Malaga: Q2 2008 financial results and outlook for 2008

Montr�al, Qu�bec, August 22, 2008 � Malaga Inc. (TSX: MLG) reports its financial results for the three-month period ending on the 30th of June 2008. The consolidated financial statements (all currency figures appear in Canadian dollars unless otherwise specified) along with the management�s discussion and analysis are available for the viewing on the Malaga website at www.malaga.ca and the documents have been filed with SEDAR at www.sedar.com.

Q2 Overview
During the three-month period ending on the 30th of June 2008, the Company recorded a net loss of $1.0M or $(0.01) per share compared to a net loss of $0.5M or $(0.01) per share for the comparative period in 2007. This increased net loss is due to the low average tungsten grade (0.79%) milled during Q2 2008 as compared to 1.14% during Q2 2007. The Company is actively implementing a series of remedial actions to increase the tungsten grade, which are discussed in detail below.

In Q2 2008 mined tonnage increased (21,811 tons compared to 18,438 tons in Q2 2007), recovery rates increased (81.6% compared to 74.9% in Q2 2007) but the amount of tungsten concentrate sold dropped to 14,411 MTU�s totalling $2.5M (15,044 MTU in Q2 2007) due to the low tungsten grades encountered in the mine.

Cash, cash equivalents and short-term investments totalling $1,886,861 as at June 30, 2008 and working capital was $900,000 on June 30, 2008.

In order to develop new higher grade mining zones, during the last three-month period Malaga has invested $800,000 in mine development and has purchased $300,000 in capital assets which brings the total amount invested since the beginning of 2008 to $1,800,000 and $900,000, respectively.

Finally, during the quarter the Company reinforced its financial and technical expertise by nominating A. Michel Lavigne, Jean C. Lavoie, Luc Filiatreault and Paul Cregheur to its Board of Directors.

Operating results
Metal sales and production
Metal sales are:

Three-month period ended June 30, 2008
The Company recorded a net loss of $1M compared to a net loss of $0.5M for the corresponding period in 2007. The Company recorded a negative gross margin of $0.1M for the three-month period ended June 30, 2008. This loss comes from the low grade WO3 ore extracted from the Huaura sector of the Pasto Bueno mine which was 0.68%. Some ore from higher grade zones was also extracted to increase the overall grade but this increased the cash cost per UTM by $17 compared to the first quarter 2008 due to the extra mining effort required. Other items contributed to an increase of $2/MTU.

Administrative expenses are detailed below:

The increase in the administrative expenses can be explained by an increase of $98,360 in Peru in comparison to the corresponding period in 2007. This increase comes from the higher level of activities compared to 2007 related to environmental studies and some development projects as well as salaries increase. The Company shares the same senior management with Dynacor Gold Mines Inc. Common expenses are billed to Dynacor Gold Mines Inc. according to their use. The investor relations fees have increased by over $80,000 due to the increased activities. Travel expenses are comprised of different trips to Peru by management. Travel expenses have decreased by $38,000 in comparison to the corresponding period in 2007. The Canadian office expenses are in a credit position pursuant to a reimbursement of capital taxes.

The Company recorded a gain on foreign exchange of $17,048 (loss of $120,154 for the corresponding period in 2007) arising from the increase in value of the Nuevo Sol compared to the Canadian dollar. Stock based compensation amounts to $107,510 ($381,220 for the corresponding quarter in 2007) following the issuance of options to Board�s members.

Pasto Bueno Property
Underground Development Program
During the past 6 months, Malaga has invested 2.7 million dollars in underground exploration (tunnelling and drilling) and for the purchase of capital assets for the Pasto Bueno mine and plant.

Malaga�s 10,650 meters drilling campaign in the Huaura and Huayllapon sectors is now well underway. As of the 1st of August, approximately 73% of the drilling program has been completed (7,752 meters) adding up to a total of 20 drill holes.

Malaga is also pleased to be able to report that underground exploration and development work is also progressing quickly. More than 1,070 m of access tunnels were excavated during Q2 (789 m during Q1 2008) adding up to a total of 1,859 m during the first six months of 2008.

Several different sectors of the Pasto Bueno mine are being developed simultaneously, the objective is to gain access and to prepare newly discovered high grade mineralized zones as quickly as possible in order to increase the mine�s production. As these new zones are brought into production the grade of ore that is extracted and milled will also increase Three zones are being developed:

Consuelo
Development work is underway extending inwards from levels 8, 10, 12 and 13 in order to prepare new production zones and bring them online as soon as possible. These new areas will begin producing tungsten ore in the autumn of 2008.

Huayllapon
Development work continues in the Huayllapon sector in order to prepare new mining zones in the Chabuca vein. These zones will be put into production in Q4 2008.

Brownfields
Excavation of a lateral access tunnel began in early 2008 continues forward towards to reach the Santa Marta vein which was recently uncovered by drill holes HDD8, 10, 11, 12 and 14 and which is located 450 meters west of the Consuelo vein. This rather important underground development will continue throughout 2008 and should be completed by the end of Q1 2009.

Hydroelectricity
Hidropesac had initially planned to have two hydroelectric generators with a rated capacity of 600 KW/h online during the Q2 2008. All the necessary equipment and infrastructure was installed by the end of June 2008, however during the testing phase at the end of June a major problem occurred which led to significant damage in the water conduit that feeds the plant. Reparations to the conduit will take about two months and will be supervised by Emerging Power Developers (Malaga�s Swiss partner in Hidropesac). Power production is now expected to begin towards the end of Q3 or the beginning of Q4 2008.

Outlook
Mine development work continues at Pasto Bueno in order to increase the ore grade to above 1% WO3 and with the objective of increasing the daily processing capacity to 350 tons by Q1 2009 (an increase of 40%). Further work on both the plant and the mine during 2009 should enable the Company to further increase its daily production capacity by the end of 2009. Malaga also intends to publish a new resource estimation that is National Instrument 43-101 compliant on part of its mining concessions, as soon as possible.

ABOUT MALAGA INC.
Malaga Inc. is a tungsten mining company that uses modern, efficient and productive mining technology. The Company is committed to growth, through increasing its tungsten concentrate production, continuing the exploration of the Pasto Bueno property, and through strategic acquisitions. It also seeks diverse growth opportunities such as developing the hydroelectric potential of the Pasto Bueno property, through Hidropesac, in which the Company holds 44%, as well as through its holding in Dynacor Gold Mines Inc., in which the Company owns 13.3%.

For more information, please contact:

Jean Martineau
President & CEO
Malaga Inc.
514 288-3224

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