In Agusan, Australian miner eyes more gold

Medusa Mining Ltd. expects to save $10 million from its expansion program by remodeling its existing mill site at the Co-O mine in Agusan del Sur.

Aggressive underground mine development, combined with an expanded mill capacity, will result in an increase in the company’s output in the next financial year, starting July 1.

Production may reach up to 110,000 ounces, according to Medusa’s report sent via e-mail.

Budgeted production for the 2010-2011 fiscal year, which ends on June 30, has been set at 100,000 ounces.

On the mill expansion, Medusa’s consulting engineers recommended extensive remodeling of the current mill site to maximize the use of existing facilities.

The initial capital expenditure for the mill expansion had been estimated at $80 million. But when Medusa opted to remodel the mill, instead of building additional facilities, the company expected to cut costs by up to $10 million, thus reducing the original capex estimate to $70 million.

“We should now be able to achieve considerable savings on capex with the new mill, and that we are still on-track to receive permits for the expansion around late September,” said Medusa managing director Peter Hepburn-Brown.

Production for the September 2011 quarter may be reduced because of the company’s development activities.

However, the expansion, through its Philippines subsidiary, Philsaga Mining Corp., is necessary to prepare the mine for increased production, Medusa said.