30th Apr 2007 07:02
Medusa Mining Limited30 April 2007 MEDUSA MINING LIMITED QUARTERLY ACTIVITIES REPORT PERIOD ENDING 31 MARCH 2007 Medusa Mining Limited ("Medusa" or "The Company"), the Australian based companyoperating and developing gold mines in the Philippines, is pleased to provideits quarterly update on activities for the period ending 31 March 2007, asrequired by the Australian Stock Exchange. KEY POINTS: Co-O MINE & PRODUCTION • Successful commissioning of large ball mill; • First export shipment of bullion to refinery in Hong Kong; • 3W shaft completed to 3050 metre level in full operation; • January landslide effects on the 3050 metre level resolved by late February, but pumping continued until mid-March to lower the water to the 3010 metre level, hence reducing mining activities; • Gold production from 4,294 dry tonnes at a recovered grade of 9.5 g/t gold totalled 1,315 ounces at an average cash cost of US$509 per ounce, generating income of approximately US$0.9 million; • Q2 production expected to achieve annualised 40,000 ounces; • Co-O deeps drilling continuing - multiple high grade results up to 4.7 metres @ 57.65 g/t gold. Next report due late May; • 3050 metre level assays show continuous vein at 35.37 g/t gold over 267 metres strike at average width of 1.4 metres. TAMBIS BANANGHILIG MINE • Re-interpretation of data and drilling in progress. BANBANON (SINUG-ANG) PROJECT • Drilling completed around an existing shaft, interpretation in progress for shaft refurbishment decision. ANOLING PROJECT • Surface and underground exploration commenced. CORPORATE • Picop's filed Motion for Reconsideration dismissed with finality on 14 February 2007; • Exercise of 31 January 2007 options completed. GOLD PRODUCTION The production statistics for the current financial year are summarised in Table1. Table I: Gold ProductionPeriod Ore Recovered Cash Gold Comments mined grade ounces costs sales (wet (g/t (ozs) (US $ per (US $ tonnes) Au) oz) million)Jul to Sept2006 12,024 9.3 3,522 263 2.17 Development & some stope ore Oct to Dec 13,949 8.8 3,647 278 2.20 2006Jan to Mar 5,611 9.5 1,315 509 0.90 Re-establishing mine2007 accessTOTAL 31,584 9.1 8,484 308 5.27 Approximately 2,325 tonnes of ore were stockpiled at 31 March 2007. Production was severely hampered by the January landslide which resulted in lossof access to the mine and blocked the drainage, cut off the electricity for thewater pumps and flooded the bottom of the mine. The cash cost per ounceincreased as a consequence of the reduced ounces. The Company now expects toachieve its initial annualised target of 40,000 ounces in Q2. The 500 tpd ball mill was successfully commissioned during March once sufficientore had been stockpiled and will be operated on a batch basis for all futureprocessing until an average of more than 400 tonnes per day of ore is mined. The200 tpd circuit will be retained in its entirety as a backup unit. PICOP SUPREME COURT CASE On 6 December 2006, the Supreme Court ("SC") of the Republic of the Philippinesunanimously confirmed that Department of Environment and Natural Resources("DENR") can now proceed, subject to regulatory compliance, with the issuance toPhilsaga Mining Corporation ("Philsaga") of Mineral Production Sharing Agreement("MPSA") application 084-XIII covering the Co-O Goldmine. As anticipated, on 6 January 2007, Picop lodged a Motion for Re-considerationchallenging the decision of the SC. On 14 February 2007, the Supreme Court dismissed with finality the Motion forReconsideration. Conseqently the Company is finalising the updating of its MPSAapplication in preparation for granting of the Co-O MPSA. The Special Mining Permit over the Co-O Mine has been renewed. Co-O MINE Effects of the landslide at Co-O adit entrance As discussed in the December 2006 quarterly report, production recommenced fromthe intermediate 3100 metre level via the 10W shaft on 21 January. The bottom3050 metre level of the mine achieved full operational status in late Februaryfollowing clean up of the mine post the flooding. Full development re-commencedat the 3050 metre level, however the new 3010 metre sublevel (40 metres belowthe mine bottom) was affected by flooding until mid-March when sustained pumpinglowered the water level sufficiently to permit recommencement of development. In late January, excavation of a new by-pass adit commenced to connect with the3W shaft position providing an improved loop rail system, improved safety and asecond adit access to the mine. Approximately 50% of the new 280 metre long aditis completed, however the excavation has encountered unexpected soft groundconditions over the entire length from the entrance to date requiring continuoustimbering which has slowed progress. Completion of the adit should be achievedduring Q2. Deep drilling Programme description In December 2006 the Company commenced a drilling programme designed tointersect the Co-O Mine vein system at approximately 100 metres below thecurrent bottom of the mine (i.e. at level 2950 metres) which is approximately200 metres below the adit to the mine (level 3150 metres). Holes are beingspaced at approximately 50 metre intervals along strike, but the intersectiondepth and position of each drill hole is dependent on topographic constraints.Two deeper drill holes at approximately 250 to 300 metres vertically below theadit level have also been completed. Each drill hole has been surveyed every 50metres downhole using a multishot digital camera. The first five holes have been completed and this first phase of drilling willcontinue for approximately another 3 to 4 months and further drilling may beconducted once the initial results are assessed. The next drilling update isexpected to be available in late May. Intersections of > 4g/t gold from the drilling are presented in Table II. Thelower grade intersections are included because of the variability of gradeswithin the veins and because they define gold mineralised veins requiringfurther investigation. It is important to note that drilling of narrow epithermal veins at bestgenerally provides only an indication of the presence of the gold mineralisedvein and rarely provides good quantitative data with respect to accurate gradeand volume estimations for some or all of the following reasons: • Veins commonly pinch and swell and may be brecciated or displaced by faults; • Gold distribution is commonly erratic, in shoots or controlled by structures within the vein; & • Drill core recovery can be reduced because of the brecciation and soft unconsolidated material and hence the recovered material may not be representative of the material drilled. Consequently, the Company regards the initial drilling as indicative only andoperates the policy of using drilling to locate the extent of the mineralisedveins. This is then followed by level development to support the drillingresults, which provides a more accurate estimate of vein grades and facilitatesthe estimation of resources. Table II: Summary of drilling results for holes MD 20 to MD 24 for intersectiongrades > 4 g/t gold Hole East North Dip Azimuth From Width Grade (uncut) (o) (o) (metres) (metres) g/t gold------ ------- ------- ------ ------- ------- ------- ---------- MD 20 614099 913092 -51 214 230.10 1.50 16.75 ------- ------- ---------- 250.25 0.85 4.22 ------- ------- ---------- 265.90 0.45 7.19 ------- ------- ---------- 290.70 0.60 4.92 ------- ------- ---------- 311.40 4.70 57.66 ------- ------- ---------- 323.10 1.70 15.76 ------- ------- ---------- 333.10 1.50 4.65 ------- ------- ---------- 337.05 4.55 6.98 ------- ------- ---------- 352.20 0.80 11.41 ------- ------- ---------- 359.60 0.80 4.14 ------- ------- ---------- 361.55 1.55 15.23 ------- ------- ---------- 381.95 0.35 15.56 ------ ------- ------- ------ ------- ------- ------- ---------- MD 21 614120 913134 -50 214 41.40 0.70 13.53 ------- ------- ---------- 185.90 1.80 5.04 ------- ------- ---------- Hole Stopped At 268.10m ------ ------- ------- ------ ------- ------- ------- ---------- MD 23 614120 913134 -56 214 45.20 1.70 8.30 ------- ------- ---------- 190.80 1.40 14.77 ------- ------- ---------- 349.10 0.40 7.98 ------ ------- ------- ------ ------- ------- ------- ---------- MD 22 614025 913188 -45 210 135.50 0.55 30.95 ------- ------- ---------- 161.60 0.30 14.50 ------- ------- ---------- 324.15 0.65 8.78 ------- ------- ---------- 360.80 4.80 8.19 ------ ------- ------- ------ ------- ------- ------- ---------- MD 24 614026 913190 -55 210 281.25 0.55 21.47 ------- ------- ---------- 357.75 1.25 12.38 ------- ------- ---------- 407.60 0.60 4.76 ------ ------- ------- ------ ------- ------- ------- ---------- Note: McPhar Geoservices Inc. assays are quoted. Co-O Vein System Discussion The Co-O Mine vein system trends westerly and is truncated by a majornorth-trending fault (the Oriental Fault) which has vertically downthrown thevein system on the eastern side of the fault by an estimated 300 metres andmoved the veins horizontally by approximately 20 to 40 metres, with the eastside moved to the south. The effect of the downthrow is that the Co-O veins onthe east side of the fault are not exposed at surface and the tops of the veinsappear to commence approximately 160 metres below surface and below the aditlevel. When the mine was originally developed in the late 1980s, the vein system hadonly been discovered on the west side of the Oriental Fault (despite explorationdrilling on the east side) and all mine development was carried out on the westside over approximately 600 metres of strike length. Drilling, which commencedin late 2004 (holes MD 1 to 8), intersected the vein system on the east side ofthe Oriental Fault and subsequently delineated the vein system over a strikelength of approximately 250 metres to east. Subsequent underground developmenthas verified the intersection grades and widths in holes MD 1 to 4 over a strikelength of 104 metres which is open to the east. Development on veins within the mine on the west side of the Oriental Fault overa strike length of over 600 metres indicates the vein system is open to thewest, and drilling and mapping to the east of the Oriental Fault havedemonstrated that the Co-O Vein system is still open to the east and is shown tobe over 1.5 km in length. New Drilling East of the Oriental Fault Results are contained in Table II. MD 20 intersected multiple veins hosted by altered micro-diorites, porphyriticandesites and andesitic volcanics. The high grade veins (up to 4.7 metres @57.66 g/t gold) are commonly colloform banded and vuggy, contain < 2-3%sulphides, generally as fine pyrite, and a minor overprint of calcite infractures. MD 21 intersected 2 new veins high in the hole and the hole was terminated dueto excessive deviation. MD 23 intersected the same new veins high in the hole as in MD 21 as well as anumber of the same vein positions as in MD 20 before encountering a post veinbrecciation - silicification overprint in the position of the Central andassociated veins, resulting in dilution of the gold grades in this area. Thebreccia contains fragments of the primary veins mixed with other lithologies andoverprinted by later white and black silica. The extent of this overprint willbe determined by future drilling and underground development New Drilling West of the Oriental Fault Results are contained in Table II. Hole MD 22 intersected the Central Vein (4.8 metres at 8.19 g/t gold)approximately 100 metres below the current bottom of the mine. A feature of theCentral Vein in this area is that it is intensely brecciated and returnsaveraged drill hole grades well below the grades mined around earlier drillholes. The material in MD 22 is very similar to material mined in the levelsabove it and is regarded as indicating potentially similar grade material. It isnoteworthy that the four early drill holes in the late 1980s within the currentresource block returned the results shown in Table III, and that during the 2004resource estimation were rejected "because they consistently show considerablylower grades when compared with reconciled production data and face/stopesampling" (Cube, 2004). Potentially the grade of the drilled material will besimilar to the mined material in stopes above the intersection, being a factorof between 2 and 4 times the drilled grade. Table III: Summary of 1980s Central Vein drill results Hole East North Dip Azimuth From Width Grade (uncut) (metres) (metres) g/t gold ------ ------ ------ ----- ------ ------- ------ --------- KD 44 613899 913038 -55(o) 200(o) 85.45 0.95 9.29 ------ ------ ------ ----- ------ ------- ------ --------- KD 45 613899 913038 -67(o) 200(o) 105.25 5.75 22.48 ------ ------ ------ ----- ------ ------- ------ --------- KD 46 613826 913076 -45(o) 200(o) 68.30 6.97 6.95 ------ ------ ------ ----- ------ ------- ------ -------- KD 47 613826 913076 -65(o) 195(o) 113.35 7.15 12.12 ------ ------ ------ ----- ------ ------- ------ --------- Hole MD 24 was drilled below MD 22 and intersected interpreted down dippositions of the veins approximately 235 metres below the bottom of the mine(approximately 480 metres below surface) and contained modest gold values.Further drilling will be required in this area at a later date. Sampling and Assaying All samples were taken from mainly HQ sized (65mm) and some NQ sized (45mm)drill core. The selected sample intervals were halved by diamond saw and thehalf core was bagged, numbered and sent to the Company laboratory. In a smallnumber of cases to confirm the geological logging, the selected interval wasre-split and 1/4 core re-submitted for assay. Initial sample preparation and assaying was undertaken at the Company's on-sitelaboratory. Samples were dried at 105(o)C for 6 to 8 hours, crushed to < 1.25 cmby jaw crusher, re-crushed to < 3 mm using a secondary crusher followed by ringgrinding of 700 to 800 grams of sample to nominal < 200 mesh. Barren rock wash isused between samples in the preparation equipment. The samples were assayed byfire assay with Atomic Absorption Spectrometer (AAS) finish on a 30 gram sample.All assays > 5 g/t gold were re-assayed using gravimetric fire assay techniqueson a 30 gram sample. The majority of samples which contained > 0.5 metres at > 2 g/t gold werere-assayed by McPhar Geoservices Phils Inc ("McPhar"), a NATA registeredlaboratory in Manila. The pulps were airfreighted to McPhar who fire assayed 30grams of sample using AAS finish and a selected number of samples were checkedusing gravimetric fire assay techniques. When reporting results, where available, the McPhar assays have given priorityover the Company laboratory's results due to its independence. 3050 metre development assays Compilation of the Central Vein assays from mine development on the 3050 metrelevel (currently the bottom of the mine at the bottom of the newly completed 3Wshaft) shows that the combined continuous high grade mineralisation on each sideof the Oriental Fault totals a strike length of 267 metres with an average gradeof 35.37 g/t gold (uncut) and with an average width of 1.4 metres. Over a considerable amount of the strike on the west side of the Oriental Fault,the development is completely within the vein and information from developmentabove and below the level indicates that there is generally between one and twometres of vein still in the north wall of the 3050 metre level drive. Theadditional material in the north wall is not included in the average width of1.4 metres. Re-estimation of the resources is expected to be completed during the thirdquarter following the deep drilling and the availability of more undergroundinformation. BANBANON (SINUG-ANG) PROJECT The Sinug-ang Project, situated immediately north of the Co-O Mine, comprisestwo prospects being the Banbanon Prospect in the area of current drilling whichwas explored in the 1980s by surface sampling and drilling, and the Sinug-angprospect located further to the north on the same vein system which trends in aNNW direction parallel to the Philippine Rift Fault trend. Some small scalemining activities of selected parts of the Banbanon Vein and with limitedlateral extent have been undertaken to a depth of approximately 130 metres belowsurface. Drilling has been completed around the existing Cobra Shaft which has beenchosen as a possible development position for the Banbanon Prospect. The intent,subject to positive interpretations, is to access the > 500 metre long zone of > 5g/t gold that has been outlined from surface to depths varying between 100 and 250 metres. The existing shaft could be refurbished to establish relativelyquick and cheap access to the vein system for underground investigation. Drilling has intersected the following results summarised in Table IV. Table IV. Banbanon - Sinug-ang Project Drilling Results > 2 g/t gold Hole East North Azimuth Dip From Width Grade (uncut) (metres) (metres) g/t gold --------- ------ ------ ------ ------ -------- ------- ------- BANBANON ---------- SNG 001 172337 915787 70(o) -50(o) 374.20 0.70 2.70 ------ -------- ------- --------- 394.00 1.00 2.70 --------- ------ ------ ------ ------ -------- ------- --------- SNG 002 172438 916009 90(o) -60(o) 298.45 0.20 2.83 --------- ------ ------ ------ ------ -------- ------- --------- 301.50 1.15 3.43 -------- ------- --------- 304.70 4.35 2.77 --------- ------ ------ ------ ------ -------- ------- --------- SNG 003 172487 915726 70(o) -55(o) 227.85 6.05 7.04 ------- ------- --------- including 229.40 2.90 10.25 --------- ------ ------ ------ ------- ------- --------- SNG 004 172337 915787 68(o) -52(o) 374.90 1.65 3.39 --------- ------ ------ ------ ------ -------- ------- --------- SNG 005 172487 915726 60(o) -55(o) 222.65 9.15 9.46 -------- ------- --------- including 226.05 5.75 13.46 --------- ------ ------ ------ ------ -------- ------- --------- SNG 006 172487 915726 90(o) -55(o) 242.63 0.97 2.30 --------- ------ ------ ------ ------ -------- ------- --------- SNG 008 172615 915647 70(o) -50(o) 127.90 0.30 4.20 ------ ------- -------- 138.30 0.75 7.03 --------- ------ ------ ------ ------ ------- ------- -------- SNG 010 172615 915647 90(o) -50(o) < 2g/t --------- ------ ------ ------ ------ -------- ------- --------- SNG 012 172615 915647 110(o) -50(o) < 2g/t --------- ------ ------ ------ ------ -------- ------- --------- SNG 015 172634 915685 70(o) -50(o) < 2g/t --------- ------ ------ ------ ------ -------- ------- --------- SNG 017 172756 915551 110(o) -50(o) < 2g/t --------- ------ ------ ------ ------ -------- ------- --------- SNG 019 172830 915366 70(o) -50(o) < 2g/t --------- ------ ------ ------ ------ -------- ------- --------- SNG 021 172799 915576 105(o) -60(o) < 2g/t --------- ------ ------ ------ ------ -------- ------- --------- SNG 022 172489 916179 90(o) -45(o) 91.70 2.20 4.08 --------- ------ ------ ------ ------ -------- ------- --------- 105.40 0.45 9.39 --------- ------ ------ ------ ------ -------- ------- --------- SNG 023 172503 916139 90(o) -48(o) 78.30 0.55 2.97 --------- ------ ------ ------ ------ -------- ------- --------- SNG 024 172505 916235 90(o) -49(o) < 2g/t --------- ------ ------ ------ ------ -------- ------- --------- SNG 025 172474 916278 90(o) -48(o) < 2g/t --------- ------ ------ ------ ------ -------- ------- --------- SINUG-ANG----------- SNG 007 172371 916675 90(o) -55(o) Abandoned --------- ------ ------ ------ ------ -------- ------- --------- SNG 009 172380 916725 90(o) -50(o) 107.40 0.50 2.67 --------- ------ ------ ------ ------ -------- ------- --------- SNG 011 172351 916776 90(o) -55(o) < 2g/t --------- ------ ------ ------ ------ -------- ------- --------- SNG 013 172371 916678 100(o) -66(o) < 2g/t --------- ------ ------ ------ ------ -------- ------- --------- SNG 014 172435 916549 60(o) -45(o) 45.90 1.00 5.87 --------- ------ ------ ------ ------ -------- ------- --------- 50.40 2.65 3.27 --------- ------ ------ ------ ------ -------- ------- --------- SNG 016 172435 916549 30(o) -50(o) 69.30 1.80 27.00 --------- ------ ------ ------ ------ -------- ------- --------- SNG 018 172435 916549 90(o) -50(o) 88.55 0.15 25.00 --------- ------ ------ ------ ------ -------- ------- --------- SNG 020 172395 916581 70(o) -60(o) 86.90 1.05 2.12 --------- ------ ------ ------ ------ -------- ------- --------- 91.00 2.70 4.73 --------- ------ ------ ------ ------ -------- ------- --------- Note: All assaying conducted by the Philsaga Laboratory using 30g fire assaycharges with Atomic Absorption Spectometry finish. TAMBIS BANANGHILIG MINE Background The Tambis Bananghilig Mine is located approximately 35 km by the NationalHighway to the north of the Co-O Plant. Development Work on the North-South Vein adit on the north side of the Bananghilig River hascontinued at a low level where sub-levels below the adit are being established.Final results of the metallurgical testwork programme are expected during theJune quarter. Underground development targeting previous high grade reverse circulation ("RC")drill results has shown that some previous RC drill holes that had returned highgrades over good widths had suffered severe downhole contamination resulting inexaggerated intersection widths through smearing down the drill hole of highgrades from narrow veins and veinlets. A review and interpretation of allprevious diamond drill holes in the data base is nearing completion, inconjunction with on-going underground and surface diamond drilling. Depending onprogress, results should be available late in the September quarter. NEW TENEMENT ACQUISITIONS During the quarter the Company through Philsaga applied for 324 hectaresimmediately west and north of the Sinug-ang Mine. In addition the Company through Philsaga completed two Memoranda of Agreement("MOA") with Corplex Resources Incorporated ("CRI") on two separate parcels ofground immediately south of the Tambis Project, being an application forFinancial and Technical Assistance Agreement ("FTAA") number 000004-XIIIcomprising approximately 162 hectares and application for Mineral ProductionSharing Agreement ("MPSA") number 000077-XIII comprising approximately 810hectares, and totalling approximately 972 hectares. The essential terms for both agreements are: • The Company has the right to explore and develop minerals on the tenements and will pay a 4% gross royalty on all minerals extracted; • If the Company completes a scoping study for a major new discovery which demonstrates a minimum 5 year mining life for the deposit, CRI can: (i) elect to buy back a 30% interest in the respective tenement by re-imbursing a sum equal to four times the expenditure to that time on the relevant tenement, and (ii) contribute to 30% of all on-going costs to develop the project; (iii) In the event that CRI elects not to contribute, CRI will: (a) dilute to a 15% carried interest to commencement of production which will be funded by a loan from the Company, and (b) repay the loan from production with 70% of CRI's share of cashflow being used for loan repayment. OTHER PROJECTS • Abacus Project The Mines Operating Agreement ("MOA") with Abacus Consolidated Resources andHoldings Inc. covers Exploration Permit ("EP") application number 000028-XIIIsituated to the north of the Co-O mine and millsite. The granting process for the Abacus EP is now being pursued. • Anoling Project The MOA with Alcorn Gold Resources Inc. covers Mining Production SharingAgreement ("MPSA") application number 039-XIII situated to the north of the Co-Omine and millsite. The granting process for the Anoling MPSA is now being pursued. The granting of two Small Scale Mining Permits was completed during the quarter.The Anoling Project consists of a large number of artisinal workings and oldmines dating back to pre-World War II. The workings are generally located onwesterly trending vein systems, with some indications of a conjugate northeasttrending vein set. The veins generally consist of banded quartz-carbonatematerial within clay-chlorite-pyrite gauge zones with both types of materialcarrying gold values. Examination of old workings shows that the veins pinch andswell up to approximately 2 metres wide and appear to occur in shoots of between50 to 100 metres in length. Typical grades are anticipated to be in the 8 to12 g/t gold range although a 1980s mine to approximately 100 metres depth at theeastern end of the property is reported to have produced ore at approximately 30g/t gold. The Company has commenced mapping, trenching and sampling, undergroundexploration and drilling. • Das-agan Project The MOA covering MPSA application number 039-XIII comprising two parcels andsituated to the north and east of the Co-O Mine and millsite. The grantingprocess for the Das-Agan MPSA is now being pursued. • Saugon Gold-Silver Project (Medusa 100%) Application for re-newal of the Exploration Permit is in progress. • Panaon Project (Medusa divesting 50%) No field work was carried out during the quarter. • Bunawan Project (Magnum Gold NL earning 50%) The Bunawan Project is located south of the Co-O Mine and is a joint venturebetween Philsaga and Magnum Gold NL ("Magnum") whereby Magnum is earning a 50%interest through the expenditure of US$1.5 million. In 2006 one diamond drill hole was completed to test surface alteration and goldanomalism associated with narrow quartz veining. The drill hole intersected weakanomalous gold values of 700 km(2) along 70 km strike of the richly endowed East Mindanao ridge; • Regional assessment confirms excellent prospectivity with the definition of seven porphyry target areas. Share capital as at 31 March 2007: Shares: 124, 537,548 (ASX code :MML)Unlisted options: 6,650,000 Listings Australian Stock ExchangeAlternative Investment Market (London)Frankfurt Stock Exchange -ENDS- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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