Medusa Mining

HOLD

09/11/2009 Robert Tyerman

Note the continuing strength of Philippines-focused Medusa Mining, which has forecast a 77% current year gold output increase to 86,000 oz.

Based in Western Australia and quoted Down Under and on AIM, Medusa has indicated it is on target for a two-thirds increase in production from its Co-O mine to an annual rate of 100,000 oz by the first quarter of 2010, with total gold resources estimated at more than two million oz and long-term cash costs, before financing, of $200 an ounce, against a current gold price of nearly $1,090 an ounce.

Steered by managing director Geoff Davis, the company, a star AIM performer which turned a £650,000 loss into £20m pre-tax profits in the year to June, has also cited ‘excellent exploration upside’. This includes not only high-grade gold targets, but also, significantly, six porphyry copper targets.

First recommended by Growth Company Investor at 27p in 2006 and more recently highlighted at 151p two months ago, Medusa shares have now reached 210p. Profit taking is tempting, but, for now, it could be worth holding on for more positive copper developments.

Tags: AIM, Commodities, Growth Stocks

Sector: Mining

Companies: Medusa Mining

Market cap: £355m

PE Forecast: n/a

Share price: 210p