Co-O Drilling Update

Medusa Mining Limited

("Medusa" or the "Company")

(ASX & LSE: MML)

Co-O DRILLING UPDATE

21 February 2013

Medusa Mining Limited ("Medusa" or the "Company"), through its Philippines operating company Philsaga Mining Corporation, announces an update of the Co-O Mine surface and underground drilling completed from 30 June 2012 to 28 January 2013.

Highlights include:

Surface drilling since 30 June 2012 continues to provide resource infill and extension information for mine planning to the east and west of the Oriental Fault. Drilling west of the Tinago Fault has consistently intersected veins with some indications that grades in places may be increasing at depth although to date the grades in the upper levels have been generally below 3g/t gold.

Underground drilling continues to confirm vein continuity and is providing additional information on vein splits and new veins not intersected by surface drilling.

Peter Hepburn-Brown, Managing Director of Medusa, commented:

"The Co-O Mine drilling continues to deliver high grade intersections over a strike length of approximately two kilometres and at depth. The drilling indicates the vein system appears to be weakening to the west of the Tinago Fault particularly near surface with the possibility of some higher high grades at depth. Elsewhere drilling continues to return good values from infill and extensional drilling.

Drilling is continuing with four surface and three underground rigs.The next resource update will be in the September quarter of 2013."

Co-O MINE DRILLING

Discussion

This report lists the surface and underground drill holes with new assay results returned from 30 June 2012 to 20 January 2013.

Previous detailed drilling reports for Co-O Mine are available on the Company's website.

Results down to 0.2 metres wide are reported since 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. Most drilling is sub-parallel to the cross-cutting fault direction (and perpendicular to the strike of the veins) and rarely intersects the faults, which are subsequently identified by underground on-vein development or underground drilling.

It should also be emphasised that drilling of vein systems rarely provides ore-grade intersections in every intersection in a vein. A recent statistical assessment of the percentage of ore-grade drill hole intersections required in each vein to indicate the vein will be mineable shows that 3 to 5 holes out of every 10 holes is required to intersect ore grades. This is consistent with other large vein systems in the Eastern Goldfields of Western Australia.

Drill hole collar positions are surveyed by a qualified surveyor and surface drill holes are surveyed downhole at regular intervals using a digital multi-shot downhole camera.

It is important to note that the drilling of narrow epithermal veins generally provides an indication of the presence of the gold mineralised vein but may not always provide good quantitative data with respect to accurate grade and volume estimations for some or all of the following reasons:

·; Veins commonly pinch and swell and may be brecciated or displaced by faults;

·; Gold distribution may be erratic; and

·; Drill core recovery may be reduced because of the brecciation and soft unconsolidated material and hence the recovered material may not be representative of the material drilled.

The Company regards the initial drilling as indicative only and operates the policy of using drilling to locate the position and extent of the mineralised veins. This is then followed by on-vein development to support the drilling results, and to provide a more accurate estimate of vein grades which results in the upgrading of the resource category from Inferred to Indicated. The development supports the estimation of resources and facilitates the conversion of resources to reserves.

Further information on narrow veins and the Company's policies regarding exploration, development and resources-reserves is contained on the Company's website, www.medusamining.com.au

Drilling Results

Figure 1 (attached) shows the locations of the recently completed and in progress surface drill holes EXP176 to EXP225. Completed holes comprise 50 holes for a total of 35,989 metres.

Table I shows the results ≥ 3 g/t gold over ≥0.2 metres for previous holes EXP154, EXP161, EXP163 and EXP165 to EXP175 and new holes EXP176 to EXP225. The locations of the previous holes were shown in the announcement of 9 July 2012.

Figure 2 (attached) shows the locations of the recently completed underground drill holes totalling 8,147 metres in 40 holes. Table II lists underground drill hole results ≥ 3 g/t gold over ≥ 0.2 metres received since 30 June 2012 as well as some previously completed holes whose locations were shown on Figure 2 in the announcement dated 9 July 2012.

Table I. Surface drill hole results ≥3 g/t gold and ≥0.2 metres downhole for previously completed holes EXP154, EXP161,EXP163 and EXP165 to EXP175 and new holes EXP176 to EXP225.

Notes:

(i) Intersection widths are downhole drill widths not true widths

(ii) Assays denoted by (*) are by Philsaga Mining Corporation's laboratory.

(iii) Grid coordinates based on the Philippine Reference System 92.

 Table II. Underground drill hole results ≥3 g/t gold and ≥0.2 metres downhole for new holes and previously completed holes designated †.

Notes:

(i) Intersection widths are downhole drill widths not true widths;

(ii) Assays denoted by (*) are by Philsaga Mining Corporation's laboratory.

(iii) Grid co-ordinates based on the Philippine Reference System 92.

DRILL HOLE SAMPLING AND ASSAYING PROCEDURES

Samples are taken from mainly HQ sized (hole outside diameter 96 mm, hole inside diameter 63.5 mm) and some NQ sized (hole outside diameter 75.8 mm, hole inside diameter 47.6 mm) drill core. The selected sample intervals are halved by diamond saw and half the core is bagged, numbered and sent to the Company laboratory. In a small number of cases to confirm the geological logging, the selected interval was re-split and ¼ core re-submitted for assay.

 Initial sample preparation and assaying is undertaken at the Company's on-site laboratory. Samples are dried at 105ºC for 10 to 16 hours, crushed to less than 1.25 cm by jaw crusher, re-crushed to less than 50 mm using a secondary crusher followed by ring grinding of 1 kilogram of sample to nominal particle size of less than 200 mesh. Barren rock wash is used after every five samples in the preparation equipment. The samples are assayed by fire assay with Atomic Absorption Spectrometer (AAS) finish on a 30 gram sample. All assays over 5 g/t gold are re-assayed using gravimetric fire assay techniques on a 30 gram sample. Duplicate samples are inserted every 10 samples and standard samples are included in every sample batch.

Please see link at the end of this announcement to view Firgures 1 & 2:

Figure 1. Map of the Co-O Mine Level 6 plan showing the locations of new drill holes EXP176 to EXP225

Figure 2. Map of the Co-O Mine Level 6 plan showing the locations of the new underground drill holes

For further information please contact:

JORC COMPLIANCE - CONSENT OF COMPETENT PERSONS

Medusa Mining Limited

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 Non-Executive Chairman 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". 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.

DISCLAIMER

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.

To view the figures, please click on or paste the following link in your browser:

http://www.rns-pdf.londonstockexchange.com/rns/3687Y_-2013-2-21.pdf