Officials at Medusa Mining have reduced production estimates after narrower than expected gold veins affected performance at the Co-O project in eastern Mindanao.

Anticipated production in the June quarter is now 15,600 ounces and for the first half of 2013 is about 62,200 ounces. The next half-year will also be negatively affected, following the commissioning delay of a new mill at the mine.

The revised production forecast for the three months to September 30 is now about 17,000 ounces and 35,000 ounces for the three months to December 31.

Medusa says the veins on Level 8 in the vicinity of the shaft, 100 metres below the current mining levels, were expected to be 1.4 metres to 5.5 metres wide, but on three veins the widths are less than 1 metre in conjunction with extensive faulting.

Medusa has appointed a new contactor, CPC Engineering, to complete the commissioning of the new mill at Co-O. Completion is now expected in August, at least 4 weeks late due to the previous contractor going into administration. Medusa says that because of the mill delay, lower production and weaker gold prices, it is reviewing its cost base.

Exploration drilling has been reduced to two surface and two underground drill rigs, both lowering exploration expenditure to about US$12 million in the year to June 2014 from about US$25 million to year-end 2012.

The feasibility study on the Bananghilig deposit is also being reviewed following lower gold prices and while recognizing a newly-discovered high grade zone, B2.

The high grade B2 zone adjacent to the Bananghilig 1 million ounce deposit provides various options for future development, says Medusa’s managing director Peter Hepburn-Brown.

“We are continuing to drill at B2 so options can be evaluated,” he says, “including possibly treating high grade material at the Co-O mill, to increase production while postponing the need to build a new stand-alone milling facility.”