MEDUSA MINING LIMITED · Medusa Mining Limited ... Medusa recognises that any safety and environmental incidents may have a negative impact on the ... Industry Partner of Caraga State

MEDUSA MINING LIMITED

Photo: Planting of Fruit Trees Participated by the local residents and settlers

Photo: Reforested Surroundings at Mine Site

A SOCIALLY RESPONSIBLE & ENVIRONMENT FRIENDLY COMPANY

SUSTAINABILITY REPORT 2014

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CONTENTS

CONTENTS .................................................................................................................................. 2

1. COMPANY PROFILE ............................................................................................................. 3

2. REPORT SCOPE .................................................................................................................... 4

3. ENVIRONMENTAL PERFORMANCE ..................................................................................... 5

4. EDUCATION, COMMUNITY PARTICIPATION, PROGRAMMES AND BENEFITS .................. 19

5. MISSION AND VALUES ...................................................................................................... 23

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1. COMPANY PROFILE

Medusa Mining Limited (ABN 60099377849) is a gold producer in the Philippines and is focussed on organic growth on its tenements in Central East Mindanao, Republic of the Philippines.

Medusa’s producing gold mine is Co-O Gold Mine, which is located centrally on the Company’s 820 km2 tenement holding.

Medusa’s growth has involved expanding the current Co-O Mine and milling operations to 750,000 tonnes per annum. The Co-O Mine’s combined resources are currently 1.41 million ounces of gold which are still open in most directions.

Following a successful exploration programme at the Tambis area, 30 kilometres north of the Co-O Mine, combined resources of 1.41 million ounces of gold have been outlined at the Bananghilig Gold Deposit where preliminary feasibility studies have been undertaken.

Medusa Mining Limited is listed on the Australian Stock Exchange (ASX: MML) and the corporate office is located in Perth, West Australia.

The Co-O Mine site

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2. REPORT SCOPE

Medusa’s Sustainability Report provides information about the Company’s sustainability performance for the financial year ending 30 June 2014. Medusa is focused on organic growth in the Philippines from the Co-O narrow vein underground mine and the Bananghilig potential open pit operation.

The target audiences for this report are Medusa’s stakeholders at the community, government, regulatory and investor levels.

With the exception of financial, safety and employee-related information, and unless otherwise stated, this report does not include exploration programmes or the corporate office in Perth, Australia.

Data are generally consolidated, recognising that the Company’s current principal activity is the Co-O Gold Mine operation in the Philippines.

Medusa recognises that any safety and environmental incidents may have a negative impact on the operations, the Company and its stakeholders. Therefore, through proactive management, incidents are managed through the recognised strategies that the Company has in place. The severity of incidents is classified according to five levels of consequence with Level 1 representing the level of least consequence and Level 5 representing the highest. Under its continuous disclosure requirements, the Company reports all incidents that are material to its operations.

Currency

Unless otherwise stated, all monetary amounts in this report are expressed in United States dollars (US$).

Forward-Looking Statements

This report contains certain forward-looking statements. The words 'anticipate', 'believe', 'expect', 'project', 'forecast', 'estimate', 'likely', 'intend', 'should', 'could', 'may', 'target', 'plan' and other similar expressions are intended to identify forward-looking statements. Indications of, and guidance on, future earnings and financial position and performance are also forward-looking statements.

Such forward-looking statements are not guarantees of future performance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of Medusa, and its officers, employees, agents and associates, that may cause actual results to differ materially from those expressed or implied in such statements.

Actual results, performance or outcomes may differ materially from any projections and forward-looking statements and the assumptions on which those assumptions are based.

You should not place undue reliance on forward-looking statements and neither Medusa nor any of its directors, employees, servants or agents assume any obligation to update such information.

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3. ENVIRONMENTAL PERFORMANCE

Partnerships with our communities

On 27 August 2010, as part of its commitment to environmental performance, the Board approved the establishment of a Safety, Health and Environment Committee. The role and responsibility of the Safety, Health and Environment Committee is set out in a formal charter adopted by the Board, which is summarised in the Corporate Governance Statement in the 2014 Annual Report.

The charter reflects the Company's commitment to achieving continuous improvement in targeting high safety and environmental performance and best practice.

The fiscal year (2013 – 2014) saw Philsaga continue to meet its mission and visions. All of our previous programmes and projects are progressing towards the specific goals of meeting the needs of our local stake holders. The programmes are tailored to suit the unique circumstances of our communities and run in parallel with the aims of the Local Government to address economic, educational and environmental advancement. Examples of community award presented to the Company for its community contributions are summarised below.

Photo: Awarded Fire Fighting Champion in the Provincial Fire Olympics 2014 held on June 19, 2014

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DATE GIVEN FROM PARTICULARS TO Certificates

06-October-2014 College of Engineering, University of the Philippines, Diliman

College of Engineering, University of the Philippines Diliman greatly appreciates your donation in Scholarship Program in the Field of Mining, Metallurgical, and Masterials Engineering

PMC and MMPRC Certificate of Appreciation

02-October-2014 DENR Office of the Regional Director

for the valuable contribution and support in the implementation of Adopt-an-Estero/Water Body Program

Philsaga Mining Corporation

Certificate of Appreciation

11-September-2014 Brgy. Consuelo , Bunawan, Agusan del Norte

(grateful recognition for valuable support to Navarro Memorial Central Elementary School)30th Bonok-bonok Maradhaw Karajaw Festival 2014


Certificate of Recognition

08-September-2014 San Joaquin Central School

invaluable support as donor of the renovated/repaired of 2 buildings

MMPRC Certificate of Appreciation

08-September-2014 San Joaquin Central School

invaluable support as donor of the renovated/repaired of 2 buildings



01-September-2014 Municipality of Loon support to rehabilitation of Loon Philsaga Mining Corporation


01-September-2014 Province of Bohol, Municipality of Loon

In grateful appreciation for the whole-hearted support in implementation of programs and projects of LNCES for the S.Y 2014-2015



01-September-2014 Loon National High School

in recognition to their valuable support in school repair of three buildings with seven classrooms and school supplies worth 1 million pesos AY 2014



30-July-2014 18th Sangguniang Bayan, Municipality of San Francisco

Resolution No. 108, Series of 2014 ( Expressing sincere and profound gratitude for the valuable and unending support to the local gov. of san franz)

PMC thru Atty. RCV Resolution No. 108, Series of 2014

23-July-2014 Garsuta Elementary School

Financial Support to Brigada Skwela (20, 000)


Certificate of Commendation

12-July-2014 Headquarters 401st Infantry (UNITY), Brigade, 4ID, Philippine Army

In grateful recognition and appreciation for his invaluable support to the accomplishment of the unit's mission in furtherance of AFP's Internal Peace and Security Plan "Bayanihan" toward peace and development.

Atty. Raul C. Villanueva (PMC President)

Plaque of Appreciation

01-July-2014 Headquarters 4th Military Intelligence Battalion. 4th Infantry (Diamond), Philippine Army

In grateful Appreciation for his invaluable support extended to the 4th Military Intelligence Battalion. 4th Infantry (Diamond), Philippine Army which significantly contributed to the accomplishment of the unit mission

Atty. Raul C. Villanueva (PMC President)


01-July-2014 Red Cross of the Philippines

for meritorious services rendered in furtherance of Red Cross ideals and purposes


Diploma of Service

29-June-2014 Caraga State University, College of Engineering and Information Technology

Industry Partner of Caraga State University


Plaque of Recognition

26-June-2014 DENR Donor Partner for 3 consecutive years 9 (2011-2014). Adopt-an-Estero/ Water Body System



06-June-2014 Municipal Disaster Risk Reduction and Management Office, Rosario

highly appreciation on your untiring support and generosity, which helps for the rescue operation of the management

Atty. Raul C. Villanueva (MMPRC executive director)

31-May-2014 Chamber of Mines Caraga Region , Inc

is a member of GOOD STANDING and entitled to all the rights and privileges embodied in the Constitution and by-Laws of the organization


Certificate of Membership

10-April-2014 Monkayo College of Arts, Sciences and Technology

In grateful appreciation of their untiring support and unfaltering commitment to MCAST through scholarship sponsorship



31-March-2014 Bunawan National High School

In grateful recognition and sincere appreciation for the valuable support extended to the two Science Investigatory Projects of BNHS



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29-March-2014 Wasian Elementary School

Merits and invaluable financial & material support rendered to projects and programs of WES

Atty. RCV Certificate of Recognition

28-March-2014 Tambis National High School

Continuous Support to Tambis NHS Philsaga Mining Corporation


28-March-2014 Singanan Elementary School

For the continued support that sustained the existence of SES for 6 years as Adopted School of Philsaga.

Engr. Ferdinand A. Cortes (Resident Manager, PMC)


27-March-2014 Dinuyan Elementary School (Barobo District II)

For valuable services rendered by levelling some portion of school ground and great financial support for honorarium of volunteer teachers



26-March-2014 Bayugan 3 National HS grateful and continuing support Philsaga Mining Corporation


26-March-2014 Tambis Central Elementary School

Support extended to the school that contributed much to the success of implementation of projects and programs



19-March-2014 Mindanao State University

for having served as host and partner of the Supervised On-the-Job Training Program of the School of Engineering Technology for Academic year 2-13-2014



27-January-2014 Bunawan Agusan del Sur

Resolution expressing profound thanks and gratitude to the Philsaga Mining Corporation, through Atty. Raul Villanueva, for the valuable assistance and services extended to the people of the Municipality of Bunawan ADS during the recent calamity that occur

PMC thru Atty. Raul Villanueva

Sangguniang Bayan Resolution No. 44-2014

12-January-2014 The Philippine Mine Safety and Environment Association

salutes PMC for the immediate positive response to PMSEA's activation of its Safety Networking Action Program (SNAP) during times of calamity disaster, particularly after the 2012 Compostela Valley (Pantukan) landslide and Negros Oriental earthquake


05-January-2014 Police Regional Office 13(CARAGA)Camp Rodriguez, Butuan City

in grateful recognition and appreciation of the invaluable support to the FESAGS 13 programs and activities for CY 2013



13-December-2013 DOLE Caraga Regional Office Butuan

active implementation of the Family Welfare Program (FWP) leading to the improving of the lives of their workers and increased productivity




for its commitment and active involvement in the conduct of Jobs Fair for the year 2013




for its implementation and consistent compliance with the provisions of Child Labor Law (RA 9231), as validated by the certification committee- Caraga Region (TCC- Caraga)



13-December-2013 Barangay Wasi-an, Rosario Agusan del Sur

in grateful appreciation for the effort and valuable support to the programs and projects



06-December-2013 Alpha Sigma Phi Philippines

for invaluable coordination/participation during the International Foundation Anniversary Celebration



06-December-2013 Barangay Alegria in grateful recognition and sincere appreciation to its valuable support extended to the Local Government Unit of Barangay Alegria


Plaque of Commendation

28-November-2013 DENR Ambago, Butuan City

In grateful recognition of the invaluable support extended in the successful conduct of Nature Exposure Program Module (NEPMod) Pilot Test Run



28-November-2013 Marfil National High School

For showing generous and whole hearted support to Marfil National High School by extending financial assistance through initiative and efforts for canteen repair



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22-November-2013 The Philippine Mine Safety and Environment Association , DENR- Mines GeoSciences Bureau

Most Improved Safety Performance Philsaga Mining Corporation

Most Improved Safety Performance


Safest Underground Operation Award Runner-up


Safest Underground Operation Award Runner-up

20-November-2013 Philippine Mine Safety and Environment Association

for exemplary voluntary service, dedication and commendation humanitarian support to PMSEA Pusong Minero Program



15-November-2013 Bayugan 3 Rosario Agusan del Sur

Mother's Class Philsaga Mining Corporation


13-November-2013 Phil. Red Cross Agusan del Sur Chapter

Significant assistance & generous support for basic services to the community( Bagyong Pablo)



12-November-2013 DSWD Caraga field office (Butuan City)

Sustainable Livelihood Program ( for the invaluable support and assistance granted to the Mhayahay Women Association



03-October-2013 DENR Caraga Adopt an estero/ Water Body Program Philsaga Mining Corporation


03-October-2013 DENR Caraga Adopt an estero/ Water Body Program MMPRC Certificate of Appreciation

28-September-2013 2nd Mining Community Symposium & Safety Competition

invaluable support and contribution to the success of the 2nd mining community symposium & safety competition



20-September-2013 DSWD Municipality of Rosaro, ADS

recognition in proving financial assistance on COSMETOLOGY Training for the Sustainable Livelihood Program



20-August-2013 Agusan del Sur Electric Cooperative, San Francisco, Agusan del Sur

For initiating the construction of 69KV transmission line from San Francisco to Rosario, Agusan del Sur. The benevolence and unequivocal support of PMC to the plans and programs of ASELCO has helped the cooperative realize its thrusts of providing reliable, efficient and custom friendly service to the member consumer



29-June-2013 Caraga Mine Environment Management Council and Mines and GeoSciences Bureau

invaluable support that leads to the success of the Environment Month Celebration 2013



28-June-2013 Sustainable Livelihood program

(Mahayahay Women's Association Training on Rice Trading and Cooperative Management cum Capability Building



08-June-2013 Wasian Elementary School

Merits and valuable contribution to the programs and projects



30-May-2013 San Francisco Pilot Central Elementary School

for active involvement, participation and support in the successful implementation of National Schools Maintenance Week dubbed as Brigada Eskwela 2013



28-May-2013 DepEd Caraga Administrative Region, Patin-ay

in recognition of valued support thru financial assistance to the SPED Congress 2013



20-March-2013 Bunawan National High School

for their invaluable and continuing supports to Bunawan National High School and to the Boy Scout of the Philippines- ADS council



20-March-2013 DepEd Caraga Administrative Region, Bunawan

in grateful recognition for their invaluable services and continuing support to Bunawan National High School



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19-March-2013 Tambis Elementary School

in grateful recognition and appreciation for the support extended to TCES for its vision and mission through financial assistance for teacher's 2012/13



19-March-2013 Bayugan 3 National High School

In grateful recognition of the invaluable support extended to Bayugan 3 NHS since its creation in 2001, that paved the way to the success of DepEd's thrusts, programs and projects



18-March-2013 Tambis National High School Commencement Exercises Philsaga Mining

Corporation Certificate of

Commendation

15-March-2013 Mindanao State University- Iligan Institute of Technology

for having been an active and a cooperative host and participant of the Supervised On-the-Job Training Program of the School of Engineering Technology


Token of Appreciation

12-March-2013 DOLE Caraga Good Standing Philsaga Mining Corporation

Tripartite Certificate of Compliance with Labor Standards

08-December-2012 Department of Labor and Employment, Caraga Region

for qualifying to the DOLE incentivizing Program and having voluntarily comply with labor laws and having implemented a much higher standards of excellence on their products and in their establishments as well as assisting non-complaint establishments to comply with the requirements set by law



23-November-2012 Bunawan Religious Organization , Ministers Action in School for Students, Bunawan ADS

in grateful recognition and sincere appreciation for the invaluable support during the Spiritual Emphasis Day



16-November-2012 Caraga Family Welfare Council, Inc., DOLE

for its excellent programs implementation under Medical Health Care, one of the ten dimensions of the Family Welfare Program


Best in Medical Health Care Category Award


Champion in Fire Fighting Competition PMC Fire Fighters Plaque of Recognition

30-September-2012 DENR, Environment Management Bureau

in recognition for excellent performance in the implementation of the "Adopt-an-Estero/creek/river Program"



27-September-2012 City Government of Surigao and Surigao City Tourism Council

An expression of gratitude and sincere appreciation for your commendable cooperation and support to the "Bonok-Bonok Maradjaw Karadjaw Festival 2012"



25-September-2012 Agusan del Sur Arts and Trades

in grateful recognition and appreciation to the invaluable services rendered to ASSAT



14-September-2012 Sta. Cruz National High School

as simple gratitude for the untiring effort and meritorious services extended to Sta. Cruz National high School



31-August-2012 For grateful Recognition of its invaluable support to all School needs and activities which lead to improve the performance of Maligaya National High School



28-July-2012 Pati-ay, Prosperidad, Agusan del Sur

in grateful acknowledgment of the whole-hearted support which enables the Philippine Red Cross Agusan del Sur chapter to effectively deliver its various services thereby contributing significantly to its success and prestige as an institution



28-July-2012 Red Cross of the Philippines Agusan del Sur Chapter

in grateful acknowledgment of the whole-hearted support which enables the PRCP-Agusan del Sur Chapter to effectively deliver its various services thereby contributing significantly to the success & prestigious institution



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30-June-2012 DENR, Mines and GeoSciences Bureau

in grateful recognition of the invaluable support an active participation to the 2013 Environment Month Celebration



14-June-2012 Philippine Society of Mining Engineers

for the valuable support as Platinum Sponsor during the occasion of the 2nd National Mining Engineers Convention


Token of Appreciation

08-June-2012 CENRO-ADS, Bunawan, Agusan del Sur

dedication and meritorious services in the Department

Col. Samuel Afdal Ret. Certificate of Appreciation

13-May-2012 Barangay Maligaya, Municipality of Rosario

In grateful recognition for the splendid and valuable contribution to Barangay Maligaya for the commitment, support and assistance in the conduct of improvement and developments after occurrence of calamity.

PMC thru Engr. Ferdinand A. Cortes


30-April-2012 National Police Commission, PNP, Police Regional Office 13(CARAGA)

for invaluable support extended to the various programs and projects of PNP office(Caraga) that greatly contributed for the accomplishments of its mission



30-March-2012 Bonifacio Elementary School

for the valuable support rendered as Benefactor of BES which contributed to the success of all school activities and improvement of academic performance and physical plant of the school



30-March-2012 For valuable support rendered as benefactor of Bonifacio Elementary School activities and improvements of academe performance and physical plant of the school



29-March-2012 Sta. Cruz National high School-Novele Annex

In grateful recognition for the countless effort and services extended for the success of projects and programs of SCNHS-Novele Annex.



29-March-2012 In grateful recognition for the countless effort and services extended for the success of projects and programs of Sta. Cruz. National High School, Novele, Rosario, Agusan Del Sur



03-March-2012 Saint Paul University Surigao ( Paulian Society of Mining Engineering Students)

grateful acknowledgement for the warm welcome and zealous acceptance during their Educational Tour



13-February-2012 Jesus Christ the Living Rock Fellowship (Trento Agusan del Sur)

Sponsorship of drum set Philsaga Mining Corporation


13-February-2012 Gratefully acknowledges sponsorship of Drum Set



11-February-2012 University of South-eastern Philippines (College of Engineering Mining Engineering Society)

For allowing the 4th year students of Mines to conduct fieldtrip and field study on Mineral Processing Plant



05-February-2012 Philhealth Silver sponsor for PhilHealth run Philsaga Mining Corporation


26-December-2011 Pastor Lito D Basnar, Church Pastor

For financial support extended that contribute much to the completion of Mt. Zion Baptist Church Building



13-December-2011 Jose T Cuyos, Municipal Mayor Rosario, Agisan Del sur

In grateful commendation for their support, commitment, and active participation and cooperation for adopt a tree initiative



29-November-2011 Marilou P Curugan, School head, National High School

Grateful recognition for the valuable resources extended for the success of projects and programs of Sta. Cruz National High School- Novele Annex, Novele, Rosario, Agusan Del Sur



23-April-2011 Ronald D Anteg, Punong Barangay

For continues assistance extended to Barangay Imelda, Bunawan, Agusan Del Sur and Support to the development of Barangay projects



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30-March-2011 Nilo B Montano EPS - District OIC

For the selfless effort and financial support to Trento National High School



25-March-2011 Atty. Generoso S Sansaet, CFC Provincial area coordinator

Insincere appreciation of their invaluable and untiring commitment and un wavering support to all activities undertaken by the couples for Christ Kids for Christ Ministry in the province of ADS especially during the Mindanao KIDS Village held in koronadal City South Cotabato and North Eastern Mindanao Regional Couple Coordinator and ROCKS facilitator conference hosted by the Province of Agusan Del Sur



22-March-2011 Avalota A Cejas, Head teacher

For support and involvement which spells resounding success of the 2011 Angel Festival competition financial Assistance and the clean-up green won on waste trash can



01-March-2011 Marilou P Curugan, School Head

For having served as host and partner of the supervised On- the- Job Training Program of the school of Engineering technology for Academic Year 2010- 2011


Plaque of appreciation

26-November-2010 Crucita Z Montejo -Taala, Schools Division Superintendent

For the full support extended to Trento National High School year 2009-2010 hi/her selfless efforts and personal sacrifices made the school realize its missions, gals, and objectives.



17-June-2010 Maria Valentia G Plaza, Provincial Governor

In grateful acknowledgement and appreciation for invaluable support and sincere involvement as Corporate Sponsor, Which greatly contributed to the success of the 18th Naliyagan Festival



16-March-2010 Marcelo P Salzar,DM Chancellor

For having been active and a cooperative host and partner of the supervised-on-the- Job Training program of the School Engineering technology Academic Year 2009-2010



05-February-2010 DOLE Caraga Regional Office

Child Labor-Free Establishment for not engaging in child labor and not using products or materials produced through the use of child labor


Child Labor-Free Establishment

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Managing Risk

The Board recognises that risk oversight is a core function of the Board that serves in protecting and enhancing shareholder wealth.

The Board has approved a Risk Management Policy that outlines the Company's policies for the oversight and management of material business risks and the design, implementation and monitoring of an internal compliance and control framework. A copy of the Risk Management Policy is available on the Company’s website at www.medusamining.com.au.

The Board is ultimately responsible for the oversight and management of material business risks. However, the design and implementation of the risk management policy and the day to day management of risk is the responsibility of the Managing Director, with the assistance of senior management.

The Managing Director is responsible for reporting directly to the Board on all matters associated with risk management and in fulfilling his duties. The Managing Director has unrestricted access to all company employees, contractors and records and may obtain independent expert advice on any matters he deems appropriate.

Whilst the Board acknowledges that it is responsible for the overall internal control framework, it is also cognisant that no cost-effective internal control system will preclude all errors and irregularities.

The Company's main business risks are determined by the nature of its business activities and assets. There are numerous factors (both external and internal) that could influence the risk profile of the Company.

External risk factors that could influence the risk profile of the Company include:

• exposure to gold price;

• exchange rate fluctuations;

• geographical location;

• weather;

• political issues;

• nature of operations;

• environmental management;

Internal risk factors that could influence the risk profile of the Company include:

• operational performance;

• compliance;

• commercial dealings and relationships;

• financial control;

• information systems and technology;

• people and skills; and

• quality of management.

The Company’s risk management system is continuously developing and will evolve with the evolution and growth of the Company’s activities.

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Occupational Health and Safety

The Safety Department has established a Company-wide system of identifying, measuring, appraising and controlling performance problems that may produce accident loss.

The Safety Department conducts:

1. Safety and Skills Training for employees 2. Apprenticeship Training 3. First Aid Training 4. Mine rescue training 5. Site Inspections

During the year the following activities were undertaken:

• a comprehensive Safety Review was undertaken of the Company's operations by an external consultant (this is the fourth audit completed and is be done annually);

• continued comprehensive annual health checks and drug testing for all employees;

• expanded training activities for all underground personnel;

• first aid training for all mine employees for use at work and in the home;

• mine rescue and fire fighting teams and equipment have been upgraded with the teams participating in annual national competitions; and

• regular safety meetings that emphasise workforce participation in ensuring safety and hazard minimisation.

The 12 month Lost Time Accident Frequency Rate to 30 June 2011 was 1.63, to 30 June 2012 was 1.04, to 30 June 2013 was 0.10 and to 30 June 2014 was 0.18 which is below industry standards for manually intensive, narrow vein, underground mines and shows the continuing progress made in Safety during the year.

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Table III Summarising The Safety Statistics

Description

FY 2014

FY 2013

FY 2012

FY 2011

FY 2010

FY 2009

FY 2008

FY 2007

Lost time injuries (1) 6 7 9 6 0 1

LTAFR (2) - Philsaga 0.18 0.10 1.0 1.6 2.2 1.7 0 0.6

LTAFR (WA U/G Gold Mining Industry) - 3.1 2.8 1.6 4.4 3.5

Notes:

(1) Does not include first aid injuries

(2) Per million man-hours worked

Graph showing the safety statistics

Graph Showing Lost Incident Frequency Rate – Philsaga

0

1

2

3

4

5

6

7

8

9

10

FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012

Lost time injuries

LTIFR - Philsaga

LTIFR - WA U/G Goldmining Industry

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

FY 2008 -2009 FY 2009 -2010 FY 2010 -2011 FY 2011 -2012

Lost Incident Frequency Rate-Philsaga

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Photo: Quarterly Basic Life Support and Standard First Aid Training

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Safety awards received by the Company are summarised below: SAFETY AWARDS RECEIVED (COVERAGE: 2010 to 2014)

NAME OF AWARD DATE AWARDED TYPE OF AWARD AWARDED BY

PROVINCIAL FIRE OLYMPICS 2014 FIRE FIGHTING CHAMPION AWARD

JUNE 9, 2014 PLAQUE BUREAU OF FIRE PROTECTION – AGUSAN DEL SUR

APPRECIATION AWARD June 19, 2014 PLAQUE DEPARTMENT OF INTERIOR AND LOCAL GOVERNMENT, BUREAU OF FIRE PROTECTION

CHAMPION IN FIRE FIGHTING COMPETITION November 16, 2012 PLAQUE THE PHILIPPINE MINE SAFETY AND ENVIRONMENT ASSOCIATION , DENR- MINES GEOSCIENCES BUREAU

APPRECIATION AWARD JULY 28, 2012 PLAQUE PHILIPPINE RED CROSS – AGUSAN DEL SUR CHAPTER

PARTICIPATION AWARD (FIRE SAFETY LECTURE AND DRILL) MARCH 26, 2012 CERTIFICATE BUREAU OF FIRE PROTECTION – AGUSAN DEL SUR

RECOGNITION AWARD (SPONSORSHIP) DEC 4, 2011 CERTIFICATE PHILIPPINE RED CROSS – AGUSAN DEL SUR CHAPTER

ATTENDANCE AWARD

(STANDARD FIRST AID AND BASIC LIFE SUPPORT TRAINING) DEC 2, 2011 CERTIFICATE PHILIPPINE RED CROSS – AGUSAN DEL SUR CHAPTER

COMPLETION AWARD

(FIRE VOLUNTEER/FIRE BRIGADE TRAINING) NOV 18, 2011 CERTIFICATE BUREAU OF FIRE PROTECTION – AGUSAN DEL SUR

FIRE EXTINGUISHMENT

COMPETITION (1ST PLACE) AUG 20, 2011 PLAQUE PSEM – CARAGA CHAPTER

COMMENDATION AWARD

(MINE RESCUE DEMONSTRATION) AUG 20, 2011 PLAQUE PSEM – CARAGA CHAPTER

APPRECIATION AWARD

AUG 20, 2011 CERTIFICATE PSEM – CARAGA CHAPTER

DIPLOMA OF SERVICE JULY, 2011 CERTIFICATE PHILIPPINE RED CROSS

FIRE DRILL AWARD SEPT 16, 2010 CERTIFICATE BUREAU OF FIRE PROTECTION – AGUSAN DEL SUR

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The Company operates a 24 hour, fully staffed and functional hospital with services available for Company personnel and their families, and other local residents.

Student vocational employment

The Company regularly provides vocational employment for student accountants, metallurgists, engineers and geologists from provincial universities and technical colleges. A number of these students have become employees of the Company after graduation.

Environmental responsibility

Environmental responsibility forms an important part of the Company's Code of Conduct. The Code of Conduct outlines the Company's commitment to appropriate and ethical corporate practices and describes how the Company expects its Directors and employees to behave in the conduct of the Company's business activities.

In accordance with the Code of Conduct, the Company:

• is fully aware of its obligations to comply with relevant statutory and regulatory requirements with respect to the environment; and

• monitors appropriately its environmental performance and is committed to ensuring proper rehabilitation is carried out on the sites where the Company has been conducting its exploration or operational activities.

One of the Company’s objectives is to undertake a baseline Carbon Footprint Analysis of the Co-O operations once the expansion of the mine and mill has been completed and operating at full capacity.

Environmental operating requirements

The Company's flagship Co-O Gold Project’s established processing facilities are subject to regular inspections by the Department of Environment and Natural Resources (“DENR”) through the Mines and Geosciences Bureau (“MGB”). The operations continue to maintain a high level of recognition for adherence to statutory requirements.

The Company through its Environmental Protection and Enhancement Program conducts environmental activities for the protection and conservation of the environment. Activities such as reforestation, enhancement, and mitigation and pollution control were among the major activities set by the company to comply with all regulation related to the environment and improve its environmental performance. Further, the company endeavours to be an environmentally and socially responsible mining company, hence adopting best mining practices from exploration to mine development to minimise environmental impacts. As part of the new Co-O Mill expansion, a detoxification plant has been constructed to ensure the tailings waste water will is benign and to maximise the recirculation of chemicals and water.

The Company's Co-O mining operation is underground thus resulting in very small surface footprint. Rehabilitation of disturbed areas around all operations is part of the Company's normal operating procedure. Water samples are taken on a monthly basis to monitor water quality in and around the operation's facilities and during each year over 1,600 samples are collected and analysed with the results submitted to the relevant authorities.

The Company has also adopted the Mining Forest, Green Philippines and Tree for Life Programmes as prescribed by the Philippines Government. The Company has its own nursery which produces

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local tree species for reforestation projects as well as the rubber tree seedlings used for the establishment of the rubber plantations.

The Co-O Gold Project operates under the terms of an Environmental Compliance Certificate (“ECC”) which was renewed by the Philippines Environmental Management Bureau (“EMB”) on 15 July 2009. An updated ECC for 2,500 tonnes per day was issued on 9 October 2012. The conditions of the updated ECC require the Company to:

(a) institute a number of commitments, mitigating measures and monitoring requirements to minimise any adverse impact of the project to the environment throughout its implementation, including:

• observing good vegetative practices, proper land use and sound soil management; • conducting an effective information, education and communication programme to inform and

educate all stakeholders, especially local residents, on the project’s mitigating measures; • rehabilitating roads with minimal land and ecological disturbance; and • establishing a reforestation and carbon sink programme to mitigate greenhouse gas emissions

of the project; • ensure that its mining and milling processing operations conform with the provisions of R.A.

No, 6969 (Toxic Substances and Hazardous and Nuclear Wastes Control Act of 1990), R.A. No. 9003 (Ecological Solid Waste Management Act of 2000), R.A. No. 9275 (Philippine Clean Water Act of 2004), and R.A. No. 8749 (Philippine Clean Air Act of 1999);

• comply with the environmental management and protection requirements of the Philippine Mining Act of 1995 (RA. No. 7942) and its Revised Implementing Rules and Regulations (D A, O). No, 96-40, as amended), as well as the pertinent provisions of the Memorandum of Agreement between the EMB and Mines and Geosciences Bureau (“MGB”) executed on 16 April 1998, which include:

• submitting an Environmental Protection and Enhancement Programme with the Final Mine Rehabilitation and/or Decommissioning Plan integrated thereto, to the MGB, for approval;

• setting up a Contingent Liability and Rehabilitation Fund and Environmental Trust Fund; • maintaining the existing Mine Environmental Protection and Enhancement Office to

competently handle the environmental aspects of the project; • establishing a Mine Rehabilitation Fund Committee and Multipartite Monitoring Team; • submitting a Social Development and Management Programme; and • designating a Community Relations Officer; • ensure that the Company's contractors and subcontractors properly comply with the relevant

conditions of the ECC; • protect the headwaters and natural springs/wells within the project site that are being utilised

as sources of potable water by the community; • Continued operation and maintenance of the Philsaga Hospital; • Each of Philsaga Mining Corporation (“PMC”) and Mindanao Mineral Processing and Refining

Corporation (“MMPRC”) shall have its own Environmental and Protection and Enhancement Programme (“EPP”) and Final Mine Rehabilitation/Monitoring and/or Decommissioning Plan (‘FMRDP”) with corresponding Mine Rehabilitation and/or Decommissioning Fund; and

• Each of PMC and MMPRC shall have its own Five-Year Social Development and Management Programme (“SDMP”) with the corresponding budget allocation of 1.5% of the operating costs.

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4. EDUCATION, COMMUNITY PARTICIPATION, PROGRAMMES AND BENEFITS

COMMITMENT

The Company, through Philsaga which was established in since 2001, has established an enviable record in the local communities in which it operates. This record is acknowledged by municipal and regional governments, and at a national level.

The vision of Philsaga is:

“To see the Filipino people improve their quality of life by addressing the unmet basic needs of the people at the provincial and village levels with special emphasis on the youth and the environment, by providing scholarship to the poor and deserving students by assisting them in their livelihood and for uplifting their social and economic needs”.

It is the Company’s objective to build on this record and strengthen reciprocal relationships between the Company, Philsaga and other organisations and the communities in which it operates. EDUCATION

“Through all our education initiatives, it is pleasing to report that over 9,840 students are enrolled at the schools supported by the Company.”

Scholarships

The Company support for two scholarship programmes, which commenced in 2003, has continued strongly during the year:

• Full education scholarships currently support 75 students;

• Half scholarships supports 40 students; and

• Educational assistance supports 17 Students.

Company schools and Adopt-a-School programme

During the year, the Company managed the Philsaga High School at the mill, supported the Upper Co-O Elementary School at the Co-O Mine and continued its “adopt–a-school” programme in which 23 schools participated. Corporate sponsorship also assisted in achieving its aims.

The following were achieved:

• Supported 42 teacher’s salaries and support for training seminars for teachers to upgrade their teaching skills, as well as provision of instructional materials;

• Since commencement of the Adopt-a-School programme more than 24 classrooms have been constructed including at the Philsaga High School and the Upper Co-O Elementary School;

• In conjunction with its partner agencies, provided school supplies for students; and

• Provided two daily return bus services for high school students from remote areas to attend high school.

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LIVELIHOOD PROJECTS

Rice production financing

This project has continued through the year aimed at progressively developing debt free farming communities through the provision of financing arrangements to qualified farmers. The programme is in its fifth cropping season and extends assistance to 100 beneficiaries covering 100 hectares of rice farms.

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Rice Growing

Photo: Rice Plantation

Rubber tree plantation re-afforestation

The Company provides interest free loans in the form of rubber tree seedlings and other inputs to indigenous landowners for the establishment of rubber plantations which provide income for 50-60 years from around year seven. This year approximately 120 hectares were planted comprising over 108,000 seedlings which were generated in the Company’s nurseries.

3 year old Rubber Trees

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Photo: Rubber Seedling Nursery

COMMUNITY DEVELOPMENT AND ASSISTANCE PROGRAMMES

The Company continued to provide assistance with a number for community-based projects.

Teacher training

The Company continued to support teacher salaries for volunteer teachers as well as teacher training to improve teacher knowledge and skills in conjunction with the Department of Education for the fifth year.

Day care centres

Support was provided for 12 day care centres which cater for children below six years old. Philsaga provides teacher and staff salaries, school supplies and instructional materials.

Community health

The Company provides general health and dental services to its employees and dependants and undertakes minor surgical and dental missions to nearby villages within its sphere of operation.

In addition to the 16 bed hospital at the Co-O Mine site, the Company provides a clinic at the mill site for employees and local residents.

Organic fruit tree programmes

The adoption of four sitios (or small villages) aims to provide a sustainable livelihood by planting of fruit trees suitable in the area and by encouraging the use of organic fertiliser over that of inorganic. The programs have the technical support of the Department of Agriculture and the Department of Trade and Industry conducts various financial seminars.

The Company’s nursery has produced over 10,000 fruit trees for distribution.

Institutional partnering

Philsaga frequently partners various local government departments such as Department of Social Work and Development, Department of Trade and Industry, Department of Agriculture and Department of Education to achieve common goals. The same goes for various indigenous cultural communities.

The Company has likewise created an informal partnership with Caraga State University by means of supporting all of its environmental and bio-diversity studies, monitoring and geo-tagging of the flora and fauna in the mill and mine site areas.

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Non-government organisation partnering

Philsaga is partnering three non-government organisations involved in community assistance

• A home for abandoned or orphaned children of local indigenous people;

• an orphanage for 26 boys aged 6 to 17 years where support is provided for the boys to develop small business skills; and

• care for the Elderly Foundation Inc. which provides comfort for 38 residents and 5 staff.

These Foundations care for the abandoned or sick senior members of the community, orphaned or neglected children, children of indigenous people who have been deserted by their families and a group of talented and skilled handicapped associates.

5. MISSION AND VALUES

Medusa’s Mission

Our business is producing gold in the Philippines. We strive to create growth by discovery, development and training of people.

Setting the Standards for Behaviour

The Company has a formal Code of Conduct, which outlines the Company's commitment to appropriate ethical and responsible decision making and corporate practices.

The Code of Conduct describes how the Company expects its Directors and employees to behave in the conduct of the Company's business activities.

The Company reviewed its Code of Conduct during 2014.

Values

Medusa continuously and consistently strives to balance key economic, social, environmental and ethical values at our projects. Every employee takes responsibility for their health and safety and are encouraged to work together as a team to create a workplace free of injury, illness and discrimination.

The Company provides its employees with training, education and skills to promote innovation, teamwork and accountability at work and at home. We embrace cultural diversity.

We form partnerships with local communities and organisations, sharing their environments, traditions and values.

Documents

MEDUSA MINING LIMITED · Medusa Mining Limited ... Medusa recognises that any safety and environmental incidents may have a negative impact on the ... Industry Partner of Caraga State