Medusa Mining (MML) may be at the tail end of an operational turnaround, but you wouldn't know it from the company’s share price. Medusa's market value has nearly halved since mid-2011 and the shares now trade near a three-year low.
It was always going to be difficult for Medusa to upgrade and expand its Co-O underground gold mine in the Philippines while maintaining gold production. But heavy rains and a fire at the Baguio shaft caused delays and production fell even lower than expected.
Yet Medusa's game-changer Saga shaft is finally in operation and the company is set to rapidly ramp-up production. True, the mill expansion isn't finished yet, but Medusa insists it should be tied-in by June. So, if all goes to plan, Medusa will produce 80,000-90,000 ounces during the year to-end June, rising to 200,000 ounces in fiscal 2014. Should it proceed with the development of the nearby Bananghilig gold project, production could rise to 400,000 ounces by 2016.
Broker SP Angel forecasts full-year adjusted EPS of 43.4¢, and 109.8¢ for 2014 (2012: 35.2¢).
MEDUSA MINING (MML) | ||||
|---|---|---|---|---|
| ORD PRICE: | 272p | MARKET VALUE: | £514m | |
| TOUCH: | 268-272p | 12-MONTH HIGH: | 420p | LOW: 266p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 14 | |
| NET ASSET VALUE: | 185¢* | NET CASH: | $8.8m | |
| Half-year to 31 Dec | Turnover (US$m) | Pre-tax profit (US$m) | Earnings per share (US¢) | Dividend per share (A¢) |
|---|---|---|---|---|
| 2011 | 40.9 | 24.1 | 12.7 | 5.00 |
| 2012 | 52.4 | 28.6 | 15.2 | nil |
| % change | +28 | +19 | +20 | -100 |
£1=$1.51 £1=A$1.48 | ||||
