Medusa Mining has completed and commissioned the upgrade of the L8 shaft, and has started to haul ore from the 8 level.
This is a positive development, as the haulage capacity increases by 33%. The additional free cash flow will be used for additional exploration work.
Medusa's situation is definitely improving, and will very likely expand its resources this year.
Some more good news from the Philippines, as Medusa Mining (OTCPK:MDSMF) has announced it has completed and already commissioned the L8 shaft at the company's Co-O gold mine. As the commissioning of the shaft has been completed, the underground mining activities at the 8 level have started earlier this week.
This shaft upgrade will be quite important for Medusa Mining, as it increases the monthly haulage capacity by 33% to 60,000 tonnes per month. This is due to using larger skips with a 4.8 tonne capacity versus the previous ones which had a 3.6 tonne capacity. Additionally, the new double-men cages, which are replacing the previous single-men cages, will greatly reduce the time needed to reach the underground ore levels, and thus improve the operational efficiency. The mine plan will very likely be updated due to the additional haulage capacity, and the Medusa management team is expecting to provide an update on this matter at the end of February or in the beginning of March.
The output in the second half of the financial year (from January till June) is expected to be 50-55,000 ounces, and Medusa Mining should be able to produce in excess of 110,000 ounces of gold on an annual basis. The expected AISC for FY 2015 is $950-$1000/oz, but as the production rate increases, the cost per ounce should decrease, and I think Medusa should be in a position to produce its gold at an AISC of $900-$950, thus increasing the free cash flow.
(click to enlarge)
(Source: Press Release)
In other news, the company has announced it was able to put forward somehigh-priority drill targets on its extensive land package in the Philippines. It has, however, reduced the surface area by 60% as part of a "rationalization exercise". The company has done its homework really well, and on the previous image you can see a visualisation of the exploration targets and their respective position on the "advancement curve".
The company is aiming todevelop the exploration assets to define resources which could be trucked to the existing mill at the Co-O project, but the possibility of standalone operations shouldn't be excluded. As Medusa Mining should be generating free cash flow again this year, I wouldn't be surprised to see the company kick its exploration plans into a higher gear.
MML Price at posting:
85.0¢ Sentiment: Buy Disclosure: Held
