Lower than expected gold output and a recent review of operations have resulted in Medusa Mining lowering its production guidance from the Co-O Gold Project in the Philippines for 2016 to around 108,000 ounce from 120,000 to 130,000 ounces.

For the three months to March 31, the company produced 21,980 ounces at a head grade of 5.47 grams/tonne (g/t) gold compared to 29,674 ounces in the December 2015 quarter. Gold recovery averaged 94%, which was on par with the previous quarter. All in sustaining costs (AISC) were US$1033, up from US$950 in the preceding quarter.

The increase in cash costs and AISC is due to reduced ounces from a combination of the following factors:

  • Mine development advance was up by 8% quarter on quarter, lowering the overall grade of ore material hoisted, and the development waste displaced ore material as the Co-O mine is hoist constrained.
  • Mill throughput was down by 9% quarter on quarter. The mine feed grade was down by 20% quarter on quarter based on the available stoping material. Broken stockpiles were at 50,000 tonnes as of March 31, 2016.

Medusa expects the AISC guidance will remain at elevated levels of between US$900 to US$1000 until all mine medium-term waste infrastructure project are completed and the cost efficiencies they produce materialise.

During the March quarter horizontal and vertical development advanced 5266 metres, up from 4836 in the December quarter. With the service shaft, blind sinking was complete from the surface to 65 metres and 26 metres remained to connect with the top of the Alimak raise, which is completed from Level 8 to above Level 3.

Medusa is developing three internal winzes from Level 8 to Level 10 in advance of the Service Shaft extension to L10. The primary exploration drift on L8 was completed in the quarter to 84E with drilling scheduled to start during April.

Underground drilling to expand the resource kicked off in March from levels 8 to 16, but there were initial delays due to rig availability and issues around the chambers. Results include 3.35 metres @ 146 g/t gold, 3.1 metres @ 76 g/t, 2.35 metres @ 69 g/t and 0.55 metres @ 336 g/t. Surface exploration is continuing at the South Agsao veins.

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