Philippines-focused Medusa Mining (ASX:MML) is planning for the long term future of its flagship Co-O mine and has approved the construction of a US$10mln underground service shaft.
Surface earthworks for the project have kicked off, it said, which will take around 17 months to construct with an estimated pay back time of 1.4 years.
The new shaft, almost 400 metres underground, will have a rope-guided cage and improve the efficiency of the mine between levels 3 and levels 8, the company said.
It will increase hauling capacity from level 8 to around 1,700 dry tonnes a day (dptd) from 1,400 and lift the total mine capacity to around 2,700dptd from all shafts.
The new shaft will have a nominal ten year working life.
It comes after extensive re-modelling and reinterpretation of the geology at the mine over the last two years.
Geoff Davis, chief executive of Medusa, told investors: "The advances in the geological understanding of the large Co-O vein system greatly enhance our ability to plan for the future, as well as demonstrate the considerable upside beyond the current resources and reserves that will support a long life future.
"The mine to 30 June 2014 has produced approximately 630,000 ounces, and at the same date had 1.4 million ounces of total resources.
"The service shaft will greatly improve the efficiency of the Co-0 mine with respect to the transport of men and materials, supervision, safety and ore haulage. This is an important step in improving our haulage systems for the future."
SP Angel rates Medusa shares a 'buy' and puts its target price for the stock under review.
It notes that the mine development had been a bottleneck to making use of the new mill capacity which was to take the miner from a 100,000 ounce a year producer to a 200,000 one.
"We currently have 2,000 tpd of mine capacity built into our model for the next two years rising to 2,500 tpd in 2017," noted the broker.
