PERTH, Australia (Dow Jones) - Australia's Medusa Mining Ltd. is eyeing its second Philippines gold mining operation if an upcoming exploration program proves successful.

From July, Medusa will use six drilling rigs to upgrade resources at its Bananghilig project, Managing Director Geoff Davis said in an interview with Dow Jones Newswires.

A feasibility study is due for completion in the second half of next year, with the aim of justifying a new 200,000 ounce-a-year open cut mine with a minimum five-year life, he said.

It would be Medusa's second gold mine in the Philippines behind the Co-O venture, which is now producing at a rate of 100,000 oz a year following a recent expansion.

Bananghilig, which requires an upgrade of its 650,000 oz resource to justify the new mine, is part of Medusa's pipeline of projects that could expand production to 300,000-400,000 oz a year in the medium term, Davis said.

To help achieve the goal, Medusa is spending US$18 million on exploration this fiscal year ending June 30.

"We are probably one of the most aggressive explorers, for our size, anywhere in the world," Davis said, adding that spending will probably rise to US$20 million next year.

A lot of the funds will go toward finding extensions of Co-O's multiple underground gold veins.

Davis hopes to boost gold resources at Co-O by 60% to roughly 2 million ounces, which would justify an expansion to 200,000 oz a year.

Perth-based Medusa is part of a mining revival in the Philippines, fostered by the pro-development polices of President Gloria Macapagal-Arroyo, who came to power in 2001.

Several gold and nickel mines have started in recent years, while a feasibility study on Xstrata's mooted US$5.2 billion Tampakan copper-gold venture is due to be completed next month.

"Any producer who is looking to either consolidate the South East Asian gold space, or gain a footprint in it, is likely to look at Medusa," the broker said.

"I wouldn't disagree with that but we haven't had any formal approaches at this point," Davis said, in response to the Citi note.

"It's something we can't control - it's an open share register," he said.

China is one country that has already declared an interest in the Philippines mining sector via its current A$545 million bid for Melbourne-based Indophil Resources NL, part owner of Tampakan.

Medusa, which has six copper exploration targets in the country, has a market capitalization of about A$660 million.