MEDUSA Mining has made significant progress on its five focus areas of development at the Co-O Gold Project - E15 service shaft; mine ventilation upgrade; mine de-watering expansion; Level 8 drilling stations for resource expansion; and prioritised mine development.

The company says the benefits of work on some of these areas will start to be felt in the second half of this financial year while others, including the service shaft, will not feed through until the following financial year.

Medusa said production in the December quarter was affected by additional maintenance work. In the six months to December 31 it produced 38,507 ounces of gold, compared to 61,169 ounces in the same period of 2015, at an average recovered grade of 5.02 g/t versus 6.80 g/t the year before.

The company has revised its production guidance range for this financial year from 105,000-115,000 ounces to 85,000-95,000 ounces. All-in sustaining costs of between US$1250 and US$1350 per ounce are forecast, an increase from the previous guidance of US$1000-$1100.

The original guidance was presented as being back-end loaded, but with poor results for the December quarter when 17,350 ounces were produced, the production plan for the second half does not have the flexibility to recover lost production.

The poor production relates to reduced grades due to the increased amount of development ore in the mill feed blend. Overall mine production output has been below plan and Medusa says the tonnage shortfall relates to higher L8 mine-shaft maintenance requirements, which impacted hoisting availability.

The company expected the hoisting issue to be resolved in the March quarter, allowing it to deliver to the back-end loaded full year plan, albeit later than the original guidance.

Co-O resources have been re-estimated at 961,000 ounces, which Medusa says is a robust number considering its 10-year production history and last year’s production of 108,578 ounces.

The first half resource drilling of approximately 23,000 metres is a significant investment in expanding Co-O’s down dip potential. This rate will continue throughout the second half with the intent to re-building the resource and reserve base.

Exploration activities have been aligned to a new strategy, with increased focus on near-mine activities while regional targets that have not returned expected results will be rationalised. The regional focus also includes exploration prospects outside Medusa’s tenement position.