Medusa Mining Limited (ASX:MML)

April 14, 2016 | Price: $0.81

Growth Portfolio

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.

Disclaimer

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of LeMessurier Securities Pty Ltd (AFSL No. 296877). The information contained in this report is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

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