Quarterly Report
(Thomson Reuters ONE) - MEDUSA MINING LIMITED ABN: 60 099 377 849 Unit 7, 11 Preston Street Como WA 6152 PO Box 860 Canning Bridge WA 6153 Telephone: 618-9367 0601 Facsimile: 618-9367 0602 Email: admin(at)medusamining.com.au Internet: www.medusamining.com.au MEDUSA MINING LIMITED (AIM: MML) QUARTERLY ACTIVITIES REPORT PERIOD ENDED 30 SEPTEMBER 2009Medusa Mining Limited ("Medusa" or the "Company"), a gold producerthrough its Philippines operating company Philsaga Mining Corporation("Philsaga"), announces its Quarterly Activities Report for theperiod ending 30 September 2009.Highlights: * Record gold production of 18,054 ozs (compared to 16,009 ozs in the previous quarter) at an average grade of 14.7 g/t gold and average cash cost of US$193 per oz at Co-O mine; * Forecast production FY 2009/10 revised upwards from 82,000 ozs to 86,000 ozs; * Long term cash costs at Co-O Mine circa US$200 per oz; * Phase II expansion to increase gold production at Co-O Mine from 60,000 ozs to 100,000 ozs per annum on target for Q1 2010; * Total resources of 2.03M ozs gold; * Excellent exploration upside: high grade vein and disseminated bulk gold targets, plus six porphyry copper targets;Managing Director Geoff Davis commented:"These are excellent results. Production at Co-O has increased, thecash cost remains low and we remain on schedule to increaseannualised production to 100,000 ozs.In addition, the drill programme continues to enhance the overallresource and to identify additional gold and copper targets." 28 October 2009For further information, please contact:Medusa Mining Limited +61 8 9367 0601Geoffrey Davis, Managing DirectorRoy Daniel, Finance DirectorFairfax I.S. PLC +44 (0)20 7598 5368Nominated Adviser / Joint BrokerEwan LeggatMirabaud Securities Limited +44 (0)20 7321 2508Joint BrokerPeter KrensLothbury Financial +44 (0)20 7011 9411Michael Padley / Libby MossOVERVIEW:Co-O MINE PRODUCTION * Record gold production of 18,054 ozs (compared to 16,009 ozs in the previous quarter) at an average grade of 14.7 g/t gold and average cash cost of US$193 per oz (US$150 per oz before taxes, royalties and local production taxes); * Gold production forecast for the fiscal year now revised from 82,000 to 86,000 ozs.Co-O EXPANSION * Phase II expansion to raise production from 60,000 ozs to 100,000 ozs per annum in early 2010 is on schedule; * Mill expansion is on schedule for completion in December 2009.Co-O RESOURCES DRILLING * Six surface diamond rigs continuing with extensional drilling at the Co-O Mine; * Three surface rigs continuing with testing veins away from the Co-O Mine; * A drilling update is expected late next quarter.BANANGHILIG MAIDEN RESOURCE * Maiden Inferred Resource of 650,000 ounces of gold in 15,000,000 tonnes at a grade of 1.3 g/t gold; * Drill hole intersections in the deposit include 205.90 metres at 2.42 g/t gold, 182.00 metres at 2.13 g/t gold, 116.50 metres at 3.96 g/t gold, 64.00 metres at 8.40 g/t gold and 569.90 metres at 0.64 g/t gold; * Additional nearby potential open-pit targets identified.LINGIG COPPER * Drilling has extended mineralisation now identified in two distinct geological settings; * Thrust-hosted mineralisation - new intersection 159.7 metres at 0.40% copper; * Porphyry-associated mineralisation - first intersection 209.10 metres at 0.25% copper.PROJECT OVERVIEWThe locations of the Company's projects are shown on Figures 1 and 2(please see the link at the end of this announcement).Co-O MINEGOLD PRODUCTIONThe production statistics for the current quarter with comparativesfor the June 2009 quarter and corresponding 2008 quarter aresummarised in Table I.Table I. Gold production statistics+-------------------------------------------------------------------+| | | | Quarter | || | | Quarter | ended | Quarter || | | ended | 30 June | ended || Period | Unit | 30 Sep 2009 | 2009 | 30 Sep 2008 ||--------------------+--------+-------------+---------+-------------|| Tonnes mined | tonnes | 40,434 | 38,196 | 21,443 ||--------------------+--------+-------------+---------+-------------|| Ore milled | tonnes | 40,467 | 36,622 | 21,443 ||--------------------+--------+-------------+---------+-------------|| Head grade | gpt | 14.78 | 14.28 | 11.40 ||--------------------+--------+-------------+---------+-------------|| Recovery | % | 94% | 94% | 90% ||--------------------+--------+-------------+---------+-------------|| Gold produced (1) | ounces | 18,054 | 16,009 | 6,986 ||--------------------+--------+-------------+---------+-------------|| Cash costs (2) | US$ | US$193 | US$198 | US$243 ||--------------------+--------+-------------+---------+-------------|| Gold sold | ounces | 18,054 | 19,510 | 6,986 ||--------------------+--------+-------------+---------+-------------|| Average gold price | US$ | US$975 | US$926 | US$818 || received | | | | |+-------------------------------------------------------------------+Note:(1) Gold production, is actual gold poured during the period anddoes not reflect changes in the balance of gold in circuit(2) Cash costs refers to the cost of gold mined (net ofdevelopment costs), produced and sold and includes taxes, royaltiesand localproduction taxes of US$43 per ounce (Jun 2009 qtr of US$46 perounce; Sep 2008 qtr of US$34 per ounce)Gold production for the quarter increased to 18,054 ounces (a 12.5%increase from the previous quarter's production) at an average gradeof 14.78 g/t gold and cash costs of US$193 per ounce.Medusa is an unhedged gold producer and received an average goldprice of US$975 per ounce from the sale of 18,054 ounces of gold forthe quarter.Phase II of the Company's expansion programme is on schedule, and theincremental benefits of that expansion are flowing through asevidenced by the record gold production of 18,054 ounces. Theforecast gold production for the fiscal year to 30 June 2010 has beenrevised upwards from 82,000 ounces to 86,000 ounces at an anticipatedaverage cash cost of US$200 per ounce.A breakdown of actual and forecasted production ounces and cost perounce by quarters for the last five quarters and the remaining threequarters of this fiscal year is highlighted in Graph 1 (please seethe link at the end of this announcement).PHASE II EXPANSIONWork on the Phase II expansion is on schedule.(a) Baguio ShaftThe Baguio Shaft is now operational with its new winder installed.From October 2009 this shaft is expected to contribute significantlyto ore production.(b) Mill ExpansionFabrication of the expanded crushing circuit is progressing onschedule for completion in December 2009.(c) Tailings DamConstruction of a new two year life tailings dam has been completedand a larger eight year life dam is due for completion in the firstquarter of 2010 subject to favourable weather conditions.RESOURCE DRILLINGExtensional drilling is continuing along and across strike at theCo-O Mine using six surface diamond drill rigs. This work willcontinue into 2010. Three underground rigs are in use forpre-development drilling.A further three surface rigs are testing new veins around the Co-OMine. Figure 3 (please see the link at the end of this announcement)shows the veins located to date around the Co-O Mine.The aim of this drilling is to extend the vein system so thatadditional production scenarios can be considered through replicatingmining infrastructure.A drilling update is expected late in the next quarter.LINGIG COPPER PROJECTThe Lingig prospect is covered by a Mines Operating Agreement ("MOA")over Mineral Production Sharing Agreement ("MPSA") application numberAPSA 024-XIII comprising two parcels situated to the north and to theeast (the Lingig porphyry copper prospect) of the Co-O Mine andmillsite as shown on Figure 2 (please see the link at the end of thisannouncement).BACKGROUNDFigure 4 (please see the link at the end of this announcement) showsthe current interpretation of the regional geology with drill holelocations and a summary of results. Table II contains drill holeresults and Figures 5 and 6 (please see the link at the end of thisannouncement) show selected cross-sections. Additional backgroundinformation is contained in announcements dated 13 November 2007 and17 March 2008 and the quarterly report for the period to 31 December2007.The 17 March 2009 announcement reported copper mineralisationcontained within an extensive east-dipping 200 to 300 metre thickthrust zone. The thrust footwall is an un-mineralized medium-grainedbiotite-hornblende quartz diorite which intruded the basalticsequence (numerous basalt xenoliths are present near the dioritecontact in both core and in outcrop). The approximate intrusivecontact subsequently became the footwall of a regional thrust zone.The 200 to 300 metre thick thrust zone is mineralised in somesections with disseminated and hairline veined chalcopyrite and minorbornite, with widespread epidote alteration, magnetite, pyrite, localshearing, and carbonate veining. A 'quartz diorite sill' immediatelyabove the thrust contact is mineralised with chalcopyrite asdisseminations and veining and bornite, with common quartz veins uptotwo centimetre thick hosting centre-line pyrite, chalcopyrite, andbornite. The bornite and increased chalcopyrite content contributedto the higher copper assay grades. The 'quartz diorite sill'mineralisation is accompanied by magnetite disseminations andveining.The continuing drilling program is designed to test the lateralextent of the thrust contact and its associated coppermineralisation. Interpretations of results to date indicate that thegeology is structurally complex, with a predominance of NE, NW andENE trending structures. Some of these structures may be controllingmineralisation, whilst some appear to be overprinting and possiblyremobilising the original copper mineralisation. Within the shearcorridors the veining and alteration destroy the primary magnetite inthe basaltic units.The drill results at the Northern Discovery Area highlight two zonesof significant copper mineralisation in distinct geological settings.One is as previously reported (Zone 1) with a second zone locatedapproximately 400 metres to the south (Zone 2).DrillingSince the previous announcement on 17 March, 2009, the Company hasdrilled approximately 6,400 metres in 17 angled holes using threerigs. All holes were cored from surface. Drilling difficulties wereexperienced in LIN 9, which was abandoned and twinned by LIN 10.Whilst assay results are still awaited for holes LIN 21 to LIN 25,all other holes have been sampled and assays returned. Only minorintervals of interest in LIN 12 were sampled.Holes LIN 11, LIN 12 (re-drilled as LIN 13) and 15 were drilled onthe large complex to the south. All other holes were drilled in thenorthern area around the 1974 discovery hole JDH 1.NORTHERN DISCOVERY AREAZone 1 Thrust-hosted mineralisationThe recent drilling has confirmed the continuation of the coppermineralised 'quartz diorite sill' above the thrust contact (Figs 4and 5), with the 'sill' dipping both to the north and to the east atmoderate angles (LIN 2 to LIN 6, and LIN 2 to LIN 19 respectively).Further down dip however, the 'sill' diverges from the thrustcontact, and the contained copper grades are considerably reduced.An alternative interpretation of the 'quartz diorite sill' is that itrepresents a zone of carbonate, sericite and pyrite alteration thatproduces rounded white 'spots' as wall rock alteration aroundfractures and veins. The alteration is destructive to primary rocktextures, and produces a porphyritic to slightly dioritic texturedrock in appearance. What has been previously identified as a 'dioritesill' may alternatively represent a highly altered zone overprintinga protolith host of dolerite, minor quartz diorite, or andesiteporphyry.The variably copper mineralised basaltic units above the altered'sill', which are characterised by local shearing, epidotealteration, and pyrite and chalcopyrite veining with disseminatedmagnetite, become less altered and copper mineralised further awayand down dip from LIN 2 and LIN 3. The pyrite occurs both as part ofthe mineralisation and as a sulphide halo around the mineralisation.The orientation of the pyrite halo suggests influence by both NW andNE trending structures.The significance of the re-interpretation of the 'diorite sill' andits associated mineralisation is that the copper mineralisation isnot necessarily then confined to the thrusted zone above the thrustcontact. The enriched chalcopyrite + bornite + pyrite + magnetitemineralisation and alteration around LIN 2 and LIN 3 may beattributed to a concentration of porphyry style mineralisationfocused within a NE trending structural corridor. Under thisinterpretation, the mineralisation would dip steeply to the northand/or northwest.Zone 2 Porphyry-associated mineralisationZone 2 is located approximately 400 metres south of Zone 1, separatedby a hill of strongly pyrite veined and epidote altered basalt. Zone2 is characterised by three styles of mineralisation. Figure 6(please see the link at the end of this announcement) shows thecross-section for this zone.The first style is similar to that hosted by the basaltic units abovethe 'diorite sill' in LIN 2 (Zone 1), being variably sheared basalthosting chalcopyrite with trace bornite and weak magnetitemineralisation within a pyrite and pyrite + carbonate halo. Thismineralisation is interpreted as representing a zone of up-dip fluidmigration, from either the underlying mineralised intrusive brecciasor the mineralised "diorite sill".The second style is disseminated chalcopyrite hosted by amedium-grained quartz diorite. The quartz diorite has a distinct lackof sulphidic quartz veins, and is relatively non-magnetic. It ischaracterised by common small golf ball sized mafic xenoliths (?) andfine-grained pale brown retrograde biotite. Clots of remnant chloriterimming chalcopyrite grains are noted within the pale brown biotitealteration. The mineralisation is considered to be primary andrelated to the biotite alteration, and has a sill-like orientationbeneath the regional thrust contact. The sill is interpreted to pinchout to the north, but remains open to the east and south.Observations from LIN 20 suggest that at least part of the dioritehosted disseminated copper mineralisation may have been truncated bythe overlying thrust contact. The dolerite immediately above thecontact is generally not mineralised. A halo of pyrite alterationoccurs in the hanging wall of the thrust contact.The third style of mineralisation is hosted by polylithic intrusivebreccias. Variably sized clasts upto 40cm of quartz diorite, basaltand minor dolerite host up disseminated fine-grained chalcopyrite inboth the matrix and in some clasts. The chalcopyrite is associatedwith secondary pale brown biotite, which is noted in both the matrixand in some of the breccia clasts. A distinct lack of mineralisedquartz veining and limited magnetite characterise the breccia. Thebreccia appears to be blind, probably not reaching the surface, andis enveloped by a weak pyrite halo.The chalcopyrite mineralised, pale brown biotite-altered dioriteappears to pinch to the north, but may widen to the south, suggestingthat it is open to the east (down dip), south, and vertically (withinintrusive breccias).QUARTZ DACITE PORPHYRY COMPLEXInterpretations suggest that the complex is a flow of daciticcomposition underlain by flat-lying to low angle amygdaloidal basaltand basalt flows with flow breccias tops. The units have beenstrongly sheared with strongly developed wide spread zones of clay +pyrite +/- minor copper and lead sulphides + variable silicaalteration. Surficial weathering processes have enriched gold in nearsurface zones as indicated by previously reported anomalous rock chipvalues. Three holes drilled into selected sites within the complexintersected only minor copper mineralisation (LIN 11, LIN 12re-drilled as 13 and LIN 15).Links to the Zone 1 and Zone 2 mineralised systems to the north areunclear. Outcropping copper minerals with anomalous rock chip valuesto 1,000 ppm copper occur in east-trending drainages immediatelysouth of the Silver Belt Prospect indicate that the potential remainsfor the altered dacitic complex area to host a larger coppermineralised system.Work ProgrammeThere are currently three drill rigs in operation at the projectwhich will continue to test the evolving geological models andextensions to the mineralised zones for the remainder of the year.Table II. Summary of all new Lingig drilling results (LIN holes) andrelevant 1974 drilling results (JDH holes) for intersections >10metres wide(including sub-grade material up to 10 metres wide). LIN 5 and 10 to20 results returned since 17 March 2009.+------------------------------------------------------------------------------------------+| | | | | | Cut-off 0.1% copper || | | | | |------------------------------------------------|| | | | | |From |To |Width |Grade |Gold ||Hole |East |North |Azimuth |Dip |(metres) |(metres) |(metres) |(% Cu) |(g/t) ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 1 |652072 |896918 |0 |-90 |71.00 |196.10 |125.10 |0.26 |0.03 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 2 |652075 |896844 |0 |-90 |2.00 |269.30 |267.30 |0.62 |0.06 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 3 |652075 |896844 |180 |-60 |0.00 |224.00 |224.00 |0.77 |0.11 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 5 |651994 |897150 |0 |-90 |389.40 |408.70 |19.30 |0.10 |0.01 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 6 |651994 |897150 |166 |-62 |94.10 |114.10 |20.00 |0.13 |0.01 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | |280.40 |294.40 |14.00 |0.14 |0.01 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | |362.20 |421.60 |59.40 |0.31 |0.02 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||JDH 1 |652073 |896908 |0 |-90 |52.00 |250.00 |198.00 |0.34 |0.01 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||JDH 3 |651865 |895926 |0 |-90 |12.00 |100.00 |88.00 |0.14 |0.00 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||JDH 5 |651828 |895648 |0 |-90 |18.00 |100.00 |82.00 |0.18 |0.00 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | |224.00 |242.00 |18.00 |0.15 |0.00 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 10|652272 |896565 |270 |-60 |175.75 |212.30 |36.55 |0.12 |0.07 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 13|651466. |894756 |180 |-50 |3.00 |212.10 |209.10 |0.25 |0.07 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | |232.10 |242.10 |10.00 |0.11 |0.01 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 17|652469 |896366 |270 |-60 |144.75 |170.70 |25.95 |0.33 |0.03 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | |230.80 |275.30 |44.50 |0.34 |0.09 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 19|652236 |896845 |242 |-60 |148.10 |307.80 |159.70 |0.40 |0.04 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 20|652681 |896364 |270 |-60 |280.10 |318.10 |38.00 |0.20 |0.02 |+------------------------------------------------------------------------------------------+Notes:Assaying undertaken by McPhar Geoservices in Manila using :(i) Gold by fire assay on 30g. samples with Atomic AbsoptionSpectroscopy ("AAS") finish.(ii) Cu - by AAS following concentrated HCI and HCI/HNO3/HCIO4leach in latter stages on 1g. sample.Table II. (cont'd) Summary of all new Lingig drilling results (LINholes) and relevant 1974 drilling results (JDH holes) forintersections >10 metres wide(including sub-grade material up to 10 metres wide). LIN 5 and 10 to20 results returned since 17 March 2009.+------------------------------------------------------------------------------------------+| | | | | | Cut-off 0.3% copper || | | | | |------------------------------------------------|| | | | | |From |To |Width |Grade |Gold ||Hole |East |North |Azimuth |Dip |(metres) |(metres) |(metres) |(% Cu) |(g/t) ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 1 |652072 |896918 |0 |-90 |118.50 |153.50 |35.00 |0.32 |0.02 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | |161.50 |196.10 |34.60 |0.35 |0.04 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 2 |652075 |896844 |0 |-90 |26.00 |240.65 |214.65 |0.72 |0.07 ||------+---------+--------+---------+-----+------------------------------------------------|| | | | | |including ||------+---------+--------+---------+-----+------------------------------------------------|| | | | | |132.00 |142.65 |10.00 |1.00 |0.27 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------|| | | | | |172.00 |240.65 |68.65 |1.03 |0.08 ||------+---------+--------+---------+-----+----------+----------+----------+-------+-------||LIN 3 |652075 |896844 |180 |-60 |10.00 |222.00 |212.00 |0.80 |0.07 ||------+---------+--------+---------+-----+------------------------------------------------|| | | | | |including ||------+---------+--------+---------+-----+------------------------------------------------|| | | | | |68.00 |146.00 |78.00 |1.16 |0.21 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------|| | | | | |180.00 |190.00 |10.00 |1.02 |0.06 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------|| | | | | |206.00 |218.00 |12.00 |0.98 |0.20 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------||LIN 5 |651994 |897150 |0 |-90 | | | | | ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------||LIN 6 |651994 |897150 |166 |-62 |364.20 |400.20 |36.00 |0.37 |0.03 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------||JDH 1 |652073 |896908 |0 |-90 |100.00 |112.00 |12.00 |0.43 |0.00 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------|| | | | | |134.00 |146.00 |12.00 |0.40 |0.00 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------|| | | | | |200.00 |250.00 |50.00 |0.67 |0.04 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------||JDH 3 |651865 |895926 |0 |-90 | | | | | ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------||JDH 5 |651828 |895648 |0 |-90 | | | | | ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------|| | | | | | | | | | ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------||LIN 10|652272 |896565 |270 |-60 | | | | | ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------||LIN 13|651466. |894756 |180 |-50 |27.95 |83.85 |55.90 |0.44 |0.10 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------|| | | | | |94;60 |124.55 |29.95 |0.36 |0.03 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------||LIN 17|652469 |896366 |270 |-60 |150.70 |170.70 |20.00 |0.37 |0.03 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------|| | | | | |234.80 |273.30 |38.50 |0.37 |0.10 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------||LIN 19|652236 |896845 |242 |-60 |206.10 |284.10 |78.00 |0.66 |0.06 ||------+---------+--------+---------+-----+------------------------------------------------|| | | | | |including ||------+---------+--------+---------+-----+------------------------------------------------|| | | | | |260.10 |278.10 |20.00 |1.23 |0.10 ||------+---------+--------+---------+-----+------------+--------+----------+-------+-------||LIN 20|652681 |896364 |270 |-60 |282.10 |294.10 |12.00 |0.36 |0.05 |+------------------------------------------------------------------------------------------+Notes:Assaying undertaken by McPhar Geoservices in Manila using :(i) Gold by fire assay on 30g. samples with AAS finish.(ii) Cu - by AAS following concentrated HCI and HCI/HNO3/HCIO4leach in latter stages on 1g. sample.TAMBIS-BAROBO REGIONBackgroundThe Tambis project, currently comprising the Bananghilig Gold Depositand the Kamarangan copper porphyry prospect (Figure 2 - please seethe link at the end of this announcement), is operated under a MiningAgreement with Philex Gold Philippines Inc. Over Mineral ProductionSharing Agreement ("MPSA") application APSA-000022-XIII which covers6,262 hectares.In the 1980s and 1990s a large amount of diamond and reversecirculation drilling totalling 29,477 metres in 344 holes wasundertaken by various explorers to investigate a large area of knownmineralisation.From 2005 to 2007, Philsaga undertook underground exploration througha 50 metre deep shaft and development, adits, and underground andsurface drilling totalling 7,715.50 metres in 31 holes.Figure 2 (please see the link at the end of this announcement) showsthe location of the Bananghilig Deposit and Figure 7 (please see thelink at the end of this announcement) shows the surface geology.Table III summarises some of the significant drillhole intersectionsfrom the Bananghilig drilling.Table III. Summary of significant Bananghilig intersections+---------------------------------------------------------------------------+| | | | | | | | Gold || | | | | | | | (uncut) || | | | Dip| Azimuth | From | Length | (g/t ||Hole | East | North | (°)| (°) | (metres) | (metres) | gold) ||---------+--------+--------+-----+---------+----------+----------+---------||DD34-3 | 612486 | 945509 | -45| 130| 0.00| 170.10|2.09 ||---------+--------+--------+-----+---------+----------+----------+---------||DD34 -46A| 612515 | 945493 | -45| 130| 0.00| 182.00|2.13 ||---------+--------+--------+-----+---------+----------+----------+---------||DDH-G1 | 612541 | 945476 | -80| 90| 0.00| 116.50|3.96 ||---------+--------+--------+-----+---------+----------+----------+---------||DDH-G3 | 612541 | 945476 | -80| 30| 0.00| 108.81|2.03 ||---------+--------+--------+-----+---------+----------+----------+---------||RC38-35 | 612680 | 945409 | -60| 130| 0.00| 64.00|8.40 ||---------+--------+--------+-----+---------+----------+----------+---------||RC40-16 | 612515 | 945493 | -45| 130| 0.00| 55.00|4.14 ||---------+--------+--------+-----+---------+----------+----------+---------||TDH 10 | 612827 | 945226 | -50| 135| 10.50| 106.00|1.60 ||---------+--------+--------+-----+---------+----------+----------+---------||TDH 11 | 612808 | 945224 | -55| 320| 0.00| 569.90|0.64 ||---------+--------+--------+-----+---------+----------+----------+---------||TDH 12 | 612848 | 945259 | -50| 327| 0.00| 137.80|0.94 ||---------+--------+--------+-----+---------+----------+----------+---------||TDH 18 | 612765 | 945263 | -45| 324| 0.00| 256.20|1.30 ||---------+--------+--------+-----+---------+----------+----------+---------||TUG 05 | 612748 | 945247 | -1| 153| 0.00| 205.90|2.42 |+---------------------------------------------------------------------------+ Notes:(i) Holes pre-fixed TDH and TUG are Philsaga surface andunderground diamond drill holes(ii) All other holes pre-date Philsaga.Resource estimationA global Inferred Resource estimation for Bananghilig was undertakenby Cube Consulting Pty Ltd of West Perth, Western Australia. Theestimation was based on historical and more recent Philsaga drillholedata.Table IV summarises the resource at various cut-offs with 0.6 g/tgold being taken as the base case resource estimate. The majority ofthe resource is contained within a 0.2 g/t gold domain (Domain 1)which measures 850 metres east to west and 550 metres north - south,with the mineralisation defined to variable depths of between 100 to150 metres due to drill hole density constraints. The mineralisationis also open in all other directions. A smaller domain (Domain 2) tothe northeast is approximately 375 metres long in a northeasterlydirection, approximately 100 metres wide and open beyond 75 metresdepth and has increasing grades towards the northeast.Table IV. Resource estimate as at August 2009+------------------------------------------------------+| Cut-off (g/t gold) | tonnes | g/t gold | ounces ||--------------------+------------+----------+---------|| 0.50 | 20,000,000 | 1.1 | 730,000 ||--------------------+------------+----------+---------|| 0.60 | 15,000,000 | 1.3 | 650,000 ||--------------------+------------+----------+---------|| 0.70 | 12,000,000 | 1.5 | 580,000 ||--------------------+------------+----------+---------|| 0.80 | 10,000,000 | 1.7 | 530,000 ||--------------------+------------+----------+---------|| 0.90 | 8,000,000 | 1.9 | 480,000 ||--------------------+------------+----------+---------|| 1.00 | 7,000,000 | 2.1 | 440,000 |+------------------------------------------------------+The Bananghilig Mineral Resource estimate is based on a number offactors and assumptions, some of which are listed below: * All available drilling data were used for the Mineral Resource estimate. * There is no available QA/QC information (sample duplicates, blanks and certified reference materials) for the historical drilling data. Drilling completed by Philsaga undergoes internal QA/QC and assays greater than 1 g/t gold are checked by an independent laboratory (McPhar). The average grade for drilling completed by Philsaga supports the average grade for the historical drilling data within the mineralised domains. * A theoretical bulk density of 2.6 t/m3 was used throughout the model, based on average bulk densities for the modelled lithologies. * The mineralisation has been defined using gold only assay data at a plus 0.2 g/t gold lower cut off. This interpretation has resulted in two broad domains, the principal one, domain 1 and a smaller domain 2 to the northwest. High grade assay cuts (30 g/t gold in domain 1 and 2 g/t gold in domain 2) have been applied to 2.5 metre downhole composite data. * The Resource has been estimated using Ordinary Block Kriging and Uniform Conditioning (UC). UC is a mathematical method that allows the discrimination of ore and waste at an assumed selective mining unit size within an estimated panel of significantly larger size. In theory, this provides a more correct prediction of estimated resource grade and tonnes above a cut off than an Ordinary Block Kriging alone. The method draws information from the composite data variogram model and Krige's Relationship. * The application of the (UC) technique at Bananghilig is based on the premise that mining would be by open pit extraction. A Selective Mining Unit ("SMU") of 5 metres by 5 metres by 2.5 metres was evaluated within Ordinary Kriged panels Y=25 metres; X=25 metres and Z=5 metres for the purposes of reporting recoverable resources.BANANGHILIG DEPOSITRegional GeologyThe Bananghilig Gold Deposit is located on the northern edge of alarge aero-magnetically defined alteration zone measuringapproximately 9.5 kilometres by 7.3 kilometres and which alsocontains the Kamarangan copper porphyry target. The Tambis Districtis generally underlain by fine to coarse-grained andesitic anddacitic flows of probable pre-Tertiary age that constitute thebasement rocks. Locally, the basement rocks show agglomeraticfeatures and in places are cut by andesite to dacite porphyry dykesand bodies of hydrothermal breccias of various shapes and sizes.The southeastern part of the Tambis District is covered by a youngerbedded sedimentary formation comprising basal mudstone, sandyclastics and agglomerates with massive white limestone toapproximately 60 metres thick as the uppermost member. The limestonebounds the Bananghilig area along the southeast and extends andpossibly dips to the southeast.Structurally the Bananghilig Deposit is located near the intersectionof the Barobo Fault (parallel to the Philippine Rift Fault) and theLianga Bay Fault system.Local Geology and MineralisationThe Bananghilig Deposit is located partly within an elliptical-shapeddiatreme breccia body (Figure 7 please see the link at the end ofthis announcement) measuring approximately 1,000 metres long and 750metres wide within a larger interpreted caldera measuringapproximately 10 kilometres by 6 kilometres.The diatreme breccia is open to the south beneath the younger massivewhite limestone rocks.The gold mineralisation styles in the diatreme are generallyassociated with pyrite and sphalerite along and around vein-likezones, in fractures and/or breccia in-fill in milled/fluidised muddymatrix breccia bodies and coarsely brecciated/fracturedandesitic-dacitic wallrock. The mineralisation is also contained inintensely altered coarse-grained porphyritic (colloquially "peanutbrittle") andesitic intrusive rocks located mainly on the northernmargin of the diatreme breccia.Widespread silica-clay-sericite-pyrite hydrothermal alterationaffects the volcanic wallrocks, the various breccia bodies and thehypabyssal intrusives associated with them. The alteration assemblagetypifies that found in advanced argillic alteration systems.Rock hardnessObservations from the underground exploration activities conducted bythe Company, and observations from recent drilling, both indicatethat the deposit is likely to be "free dig" to well beyond 50 metresfrom surface. The softness of the ore is due to the ubiquitousargillic alteration. Further work is required to ascertain the extentof these favourable characteristics.Future workFuture work at Bananghilig will involve: * Extensional drilling to increase the deposit size and determine its boundaries, * Infill drilling to upgrade the resource categories, extend and define higher grade zones, * Detailed metallurgical studies, * Detailed geotechnical studies, and * Preliminary engineering studies.MINERALISATION POTENTIAL - BAROBO FAULT CORRIDORFigure 8 (please see the link at the end of this announcement) showsthe regional structure and geology highlighting the mineralisationpotential in favourable limestone and calcareous clastic rocks alongthe Barobo Fault Corridor. Mineralisation has been located innumerous outcrops and in drill holes which are summarised in Table V.The mineralisation located to date is generally associated withsilica and sphalerite-galena replacement of the host rocks.The calcareous sequence along the Barobo Fault Corridor is the samesequence that has been extensively skarned and mineralised at theKamarangan copper porphyry prospect. This sequence is interpreted asthe oldest calcareous sequence known to date in the district and maybe up to 1,600 metres thick.The sequence is regarded as favourable for hosting large disseminatedbodies of gold mineralisation.Table V summarises some of the more significant drill holeintersections from scout drilling (four holes at Guinhalinan, sevenholes at Saguilsuilan and six holes at Alikway). The focus of thisscout drilling was on potential high grade mineralisation, notpotentially open-pittable targets. All show that gold mineralisationis contained with this calcareous sequence. It should be noted, asalso shown in soil sampling on Figure 8 (please see the link at theend of this announcement), that zinc is commonly associated with goldin this environment.Table V. Summary of scout drilling on Barobo Corridor limestonehosted prospects+---------------------------------------------------------------------------------------+| | | | | | | | Gold | ||Hole | East | North | Dip | Azimuth | From | Length | (uncut) | Zinc || | | | (°) | (°) | (metres) | (metres) | (g/t | (%) || | | | | | | | gold) | ||-------------+--------+--------+-----+---------+----------+----------+---------+-------||Guinhalinan | | | | | | | | ||-------------+--------+--------+-----+---------+----------+----------+---------+-------||DGN 002 | 615640 | 936325 | -55 | 315 | 22.60 | 7.30 | 2.72 | 0.62 ||-------------+--------+--------+-----+---------+----------+----------+---------+-------||DGN 003 | 615639 | 936323 | -50 | 275 | 27.55 | 8.15 | 1.30 | 0.27 ||-------------+--------+--------+-----+---------+----------+----------+---------+-------||DGN 004 | 615593 | 936377 | -45 | 140 | 15.40 | 6.00 | 0.67 | 0.02 ||-------------+--------+--------+-----+---------+----------+----------+---------+-------|| | | | | | 27.40 | 6.70 | 2.08 | 0.38 ||-------------+--------+--------+-----+---------+----------+----------+---------+-------|| | | | | | 41.10 | 17.60 | 0.81 | 0.05 ||-------------+--------+--------+-----+---------+----------+----------+---------+-------||Saguilsilan | | | | | | | | ||-------------+--------+--------+-----+---------+----------+----------+---------+-------||SAG 006 | 613277 | 939478 | -45 | 230 | 36.60 | 24.00 | 0.52 | No || | | | | | | | | assay ||-------------+--------+--------+-----+---------+----------+----------+---------+-------||Alikway | | | | | | | | ||-------------+--------+--------+-----+---------+----------+----------+---------+-------||ALK 001 | 616646 | 934544 | -50 | 180 | 116.40 | 1.90 | 21.20 | 0.85 |+---------------------------------------------------------------------------------------+ANOLINGThe Mines Operating Agreement ("MOA") with Alcorn Gold Resources Inc.covers Mining Production Sharing Agreement ("MPSA") applicationnumber 039-XIII situated approximately 8 kilometres north from themillsite as shown on Figure 2 (please see the link at the end of thisannouncement). Processing of the Anoling MPSA is progressing.Mapping and sampling is continuing.OTHER PROJECTS * Bunawan Joint Venture (Medusa earning 70% interest) The Company, through its Philippines operating company, Philsaga Mining Corporation ("Philsaga"), signed a joint venture agreement ("JVA") with Bunawan Mining Corporation ("Bunawan") on 23 August 2007, the Philippine operating company of ASX listed Sierra Mining Limited ("Sierra"), whereby Philsaga will earn a 70% joint venture interest in Exploration Permit application ("EPA") 000037-XIII and Mineral Production Sharing Agreement application ("MPSA") 000003-XIII (together the "Bunawan JV"). Following the announcement dated 17 June 2009 of Bunawan's Australian listed parent company, Sierra Mining Limited, advising that EPA 000037-XIII had been denied on "the basis of certification of non-consent issued by the National Commission of Indigenous People", the Company has withdrawn the Demand Letter for Arbitration from the Philippine Dispute Resolution Centre Inc. * Sur-sur Project. The Company is advancing the tenement applications. * Saugon Project Re-mapping and sampling is continuing.FINANCIALS * The Company received proceeds of US$17.6 million from the sale of 18,054 ounces of gold at an average sale price of US$975 per ounce; * As at 30 September 2009, the Company which is debt free, had a consolidated cash balance of US$25.2 million (June 2009: US$26.6 million); * The reduction in the Company's cash balance during the quarter (aside from operating cash costs and corporate overheads) were attributable to: * Reduction of the June 2009 creditors balance by approximately US$6 million; * US$2.4 million was spent on mine development; * Capital works associated with the mine and mill expansion of US$2.3 million; and * Exploration expenditure of US$3.4 million for the quarter. * Medusa is now classed as a producing entity by the Australian Stock Exchange and is no longer required to produce a cashflow statement on a quarterly basis. Therefore, Medusa shall only be reporting interim financial results and final financial results going forward.ABOUT MEDUSA MINING LIMITEDMedusa Mining Limited ("Medusa" or the "Company"), a public companylisted on the ASX and AIM, is an Australian based gold producer,focussed solely on the Philippines.With total current resources of over 2,000,000 ounces of gold,Medusa's corporate strategy is to become a mid tier 300,000 to400,000 ounce per year, low cost gold producer. The Company iscurrently expanding its high grade Co-O Mine operations(1,380,000 ounces at 10.8 g/t gold) to increase its productioncapacity to 100,000 ounces per year, and is conducting near mineexploration to assess the possibilities of further expansion to200,000 ounces per year. Current cash costs at the Co-O Mine areapproximately US$200 per ounce.A pipeline of deposits is now being established with the BananghiligDeposit (650,000 ounces at 1.3 g/t gold) recently added and which isexpected to expand, potentially in conjunction with new nearbydiscoveries.Further potential upside exists in the discovery of substantialcopper deposits within the tenement holding of > 800km2.JORC COMPLIANCE - CONSENT OF COMPETENT PERSONSMedusa Mining LimitedInformation in this report relating to Exploration results is basedon information compiled by Mr Geoff Davis, who is a member of TheAustralian Institute of Geoscientists. Mr Davis is the ManagingDirector of Medusa Mining Limited and has sufficient experience whichis relevant to the style of mineralisation and type of deposits underconsideration and to the activity which he is undertaking to qualifyas a Competent Person as defined in the 2004 Edition of the"Australian Code for Reporting of Exploration Results, MineralResources and Ore Reserves". Mr Davis consents to the inclusion inthe report of the matters based on his information in the form andcontext in which it appears.Cube Consulting Pty LtdInformation in this report relating to Mineral Resources hasbeen estimated and complied by Mark Zammit of Cube Consulting PtyLtd. Mr Zammit is a member of The Australasian Institute of Mining &Metallurgy and has sufficient experience that is relevant to thestyle of mineralisation and type of deposit under consideration andto the activity which he is undertaking to qualify as a CompetentPerson as defined in the 2004 Edition of the "Australian Code forReporting of Exploration Results, Mineral Resources and OreReserves". Mr Zammit consents to the inclusion in the report of thematters based on his information in the form and context in which itappears.Cube Consulting is an independent Perth based resource industryconsulting firm specialising in geological modelling, resourceestimation and information technology.Crosscut ConsultingThe information in this report that relates to Ore Reserves is basedon information compiled by Declan Franzmann, B Eng (Mining),MAusIMM. Mr Franzmann is a full-time employee of CrosscutConsulting.Mr Franzman has sufficient experience which is relevant to the styleof mineralisation and type of deposit under consideration and to theactivity which they are undertaking to qualify as Competent Personsas defined in the 2004 Edition of the "Australasian Code forReporting of Exploration Results, Mineral Resources and OreReserves". Mr Franzmann consents to the inclusion in the report ofthe matters based on his information in the form and context in whichit appears.---END OF MESSAGE---http://hugin.info/138050/R/1350485/325870.pdfThis announcement was originally distributed by Hugin. The issuer is solely responsible for the content of this announcement.
Datum: 28.10.2009 - 08:01 Uhr
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