Medusa Mining has lost 39 per cent of its market value over the past year, and its latest full-year results, detailing falling production, revenues and dividends, are unlikely to spark a recovery in the miner's flagging share price. Unfortunately, a recent fire at the miner's Baguio shaft in the Philippines will temporarily hold back grades, thereby cancelling out any near-term benefits of a planned significant ramp up in gold production.
Heavy rains and expansion of the Co-O mine took a toll on full-year gold production, which fell by 40 per cent to 60,595 ounces. Although mining and milling volumes were broadly similar to last year, Medusa was forced to process lower-grade materials. This increased cash costs to $261 (£165) an ounce (oz) from $189/oz in 2011 - although this is still low by industry standards. Despite higher gold prices, the overall result was a 55 per cent fall in net profits to $49.2m. Net cash has fallen to $12m from $38m at the half-year mark, although Medusa has around $40m in unsold gold.
Medusa forecasts production of 100,000/oz-120,000/oz for 2013, with cash costs of around $210/oz, although until the company's Saga shaft comes online at the end of this year, production will be flat due to limited haulage capacity.
Broker Fairfax expects current year EPS of 77.3¢ (26.1¢ in 2012), subject to review post these results.
| MEDUSA MINING (MML) | ||||
|---|---|---|---|---|
| ORD PRICE: | 322p | MARKET VALUE: | £608m | |
| TOUCH: | 315-329p | 12-MONTH HIGH: | 548p | LOW: 280p |
| DIVIDEND YIELD: | 1.4% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 167¢ | NET CASH: | $12m | |
| Year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (A¢) |
|---|---|---|---|---|
| 2008* | 18 | 1 | -0.9 | nil |
| 2009 | 43 | 27 | 18.7 | nil |
| 2010 | 95 | 66 | 37.8 | 5.0 |
| 2011 | 150 | 110 | 58.7 | 10.0 |
| 2012 | 81 | 48 | 26.1 | 7.0 |
| % change | -46 | -56 | -56 | -30 |
Ex-div: 10 Sep Payment: 4 Oct *Australian dollars £1=$1.58 £1=A$1.53 | ||||
