Last week, Medusa reported a new resource estimate for Co-O, which put the probable reserve at 505,000oz of gold contained within 1.46 Mt (million tonnes) grading 10.7g/t gold. Just a week earlier, the company reported record gold production at the property - with 25,012oz being produced for US$182/oz - for the fourth quarter.
The stockbroker highlighted that Medusa has maintained a 5 year mining reserve at the mine, and “since Co-O is a narrow high grade vein deposit, it is not cost effective to extend the reserve base further” for the Co-O’s current production profile.
Fairfax also noted that whilst the grade of the new reserve is lower, “we do not feel that this materially affects the valuation for the company. It is also a feature of the operation that the reserve grade at times underestimates the grade of the ore processed”.
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