Completion of A$34 million placement

NOT FOR DISTRIBUTION OR RELEASE INTO THE UNITED STATES OR ANY OTHER JURISDICTION IN WHICH ITS DISTRIBUTION WOULD BE UNLAWFUL

ANNOUNCEMENT

31 October 2013

successful completion of PLACEMENT AND INCREASE IN SIZE TO A$34 MILLION

(ASX & LSE: MML)

Medusa Mining Limited ("Medusa" or the "Company") is pleased to announce that due to significant demand in relation to its recently announced non-underwritten placement of new ordinary shares in the Company ("New Shares") to raise up to A$25 million (approximately £14.8 million) (the "Placement"), it has decided to increase the placement size to A$34 million (approximately £20 million).

The issue price under the Placement was set at A$1.80 per share, a 10% discount to the last closing price of Medusa shares on ASX. The Placement enjoyed strong demand from existing shareholders and new investors and Medusa has received binding commitments from investors to subscribe for A$34 million (approximately £20 million).

Settlement of the Placement is to occur in the following two tranches:

1. Settlement of the the first tranche of 9,445,195 New Shares ("Tranche 1") is to occur on or about 07 November 2013, with the New Shares to be issued under the existing authority granted by shareholders at the Company's 2012 Annual General Meeting.

2. Settlement of the second tranche of 9,445,195 New Shares ("Tranche 2") is conditional on the approval by shareholders of the proposed Resolution 4 (Disapplication of pre-emptive rights) at the Company's 2013 Annual General Meeting to be held on 22 November 2013 ("Approval Resolution"), and subject to that Approval Resolution being passed, settlement is to occur on or about 25 November 2013.

Application will be made to the ASX for the New Shares to be granted official quotation on ASX immediately following their issue. Application will also be made to the Financial Conduct Authority ("FCA") for admission of the New Shares to the Standard Listing Segment of the Official List of the UK Listing Authority and to the London Stock Exchange for admission to trading on its Main Market for Listed Securities (together "UK Admission"). Application for UK Admission will be made as soon as practicable following issue of the New Shares. All New Shares will rank equally with existing Medusa shares.

Approval Resolution proposed at 2013 Annual General Meeting

The Approval Resolution is proposed in the Company's notice of meeting for its 2013 Annual General Meeting that was despatched by the Company to shareholders on 18 October 2013. The Approval Resolution seeks shareholder approval to renew the authority given to the Directors to issue up to 9,445,195 shares and other equity securties for cash without following the pre-emptive provisions in Rule 2.1A of the Company's Constitution. Subject to specified exceptions, Rule 2.1A provides that the Company must not issue shares or other equity securties for cash to any person without first offering them to existing shareholders in proportion to their existing holdings or obtaining shareholder approval.

At the time of issue of that notice, the Placement had not been contemplated and accordingly the Approval Resolution was proposed simply to refresh the disapplication of pre-emptive rights in the Company's constitution so that the Company would be authorised to issue up to 9,445,195 New Shares (being 5% of the Company's current issued share capital) in the period from the date of the 2013 Annual General Meting (being 22 November 2013) to the date of the Company's next Annual General Meeting or 22 February 2015 (whichever was later).

It is now proposed that the Company issue the full number of shares (being 9,445,195 New Shares) under Tranche 2 of the Placement pursuant to the authority sought by the Approval Resolution. Accordingly, if the Approval Resolution is passed, the Company will issue 9,445,195 New Shares under Tranche 2 of the Placement. Subject to limited exceptions, the Directors will not have authority to issue further equity securities for cash without first offering them to existing shareholders in proportion to their existing holdings unless a further shareholder approval is sought and obtained.

The Company's acknowledges its prior statement that the Directors intended to follow the United Kingdom's Pre-Emption Group guidelines regarding cumulative usage of the authority within a rolling three-year period, namely that the issue of shares to investors for cash other than to existing shareholders amounting to in excess of 7.5% of the issued ordinary share capital of the Company should not take place without prior consultation with Shareholders.

However, given the unexpected issues the Company experienced with the commissioning of the new Co-O Mill as a result of the failure of the SAG Mill powercells, and the consequential reduction in production for the December quarter, (as announced on 23 October 2013), the Company considered it prudent to undertake the Placement in order to:

· to pay down outstanding trade creditors to normal operating levels;

· to partly pay down the Company's working capital facility with Philippine Banks; and

· for working capital to maintain a prudent liquidity buffer pending the commencement of production from the Company's new Co-O Mill.

NOT AN OFFER

This announcement does not constitute an offer, and may not be used in connection with an offer to sell or issue or the solicitation of an offer to buy or subscribe for New Shares in any JURSIDICTION.

NO PUBLIC OFFER OF SECURITIES IS BEING MADE IN ANY JURISDICTION. MEMBERS OF THE PUBLIC ARE NOT ELIGIBLE TO TAKE PART IN THE PLACEMENT.

NOTICE TO UK RESIDENTS

This announcement is not a prospectus for the purposes of the Prospectus Rules published by the FCA and has not been, and will not be, approved by, or filed with, the FCA. This Announcement contains no offer to the public within the meaning of Section 102B of the United Kingdom Financial Services and Markets Act 2000 (as amended), the United Kingdom Companies Act 2006 or otherwise.

NOTICE TO US RESIDENTS

This document may not be released or distributed in the United States. This document does not constitute an offer to sell, or a solicitation of an offer to buy, securities in the United States. Any securities described in this document have not been, and will not be, registered under the US Securities Act of 1933 and may not be offered or sold in the United States except in transactions exempt from, or not subject to, the registration requirements under the US Securities Act and applicable US state securities laws.

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