Medusa Mining (ASX:MML, LON:MML), as previously flagged, produced less gold ounces in the quarter to end September than it had forecast.
Earlier this month, the company revealed that a delay in the repair of the power cells at its new SAG mill at the Co-O mine in the Philippines would hit output.
For the three months, 14,502 ounces were produced, compared to 17,000 ounces forecast. Production was down because the firm is using the old mill while the new mill awaits full commissioning.
For the three months, gold sold amounted to 15,560 ounces, compared to 16,236 ounces in the quarter, which ended in June.
Cash costs, net of development costs, stood at U$339 per ounce - an improvement of 4.5% against the previous quarter, Medusa added.
US$9.2mln was spent on mine development over the quarter compared to US$10.3mln in the June quarter, while at the end of the period, the company had cash and cash equivalents of US$5.99mln.
House broker SP Angel rates Medusa shares a 'buy' and targets a price of 300p on the stock (current price: 128.75p).
"Given the recent announcement of the delay in getting the power cells back to start the Sag Mill commissioning – this announcement should not be a surprise to the market," it noted.
The City firm said it was now bringing down its December quarter forecast to 18,500 ounces (from 35,000oz), assuming that Medusa keeps milling around 30,000 tonnes a month for October and November and this ramps up to 45,000 tonnes in December as the new mill is commissioned.
"We will review our full year forecasts once the mill is up and running," it said.
"Till the new mill is commissioned, the shares are likely to remain range bound but the long term fundamentals in our view remain unchanged," it added.