Fairfax Securities has issued a note on Medusa Mining (ASX, AIM: MML; TSX: MLL), following a recent visit to the group’s Co-O mine in the Philippines, saying it feels that future developments at the project will continue to add value.
The visit helped the broker gain a clearer idea how future production growth is likely to evolve.”We have taken a conservative approach to this by raising the production profile from 100,000 ozpa to 130,000 ozpa by 2012 through incremental expansions from Co-O, maintaining a long term cash cost of US$200/oz” it said. It sees considerable organic potential for Medusa to expand production substantially.
It called Co-O well developed with considerable infrastructure in place and significant stockpiles which puts the mine in a strong position minimising risks from production difficulties. The operation has expanded considerably in the two years since the broker’s last visit to site.
“The company has provided considerable newsflow in recent months on various projects which include additional potential at Co-O, other gold projects and copper targets. Management is budgeting US$18m on exploration this year and next and anticipates expanding its production base to 300,000-400,000ozpa through organic growth,” Fairfax noted.