Medusa

Medusa Mining is continuing to boost gold production after it has turned £800,000 first-half losses into interim pre-tax profits of £4.6m.

Based in Western Australia and quoted on AIM, the company increased production at its Co-O mine in the Philippines 119% to 19.144 oz in the six months to December at a decidedly respectable grade of 12.71g of gold per tonne of ore. Medusa says its average production cost was $225 an oz, against a current market price of more than $900.

Managing director Geoffrey Davis says the company, which ended December with £2.6m cash, is ‘on schedule’ to lift production to an annual rate of 60,000 oz by the third quarter of this year and then to 100,000 oz a year from the first quarter of 2010, with expected long-term cash costs (before financing) of $200 an oz. In the first half, Medusa increased Co-O’s estimated gold resource 40% to more than 1.2m oz and the company is continuing an ‘intensive’ drilling programme to increase its resource base further.

Initially highlighted by Growth Company Investor in 2006 at 27p and again at 48p last January, Medusa shares, which hit 69p at the end of 2007, now trade at 64p. They are worth holding on to for now.

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