Quarterly Report
April 16 2008 - 5:31AM
UK Regulatory
Quarterly Report
MEDUSA MINING LIMITED
(AIM: MML)
QUARTERLY REPORT
PERIOD ENDING 31 MARCH 2008
Medusa Mining Limited ("Medusa" or "The Company"), the Australian
based company operating and developing gold mines in the Philippines,
is pleased to provide its quarterly update on activities for the
period ending 31 March 2008, as required by the Australian Stock
Exchange.
KEY POINTS:
Co-O MPSA GRANTED FOR 25 YEARS
Co-O MINE PRODUCTION
* Production target of 5,086 ounces achieved at an average grade of
11.95 g/t gold and average cash cost of US$238 per ounce.
Co-O MINE EXPANSION
* Phase I expansion on schedule. Benefits anticipated to commence to
flow in Q3 2008. On completion of the Agsao shaft in Q2 2009, mine
production is expected to increase to approximately 60,000
annualised ounces in Q3 2009;
* Phase II Hill View Shaft expansion to raise production to 100,000
ozs per year from Co-O Mine by early 2010;
* Poles and line have arrived for installation of grid power to the
mine, transformers awaited. Sub-station completion delayed until at
least August 2008.
Co-O RESOURCE EXPANSION DRILLING
* Significant new intersections discovered, including 3.45 metres at
12.48 g/t gold, 14.6 metres at 5.29 g/t gold and 1.45 metres at
12.64 g/t gold;
* Resource drilling is continuing.
LINGIG PORPHYRY COPPER DISCOVERY
* Permitting is still in progress to allow drilling as soon as
possible.
ANOLING
* Underground exploration continuing.
TAMBIS - BAROBO AREA
* Iron ore and gold target outlined at Kamarangan.
REGIONAL & RESEARCH
* Remote sensing tectonic analysis has demonstrated excellent
mega-scale structural preparation consistent with known
mineralisation orientations and locations;
* Research programme through the University of Western Australia
recommenced.
For further information, please contact:
Medusa Mining Limited +61 8 9367 0601
Geoffrey Davis, Managing Director
Roy Daniel, Finance Director
Fairfax I.S. PLC +44 (0)20 7598 5368
Nominated Adviser / Joint Broker
Ewan Leggat
Mirabaud Securities Limited +44 (0)20 7321 2508
Joint Broker
Peter Krens
Bankside Consultants +44 (0)20 7367 8888
Michael Padley / Louise Davis
PROJECT OVERVIEW
The locations of the Company's projects are shown on Figures 1 and 2
(please see the link at the end of this announcement).
Co-O MPSA
On 20 March 2008, Mineral Production and Sharing Agreement ("MPSA")
number 262-2008-XIII mining rights was registered over the Co-O Mine
for 25 years renewable. The MPSA covers an area of 2,209 hectares (22
km�) and replaces MPSA application number XIII-00084.
GOLD PRODUCTION
The production statistics for the current financial year are
summarised in Table I.
Table I: Gold Production
Period Gold Head Cash Comments
produced grade costs
(ozs) (g/t (US$ per
gold) oz)
Jul to Sep 5,050 9.45 248 Stoping of accessible lower grades
2007 due to lack of development miners
and re-assignment of some of
workforce to the expansion
projects
Oct to Dec 3,686 10.46 263 Expansion activities and shortage
2007 of miners results in reduced
production as advised.
Jan to Mar 5,086 11.95 238 Mainly on-vein development, some
2008 minor stope production.
TOTAL 13,822 10.69 248
In line with its Phase I expansion production target, the Company
produced 5,086 ounces of gold at an average grade of 11.95 g/t gold
and average cash production costs of US$238 per ounce.
The benefits of the Phase I expansion are currently on track to start
to flow through in the third quarter 2008.
Co-O MINE
RESOURCE EXPANSION DRILLING
After discussions with its resource consultants and as a result of
continuing positive drill intersections west of the Oriental Fault,
the Company has decided to postpone the estimation of an interim
resource as it concentrates on increasing the levels of confidence by
drilling and development for the interpretation of the veins. Other
factors influencing this decision include:
* At the 3050 metre level, a number of splits in the West Catto
Veins are being delineated by the on-going on-vein development,
including the discovery of a vein that shows dip variations from
sub-vertical to 30� to the north and swings in strike directions.
This vein's variable dip and strike requires further development
work to determine its geometry, as well as for the Catto West
veins. The wide intercept in MD 61 (14.60 metres at 5.29 g/t gold)
may be another example of yet to be understood dip and strike
variations not previously seen in the mine. There are also
increasing indications of other low angle veins elsewhere in the
mine.
* At the eastern end of the vein system, additional drilling is
required to assist with vein interpretation due to faulting of the
vein system in this area around the Agsao River.
The drilling and underground development will continue to the point
where vein interpretations can be undertaken with confidence. At that
time a new resource estimation will be undertaken.
Drilling programme and results
Figure 1 shows the location of the Co-O Mine and Figure 5 shows the
diamond drill holes drilled around the Co-O Mine up to the
announcement of 24 January 2008. Figure 4 shows an updated three
dimensional model of the vein system. (Please see the link at the end
of the announcement for these images.)
Since the last drilling update on 24 January 2008 a total of 11 new
surface holes have been completed. Drilling is continuing, utilising
four surface drilling rigs and two underground rigs.
Table II lists the diamond drilling results greater than 3 g/t gold
from the Co-O Mine for drill holes MD 46 to MD 68 and for underground
drill hole DBH 03. Previous announcements on the Co-O drilling on 9
July, 15 May and 28 February 2007 contain information regarding
drilling and surveying techniques, comments on vein interpretation
and methodologies and assaying protocols.
Table II. Drill hole results greater than 3 g/t gold for holes MD 46
to 68.
Grade
(uncut)
Dip Azimuth From Width (g/t
Hole East North (�) (�) (metres) (metres) gold)
EAST
MD 46 614,047 912,472 -48 41 489.30 0.85 8.51
501.40 0.40 4.50
542.90 1.40 20.62
MD 48
(Agsao Shaft 614,257 912,704 -60 253 212.45 1.95 22.02
pilot hole)
MD 49 614,129 912,487 -50 40 449.85 2.05 6.61
463.90 1.00 4.24
MD 55 614,134 912,495 -45 35 361.60 3.45 12.48
421.20 0.70 12.23
486.25 0.70 3.89
MD 64 614,175 912,505 -45 41 405.80 1.00 3.19
MD 67 614,173 912,504 -52 43 278.00 0.80 7.20
398.30 1.30 6.55
WEST
MD 47 613,805 912,788 -55 30 153.30 1.80 4.70
MD 51 613,749 912,798 -53 17 130.50 1.30 6.50
155.75 0.25 41.06
MD 52 613,754 912,816 -50 14 75.25 0.55 3.53
157.60 0.30 5.31
170.40 0.30 14.93
MD 54 613,830 912,745 -47 29 174.00 1.80 14.59
MD 56 613,809 912,706 -54 29 390.85 1.00 3.11
MD 57 613,739 912,767 -54 16 152.55 0.45 39.64
191.90 3.45 26.26
MD 58 613,739 912,767 -58 16 176.10 0.40 43.46
207.00 0.70 7.45
280.40 0.90 6.18
MD 61 613,662 912,804 -47 347 249.10 14.60 5.29
308.20 1.45 12.64
MD 62 613,723 912,767 -56 2 184.65 2.10 9.07
MD 65 115.60 0.65 25.42
153.05 2.75 8.80
DBH 03 613,918 912,909 -0.2 236 29.05 1.05 6.58
57.30 1.90 9.60
72.20 0.40 17.21
Notes:
(i) Independent laboratory McPhar assays are quoted in
preference to Philsaga assays;
(ii) Grid coordinates based on the Philippine Reference
System 92;
(iii) Intersection lower cut-off grade is 3 g/t gold in line
with current resource estimation parameters;
(iv) Some previously reported intersection widths and grades
may have changed as a result of check assaying by McPhar.
Co-O PHASE 1 MINE EXPANSION
Expansion works have continued to proceed well during the quarter
with more of the activities focussed on on-vein development in
preparation for the setting up of production stopes. A total of 1,147
metres of development was completed (compared to 821 metres in the
previous quarter).
In the third quarter of 2008 it is anticipated that stope production
should be underway from five levels in the mine, these being the
3150, 3100, 3050, 3000 and 2950 metre levels.
(a)Development of the Catto Veins
A new drive following underground drill hole DBH 3 on the 3050 metre
level on the west side of the Oriental Fault has intersected the West
Catto Veins and driving west along the veins is underway. A number of
branch veins have been encountered including one vein on the 3050
metre level which has a dip of 30� to 50� north together with abrupt
changes in strike. When more vertical and horizontal development is
completed in these areas, interpretation of the veins can be
completed. Driving to the New Catto Veins on the east side of the
Oriental Fault is underway by driving along the Jereme Vein first to
the east from the 3000 metre level.
(b)Beta Shaft
The set-up for the new internal inclined Beta Shaft (footings,
headframe and winder), to an inclined depth of 120 metres (100 metres
vertical) is nearly completed and sinking is underway.
Provided ground conditions are reasonable, ore production through the
Beta Shaft should commence in the last quarter of 2008.
(c)Agsao Shaft
The new external Agsao Shaft, to an inclined depth of 240 metres (200
metres vertical) has commenced sinking in hard, fresh rock following
cementing of the top section of the shaft down through the soft
weathered material. The bottom of this shaft will be at the 2950
metre level and will be connected to the Beta internal inclined shaft
at the same 2950 metre level. Plate 1 (please see the link at the end
of this announcement) shows the Agsao Shaft headframe and winder.
Provided ground conditions are reasonable, ore production through the
Agsao Shaft should commence in the second quarter of 2009.
(d)3150 metre level
Development has intersected the West Catto Veins and on-vein
development is now underway. Provided vein widths and grades are
suitable, stope production should commence in the third quarter of
2008.
Co-O PHASE II DEEP SHAFT EXPANSION
The current resource size, combined with on-going drill intersections
indicating the deposit is still open along strike in both directions
as well as at depth, justifies an expanded production profile to
approximately 100,000 ounces per year.
The initial Hill View Shaft target depth, as shown on Figures 3 and 4
(please see the link at the end of this announcement), is
approximately 420 metres or 100 metres below (at the 2850 metre
level) the "in-progress" Agsao Shaft (which will bottom at the 2950
metre level). The shaft will have the capacity to be further deepened
to 600 metres. The new shaft will have a double drum winder with the
capacity to hoist up to 700 tonnes per day of ore, which when
combined with the Agsao Shaft, Beta, 3W and 10W shafts will lift
hoisting capacity from the mine to approximately 1,000 tonnes of ore
per day. At the current reserve grade of 11.1 g/t gold, this equates
to approximately 100,000 ounces of gold production per year. This
Phase II expansion will not interfere with the current expansion of
the mine to a target of 60,000 annualised ounces on commencement of
ore haulage from the Agsao Shaft in the second quarter of 2009.
Co-O MINE GRID POWER
The poles and cable for the power line to the Co-O Mine have been
delivered however transformers and associated electrical equipment
are now expected to be delivered during the next quarter. The upgrade
of the sub-station at the nearby town of San Francisco to the north
of the Co-O millsite has been delayed until at least August 2008 and
consequently the timing of the completion of the power line will
depend on completion of the sub-station and the arrival of the
outstanding items.
TAMBIS-BAROBO AREA
Soil sampling
Processing of the recently completed ridge and spur soil samples is
in progress with results anticipated in the second quarter of the
2008.
KAMARANGAN IRON ORE TARGET
During the recent ridge and spur soil sampling programme described
above, an extensive area of weathered magnetite with secondary
hematite skarn mineralisation was located (Figure 2, please see the
link at the end of this announcement). The magnetite skarn area is
also marked by extensive alluvial gold workings from previous local
sluicing operations. Magnetite is a magnetic iron oxide mineral that
contains 72.36% iron. Its magnetic property permits recovery of a
magnetite concentrate by relatively simple magnetic separation
techniques.
Skarn rocks are formed when hot fluids containing silica, iron and
other metals emanate from intrusive rocks (such as granites or
porphyry copper bodies) and come into contact with and react with
limestones and other calcareous rocks. At Kamarangan the skarns are
hosted by a banded limestone sequence which is older than the
"younger" massive white limestone which outcrops prominently to east.
The younger limestone is the unit which caps the blanket style
disseminated gold mineralisation hosted by diatreme breccias at
Bananghilig.
Table III lists the iron, gold, silver and copper assay results from
various outcrops.
Table III. Assay results from 21 surface samples in the Kamarangan
iron skarn area
Sample number Sample type Au (ppm) Cu (ppm) Ag (ppm) Fe (%)
425253 1m channel 1.23 602
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