Medusa Mining (ASX, LSE: MML; TSX: MLL), through its Philippines operating company Philsaga Mining Corporation, has approved the construction of a new treatment plant and associated infrastructure as well as commencing a major mine development program to increase production capacity at the Co-O Mine in the Philippines.
For the year ended 30 June 2010, the Co-O Mine and current mill produced 89,679 ounces of gold. Once fully operational, the new plant is expected to provide processing capacity to produce 200,000 ounces of gold per annam based on the current grade of the Co-O Mine’s reserves.
Preliminary cost estimates for the new plant (with an initial design capacity to treat 750,000 tonnes per annum) and expansion are expected to be approximately US$80 million and the company intends to fund the cash requirements of the new plant and expansion internally.
The construction time for the new plant after the necessary regulatory approvals are granted is estimated at between 18 to 24 months, and the full benefits of the expansion are expected to be realised shortly thereafter.
The company is currently in preliminary discussions with engineering groups and will provide further details in due course.
Geoff Davis, managing director, said “this decision heralds a new era for the Co-O Project, and demonstrates the Board’s confidence in the future of its Co-O operations. It also confirms a measured approach to our growth strategy."
The capital requirements of the new plant and expansion will be funded out of cashflow and the cashflow generated from the new plant, once it is operational, is intended to in turn fund the company’s next project, Bananghilig.
The drill results released on 29 October 2010 re-inforce the growth potential of the Co-O Mine and surrounding area. The highlight of the 16,700 metre drill campaign was a one metre section where the gold grade was measured at 321.17 ounces per tonne.