Overview

Introduction

Medusa Mining Limited (“Medusa” or the “Company”), a public company listed on the ASX  is an Australian based gold producer, focused solely in the Philippines.

On 22 December 2004 the Company announced it had completed a Heads of Agreement to merge with Philsaga Mining Corporation (“Philsaga”) which owned the high grade, underground, narrow vein Co-O Gold Mine. Philsaga was a privately owned Filipino corporation.

On 4 December 2006 the merger was completed, and the Company commenced redeveloping the Co-O Mine with an initial production target of 40,000 ounces per year.

In September 2007 the Company decided to expand the production capacity by commencing a Phase 1 expansion to increase production to 60,000 ounces annualised by the third quarter of 2009. Phase I was completed ahead of schedule by 31 March 2009 with annualised production of approximately 65,000 ounces in the quarter. Phase 2 expansion to annualised production of 100,000 was completed in the March quarter 2010, on schedule.

In 2012, the Company commenced its Phase 3 expansion to upgrade the mine hoisting capacity with the L8 shaft construction and to construct a new mill with 2,500 tpd capacity. Commissioning of the mill was completed in the March Quarter 2014.

In April 2015, the Company commenced the construction of a service shaft for all men and materials which will improve the hoisting capacity of the L8 shaft. This should be completed mid-calendar year 2016.

The Company’s current mineral resources and ore reserves are reported in accordance with the guidelines of the JORC Code 2012 (Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves). Refer to announcements of 4 and 25 September 2015, the September 2015 Quarterly Report, and the 2015 Annual Report.

Reporting of Mineral Resources under JORC Code 2004 guidelines gave an estimate of the volume of in-ground mineralisation above a certain cut-off grade (3 g/t gold at Co-O) and had a reasonable expectation of being mined.

JORC Code 2012 requires a statement of assumptions used, to define reasonable prospects for eventual economic extraction for resource reporting, such as cut-off grade, minimum mining width and gold price parameters.

The mineral resources since 2014 differ from previous estimates as some vein material which is high grade but narrow in width and may not meet the revised minimum requirement for economic extraction when diluted for mining at a nominated gold price and/or extraction cost, is therefore no longer allowed to be included in the reported resource.

However, should the gold price improve or costs decrease, then this un-classified mineralisation may be available to be included in future resource statements

Figure 1: Locations of
Philippines Projects

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Within the Company’s large tenement holding, covering 596 square kilometres, work is progressing on a number of other gold prospects as well as several copper prospects.

The locations of the Company’s projects and projects of other mining investors in the Philippines are shown on Figure 1.