COMO, WESTERN AUSTRALIA, Jul 29 (MARKET WIRE) —
Medusa Mining Limited (TSX: MLL)(ASX: MML)(AIM: MML) –

OVERVIEW:

Co-O MINE PRODUCTION

– Quarterly production of 25,012 ounces at an average grade of 13.65 g/t
at cash cost of US$182 per ounce and record annual production of 89,679
ounces

Co-O RESOURCES & RESOURCE DRILLING

– Indicated Resources increased by 4% to 603,000 ounces and Inferred
Resources increased by 36% to 898,000 ounces
– Drill gold results announced 30 June include 1.00 metre at 26.83 g/t,
2.00 metres at 23.35 g/t, 1.00 metre at 22.13 g/t, 1.20 metres at 28.74
g/t, 1.70 metres at 54.41 g/t, 1.95 metres at 36.39 g/t, 1.25 metres at
23.76 g/t and 4.00 metres at 64.54 g/t
– Reserve estimate scheduled for August 2010

BANANGHILIG DEPOSIT

– Granting of the Tambis MPSA covering the Bananghilig Deposit is well
advanced
– Drilling has commenced with one rig, with four more rigs expected to
follow by the end September

LINGIG COPPER

– Mineralisation located in two settings, basalt-hosted and diorite-hosted
– Recent results include 154.60 metres at 0.45% copper ending in
mineralisation and 86.00 metres at 0.12% copper
– Assessment of results to be undertaken before further drilling

SAUGON PROJECT

– Drilling currently underway with two rigs

FINANCIALS & CORPORATE

– Total cash and bullion at end of quarter of approximately US$62.0
million (unaudited)
– Appointment of Mr Peter R. Jones as Non-executive Chairman and Mr Peter
Hepburn-Brown as Executive Director Operations

(ii) The potential target size and grade is conceptual in nature, and
there has been insufficient exploration to define a mineral resource, and
it is uncertain if further exploration will result in the target being
defined as a mineral resource. Refer to Stock Exchange announcement dated
18 January 2010.

SNAPSHOT OF MEDUSA:

– Expanding gold producer operating solely in the Philippines
– Debt free and un-hedged
– Forecast production FY 2010/11 of 100,000 ozs.
– Long term cash costs at Co-O Mine circa US$190 per oz
– Co-O Mine conceptual target size 3 to 7 million ozs(ii)
– Mineral Resources comprise
— Co-O Mine: Indicated 603k ozs at 13.2 g/t gold; Inferred 898k ozs
at 9.6 g/t gold
— Bananghilig: Inferred 650k ozs at 1.3 g/t gold
– Probable Reserves : Co-O Mine 500k ozs @ 14.9 g/t gold
– Organic growth policy to potentially produce 300,000 to 400,000 ozs per
year
– Excellent exploration upside: high grade vein and disseminated bulk gold
targets, plus seven porphyry copper targets

Board of Directors
Peter R. Jones (Non-executive Chairman)
Geoffrey Davis (CEO)
Peter Hepburn-Brown (Director Operations)
Roy Daniel (CFO)
Robert Weinberg (Non-executive Director)
Andrew Teo (Non-executive Director)

Capital Structure:
Ordinary shares: 187,584,911
Unlisted options: 1,240,000

Listings:
ASX and AIM (Code: MML), TSX (Code: MLL)

Address and Contact Details:
PO Box 860
Canning Bridge WA 6153
Telephone: +618 9367 0601
Facsimile: +618 9367 0602
Email: admin@medusamining.com.au
Website: www.medusamining.com.au

PROJECT OVERVIEW

The locations of the Company’s projects are shown on Figures 1 and 2.

To view Figure 1, please visit the following link:

http://media3.marketwire.com/docs/mll0728fig1.pdf.

To view Figure 2, please visit the following link:

http://media3.marketwire.com/docs/mll0728fig2.pdf.

Co-O MINE

GOLD PRODUCTION

The production statistics for the June 2010 quarter with comparatives for
the March 2010, December 2009 and September 2009 quarters and Year to
Date are summarised in Table I.

Table I. Gold production statistics

—————————————————————————-

Qtr ended Qtr ended Qtr ended Qtr ended YTD 30 Jun
Period Unit 30 Jun 10 31 Mar 10 31 Dec 09 30 Sep 09 10
—————————————————————————-
Tonnes mined WMT 53,872 51,512 54,222 43,287 202,893
—————————————————————————-
Ore milled DMT 60,611 40,943 37,588 40,467 179,609
—————————————————————————-
Head grade gpt 13.65 20.61 18.68 14.78 16.52
—————————————————————————-
Recovery % 94% 94% 94% 94% 94%
—————————————————————————-
Gold produced
(1) ozs 25,012 25,505 21,108 18,054 89,679
—————————————————————————-
Cash costs (2) US$ $182 $180 $184 $193 $184
—————————————————————————-
Gold sold ozs 24,858 – 21,108 18,054 64,020
—————————————————————————-
Average gold
price received US$ $1,182 – $1,111 $975 $1,100
—————————————————————————-

Note:

(1) Gold production, is actual gold poured during the period and does not
reflect changes in the balance of gold in circuit
(2) Cash costs refers to the cost of gold mined (net of development costs),
produced but not necessarily sold and includes royalties and local taxes
of US$46 per ounce for the Jun 2010 qtr (Mar 10 qtr: US$48 per oz, Dec
09 qtr: US$48 per oz, Sep 2009 qtr: US$34 per ounce, YTD: US$46 per
ounce)

Gold production for the quarter was 25,012 ounces at an average grade
of 13.65 g/t gold and cash costs of US$182 per ounce. Annual production
for the year ended June 2010 was 89,679 ounces at an average grade of
16.52 g/t gold and cash costs of US$184 per ounce, inclusive of taxes,
royalties and production taxes of US$46 per ounce.

Medusa an unhedged gold producer, sold 24,858 ounces of gold at an
average price of US$1,182 during the quarter.

The increased tonnage processed reflects increased throughput capacity of
the mill. The reduction in grade compared to the previous quarter
reflects less development in areas with black leader (which are being set
up for longhole stoping) and the use of some of the stockpiled material.
The grade is within the anticipated long term grade range of 12 to 15 g/t
gold.

The forecast for the forthcoming fiscal year is production of 100,000
ounces at anticipated cash costs of US$190 per ounce.

To view Graph 1, please visit the following link:

http://media3.marketwire.com/docs/mll0728graph1.pdf.

Co-O MINE

Mineral Resource Estimate

A new mineral resource estimate was completed by Cube Consulting Pty Ltd
of Perth, Western Australia (see announcement of 22 July 2010) resulting
in the Indicated Resources increasing by 4% and the Inferred Resources
increasing by 36% as summarised in Table II.

Table II. Co-O Mine mineral resource estimate to 21 June 2010

—————————————————————————-

greater than 0 g/t gold
Category ——————————————
tonnes g/t gold ounces
—————————————————————————-
Indicated 1,418,000 13.2 603,000
—————————————————————————-
Inferred 2,905,000 9.6 898,000
—————————————————————————-

Notes:

– A lower cut-off of 0 g/t gold has been applied
– Variable upper cuts up to 200 g/t gold has been applied to different
veins
– Rounding to the nearest 1,000 may result in some slight discrepancies in
totals.

Mine Development

The new 60 metre inclined shaft (6W) to the Level 6 has reached final
depth and development on Level 6 will commence during the next quarter
(Fig. 4).

A vertical siter or shaft location drill hole to 500 metres depth has
been completed to the north of the adit entrances (Fig. 4) in preparation
for sinking a vertical ventilation shaft, the Mid Royal Shaft, initially
to Level 2. This shaft will also allow rationalisation of services into
the mine (power, water, compressed air). Preparations for shaft sinking
is expected to commence during the next quarter.

The Level 3 drive from the Baguio Shaft to below the Tinago Shaft has
been completed and preparations are under way to commence an Alimak rise
to link Level 3 to the Tinago Shaft. This will then act as the main
ventilation exhaust for the western end of the mine. It is intended that
a power line will be installed to the Tinago Shaft.

Mine Production

Production has continued uninterrupted at the mine. Surface stockpiles
are approximately 20,000 tonnes which were drawn down by around 7,000
tonnes.

The fitting of the skip and headframe to the vertical Ventilation Shaft
near the Baguio Shaft to haul mineralised material from above Level 1 has
been completed with haulage commenced.

Mill Expansion

The mill expansion comprised a new primary, secondary and tertiary
crushing circuit with a washing and screening section. The fine ore is
stored in two 800 tonne capacity fine ore bins.

Mill operation during the period was in line with management
expectations. Increased efficiencies were achieved after smaller diameter
grinding balls were loaded into the ball mill in line with the finer feed
size now available. The milling averaged 666 tonnes per day compared to
454 tonnes per day in the previous quarter, an increase of 46%.

A thickener unit is nearing completion. Construction of a new water
storage tank is expected to commence during the next quarter followed by
two new leach tanks.

Tailings Dam

Construction of a new eight year life tailings dam has been completed.

Power

Construction has commenced on the dedicated power line from the San
Francisco sub-station to the mill. It is anticipated that this will be
completed in the December quarter 2010.

RESOURCE DRILLING

Discussion

Figure 4 (attached) shows all the new MD series diamond drill holes from
MD 241 to MD 260 totalling 13,993 metres which have been completed around
the Co-O Mine since 29 March 2010. Results are awaited for MDs 258 and
259. Figure 5 (attached) shows the underground drilling totalling 4,865
metres from all levels in the mine.

A possible new vein(s) discovery is indicated by intersections to the
north of the Royal Vein which have been returned from MED 244 (0.40
metres at 17.20 g/t gold and 1.00 metre at 3.14 g/t gold), MED 252 (0.25
metres at 16.87 g/t gold and 0.20 metres at 16.11 g/t gold), and EXP 028
(0.35 metres at 10.59 g/t gold, 1.00 metre at 1.37 g/t gold and 0.20
metres at 2.39 g/t gold) in conjunction with a deep intersection in MD 68
which intersected 3.10 metres at 15.37 g/t gold at approximately 500
metres below Level 1 (announced 4 June 2008).

An increasing amount of resource drilling will be undertaken from
underground allowing some of the surface rigs to be re-allocated to the
Bananghilig Project.

Drill results

Table III lists the surface diamond drilling results greater than 3 g/t
gold over greater than 0.5 metres from the Co-O Mine for new drill holes
from MD 241 to MD 260 as well as results not previously reported for one
earlier hole as announced on 30 June 2010. Other reports containing
intersections for holes numbered MD 217 to 240 were announced on 29 March
2010 and for holes below MD 217 were announced on 18 January 2010, 1 July
2009, 1 December 2008 and 12 August 2008. In 2007 the announcements are
dated 9 July, 15 May and 28 February. The announcement of 30 June 2010
also contains information regarding drill hole surveying techniques and
comments on vein interpretation, resource conversion methodologies and
sampling and assaying procedures.

Table IV lists the underground drill holes from Levels 2, 3, 4 and 5.

The announcement of 30 June 2010 contains more detailed results for
surface and underground drill holes down to 0.2 metres wide as
underground development shows that in many cases as the veins approach
cross-cutting faults, they narrow down on both sides of the fault over 5
to 10 metres before widening out, and hence the narrower intersections
are important in defining vein continuity. There is also some pinching
and swelling of veins along strike and some cross-faulting. Most drilling
is sub-parallel to the fault directions and rarely intersects the faults,
which are subsequently identified by underground on-vein development.

Table III. Co-O surface drill hole results greater than 3 g/t gold and
greater than 0.5 metres downhole for new holes MD 241 to MD 260 and
complete assays for previously partly reported hole designated (i)

—————————————————————————-

Grade
Hole Dip Azimuth From Width (uncut)
number East North (degrees) (degrees) (metres) (metres) (g/t gold)
—————————————————————————-
MD 237(i) 613812 913203 -49 176 299.50 1.15 14.10 (i)
——————————
331.20 1.00 26.83 (i)
—————————————————————————-
MD 241 614136 912992 -45 193 278.10 2.00 23.35
——————————
308.90 0.60 35.45
——————————
404.80 0.65 7.16
—————————————————————————-
MD 244 614130 913231 -60 180 77.75 1.00 3.14
——————————
205.20 0.50 4.52
——————————
256.40 0.75 17.95
——————————
276.80 1.00 7.60
——————————
356.50 0.80 15.52
——————————
380.10 1.00 22.13
—————————————————————————-
MD 245 613721 913204 -47 180 298.60 0.95 8.82 (i)
——————————
MD 247 613640 913131 -45 191 376.00 1.15 5.50 (i)
—————————————————————————-
MD 252 614292 913157 -45 200 220.90 1.50 5.86 (i)
——————————
441.70 0.60 4.23 (i)
——————————
495.30 1.20 28.74 (i)
——————————
531.30 1.40 4.54 (i)
——————————
MD 260 613450 913207 -67 148 413.50 1.00 6.57 (i)
—————————————————————————-

Notes:

(i) Intersection widths are downhole drill widths not true widths
(ii) Assays denoted by (i) are by Philsaga Mining Corporation’s laboratory,
all other assays are by McPhar Geoservices Inc. in Manila
(iii) Grid coordinates based on the Philippine Reference System 92.

Table IV. Co-O underground drill hole results greater than 3 g/t gold
and greater than 0.5 metres downhole

—————————————————————————-

Grade
Hole Dip Azimuth From Width (uncut)
number East North (degrees) (degrees) (metres) (metres) (g/t gold)
—————————————————————————-
LEVEL 2
—————————————————————————-
L2-014 613350 912801 3 0 86.00 0.70 38.16 (i)
——————————
152.05 0.65 18.33 (i)
—————————————————————————-
L2-015 613368 912785 3 10 86.00 0.70 29.00 (i)
——————————
89.65 0.30 13.10 (i)
——————————
159.70 0.35 7.80 (i)
—————————————————————————-
LEVEL 3
—————————————————————————-
L3-003 613258 912846 3 59 3.20 1.55 4.31 (i)
——————————
L3-004 613376 912985 3 327 21.20 0.90 3.09 (i)
—————————————————————————-
L3-005 613477 912930 3 42 87.25 1.35 7.20 (i)
—————————————————————————-
L3-008 613913 913028 3 23 103.10 4.20 4.98 (i)
—————————————————————————-
LEVEL 4
—————————————————————————-
L4-002 613923 912905 3 157 56.25 0.75 5.03 (i)
—————————————————————————-
L4-004 613923 912905 3 157 Wait
—————————————————————————-
L4-005 613758 912749 3 32 22.30 1.70 54.41 (i)
——————————
27.70 0.90 10.07 (i)
—————————————————————————-
L4-006 613760 912748 3 47 31.50 1.10 11.53 (i)
——————————
137.20 1.20 5.41 (i)
—————————————————————————-
L4-007 613757 912749 3 352 12.60 1.00 10.22 (i)
—————————————————————————-
LEVEL 5
—————————————————————————-
L5-001 613880 912749 -60 346 29.95 1.95 35.39 (i)
——————————
39.45 1.25 23.76 (i)
——————————
44.80 4.00 64.53 (i)
——————————
51.45 1.25 5.36 (i)
—————————————————————————-
L5-003 613888 912794 3 0 57.40 2.30 12.40 (i)
——————————
99.00 2.00 3.70 (i)
—————————————————————————-
L5-004 613885 912794 3 342 90.50 3.10 14.61 (i)
—————————————————————————-
L5-005 613883 912793 3 330 55.80 2.05 6.43 (i)
——————————
58.50 0.60 14.37 (i)
——————————
258.90 1.40 3.20 (i)
—————————————————————————-
L5-006 613885 912789 -70 168 48.20 0.70 56.87 (i)
——————————
50.45 2.80 18.11 (i)
—————————————————————————-
L5-007 613885 912789 -56 168 37.75 6.50 12.24 (i)
—————————————————————————-

Notes:

(i) Intersection widths are downhole drill widths not true widths
(ii) Assays denoted by (i) are by Philsaga Mining Corporation’s laboratory,
all other assays are by McPhar Geoservices Inc. in Manila
(iii) Grid coordinates based on the Philippine Reference System 92.

Co-O CONCEPTUAL TARGET SIZE

As announced on 18 January 2010, a conceptual target size(ii) for the
Co-O Mine was estimated at between 3 and 7 million ounces. Further
details are provided in the above announcements.

Figure 6 (attached) was included in the announcement of 22 July 2010 and
shows a composite longitudinal projection of all the drill hole
intersection grades below Level 6 (250 metres below Level 1). These
intersections strongly support the concept that mineralisation extends to
a depth of 500 metres below Level 1, and also show that the
mineralisation occurs below the 500 metre level.

It should be noted that the conceptual target size(ii) includes the
current resource estimate. The mine has produced approximately 290,000
ounces to 30 June 2010.

(ii) The potential target size and grade is conceptual in nature, and
there has been insufficient exploration to define a mineral resource, and
it is uncertain if further exploration will result in the target being
defined as a mineral resource.

Co-O REGIONAL DRILLING

Using the Co-O Mine as a model, drill testing commenced in the September
quarter of 2009 on veins in the vicinity of the Co-O Mine.

The Co-O vein system outcrops at surface on the western side of the
Oriental Fault, where it was first discovered. The veins at surface
rarely exceed 0.5 metres width and generally assay around 1 to 5 g/t gold
(with possibly some supergene enrichment). Gold values start to increase
significantly approximately 80 metres below surface.

Figure 7 (attached) shows the positions of the 28 holes completed to
date. Results for EXP 001 to 012 were announced on 10 December 2009 and
an update to EXP 022 was provided on 29 March 2010. A total of 5,189.6
metres have been completed in the seven holes EXP 022 to 028.

Table V shows the results greater than 1 g/t gold for holes EXP 022 to
028.

Table V. Co-O regional drill hole results greater than 1 g/t gold and
greater than 0.2 metres downhole for holes EXP 022-028

—————————————————————————-

Grade
Hole Dip Azimuth From Width (uncut)
number East North (degrees) (degrees) (metres) (metres) (g/t gold)
—————————————————————————-
EXP 024 613551 914075 -47 270 547.40 1.00 2.48 (i)
—————————————————————————-
EXP 027 613941 913554 -55 155 683.00 0.25 2.12 (i)
—————————————————————————-
EXP 028 614180 913559 -56 157 704.70 0.35 10.59 (i)
—————————————————————————-
707.80 1.00 1.37 (i)
——————————
724.90 0.20 2.39 (i)
—————————————————————————-

Notes:

(i) Intersection widths are downhole drill widths not true widths
(ii) Assays denoted by (i) are by Philsaga Mining Corporation’s laboratory,
all other assays are by McPhar Geoservices Inc. in Manila
(iii) Grid coordinates based on the Philippine Reference System 92.

To view Figure 3, please visit the following link:

http://media3.marketwire.com/docs/mll0728fig3.pdf.

To view Figure 4, please visit the following link:

http://media3.marketwire.com/docs/mll0728fig4.pdf.

To view Figure 5, please visit the following link:

http://media3.marketwire.com/docs/mll0728fig5.pdf.

To view Figure 6, please visit the following link:

http://media3.marketwire.com/docs/mll0728fig6.pdf.

To view Figure 7, please visit the following link:

http://media3.marketwire.com/docs/mll0728fig7.pdf.

LINGIG COPPER PROJECT

The Lingig prospect is covered by a Mines Operating Agreement (“MOA”)
over Mineral Production Sharing Agreement (“MPSA”) application number
APSA 024-XIII comprising two parcels situated to the north and to the
east (the Lingig porphyry copper prospect) of the Co-O Mine and millsite
as shown on Figure 2.

Drilling has intersected copper mineralisation in two settings and
results to date are shown on Figure 8. Additional information is
contained in the announcement dated 7 May 2010.

Basalt-hosted mineralisation (now called the Basalt Prospect) is hosted
within the basaltic and doleritic rocks around the 1974 discovery area.
This mineralisation appears to form a large north plunging body presumed
to be still open to the north down-plunge. The most recent and most
northerly drill hole returned 154.60 metres at 0.45% copper but was
abandoned in strong mineralisation. It is interpreted that the bottom of
this mineralisation may be faulted-off by the underlying thrust fault and
the rest of the mineralised zone is yet to be located. Further drilling
is required.

Breccia-hosted mineralisation (now called the Breccia Prospect) has
continued to be located associated with intense biotitic alteration in
dioritic, polylithic hydrothermal breccias.

The breccia body is tabular and open to the south with copper
mineralisation in intensely altered hydrothermal breccias with the most
recent intersections of 154.7 metres at 0.19% copper in hole LIN 37 and
86.0 metres of 0.12% copper in hole LIN 40. Further drilling is required.

TAMBIS-BAROBO REGION

The Tambis project, currently comprising the Bananghilig Gold Deposit and
the Kamarangan copper porphyry prospect (Fig. 2), is operated under a
Mining Agreement with Philex Gold Philippines Inc. over MPSA application
APSA-000022-XIII which covers 6,262 hectares (includes the Bananghilig
Gold Project and the Kamarangan copper-molybdenum prospect). Processing
of the application is well advanced.

Banaghilig Gold Project

Figure 2 shows the location of the Bananghilig Deposit. Drilling has
commenced at site and by the end of September it is intended that there
will be five rigs operating with the aim to increase the resources to a
level which could provide a 5 year minimum mining life at a production
rate of approximately 200,000 ounces per year.

Usa Porphyry Copper-Gold Prospect

Background

The Usa prospect located within Mineral Production Sharing Agreement
application (“APSA”) XIII-00077. The Company has a Memorandum of
Agreement with Corplex Resources Inc (“Corplex”) whereby:

– Corplex will receive a 4% gross royalty on all production, or
– in the event of a major discovery and completion of a Scoping Study
which demonstrates at least a five year mine life, Corplex can elect to,

(a) buy back a 30% interest by re-imbursing to the Company a sum equal to
four times the expenditure on the tenement; and
(b) contribute to 30% of all on-going expenditure from the point of buy-back
forwards.
(c) should Corplex elect not to contribute to all on-going expenditure, then
Corplex can elect once only to dilute to a 15% non-contributing free
carried interest to commencement of production, at which point the
Company shall provide a loan to Corplex to fund its 15% interest; or
(d) in the event that Corplex does not exercise the buy-back, then Corplex
will maintain its 4% gross royalty on production.

There are indications that the prospect extends eastwards into APSA
XIII-00098 which is owned by Mindanao Philcord Mining Corporation which
will receive a 1% Net Profits Interest from any production.

Regional Setting

Detailed information on the Usa prospect is contained in the announcement
dated 5 May 2010 and Figure 2 shows the Usa prospect location. Figure 9
shows the detailed geology and geochemistry contours of rock chip
samples.

The Usa prospect is located adjacent to the west side of the Barobo Fault
corridor. This fault is parallel to the Philippine Rift Fault located
approximately 30 kilometres to the west of the Usa prospect. The Barobo
Fault corridor has numerous gold prospects already located along or
adjacent to it, including Guinhalinan, Umbon, Matanog and Alikway.

Local Geology and Mineralisation

The geology consists of a mineralised and altered diorite complex which
is intruding andesitic volcanics, older limestone and calcareous
sediments. The setting and style of mineralisation are very similar to
that at the Kamarangan copper-molybdenum porphyry prospect to the north
where chalcopyrite and magnetite bearing diorite was intersected over
several hundred metres in two holes during a scout diamond drilling
completed in late 2008 to early 2009 (see announcement dated 29 May
2009).

The fine- to medium-grained diorite is variably but strongly phyllic
altered (white clay, sericite and pyrite) with variably dispersed
hairline veinlets of fine-grained magnetite. Mineralisation is
predominantly pyrite occurring as fracture filling grains disseminated
grains and vein infill. The pyrite is accompanied with bornite, and with
occasional chalcopyrite. Malachite stained limestone and calcareous
sediments with sphalerite, pyrite and bornite veins, and weakly
mineralised pyrite and chalcopyrite magnetite have been noted in drainage
float samples to the north of the diorite.

Contouring of the rock chip copper results (greater than 700 ppm Cu) and
gold results (greater than 0.1 g/t Au) are shown on Figure 9 which are in
close spatial proximity. The relationship of the diorite body to the
surrounding rocks suggests that it has been recently uncovered and is not
deeply eroded.

Artisanal mining activity with small but consistent recoveries is common
in the drainages overlying and downstream of the mineralised altered
diorite. Less active artisanal mining activity is noted to the north
where chlorite and clay altered, sulphide veined andesitic units occur.

A large grid based soil sampling program designed to delineate the extent
of the gold and copper mineralisation should be completed during the
September quarter.

ANOLING

The Mines Operating Agreement with Alcorn Gold Resources Inc. covers MPSA
application number 039-XIII situated approximately 8 kilometres north
from the millsite as shown on Figure 2. Processing of the MPSA is
progressing.

Mapping and sampling is continuing. Drilling will recommence when the
MPSA is granted.

SAUGON PROJECT

Drilling commenced at Saugon during the quarter with two drilling rigs. A
detailed summary of previous exploration conducted in 2004 was published
on 20 April 2010.

FIRST HIT VEIN

Discussion

Figure 10 shows the regional geology, location of the First Hit Vein, and
the Paradise and Mabas Prospects.

Work in 2004 involved drilling of the First Hit Vein in conjunction with
underground development via a 30 metre deep 60 degrees inclined winze
down the vein-breccia to assist in understanding the mineralisation. By
chance, the winze was sunk at a contact between well banded and high
grade vein on the north wall and polylithic hydrothermal quartz breccias
on the south wall containing fragments of various different vein and
silica types, and with lower grade gold values.

The 2004 drilling indicated three zones of mineralisation as being partly
developed footwall and hanging wall zones and a well developed central
zone (First Hit Vein) which has the highest grades and a more prominent
silver-polymetallic association.

Regional Setting

Subsequent to the drilling in 2004, an aeromagnetic survey was completed
which showed the First Hit Vein set are on the northern edge of a large,
northeast-trending demagnetised zone over 2,000 metres wide and
approximately 8,000 metres long, part of which is shown on Figure 10. A
number of features within this zone were interpreted to be suggestive of
intrusive bodies, possibly porphyry copper-related. Field work has
established that outcropping areas of the northern side of this zone show
intense clay-pyrite alteration, which is presumed to extend across the
bulk of the zone under cover to the south.

Sections of the demagnetised zone are covered by younger sediments, some
grits and shales at the base and capped by white, semi-massive to massive
limestone. This appears to be a remnant of the same younger sequence that
occurs elsewhere to the north in the Company’s tenements.

Drilling

Drilling has re-commenced at the First Hit Vein with two rigs, and will
test additional targets that have been outlined by recent field work. As
the 2004 drill holes were not down hole surveyed in the early drilling,
some holes will be repeated to establish the geometry of the mineralised
system before step-out drilling is undertaken. Two rigs will be involved
in the programme which will be results-driven over the next 4 to 6 months.

Table I. First Hit Vein drill hole results greater than 3 g/t gold and
greater than 0.2 metres downhole

—————————————————————————-

Grade
(uncut)
(g/t gold,
g/t Ag, %
Hole Dip Azimuth From Width Cu, %Pb,
number East North (degrees) (degrees) (metres) (metres) %Zn)
—————————————————————————-
35.75, 544,
0.38, 1.88,
SDDH 2B 616944 899267 -55 316 108.50 1.00 1.62
—————————————————————————-
9.76, 142,
0.30, 1.18,
SDDH 4 616912 899318 -59 290 89.50 0.20 0.40
—————————————————————————-
3.26, 32,
0.20, 0.20,
SDDH 5 616964 899344 -54 345 71.80 0.95 0.61
—————————————————————————-
4.97, 78,
0.74, 1.51,
SDDH 9 616979 899250 -67 319 176.20 0.20 1.54
—————————————————————————-
16.30, 244,
1.32, 2.65,
SDDH 27 616921 899334 -73 300 60.80 1.00 4.97
——————————
9.63, not
71.05 5.95 assayed
—————————————————————————-
20.54, not
SDDH 28 616922 899307 -70 300 89.95 2.05 assayed
—————————————————————————-
15.32, not
SDDH 29 616961 899315 -72 300 112.25 0.90 assayed
—————————————————————————-
3.94, not
SDDH 31 616922 899254 -75 315 174.25 0.75 assayed
—————————————————————————-
6.87, not
SDDH 34 617033 899279 -65 310 173.80 0.40 assayed
—————————————————————————-
5.05, not
SDDH 35 617000 899305 -65 310 128.20 0.85 assayed
—————————————————————————-

Notes:

(i) Intersection widths are downhole drill widths not true widths;
(ii) All assays are by McPhar Geoservices Inc laboratory in Manila;
(iii) Grid coordinates based on the Philippine Reference System 92;
(iv) The drill holes have not been downhole surveyed.

OTHER PROSPECTS

Paradise Prospect

Holes SDDH 19 and 22 were drilled at the Paradise Prospect which consists
of an outcropping silica-barite cap with anomalous gold values. Drilling
encountered a 1.60 metre wide barite vein containing 0.89 g/t gold.
Extensive clay-pyrite alteration of volcanics was uncovered in road
cuttings to the south and northeast of the silica outcrops.

Mabas Prospect

Holes SDDH 15, 16, 18, 20, 21, 23 and 24 were drilled at the Mabas
Prospect where there were some existing workings. The best drill-hole
intersection below the workings was 1 metre at 5.64 g/t gold in SDDH 24.
The workings were re-opened and developed. The mineralisation consisted
of generally black chalcedonic silica with some lead-zinc mineralisation
and gold values in the 6 to 8 g/t range. The silica appeared to be
confined to a lens or boudin within the Mabas Shear zone.

Mabas South Prospect

The Mabas South Prospect has been discovered by recent field work, and
whilst a narrow vein at less than 0.5 metres wide, has consistently
returned gold values around 10 g/t gold in most samples. This vein will
be drilled to test for grade and thickness at depth.

To view Figure 8, please visit the following link:

http://media3.marketwire.com/docs/mll0728fig8.pdf.

To view Figure 9, please visit the following link:

http://media3.marketwire.com/docs/mll0728fig9.pdf.

To view Figure 10, please visit the following link:

http://media3.marketwire.com/docs/mll0728fig10.pdf.

FINANCIALS (unaudited)

As at 30 June 2010, the Company which is debt free, had total cash and
bullion of approximately US$62.0 million (31 Mar 2010: US$48.1 million);

During the quarter,

– the Company sold 24,858 ounces of gold at an average price of US$1,182
(No gold was sold during the Mar 2010 qtr). Year to date gold proceeds
totalled US$70.4 million from the sale of 64,020 ounces of gold at an
average price of US$1,100 per ounce);
– incurred exploration expenditure of US$5.4 million (Mar 2010 qtr: US$4.3
million; YTD:US$18.9 million);
– spent US$1.8 million on capital works associated with the mine/mill
expansion and sustaining capital (Mar 2010 qtr: US$1.8 million); YTD
US$7.7 million); and
– incurred US$2.0 million in capitalised mine development (inclusive of
shaft sinking) costs (Mar 2010 qtr: US$1.8 million; YTD: US$7.9
million).

CORPORATE

Mr Peter R. Jones was appointed Non-executive Chairman of
the Company on 8 July 2010 and Mr Peter Hepburn-Brown was appointed as
Executive Director – Operations.

Managing Director, Geoff Davis commented:

“I am pleased with this quarter’s production of 25,012 ounces and the
record production for the year of 89,679 ounces. Surface stockpiles and
broken ore underground augur well for achieving our production targets.

Following recent completion of the Co-O Mine two phase expansion program
to the production level of 100,000 annualised ounces, we will focus on
stabilising the operations for the next two quarters at production levels
around 25,000 ounces per quarter for the first half and then assess the
possibility of incremental production increases for the second half.

The Company is pleased with the new resource estimate at Co-O and intends
to maintain the annual total resources estimate at current levels, but
will actively continue drilling to seek exensional mineralisation outside
the current mine limits.

An exploration budget of US$20 million for the forthcoming year will
ensure a very active programme. Drilling has commenced on schedule at the
extensive Bananghilig Deposit and is underway at Saugon, highlighting
both the short and long term potential of the Company.”

Information in this report relating to Exploration Results has been
reviewed and is based on information compiled by Mr Geoff Davis, who is a
member of The Australian Institute of Geoscientists. Mr Davis is the
Managing Director of Medusa Mining Limited and has sufficient experience
which is relevant to the style of mineralisation and type of deposits
under consideration and to the activity which he is undertaking to
qualify as a “Competent Person” as defined in the 2004 Edition of the
“Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves” and is a “Qualified Person” as defined in
“National Instrument 43-101″ of the Canadian Securities Administrators.
Mr Davis consents to the inclusion in the report of the matters based on
his information in the form and context in which it appears.

Information in this report relating to Mineral Resources has been
estimated and compiled by Mark Zammit of Cube Consulting Pty Ltd of
Perth, Western Australia. Mr Zammit is a member of The Australasian
Institute of Mining & Metallurgy and has sufficient experience that is
relevant to the style of mineralisation and type of deposit under
consideration and to the activity which he is undertaking to qualify as a
Competent Person as defined in the 2004 Edition of the “Australasian Code
for Reporting of Exploration Results, Mineral Resources and Ore Reserves”
and is a “Qualified Person” as defined in “National Instrument 43-101″ of
the Canadian Securities Administrators. Mr Zammit consents to the
inclusion in the report of the matters based on his information in the
form and context in which it appears.

Information in this report relating to Ore Reserves is based on
information compiled by Declan Franzmann, B Eng (Mining), MAusIMM. Mr
Franzmann is a full-time employee of Crosscut Consulting. Mr Franzman has
sufficient experience which is relevant to the style of mineralisation
and type of deposit under consideration and to the activity which they
are undertaking to qualify as Competent Persons as defined in the 2004
Edition of the “Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves” and is a “Qualified Person” as
defined in “National Instrument 43-101″ of the Canadian Securities
Administrators. Mr Franzmann consents to the inclusion in the report of
the matters based on his information in the form and context in which it
appears.

Refer to the revised Technical Report which was filed on www.sedar.com in
March 2010 for further discussion of the Co-O Deposit’s geology,
structural controls, drilling, sampling and assaying information, and any
known material environmental, permitting, legal, title, taxation,
socio-political, marketing or other relevant issue.

DISCLAIMER

This announcement may contain 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.

Contacts:
Australia
Medusa Mining Limited
Geoffrey Davis
Managing Director
+61 8 9367 0601

Australia
Medusa Mining Limited
Roy Daniel
Finance Director
+61 8 9367 0601
www.medusamining.com.au

United Kingdom
Fairfax I.S. PLC
Nominated Adviser and Broker
Ewan Leggat/Laura Littley
+44 (0)20 7598 5368

United Kingdom
Lothbury Financial Services Limited
Michael Padley/Libby Moss
+44 (0)20 7868 2010

Canada
Nicholas Sayce
Investor Relations
+1 416 822 4404

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