Recent News for newbies10 Apr 2011 22:59
Fairfax, repeating its buy advice, has set a 549 pence a share price target, while Seymour Pierce’s Asa Bridle this morning raised his valuation by 10.6 per cent to 613 pence a share.
His upbeat assessment comes in the wake of a very solid set of interim results in which production guidance for the current year was tweaked by 2 per cent to 102,000 ounces of the precious metal at a cash cost of US$190 an ounce, rising to 120-130,000 ounces in 2011/12.
The Seymour Pierce analyst is predicting pre-tax profit of $111.6 million this year, rising to $127.1 million next year.
Expanding production at the Co-O gold mine on the Mindanao Island in the Philippines has transformed Medusa from a small AIM-listed junior into a dividend paying, main market, gold producer in just a few short years.
It acquired the mine, which was then producing 40,000 ounces of gold a year, back in December 2006 when it completed a merger with privately owned Filipino miner Philsaga Mining Corporation.
Since then it has extended the mining operation substantially, taking the run-rate first to 60,000 and then to 100,000 ounces a year. Importantly the high-margin and cash generative mining operation gives Medusa the financial clout to keep expanding.
Medusa is now working to take production up to the 200,000 ounce a year level and ultimately it is aiming to be a 300,000 to 400,000 ounce a year, mid-tier gold producer.
Later this month Medusa will address to the BMO Capital Markets 2011 Global Metals and Mining Conference in Miami.
At this prestigious event it will outline plans to become 400,000 ounce gold producer in the next five years.
According to the company’s presentation, which has just been added to the website, it is a two-stage strategy based on the “excellent exploration” upside of Co-O.
“Medusa is at last gaining the recognition and respect that its operations deserve,” said Fairfax in a note to clients.
“It is no mean feat to maintain such a low cost mining operation and it is good to see the market beginning to respect the high margin and strong production growth forecast here.”