Medusa Mining Limited: Quarterly Activities Report Period Ended 31 March 2010
14 April 2010 - 4:24PM
Marketwired Canada
Medusa Mining Limited (TSX:MLL)(ASX:MML)(AIM:MML) -
OVERVIEW:
Co-O MINE PRODUCTION
-- Record gold production of 25,505 ozs (compared to 21,108 ozs in the
previous quarter) at an average grade of 20.61 g/t gold and average cash
cost of US$180 per oz
Co-O PHASE II EXPANSION
-- Phase II expansion completed on time with the annualised production of
100,000 ounces recorded for the quarter
-- Mill commissioning completed
Co-O RESOURCE DRILLING
-- Drilling continuing. New gold results include 1.70 metres @ 99.63 g/t,
6.40 metres @ 23.36 g/t and 4.90 meters @ 20.27 g/t
-- Resource/reserve estimates scheduled for July-August 2010
BANANGHILIG DEPOSIT
-- Planning is underway to commence pre-feasibility studies for drilling
campaign in July 2010
LINGIG COPPER
-- Drilling paused to allow assessment of results to date to be undertaken;
drill rigs re-allocated
SAUGON PROJECT
-- Preparations are underway to drill at the Saugon Project, last drilled
in 2004
-- A summary of previous results will be provided shortly
FINANCIALS
-- Cash and cash equivalent at end of quarter of US$48.1 million
-- Bonus issue of 1 new ordinary share for every 10 ordinary shares
announced and completed during the quarter
SNAPSHOT OF MEDUSA:
-- Expanding gold producer operating solely in the Philippines
-- Debt free and un-hedged
-- Forecast production FY 2009/10 approximately 90,000 ozs.
-- Long term cash costs at Co-O Mine circa US$190 per oz
-- Co-O Mine conceptual target size 3 to 7 million ounces(ii)
-- Mineral Resources comprise
-- Co-O Mine: Indicated 580k ozs at 12.3 g/t gold; Inferrred 660k ozs
at 9.0 g/t gold
-- Bananghilig: Inferred 650k ozs at 1.3 g/t gold
-- Probable Reserves : Co-O Mine 500k ozs @ 14.9 g/t gold
-- Organic growth policy to potentially produce 300,000 to 400,000 ozs per
year
-- Excellent exploration upside: high grade vein and disseminated bulk gold
targets, plus six porphyry copper targets
(ii) The potential target size and grade is conceptual in nature, and there
has been insufficient exploration to define a mineral resource, and it is
uncertain if further exploration will result in the target being defined as
a mineral resource. Refer to Stock Exchange announcement dated 18 January
2010.
Board of Directors
Geoffrey Davis (CEO)
Roy Daniel (CFO)
Robert Weinberg (Non-executive Director)
Andrew Teo (Non-executive Director)
Peter Hepburn-Brown
(Non-executive Director and Acting Chairman)
Capital Structure:
Ordinary shares: 187,409,805
Unlisted options: 1,340,000
Listings:
ASX and AIM (Code: MML), TSX (Code: MLL)
Address and Contact Details:
PO Box 860
Canning Bridge WA 6153
Telephone : +618 9367 0601
Facsimile : +618 9367 0602
Email : admin@medusamining.com.au
Website : www.medusamining.com.au
PROJECT OVERVIEW
The locations of the Company's projects are shown on Figures 1 and 2.
To view Figure 1, please visit the following link:
http://media3.marketwire.com/docs/medusa_figure_1.pdf
To view Figure 2, please visit the following link:
http://media3.marketwire.com/docs/medusa_figure_2.pdf
Co-O MINE
GOLD PRODUCTION
The production statistics for the March 2010 quarter and year to date (nine
months to 31 March 2010) with comparatives for the December 2009 and September
2009 quarters are summarised in Table I.
Table I. Gold production statistics
----------------------------------------------------------------------------
Quarter ended Quarter ended Quarter ended Current YTD
Period Unit 31 Mar 2010 31 Dec 2009 30 Sep 2009 31 Mar 2010
----------------------------------------------------------------------------
Tonnes mined tonnes 45,359 53,064 40,434 138,857
----------------------------------------------------------------------------
Ore milled tonnes 40,943 37,588 40,467 118,998
----------------------------------------------------------------------------
Head grade gpt 20.61 18.68 14.78 18.07
----------------------------------------------------------------------------
Recovery % 94% 94% 94% 94%
----------------------------------------------------------------------------
Gold produced ozs 25,505 21,108 18,054 64,667
----------------------------------------------------------------------------
Cash costs (1) US$ $180 $184 $193 $185
----------------------------------------------------------------------------
Gold sold (2) ozs - 21,108 18,054 39,162
----------------------------------------------------------------------------
Average gold
price received US$ - $1,111 $975 $1,047
----------------------------------------------------------------------------
Note:
-----
(1) Cash costs refers to the cost of gold mined (net of development costs),
produced and sold and includes taxes, royalties and local production
taxes of US$48 per ounce for the Mar 2010 qtr (Dec 09 qtr: US$48 per oz,
Sep 2009 qtr: US$34 per ounce; Current YTD: US$46 per ounce)
(2) The Company did not sell any gold during the Mar 2010 qtr and retained
its entire gold production for the qtr as bullion or on metal account.
Gold production for the quarter increased to 25,505 ounces (a 20% increase from
the previous quarter's production) at an average grade of 20.61 g/t gold and
cash costs of US$180 per ounce.
Medusa an unhedged gold producer, did not sell any gold during the quarter and
retained its entire gold production for the quarter as bullion or on metal
account.
Phase II of the Company's expansion programme was completed on schedule and the
forecast gold production for the fiscal year to 30 June 2010 is anticipated to
be around 90,000 ounces at an anticipated cash cost of US$190 per ounce.
As reported in the previous quarter, the presence of unusual amounts of black
leader material in current mine development concentrated along the Great Hamish,
Central, Jeremy and Roysan veins has resulted in the current high grades being
processed. It should be noted that the occurrence of black leader material
rarely shows up in drilling and its occurrence is highly unpredictable.
To view Graph 1, please visit the following link:
http://media3.marketwire.com/docs/medusa_graph_1.pdf
Co-O MINE
Mine Development
The mine development has proceeded extremely well with 5 levels at 50 metres
apart operating and a 6th expected to be opened around mid-year. There is
currently approximately 60,000 tonnes of broken ore in stopes underground, 21
headings and approximately 36 stopes on the breaking cycle. In addition there is
around 20,000 tonnes of ore stockpile.
This situation augurs well for meeting our production targets going forward.
Mine Production
Production has continued uninterrupted at the mine.
The fitting of the skip and headframe to the vertical Ventilation Shaft near the
Baguio Shaft to haul mineralised material from above Level 2 should be completed
in the next quarter.
Driving from Level 3 northwards from the Baguio Shaft area to link up with the 3
compartment Tinago Shaft is progressing well. A rise from Level 3 to Level 2
will complete this work and open the Tinago Shaft for ventilation initially. If
sufficient mineralised material can be located in this area, then it could be
converted to a haulage shaft.
Mill Expansion
Commissioning of the expanded milling capacity has now been completed.
Tailings Dam
Construction of a new eight year life tailings dam is progressing and is due for
completion late in the 2nd quarter of 2010 subject to favourable weather
conditions.
Power
The Company is finalising arrangements with the local power provider for a
dedicated line from San Francisco to the mill. Surveying of the route has
already commenced with the current projection for completion in the 3rd quarter
of the year. All costs over the estimated budget will be advanced initially by
the Company and these will be recovered through tariff reductions.
To view Plate 1, please visit the following link:
http://media3.marketwire.com/docs/medusa_plate_1.pdf
RESOURCE DRILLING
Discussion
Figure 3 (attached) shows all the new MD series diamond drill holes from MD 217
to MD 240 totalling 11,262 metres which have been completed around the Co-O Mine
since 9 December 2009. Results are awaited for MDs 236 and 240.
The on-going drilling programme has concentrated on infill and extensional (up
and down dip, and lateral) drilling in and around the Co-O Mine.
Drill results
Table II lists the surface diamond drilling results greater than 3 g/t gold from
the Co-O Mine for new drill holes from MD 217 to MD 240 as well as results not
previously reported for some earlier holes. These drill hole results will be
incorporated into a new resource estimate which is expected to be completed in
July-August 2010. Other reports containing intersections for holes numbered
below MD 217 were announced on 18 January 2010, 1 July 2009, 1 December 2008 and
11 August 2008. In 2007 the announcements are dated 9 July, 15 May and 28
February. The 2007 announcements also contain information regarding drilling and
surveying techniques, comments on vein interpretation and methodologies and
assaying protocols.
The announcement of 29 March 2010 contained more detailed results down to 0.2
metres wide as underground development shows that in many cases as the veins
approach cross-cutting faults, they narrow down on both sides of the fault over
5 to 10 metres before widening out, and hence the narrower intersections are
important in defining vein continuity. There is also some pinching and swelling
of veins along strike. Most drilling is sub-parallel to the fault direction and
rarely intersects the faults, which are subsequently identified by underground
on-vein development.
Table II. Drill hole results greater than 3 g/t gold and equals 0.5 metres
downhole for new holes MD 217 to MD 240 and complete assays for some previously
partly reported holes designated (i)
----------------------------------------------------------------------------
Hole East North Dip Azimuth From Width Grade (uncut)
(degrees) (degrees) (metres) (metres) (g/t gold)
----------------------------------------------------------------------------
MD 212(i) 614329 913256 -53 180 301.80 0.70 3.09
--------------------------------
387.15 0.95 9.67
--------------------------------
468.10 0.50 10.23
--------------------------------
486.30 1.30 3.46
--------------------------------
494.20 3.90 3.75
----------------------------------------------------------------------------
MD 213(i) 613320 912924 -80 180 58.80 2.25 3.06
--------------------------------
66.15 4.25 6.02
--------------------------------
72.55 1.15 3.53
----------------------------------------------------------------------------
MD 214(i) 614532 913022 -60 160 427.65 0.65 23.50
--------------------------------
479.80 1.70 99.63
--------------------------------
590.10 6.40 23.36
----------------------------------------------------------------------------
MD 215(i) 614498 913211 -65 165 612.50 1.00 4.85
----------------------------------------------------------------------------
MD 216(i) 613551 912780 -45 220 126.80 0.45 15.07
----------------------------------------------------------------------------
MD 217 613284 912951 -74 121 96.60 2.55 5.14
--------------------------------
141.10 3.00 3.59
----------------------------------------------------------------------------
MD 218 614331 913241 -45 177 377.10 0.50 13.83
--------------------------------
558.95 0.65 58.66
--------------------------------
626.70 1.70 4.42
----------------------------------------------------------------------------
MD 220 613286 912950 -77 162 87.40 3.80 8.34
----------------------------------------------------------------------------
MD 221 613366 913038 -45 202 151.45 2.45 6.33
----------------------------------------------------------------------------
MD 222 613437 913229 -45 340 605.80 0.70 3.60
----------------------------------------------------------------------------
MD 226 614331 913243 -47 160 436.50 1.05 3.05
--------------------------------
523.05 0.55 10.50
----------------------------------------------------------------------------
MD 227 614137 912987 -45 180 241.10 3.10 3.61
--------------------------------
322.25 0.50 25.63
--------------------------------
332.85 1.40 20.63
----------------------------------------------------------------------------
MD 228 613388 913227 -45 150 73.95 1.35 3.65
--------------------------------
108.20 1.00 3.83
--------------------------------
118.10 4.75 3.03
--------------------------------
147.45 0.85 30.33
--------------------------------
189.10 2.50 3.44
--------------------------------
198.80 1.60 22.48
--------------------------------
408.20 0.60 3.07
--------------------------------
411.70 1.85 3.97
----------------------------------------------------------------------------
MD 230 613836 913239 -46 170 232.00 1.30 3.67
--------------------------------
266.60 1.95 3.34
--------------------------------
372.30 3.80 6.36
--------------------------------
380.10 1.85 7.38
--------------------------------
445.90 1.00 5.67
--------------------------------
468.45 1.55 3.43
--------------------------------
533.60 3.00 10.00
----------------------------------------------------------------------------
MD 231 613969 913099 -46 189 85.25 0.75 24.93
--------------------------------
158.90 1.70 4.38
--------------------------------
169.10 2.00 16.49
--------------------------------
235.60 1.65 6.25
--------------------------------
240.40 1.50 3.82
----------------------------------------------------------------------------
MD 232 614353 913191 -56 154 350.20 1.30 17.59
--------------------------------
590.65 1.15 35.18
--------------------------------
704.80 1.00 6.27
----------------------------------------------------------------------------
MD 233 614137 912993 -60 175 306.50 2.05 5.98
--------------------------------
423.80 0.50 10.20
----------------------------------------------------------------------------
MD 235 614020 913156 -57 200 142.20 3.30 3.69
----------------------------------------------------------------------------
MD 237 613812 913203 -49 176 299.40 1.20 13.16
--------------------------------
331.20 1.00 26.83
----------------------------------------------------------------------------
MD 239 613369 913037 -45 168 110.90 4.90 20.27
--------------------------------
125.10 0.50 8.76
--------------------------------
156.80 1.30 4.84
--------------------------------
195.75 1.45 8.91
--------------------------------
233.00 1.00 10.70
--------------------------------
244.80 2.30 9.53
----------------------------------------------------------------------------
Notes:
------
(i) Intersection widths are downhole drill widths not true widths;
(ii) All assays are by Philsaga Mining Corporation's laboratory;
(iii) Grid coordinates based on the Philippine Reference System 92;
Co-O REGIONAL DRILLING
Using the Co-O Mine as a model, drill testing commenced in the September quarter
of 2009 on veins in the vicinity of the Co-O Mine.
The Co-O vein system outcrops at surface on the western side of the Oriental
Fault, where it was first discovered. The veins at surface rarely exceed 0.5
metres width and generally assay around 1 to 5 g/t gold (with possibly some
supergene enrichment). Gold values started to increase significantly
approximately 80 metres below surface.
To date 22 drill holes (EXP 1 to 22) as shown on Figure 3 (attached) have been
completed. Results for EXP 1 to 12 were announced on 17 December 2010.
Subsequent drill holes have not achieved any significant results above 1 g/t
gold to date. Hole EXP 17 was re-drilled as EXP 18, and drill hole EXP 19 was
re-drilled as EXP 21.
To view Figure 3, please visit the following link:
http://media3.marketwire.com/docs/medusa_figure_3.pdf
To view Figure 4, please visit the following link:
http://media3.marketwire.com/docs/medusa_figure_4.pdf
LINGIG COPPER PROJECT
The Lingig prospect is covered by a Mines Operating Agreement ("MOA") over
Mineral Production Sharing Agreement ("MPSA") application number APSA 024-XIII
comprising two parcels situated to the north and to the east (the Lingig
porphyry copper prospect) of the Co-O Mine and millsite as shown on Figure 2.
Drilling was completed during the quarter while results to date are assessed and
the rigs can be re-allocated to other projects. An update of recent drilling
will be provided when all results are available.
TAMBIS-BAROBO REGION
The Tambis project, currently comprising the Bananghilig Gold Deposit and the
Kamarangan copper porphyry prospect (Fig. 2), is operated under a Mining
Agreement with Philex Gold Philippines Inc. over MPSA application
APSA-000022-XIII which covers 6,262 hectares.
Figure 2 shows the location of the Bananghilig Deposit. Preparations are
advancing for a major drilling campaign commencing around July 2010 as the basis
for pre-feasibility studies. 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.
ANOLING
The Mines Operating Agreement with Alcorn Gold Resources Inc. covers MPSA
application number 039-XIII situated approximately 8 kilometres north from the
millsite as shown on Figure 2. Processing of the MPSA is progressing.
Mapping and sampling is continuing. Drilling will recommence when the MPSA is
granted.
OTHER PROJECTS
-- Sur-sur Project.
The Company is advancing the tenement applications.
-- Saugon Project
Construction of field camps and access are in progress for the
commencement of drilling shortly. A summary of results from the
Company's drilling in 2004 will be provided in the near future.
FINANCIALS
As at 31 March 2010, the Company which is debt free, had a cash and cash
equivalent balance of US$48.1 million (Dec 2009: US$35.5 million);
During the quarter,
-- The Company did not sell any gold and retained it's entire gold produced
for the quarter as bullion or on metal account (Dec 2009 qtr: Gold
proceeds totalling US$23.4 million from the sale of 21,108 ozs of gold
at an average price of US$1,111 per oz);
-- Incurred exploration expenditure of US$4.3 million (Dec 2009 qtr: US$5.8
million);
-- Spent US$1.8 million on capital works associated with the mine/mill
expansion and sustaining capital (Dec 2009 qtr: US$1.7 million); and
-- Expensed US$1.8 million in mine development costs (Dec 2009 qtr: US$1.8
million).
CORPORATE
A one for ten bonus issue of shares to all shareholders of the Company was
announced on 8 March 2010 and finalised during the quarter.
Information in this report relating to Exploration Results has been reviewed and
is based on information compiled by Mr Geoff Davis, who is a member of The
Australian Institute of Geoscientists. Mr Davis is the Managing Director of
Medusa Mining Limited and has sufficient experience which is relevant to the
style of mineralisation and type of deposits under consideration and to the
activity which he is undertaking to qualify as a "Competent Person" as defined
in the 2004 Edition of the "Australian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves" and is a "Qualified Person" as
defined in "National Instrument 43-101" of the Canadian Securities
Administrators. Mr Davis consents to the inclusion in the report of the matters
based on his information in the form and context in which it appears.
Information in this report relating to Mineral Resources has been estimated and
compiled by Mark Zammit of Cube Consulting Pty Ltd of Perth, Western Australia.
Mr Zammit is a member of The Australasian Institute of Mining & Metallurgy and
has sufficient experience that is relevant to the style of mineralisation and
type of deposit under consideration and to the activity which he is undertaking
to qualify as a Competent Person as defined in the 2004 Edition of the
"Australian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves" and is a "Qualified Person" as defined in "National Instrument 43-101"
of the Canadian Securities Administrators. Mr Zammit consents to the inclusion
in the report of the matters based on his information in the form and context in
which it appears.
Information in this report that relating to Ore Reserves is based on information
compiled by Declan Franzmann, B Eng (Mining), MAusIMM. Mr Franzmann is a
full-time employee of Crosscut Consulting. Mr Franzman has sufficient experience
which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which they are undertaking to qualify as
Competent Persons as defined in the 2004 Edition of the "Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore Reserves" and is a
"Qualified Person" as defined in "National Instrument 43-101" of the Canadian
Securities Administrators. Mr Franzmann consents to the inclusion in the report
of the matters based on his information in the form and context in which it
appears.
Refer to the revised Technical Report which was filed on www.sedar.com in March
2010 for further discussion of the Co-O Deposit's geology, structural controls,
drilling, sampling and assaying information, and any known material
environmental, permitting, legal, title, taxation, socio-political, marketing or
other relevant issue.
ABOUT MEDUSA MINING LIMITED
Medusa Mining Limited ("Medusa" or the "Company") a public company listed on the
ASX, AIM and the TSX, is an Australian based gold producer, focussed solely on
the Philippines.
With current mineral resources comprising Indicated 580,000 ounces of gold and
Inferred 1,310,000 ounces of gold, Medusa's corporate strategy is to become a
mid-tier, 300,000 to 400,000 ounce per year, low-cost gold producer.
The Company is currently expanding its high grade Co-O Mine operations
(Indicated Resources 580,000 ounces of gold inclusive of a Probable Reserve of
500,000 ounces of gold, and Inferred Resources 660,000 ounces of gold) to
increase its forecast production to 100,000 ounces per year in 2010, and is
conducting near mine exploration to assess the possibilities of further
expansion to 200,000 ounces per year. Current cash costs at the Co-O Mine are
approximately US$190 per ounce.
A pipe-line of deposits is now being established with the Bananghilig Deposit
(Inferred Resource of 650,000 ounces of gold) recently added and which is
expected to expand, potentially in conjunction with nearby discoveries.
Further potential upside exists in the discovery of substantial copper deposits
within the tenement holding of more than 800 km2.
DISCLAIMER
This announcement may contain certain forward-looking statements. The words
'anticipate', 'believe', 'expect', 'project', 'forecast', 'estimate', 'likely',
'intend', 'should', 'could', 'may', 'target', 'plan' and other similar
expressions are intended to identify forward-looking statements. Indications of,
and guidance on, future earnings and financial position and performance are also
forward-looking statements.
Such forward-looking statements are not guarantees of future performance and
involve known and unknown risks, uncertainties and other factors, many of which
are beyond the control of Medusa, and its officers, employees, agents and
associates, that may cause actual results to differ materially from those
expressed or implied in such statements.
Actual results, performance or outcomes may differ materially from any
projections and forward-looking statements and the assumptions on which those
assumptions are based.
You should not place undue reliance on forward-looking statements and neither
Medusa nor any of its directors, employees, servants or agents assume any
obligation to update such information.
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