Medusa Mining

HOLD

07/09/2009 Robert Tyerman

Philippines-focused Medusa Mining has turned a £650,000 loss into a £20m annual pre-tax profit on buoyant low-cost gold production.

Based in Western Australia and quoted Down Under and on AIM, Medusa increased output from its Co-O deposit 152% to 47,869 oz of gold at an average grade of 13.3 grammes of gold per tonne of ore in the year to June, generating revenues up 216% to £29.5m. The company, whose cash production costs, before financing expenses, fell 14% to $213 an ounce, received an average $880 an ounce for its output.

Drilling has increased the estimated gold resource at Co-O 60% to 1.38m oz and Medusa says the maiden estimated resource at its new Bananhililg project is 650,000. The company, which raised £12.5m in February at the equivalent of 62p, hopes to be producing gold at the rate of 100,000 oz a year by early 2010, says managing director Geoff Davis.

First recommended by Growth Company Investor in 2006 at 27p, Medusa shares have now reached 151p. While gold remains in vogue, they could go further.

Tags: AIM, Cash, Commodities

Sector: Mining

Companies: Medusa Mining

Market cap: £255m

PE Forecast: 7.0

Share price: 151p