Philippines focused gold producer Medusa Mining (TSX:MLL, ASX:MML, LSE:MML) reported record full year net profits this morning as it continued to ramp up production at the Co-O mine.
The London, Toronto and Sydney listed company produced 89,679 ounces of gold in the twelve month period ended 30 June 2010, up an impressive 87% on 2009, while cash costs per ounce of gold fell from $213 per ounce to an ultra-low $184 per ounce, thanks in part to a higher recovered grade during the year of 16.5 grams per tonne gold, compared to 13.3 grams per tonne in 2009.
The growing production profile and lower cost per ounce helped Medusa lift full year net profit after tax to US$65.8 million, up 131% on the previous year, while adjusted earnings per share jumped 120% to US$0.412. Revenues climbed 121% to US$94.6 million thanks to the higher production levels and strong gold price – Medusa received an average price of US$1,100 per ounce from the sale of 64,000 ounces. Medusa is debt free, unhedged and ended the period with cash and bullion of US$55.8 million.
Looking ahead to the current fiscal year, Medusa reiterated its expectation of producing 100,000 ounces of gold at cash costs in the region of US$190 per ounce, keeping the Co-0 mine firmly the lowest quartile of gold mines in operations.
Medusa`s ability to increase production at the underground mine has been down to a combination of considerable investment in infrastructure and plenty of drilling to add and upgrade ounces in the ground. At year end, the probable reserves at Co-0 climbed 5,000 ounces to 0.505 million ounces, while indicated and inferred ounces rose to 1.5 million ounces from 1.24 million ounces. During fiscal 2011 Medusa is planning to spend approximately US$21 million on exploration at the property and wider tenement package which covers more than 800 square kilometres.
“We believe our landholding sits within one of the most prospective mineralised regions in the Philippines which should enable us to achieve organic growth initially to a mid-tier 300 to 400,000 ounces per year gold producer,” Managing Director, Geoff Davis commented.
“A conceptual exploration target for the Co-O Mine was estimated during the year at between 3 million and 7 million ounces over the life of the mine. This conceptual target size indicates that the Co-O Mine could be a long-lived asset providing funding for future growth.”
Disclosure: no position