The decline in gold prices over the last 12 months has seen Philippines miner Medusa Mining take an Aus$260 million write-down of its assets. As a result of the write-down the ASX-listed company has reported a net loss of Aus$218.1 million for the year to June 30.
The impairment is purely an accounting treatment and has no bearing on JORC-compliant resources and reserves at the Co-O Gold Project in northern Mindanao. It will, therefore, have no impact on the company’s operations.
Disregarding the impairment, Medusa made an underlying profit of Aus$41.5 million for the 12 months, an increase of 34% and which it describes as ‘a good result’.
Medusa remains profitable even under current gold prices with all-in-sustaining-costs of around US$1000 per ounce with scope for this to be lowered as operational improvements are implemented to improve throughput to match plant capacity.
Medusa’s CEO Geoff Davis says the impairment will also decrease future depreciation and amortization charges. “Given that the carrying value of the company’s asset was considerable higher than its market capitalization at June 30, 2015 the company was compelled to perform an impairment test, which resulted in a charge of almost US$260 million to its 2015 financials.
Recently, Medusa announced that it had met its production guidance for the year to June 30, revealing output was 98,539 ounces, which was within the guidance of between 95,000 and 100,000 ounces. It expects to produce between 120,000 and 130,000 ounces in the current financial year as operations at the site are optimized and improved.