31st Jan 2007 08:30
Medusa Mining Limited31 January 2007 MEDUSA MINING LIMITED QUARTERLY ACTIVITIES REPORT PERIOD ENDING 31 DECEMBER 2006 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 December 2006, asrequired by the Australian Stock Exchange. KEY POINTS: Co-O MINE & PRODUCTION In the quarter: - Ore processed by the Co-O Plant during the quarter totalled 12,950 dry tonnesat an average recovered grade of 8.76 g/t gold; - Gold production totalled 3,647 ounces at an average cash cost of US$278 perounce, generating income of approximately US$2.2 million; - Production ramp-up expected during Q1 2007 to 3,000 ounces per month; - Co-O 3W shaft completed and in operation; Subsequent events: - Co-O deeps drilling in progress, first results late Feb 2007. - Mine returned to operation following clearance of the landslide which blockedthe entrance on 9 Jan 2007; TAMBIS BANANGHILIG MINE - Underground drilling in progress to prioritise development, 1,600 tonnes ofdevelopment ore at 7.57 g/t gold stockpiled. BANBANON (SINUG-ANG) PROJECT - Drilling underway around an existing shaft selected for refurbishment; - +5 g/t gold zone over 500 metres long (open) & from surface to 100 to 250metres deep below surface identified; REGIONAL ASSESSMENT - Reprocessing of selected aeromagnetics data underway. CORPORATE - Completed capital raising of A$11,143,990 in mid November 2006; - Completed Listing on AIM on 21 November 2006; - Completed merger with Philsaga Mining Corporation ("Philsaga") on 4 December2006; - Picop court case resolved favourably in the Supreme Court on 6 December 2006. GOLD PRODUCTION The 2006 production statistics are summarised in Table 1. Approximately 1,600tonnes of ore at 7.57g/t gold were stockpiled at 31 December 2006. Table 1. Gold Production for 2006:+-----------+-------+----------------+---------+---------+-------------+|Period | Ore | Recovered | Cash | Gold |Comments || +-------+--------+-------+---------+---------+ || | mined | grade |ounces | costs | sales | || +-------+--------+-------+---------+---------+ || | (wet |(g/t Au)| (ozs) |(US $ per| (US $ | || |tonnes)| | | oz) |million) | |+-----------+-------+--------+-------+---------+---------+-------------+|Jan to Mar | 5,609| 8.9| 1,613| 307 | 0.89|Development ||2006 | | | | | |ore |+-----------+-------+--------+-------+---------+---------+-------------+|Apr to Jun | 9,342| 8.0| 2,503| 334 | 1.62|Development ||2006 | | | | | |ore |+-----------+-------+--------+-------+---------+---------+-------------+|Jul to Sept| 12,024| 9.3| 3,522| 263 | 2.17|Development &||2006 | | | | | |some stope |+-----------+-------+--------+-------+---------+---------+ore ||Oct to Dec | 13,949| 8.8| 3,647| 278 | 2.20| ||2006 | | | | | | |+-----------+-------+--------+-------+---------+---------+-------------+|TOTAL | 40,924| 8.6| 11,285| 270 | 6.88| |+-----------+-------+--------+-------+---------+---------+-------------+ Production is expected to ramp up during Q1 2007 to a target of 3,000 ounces permonth. The 200 tpd circuit will continue to be used until stockpiles build sufficientlyfor the the start-up of the large mill with a current 500 tpd capacity. Thesmaller circuit will be retained in its entirety as a backup. PHILSAGA TRANSACTION The Philsaga acquisition was completed on 4 December 2006 whereby the Companypaid the vendors of Philsaga a consideration of A$12 million, via a combinationof cash and deferred payment terms, together with the issue of 25 million sharesin the Company (subject to an escrow arrangement for at least 12 months) andMedusa also paid the contractors to the mining operation a final payment of A$1million. The full terms of settlement of the acquisition of Philsaga from the Philsagavendors are: - Final payment of A$1 million to contractors; - Yandal Investments Pty Ltd was paid in full, being A$3.584 million and issuedwith 6.4 million shares; - Secdea Philippines Holdings Corporation was paid in full, being A$80,000 andissued with 4 million shares; - Advanced Concept Holdings Limited was paid A$920,000 and issued with 14.6million shares. Advanced Concept Holdings Limited has agreed to provide vendor finance for thebalance of the cash payment of A$7.416 million on the following terms: - A$2.416 million to be paid on or before 15 February 2007; - A$2.5 million to be paid on or before 15 July 2007; and - A$2.5 million to be paid on or before 15 January 2008. The above deferred payments do not include interest which has been set at 7.5%per annum. There will be no penalty for any early repayments. The deferredpayments and interest are to be secured by a charge or equivalent security overthe Co-O Mine assets. 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 of Mineral Production Sharing Agreement ("MPSA") application 084-XIIIcovering the Co-O Goldmine. As anticipated, on 6 January 2007, Picop lodged a Motion for Re-considerationchallenging the decision of the SC. Unless Picop submits fresh evidence andcompelling reasons as to why the decision handed down by the SC was incorrectand should be re-considered, the SC will issue a minute dismissing the motion tore-consider with finality. Background The case lodged in the Supreme Court of the Philippines by Picop Resources Inc("Picop"), a timber licence holder, arose when Philsaga's predecessor wasrequired under the new mining code introduced in 1995 to convert old styletenements to new tenements compliant with the new mining law. Picop lodged anadverse claim against the MPSA applications in 1997 on the grounds that miningcould not be undertaken in timber licences. Philsaga acquired these tenementapplications in 2000 and proceeded to challenge the adverse claim. Philsaga wonthe case against Picop in two lower courts and subsequently Picop lodged a casein the Supreme Court against the claimowner and a division of the Department ofEnvironment and Natural Resources. Co-O MINE Landslide at Co-O adit entrance The Company advised the ASX on 10 January 2007 that torrential monsoonal rainover the previous two weeks at the Co-O Minesite caused a landslide earlymorning on 9 January 2007 in the vicinity of the main Co-O adit resulting inapproximately 60,000 to 70,000 tonnes of material slipping from approximately 70 metres above the adit. Some of the material temporarily blocked the aditentrance and cut power lines and other services to the mine. No personnel wereaffected by the slide as all were evacuated through the Tinago Shaft at thewestern end of the mine. Round the clock work with three front end loaders and trucks allowed minedrainage at adit level to be re-established on Friday, 12 January 2007 and powerwas reconnected on Sunday night, 14 January 2007 enabling the pumps on both themain levels below the adit to be re-started. The water level in the bottom levelof the mine (3050 metre level) had risen by approximately one metre in the maindrive and has been cleared, along with rock and silt accumulations resultingfrom uncontrolled water flow down through the workings while the power anddrainage were cut. In order to reduce the risk of losing future access to the mine, the Company hascommenced excavating a new by-pass adit which will connect with the 3W shaftposition providing an improved loop rail system and improved safety. The time tocompletion is estimated at approximately 10 weeks. Repairs to the current adit are completed and the mine is back in operation. Themine access road which was also cut has been returned to full operational use. Ore production from the Co-O Mine recommenced on 21 January 2007and has beenstockpiled. Milling is planned to recommence on 1 February 2007. Deep drilling Drilling the Co-O Mine deeps on both sides of the Oriental Fault is underwayutilising two diamond drill rigs, one on each side of the fault drilling stepout holes to the east and to the west towards the Tinago Shaft area at thewestern end of the mine. The aim is to intersect the vein system (subject totopographic and other constraints) at approximately the 2950m level which isapproximately 100 metres below the current bottom of the mine (or approximately200 metres below adit level) with possibly some deeper holes being drilled,depending on results. It is anticipated that the first batch of results will beavailable in late February. Re-estimation of the resource is expected to be completed during the thirdquarter following the deep drilling and the availability of more undergroundinformation. Development Development on the 3117 metre level (the 10W shaft level) has now been driven toapproximately 450 metres west of the Oriental Fault and has continued to developon an ore grade vein approximately one metre wide generally containing between 4 and 12 g/t gold. This development will continue to approximately 550 metres west of the Oriental Fault to the position where drill hole TIN 3 intersected3.80 metres at 21.15 g/t gold. Development at the 3050 metre level (the 3W shaft level) involves driving alongveins as well as the sinking of two winzes 50 metres apart to 40 metres depth(to the 3010 metre level) on the east side of the Oriental Fault. A new subleveldevelopment is underway on the 3010 metre level. A new ventilation rise adjacent to the 10W shaft has commenced using an Alimakplatform and should be completed during Q1 2007. The raise will be approximately90 metres high to meet a 30 metre deep shaft already completed from surface andwill provide improved ventilation conditions. SINUG-ANG PROJECT The Sinug-ang Project, situated immediately north of the Co-O Mine, comprisestwo prospects: the Banbanon Prospect in the area of current drilling which wasexplored 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. Following drilling during Q4 2006, interpretative work and compilation based onthe drill results is now identifying possible positions of dilation along theSinug-ang Fault system which are to be targeted in future work. Drilling of two holes has commenced around an existing shaft that has beenchosen as a possible development position for the Banbanon Prospect in which a+500 metre long zone of +5g/t gold has been outlined from surface to depthsvarying between 100 and 250 metres. If the current drilling is successful, theexisting shaft will be refurbished to establish quick and cheap access to thevein system for underground investigation. Philsaga drilling has intersected the following results summarised in Table 2. Table 2. Sinug-ang Project Drilling Results +---------+------+------+------------+----------+---------+-------+--------+ | Hole |North | East | Dip | Azimuth |From (m) | Width | Grade | | | | | | | | (m) |(uncut) | | | | | | | | |g/t gold| +---------+------+------+------------+----------+---------+-------+--------+ |BANBANON | | | | | | | | +---------+------+------+------------+----------+---------+-------+--------+ | SNG 001 |915787|172337| -50 | 70 | 374.20| 0.70 | 2.70| +---------+------+------+------------+----------+---------+-------+--------+ | | | | | | 394.00| 1.00 | 2.70| +---------+------+------+------------+----------+---------+-------+--------+ | SNG 002 |916009|172438| -60 | 90 | 298.45| 0.20 | 2.83| +---------+------+------+------------+----------+---------+-------+--------+ | | | | | | 304.70| 4.35 | 2.77| +---------+------+------+------------+----------+---------+-------+--------+ | SNG 003 |915726|172487| -55 | 70 | 227.85| 5.95 | 5.86| +---------+------+------+------------+----------+---------+-------+--------+ | | | | |including | 229.40| 2.90 | 10.52| +---------+------+------+------------+----------+---------+-------+--------+ | SNG 004 |915787|172337| -50 | 62 | 374.90| 1.65 | 3.32| +---------+------+------+------------+----------+---------+-------+--------+ | SNG 005 |912487|175726| -55 | 60 | 222.65| 9.15 | 9.69| +---------+------+------+------------+----------+---------+-------+--------+ | | | | |including | 226.05| 5.75 | 13.50| +---------+------+------+------------+----------+---------+-------+--------+ | SNG 006 |915726|172487| -54 | 80 | 239.95| 1.05 | 1.10| +---------+------+------+------------+----------+---------+-------+--------+ | | | | | | 242.63| 0.97 | 2.30| +---------+------+------+------------+----------+---------+-------+--------+ | SNG 008 |915647|172615| -70degrees| 55degrees| 127.90| 0.30 | 4.20| +---------+------+------+------------+----------+---------+-------+--------+ | | | | | | 138.30| 0.75 | 7.03| +---------+------+------+------------+----------+---------+-------+--------+ | SNG 010 |915647|172615| -50degrees |90degrees | | | 700 km(2) along 70 km strike of the richlyendowed East Mindanao ridge; - Regional assessment confirms excellent prospectivity with the definition ofseven porphyry target areas. Share capital as at 31 December 2006: Shares: 103,672,145 ASX / AIM code: MML Listed options: 20,769,528 ASX / AIM code: MMLO Unlisted options: 4,825,000 -ENDS- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
MML.L