Additional Information
Market:ASX
Sector:Gold Mining
EPIC:MML
Latest Price: 6.16  (1.82% Ascending)
52-week High:8.71
52-week Low:4.34
Market Cap:1,163.18M
1 year chart
digital-look imported chart image
1 day chart
digital-look imported chart image
Medusa Mining Full Medusa Mining profile here

Medusa Mining (ASX: MML) is an Australian based gold producer, focused solely on the Philippines. Medusa's corporate strategy is to become a mid-tier, 300,000 to 400,000 ounce per year, low-cost gold producer.

Fairfax upgrades Medusa Mining after resource estimate revision for Co-O gold mine

Tuesday, January 19, 2010
Fairfax upgrades Medusa Mining after resource estimate revision for Co-O gold mine

Broker Fairfax upgraded its valuation of Medusa Mining (AIM, ASX: MML; TSX: MLL) to 231 pence per share despite the recent downward revision of the inferred resource at the Australian gold producer’s flagship Co-O mine in the Philippines.

Medusa has completed the re-interpretation of the resource model for its Co-O mine located in the Philippines, marginally decreasing the inferred resources while maintaining the indicated resources, taking into account production and stockpiles to provide an accurate development-based model for expanding the mine to the east.

Fairfax said its valuation was backed up by the strength in gold prices, while the company “continued to deliver” with the ongoing exploration programme expected to make up for the small loss in the inferred resource.

Following the re-interpretation, Co-O’s resource stands at 2.29 Mt (million tonnes) grading 0.9 g/t (grammes per tonne) gold for 660,000 oz (ounces) in the inferred category and 1.45 Mt at 12.3 g/t gold for 580,000 oz in the indicated category. At the start of July, the resource estimate for Co-O stood at 1.25 Mt at 15 g/t gold for 603,000 oz indicated and 2.73 Mt at 8.9 g/t gold containing 777,000 oz inferred.

The broker said that the upside potential in and around the mine remained “very attractive” with 35 veins having already been modelled with the potential to find more. Medusa now has a clearer understanding of the veins to the East and can adjust drilling accordingly to expand resources with the management estimating that Co-O has a potential target size of 3 to 7 Moz (million ounces) depending on the depth based on a conceptual model.

Medusa is currently drilling 90,000 metres per year focusing on Co-O with an annual budget of US$18 million with a number of results from the latest resource definition programme having yet to be included in resource estimates with an update expected around June/July this year.

The broker’s valuation assumed a production of 100,000 ozpa (ounces per annum) at a cash cost of US$200 until 2022, also adding a 20% premium to its NPV (net present value), noting that gold mining companies could run to two times valuation as they become more established.

The ongoing near mine exploration is aimed to assess the possibilities of further expansion to 200,000 ounces per year, while current cash costs at the Co-O Mine are approximately US$200 per ounce.

The company’s exploration portfolio was valued at US$32 million based on US$50/oz in the ground for the Bananghilig 650,000 oz resource.

No investment advice

The Company is a publisher and is not registered with or authorised by the Financial Services Authority (FSA). You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable or advisable for any specific person. You further understand that none of the information providers or their affiliates will advise you personally concerning the nature, potential, advisability, value or suitability of any particular security, portfolio of securities, transaction, investment strategy, or other matter.

You understand that the Site may contain opinions from time to time with regard to securities mentioned in other products, including company related products, and that those opinions may be different from those obtained by using another product related to the Company. You understand and agree that contributors may write about securities in which they or their firms have a position, and that they may trade such securities for their own account. In cases where the position is held at the time of publication and such position is known to the Company, appropriate disclosure is made. However, you understand and agree that at the time of any transaction that you make, one or more contributors may have a position in the securities written about. You understand that price and other data is supplied by sources believed to be reliable, that the calculations herein are made using such data, and that neither such data nor such calculations are guaranteed by these sources, the Company, the information providers or any other person or entity, and may not be complete or accurate.

From time to time, reference may be made in our marketing materials to prior articles and opinions we have published. These references may be selective, may reference only a portion of an article or recommendation, and are likely not to be current. As markets change continuously, previously published information and data may not be current and should not be relied upon.