Medusa profit drops

REVENUE, earnings and profit fell for low-cost gold producer Medusa Mining as the company focused on an expansion of its Co-O underground gold mine in the December half year.
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Revenue dropped 48% to $US40.9 million ($A38.4 million) on 48% lower gold production due to development work associated with the expansion.

The drop in production was partially offset by a 28% rise in the average gold price received to $1655 per ounce, though cash costs rose 40% to $261/oz.

Earnings before interest, tax, depreciation and amortisation fell 55% to $28.4 million, while the net profit after tax fell 59% to $24 million.

The company will pay a A5c interim unfranked dividend next month.

Medusa remains debt-free and unhedged, with cash and bullion of $US80.2 million at the end of December.

Medusa managing director Peter Hepburn-Brown described the 2012 financial year as a transition year for the company.

"It is always difficult to expand an operation and produce at the same time," he said.

"However, with the team we have onsite assisted by our consultants, we are confident we will achieve our timelines for the Co-O expansion, barring interference from the weather."

The production outlook for the full year is 75,000 ounces of gold at cash costs of $230/oz, with production in the current quarter forecast at 23,220oz at $220/oz and 25,000oz at $195/oz in the June quarter.

The $70 million Co-O expansion will eventually take production to 200,000 ounces per annum.

Output for calendar 2012 is expected to be 110,000oz, increasing to 160,000oz next year before hitting the targeted 200,000ozpa rate in 2014.

Group production will be boosted further in 2015 with the addition of Medusa's second Philippines mine, Bananghilig, which is set to produce 200,000ozpa from 2016.

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