MEDUSA MINING LIMITED
ABN: 60 099 377 849
Unit 7, 11 Preston Street
Como WA 6152
PO Box 860
Canning Bridge WA 6153
Telephone: +618-9367 0601
Facsimile: +618-9367 0602
1 October 2007
MEDUSA MINING LIMITED
Co-O MINE EXPANSION
Medusa Mining Limited ("Medusa" or the "Company"), the Australian
based company operating and developing gold mines in the Philippines,
advises that the Directors have approved a work programme to enhance
the long-term future of the Co-O Mine by:
* Sinking two new shafts;
* Expanding the haulage capacity of the mine to 400 tonnes per day;
* Accessing the recently discovered, high grade New Catto Veins as
soon as possible; and
* Installing grid power to the Co-O Mine.
The benefits of these developments are:
* Facilitatation of production increases; and
* Re-inforcement of the long-term low cash cost target of
approximately US$200 per ounce.
Geoff Davis, Managing Director of Medusa commented:
"These prioritised developments, when completed, will facilitate
production increases and the maintaining of cash costs at
approximately US$200 per ounce. It is important that they are
commenced now for the future of the mine"
Please cut and paste the link at the end of this annoucement into
your web browser for the map that accompanies this release.
Co-O Mine Expansion Programme
The Company has prioritised the sinking of two new shafts and driving
to access the New Catto Veins due to the success to date of the
on-going drilling programme at the Co-O Mine and the recent resource
and reserve upgrades at this mine, to 713,000 ounces and 256,000
ounces of gold respectively.
Prioritising these developments requires assigning a proportion of
the production miners and support personnel to these activities.
Short-term production will be sacrificed and revised production
forecasts concurrent with this aggressive development programme will
be provided in the forthcoming quarterly report.
A new internal inclined shaft to a vertical depth of 100 metres has
been commenced from near the bottom of the existing 3W shaft. This
will connect from the 3050 metre level down to the 2950 metre level.
A new external inclined shaft to a vertical depth of 200 metres has
been commenced at the eastern end of the vein system, as shown via
the link at the end of the announcement, to access the New Catto
Veins and other veins in that vicinity. The bottom of this shaft will
be at the 2950 metre level and will be connected to the new internal
inclined shaft (described above) at the 2950 metre level. This
external shaft will be dedicated to ore haulage.
A new horizontal drive approximately 150 metres long is being
undertaken from the Central Vein on the 3000 metre level 50 metres
below the 3W shaft southwards to intersect the Jereme and New Catto
Veins 1 to 3. Providing ground conditions are reasonable, it is
expected that first production from the New Catto Veins will be in
the second quarter of 2008. The New Catto Vein 3 currently has a
probable reserve of 45,000 ounces at 31.6 g/t gold and the New Catto
Vein 1 has a probable reserve of 29,000 ounces at 50 g/t gold. Both
veins are open in three directions.
On completion of this development programme, the haulage capacity of
the mine is projected to increase to 400 tonnes of ore per day plus
waste haulage as required.
Progress in developing the two new shafts will depend on ground
Co-O Mine Grid Power Connection
The Company expects to commence installation of a new power line
along the ore haul road to carry grid power from the Co-O Millsite to
the Co-O Mine in October. This should be completed in early 2008. The
current estimated cost of the power line is approximately A$1million,
which will reduce the cost of power by approximately 75% At current
diesel powered electricity generation costs, the line is anticipated
to have a pay- back period of less than one year.
Completion of the power line will correspond with the completion of a
new sub-station in the town of San Francisco, which is located
approximately 25 kilometres to the north of the Co-O Plant. This will
result in increased reliability of the power supply and upgrading of
the line capacity to the project.
Training, Recruitment and Medical Programmes
Medusa operates continuous mining skills training programmes, which
commenced approximately 18 months ago. Recruitment of skilled miners
is on-going as the Company is aware of the fact that the Phillipines
is not immune to the shortage of skilled personnel in the mining
Following the re-organisation of the mine work force during the last
quarter and as part of the Company's duty of care and social
responsibility, all mining personnel were required to undergo a full
medical examination. Thirty one of the mining workforce, including
some of the Company's leading development miners, did not pass the
medical test, which together with the new expansion programme, will
impact on the short term gold production profile. Medusa places a
heavy emphasis on the health and welfare of its workforce and
consequently is willing to accept short term reductions in gold
production. These personnel have been placed on light duties or sick
leave and all are expected to rejoin the workforce over the coming
Medusa Mining Limited +61 8 9367 0601
Geoffrey Davis, Managing Director
Roy Daniel, Finance Director
Ambrian Partners +44 (0)20 7776 6417
Richard Brown / Richard Greenfield
Bankside Consultants +44 (0)20 7367 8888
Michael Padley / Louise Davis
Information in this report relating to Exploration Results is based
on information compiled by Mr Geoff Davis, who is a member of The
Australian Institute of Geoscientists. Mr Davis is the Managing
Director of Medusa Mining Limited and has sufficient experience which
is relevant to the style of mineralisation and type of deposits under
consideration and to the activity which he is undertaking to qualify
as a Competent Person as defined in the 2004 Edition of the
"Australian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves". Mr Davis consents to the inclusion in
the report of the matters based on his information in the form and
context in which it appears.
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