Medusa Mining (ASX:MML) expects production to increase for a third quarter running and the miner to start generating cash again.
The Aussie-listed group, which recently appointed engineer Robert Gregory to carry out a comprehensive review of operations at its Co-O mine, said gold production is expected to be above 20,000 ounces for the September 2014 quarter.
Medusa produced 17,615 ounces and 16,200 ounces respectively from the underground mine in the Philippines in the two previous quarters.
An update production update for 2014-15 will follow the operations review, Medusa added.
After a number of problems with a new mill at the mine, recoveries are currently running at a minimum of 90%, Medusa said, with a head grade over the quarter of more than 5 grams per tonne (g/t) gold.
Work is ongoing to cure the teething issues that have included including battery failure, a new feeder, a leaching circuit and screens overhaul, and grind problems.
Medusa added a significant re-interpretation of the vein structure at Co-O had now been completed and it is clear the main west-trending vein is controlled by a major shear system.
Following finalising of the re-interpreted and upgraded vein model a new resource and reserve estimate is nearing completion
The new 2012 JORC code reporting requirements require cut-off grade, minimum mining width and gold price parameters to be applied to the resource estimates to determine a break even grade.
As a result, the new resources will differ from previous estimates, as some vein sections are high grade but narrow and may not meet the minimum width requirements when diluted at current gold prices and/or extraction cost.
On development, horizontal and vertical expansion is planned at a rate of approximately 1,500 metres per month across approximately 60 priority headings for the foreseeable future. This is the minimum rate for new stopes to be mined as the old stopes are being depleted, Medusa said.
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