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UPDATE: Medusa Mining ups Co-O gold resource by 30 pct to 1.96 mln ounces

Published: 10:48 27 Jul 2011 BST

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Adds broker comments....

Medusa Mining (LON:MML, ASX:MML) has upped the Co-O mine’s gold resource by 30 percent from 1.5 million to 1.96 million ounces.

The upgrade follows the group’s ongoing drilling over the past year.

The new resource comprises a total of 6.34 million tonnes of ore grading 9.6 grams per tonne gold. It has 616,000 ounces of contained gold in the indicated resource category and 1.34 million contained ounces in the inferred.

"This extremely pleasing result highlights the exceptional potential of the Co-O Mine vein system,” said managing director Peter Hepburn-Brown.

“It means we have added approximately 560,000 ounces (including replacing the ounces produced during the year) by drilling in the last 12 months at a drilling discovery cost of approximately US$24 per ounce.

“At this point there is no geological reason why a similar result can't be achieved in this current financial year as we continue work with five underground rigs and six surface rigs.”

Hepburn Brown added: “We anticipate being able to expand the Co-O vein system for quite some time yet."

The rapidly growing Co-O mine, which is located in the Philippines, is one of the world’s cheapest producing gold mines and against a backdrop of record prices above US$1,600 an ounce it is a very profitable operation.

Last month Medusa told investors that it expects Co-O to produce between 100,000 and 110,000 ounces this year, at a US$200 cash-cost per ounce.

Analyst John Meyer at house broker Fairfax, which rates the stock a "buy" targeting a price of 573 pence (current price: 520 pence) welcomed the resource upgrade and said it was "great news" for investors and the firm.

"Medusa is more than replacing its mined gold and looks like it could support further expansion of the mine and plant," he said.

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