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Medusa Mining Limited still sees plenty of potential at Co-O

In August, the Aussie-listed group said production to June 2018 should be between 80,000-90,000 ounces of gold.
picture of miners
A pumping station on Level 8 at Co-O

The Philippines may not be the most welcoming place for miners at present but Aussie-listed gold junior Medusa Mining Limited (ASX:MML) is still expecting to produce a sizeable chunk of gold this year nonetheless.

Medusa so far has not been subject to any formal intervention as a result of a crackdown on miners being orchestrated by the Philippines Department of Environmental and Natural Resources.

Calls recently have included a threat from President Duterte to close the sector down unless it improves its environmental record. 

The Co-O mine is also located on the island of Mindanao, where martial law was declared on 25 May and is still in force, though so far the company has also reported no disruptions to its operations here either.

Production steady but set to pick up

In August, the Aussie-listed group said production to June 2018 should be between 80,000-90,000 ounces of gold.

That will require the completion of the (E15) service shaft at Co-O by the March quarter of 2018, which will free up the L8 production shaft, but improvements in performance should start to come through almost immediately from that point.

All-in-sustaining –costs in the coming year are expected to be between US$1,050 to US$1,200 per ounce, compared to US$1,374oz in the year just ended.

Medusa has endured a difficult twelve months due to problems with its mine development plans at Co-O. Production over the year to June dropped to 80,700oz from 108,600oz. Revenues dropped to US$100.1mln from US$128.1mln, though the gold price per oz Medusa received rose to US$1,256 per ounce.

Hefty write-offs (US$70.8mln impairments, US$7.1mln exploration) meant an underlying loss of US$35.2mln with a net deficit of US$62.1mln.

Average cash costs rose to US$595 per ounce, with the lower production blamed for the cost increase, but with gold prices rising to a-yearly high and an end in sight to the development work, things may be picking up.

Co-O deposit still open

Medusa is still exploring heavily at the mine as reserves and resources at Co-O have traditionally looked on the low side, though the mine has been producing at a steady rate for some years and management expects ongoing exploration to continue to find new areas to mine.

In August, a revised estimate pointed to 860,000 gold ounces at 12.29 g/t compared to 960,000oz, though drilling last year indicated a number of veins are still open at depth and to the east.

A further 435,000oz sits in the nearby Bananghilig deposit.



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