Improved operating performance at its Co-O mine in the...

Improved operating performance at its Co-O mine in the Philippines meant Medusa Mining (ASX:MML) posted better production, revenue and profit in its latest half year.

For the six months ended December 31, the miner exceeded guidance and says it's on track to produce 95,000 to 100,000 ounces of gold for the full year to end-June.

Net profit for the six months was up 90% to US$24.8mln compared to US$13mln in the same period in 2013, on revenues of US$62.2mln compared to US$34mln - an 83% rise.

Production for the period was 83% higher at 47,877 ounces, with 50,683 ounces sold compared to 27,334 last year.

This was put down to factors including improved mill recoveries and throughput.

Cash costs improved to US$381 per ounce compared to US$422 an ounce a year earlier.

Cash costs for the full year are expected to be between US$400 and US$450 an ounce and Medusa expects recoveries to be maintained above 92% with a head grade of greater than 5 grams per tonne (g/t).

Following a mine review kicked off last year, a number of changes have been made throughout the mine site.

The upgrade to the L8 shaft has now been completed with the haulage rate increased from 45,000 to 60,000 tonnes per month.

"We are already seeing improvements and are confident that further improvements will flow as these changes work through the new management systems over the next six months or so," said the company.

The review proposed a 750 metres deep shaft to Level 16 be considered and this is currently being evaluated, the group said.

The mill has performed well and improvements and refinements are still underway.

As at December 31, Medusa had US$13.6mln of cash and bullion on hand compared to US$20.8mln at the same time in 2013.

Broker SP Angel repeated a 'buy' call on the shares, saying "things were going in the right direction for Medusa after a difficult period".

"Expectations to grow production based on a new mill were de-railed when mine infrastructure was found to be wanting.

"With a focus to upgrade the haulage capacity at the mine now coming through – this will enable the company to regain production back to a base level of 100,000 oz.

"With all-in sustaining costs expected to be between US$900-US$1,000, this gives them the opportunity to generate cash flows of around US$20mln at the higher end of costs and 100,000 oz of production."

Medusa shares have risen around a third in the last three months and now stand at A$0.86 a pop.