Medusa Mining earmarks $70M for expansion

Medusa Mining Ltd., which posted record gold sales and net income for its financial year that ended on June 30, 2011, said it was ready to fund the expansion at its Co-O mine in Surigao del Sur.

“Our current financial position allows the company to self-fund the Co-O mill expansion and mine development, estimated at $70 million, and we are starting to accumulate the cash required to self-fund the Bananghilig Project, as it matures from the work currently being done,” managing director Peter Hepburn-Brown said in a statement.

Medusa’s record sales and profit in its last financial year was attributed to higher gold production and prices.

The Australian miner said its net profit after tax reached $110.4 million, 68 percent higher than the $65.8 million generated in the same period last year.

The company produced a record 101,474 ounces of gold for the year, an increase of 11,795 ounces, or 13 percent from the previous year’s production of 89,679 ounces.

This generated a record $149.6 million in revenue on the back of “escalating gold prices,” Brown said. The revenue posted for the financial year ending June 30, 2011, was 58 percent higher than the previous financial year.

Medusa is an un-hedged gold producer. It got an average gold price of $1,371 per ounce from the sale of 96,217 ounces of gold. In 2010, Medusa received an average of $1,100 per ounce from 64,020 ounces of gold.

Earnings before interest, tax, depreciation and amortization totaled $120.7 million, up 64 percent from $73.7 million a year ago.

The company said it remains debt-free and had total cash and cash equivalent in gold on metal account of $102.1 million as of June 30, 2011. In the financial year ending June 30, 2010, Medusa had $55.8 million in cash and cash equivalent in gold.

Looking ahead, Brown said the expansion at Co-O would be a “major transformation” for the Australian mining company.

The planned development and mill expansion will provide new modern treatment facilities to cater to the long life operations expected from the Co-O Mine and potentially other satellite mines, Brown said.