MEDUSA MINING LIMITED
(AIM: MML)
Annual General Meeting
9 November 2007
Chairman's Address
At the Annual General Meeting of Medusa Mining Limited, the
Australian based company operating and developing gold mines in the
Philippines, which was held today at the Sheraton Hotel, 207 Adelaide
Terrace, Perth, Western Australia at 11am (WST), Chairman Kevin
Tomlinson gave the following address:
"This year has been one of tremendous development and achievement for
the Company and a year in which we have achieved many milestones: the
court case regarding mineral rights has been resolved; the resource
has been increased significantly; and funding has been put in place
to allow us to accelerate development.
"We are particularly pleased to have increased the Co-O Mine
resources by 266% to 713,000 ounces at 10.9 g/t gold, and the
reserves by 272% to 256,000 ounces at 11.1 g/t gold. The drill
programme is continuing to define additional ounces and I have just
returned from a site visit and am pleased to report that the first
two holes west of the Oriental Fault have intersected veins on the
south side of the Central Vein. These veins are in a similar
position to the high-grade New Catto Veins on the east side of the
Oriental Fault and a comprehensive new batch of drill results from
the western side are expected early next year.
"On 21 November 2006 we listed on AIM and so completed the
acquisition of Philsaga Mining Corporation, the owner of the Co-O
Mine, on 4 December 2006. With the listing, several large
institutional and European investors were introduced to the register
and these new investors, along with our long-standing shareholders,
continue to be very supportive of the Company's efforts.
"In March 2007, there was a positive and final decision from the
Supreme Court of the Philippines on the Picop case that finally
resolved the issue of tenure and confirmed our mineral rights in a
forestry licence. Even though the delay was painful at times, it
allowed us to increase our tenement holdings adjacent to the Co-O
project, and we now have a total landholding of over 820km². We are
now in the process of progressing mining licences over our
substantial tenement holdings.
"In order to accelerate our exploration and growth, we raised gross
proceeds of A$20m in June 2007. This money is to facilitate
repayment of the Philsaga Transaction acquisition costs, to expand
our efforts in the Co-O mine area and, in particular, to accelerate
exploration of our substantial porphyry targets.
"The Co-O Mine is located in a region that in my opinion is now being
demonstrated to have superb potential for the discovery of more gold
deposits, as well as a number of porphyry and related copper-gold
deposits. In all my experience reviewing mines around the globe,
this has to be one of the best mineralised 800km² that I have seen.
With the Tambis area, the Barobo Corridor, the Lingig porphyry
discovery and a number of other gold and porphyry targets, the main
issue the Company now faces is how to prioritise and manage so many
targets.
"Last week, when onsite, I was able to observe a newly discovered
prospect where the limestones have been replaced by gold bearing
fluids. I also went through the Lingig data and believe that it is
possible that we have discovered a very large porphyry system. We
are planning to drill the area in early 2008 to confirm the
prospectivity.
"It is my opinion that the Co-O Mine will develop into one of the
premier high-grade mines in the world, exemplified by drill
intersections such as 5.20m at 107.50 g/t Au and many other plus one
ounce intersections. During the final quarter of the last financial
year, the mine became productive. Whilst not meeting the target
ounces that we set, it was extremely pleasing to see the cash costs
reducing to circa US$200 per ounce. in the June quarter 2007. This
puts the Company near the bottom of the cash cost curve, in
comparison with other gold producers, and maintaining cashflow that
we will use to progress our expansion plans.
"The Board also took the difficult decision to focus on forward mine
development at the expense of short-term gold production so that the
mine could be set up for future production at an increased rate and
with reduced costs. With small scale mines, it is a common mistake
to try to maintain or increase immediate production levels at the
expense of developing access to future production areas. In the long
term, this can result in reduced production as the forward
development is not in place. Therefore, the decision to put
development ahead of production was made in the best interests of the
mine.
"The planned expansion will consist of two new inclined shafts, one
internal and one external, a new sub-level development and connection
of grid power from the Co-O Mill to the Co-O Mine. This expansion is
being undertaken as a matter of priority and will require that miners
be diverted from production operations to the expansion.
"Philsaga, Medusa's wholly owned Philippine subsidiary, has an
enviable social responsibility record, which we support and
encourage. The Company owns two schools, supports another seven,
provides educational scholarships and supports various other
community initiatives. Through these and the employment that the
Company provides, we enjoy excellent community relationships at all
levels, which will help as we come to expand our activities in the
region.
"My recent site visit to the Co-O Mine and my review of the
exploration data and prospects has confirmed my earlier enthusiasm:
I am very excited by the prospects that we have ahead of us. I am
hopeful that the next year will lead to the discovering of more
high-grade resources at both the Co-O Mine and elsewhere. The Co-O
Mine will be expanded into areas with some very high-grades and the
drilling of some of the large porphyry systems could see the Company
re-rated on a global scale. I believe that we are at the start of a
very exciting year for Medusa.
"Lastly, I would like to thank my fellow directors for patiently
putting the foundations in place that will allow us to become a world
class company. I would also like to thank the management team on the
ground and the employees of the Company who have made this possible."
Enquiries:
Medusa Mining Limited +61 8 9367 0601
Geoffrey Davis, Managing Director
Roy Daniel, Finance Director
Ambrian Partners +44 (0)20 7776 6400
Richard Brown / Richard Greenfield
Bankside Consultants +44 (0)20 7367 8888
Michael Padley / Louise Davis
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