The Asia Miner

OCT-DEC 2017

The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region

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20 | ASIA Miner | Volume 14 • Issue 4 | 2017 Philippines AFTER a difficult year at Co-O Gold Proj- ect, Medusa Mining expects to maintain production in the 2017/18 financial year at between 80,000 and 90,000 ounces. The company produced 80,743 ounces in the year ending June 30, compared to 108,578 ounces in the previous year. The average cash cost of US$595 per ounce for the 12 months, including royal- ties and local business taxes, was higher than the previous year's average of US$466 per ounce. The All in Sustaining Cost (AISC) was US$1374 per ounce compared to the previous year's US$999, primarily as a re- sult of a drop in production. AISC for the current financial year is expected to be be- tween US$1050 and US$1200 per ounce. Major write-offs, including US$70.8 mil- lion in impairments and US$7.1 million in exploration, meant an underlying loss of US$35.2 million for the period with a net deficit of US$62.1 million. Revenues fell from US$128.1 million to US$100.1 million, although the gold price per ounce received SEMIRARA Mining and Power Corp (SMPC) plans to modernise its fleet to facilitate a coal mine expansion program. The Consunji-led company spent P3.5 billion for the procurement of equipment in the first half of the year and by the end of 2017, expects to have spent P5 billion. SMPC chairman and CEO Isidro Consunji said the program was being funded through equity and debt with some financed by banks and some internally generated. It is significantly more than the P980 million spent in 2016. As at early August SMPC had taken delivery of 46 dump trucks, six hydraulic excavators and other support machinery. The company is expecting 21 more pieces of heavy equipment by the end of the year. The new dump trucks and hydraulic excavators are more fuel effi- cient, which will enable the company to reduce its carbon footprint and operating costs while boosting production. SMPC president and chief operating officer Victor Consunji said the Japanese heavy equipment supplier had informed the company that fuel consump- tion of the new dump trucks could be reduced by as much as 14% compared to older models. Fuel expenses account for 40% to 45% of SMPC's operating costs. "This is the start of our fleet modernisation program," Victor Consunji said. "We plan to continue this in 2018 by decommission- ing our aging heavy equipment and replacing it with newer models. Our goal is to improve operational efficiency and environmental per- formance." SMPC plans to increase coal output to 16 million tonnes at its mines in Antique over the next two to three years. This has been facilitated by approval of the company's amended environmental clearance certificate. 2016 was a bumper year for the coal miner as it achieved produc- tion of 11.9 million tonnes, the maximum output allowable. SMPC then submitted a work program to the Department of Energy in- dicating a 2017 target of 14 million tonnes and production of 16 million tonnes in 2018. The increase is in line with the government's push for power sta- bility, optimal energy pricing, modernized infrastructure and more reliance on domestic coal production. Semirara begins coal f leet modernisation A 3D model of the underground vein system at Co-O. Steady production expected at Co-O increased to US$1256 per ounce. Completion of the E15 Service Shaft by the March quarter of 2018 is expected to free up the L8 production shaft with im- provements in performance starting to come through almost immediately from that point. Medusa says the guidance is governed by completion of the shaft. Once complet- ed, E15 will unconstrain the L8 Production Shaft as all manpower and materials will be removed and L8 becomes a dedicated skipping shaft. The guidance also assumes that Co-O will realise improvements in the March 2018 quarter and allowing a reason- able transition period. Medusa has not been subject to any for- mal intervention as a result of a crackdown on miners orchestrated by the Philippines Department of Environmental and Natural Re- sources. The Co-O mine is on the island of Mindanao where martial law was declared on May 25 and is still in force, though so far the company has reported no disruptions to its operations. Medusa is still exploring at and near Co- O, including at Bananghilig deposit, in a bid to replenish reserves and resources, and management expects ongoing exploration to continue to find new areas to mine.

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