After a difficult year at its Co-O Gold Project in the Philippines, Medusa Mining expects to maintain production in the 2017/18 financial year at between 80,000 and 90,000 ounces. The company produced 80,743 ounces in the year ending June 30, 2017, compared to 108,578 ounces in the previous year and experienced problems with its mine development plan.
The average cash cost of US$595 per ounce for the 12 months, inclusive of royalties and local business taxes was higher than the previous year’s average cash costs of US$466 per ounce. The All in Sustaining Cost (AISC) was US$1374 per ounce of gold compared to the previous year’s AISC of US$999 per ounce, primarily as a result of a drop in production.
The AISC for the current financial year is expected to be between US$1050 and US$1200 per ounce.
According to Proactive Investors, the completion of the E15 Service Shaft by the March quarter of 2018 will free up the L8 production shaft with improvements in performance starting to come through almost immediately from that point.
Major write-offs, including US$70.8 million in impairments and US$7.1 million in exploration, meant an underlying loss of US$35.2 million for the period with a net deficit of US$62.1 million. Revenues fell from US$128.1 million to US$100.1 million, alhough the gold price per ounce received increased rose to US$1256 per ounce.
Medusa says the guidance is governed by completion of the E15 shaft. Once completed, the E15 will unconstrain the L8 Production Shaft as all manpower and materials will be removed and the L8 Production Shaft becomes a dedicated skipping shaft.
The guidance also assumes that Co-O will be realising improvements within the March 2018 quarter and allowing a reasonable transition period.
Proactive Investors says that Medusa has not been subject to any formal intervention as a result of a crackdown on miners orchestrated by the Philippines Department of Environmental and Natural Resources.
The Co-O mine is also on the island of Mindanao, where martial law was declared on May 25 and is still in force, though Proactive says so far the company has also reported no disruptions to its operations.
Medusa is still exploring at and near Co-O, including at the Bananghilig deposit, in a bid to replenish reserves and resources, and management expects ongoing exploration to continue to find new areas to mine.