anoling Project
The Anoling project is located approximately 8 kilometres by road from the Co-O Plant and is operated under a Mines Operating Agreement with Alcorn Gold Resources Inc. over MPSA application number 039-XIII.

The Anoling Mine area consisted of a large number of artisanal workings and old mines on narrow veins dating back to pre-World War II. The veins generally consist of banded quartz-carbonate material within clay-chlorite-pyrite gouge zones with both types of material carrying gold values. Drilling has been discontinued while the tenement is being progressed to granting.  Detailed geological work is still progressing.

Apical Gold Project (Medusa earning 70%)
A Joint Venture Agreement ("JVA") with MRL Gold Phils., Inc. ("MRL") and an underlying claim owner covers MPSA application number 0028-XIII situated in the provinces of Agusan del Sur and Surigao del Sur in east Mindanao to the north of the Co-O Mine and Plant. The MPSA comprises approximately 20.84 km² (2084 hectares) in the Tambis area MRL is the Philippine operating company of Mindoro Resources Ltd, a public company listed on the TSX Venture Exchange in Canada.

The Company is advancing the tenement for granting.

Saugon Gold-Silver Project (Medusa 50%)
The Saugon prospect is situated approximately 10 kilometres south of the Co-O Gold Mine and 28 kilometres by road from the Co-O Plant. Work commenced in early 2003 on the First Hit Vein which has been followed intermittently at the surface over 600 metres and which has been explored underground via a 40 metre deep winze, level development and drilling of 31 diamond drill holes.

Re-assessment of the drilling in combination with the aeromagnetics has identified a large alteration area within which there are aeromagnetically defined targets for further work.

Work is in progress in preparation for drilling in late 2010.

Corplex Gold Projects
The Company through Philsaga has two Memoranda of Agreement ("MOA") with Corplex Resources Incorporated ("CRI") on two separate parcels of ground immediately south of the Tambis Project, being an application for Financial and Technical Assistance Agreement (FTAA 000004-XIII) comprising approximately 162 hectares and an application for Mineral Production Sharing Agreement (APSA 000077-XIII) comprising approximately 810 hectares.

The Company is advancing the tenement applications.

Barobo Gold Corridor
The regional structure and geology highlights the mineralisation potential in favourable limestone and calcareous clastic rocks along the Barobo Fault Corridor. Mineralisation has been located in numerous outcrops and in drill holes. The mineralisation located to date is generally associated with silica and sphalerite-galena replacement of the host rocks.