Medusa Mining delivers on promise (February 25, 2011)

Record gold production at low cash costs averaging US$186 per oz. contributed to record net profit after tax of US$58.1 million in the six months ended Dec. 31 2010, Medusa Mining (MLL-T, MML-L, MML-A) reports.

The company’s flagship asset, the high-grade underground gold mine Co-O in the Philippines, produced a record 51,127 ounces of gold in the half year, a 30% increase from the year-earlier six-month period, at an average recovered grade of 14.28 grams gold per tonne.

Earnings before interest, tax, depreciation and amortisation or EBITDA reached US$63.3 million, up 101% year-on-year from US$31.5 million. Revenues jumped 90% to a record US$78.3 million due to increased gold production and higher gold prices.

Debt free and unhedged, Medusa received an average gold price of US$1,291 per oz. from the sale of 48,883 ounces of gold in the half-year period.

Medusa anticipates gold production of 102,000 ounces at an average cash cost of US$190 per oz. for the full fiscal year ending on June 30 2011.

In November 2010, Medusa’s board approved plans to build a new US$80 million treatment plant at the Co-O mine, with a capacity to produce 200,000 oz. gold per year. The new plant will be funded out of cashflow.   

At presstime in Toronto Medusa was trading at $6.97 per share. Over the last year it has traded in a range of $3.30 per share (July 7, 2010) and $7.70 per share (Jan. 19, 2011) and has 188.2 million shares outstanding.

The Co-O mine lies on the west bank of the Agsao River, about 20 km east of the Philippine Fault and 140 km north of Davao. It is situated along the Diwata Ranges, which form part of the East Mindanao Ridge, a mineralized region with a mining history dating to before the Second World War.