Shares in Medusa Mining (ASX: MML, LON: MML) this morning paused for breath after another strong quarterly progress report.
However according to City brokers following the stock, the London and ASX-listed gold miner’ prospects are brighter than ever.
"We believe there is further upside, given the company's enviable cash margin and expansion plans over the medium term,” said Asa Bridle of Seymour Pierce.
Earlier, Medusa said its new plant at the Co-O mine in the Philippines will open in the middle of 2013 as it revealed it was on track for an annualised rate of production of 100,000 ounces of gold a year.
Output was 25,114 ounces in the three months to March 31 at an average grade of 11.58 grams per tonne and a cash cost of US$191 per ounce. The cumulative total in the past three quarters is 76,241 ounces.
It means Medusa has generated more than US$92 million in cash, allowing it to declare a 5 cents a share dividend, which was paid on March 23.
Key to the future development of the company is the new plant at Co-O. Permitting should be complete by late September, the group said this morning, and the estimated build time is 21 months.
Medusa is currently sinking another shaft at Co-O, called the Saga Shaft, which has reached 32 metres. The plan is to have it down to 200 metres, or level five, by the end of the year and to 300 metres, or level seven by June next year.
Drilling at Co-O, meanwhile, has discovered a new high grade vein. Early results reveal a 2 metre section with 219.7 grams of gold per tonne and 800 millimetres at 42.333 grams.
At the Bananghilig deposit, also in the Philippines, resource validation and drilling continues with two rigs on site. Regional mapping is also being carried out.
Managing director Geoff Davis said: "The Company has attained its forecast gold production for the quarter and is on track to meet its annual forecast production.
"At the Co-O Mine, the Saga Shaft is progressing and the Level one adit to access the Royal and NT veins is well underway. The accelerated development programme will continue to open up new levels and new veins.
"Drilling at the Co-O Mine continues to deliver some outstanding results, and potential resource additions in the area of the Royal and North Tinago veins are taking shape.
"The permitting process for the new Co-O Mill is progressing and currently on track to be completed by the end of September 2011.
"At the Bananghilig prospect drilling with six rigs is continuing. Initial findings of an extensive regional mapping programme over the Tambis region will be reported shortly."
The result of such a resilient showing was a 3 per cent fall in the share price, which was down 18.55 pence at 507.95 pence at 11 am.
This was no doubt the result of profit-taking following a 49 per cent spike in the share price over that last six months.
Fairfax, the company’s broker, is a buyer up to 549 pence. In a note to clients today, it said: “The Co-O mine continues to deliver to plan as management keep operations running smoothly and deliver on promises.
"The growing cash pile being generated ensures that the active programme of development, expansion and exploration across numerous targets are well funded and can be advanced in the appropriate manner.
“We see further value generation to come from the exciting exploration portfolio, the expansion of Co-O and work that should expand the resource base and extend the mine life.
"Medusa provides an excellent means for investors to get exposure to gold with a low risk, high margin established asset funding future activities.”