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Medusa Mining chairman reiterates 400,000 ounces per year gold target

Last updated: 07:29 10 Nov 2011 GMT, First published: 08:29 10 Nov 2011 GMT

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Philippines-focused gold miner Medusa Mining (LON:MML, ASX:MML) today reiterated the company’s aim of becoming a mid-tier producer of 400,000 ounces of gold per annum by late 2015.

Speaking at the firm’s Annual General Meeting in Perth, Western Australia, Geoff Davis said that Medusa was “steadily progressing” towards its objective, with the current expansion of mill capacity at its Co-O gold deposit to produce 200,000 ounces per year and through continued exploration success at its Bananghilig deposit along with the construction of a second 200,000-ounce milling facility.

Meanwhile, Medusa’s ambitions in the Philippines do not stop with Co-O and Bananghilig, added Davis. “We are positive that these two gold projects will not be the end of the gold story,” he said, pointing out that the firm has budgeted US$27 million for exploration, “which keeps 20 diamond drill rigs turning 365 days of the year”.

Davis said that the firm intends to fund its future capital expenditure out of cash flow, and at the same time will also continue to pay a small dividend to shareholders. Once all future capex requirements are satisfied by cash in the bank, the firm plans to review its dividend policy, he added.

During its last financial year, Medusa produced 101,474 ounces of gold at cash costs of just US$190 per ounce, generating a net pre-tax profit of US$110 million. For this year the firm expects production to be between 90,000 and 100,000 ounces.

Shares in Medusa were down 1.6 per cent at 420 pence each in early trading this morning.

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