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Plenty of upside potential at Medusa Mining, says SP Angel

Published: 14:35 09 May 2014 BST

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Medusa Mining's (LON:MML, ASX:MML) latest investor presentation highlights the miner is targeting full year 2015 output of 140,000 -160,000 ounces of gold from its flagship Co-O mine in the Philippines.

That's assuming head grades of 5-7 g/t of the yelow metal at a cash cost of US$400 per ounces, notes SP Angel, which has drilled deeper into the update.

John Meyer says today's presentation did not not provide any material differences from one posted on March 5, but does hone in on the fact the head grade for 2015 has come down from 5 to 8 g/t to 5 to 7 g/t. 

"The latter grade is in line with our expectations of 6.2 g/t gold," he said, adding that the broker has factored in higher grade assumptions with head grade of 6.8 g/t gold for full year 2016 and 7.7 g/t gold for full year 2017.

Meyer notes that 2014 grades have disappointed, with the last quarter seeing head grades of 4.2 g/t because of dilution from development ore.

"Even with lower grade assumptions the company is forecasting 140,000 – 160,000 oz for FY 2015. We are at the lower end of these expectations which still gives significant upside from current levels," notes Meyer.

"It is disappointing for London based shareholders who cannot hold the stock now with the delisting from the London market due shortly, as they will now not be able to participate in the recovery of the share price."

Medusa shares are trading down 2.38% to 92.25p.

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