Medusa Share Discussion Threads

[deka1] 29/4/2019 08:23

Hi TF , about time we had some good news.

[tightfist] 29/4/2019 08:19

Thanks deka, looks very encouraging, especially the AISC reduction and the corresponding cash balance increase. Hopefully we will move up from this somewhat boring share price level over the next couple of weeks and we will start to see the true value of MML realised. Will take a deeper look to appreciate the reporting style of the new CEO; it does seem quite informative?

Not so chuffed with the down-beat statements re: future grade stabilisation around 6g/t and ore hoisting limitations up E15, but I suppose you can’t have it all ways.

Cheers, tightfist

[deka1] 29/4/2019 06:46

Thanks Noirua, I thought it worth posting a copy

QUARTERLY ACTIVITIES REPORT PERIOD ENDED 31 March 2019
OVERVIEW: Co-O MINE PRODUCTION  Production: 29,858 ounces at average head grade of 6.98 g/t gold (Dec 2018 Qtr: 23,120 ounces at average head grade of 6.11 g/t gold);  Cash Costs: US$510 per ounce (Dec 2018 Qtr: US$567 per ounce);  All-In Sustaining Costs (“AISC”): US$939 per ounce (Dec 2018 Qtr: US$1,156 per ounce);  Mill Performance: Gold recovery averaged 94.7% (Dec 2018 Qtr 94.5%);  Mine Development: Total advance was 7,293 metres of horizontal and vertical development (Dec 2018 Qtr: 6,920 metres);  Mine Infrastructure Projects: ­ Work is continuing to link the hoisting winzes on level 10 with E15 shaft. E35 winze continued development reaching the proposed level 11. This winze will continue to level 12; ­ Detailed planning has continued for the establishment of a major pumping station on level 10; and ­ Review and planning for the systematic refurbishment of the L8 shaft to improve its longevity as a key infrastructure at Co-O.

[noirua] 29/4/2019 02:11

Costs well down and production up is a good surprise for the last quarter:

[tightfist] 19/4/2019 16:10

Diwalwal offers up some interesting scenarios which would take some time to play-out in the M&A or JV space. Tribune obviously mean business; for toll processing I hope that MML are savvy enough to factor in substantial cost-of-capital (avoidance) in addition to the direct and indirect cost of operating. As well as profit together with a substantial term.

Note that the MML update on RCV progress was issued a few days after this SA note was published; maybe we are going to see a race to fill the mill capacity…. Or am I dreaming!

Cheers, tightfist

[chipperfrd] 17/4/2019 11:51

Thanks Steve. Interesting!

[stevea171] 17/4/2019 10:01

Seeking Alpha: A Possible Game Changer for Medusa Mining. 9/4/2019 by Michael Jolly.



Summary

Medusa Mining has struggled to keep its processing mill at full capacity with this issue looking likely to continue in the future.

The Diwalwal project may provide a possible solution to the under-utilized mill problem if a sizeable high grade resource is able to be determined.

If a deal was to be reached with the owners of the Diwalwal project, blending Medusa's ore with Diwalwal's ore would result in lower cash costs for Medusa's mill.

Medusa Mining is a gold mining company who owns the Co-O mine in the Philippines. For many years it has struggled to bring enough ore to the surface from its sole underground mine to run the Co-O mill at full capacity (2500 tonnes per day). This has caused higher cash costs due to the mills high fixed costs being spread over fewer ounces as otherwise could be. A newly installed service shaft, which has recently been commissioned at the Co-O mine, will allow the Level 8 shaft to be solely used to transport ore. However, the mill will still not operate at full capacity particularly with the service portals coming to the end of their productive lives. More information on the Co-O mines shaft capacity and future haulage rates, have been detailed in a previous report. To combat the under-utilized mill problem, Medusa has been exploring nearby gold prospects. Notably, the Royal Crown Vein and Durian prospect have recently been assessed as providing potential growth for the company, however no major announcements have been made in relation to these prospects. An alternative option would be to explore potential opportunities with another nearby, sizeable gold prospect who currently has no accessibility to a mill. This is where Tribune Resources recently acquired Diwalwal gold project could come in to consideration.

The Diwalwal gold project is a low sulphidation epithermal gold project only 40 kilometres from Medusa Mining’s Co-O processing mill. Very little modern day mining and exploration has been conducted at this project, which makes the project prospective for some rich veins of gold. Even though Diwalwal has no JORC 2012 compliant resource to speak of, drilling was conducted in 2006 where 21 diamond core drill holes were completed on one of the vein systems named Balite. In 2017, Prometheus, the previous owner in the project, re-logged the existing drill cores, re-sampled some of the samples of the drill cores and re-mapped an underground mine tunnel called the Victory Tunnel. Judging by the very sizeable $30 million (NYSEARCA:AUD) price tag Tribune Resources paid to acquire this project in December 2018, a fairly large, high-grade resource looks highly possible.

Tribune Resources is currently focusing on two vein systems named the Balite and the Buenas-Tinago veins. The Balite vein has widths of between 2.5 to 6 metres with a typical gold grade of 10g/t in the mined faces. Buenas-Tinago has widths of 1 to 4 meters with a typical gold grade of 8g/t in mined faces. Tribune has been drilling the Balite vein in February and March and is aiming for a JORC 2012 resource of 1.5 - 2 million tonnes of ore grading between 7.5-9g/t for 0.35-0.56 million ounces of gold. The Victory Tunnel has enabled Tribune to access this ore body to drill out a resource. They will be drilling along a strike of 550 metres and 200 metres of vertical extent from the 600 m level down dip to 400 mRL.

Where does Medusa come in to the picture?

The Philippines is not an overly favorable mining jurisdiction to operate in. The Philippine President has openly spoken out against mining, mainly open pit mining in the Philippines due to the environmental costs. Illegal mining is also a serious issue as are the lack of rules and regulations within the mining sights themselves. As such, violence and instability is a concern in the mining town of Diwalwal. This, combined with having to build a new mill to process your gold, the shareholders of Tribune Resources may be hesitant to allow a capital outlay of this size due to the political and social risks involved. A far more safe and cost effective way of monetizing this asset would be for Tribune to mill Diwalwal's ore through Medusa's Co-O mill. The Co-O mill has always struggled to run its mill at full capacity with a company presentation in October 2018 stating that its mill has only been running at 55% capacity, which equates to under 1500 tonnes a day or 133,000 tonnes for the September 2018 quarter.

There is potential for Medusa’s Co-O mine to see a temporary increase in mined ore hauled to the surface due to the service shaft being fully operational and the Level 8 shaft being solely used to transport ore during the 2019 calendar year. However, this additional hoisting capacity may be short lived as the other shafts, Baguiao and Agsaio and service portals will have reduced capacity as the ore on these levels will be exhausted. The Royal Crown Vein and the Durian prospect could also increase mined ore, however there are far too many unknowns with regards to the size and grade of these resources as no announcements have been released so far. This therefore leaves Medusa with mining capacity of only 1500 tonnes per day for the foreseeable future. If Diwalwal’s ore were to be processed through Medusa’s Co-O mill there would be a high chance that the mill would run at full capacity. This would in turn spread the mills high fixed costs over more ounces of gold, therefore reducing cash costs.

The following outlines a few assumptions relating to Diwalwal’s resource size, grade and mining capacity. Let us presume that Tribune does find a mineable resource target of 1.5 million tonnes grading 8g/t of gold. Let us also presume that they could extract around 1000 tonnes per day from the Balite vein. If this ore were to be blended with Co-O’s 1500 tonnes per day of mined ore grading 6g/t, the mill would be running at full capacity. The blended ore would contain a milled grade of 6.8g/t. If the mill can continue with its 95% recoveries, Medusa would produce around 47,000 ounces per quarter or 188,000 ounces per year. Not only would the economics of the mill change but the project would also be de-risked to an extent as there would be 2 mineable deposits. It must be noted that Diwalwal would have to drill out a sizeable high-grade resource before any kind of joint venture could be signed. Furthermore, it is unlikely that Tribune would be interested in receiving anything less than 70,000 ounces per year due to the company having an 80% economic interest in Diwalwal. If a sizeable high grade resource is drilled out at the Balite vein, Tribune might have some negotiation power, particularly if the two companies decide to go down the joint venture path. If a joint venture did occur, and Tribune was to receive at least 70,000 of the 188,000 ounces of total production, they would require somewhere between 35-40% of the joint venture. This would still be beneficial for Medusa as they would be receiving an additional 15,000+ ounces of gold per year and would be producing these 188,000 ounces at a substantially lower cash cost.

The Co-O mine also has scope to reduce All In Sustaining Costs (AISC) without the help of the Diwalwal project. The sustaining costs make up around 45% of the AISC figure which is quite high for a mining operation. This high figure could be attributed to the high development costs per ounce produced. The mine workers sometimes mine gold ounces outside of the reserve. At times this pays dividends if the grade is higher than the reserve but at other times, it doesn’t, which reduces the overall grade mined.

It is far too early to determine whether the Diwalwal gold project would be a great fit for Medusa’s processing mill as Tribune still needs to establish a sizeable high-grade resource. Medusa might be looking at other mines to feed its mill, but Diwalwal looks like a very promising project. Time will tell whether Medusa Mining can come through with the goods and fully utilize its mill and reduce its cash costs in the future.

[tightfist] 16/4/2019 11:17

Hi WB,

The Q3 update is now only two weeks away and hopefully we will see the fruits of our money starting to be realised with increased ore haulage up L8 shaft (now it is 100% committed to haulage) and hence gold production. However, maybe the BoD will still be satisfied with a "on track-to meet guidance" statement.....

More interesting will be the depth and vision which the new CEO communicates and builds on the story. If there were true believers here IHMO the share price would double or treble in fairly short-order.


Cheers, tightfist

[wbecki] 16/4/2019 08:57

”Maiden Royal Crown vein gold deposit mineral resource”

Maiden Inferred Resource of 50koz @ 5.0 g/t gold at Royal Crowne Vein located 3km from the Co-O mill;
Mineralisation extends from surface to 150 metres below surface and  is open along strike ;and at depth

Chief Executive Officer's Statement:
“It is pleasing that our 2018 drilling campaign has achieved the objective of validating historical data and establishing an initial Inferred Resource of 50koz gold. With the mineralisation still open at depth and along strike, there is good potential to grow the resource. A second phase campaign of drilling is planned to increase the confidence and size of the resource base. This would enable us to better evaluate the project’s potential to provide additional feed to the under utilised Co-O mill, located just 3km away.”

[wbecki] 09/4/2019 08:27

”Mineral Resource & Reserves update”
Chief Executive Officer's Statement:
“The 12 months of diamond drilling and mine development has resulted in an increase in the total Co-O Mine resource to 890,000 ounces after allowing for depletion. It is pleasing to see the Measured and Indicated resource categories increase.

Total resources now stand at 1.40 million ounces of gold.

The Company continued its focus and intensive review of the Great Hamish Vein (“GHV”) and Jereme Vein, gaining greater understanding of structures, vein textures and their relationships with mineralisation and gold grades in the eastern extension. This has resulted in maintaining a high level of confidence in the Co-O resources, better defining the eastern geologic extension to the main GHV between Levels 12 and 16 and greater understanding of the structural controls on the epithermal gold system created by the Diatreme Intrusive Contact.


The Co-O Mine Proven and Probable Ore Reserves have increased to 1.585 million tonnes at a grade of 6.86 g/t gold for a total of 350,000 ounces contained gold after depletion, compared to the 31 December 2017 estimate of 1.520 million tonnes at a grade of 6.69 g/t gold for a total of 327,000 ounces contained gold. This Proven and Probable Reserve represents a 125% replenishment of the ounces mined.



Concur re the CEO.
Fingers crossed we get some decent appreciation here over the next 12-24 months as this has been a dog of an investment gold side.

[tightfist] 09/4/2019 08:06

A welcome up-tick in trading volume after six weeks wandering around the ASX wilderness. The modest YoY increase in Reserves is welcome, reversing the trend of the last two years - part of what has been holding the share price back?

More importantly I thought the new CEO came over rather well and actually gave us a little sorely-needed insight and forward-looking view on the Co-O ore body and future operations possibilities? Or is the CEO really a one-eyed man and King pretender?! Time will tell......

Cheers, tightfist

[deka1] 05/4/2019 06:29

Must have been a good QTR ?

[deka1] 08/3/2019 12:36

Cheers stevia, cant beat having someone close to the action on the ground so to speak,
Greatly appreciate any info you come across ,many thanks

[rhuvaal2] 08/3/2019 11:56

Being sub-geriatric I feel unable to do it myself but there are some bullet points mentioned and it would be good to have them discussed with Ruffer's specialist person dealing with MML. Many thanks to anyone who might like to have a go.

[stevea171] 08/3/2019 09:23

Hope you are well Deka.

I should add to my last post that I am from Brisbane (Q'ld) and have property there.
It doesn't make me an expert on the geology of Central Qld but one of the first rules of exploration is to go where plenty of oil, gold, whatever has been found. I'm not aware of any gold mining, historic or current, anywhere in the vicinity that they are going to drill.

[deka1] 08/3/2019 06:49

WOW----that was some read, well done guys and thanks for the posts, nothing for me to add , you got everything covered .

[tightfist] 06/3/2019 11:23

(Repeat post)

[tightfist] 06/3/2019 11:23

Steve,

Thanks for your notes that I largely agree with. The last time that MML presented in London was (from memory) in September 2017 - BT presented, and AT and RD were in the audience, as was Robert Weinberg the London-based director who resigned at the end of 2015. They had had a number of meetings in the UK earlier in the week.

I think we have learned that there is far more to this game than the country of listing. The two largest ii’s have progressively arisen in the last three years and together now hold 36% (out of a total ii holding of 55%, the Oz ii holding is only 8%) and are actually based in the US and UK; there were a number of well-informed people in the well-attended 2017 London audience who seemed to be well aware of the issues (and valuation anomaly) regarding MML.

If you have followed my posts over the years you are aware that I think AT is totally unsuited to any role at MML. Amongst his traits seems to be employing yes-men “poodles”;; anyone who is his own man is shown the door, especially if he shows any aggression/risk-taking on setting and achieving measurable deliverables. The AT modus operandii seems to be tardy setting and then pronouncing the achievement of easy targets.

However.... the good news is a gathering tide of discontent, as witnessed by the rejection of the 2018 Remuneration Report. I have mentioned before that (my interpretation) of the 20.11.18 ASX RNS is that several family members of Paul J Isaac (principal of Arbiter) have bought shares that are now substantially underwater. In my view he will not allow this to continue.

My hope is that lobbying Arbiter and Ruffer will yield results - ideally the replacement of AT by a Chairman who is worthy of the role and can coach DMcG into shareholder value behaviour before he becomes too comfortable.

Cheers, tightfist

[andypar] 06/3/2019 11:07

Medusa's strategy is to find near mine resources that can be put through the mill that is underutilised. This is a no brainer. They should not be wasting money exploring elsewhere etc when they have an underutilised mill.

E15 shaft has significantly improved efficiency and I'm hoping for this quarter to show a positive uplift in production and related reduction in AISC.

I have recently bought more. Let's hope this is the start of a more outward-looking MML who will do lots of PR etc now that they have a positive story to tell.

[stevea171] 05/3/2019 12:53

Speedsgh. lol!

[speedsgh] 05/3/2019 12:22

Steve - Perfectly summarised. Goes without saying that I am of a similar mind. One thing is for certain: I won't be relying on MML to provide me with a comfortable retirement. I would however be willing to pay towards the costs for a removal firm to relocate AT & his packed bags to a remote island somewhere!

[stevea171] 05/3/2019 11:31

Chip, Tightfist, WBecki, everyone. Thanks for reading and approval.

Chip. Thanks for use of your stats I purloined from above!

Tightfist. Imo Teo is attempting to make Dave McG into a paid poodle who owes his CEO role to him and has to toe the Teo party line. If he steps out of line he will not be given a place on the Board and can be disposed of. No independent voice is to be allowed.
BT was a departure from that but he left probably because there was no Board support to take the Cambodia project seriously or to back it financially.

Re CEO presentations. When was the last time Medusa presented to the public at Proactive events in Auz? Perhaps when Geoff was CEO? I don't remember any since Teo took over. Why is that? Probably because the company is running scared of Australian shareholders and the Australian public.

For the share price to rise they have to target the Australian public and institutions because of the ASX listing. London institutional investments are historic and probably will not increase or widen. Same with UK based private investors. So London presentations are of no consequence because as you say the listing is gone and not coming back unless they need to raise capital for a project. They have no projects.

If they announced a Proactive event in Sydney or London what are they going to say? They have no credible record and no credible plans for company development. They are operating as a quasi private company, which is all Teo knows, with complete contempt for shareholders. They have reason to be afraid.

The Q'ld projects will likely come to nothing. Imo this is just papering over the bankruptcy of ideas and ambition of the company.

Imo unless the major shareholders step in at the next AGM and vote down the directors remuneration resolution (for 2nd successive year) then call an EGM to sack the directors, as they would be legally entitled to, Teo will continue like this indefinitely.

[wbecki] 05/3/2019 09:27

Superb summary, thanks for sharing from moi aussi :)

[tightfist] 05/3/2019 07:31

Thanks from me too. You have hit most of the key points for me; the only thing I would add is the shrinking global perspective, exemplified by the cancelled London listing. But the reference to secrecy/opacity as if it was a private company and retrenchment whereby Cambodia has been substituted by Queensland is maybe sufficient!

FYI, I will be writing my own letter next week. I will request DMcG to show his face at Proactive in London in September 2019 (and feel the heat/frustration of shareholders directly).

Cheers, tightfist