Medusa Mining Ltd (ASX:MML) Co-O Resource Update

Medusa Mining Ltd (ASX:MML) 26 August 2008


                        MEDUSA MINING LIMITED
                             (AIM: MML)

                    Co-O MINING INVENTORY UPDATE

Medusa Mining Limited ("Medusa" or the "Company"), the Australian
based company operating and developing gold mines in the Philippines,
through its Philippines operating company Philsaga Mining Corporation
("Philsaga") advises that it has completed a new Mining Inventory and
JORC compliant Ore Reserve estimation at the Co-O Mine.

The Probable Reserve estimate is 721,000 tonnes at 10.77 g/t gold
containing 249,000 ounces.

In addition to the Probable Reserve, there is an additional potential
mining inventory of 949,000 tonnes at an estimated grade of 10.60 g/t
gold containing an estimated 323,000 ounces of gold.  This potential
mining inventory is based on mineralisation that is currently in the
Inferred Resource category and therefore cannot be quoted as an Ore
Reserve.

Reserve Estimations

Golder Associates Pty Ltd of Perth Western Australia were contracted
to undertake a reserve estimation based on the resource wireframe
model provided by Cube Consulting Pty Ltd.  A resource announcement
totalling 862,000 ounces at a grade of 10.72 g/t gold was made on 12
August 2008.

The reserve estimation was derived from the Indicated Resource of
1,048,000 tonnes at 11.63 g/t gold containing 392,000 ounces of gold.

Table I: Co-O Mine probable reserve estimates for veins containing
>25,000 ounces


Vein name         > 3 g/t gold
            tonnes  g/t gold ounces
Central     341,000     9.21 101,000
Jereme       61,000    14.27  28,000
New Catto 1  17,000    45.21  25,000
New Catto 3  39,000    30.14  38,000
Other veins 263,000     6.54  57,000
Grand Total 721,000    10.77 249,000


The reserve and potential mining inventory estimations were
undertaken by Golder Associates Pty Ltd (2008).


The parameters used for the estimation include the following:

* A minimum diluted mining width of one metre;
* A block cut-off of 3 g/t gold;
* A dilution factor of 10% at 0 g/t gold; and
* A mining recovery of 73%.

Golder has classified the ore reserves in compliance with the JORC
Code as Probable Reserves.

A potential mining inventory was also estimated by applying the same
parameters to the Inferred Resources resulting in 949,000 tonnes at a
grade of 10.60 g/t gold for 323,000 ounces.


Figure 1 shows the three dimensional wirefame model of the Co-O Mine
vein system (please see the link at the end of this announcement).


For further information, please contact:


Medusa Mining Limited                   +61 8 9367 0601
Geoffrey Davis, Managing Director
Roy Daniel, Finance Director

Fairfax I.S. PLC                        +44 (0)20 7598 5368
Nominated Adviser / Joint Broker
Ewan Leggat

Mirabaud Securities Limited             +44 (0)20 7321 2508
Joint Broker
Peter Krens

Lothbury Financial                      +44 (0)20 7011 9411
Michael Padley / Louise Davis



JORC COMPLIANCE - CONSENT OF COMPETENT PERSONS

Medusa Mining Limited

Information in this report relating to Exploration Results, 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 mineralization 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
"Australian  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.

Golder Associates Pty Ltd

The information in this report that relates to Ore Reserves is based
on information compiled by Charles Hastie BAppSc (Mining
Engineering), B AppSc (Multidisciplinary Science), MAusIMM and Peter
Onley MBA, MSc, BSc (Hons), FAusIMM, CP.  Mr Onley is a full-time
employee of Golder Associates Pty Ltd.
Mr Onley 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". Mr Onley consents to the inclusion in the report of the
matters based on their information in the form and context in which
it appears.

Golder Associates is a global consulting group employing more than
5500 staff offering services in earth engineering and environmental
sciences.

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LINK: http://hugin.info/138050/R/1245671/269100.pdf

Medusa Mining Ltd

http://www.medusamining.com.au

ISIN: AU000000MML0

Stock Identifier: AIMX.MML