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Growth Portfolio: Medusa Mining Limited (ASX: MML)

Published 14-APR-2016 00:00 A.M.


1 minute read

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Overview: Medusa Mining Limited ("Medusa", "the Company") is an Australian-based resources company focused on gold mining projects in the Philippines. Medusa's flagship project is the 100% owned Co-O Mine located in the Philippines. Total Ore Reserves of the Co-O Mine are estimated at 1.8million tonnes at a grading of 7.3 g/t which equates to 427,000 ounces of gold.

Catalysts: After operating profitably amid a four-year contraction in gold prices, Medusa’s is positioned to deliver improving earnings on the back of recent gold price strength. The Company is on target to produce 120,000-130,000 ounces of gold at its Co-O mine at All-in-Sustaining- Costs (AISC) of US$900 – US$1000. The company has a strong balance sheet with cash and cash equivalents totalling US13.6million and no debt.

Hurdles: There is a risk that the company won’t be able to extend the mining operations beyond the current mine life, which is approximately three years. Apart from the Co-O mine, Medusa’s expansion projects are characterised by lower grade resource operations with economics that has yet to be established. In addition, there is a sovereign risk as Medusa is operating in the Philippines

Investment View: Medusa Mining offers profitable exposure to the gold mining industry. We are attracted to its high-grade underground mine operations and strong balance sheet. While sovereign risks and my life are principal hurdles, Medusa is well-positioned to benefit from any cyclical recovery in the gold price. We initiate coverage with a ‘buy’ recommendation.


General Information Only

S3 Consortium Pty Ltd (S3, ‘we’, ‘us’, ‘our’) (CAR No. 433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this article is general information and is for informational purposes only. Any advice is general advice only. Any advice contained in this article does not constitute personal advice and S3 has not taken into consideration your personal objectives, financial situation or needs. Please seek your own independent professional advice before making any financial investment decision. Those persons acting upon information contained in this article do so entirely at their own risk.

Conflicts of Interest Notice

S3 and its associated entities may hold investments in companies featured in its articles, including through being paid in the securities of the companies we provide commentary on. We disclose the securities held in relation to a particular company that we provide commentary on. Refer to our Disclosure Policy for information on our self-imposed trading blackouts, hold conditions and de-risking (sell conditions) which seek to mitigate against any potential conflicts of interest.

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The information contained in this article is current as at the publication date. At the time of publishing, the information contained in this article is based on sources which are available in the public domain that we consider to be reliable, and our own analysis of those sources. The views of the author may not reflect the views of the AFSL holder. Any decision by you to purchase securities in the companies featured in this article should be done so after you have sought your own independent professional advice regarding this information and made your own inquiries as to the validity of any information in this article.

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