Absolutely everything is working for this mining company: Its output has almost doubled, its average grade is up, production costs fell, the price of the metal it mines rose substantially, and it’s debt-free. Is this miner really as good as it sounds? I had to call my friend Richard M., a 25-year veteran in resource investing and ask him. He told me Medusa is in his portfolio already. That’s all I needed to know. Here’s the scoop from Investors Chronicle…
Medusa Mining has produced stunning results for the year to end-June 2010. Even after allowing for a $5.89m adverse accounting adjustment, both revenues and profits more than doubled. The key was a jump in gold production from the company’s underground Co-0 mine on the Philippine island of Mindanao. Gold production jumped from under 48,000oz to nearly 90,000oz, the average grade was up from 13 to over 16 grams per tonne and the average gold price was $1,100 per oz. At the same time production costs dipped from $213 to $184 per oz. And despite doubling exploration expenditure of $18.92m, the company remains debt free while year end cash and bullion holdings advanced from $26.5m to $55.8m.
This financial muscle means that Medusa can continue its ambitious exploration programme. The budget for 2010-11 is $21m of which $6m will be spent extending the Co-0 mine and probably more exploring the low but open cast gold mine at Bananghilig 20km away. Medusa expects to produce 100,000oz of gold this year with Co-0 anticipated to have a 25 to 30-year mine life.
This is the kind of company that can climb the charts very quickly. And remember this. Gold is far from played out. There’s nothing I can see standing in the way of this outstanding mining company and big profits.
