Medusa Mining Limited (TSX:MLL)(ASX:MML)(AIM:MML) -
OVERVIEW:
Co-O MINE PRODUCTION
-- Quarterly production of 25,012 ounces at an average grade of 13.65 g/t
at cash cost of US$182 per ounce and record annual production of 89,679
ounces
Co-O RESOURCES & RESOURCE DRILLING
-- Indicated Resources increased by 4% to 603,000 ounces and Inferred
Resources increased by 36% to 898,000 ounces
-- Drill gold results announced 30 June include 1.00 metre at 26.83 g/t,
2.00 metres at 23.35 g/t, 1.00 metre at 22.13 g/t, 1.20 metres at 28.74
g/t, 1.70 metres at 54.41 g/t, 1.95 metres at 36.39 g/t, 1.25 metres at
23.76 g/t and 4.00 metres at 64.54 g/t
-- Reserve estimate scheduled for August 2010
BANANGHILIG DEPOSIT
-- Granting of the Tambis MPSA covering the Bananghilig Deposit is well
advanced
-- Drilling has commenced with one rig, with four more rigs expected to
follow by the end September
LINGIG COPPER
-- Mineralisation located in two settings, basalt-hosted and diorite-hosted
-- Recent results include 154.60 metres at 0.45% copper ending in
mineralisation and 86.00 metres at 0.12% copper
-- Assessment of results to be undertaken before further drilling
SAUGON PROJECT
-- Drilling currently underway with two rigs
FINANCIALS & CORPORATE
-- Total cash and bullion at end of quarter of approximately US$62.0
million (unaudited)
-- Appointment of Mr Peter R. Jones as Non-executive Chairman and Mr Peter
Hepburn-Brown as Executive Director Operations
(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.
SNAPSHOT OF MEDUSA:
-- Expanding gold producer operating solely in the Philippines
-- Debt free and un-hedged
-- Forecast production FY 2010/11 of 100,000 ozs.
-- Long term cash costs at Co-O Mine circa US$190 per oz
-- Co-O Mine conceptual target size 3 to 7 million ozs(ii)
-- Mineral Resources comprise
-- Co-O Mine: Indicated 603k ozs at 13.2 g/t gold; Inferred 898k ozs
at 9.6 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 seven porphyry copper targets
Board of Directors
Peter R. Jones (Non-executive Chairman)
Geoffrey Davis (CEO)
Peter Hepburn-Brown (Director Operations)
Roy Daniel (CFO)
Robert Weinberg (Non-executive Director)
Andrew Teo (Non-executive Director)
Capital Structure:
Ordinary shares: 187,584,911
Unlisted options: 1,240,000
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/mll0728fig1.pdf.
To view Figure 2, please visit the following link:
http://media3.marketwire.com/docs/mll0728fig2.pdf.
Co-O MINE
GOLD PRODUCTION
The production statistics for the June 2010 quarter with comparatives for the
March 2010, December 2009 and September 2009 quarters and Year to Date are
summarised in Table I.
Table I. Gold production statistics
----------------------------------------------------------------------------
Qtr ended Qtr ended Qtr ended Qtr ended YTD 30 Jun
Period Unit 30 Jun 10 31 Mar 10 31 Dec 09 30 Sep 09 10
----------------------------------------------------------------------------
Tonnes mined WMT 53,872 51,512 54,222 43,287 202,893
----------------------------------------------------------------------------
Ore milled DMT 60,611 40,943 37,588 40,467 179,609
----------------------------------------------------------------------------
Head grade gpt 13.65 20.61 18.68 14.78 16.52
----------------------------------------------------------------------------
Recovery % 94% 94% 94% 94% 94%
----------------------------------------------------------------------------
Gold produced
(1) ozs 25,012 25,505 21,108 18,054 89,679
----------------------------------------------------------------------------
Cash costs (2) US$ $182 $180 $184 $193 $184
----------------------------------------------------------------------------
Gold sold ozs 24,858 - 21,108 18,054 64,020
----------------------------------------------------------------------------
Average gold
price received US$ $1,182 - $1,111 $975 $1,100
----------------------------------------------------------------------------
Note:
(1) Gold production, is actual gold poured during the period and does not
reflect changes in the balance of gold in circuit
(2) Cash costs refers to the cost of gold mined (net of development costs),
produced but not necessarily sold and includes royalties and local taxes
of US$46 per ounce for the Jun 2010 qtr (Mar 10 qtr: US$48 per oz, Dec
09 qtr: US$48 per oz, Sep 2009 qtr: US$34 per ounce, YTD: US$46 per
ounce)
Gold production for the quarter was 25,012 ounces at an average grade of 13.65
g/t gold and cash costs of US$182 per ounce. Annual production for the year
ended June 2010 was 89,679 ounces at an average grade of 16.52 g/t gold and cash
costs of US$184 per ounce, inclusive of taxes, royalties and production taxes of
US$46 per ounce.
Medusa an unhedged gold producer, sold 24,858 ounces of gold at an average price
of US$1,182 during the quarter.
The increased tonnage processed reflects increased throughput capacity of the
mill. The reduction in grade compared to the previous quarter reflects less
development in areas with black leader (which are being set up for longhole
stoping) and the use of some of the stockpiled material. The grade is within the
anticipated long term grade range of 12 to 15 g/t gold.
The forecast for the forthcoming fiscal year is production of 100,000 ounces at
anticipated cash costs of US$190 per ounce.
To view Graph 1, please visit the following link:
http://media3.marketwire.com/docs/mll0728graph1.pdf.
Co-O MINE
Mineral Resource Estimate
A new mineral resource estimate was completed by Cube Consulting Pty Ltd of
Perth, Western Australia (see announcement of 22 July 2010) resulting in the
Indicated Resources increasing by 4% and the Inferred Resources increasing by
36% as summarised in Table II.
Table II. Co-O Mine mineral resource estimate to 21 June 2010
----------------------------------------------------------------------------
greater than 0 g/t gold
Category ------------------------------------------
tonnes g/t gold ounces
----------------------------------------------------------------------------
Indicated 1,418,000 13.2 603,000
----------------------------------------------------------------------------
Inferred 2,905,000 9.6 898,000
----------------------------------------------------------------------------
Notes:
-- A lower cut-off of 0 g/t gold has been applied
-- Variable upper cuts up to 200 g/t gold has been applied to different
veins
-- Rounding to the nearest 1,000 may result in some slight discrepancies in
totals.
Mine Development
The new 60 metre inclined shaft (6W) to the Level 6 has reached final depth and
development on Level 6 will commence during the next quarter (Fig. 4).
A vertical siter or shaft location drill hole to 500 metres depth has been
completed to the north of the adit entrances (Fig. 4) in preparation for sinking
a vertical ventilation shaft, the Mid Royal Shaft, initially to Level 2. This
shaft will also allow rationalisation of services into the mine (power, water,
compressed air). Preparations for shaft sinking is expected to commence during
the next quarter.
The Level 3 drive from the Baguio Shaft to below the Tinago Shaft has been
completed and preparations are under way to commence an Alimak rise to link
Level 3 to the Tinago Shaft. This will then act as the main ventilation exhaust
for the western end of the mine. It is intended that a power line will be
installed to the Tinago Shaft.
Mine Production
Production has continued uninterrupted at the mine. Surface stockpiles are
approximately 20,000 tonnes which were drawn down by around 7,000 tonnes.
The fitting of the skip and headframe to the vertical Ventilation Shaft near the
Baguio Shaft to haul mineralised material from above Level 1 has been completed
with haulage commenced.
Mill Expansion
The mill expansion comprised a new primary, secondary and tertiary crushing
circuit with a washing and screening section. The fine ore is stored in two 800
tonne capacity fine ore bins.
Mill operation during the period was in line with management expectations.
Increased efficiencies were achieved after smaller diameter grinding balls were
loaded into the ball mill in line with the finer feed size now available. The
milling averaged 666 tonnes per day compared to 454 tonnes per day in the
previous quarter, an increase of 46%.
A thickener unit is nearing completion. Construction of a new water storage tank
is expected to commence during the next quarter followed by two new leach tanks.
Tailings Dam
Construction of a new eight year life tailings dam has been completed.
Power
Construction has commenced on the dedicated power line from the San Francisco
sub-station to the mill. It is anticipated that this will be completed in the
December quarter 2010.
RESOURCE DRILLING
Discussion
Figure 4 (attached) shows all the new MD series diamond drill holes from MD 241
to MD 260 totalling 13,993 metres which have been completed around the Co-O Mine
since 29 March 2010. Results are awaited for MDs 258 and 259. Figure 5
(attached) shows the underground drilling totalling 4,865 metres from all levels
in the mine.
A possible new vein(s) discovery is indicated by intersections to the north of
the Royal Vein which have been returned from MED 244 (0.40 metres at 17.20 g/t
gold and 1.00 metre at 3.14 g/t gold), MED 252 (0.25 metres at 16.87 g/t gold
and 0.20 metres at 16.11 g/t gold), and EXP 028 (0.35 metres at 10.59 g/t gold,
1.00 metre at 1.37 g/t gold and 0.20 metres at 2.39 g/t gold) in conjunction
with a deep intersection in MD 68 which intersected 3.10 metres at 15.37 g/t
gold at approximately 500 metres below Level 1 (announced 4 June 2008).
An increasing amount of resource drilling will be undertaken from underground
allowing some of the surface rigs to be re-allocated to the Bananghilig Project.
Drill results
Table III lists the surface diamond drilling results greater than 3 g/t gold
over greater than 0.5 metres from the Co-O Mine for new drill holes from MD 241
to MD 260 as well as results not previously reported for one earlier hole as
announced on 30 June 2010. Other reports containing intersections for holes
numbered MD 217 to 240 were announced on 29 March 2010 and for holes below MD
217 were announced on 18 January 2010, 1 July 2009, 1 December 2008 and 12
August 2008. In 2007 the announcements are dated 9 July, 15 May and 28 February.
The announcement of 30 June 2010 also contains information regarding drill hole
surveying techniques and comments on vein interpretation, resource conversion
methodologies and sampling and assaying procedures.
Table IV lists the underground drill holes from Levels 2, 3, 4 and 5.
The announcement of 30 June 2010 contains more detailed results for surface and
underground drill holes 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 and some cross-faulting.
Most drilling is sub-parallel to the fault directions and rarely intersects the
faults, which are subsequently identified by underground on-vein development.
Table III. Co-O surface drill hole results greater than 3 g/t gold and greater
than 0.5 metres downhole for new holes MD 241 to MD 260 and complete assays for
previously partly reported hole designated (i)
----------------------------------------------------------------------------
Grade
Hole Dip Azimuth From Width (uncut)
number East North (degrees) (degrees) (metres) (metres) (g/t gold)
----------------------------------------------------------------------------
MD 237(i) 613812 913203 -49 176 299.50 1.15 14.10 (i)
------------------------------
331.20 1.00 26.83 (i)
----------------------------------------------------------------------------
MD 241 614136 912992 -45 193 278.10 2.00 23.35
------------------------------
308.90 0.60 35.45
------------------------------
404.80 0.65 7.16
----------------------------------------------------------------------------
MD 244 614130 913231 -60 180 77.75 1.00 3.14
------------------------------
205.20 0.50 4.52
------------------------------
256.40 0.75 17.95
------------------------------
276.80 1.00 7.60
------------------------------
356.50 0.80 15.52
------------------------------
380.10 1.00 22.13
----------------------------------------------------------------------------
MD 245 613721 913204 -47 180 298.60 0.95 8.82 (i)
------------------------------
MD 247 613640 913131 -45 191 376.00 1.15 5.50 (i)
----------------------------------------------------------------------------
MD 252 614292 913157 -45 200 220.90 1.50 5.86 (i)
------------------------------
441.70 0.60 4.23 (i)
------------------------------
495.30 1.20 28.74 (i)
------------------------------
531.30 1.40 4.54 (i)
------------------------------
MD 260 613450 913207 -67 148 413.50 1.00 6.57 (i)
----------------------------------------------------------------------------
Notes:
(i) Intersection widths are downhole drill widths not true widths
(ii) Assays denoted by (i) are by Philsaga Mining Corporation's laboratory,
all other assays are by McPhar Geoservices Inc. in Manila
(iii) Grid coordinates based on the Philippine Reference System 92.
Table IV. Co-O underground drill hole results greater than 3 g/t gold and
greater than 0.5 metres downhole
----------------------------------------------------------------------------
Grade
Hole Dip Azimuth From Width (uncut)
number East North (degrees) (degrees) (metres) (metres) (g/t gold)
----------------------------------------------------------------------------
LEVEL 2
----------------------------------------------------------------------------
L2-014 613350 912801 3 0 86.00 0.70 38.16 (i)
------------------------------
152.05 0.65 18.33 (i)
----------------------------------------------------------------------------
L2-015 613368 912785 3 10 86.00 0.70 29.00 (i)
------------------------------
89.65 0.30 13.10 (i)
------------------------------
159.70 0.35 7.80 (i)
----------------------------------------------------------------------------
LEVEL 3
----------------------------------------------------------------------------
L3-003 613258 912846 3 59 3.20 1.55 4.31 (i)
------------------------------
L3-004 613376 912985 3 327 21.20 0.90 3.09 (i)
----------------------------------------------------------------------------
L3-005 613477 912930 3 42 87.25 1.35 7.20 (i)
----------------------------------------------------------------------------
L3-008 613913 913028 3 23 103.10 4.20 4.98 (i)
----------------------------------------------------------------------------
LEVEL 4
----------------------------------------------------------------------------
L4-002 613923 912905 3 157 56.25 0.75 5.03 (i)
----------------------------------------------------------------------------
L4-004 613923 912905 3 157 Wait
----------------------------------------------------------------------------
L4-005 613758 912749 3 32 22.30 1.70 54.41 (i)
------------------------------
27.70 0.90 10.07 (i)
----------------------------------------------------------------------------
L4-006 613760 912748 3 47 31.50 1.10 11.53 (i)
------------------------------
137.20 1.20 5.41 (i)
----------------------------------------------------------------------------
L4-007 613757 912749 3 352 12.60 1.00 10.22 (i)
----------------------------------------------------------------------------
LEVEL 5
----------------------------------------------------------------------------
L5-001 613880 912749 -60 346 29.95 1.95 35.39 (i)
------------------------------
39.45 1.25 23.76 (i)
------------------------------
44.80 4.00 64.53 (i)
------------------------------
51.45 1.25 5.36 (i)
----------------------------------------------------------------------------
L5-003 613888 912794 3 0 57.40 2.30 12.40 (i)
------------------------------
99.00 2.00 3.70 (i)
----------------------------------------------------------------------------
L5-004 613885 912794 3 342 90.50 3.10 14.61 (i)
----------------------------------------------------------------------------
L5-005 613883 912793 3 330 55.80 2.05 6.43 (i)
------------------------------
58.50 0.60 14.37 (i)
------------------------------
258.90 1.40 3.20 (i)
----------------------------------------------------------------------------
L5-006 613885 912789 -70 168 48.20 0.70 56.87 (i)
------------------------------
50.45 2.80 18.11 (i)
----------------------------------------------------------------------------
L5-007 613885 912789 -56 168 37.75 6.50 12.24 (i)
----------------------------------------------------------------------------
Notes:
(i) Intersection widths are downhole drill widths not true widths
(ii) Assays denoted by (i) are by Philsaga Mining Corporation's laboratory,
all other assays are by McPhar Geoservices Inc. in Manila
(iii) Grid coordinates based on the Philippine Reference System 92.
Co-O CONCEPTUAL TARGET SIZE
As announced on 18 January 2010, a conceptual target size(ii) for the Co-O Mine
was estimated at between 3 and 7 million ounces. Further details are provided in
the above announcements.
Figure 6 (attached) was included in the announcement of 22 July 2010 and shows a
composite longitudinal projection of all the drill hole intersection grades
below Level 6 (250 metres below Level 1). These intersections strongly support
the concept that mineralisation extends to a depth of 500 metres below Level 1,
and also show that the mineralisation occurs below the 500 metre level.
It should be noted that the conceptual target size(ii) includes the current
resource estimate. The mine has produced approximately 290,000 ounces to 30 June
2010.
(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.
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 start to increase significantly approximately
80 metres below surface.
Figure 7 (attached) shows the positions of the 28 holes completed to date.
Results for EXP 001 to 012 were announced on 10 December 2009 and an update to
EXP 022 was provided on 29 March 2010. A total of 5,189.6 metres have been
completed in the seven holes EXP 022 to 028.
Table V shows the results greater than 1 g/t gold for holes EXP 022 to 028.
Table V. Co-O regional drill hole results greater than 1 g/t gold and greater
than 0.2 metres downhole for holes EXP 022-028
----------------------------------------------------------------------------
Grade
Hole Dip Azimuth From Width (uncut)
number East North (degrees) (degrees) (metres) (metres) (g/t gold)
----------------------------------------------------------------------------
EXP 024 613551 914075 -47 270 547.40 1.00 2.48 (i)
----------------------------------------------------------------------------
EXP 027 613941 913554 -55 155 683.00 0.25 2.12 (i)
----------------------------------------------------------------------------
EXP 028 614180 913559 -56 157 704.70 0.35 10.59 (i)
----------------------------------------------------------------------------
707.80 1.00 1.37 (i)
------------------------------
724.90 0.20 2.39 (i)
----------------------------------------------------------------------------
Notes:
(i) Intersection widths are downhole drill widths not true widths
(ii) Assays denoted by (i) are by Philsaga Mining Corporation's laboratory,
all other assays are by McPhar Geoservices Inc. in Manila
(iii) Grid coordinates based on the Philippine Reference System 92.
To view Figure 3, please visit the following link:
http://media3.marketwire.com/docs/mll0728fig3.pdf.
To view Figure 4, please visit the following link:
http://media3.marketwire.com/docs/mll0728fig4.pdf.
To view Figure 5, please visit the following link:
http://media3.marketwire.com/docs/mll0728fig5.pdf.
To view Figure 6, please visit the following link:
http://media3.marketwire.com/docs/mll0728fig6.pdf.
To view Figure 7, please visit the following link:
http://media3.marketwire.com/docs/mll0728fig7.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 has intersected copper mineralisation in two settings and results to
date are shown on Figure 8. Additional information is contained in the
announcement dated 7 May 2010.
Basalt-hosted mineralisation (now called the Basalt Prospect) is hosted within
the basaltic and doleritic rocks around the 1974 discovery area. This
mineralisation appears to form a large north plunging body presumed to be still
open to the north down-plunge. The most recent and most northerly drill hole
returned 154.60 metres at 0.45% copper but was abandoned in strong
mineralisation. It is interpreted that the bottom of this mineralisation may be
faulted-off by the underlying thrust fault and the rest of the mineralised zone
is yet to be located. Further drilling is required.
Breccia-hosted mineralisation (now called the Breccia Prospect) has continued to
be located associated with intense biotitic alteration in dioritic, polylithic
hydrothermal breccias.
The breccia body is tabular and open to the south with copper mineralisation in
intensely altered hydrothermal breccias with the most recent intersections of
154.7 metres at 0.19% copper in hole LIN 37 and 86.0 metres of 0.12% copper in
hole LIN 40. Further drilling is required.
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 (includes the Bananghilig Gold
Project and the Kamarangan copper-molybdenum prospect). Processing of the
application is well advanced.
Banaghilig Gold Project
Figure 2 shows the location of the Bananghilig Deposit. Drilling has commenced
at site and by the end of September it is intended that there will be five rigs
operating with the aim 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.
Usa Porphyry Copper-Gold Prospect
Background
The Usa prospect located within Mineral Production Sharing Agreement application
("APSA") XIII-00077. The Company has a Memorandum of Agreement with Corplex
Resources Inc ("Corplex") whereby:
-- Corplex will receive a 4% gross royalty on all production, or
-- in the event of a major discovery and completion of a Scoping Study
which demonstrates at least a five year mine life, Corplex can elect to,
(a) buy back a 30% interest by re-imbursing to the Company a sum equal to
four times the expenditure on the tenement; and
(b) contribute to 30% of all on-going expenditure from the point of buy-back
forwards.
(c) should Corplex elect not to contribute to all on-going expenditure, then
Corplex can elect once only to dilute to a 15% non-contributing free
carried interest to commencement of production, at which point the
Company shall provide a loan to Corplex to fund its 15% interest; or
(d) in the event that Corplex does not exercise the buy-back, then Corplex
will maintain its 4% gross royalty on production.
There are indications that the prospect extends eastwards into APSA XIII-00098
which is owned by Mindanao Philcord Mining Corporation which will receive a 1%
Net Profits Interest from any production.
Regional Setting
Detailed information on the Usa prospect is contained in the announcement dated
5 May 2010 and Figure 2 shows the Usa prospect location. Figure 9 shows the
detailed geology and geochemistry contours of rock chip samples.
The Usa prospect is located adjacent to the west side of the Barobo Fault
corridor. This fault is parallel to the Philippine Rift Fault located
approximately 30 kilometres to the west of the Usa prospect. The Barobo Fault
corridor has numerous gold prospects already located along or adjacent to it,
including Guinhalinan, Umbon, Matanog and Alikway.
Local Geology and Mineralisation
The geology consists of a mineralised and altered diorite complex which is
intruding andesitic volcanics, older limestone and calcareous sediments. The
setting and style of mineralisation are very similar to that at the Kamarangan
copper-molybdenum porphyry prospect to the north where chalcopyrite and
magnetite bearing diorite was intersected over several hundred metres in two
holes during a scout diamond drilling completed in late 2008 to early 2009 (see
announcement dated 29 May 2009).
The fine- to medium-grained diorite is variably but strongly phyllic altered
(white clay, sericite and pyrite) with variably dispersed hairline veinlets of
fine-grained magnetite. Mineralisation is predominantly pyrite occurring as
fracture filling grains disseminated grains and vein infill. The pyrite is
accompanied with bornite, and with occasional chalcopyrite. Malachite stained
limestone and calcareous sediments with sphalerite, pyrite and bornite veins,
and weakly mineralised pyrite and chalcopyrite magnetite have been noted in
drainage float samples to the north of the diorite.
Contouring of the rock chip copper results (greater than 700 ppm Cu) and gold
results (greater than 0.1 g/t Au) are shown on Figure 9 which are in close
spatial proximity. The relationship of the diorite body to the surrounding rocks
suggests that it has been recently uncovered and is not deeply eroded.
Artisanal mining activity with small but consistent recoveries is common in the
drainages overlying and downstream of the mineralised altered diorite. Less
active artisanal mining activity is noted to the north where chlorite and clay
altered, sulphide veined andesitic units occur.
A large grid based soil sampling program designed to delineate the extent of the
gold and copper mineralisation should be completed during the September quarter.
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.
SAUGON PROJECT
Drilling commenced at Saugon during the quarter with two drilling rigs. A
detailed summary of previous exploration conducted in 2004 was published on 20
April 2010.
FIRST HIT VEIN
Discussion
Figure 10 shows the regional geology, location of the First Hit Vein, and the
Paradise and Mabas Prospects.
Work in 2004 involved drilling of the First Hit Vein in conjunction with
underground development via a 30 metre deep 60 degrees inclined winze down the
vein-breccia to assist in understanding the mineralisation. By chance, the winze
was sunk at a contact between well banded and high grade vein on the north wall
and polylithic hydrothermal quartz breccias on the south wall containing
fragments of various different vein and silica types, and with lower grade gold
values.
The 2004 drilling indicated three zones of mineralisation as being partly
developed footwall and hanging wall zones and a well developed central zone
(First Hit Vein) which has the highest grades and a more prominent
silver-polymetallic association.
Regional Setting
Subsequent to the drilling in 2004, an aeromagnetic survey was completed which
showed the First Hit Vein set are on the northern edge of a large,
northeast-trending demagnetised zone over 2,000 metres wide and approximately
8,000 metres long, part of which is shown on Figure 10. A number of features
within this zone were interpreted to be suggestive of intrusive bodies, possibly
porphyry copper-related. Field work has established that outcropping areas of
the northern side of this zone show intense clay-pyrite alteration, which is
presumed to extend across the bulk of the zone under cover to the south.
Sections of the demagnetised zone are covered by younger sediments, some grits
and shales at the base and capped by white, semi-massive to massive limestone.
This appears to be a remnant of the same younger sequence that occurs elsewhere
to the north in the Company's tenements.
Drilling
Drilling has re-commenced at the First Hit Vein with two rigs, and will test
additional targets that have been outlined by recent field work. As the 2004
drill holes were not down hole surveyed in the early drilling, some holes will
be repeated to establish the geometry of the mineralised system before step-out
drilling is undertaken. Two rigs will be involved in the programme which will be
results-driven over the next 4 to 6 months.
Table I. First Hit Vein drill hole results greater than 3 g/t gold and greater
than 0.2 metres downhole
----------------------------------------------------------------------------
Grade
(uncut)
(g/t gold,
g/t Ag, %
Hole Dip Azimuth From Width Cu, %Pb,
number East North (degrees) (degrees) (metres) (metres) %Zn)
----------------------------------------------------------------------------
35.75, 544,
0.38, 1.88,
SDDH 2B 616944 899267 -55 316 108.50 1.00 1.62
----------------------------------------------------------------------------
9.76, 142,
0.30, 1.18,
SDDH 4 616912 899318 -59 290 89.50 0.20 0.40
----------------------------------------------------------------------------
3.26, 32,
0.20, 0.20,
SDDH 5 616964 899344 -54 345 71.80 0.95 0.61
----------------------------------------------------------------------------
4.97, 78,
0.74, 1.51,
SDDH 9 616979 899250 -67 319 176.20 0.20 1.54
----------------------------------------------------------------------------
16.30, 244,
1.32, 2.65,
SDDH 27 616921 899334 -73 300 60.80 1.00 4.97
------------------------------
9.63, not
71.05 5.95 assayed
----------------------------------------------------------------------------
20.54, not
SDDH 28 616922 899307 -70 300 89.95 2.05 assayed
----------------------------------------------------------------------------
15.32, not
SDDH 29 616961 899315 -72 300 112.25 0.90 assayed
----------------------------------------------------------------------------
3.94, not
SDDH 31 616922 899254 -75 315 174.25 0.75 assayed
----------------------------------------------------------------------------
6.87, not
SDDH 34 617033 899279 -65 310 173.80 0.40 assayed
----------------------------------------------------------------------------
5.05, not
SDDH 35 617000 899305 -65 310 128.20 0.85 assayed
----------------------------------------------------------------------------
Notes:
(i) Intersection widths are downhole drill widths not true widths;
(ii) All assays are by McPhar Geoservices Inc laboratory in Manila;
(iii) Grid coordinates based on the Philippine Reference System 92;
(iv) The drill holes have not been downhole surveyed.
OTHER PROSPECTS
Paradise Prospect
Holes SDDH 19 and 22 were drilled at the Paradise Prospect which consists of an
outcropping silica-barite cap with anomalous gold values. Drilling encountered a
1.60 metre wide barite vein containing 0.89 g/t gold. Extensive clay-pyrite
alteration of volcanics was uncovered in road cuttings to the south and
northeast of the silica outcrops.
Mabas Prospect
Holes SDDH 15, 16, 18, 20, 21, 23 and 24 were drilled at the Mabas Prospect
where there were some existing workings. The best drill-hole intersection below
the workings was 1 metre at 5.64 g/t gold in SDDH 24. The workings were
re-opened and developed. The mineralisation consisted of generally black
chalcedonic silica with some lead-zinc mineralisation and gold values in the 6
to 8 g/t range. The silica appeared to be confined to a lens or boudin within
the Mabas Shear zone.
Mabas South Prospect
The Mabas South Prospect has been discovered by recent field work, and whilst a
narrow vein at less than 0.5 metres wide, has consistently returned gold values
around 10 g/t gold in most samples. This vein will be drilled to test for grade
and thickness at depth.
To view Figure 8, please visit the following link:
http://media3.marketwire.com/docs/mll0728fig8.pdf.
To view Figure 9, please visit the following link:
http://media3.marketwire.com/docs/mll0728fig9.pdf.
To view Figure 10, please visit the following link:
http://media3.marketwire.com/docs/mll0728fig10.pdf.
FINANCIALS (unaudited)
As at 30 June 2010, the Company which is debt free, had total cash and bullion
of approximately US$62.0 million (31 Mar 2010: US$48.1 million);
During the quarter,
-- the Company sold 24,858 ounces of gold at an average price of US$1,182
(No gold was sold during the Mar 2010 qtr). Year to date gold proceeds
totalled US$70.4 million from the sale of 64,020 ounces of gold at an
average price of US$1,100 per ounce);
-- incurred exploration expenditure of US$5.4 million (Mar 2010 qtr: US$4.3
million; YTD:US$18.9 million);
-- spent US$1.8 million on capital works associated with the mine/mill
expansion and sustaining capital (Mar 2010 qtr: US$1.8 million); YTD
US$7.7 million); and
-- incurred US$2.0 million in capitalised mine development (inclusive of
shaft sinking) costs (Mar 2010 qtr: US$1.8 million; YTD: US$7.9
million).
CORPORATE
Mr Peter R. Jones was appointed Non-executive Chairman of the Company on 8 July
2010 and Mr Peter Hepburn-Brown was appointed as Executive Director -
Operations.
Managing Director, Geoff Davis commented:
"I am pleased with this quarter's production of 25,012 ounces and the record
production for the year of 89,679 ounces. Surface stockpiles and broken ore
underground augur well for achieving our production targets.
Following recent completion of the Co-O Mine two phase expansion program to the
production level of 100,000 annualised ounces, we will focus on stabilising the
operations for the next two quarters at production levels around 25,000 ounces
per quarter for the first half and then assess the possibility of incremental
production increases for the second half.
The Company is pleased with the new resource estimate at Co-O and intends to
maintain the annual total resources estimate at current levels, but will
actively continue drilling to seek exensional mineralisation outside the current
mine limits.
An exploration budget of US$20 million for the forthcoming year will ensure a
very active programme. Drilling has commenced on schedule at the extensive
Bananghilig Deposit and is underway at Saugon, highlighting both the short and
long term potential of the Company."
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 "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 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
"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 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 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.
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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