TORONTO, ONTARIO--(Marketwire - April 16, 2012) - Medusa Mining Limited (News - Market indicators)(LSE:MML) ("Medusa" or the "Company"), through its Philippines operating company Philsaga Mining Corporation, announces an update of the Co-O Mine surface and underground drilling undertaken since the report dated 17 October 2011 up to 31 March 2012.

Surface drilling since October 2011 continues to provide resource infill and extension information for mine planning mainly to the east of the Oriental Fault, including the multiple East Agsao Veins and veins associated with the Roysan Vein. Two surface drill rigs are about to commence drilling to the west of the Oriental Fault and four will remain on the east side of the fault.

Underground drilling continues to confirm vein continuity. Recent statistical studies indicate that 3 to 5 holes out of every 10 holes in a particular vein are required to return ore-grades to indicate that the vein will be mineable.

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

Co-O MINE DRILLING

Discussion

This report lists the surface and underground drill holes with new assay results returned since 27 September 2011 to 31 March 2012.

Previous detailed drilling reports were published for Co-O Mine drilling on 17 October 2011, 27 July 2011, 05 April 2011, 18 January 2011, 29 October 2010, 30 June 2010, 29 March 2010, January 2010, 10 December 2009, 01 July 2009, 22 January 2009, 01 December 2008 and 12 August 2008. In 2007 the announcements are dated 09 July, 15 May and 28 February.

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 surface drill holes EXP111 to EXP145 comprising 35 holes for a total of 25,152 metres. Assay results are awaited for holes EXP138 to EXP145.

Holes EXP127 to 1,201 metres and EXP133 to 1,200 metres were completed to test for possible deep shaft positions. Hole EXP127 intersected a number of ore-grade veins, however EXP133 was in barren ground for its entire length.

Table I shows the results ≥ 3 g/t gold over ≥ 0.2 metres for holes EXP102 to EXP137. The locations of holes EXP102 to EXP110 were shown in the announcement of 17 October 2011. A number of these holes have been drilled to define the upper limits of mineralisation in the structures containing the veins and consequently some may not have intersected vein mineralisation within the grade and/or width parameters in this report.

Figure 2 (attached) shows the locations of the recently completed underground drill holes totalling 14,023 metres in 66 holes. Table II lists underground drill hole results ≥ 3 g/t gold over ≥ 0.2 metres received since 27 October 2011 as well as some previously completed holes whose locations are also shown in Figure 2. Assays are awaited for holes L2-051 to L2-053, L2-055 to L2-057, L3-022, L3-027, L3-028, L5-087, L5-088, L5-091 to L5-096, L5-105, L5-106, L6-023, L6-025 and LM-011.

DRILL HOLE SAMPLING AND ASSAYING PROCEDURES

Samples are taken from mainly HQ sized (hole outside diameter 96 mm, hole inside diameter 63.5mm) 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 was 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 1/4 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 6 to 8 hours, crushed to less than 1.25 cm by jaw crusher, re-crushed to less than 3 mm using a secondary crusher followed by ring grinding of 700 to 800 grams of sample to nominal particle size of less than 200 mesh. Barren rock wash is used between 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.

Check assaying of approximately 50% of samples used in the yearly resource estimates is undertaken by McPhar Geoservices Phils Inc ("McPhar"), a NATA and ISO 9001/2000 accredited laboratory in Manila. The pulps are airfreighted to McPhar who fire assay 30 grams of samples using AAS finish and a selected number of samples are checked using gravimetric fire assay techniques. Duplicate samples and standards are included in each batch of check samples.

When reporting results, where available, the assays of McPhar as an independent laboratory have been given priority over the Company laboratory's results.

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 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 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.

To view Figure 1. Map of the Co-O Mine Level 6 plan showing the locations of new drill holes EXP111 to EXP145, please visit the following link:

http://media3.marketwire.com/docs/782439A.pdf

To view Figure 2. Map of the Co-O Mine Level 6 plan showing the locations of the new underground drill holes, please visit the following link:

http://media3.marketwire.com/docs/782439B.pdf

ABN: 60 099 377 849