Medusa Mining Limited: Quarterly Activities Report Period Ended 30 September 2011
24.10.2011 | Marketwire
TORONTO, ONTARIO -- (Marketwire - Oct. 24, 2011) - Medusa Mining Limited (ASX: MML) (LSE: MML) -Snapshot of Medusa:
- Un-hedged, low cost, dividend paying gold producer focused on organic growth in the Philippines
- Growth path to production of 400,000 ozs per year by end of 2015
- Growth underpinned by strong cashflow from Co-O Mine (narrow vein underground)
-- FY 2011/12: target 100,000 to 110,000 ozs at cash costs circa US$200/oz
- Current Mineral Resources comprise
-- Co-O Mine: Indicated 616k ozs at 12.0 g/t gold; Inferred 1344k ozs at 8.8 g/t gold
-- Bananghilig: Inferred 650k ozs at 1.3 g/t gold
- Current Probable Reserves : Co-O Mine 502k ozs @ 10.1 g/t gold
- Co-O Mine Resources and Reserves to be maintained at current levels
- Conceptual exploration target size (ii) of Co-O Mine of 3 to 7 million ozs
- Excellent exploration upside: high grade vein and disseminated bulk gold targets, plus seven copper targets
- 820 km2 of tenements and exploration budget for FY 2011/12 of US$27M
Board of Directors:
Geoffrey Davis (Non-executive Chairman)
Peter Hepburn-Brown (Managing Director)
Ciceron Angeles (Non-executive Director)
Robert Weinberg (Non-executive Director)
Andrew Teo (Non-executive Director)
Capital Structure:
Ordinary shares: 188,827,911
Unlisted options: 785,000
Listings:
ASX and LSE (Code: MML)
Address and Contact Details:
PO Box 860
Canning Bridge WA 6153
Telephone: +618 9367 0601
Facsimile: +618 9367 0602
Email: admin@medusamining.com.au
Website: www.medusamining.com.au
OVERVIEW:
Co-O MINE PRODUCTION & DEVELOPMENT
- New Co-O mill with capacity for 200,000 ounces per year (750,000 tonnes per year): all long lead time items ordered. Permitting has been delayed due to successive typhoons in Manila in September and October.
- As advised 22 June 2011, due to Agsao Shaft refurbishment to increase the haulage capacity and accelerating development, quarterly productio was reduced to 10,510 ounces at a recovered grade of 8.33 g/t gold and cash costs of US$291 per ounce
- Saga Shaft: currently at 145 metres and on schedule to reach Level 6 late in the December quarter
Co-O MINE DRILLING
- Drilling is continuing with six surface and five underground rigs
- Drill results include 1.40 metres at 28.02 g/t gold, 1.45 metres at 56.23 g/t gold, 2.50 metres at 72.80 g/t gold, 1.00 metre at 21.53 g/t gold, 2.35 metres at 10.61 g/t gold and 2.05 metres at 15.97 g/t gold
TAMBIS AREA - BANANGHILIG DEPOSIT
- Successful resource validation drilling and extensional drilling with six rigs continuing
- Drill results include 18.30 metres at 2.23 g/t gold, 18.85 metres at 2.05 g/t gold, 23.40 metres at 2.33 g/t gold, 12.35 metres at 2.74 g/t gold, 11.65 metres at 4.87 g/t gold, 8.25 metres at 8.67 g/t gold and 5.30 metres at 20.14 g/t gold
- IP and ground magnetics programme completed
SAUGON PROJECT
- Drilling reduced to one rig for last scout drilling hole
- IP survey preparation in progress
ANOLING
- Drilling with two rigs commencing
CORPORATE & FINANCIALS (unaudited)
- Total cash and cash equivalent in gold on metal account at end of quarter of approximately US$80.9 million
(ii)The potential target size and grade is conceptual in nature, and there has been insufficient exploration to define a mineral resource, and it is uncertain if further exploration will result in the target being defined as a mineral resource. Refer to Stock Exchange announcement dated 18 January 2010.
PROJECT OVERVIEW
The locations of the Company's projects are shown on Figures 1 and 2.
To view "Figure 1. Location diagram showing the Company's tenement areas and prominent East-West structures", please visit the following link:
http://media3.marketwire.com/docs/738186_fig_1.pdf
To view "Figure 2. Regional tenement map showing mines and prospects", please visit the following link: http://media3.marketwire.com/docs/738186_fig_2r.pdf
Co-O MINE
Gold Production
The production statistics for the September 2011 quarter with comparatives for the previous four quarters are summarised in Table I below.
Table I. Gold production statistics
--------------------------------------------------------------------------
Qtr ended Qtr ended Qtr ended Qtr ended Qtr ended
Period Unit 30 Sep 11 30 Jun 11 31 Mar 11 31 Dec 10 30 Sep 10
--------------------------------------------------------------------------
Tonnes mined WMT 41,596 69,562 71,060 61,621 60,367
--------------------------------------------------------------------------
Ore milled DMT 42,152 76,365 71,747 66,038 52,463
--------------------------------------------------------------------------
Recovered grade gpt 8.33 11.05 11.58 13.09 15.77
--------------------------------------------------------------------------
Recovery % 93% 93% 94% 94% 94%
--------------------------------------------------------------------------
Gold produced ozs 10,510 25,233 25,114 26,123 25,004
--------------------------------------------------------------------------
Cash costs (1) US$/oz $291 $194 $191 $185 $187
--------------------------------------------------------------------------
Gold sold ozs 15,446 21,423 25,911 23,224 25,659
--------------------------------------------------------------------------
Average gold
price received US$ $1,587 $1,518 $1,401 $1,384 $1,208
--------------------------------------------------------------------------
Note:
-----
(1) Net of development costs and includes royalties and local business taxes
Gold production for the quarter was 10,510 ounces, at an average recovered grade of 8.33 g/t gold and cash costs of US$291 per ounce, inclusive of royalties and local business taxes.
As advised to the ASX on 22 June 2011, the mine is pre-dominantly in development mode to prepare for the future production increase and all development ore mined has been treated through the mill. The increased amount of development ore treated is the main reason for the lower recovered grade during the quarter.
The Company also carried out refurbishment and upgrading of the Agsao shaft during the quarter which reduced haulage capacity and resulted in the lower mill throughput.
With the current accelerated development program proceeding, the Company expects to meet its production guidance of 100,000 ounces for the full year.
Whilst cash costs per ounce for the quarter have increased due to a significant drop in production, the Company anticipates, that the unit costs will average US$200 per ounce for the year as production increases in the latter quarters.
Medusa, an un-hedged gold producer, sold 15,446 ounces of gold at an average price of US$1,587 per ounce during the quarter.
Preliminary Development Timetable
Graph 2 has been extracted from the May 2011 Investor Presentation and shows the Preliminary Development Timetable for the new Co-O Mill followed by the Bananghilig Project.
New Co-O Plant
In November 2010, the Board approved the construction of a new plant with capacity to produce 200,000 ounces of gold per year based on processing up to 750,000 tonnes per year at the current reserve grade of the Co-O Mine. The estimated Capex is US$70 million.
Extensive remodelling of the current mill site which would maximise the use of the existing facilities is about to commence.
The application to upgrade the Environmental Clearance Certificate for the current Co-O Mill to 2,500 tonnes per day has been delayed due to successive typhoons in September and early October which affected government departmental offices, and is now expected shortly.
Preliminary works commenced in July 2011 for the replacement and transferral of buildings and facilities around the current mill to make room for the expansion. The orders for the jaw crusher and SAG mill have been placed and delivery is scheduled in December 2011 and mid-2012 respectively.
Operations
Mine Development
Major renovations are underway at the Co-O Mine to modernise the mine for its expected long life.
As part of this process, as advised on 22 June 2011, the Agsao Shaft was shut down for extensive refurbishment in July and August with a consequent reduction in production for the period. Concurrent with the refurbishment, a larger winder and skip were installed increasing the haulage capacity of the shaft to more than 400 tonnes per day. Commissioning commenced on 01 September 2011.
In order to open up more levels and develop more working faces, acceleration of the lateral development is on-going to ensure the underground infrastructure and on-vein development will be in place as the Saga Shaft reaches Level 6, then Level 8. This accelerated development will increase to approximately 800 metres per month and will continue for at least the next 18 months and is consequently increasing the proportion of development ore supplied to the mill which is expected comprise the majority of the mill feed during this accelerated development period.
During the quarter sinking of the Saga Shaft progressed smoothly and is currently at 145 metres depth. Completion is estimated to Level 6 late in the December quarter and ore haulage from Level 6 anticipated to commence late in the first quarter of CY 2012. The new winder for the Saga Shaft has been ordered and is due on site in December 2011.
Development on Level 6 is continuing mainly to the east from the Sabor Shaft. A second internal shaft between Levels 5 and 6 is nearing completion and will enhance production from Level 6.
Mine Production
Production has continued uninterrupted at the mine except for the Agsao Shaft as described above. All surface stockpiles have been depleted and underground broken ore is approximately 54,000 tonnes. Ore trucked to the mill during the quarter was predominantly development ore, low grade stockpiles and some stope ore.
Mill Expansion
Preparations for the new mill expansion are in progress. The expansion will involve
- Replacement of some of the existing leach tanks with larger tanks, upgrading of the thickener and the elution circuit
- Construction of new crushing and grinding sections separate from the current crushing and grinding sections
- Connection of the new crushing and grinding sections to the leaching section in 2013 which is expected to result in a period of 2-3 weeks of mill down time
Health and Safety
Lost time accident frequency rate (LTAFR) for the quarter was 0 and the rolling 12 month LTAFR is 1.48 including exploration. By comparison, the latest West Australian gold mining industry figure available to December 2010 was 3.10, excluding exploration statistics of 6.70.
There were no breaches of any of the project's operating regulations during the quarter.
To view "Graph 2. Preliminary Development Timetable", please visit the following link:
http://media3.marketwire.com/docs/738186_graph_2.pdf
Reserve Estimate
A new reserve estimate was undertaken by Carras Mining Pty Ltd of Perth, Western Australia was contracted to undertake the reserve estimation based on the resource wireframe model provided by Cube Consulting Pty Ltd. Updated Indicated and Inferred Resources were announced on 27 July 2011.
The Probable Reserve, as at 30 June 2011, now stands at 502,000 ounces contained in 1,500,000 tonnes at 10.1 g/t gold.
The Probable Reserve was estimated from an Indicated Resource of 1,601,000 tonnes at 12.0 g/t gold containing 616,000 ounces of gold. The estimate was based on a gold price of US$1000 per ounce, a minimum stope width of 1.2 metre and a stope cut-off grade of 3.0 g/t gold.
Mine Resource Drilling
Detailed information is contained in the announcement dated 18 October 2011 which lists intersections down to 0.2 metres downhole width since 30 June 2011.
Figure 3 (attached) shows the locations of the new Co-O Mine EXP 087-110 holes comprising 24 holes for a total of 16,824 metres. Assays are available for EXP 087 to EXP 101. The MD series of holes has been discontinued.
Table II lists the EXP surface diamond drill hole results greater than or equal to 3 g/t gold over greater than or equal to 0.5 metres downhole.
Figure 4 (attached) shows the recently completed underground drilling totalling 6,900 metres in 33 holes.
Table III lists underground drill hole results greater than or equal to 3 g/t gold over greater than or equal to 0.5 metres downhole for 8 out of 33 holes. Assays are awaited for holes L2-042 and 43, L2-046, L5-068 to 083, L6-003 to 010 and LM 001.
Table II. Surface drill hole results greater than or equal to 3 g/t gold and
greater than or equal to 0.5 metres downhole for new holes EXP 087 to EXP
101.
----------------------------------------------------------------------------
Grade
Hole Dip Azimuth From Width (uncut)
number East North (degrees) (degrees) (metres) (metres) (g/t gold)
----------------------------------------------------------------------------
EXP 087 614291 912989 -45 180 357.65 1.00 9.13 (i)
------------------------------
424.80 1.40 28.02 (i)
----------------------------------------------------------------------------
EXP 088 614066 913152 -57 160 469.70 0.55 4.26 (i)
------------------------------
523.55 1.00 3.37 (i)
----------------------------------------------------------------------------
EXP 089 614542 912901 -55 180 345.95 6.60 6.54 (i)
----------------------------------------------------------------------------
EXP 091 614217 913473 -50 160 627.00 0.50 8.57 (i)
------------------------------
738.65 2.20 8.88 (i)
----------------------------------------------------------------------------
EXP 092 614575 913323 -50 160 113.75 0.75 4.53 (i)
------------------------------
286.75 1.45 56.23 (i)
------------------------------
501.70 0.50 10.03 (i)
------------------------------
579.00 1.55 33.55 (i)
----------------------------------------------------------------------------
EXP 093 614595 912950 -55 180 371.00 1.00 21.53 (i)
------------------------------
496.70 2.50 72.80 (i)
------------------------------
660.60 0.60 9.30 (i)
----------------------------------------------------------------------------
EXP 094 614758 913452 -50 160 725.10 1.10 14.73 (i)
----------------------------------------------------------------------------
EXP 095 614066 913152 -47 160 162.35 1.00 4.81 (i)
------------------------------
403.15 1.00 4.33 (i)
------------------------------
431.10 2.20 4.98 (i)
------------------------------
452.90 0.50 3.27 (i)
------------------------------
499.65 2.35 10.61 (i)
------------------------------
510.30 1.20 6.46 (i)
------------------------------
533.50 3.40 6.53 (i)
------------------------------
581.20 1.35 3.50 (i)
------------------------------
609.80 2.05 15.97 (i)
------------------------------
648.45 2.35 7.69 (i)
------------------------------
657.80 0.70 4.38 (i)
----------------------------------------------------------------------------
EXP 097 614589 913104 -52 160 285.60 5.10 5.22 (i)
------------------------------
448.20 1.15 5.92 (i)
------------------------------
519.55 0.50 24.30 (i)
------------------------------
536.45 1.95 9.74 (i)
----------------------------------------------------------------------------
Notes:
------
(1) Intersection widths are downhole drill widths not true widths;
(2) Assays denoted by (i) are by Philsaga Mining Corporation's
laboratory, all other assays are by McPhar Geoservices Inc. in Manila;
(3) Grid coordinates based on the Philippine Reference System 92.
Table III. Underground drill hole results greater than or equal to 3 g/t
gold and greater than or equal to 0.5 metres downhole.
----------------------------------------------------------------------------
Grade
Hole Dip Azimuth From Width (uncut)
number East North (degrees) (degrees) (metres) (metres) (g/t gold)
----------------------------------------------------------------------------
LEVEL 2
-------
L2-044 613416 912949 0 322 3.80 0.60 11.17 (i)
----------------------------------------------------------------------------
L2-047 614057 913020 0 231 72.05 0.75 6.50 (i)
----------------------------------------------------------------------------
LEVEL 4
-------
L4-024 613985 912881 0 152 108.55 2.40 24.34 (i)
----------------------------------------------------------------------------
LEVEL 5
-------
L5-067 613945 912889 -58 138 60.45 0.80 5.87 (i)
----------------------------------------------------------------------------
Notes:
------
(1) Intersection widths are downhole drill widths not true widths;
(2) Assays denoted by (i) are by Philsaga Mining Corporation's
laboratory, all other assays are by McPhar Geoservices Inc. in Manila;
(3) Grid co-ordinates based on the Philippine Reference System 92.
Co-O Drill Hole Sampling and Assaying Procedures
Samples are taken from mainly HQ sized (hole outside diameter 96 mm, hole inside diameter 63.5mm) and some NQ sized (hole outside diameter 75.8 mm, hole inside diameter 47.6 mm) drill core. The selected sample intervals are halved by diamond saw and half the core is bagged, numbered and sent to the Company laboratory. In a small number of cases to confirm the geological logging, the selected interval was re-split and 1/4 core re-submitted for assay.
Initial sample preparation and assaying is undertaken at the Company's on-site laboratory. Samples are dried at 105 degrees C for 6 to 8 hours, crushed to less than 1.25 cm by jaw crusher, re- crushed to less than 3 mm using a secondary crusher followed by ring grinding of 700 to 800 grams of sample to nominal particle size of less than 200 mesh. Barren rock wash is used between samples in the preparation equipment. The samples are assayed by fire assay with Atomic Absorption Spectrometer (AAS) finish on a 30 gram sample. All assays over 5 g/t gold are re-assayed using gravimetric fire assay techniques on a 30 gram sample.
Check assaying of approximately 50% of samples used in the yearly resource estimates is undertaken by McPhar Geoservices Phils Inc ("McPhar"), a NATA and ISO 9001/2000 accredited laboratory in Manila. The pulps are airfreighted to McPhar who fire assay 30 grams of samples using AAS finish and a selected number of samples are checked using gravimetric fire assay techniques. Duplicate samples and standards are included in each batch of check samples. When reporting results, where available, the assays of McPhar as an independent laboratory have been given priority over the Company laboratory's results.
To view "Figure 3. Map of the Co-O Mine Level 6 plan showing the locations of drill holes EXP087 to EXP110", please visit the following link:
http://media3.marketwire.com/docs/738186_fig_3.pdf
To view "Figure 4. Map of the Co-O Mine Level 6 plan showing the location of the underground drill holes", please visit the following link:
http://media3.marketwire.com/docs/738186_fig_4.pdf
TAMBIS REGION
The Tambis project, currently comprising the Bananghilig Gold Deposit and the Kamarangan copper-molybdenum porphyry prospect (Fig. 5), is operated under a Mining Agreement with Philex Gold Philippines Inc. over Mineral Production Sharing Agreement ("MPSA") 344-2010-XIII which covers 6,262 hectares.
BANANGHILIG GOLD DEPOSIT
In July 2010, new regional and detailed mapping and drilling programmes were commenced with the aim of validating the current resource of 650,000 ounces of gold and extending it to provide a reserve of approximately 1,000,000 ounces. This reserve would form the basis for a feasibility study which would target production of 200,000 ounces of gold per year from a new milling facility.
TAMBIS REGIONAL GEOLOGICAL SETTING
The Tambis regional geology, termed the Tambis intrusive-breccia complex, typifies a structurally complex intermediate-sulphidation, epithermal gold, breccia-type system, including disseminated gold overprinting the host Tertiary-age igneous package which had been emplaced into an andesitic volcanic basement. The fertile igneous suite comprises a multi-phase calc-alkaline, high level, sub-volcanic intrusive package cut by extensive bodies of phreatomagmatic diatremes and hydrothermal breccias.
Laboratory studies including fluid inclusions have indicated that the Tambis area is only shallowly eroded with an estimated 500 to 950 metres of material stripped from the original surface.
The Tambis intrusive-breccia complex is overlain by younger marine limestones and basal mudstones to the south and the east. The extent of the complex below this younger cover is yet to be determined.
LOCAL GEOLOGICAL SETTING
Figure 5 shows the geological setting which is characterised by a shallowly eroded, extensive volcanic and sub-volcanic intrusive, multi-phase diatreme complex which is similar to the well known Philippine gold districts of Surigao in northern Mindanao, and Baguio and Mankayan in northern Luzon. The Baguio District is recognised as producing 28 million ounces of gold and is far from mined out.
The intrusive complex comprises predominantly andesite porphyry, feldspar porphyry, porphyritic andesite with smaller stock-like bodies of dioritic and dacitic composition. Figure 5 also shows radiometric anomalies and aeromagnetic features, the copper prospects and generalised gold prospects and vein systems.
Figure 6 shows the zones and names of the main mineralised quartz veins and stockwork areas which appear to be controlled by structural corridors which are orthogonal to the northwest- trending Barobo and Lianga Faults which in turn are sub-parallel to the Philippine Rift Fault direction. The main designated mineralised areas within the northeast corridor are Supon - Bananghilig, Malinao, Tagabaca, Canugas and Lansang which are discussed below except Malinao which will be discussed in the update on drilling in the September quarter.
To view "Figure 5. Tambis District showing the regional geology and the Tambis intrusive complex", please visit the following link:
http://media3.marketwire.com/docs/738186_fig_5.pdf
DEPOSIT DESCRIPTION AND MINERALISATION
Introduction
Figure 6 shows that the Bananghilig Deposit currently consists of three zones, each approximately 1 kilometre long and open in all directions, locally termed the Sorex, Garden and Malinao zones. These zones are broadly defined on the basis of the projection in plan of greater than or equal to 0.5 g/t gold drill hole intersections. The bulk of the current resources are in the Sorex and
Garden zones.
Figure 7 shows the cross section through line 10710N. Assays above 0.5 g/t gold are depicted in histograms.
In breccia hosted deposits the mineralisation is commonly not uniformly disseminated or distributed due to the presence of fragments/clasts/blocks in finer matrix material, ie, the host rock to the mineralisation is extremely inhomogeneous. Consequently the location of the mineralisation within the breccias is influenced not only by the structural emplacement of veins, breccias/fractures and disseminations, but also by the relative distribution of the fragments and matrix and the susceptibility of each to mineralisation. This style of mineralisation should be considered as a bulk mining proposition where mineralised domains are established, and generally cannot be evaluated simply on the basis of individual assay intervals.
Deposit Geology and Mineralisation
The Bananghilig Deposit (Fig. 6) is located partly within diatreme breccias which measure at least 1,000 metres west to east and are still open to the south beneath the younger sediments, and also around the diatreme margins and in the country rocks along structural corridors.
The diatreme breccias contain unsorted fragments of the andesitic basement as well as fragments of the later intrusive rocks predating the diatreme events in a matrix of comminuted rock flour and magmatic crystals. Fragment sizes range from granule-sized to building-sized mega-blocks which have been torn off the walls of the diatreme during the multi-episodal explosive activity. The explosive activity also fractured the mega-blocks and wall rocks, preparing them for subsequent mineralisation deposition. The cross-section in Figure 7 shows several of the mega-blocks which are the same composition as the wall rocks in this area.
After the diatreme formation, several events of hydraulic fracturing, hydrothermal and fault brecciation, rock alteration, quartz veining and precious- and base-metal mineralisation occurred. Based on mineral associations and fluid inclusion results, the main gold deposition event appears to have occurred following multiple hydrothermal fracturing along the margins of, and within the diatreme complex. High gold concentrations appear to be associated with elevated Ag and base metals.
The gold mineralisation style (+Ag +/-Zn +/-Cu +/-Pb) is classified as an intermediate sulphidation epithermal system. In and immediately adjacent to the diatreme, the gold mineralisation generally occurs in vein-like zones, in fractures and/or breccia in-fill in milled/fluidised muddy matrix breccia bodies and coarsely brecciated/fractured andesitic-dacitic wallrock. It should be noted that the vein zones shown on Figure 6 that are in the area of the younger sediments are projected from below the limestone contact.
Breccia veins in the deposit exhibit epithermal mineral growth textures and in particular are related to retrograde boiling of the mineralizing fluids. Major hydrothermal breccia veins are sub-vertical to steeply dipping, averaging one metre thick, and form anastomosing pinch-and-swell patterns up to several hundred meters along strike. They are commonly offset in many places by post-mineralisation faults. Down dip continuity of breccia vein mineralisation has been demonstrated to persist down to 500 meters from surface. The breccia veins generally form a northeast-trending sub-parallel array with minor north-south and east-west trends.
Widespread silica-illite-pyrite hydrothermal alteration affects the volcanic wallrocks, the various breccia bodies and the hypabyssal intrusives associated with them. The pervasive near-surface argillic alteration haloes grade laterally and vertically at depth into chloritic and propylitic alteration assemblages.
To view "Figure 6. Interpreted geological map showing drill hole locations and section line 10710N", please visit the following link:
http://media3.marketwire.com/docs/738186_fig_6.pdf
To view "Figure 7. Cross section 10710N through the Sorex and Garden zones", please visit the following link:
http://media3.marketwire.com/docs/738186_fig_7.pdf
DRILL RESULTS
Since 24 July 2010 to 31 August 2011, 32,311.05 metres of diamond drilling in 93 holes have been completed. The drilling is on-going with 7 rigs in the area.
Figure 6 shows the post July 2010 drill hole locations as blue dots and drill hole traces for all the drill holes with assays available (TDH 027 to TDH 102) at 31 August 2010. All pre-July 2010 drill holes are shown as black dots for collar positions.
First pass assaying for gold has been undertaken on all samples submitted to the laboratory. Additional assaying is underway from selected intervals for base metals, silver and other elements.
The announcement dated 12 September 2011 contains additional detailed information and drill hole intersections are reported down to 0.5g/t gold. The results are summarised in Table V where significant intercepts are defined on the following basis:
(i) lower cutoff grade of 0.5 g/t Au, and
(ii) greater than or equal to 5 metres downhole intercept width at greater than or equal to 1.00 g/t Au, or
(iii) less than or equal to 5 metres downhole intercept width at greater than or equal to 5 gram(x)metres, and
(iv) maximum of 3 metres of downhole internal dilution at less than or equal to 0.5 g/t Au.
Table V. Sorex, Garden and Malinao zones surface drill hole results.
----------------------------------------------------------------------------
Grade
Hole Dip Azimuth From Width (uncut)
number East North (degrees) (degrees) (metres) (metres) (g/t gold)
----------------------------------------------------------------------------
TDH 027 612978 945781 -50 130 175.10 5.00 1.12
------------------------------
248.45 2.00 2.86
------------------------------
287.65 2.00 10.12
------------------------------
302.00 7.00 1.16
----------------------------------------------------------------------------
TDH 028 612548 945822 -47 150 24.60 2.00 5.97
------------------------------
30.10 2.00 2.60
------------------------------
226.20 0.70 14.70
------------------------------
261.30 5.05 1.47
------------------------------
295.25 4.00 1.53
------------------------------
303.25 4.80 2.81
----------------------------------------------------------------------------
TDH 029 612774 945977 -47 130 58.90 3.50 1.49
------------------------------
109.50 7.30 1.97
----------------------------------------------------------------------------
TDH 031 612495 945757 -47 130 217.00 9.00 1.19
------------------------------
312.60 4.40 4.82
----------------------------------------------------------------------------
TDH 032 612846 946086 -47 130 40.70 2.40 19.70
----------------------------------------------------------------------------
TDH 034 612425 945658 -47 130 108.25 3.30 2.07
------------------------------
187.10 3.00 2.26
------------------------------
222.05 5.00 1.17
------------------------------
346.60 5.25 1.04
----------------------------------------------------------------------------
TDH 035 612639 945634 -47 130 58.70 2.70 2.69
------------------------------
141.75 1.20 36.05
------------------------------
196.70 4.50 1.13
----------------------------------------------------------------------------
TDH 036 612468 945649 -47 130 9.70 7.30 6.81
------------------------------
38.40 2.00 2.99
------------------------------
101.25 2.00 41.19
------------------------------
195.20 5.00 1.42
------------------------------
240.80 4.65 1.41
----------------------------------------------------------------------------
TDH 037 612693 945708 -47 130 110.50 2.00 4.50
------------------------------
309.65 6.00 1.93
----------------------------------------------------------------------------
TDH 038 612381 945693 -47 130 90.20 11.25 1.30
----------------------------------------------------------------------------
TDH 039 612595 945680 -47 130 104.05 2.00 4.91
------------------------------
122.80 18.50 1.67
----------------------------------------------------------------------------
TDH 040 612465 945782 -47 130 47.90 3.00 1.93
------------------------------
195.70 1.20 4.75
------------------------------
222.50 7.00 6.10
----------------------------------------------------------------------------
TDH 042 612595 945680 -47 130 25.75 1.00 11.33
------------------------------
88.65 4.75 1.16
------------------------------
226.00 3.40 2.02
------------------------------
235.30 1.00 8.48
------------------------------
209.25 8.50 1.04
------------------------------
320.05 5.00 1.82
----------------------------------------------------------------------------
TDH 043 612757 945123 -47 310 10.50 2.35 2.24
------------------------------
86.60 15.65 1.24
------------------------------
227.65 3.00 1.79
------------------------------
240.25 6.00 1.14
----------------------------------------------------------------------------
TDH 045 612696 945811 -47 130 271.20 5.70 1.18
------------------------------
359.15 8.85 1.68
------------------------------
398.85 21.40 1.04
------------------------------
483.90 3.10 3.22
------------------------------
504.50 8.10 2.80
----------------------------------------------------------------------------
TDH 046 612755 945121 -47 130 79.60 7.00 1.19
----------------------------------------------------------------------------
TDH 047 612720 945169 -47 130 85.30 0.50 54.39
------------------------------
163.90 18.30 2.23
----------------------------------------------------------------------------
TDH 048 612902 946194 -47 130 138.50 1.00 32.20
----------------------------------------------------------------------------
TDH 049 51.05 3.65 7.12
----------------------------------------------------------------------------
TDH 050 612718 945171 -60 130 86.85 3.20 1.49
----------------------------------------------------------------------------
TDH 051 612757 945123. -60 130 84.55 13.05 2.27
------------------------------
106.10 5.90 2.46
------------------------------
132.00 36.70 1.07
------------------------------
196.35 5.50 1.00
----------------------------------------------------------------------------
TDH 052 612625 945044 -47 130 62.40 18.85 2.09
------------------------------
126.30 1.00 5.96
------------------------------
334.30 4.00 3.98
------------------------------
369.40 1.00 7.73
----------------------------------------------------------------------------
TDH 054 612883 945232 -47 130 126.45 8.55 2.59
------------------------------
258.10 10.15 2.34
----------------------------------------------------------------------------
TDH 058 613081 945395 -47 130 23.40 6.00 1.04
------------------------------
198.10 1.35 20.97
----------------------------------------------------------------------------
TDH 059 612465 944990 -60 130 54.35 7.80 1.17
------------------------------
112.85 6.00 1.33
------------------------------
122.05 9.45 1.12
----------------------------------------------------------------------------
TDH 060 612799 945340 -47 130 142.55 10.95 1.49
------------------------------
221.10 1.50 12.59
------------------------------
233.60 1.05 10.15
------------------------------
254.55 4.15 9.82
------------------------------
262.35 4.80 1.15
----------------------------------------------------------------------------
TDH 061 612557 945147 -47 130 17.60 4.30 1.89
----------------------------------------------------------------------------
TDH 062 612493 945421 -60 130 51.50 11.60 1.26
------------------------------
66.40 23.40 2.33
------------------------------
100.65 2.60 3.49
------------------------------
156.00 7.75 1.82
------------------------------
191.00 3.00 14.38
------------------------------
204.10 3.00 3.99
----------------------------------------------------------------------------
TDH 063 612849 945301 -47 130 187.50 1.00 6.21
------------------------------
212.90 4.60 1.22
------------------------------
246.15 4.65 1.11
----------------------------------------------------------------------------
TDH 064 612397 945291 -60 130 58.75 1.00 5.65
------------------------------
125.45 9.40 1.28
----------------------------------------------------------------------------
TDH 065 612916 945151 -60 130 115.80 7.95 1.04
------------------------------
195.45 6.60 1.30
----------------------------------------------------------------------------
TDH 066 612799 945340 -60 310 188.00 2.05 3.18
------------------------------
219.60 3.40 2.35
----------------------------------------------------------------------------
TDH 067 612721 945476 -47 130 43.30 5.40 10.93
----------------------------------------------------------------------------
TDH 068 612798 945184 -60 130 13.55 2.35 5.80
----------------------------------------------------------------------------
TDH 069 612612 945326 -47 130 14.45 3.00 2.00
------------------------------
23.35 3.00 3.01
------------------------------
101.45 6.55 1.83
------------------------------
253.10 3.70 3.04
----------------------------------------------------------------------------
TDH 070 612869 945118 -60 130 102.70 10.00 3.12
------------------------------
400.45 5.00 4.13
----------------------------------------------------------------------------
TDH 071 612805 945267 -47 130 234.90 2.70 5.98
------------------------------
253.65 2.90 2.47
------------------------------
293.80 1.90 4.70
----------------------------------------------------------------------------
TDH 073 612673 945205 -60 130 221.70 10.90 1.12
----------------------------------------------------------------------------
TDH 074 612727 945077 -60 130 125.85 8.95 1.49
----------------------------------------------------------------------------
TDH 076 612801 945405 -60 130 94.20 7.75 1.12
------------------------------
128.35 5.60 1.54
----------------------------------------------------------------------------
TDH 077 612965 945170 -60 130 81.20 1.25 8.08
------------------------------
196.00 4.85 2.09
----------------------------------------------------------------------------
TDH 078 612756 945211 -60 130 76.25 1.00 45.00
----------------------------------------------------------------------------
TDH 080 612863 945370 -60 130 118.30 2.85 45.12
----------------------------------------------------------------------------
TDH 081 612537 945346 -60 130 41.90 1.55 6.15
------------------------------
196.30 3.15 1.66
----------------------------------------------------------------------------
TDH 082 612788 944959 -60 130 298.35 9.25 2.43
----------------------------------------------------------------------------
TDH 083 612910 945425 -60 130 196.60 1.00 34.00
------------------------------
219.55 6.20 2.97
----------------------------------------------------------------------------
TDH 084 612763 945433 -60 130 85.25 1.80 6.02
----------------------------------------------------------------------------
TDH
085B 612570 945371 -70 130 12.90 7.10 1.90
------------------------------
48.00 20.35 1.61
------------------------------
108.65 20.35 1.63
------------------------------
147.05 7.00 2.65
----------------------------------------------------------------------------
TDH 086 613012 945384 -60 130 5.35 20.55 1.73
------------------------------
54.65 1.00 5.63
------------------------------
185.45 12.35 2.74
----------------------------------------------------------------------------
TDH 087 612560 945067 -60 130 64.20 3.60 1.61
------------------------------
90.15 11.25 1.11
------------------------------
104.40 9.20 1.81
------------------------------
185.05 7.00 6.19
----------------------------------------------------------------------------
TDH
088B 612664 944986 -50 130 7.25 8.95 3.48
------------------------------
129.90 6.25 2.13
----------------------------------------------------------------------------
TDH 089 612602 945191 -60 130 57.85 2.30 3.62
----------------------------------------------------------------------------
TDH 090 612898 945096 -60 130 107.60 12.45 1.13
------------------------------
126.05 14.25 1.39
----------------------------------------------------------------------------
TDH 092 612436 945484 -60 130 118.35 13.05 1.33
------------------------------
154.90 1.70 4.32
------------------------------
189.85 3.25 3.59
------------------------------
264.60 4.90 1.03
----------------------------------------------------------------------------
TDH 093 612722 945475 -70 310 195.30 7.80 2.50
------------------------------
273.05 1.00 10.72
----------------------------------------------------------------------------
TDH 094 612631 944946 -60 130 7.80 10.60 1.18
----------------------------------------------------------------------------
TDH 095 613043 945413 -60 130 285.00 2.00 5.16
------------------------------
323.90 3.00 2.15
------------------------------
359.15 3.80 1.33
----------------------------------------------------------------------------
405.20 18.25 1.10
----------------------------------------------------------------------------
TDH 096 612452 945412 -70 130 12.15 6.05 1.12
------------------------------
44.35 4.00 2.27
------------------------------
76.40 1.00 6.16
----------------------------------------------------------------------------
TDH 097 612429 945257 -60 130 43.95 11.65 4.87
------------------------------
162.05 6.20 1.58
----------------------------------------------------------------------------
TDH 098 612583 945502 -60 130 58.60 3.70 1.65
------------------------------
82.80 4.15 1.30
------------------------------
90.80 3.65 5.03
----------------------------------------------------------------------------
TDH 099 612863 945209 -60 130 176.95 2.30 8.66
------------------------------
188.15 7.20 2.93
------------------------------
213.55 4.30 9.26
----------------------------------------------------------------------------
TDH 100 612831 945073 -60 130 112.75 2.85 3.88
------------------------------
378.95 8.25 8.67
------------------------------
413.30 2.00 2.55
------------------------------
650.95 12.85 1.83
----------------------------------------------------------------------------
TDH 102 612770 945368 -47 130 109.70 5.40 4.17
------------------------------
137.35 5.30 20.14
------------------------------
173.40 5.55 3.72
----------------------------------------------------------------------------
Notes:
------
(1) Intersection widths are downhole drill widths not true widths;
(2) Assays denoted by (i) are by Philsaga Mining Corporation's
laboratory, all other assays are by McPhar Geoservices Inc. in Manila;
(3) Check surveying of collar positions in progress;
(4) Grid coordinates based on the Philippine Reference System 92.
DISCUSSION OF RESULTS AND STATISTICAL COMPARISONS
Statistical comparisons have been undertaken between the two historical drilling assay data sets and the new drilling assay data set. The drilling since July 2010 supports the grade tenor shown by the historical drilling, particularly the drilling by Philex. The Sorex drilling was more concentrated on a higher grade zone in the northwest part of the Sorex zone which may have skewed the Sorex data set. However when the higher grade subsets and the lower grade subsets are compared, the subsets are statistically comparable.
Drilling was undertaken to twin some of the historical drillholes of Sorex, Philex and Philsaga. Drill hole TDH 062 was the first drill hole to be completed in the Sorex area. Results from this hole correlate well with nearby drilling considering the nature of the mineralisation.
The recent drilling has extended the limits of the known mineralisation to the northeast and southwest along the strike of each of the Malinao, Sorex and Garden zones, and southeast beneath the younger sedimentary sequence, and at depth.
Essentially the mineralisation is open in all directions with the potential for the discovery of additional resources.
DRILL HOLE SAMPLING AND ASSAYING PROCEDURES
Drilling Procedures
Drilling, sampling and analytical methodologies are of internationally acceptable standards. Drilling and analyses are carried out by independent contractors, SBF Philippines Drilling Resources Corp. (SBF), and Intertek Testing Services Philippines, Inc. (Intertek) respectively.
Drilling is carried out by SBF using wireline diamond coring techniques, with the core being predominantly HQ triple-tube (HQ3) diameter (OD 61mm). The holes are initially collared using PQ drillbits (OD 123mm) to recover PQ3 core (OD 83mm) until the drillbit encounters competent ground, then the coring bit is reduced to HQ3 for the remainder of the drill hole. If difficult conditions are encountered, then the drill bit is changed to NQ3 (core OD 45mm) and the hole continued until the planned depth or bad ground conditions prevent further drilling, whichever occurs first. Core recovery is generally better than 95% and is considered to be good.
USA PORPHYRY COPPER-GOLD PROSPECT
The Usa prospect is located within MPSA application XIII-00077 and the Company has a Memorandum of Agreement with Corplex Resources Inc. Processing of the tenement application is progressing.
An IP and ground magnetic programme is planned.
LINGIG
The Lingig prospect is located in Mineral Production Sharing Agreement 343-2010-XIII with an area of 3,824 hectares over which the Company has an operating agreement.
An IP and ground magnetics programme is planned for later in the year.
ANOLING
The Mines Operating Agreement with Alcorn Gold Resources Inc. covers MPSA application 039-XIII situated approximately 8 kilometres north from the millsite as shown on Figure 2. Approval of the MPSA is awaited.
Two drill rigs were moved to Anoling in October to recommence drilling and a third should be available in November. A tabulation of previous drilling results from 50 holes is contained in the 2011 Annual Report.
Mapping, trenching and sampling have recommenced.
SAUGON PROJECT
First Hit Vein
Background
Figure 2 shows the Saugon Project located approximately 28 kilometres by road from the Co-O Mill. Work in 2004 involved drilling at the First Hit Vein (holes SDDH1 to SDDH35) in conjunction with underground development via a 30 metre deep inclined winze down the vein- breccia to assist in understanding the mineralisation.
Further details are contained in the announcements dated 20 April 2010 which summarised the historical results and 01 December 2010 which contained drilling results for holes SDDH 36 to 64A.
Drilling
Drilling continued with three drill rigs up to late August. Two of these rigs have been re-allocated to the Anoling Project and one will complete one last scout drill hole before re-allocation to Anoling. Regional mapping and prospect trenching are continuing and preparations for an IP and ground magnetic programme are underway.
FINANCIALS (unaudited)
As at 30 September 2011, the Company which is debt free, had total cash and cash equivalent in gold on metal account of approximately US$80.9 million (30 Jun 2011: US$100.2 million).
During the quarter,
- the Company sold 15,446 ounces of gold at an average price of US$1,587 per ounce (Jun 2011 qtr: sold 21,423 ounces of gold at an average price of US$1,518 per ounce).;
- incurred exploration expenditure of US$7.99 million (Jun 2011 qtr: US$7.5 million);
- spent US$5.36 million on capital works, associated sustaining capital at the mine and mill and also costs for the new mill construction and infrastructure (Jun 2011 qtr: US$3.0 million); and
- spent US$6.74 million on general and accelerated mine development, inclusive of shaft sinking costs (Jun 2011 qtr: US$4.5 million).
CORPORATE
Dividend
A final unfranked dividend of A$0.05 per share was paid to shareholders on 30 September 2011. No foreign conduit income was attributable to the dividend and the total amount paid was US$9.34 million
Managing Director, Peter Hepburn-Brown commented:
"We are focused on the long term development of the potentially long-life Co-O Mine that will be capable of producing more ore more efficiently than it does today.
Now that we know the layout of approximately 2 million resource ounces in the mine, the mine is undergoing major renovations to modernise it, and like any renovations there are inconveniences and altered work practices during the renovation stages. Despite these short term hiccups, on completion we will have a modern efficient underground mine serviced by efficient shafts and underground haulage systems.
The major renovations include:
- accelerating development with the target of achieving 800 metres per month to open up more veins and levels to increase the number of headings and stopes. This also involves development in waste rock, not always on ore.
- refurbishment of the Agsao Shaft and increasing its haulage capacity from approximately 250 tonnes per day to over 400 tonnes per day. The major renovations are completed with some on-going activities.
- sinking of the 3-compartment Saga Shaft expected to be hauling ore in the June 2012 quarter after reaching Level 6 late in the December 2011 quarter, followed by the installation of the winder, permanent headframe and underground ore and waste rock storage bins (and later to Level 8)
- increasing the number of level to level ore passes and internal shafts
Whilst the production was reduced for the September quarter, as advised to the market in June 2011 primarily due to the Agsao Shaft closure and predominantly development ore being treated, we are confident of achieving our year-end production target of 100,000 ounces.
I urge all shareholders to focus on our long term objectives of developing a profitable long term asset and not to be influenced by short term production volatility".
Information in this report relating to Exploration Results has been reviewed and is based on information compiled by Mr Geoff Davis, who is a member of The Australian Institute of Geoscientists. Mr Davis is the Chairman of Medusa Mining Limited and has sufficient experience which is relevant to the style of mineralisation and type of deposits under consideration and to the activity which he is undertaking to qualify as a "Competent Person" as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and is a "Qualified Person" as defined in "National Instrument 43-101" of the Canadian Securities Administrators. Mr Davis consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Information in this report relating to Mineral Resources has been estimated and compiled by Mark Zammit of Cube Consulting Pty Ltd of Perth, Western Australia. Mr Zammit is a member of The Australasian Institute of Mining & Metallurgy and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and is a "Qualified Person" as defined in "National Instrument 43-101" of the Canadian Securities Administrators. Mr Zammit consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Information in this report relating to Ore Reserves is based on information compiled by Dr Spero Carras of Carras Mining Pty Ltd. Dr Carras is a Fellow of the Australasian Institute of Mining & Metallurgy and has 30 years of experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves" and is a "Qualified Person" as defined in "National Instrument 43-101" of the Canadian Securities Administrators. Dr Carras consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.
DISCLAIMER
This announcement may contain certain forward-looking statements. The words 'anticipate', 'believe', 'expect', 'project', 'forecast', 'estimate', 'likely', 'intend', 'should', 'could', 'may', 'target', 'plan' and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements.
Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Medusa, and its officers, employees, agents and associates, that may cause actual results to differ materially from those expressed or implied in such statements.
Actual results, performance or outcomes may differ materially from any projections and forward-looking statements and the assumptions on which those assumptions are based.
You should not place undue reliance on forward-looking statements and neither Medusa nor any of its directors, employees, servants or agents assume any obligation to update such information.
Contact Information
Australia
Medusa Mining Limited
Geoffrey Davis
Chairman
+61 8 9367 0601
www.medusamining.com.au
Medusa Mining Limited
Peter Hepburn-Brown
Managing Director
+61 8 9367 0601
United Kingdom
Fairfax I.S. PLC
Financial Adviser and Broker
Ewan Leggat/Laura Littley
+44 (0)20 7598 5368