Medusa Mining reaches 100,000 annualised gold production rate in Q3

Medusa Mining (ASX, AIM: MML, TSX: MLL) has reported a company record level of gold production during the third quarter ended 31 March 2010, with 25,505 ounces of gold compared to 21,108 ounces produced in the previous quarter. The period also marked the completion of the Phase II expansion of the Co-O mine in the Philippines, on schedule, and the mine is now operating at a production rate that supports its target for 2010 of 100,000 ounces.

At 25,505oz the third quarter production represented a 20% increase from the previous quarter and was actually 505oz above the target for the period. Medusa achieved an average grade of 20.61 grams per tonne (gpt) gold, at cash costs of US$180 per ounce.

"We are pleased with the scheduled completion of our expansion programme to enable the production of 100,000 annualised ounces”, Medusa MD Geoff Davis commented. “In addition, underground development at the Co-O Mine is also well advanced with approximately 60,000 tonnes of broken ore underground and 20,000 tonnes in surface stockpiles which augurs well for meeting our production targets”.

Medusa also updated investors on the on-going resource drilling at Co-O. The latest set of results include 1.70 metres at 99.63 grams per tonne (gpt) gold, 6.40 metres at 23.36gpt and 4.90 meters at 20.27gpt. The on-going drilling programme has concentrated on infill and extensional drilling, up and down dip, and laterally in and around the Co-O Mine.

These latest set of results, along with previous results, will be incorporated into a new resource estimate which is expected to be completed in July-August 2010.

In the broader vicinity of the Co-O mine, the company also continued its regional drilling throughout the quarter.

At the Tambis project, comprising the Bananghilig gold deposit and the Kamarangan copper prospect, preparations are advancing for a major drilling campaign at Bananghilig, commencing around July 2010. The upcoming programme will form the basis for pre-feasibility studies, and the aim of the work will be to increase the resources, to a level which could provide a 5 year minimum mining life at a production rate of approximately 200,000 ounces per year.

At Medusa’s Saugon project, the company said that construction of field camps and access are  in progress for the start of drilling shortly. The last drilling work conducted at Saugon was completed in 2004, and a summary of those results will be provided in the near future.

“On-going drilling at Co-O, preparations for drilling at Bananghilig (expected to start around July) and commencing of drilling at Saugon highlight both the short term and long term potential of the Company", Davis added.

Looking to the current quarter and to the year end, Medusa is forecasting gold production for the fiscal year to 30 June 2010 to be around 90,000 ounces, with an anticipated cash cost of US$190 per ounce.

In reference to the statement, London-based stockbroker Fairfax Securities highlighted that Q3 was another strong quarter for Medusa, and noted that the company has beaten the broker’s expectations again. Also, according to Fairfax, the company has decided to retain gold rather than cash for Q3’s production, which gives investors the potential for greater leverage to gold.

The Co-O mine is located in a region of world class gold-copper deposits and south of the typhoon belt in the Philippines, It has Indicated Resources of 580,000 ounces of gold inclusive of a Probable Reserve of 500,000 ounces of gold, and Inferred Resources of 660,000 ounces of gold.

http://www.proactiveinvestors.com.au/companies/news/6445/medusa-mining-reaches-100000-annualised-gold-production-rate-in-q3-6445.html