PROPOSED PLACEMENT TO RAISE UP TO AUD25 MILLION

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

30 October 2013

Proposed PLACEMENT TO RAISE UP TO A$25 MILLION

(ASX & LSE: MML)

Medusa Mining Limited ("Medusa" or the "Company") today announces its intention to raise up to A$25.0 million (approximately £14.8 million) by way of a non-underwritten placement of new ordinary shares in the Company (the "New Shares") at A$1.80 per New Share to institutional and other investors (the "Placement"). The Placement will be conducted by way of a volume only bookbuild process in Australia whereby Euroz Securities Limited ("Euroz") will be acting as lead manager and bookrunner.

The net proceeds of the Placement are intended to be used:

· 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.

The New Shares are proposed to be issued in two tranches:

· the first tranche being up to 9,445,195 New Shares (being the number of ordinary shares available to be issued under the shareholder approval that was granted at the Company's 2012 Annual General Meeting and representing 5% of the Company's share capital), which will be issued on or about 7 November 2013 ("Tranche 1"); and

· the second tranche being the balance subject to the grant of shareholder approval by special resolution 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"), which will authorise the issue of up to a further 9,445,195 New Shares ("Tranche 2"). It is envisaged, however, that approximately 4.5 million New Shares representing less than 2.5% of the Company's existing share capital will be issued as part of Tranche 2. The New Shares under Tranche 2 are, subject to this shareholder approval, to be issued on or about 25 November 2013.

The Placement is subject to the terms and conditions that will be set out in a Placement Confirmation Letter provided by Euroz to selected participating eligible investors. Important information regarding the Placement and the offer restrictions applicable to the Placement are outlined in the accompanying presentation. To access the presentation please cut and paste the following link into your browser:

http://www.rns-pdf.londonstockexchange.com/rns/7205R_-2013-10-30.pdf

This announcement is not intended to lift the ASX Trading Halt currently in place for all Medusa Securities. The Company proposed to announce the results of the Placement prior to the open of trading on ASX on Monday, 4 November 2013, with trading on ASX to re-commence on Monday, 4 November 2013.

The New Shares, will, when issued, be credited as fully paid and will rank pari passu in all respects with the existing issued ordinary shares in the Company, including the right to receive all dividends and other distributions declared made or paid after the date of issue.

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 ("Official List") 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.

KEY DATES *

* The key dates above are subject to change without notice. The Company reserves the right to amend any or all of these dates and times, subject to the Corporations Act, the ASX Listing Rules and other applicable laws.

Approval Resolution

The Approval Resolution was 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. At the time of issue of that notice, the proposed 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 in the period from the date of the 2013 Annual General Meting 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 New Shares under Tranche 2 of the Placement pursuant to the authority granted by the Approval Resolution. Further details of the New Shares proposed to be issued under Tranche 2 will be notified to shareholders with the announcement of the results of the Placement prior to the 2013 Annual General Meeting.

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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