Quarterly Report
(Thomson Reuters ONE) - MEDUSA MINING LIMITED (AIM: MML) QUARTERLY ACTIVITIES REPORT PERIOD ENDED 31 DECEMBER 2009Medusa Mining Limited ("Medusa" or the "Company"), through its Philippinesoperating company Philsaga Mining Corporation ("Philsaga"), announces itsQuarterly Activities Report for the period ending 31 December 2009.Highlights:Co-O MINE PRODUCTION * Record gold production of 21,108 ozs(compared to 18,054 ozs in the previous quarter) at an average grade of 18.68 g/t gold and average cash cost of US$184 per oz (US$136 per oz before taxes, royalties and local production taxes)Co-OPHASE II EXPANSION * Mine expansion to raise production to100,000 ozs per annum in early 2010 is completed * Mill construction completed and commissioning commenced * New MPSA 299-2009-XIII with area of 2,200 hectares was granted abutting the east side of the Co-O Mine MPSARE-INTERPRETEDCo-O RESOURCE MODEL * Re-interpreted resource model (announced 18 January 2010 ), consistent with Agsao Shaft Level 5 development, now provides an accurate development based model for expanding the mine to the eastCONCEPTUALTARGET SIZE * Conceptual target size range from 3 million ozs in 9.3 million tonnes to 7 million ozs in 22 million tonnes using a grade range of 9 to 11 g/t gold with a preferred average grade of the current resources of 10 g/t goldBANANGHILIG DEPOSIT * Planning is underway to commence a pre-feasibility study drilling campaign in July 2010LINGIG COPPER * Drilling with three surface rigs is continuingEXPLORATION BUDGET * The exploration budget for the full year increased to US$18MFINANCIALS * Consolidated cash balance of US$35.5 million. 21 January 2010Managing Director Geoff Davis commented:"We are very pleased to again report incrementally increased quarterlyproduction on the way to the target of 100,000 ounces of annualised production,and the cash costs continue to decrease as our production increases.The recent re-interpretation of the Co-O vein system and estimation of theconceptual target size for the mine provide optimism for a long future for theCo-O Mine".For further information please contact: Australia Medusa Mining Limited +61 8 9367 0601 Geoffrey Davis, Managing Director Roy Daniel, Finance Director United Kingdom Fairfax I.S. PLC +44 (0)20 7598 5368 Nominated Adviser/Joint Broker Ewan Leggat Lothbury Financial +44 (0)20 7011 9411 Michael Padley/Libby Moss Canada Nicholas Sayce, Investor Relations +1 416 822 4404PROJECT OVERVIEWThe locations of the Company's projects are shown on Figures 1 and 2 (please seethe link at the end of this announcement).Co-O MINEGOLD PRODUCTIONThe production statistics for theDecember 2009 quarter and half year withcomparatives for the December 2008 quarter and half year periods are summarisedin Table I.Table I.Gold production statistics+------------------+------+-----------+-----------+-----------+-----------+| | | Quarter| Quarter| Half-year| Half-year||Description | Unit | ended| ended| ended| ended|| | |31 Dec 2009|31 Dec 2008|31 Dec 2009|31 Dec 2008|+------------------+------+-----------+-----------+-----------+-----------+|Tonnes mined |tonnes| 53,064 | 25,575| 93,498 | 49,534 |+------------------+------+-----------+-----------+-----------+-----------+|Ore milled |tonnes| 37,588| 25,575| 78,055| 49,534 |+------------------+------+-----------+-----------+-----------+-----------+|Head grade | gpt | 18.68| 15.84| 16.65| 12.71|+------------------+------+-----------+-----------+-----------+-----------+|Recovery | % | 94%| 93%| 94%| 92%|+------------------+------+-----------+-----------+-----------+-----------+|Gold produced (1) |ounces| 21,108| 12,158| 39,162| 19,144 |+------------------+------+-----------+-----------+-----------+-----------+|Cash costs(2) | US$ | US$184| US$215| US$189| US$225|+------------------+------+-----------+-----------+-----------+-----------+|Gold sold |ounces| 21,108| 12,158| 39,162| 19,144|+------------------+------+-----------+-----------+-----------+-----------+|Average gold price| US$ | US$1,111| US$800| US$1,047| US$812||received | | | | | |+------------------+------+-----------+-----------+-----------+-----------+Note:(1) Gold production is actual gold produced during the period and does notreflect changes in the balance of gold in circuit;(2) Cash costs refer to the cost of gold mined (net of mine developmentcosts), produced and sold and includes taxes, royalties and localproduction taxes of US$48 per ounce for the Dec 2009 qtr (Dec 2009 half-year ofUS$46 per oz).Gold production for the quarter increased to 21,108 ounces (a 17% increase fromthe previous quarter's production) at an average grade of 18.68 g/t gold andcash costs of US$184 per ounce.Medusa is an unhedged gold producer and received an average gold price ofUS$1,111 per ounce from the sale of 21,108 ounces of gold for the quarter.Phase II of the Company's expansion programme is on schedule, and theincremental benefits of that expansion are flowing through as evidenced by therecord gold production of 39,162ounces for the past six months. The forecastgold production for the fiscal year to 30 June 2010 has been revised upwardsfrom 86,000 ounces to 89,000 ounces at an anticipated average cash cost ofUS$190 per ounce.As described in the announcement dated 16 May 2007 regarding the occurrence of"black leader" high grade mineralisation in some veins, there has been anunusual amount of black leader material in recent mine development activitieswhich is responsible for the current high grades. The occurrence of black leadermaterial rarely shows up in drilling and at this stage, its occurrence is notpredictable.A breakdown of actual and forecasted production ounces and cost per ounce byquarters for the last six quarters and the remaining two quarters of this fiscalyear is highlighted in Graph 1 (please see the link at the end of thisannouncement).PHASE II EXPANSION a. Mine ProductionThe mine can now produce at the required rate of approximately 750 tonnes of oreper day to achieve a production rate of approximately 100,000 ounces annualised.The vertical Ventilation Shaft near the Baguio Shaft is now being fitted with askip and headframe to haul mineralised material as sufficient mineralisedmaterial has now been located above Level 1. b. Mill ExpansionThe new mill crushing, screening and washing circuits were completed onschedule. A new back-up genset due to arrive early December was delayed by theChristmas period until the second week of January. Commissioning of the millexpansion has commenced. c. Tailings DamConstruction of a new eight year life tailings dam is progressing and is due forcompletion mid-year 2010 subject to favourable weather conditions. d. PowerThe Company has been evaluating several options to replace the rural power linecurrently in use from San Francisco to the mill site with a dedicated powerline, as the current rural line is becoming unreliable due to the increase inload. The favoured option (in agreement with the local power co-operative) willinvolve the installation of a new power line along the same route as the currentpower line and the cost of the capital outlay by the Company will be offset by areduction in future power tariffs.RE-INTERPRETATION OF RESOURCE MODELThe sole purpose of the re-interpretation was to correct inconsistencies to theeast of the Oriental Fault between previous drillhole based interpretations andthe on-going development on Level 5 from the Agsao Shaft. The revised resourceis JORC and NI 43-101 compliant. A large number of drill hole intersections areyet be included in the re-interpreted resource model (Fig.3please see the linkat the end of this announcement).Table II.Co-O Mine mineral resource estimates for the major veins.+-----------------+-----------+----------------------------------+| | | > 0 g/t gold || Vein name | Category +-----------+----------+-----------+| | | tonnes | g/t gold | contained || | | | | ounces |+-----------------+-----------+-----------+----------+-----------+| | Indicated | 342,000 | 9.57 | 110,000 || Central | | | | || | Inferred | 250,000 | 3.27 | 26,000 |+-----------------+-----------+-----------+----------+-----------+| | Indicated | 97,000 | 14.53 | 45,000 || Jereme | | | | || | Inferred | 93,000 | 7.81 | 23,000 |+-----------------+-----------+-----------+----------+-----------+| | Indicated | 82,000 | 16.84 | 44,000 || Jereme Footwall | | | | || | Inferred | 73,000 | 12.73 | 30,000 |+-----------------+-----------+-----------+----------+-----------+| | Indicated | 188,000 | 21.16 | 130,000 || Great Hamish | | | | || | Inferred | 191,000 | 10.79 | 66,000 |+-----------------+-----------+-----------+----------+-----------+| | Indicated | 170,000 | 11.42 | 63,000 || Great Hamish FW | | | | || | Inferred | 196,000 | 12.21 | 77,000 |+-----------------+-----------+-----------+----------+-----------+| | Indicated | 96,000 | 23.10 | 71,000 || Roysan | | | | || | Inferred | 98,200 | 23.29 | 73,000 |+-----------------+-----------+-----------+----------+-----------+| | Indicated | 56,000 | 18.28 | 30,000 || Catto 1 | | | | || | Inferred | 54,000 | 18.99 | 33,000 |+-----------------+-----------+-----------+----------+-----------+| East Agsao 4 | Inferred | 196,000 | 12.01 | 76,000 |+-----------------+-----------+-----------+----------+-----------+| | Indicated | 420,000 | 6.50 | 90,000 || Other veins | | | | || | Inferred | 1,140,000 | 7.10 | 260,000 |+-----------------+-----------+-----------+----------+-----------+| Total Indicated | 1,450,000 | 12.3 | 580,000 |+-----------------------------+-----------+----------+-----------+| Total Inferred | 2,290,000 | 9.0 | 660,000 |+-----------------------------+-----------+----------+-----------+The resource estimations have been undertaken by Cube Consulting Pty Ltd, 2010.Note: Rounding may result in some slight discrepancies in totalsThis re-interpretation has marginally decreased the Inferred Resources butmaintained the Indicated Resources taking into account production of 39,162ounces and stockpiles containing approximately 8,500 ounces. This now providesan accurate development based model for expanding the mine to the east.Thirty-five veins have now been modelled with resources and more are expected tobe identified. Future resource updates will be done annually in June-July.DiscussionDiamond drilling has continued since the resource model update announced on 1July 2009 and focused on extending the Co-O vein system. A total of 52 drillholes have been completed (as announced on 10 December 2009) since the previousresource estimation and considered for inclusion in the re-interpreted resourcemodel in conjunction with available underground sampling data, and excludingmined material.Thirty five veins now have resources allocated to them, with a number of the newveins, particularly the East Agsao series of veins, being open in almost alldirections. The vein system is open at depth.It should be noted that a large number of drill holes in a number of areas shownon Figure 4(please see the link at the end of this announcement) are still to beincluded in resource estimates, and will be included as the confidence levelsincrease and demonstrated continuity improves through additional drilling and/ordevelopment.As a result of extensive development from the bottom of the Agsao Shaft (Level5) since the previous resource estimate, this new wireframe model has correctedpreviously noted (see announcement of 1 July 2009) inconsistent veinorientations on the east side of the Oriental Fault. It is now clear from theunderground development that the vein system continues in an easterly direction,disrupted in places by north-trending step-faulting, which generally down-throwsthe veins on the east side of each fault. Re-interpretation as straight veinshas resulted in some inferred resources loss compared to the previousinterpretation of curved veins which was based solely on drillhole data.Figure 5(please see the link at the end of this announcement) shows all thecurrent development in the mine.Resource drilling is continuing with the aim of increasing confidence levels forinterpretation in some areas which will result in the inclusion of more drillhole intersections as well as extensions to the vein system.Stockwork/stringer mineralisationAt the western end of the mine, preliminary work suggests the possible presenceof a number of stockwork or stringer zones where narrow quartz veins over widthsof 5 to 6 metres have been developed. One of these has been defined asapproximately 40 metres long within the Great Hamish Vein. An Alimak rise withinthis zone has been completed between Levels 2 and 3 demonstrating continuity andthat it is open above and below these levels. Two early bulk samples testedthrough the mill returned head grades of 14 and 17 g/t gold. Alimak long-holestoping (much cheaper than shrink stoping) is about to commence in this zone andwill be employed if other similar zones are defined.Other potentially similar stockwork or stringer zones may be present in parts ofother veins and a similar zone outcrops near the Tinago Shaft which will besubject to additional exploration. A drive to connect the Baguio Shaft and theTinago Shaft on Level 3 is underway and expected to allow underground assessmentof previous drill hole TIN 3 with a similar interpreted style adjacent to theCentral Vein and between Levels 2 and 3. It returned two close spacedintersections of 3.80 metres at 21.15 g/t gold and 6.60 metres at 2.45 g/t gold(see announcement dated 28 February 2007).Specific gravityA programme of specific gravity ("SG") measurements is underway for the lowerlevels of the mine. Initial results indicate that the currently used SG of 2.45may be conservative. This programme should be completed before the next resourceestimate.Vein modellingCube Consulting Pty Ltd of Perth, Western Australia was contracted to undertakethe resource estimations. A wireframe model of the vein system and the minedepletions were based on all available information as at 7 December 2009. A 2Dlongitudinal modelling approach was used and is based on an accumulationvariable incorporating mineralised vein horizontal width and intercept grade. Variography was used to analyse the spatial continuity of the horizontal widthand accumulation variables within the mineralised veins and to determineappropriate estimation inputs to the interpolation process. The accumulationvariables were interpolated into blocks using Ordinary Kriging. High gradelimits were applied to gold prior to the calculation of the accumulationvariable. Mineral resources have been reported in accordance with The 2004Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORCCode) and Canadian National Instrument 43-101.RESOURCE DRILLINGOn 10 December 2009 the drilling results for drill holes MD 165 to 216 werereleased. These results are summarised in TableIII which should be read inconjunction with the 10 December 2009 announcement which contains more detailand intersections down to 0.2 metres downhole width.Table III.Drill hole results >3 g/t gold and >0.5 metres downhole width forholes MD 165 to MD 216.+------+------+------+---+-------+--------+--------+-------------+|Hole | East |North |Dip|Azimuth| From | Width |Grade (uncut)|| | | |(°)| (°) |(metres)|(metres)| (g/t gold)|+------+------+------+---+-------+--------+--------+-------------+|MD 166|613606|913221|-45| 186 | 45.55| 0.55 | 3.06|+------+------+------+---+-------+--------+--------+-------------+|MD 168|613423|913169|-47| 185 | 191.10| 4.00 | 3.76|+------+------+------+---+-------+--------+--------+-------------+|MD 170|613809|913202|-46| 190 | 109.40| 1.00 | 5.28|| | | | | +--------+--------+-------------+| | | | | | 137.45| 0.50 | 8.27|| | | | | +--------+--------+-------------+| | | | | | 519.85| 1.00 | 3.50|| | | | | +--------+--------+-------------+| | | | | | 636.25| 2.15 | 18.43|+------+------+------+---+-------+--------+--------+-------------+|MD 171|614677|912995|-57| 166 | 413.80| 3.10 | 3.67|| | | | | +--------+--------+-------------+| | | | | | 430.85| 1.00 | 7.40|+------+------+------+---+-------+--------+--------+-------------+|MD 172|613420|913124|-45| 171 | 54.85| 1.60 | 3.05|| | | | | +--------+--------+-------------+| | | | | | 114.20| 1.00 | 7.41|| | | | | +--------+--------+-------------+| | | | | | 127.20| 0.80 | 5.01|| | | | | +--------+--------+-------------+| | | | | | 243.45| 0.85 | 83.47|+------+------+------+---+-------+--------+--------+-------------+|MD 173|613411|913106|-47| 185 | 76.30| 0.50 | 13.21|| | | | | +--------+--------+-------------+| | | | | | 99.10| 2.00 | 6.49|+------+------+------+---+-------+--------+--------+-------------+|MD 175|613713|913335|-55| 190 | 383.80| 1.00 | 4.16|+------+------+------+---+-------+--------+--------+-------------+|MD 178|614532|913023|-70| 160 | 314.10| 0.50 | 59.44|| | | | | +--------+--------+-------------+| | | | | | 334.55| 0.65 | 18.71|| | | | | +--------+--------+-------------+| | | | | | 395.05| 2.90 | 6.75|| | | | | +--------+--------+-------------+| | | | | | 459.80| 1.55 | 9.73|+------+------+------+---+-------+--------+--------+-------------+|MD 179|613351|912825|-68| 217 | 65.65| 2.80 | 7.43|| | | | | +--------+--------+-------------+| | | | | | 113.65| 0.75 | 100.63|+------+------+------+---+-------+--------+--------+-------------+|MD 180|613870|913302|-45| 190 | 403.50| 0.65 | 8.37|| | | | | +--------+--------+-------------+| | | | | | 427.50| 3.01 | 3.06|+------+------+------+---+-------+--------+--------+-------------+|MD 183|613352|912824|-63| 171 | 65.30| 0.85 | 13.73 (*)|| | | | | +--------+--------+-------------+| | | | | | 151.05| 1.25 | 14.66 (*)|+------+------+------+---+-------+--------+--------+-------------+|MD 187|614226|913131|-56| 180 | 210.70| 1.10 | 6.54|| | | | | +--------+--------+-------------+| | | | | | 421.50| 1.10 | 4.32 (*)|| | | | | +--------+--------+-------------+| | | | | | 438.55| 0.50 | 9.35 (*)|+------+------+------+---+-------+--------+--------+-------------+|MD 188|613475|912843|-45| 185 | 53.80| 0.65 | 47.90|| | | | | +--------+--------+-------------+| | | | | | 127.95| 1.00 | 3.89|| | | | | +--------+--------+-------------+| | | | | | 160.80| 2.60 | 9.65|+------+------+------+---+-------+--------+--------+-------------+|MD 189|614532|913021|-70| 175 | 322.95| 1.00 | 3.37|| | | | | +--------+--------+-------------+| | | | | | 394.00| 2.95 | 5.74|| | | | | +--------+--------+-------------+| | | | | | 401.65| 2.15 | 15.41|| | | | | +--------+--------+-------------+| | | | | | 436.40| 2.40 | 18.89|| | | | | +--------+--------+-------------+| | | | | | 497.40| 0.50 | 11.59|| | | | | +--------+--------+-------------+| | | | | | 671.00| 0.90 | 32.29|+------+------+------+---+-------+--------+--------+-------------+|MD 190|613342|912848|-71| 196 | 29.80| 1.00 | 3.67|| | | | | +--------+--------+-------------+| | | | | | 155.40| 1.30 | 11.03|+------+------+------+---+-------+--------+--------+-------------+|MD 191|613522|912806|-56| 187 | 149.80| 1.70 | 14.90|+------+------+------+---+-------+--------+--------+-------------+|MD 195|613331|912882|-70| 189 | 16.10| 1.00 | 6.71 (*)|| | | | | +--------+--------+-------------+| | | | | | 211.00| 0.50 | 13.55|+------+------+------+---+-------+--------+--------+-------------+|MD 196|614163|913110|-50| 175 | 99.20| 0.90 | 4.03|| | | | | +--------+--------+-------------+| | | | | | 434.10| 1.50 | 5.78|| | | | | +--------+--------+-------------+| | | | | | 485.10| 3.20 | 11.37|| | | | | +--------+--------+-------------+| | | | | | 492.85| 0.20 | 3.76|| | | | | +--------+--------+-------------+| | | | | | 520.00| 0.20 | 3.62|| | | | | +--------+--------+-------------+| | | | | | 539.75| 2.00 | 103.36|| | | | | +--------+--------+-------------+| | | | | | 544.90| 1.65 | 62.36|+------+------+------+---+-------+--------+--------+-------------+|MD 197|614226|913107|-60| 180 | 98.60| 3.05 | 6.04|| | | | | +--------+--------+-------------+| | | | | | 123.80| 2.15 | 6.08|| | | | | +--------+--------+-------------+| | | | | | 408.50| 1.00 | 3.29|| | | | | +--------+--------+-------------+| | | | | | 411.85| 1.20 | 6.31|| | | | | +--------+--------+-------------+| | | | | | 438.00| 0.90 | 4.17|| | | | | +--------+--------+-------------+| | | | | | 463.25| 1.35 | 6.34|| | | | | +--------+--------+-------------+| | | | | | 495.55| 1.25 | 3.88|+------+------+------+---+-------+--------+--------+-------------+|MD 199|614567|913137|-58| 158 | 401.40| 1.55 | 8.27 (*)|| | | | | +--------+--------+-------------+| | | | | | 430.60| 1.90 | 24.07 (*) || | | | | +--------+--------+-------------+| | | | | | 551.05| 0.50 | 26.54 (*)|| | | | | +--------+--------+-------------+| | | | | | 561.00| 1.20 | 3.07 (*)|| | | | | +--------+--------+-------------+| | | | | | 566.00| 1.50 | 6.63 (*)|+------+------+------+---+-------+--------+--------+-------------+|MD 200|614533|913020|-45| 175 | 515.80| 1.70 | 41.69 (*)|+------+------+------+---+-------+--------+--------+-------------+|MD 201|613316|912930|-75| 127 | 43.35| 2.10 | 5.15 (*)|| | | | | +--------+--------+-------------+| | | | | | 128.90| 0.50 | 4.77 (*)|+------+------+------+---+-------+--------+--------+-------------+|MD 202|614157|913197|-52| 175 | 255.30| 0.50 | 64.93 (*)|+------+------+------+---+-------+--------+--------+-------------+|MD 204|614294|913116|-45| 180 | 91.20| 2.10 | 3.47 (*)|+------+------+------+---+-------+--------+--------+-------------+|MD 205|614536|913221|-64| 158 | 214.55| 1.30 | 9.07 (*)|| | | | | +--------+--------+-------------+| | | | | | 474.85| 0.60 | 4.66 (*)|| | | | | +--------+--------+-------------+| | | | | | 515.45| 0.55 | 4.47 (*)|+------+------+------+---+-------+--------+--------+-------------+|MD 210|613478|912846|-85| 185 | 90.45| 6.35 | 8.46 (*)|| | | | | +--------+--------+-------------+| | | | | | 234.55| 0.85 | 18.90 (*)|| | | | | +--------+--------+-------------+| | | | | | 240.40| 2.45 | 3.56 (*)|| | | | | +--------+--------+-------------+| | | | | | 313.10| 1.70 | 3.87 (*)|+------+------+------+---+-------+--------+--------+-------------+|MD 211|614009|912469|-50| 192 | 134.25| 1.25 | 8.90 (*)|| | | | | +--------+--------+-------------+| | | | | | 163.70| 4.15 | 6.25 (*)|| | | | | +--------+--------+-------------+| | | | | | 197.95| 1.20 | 3.02 (*)|+------+------+------+---+-------+--------+--------+-------------+|MD 213|613320|912924|-80| 180 | 58.80| 2.25 | 3.06 (*)|| | | | | +--------+--------+-------------+| | | | | | 72.55| 1.15 | 3.53 (*)|+------+------+------+---+-------+--------+--------+-------------+Notes:(i) Intersection widths are downhole drill widths not true widths;(ii) Assays denoted (*) are Philsaga assays, all others are by McPharGeoservices Inc in Manila; and(iii) Grid coordinates based on the Philippine Reference System 92.Drilling is continuing along and across strike at the Co-O Mine using sixsurface diamond drill rigs with the aim of increasing confidence levels in someareas and identifying additional mineralisation that can be developed forproduction.Co-O MINE CONCEPTUAL TARGET SIZE **Estimates (Table IV) have been undertaken for the Co-O Mine conceptual targetsize** based on a drill-defined strike length of approximately 1,500 metres andup to 2,000 metres based on potential extensions.Aggregate across-strike widths of the veins of 5 and 8 metres (ie, adding thewidth of each individual vein across strike to give an aggregate vein width) areregarded as possibly conservative. Depths of between 500 and 750 metres belowLevel 1 (adit level) in the mine are regarded as geologically reasonable as afew deeper drill holes below 400 metres below Level 1 have intersected goodgrade mineralisation.The estimate used a grade range of 9 to 11 g/t gold with a preferred averagegrade of the current resources of 10 g/t gold.Table IV.Co-O Mine conceptual target parameters and estimates **+----------------+-----------+---------------+------------+-------+------------+|Strike |Depth below| Aggregate | Conceptual | Gold | Conceptual ||length(metres) | Level | Vein | tonnes | grade | contained || | I(metres) | width(metres) | | (g/t) | ounces |+----------------+-----------+---------------+------------+-------+------------+|1,500 | 500| 5| 9,375,000| 10 | 3,125,000|| | +---------------+------------+-------+------------+| | | 8| 14,700,000| 10 | 4,725,000|| | +---------------+------------+-------+------------+| | | 10| 18,750,000| 10 | 6,250,000|| +-----------+---------------+------------+-------+------------+| | 750| 5| 15,000,000| 10 | 5,000,000|| | +---------------+------------+-------+------------+| | | 8| 22,050,000| 10 | 7,000,000|| | +---------------+------------+-------+------------+| | | 10| 30,000,000| 10 | 10,000,000|| +-----------+---------------+------------+-------+------------+| | 1000| 5| 18,750,000| 10 | 6,250,000|| | +---------------+------------+-------+------------+| | | 8| 29,400,000| 10 | 9,450,000|| | +---------------+------------+-------+------------+| | | 10| 37,500,000| 10 | 12,500,000|+----------------+-----------+---------------+------------+-------+------------+|2,000 | 500| 5| 12,500,000| 10 | 4,160,000|| | +---------------+------------+-------+------------+| | | 8| 19,600,000| 10 | 6,300,000|| | +---------------+------------+-------+------------+| | | 10| 25,000,000| 10 | 8,125,000|| +-----------+---------------+------------+-------+------------+| | 750| 5| 20,000,000| 10 | 6,660,000|| | +---------------+------------+-------+------------+| | | 8| 29,400,000| 10 | 9,450,000|| | +---------------+------------+-------+------------+| | | 10| 40,000,000| 10 | 10,330,000|| +-----------+---------------+------------+-------+------------+| | 1,000| 5| 25,000,000| 10 | 8,125,000|| | +---------------+------------+-------+------------+| | | 8| 39,200,000| 10 | 10,200,000|| | +---------------+------------+-------+------------+| | | 10| 50,000,000| 10 | 16,250,000|+----------------+-----------+---------------+------------+-------+------------+Notes:(i) SG of 2.45 used for all estimates;(ii) Estimates rounded to nearest 1000; and(iii) Highlighted cases indicate most geologically reasonable based oncurrent knowledge.** The potential target size and grade is conceptual in nature, and there hasbeen insufficient exploration to define a mineral resource, and it is uncertainif further exploration will result in the target being defined as a mineralresource.REGIONAL DRILLINGUp tothree surface rigs are testing new veins around the Co-O Mine as shown onFigure 6 (please see the link at the end of this announcement). The aim of thisdrilling is to extend the vein system so that additional production scenarioscan be considered through replicating mining infrastructure.The Co-O vein system outcrops at surface on the western side of the OrientalFault, where it was first discovered. The veins at surface rarely exceed 0.5metres width and generally assay around 1 to 5 g/t gold (with possibly somesupergene enrichment). Gold values started to increase significantlyapproximately 80 metres below surface.Up to the announcement on 9 December 2009, 16 drill holes (EXP 1 to 16) had beencompleted. Results are available for EXP 1 to 12 (Table V) where stronglyanomalous values have been obtained from a number of individual samples inexcess of 0.5g/t gold and up to 5.13 g/t gold. These mineralised structures willbe assessed for further follow-up either along strike or at depth.Table V.Drill hole results >0.5 g/t gold for holes EXP 1 to 12.+------+------+------+---+-------+--------+--------+-------------+|Hole | East| North|Dip|Azimuth| From| Width|Grade (uncut)|| | | |(°)| (°)|(metres)|(metres)| (g/t gold)|+------+------+------+---+-------+--------+--------+-------------+|EXP 2 |613792|912724|-63| 130| 24.50| 2.00| 1.39 (*)|| | | | | +--------+--------+-------------+| | | | | | 62.55| 1.35| 1.72 (*)|| | | | | +--------+--------+-------------+| | | | | Incl.| 63.55| 0.35| 5.13 (*)|| | | | | +--------+--------+-------------+| | | | | | 179.30| 1.00| 1.60 (*)|| | | | | +--------+--------+-------------+| | | | | | 185.30| 1.00| 0.65 (*)|| | | | | +--------+--------+-------------+| | | | | | 190.30| 0.70| 0.71 (*)|| | | | | +--------+--------+-------------+| | | | | | 416.60| 1.00| 0.58 (*)|| | | | | +--------+--------+-------------+| | | | | | 446.70| 1.00| 0.53 (*)|| | | | | +--------+--------+-------------+| | | | | | 452.00| 1.00| 0.79 (*)|+------+------+------+---+-------+--------+--------+-------------+|EXP 3 |615733|911967|-60| 175| 232.00| 1.00| 0.71 (*)|+------+------+------+---+-------+--------+--------+-------------+|EXP 10|614880|913266|-70| 158| 583.30| 1.00| 0.55 (*)|| | | | | +--------+--------+-------------+| | | | | | 636.15| 0.35| 2.20 (*)|| | | | | +--------+--------+-------------+| | | | | | 659.60| 1.00| 0.65 (*)|| | | | | +--------+--------+-------------+| | | | | | 671.45| 1.45| 0.77 (*)|+------+------+------+---+-------+--------+--------+-------------+|EXP 12|614961|913050|-47| 162| 782.90| 0.70| 0.76 (*)|| | | | | +--------+--------+-------------+| | | | | | 783.75| 0.65| 0.72 (*)|| | | | | +--------+--------+-------------+| | | | | | 785.35| 0.55| 0.85 (*)|+------+------+------+---+-------+--------+--------+-------------+Notes:(i) Assays denoted (*) are Philsaga assays;(ii) Grid coordinates based on the Philippine Reference System 92;(iii) Assays awaited for EXP 13 to 16; and(iv) Intersections widths are downhole drill widths not true widths.LINGIG COPPER PROJECTThe Lingig prospect is covered by a Mines Operating Agreement ("MOA")overMineral Production Sharing Agreement ("MPSA") application number APSA024-XIII comprising two parcels situated to the north and to the east (theLingig porphyry copper prospect) of the Co-O Mine and millsite as shown onFigure 2 (please see the link at the end of this announcement).Drilling is continuing with three drilling rigs. The most recent results wereannounced on 12 October 2009.TAMBIS-BAROBO REGIONThe Tambis project, currently comprising the Bananghilig Gold Deposit and theKamarangan copper porphyry prospect (Fig. 2please see the link at the end ofthis announcement), is operated under a Mining Agreement with Philex GoldPhilippines Inc. over Mineral Production Sharing Agreement ("MPSA") applicationAPSA-000022-XIII which covers 6,262 hectares.Figure 2(please see the link at the end of this announcement) shows the locationof the Bananghilig Deposit. Planning is underway for a major drilling campaigncommencing around July 2010 as the basis for pre-feasibility studies. The aim ofthe work will be to increase the resources to a level which could provide a 5year minimum mining life at a production rate of approximately 200,000 ouncesper year.ANOLINGThe Mines Operating Agreement ("MOA") with Alcorn Gold Resources Inc. coversMPSA application number 039-XIII situated approximately 8 kilometres north fromthe millsite as shown on Figure 2 (please see the link at the end of thisannouncement). Processing of the MPSA is progressing.Mapping and sampling is continuing. Drilling will recommence when the MPSA isgranted.OTHERPROJECTS * Sur-sur ProjectThe Company is advancing the tenement applications. * Saugon ProjectRe-mapping, re-logging of core and sampling are continuing in preparation fordrilling in 2010.FINANCIALSAs at 31 December 2009, the Company which is debt free, had a consolidated cashbalance of US$35.5 million (Sep 2009: US$25.2 million);During the quarter, * The Company received proceeds of US$23.4 million from the sale of 21,108 ounces of gold at an average sale price of US$1,111 per ounce; * Incurred exploration expenditure of US$5.8 million (Sep 2009 qtr: US$3.4 million); * Spent US$1.7 million on capital works associated with the mine and mill expansion (Sep 2009 qtr: US$2.3 million); and * Expensed US$1.8 million in mine development costs (Sep 2009 qtr: US$2.4 million).CORPORATE * Mr Kevin Tomlinson resigned as Non-Executive Chairman of the Company on 13 January 2010.Information in this report relating toExploration Results is based oninformation compiled by Mr Geoff Davis, who is a member of The AustralianInstitute of Geoscientists. Mr Davis is the Managing Director of Medusa MiningLimited and has sufficient experience which is relevant to the style ofmineralisation and type of deposits under consideration and to the activitywhich he is undertaking to qualify as a "Competent Person" as defined in the2004 Edition of the "Australian Code for Reporting of Exploration Results,Mineral Resources and Ore Reserves" and is a "Qualified Person" as defined in"National Instrument 43-101" of the Canadian Securities Administrators. MrDavis consents to the inclusion in the report of the matters based on hisinformation in the form and context in which it appears.Information in this report relating toMineral Resources has been estimated andcompiled by Mark Zammit of Cube Consulting Pty Ltd of Perth, Western Australia.Mr Zammit is a member of The Australasian Institute of Mining & Metallurgy andhas sufficient experience that is relevant to the style of mineralisation andtype of deposit under consideration and to the activity which he is undertakingto qualify as a Competent Person as defined in the 2004 Edition of the"Australian Code for Reporting of Exploration Results, Mineral Resources and OreReserves" and is a "Qualified Person" as defined in "National Instrument43-101" of the Canadian Securities Administrators. Mr Zammit consents to theinclusion in the report of the matters based on his information in the form andcontext in which it appears.Refer to the Technical Report which was filed onwww.sedar.com
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