Medusa Mining Limited (ASX:MML), which operates the Co-O mine in the Philippines, now expects production for the year of around 108,000 ounces of gold.
That's down from 120- 130,000 ounces after lower than expected output in the first quarter to end March and the results of a new operations review.
For the three months to end March, the miner produced 21,980 ounces at a head grade of 5.47 g/t gold compared to 29,674 ounces in the last quarter (to December 2015).
All in sustaining costs (ASIC) were US$1,033, up from US$950 in the preceding quarter.
Underground drilling to expand the resource kicked off last month from levels eight to 16, but there were initial delays due to rig availability and issues around the chambers.
The firm highlighted that elevated AISC guidance (between US$900 and US$1,000) will persist until all mine medium term waste infrastructure projects are completed.