Medusa Mining, a public company listed on the ASX and LSE, is an Australian based gold producer, focused solely on the Philippines. Medusa's corporate strategy is to become a mid-tier, 400,000 ounce per year, low-cost gold producer.
The Company has completed the two-phase expansion of its high grade Co-O Mine operations to a production level of 100,000 annualised ounces. The Company has approved a Phase 3 expansion to build an expanded mill with capacity for 200,000 ounces of production.
Ongoing drilling is verifying and expanding the Bananghilig Deposit with the aim of defining one million ounces of reserves to initiate feasibility studies.
Further potential upside exists for the discovery of copper and additional gold deposits within the tenement holding of more than 800km2.
Broker likes Medusa Mining's relative value
There is significant value in Philippines-based gold producer Medusa Mining (LON:MML, ASX:MML), broker Seymour Pierce has concluded after a comparison of its rating relative to larger rival Randgold Resources (LON:RRS).
The broker says market expectations are for Randgold to grow production by 17 per cent in the next full year and by 9 per cent in 2013.
EBITDA margins over these two years are 62.8 per cent and 62.3 per cent respectively while the South African firm is trading on earnings multiples of 16.2 and 16.5 and price to cash flow multiples of 12.5 and 12.9.
Medusa, meanwhile, offers production growth of 27.1 per cent and 66.0 per cent in the years to end June 2013 and full year 2014, with EBITDA margins of 78.9 per cent and 77.5 per cent but trades on an earnings multiple of 8.4 and price to cash flow of 8.2 times dropping to 6.1.
The broker says Medusa also offers a yield above 1 per cent against 0.6 per cent at Randgold.
It adds it has “no axe to grind against Randgold” but the disparity highlights the fact “there are well financed alternative producers further down the market cap scale that would appear to offer significant value”.
Medusa also trades below the weighted average for its London listed gold peer group on all three earnings metrics for the full year to 2013.
Seymour Pierce has a buy rating on Medusa with a price target of 526p.
Medusa recently forecast production of 90-100,000 ounces gold production this year to June, rising to 120,000 ounces in 2012/13 and 200,000 ounces the year after.
It is currently producing gold at the Co-O mine in the Philippines and developing a second deposit in the country at Bananghilig.
Medusa’s ambition is to become a mid-tier producer of 400,000 ounces of gold by late 2015 and has earmarked at least US$22million this year for gold exploration.
