Quarterly Report

    Quarterly Report
             



                        MEDUSA MINING LIMITED
                             (AIM: MML)

                     QUARTERLY ACTIVITIES REPORT
                     PERIOD ENDING 30 JUNE 2008


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"),   announces   its  Quarterly   update   on
activities for the  period ending 30  June 2008, as  required by  the
Australian Stock Exchange.

Key Points:

Co-O MINE PRODUCTION
* The Company achieved its Phase I expansion quarterly production
  target of 5,187 ounces at an average grade of 8.64 g/t gold and
  average cash cost of US$247 per ounce.


Co-O MINE EXPANSION
* Phase I expansion on schedule. Incremental benefits will commence
  to flow in Q3 2008. On completion of the Agsao shaft in Q2 2009
  mine, production is expected to increase to approximately 60,000
  annualised ounces in Q3 2009;
* Forecast production for FY 2008-09: 38,000 to 45,000 ounces
* Phase II expansion commencing next quarter to raise production from
  60,000 ozs to 100,000 ozs per year from Co-O Mine in early 2010
  (independent of Phase I expansion);
* Power line to the mine expected to be energised before November
  2008.

Co-O RESOURCE EXPANSION DRILLING
* Significant new intersections including 3.10 metres at 15.37 g/t
  gold, 3.0 metres at 18.94 g/t gold and 10.20 @ 13.53 g/t gold;
* Resource update expected in mid-August 2008.

LINGIG PORPHYRY COPPER DISCOVERY
* Permitting completed and drilling commenced.

ANOLING
* Underground exploration continuing.

TAMBIS-BAROBO AREA
* Drilling is underway at the Kamarangan gold-iron target.

REGIONAL
Construction of 3D geological and  structural model of the  Company's
tenement area is underway.

For further information, please contact:


+------------------------------------------------------------+
| Medusa Mining Limited             |    [phone]     |
|-----------------------------------+------------------------|
| Geoffrey Davis, Managing Director |                        |
|-----------------------------------+------------------------|
| Roy Daniel, Finance Director      |                        |
|-----------------------------------+------------------------|
|                                   |                        |
|-----------------------------------+------------------------|
| Fairfax I.S. PLC                  |    [phone] |
|-----------------------------------+------------------------|
| Nominated Adviser / Joint Broker  |                        |
|-----------------------------------+------------------------|
| Ewan Leggat                       |                        |
|-----------------------------------+------------------------|
|                                   |                        |
|-----------------------------------+------------------------|
| Mirabaud Securities Limited       |    [phone] |
|-----------------------------------+------------------------|
| Joint Broker                      |                        |
|-----------------------------------+------------------------|
| Peter Krens                       |                        |
|-----------------------------------+------------------------|
|                                   |                        |
|-----------------------------------+------------------------|
| Lothbury Financial                |    [phone] |
|-----------------------------------+------------------------|
| Michael Padley / Louise Davis     |                        |
+------------------------------------------------------------+

PROJECT OVERVIEW

The locations of the Company's projects are shown on Figures 1 and  2
(please see the link at the end of this announcement).

Co-O MINE

GOLD PRODUCTION

The  production  statistics  for  the  current  financial  year   are
summarised in Table I.

Table I: Gold Production


+-------------------------------------------------------------------+
| Period   |   Gold   | Head  |  Cash   |                           |
|          | produced | grade |  costs  |                           |
|----------+----------+-------+---------| Comments                  |
|          |          | (g/t  |  (US$   |                           |
|          |  (ozs)   | gold) | per oz) |                           |
|----------+----------+-------+---------+---------------------------|
| Jul   to |    5,050 |  9.45 |   248   | Stoping of accessible     |
| Sep 2007 |          |       |         | lower grades due to lack  |
|          |          |       |         | of development miners and |
|          |          |       |         | re-assignment of some of  |
|          |          |       |         | workforce to the          |
|          |          |       |         | expansion projects        |
|----------+----------+-------+---------+---------------------------|
| Oct   to |    3,686 | 10.46 |   263   | Expansion activities and  |
| Dec 2007 |          |       |         | shortage of miners        |
|          |          |       |         | results in reduced        |
|          |          |       |         | production as advised.    |
|----------+----------+-------+---------+---------------------------|
| Jan   to |    5,086 | 11.95 |   238   | Mainly on vein            |
| Mar 2008 |          |       |         | development, some minor   |
|          |          |       |         | stope production.         |
|----------+----------+-------+---------+---------------------------|
| Apr   to |    5,187 |  8.64 |   247   | Mainly on vein            |
| Jun 2008 |          |       |         | development, some stope   |
|          |          |       |         | production                |
|----------+----------+-------+---------+---------------------------|
| TOTAL    |   19,009 | 10.42 |   248   |                           |
+-------------------------------------------------------------------+


In line with  its Phase  I expansion production  target, the  Company
produced 5,187 ounces of  gold at an average  grade of 8.64 g/t  gold
and average cash production costs of US$247 per ounce.

The benefits of the Phase I expansion  are on track to start to  flow
through in the third quarter 2008.

PHASE 1 MINE EXPANSION

Expansion works have  continued to  proceed well  during the  quarter
with a  total  of 1,388  metres  of development  completed  (previous
quarter: 1,147 metres).

The incremental  production forecast  during the  advanced and  final
stages of the Phase 1 expansion, for the financial year 2008 to 2009,
is expected to be  between 38,000 to 45,000  ounces depending on  the
grades returned from the new areas under development.

Completion of  the Phase  1  expansion is  on  track for  the  second
quarter of 2009 with the 60,000 ounces annualised production expected
from July 2009 onwards.

The construction  of  a vertical  ventilation  shaft to  a  depth  of
approximately 70  metres to  link with  upper level  workings at  the
western end is underway and is scheduled to be completed within  four
months, depending on ground conditions.

(a)Beta Shaft
The Beta  Shaft  to an  inclined  depth  of 120  metres  (100  metres
vertical) is progressing satisfactorily.

(b)Agsao Shaft
The new external Agsao Shaft, to an inclined depth of 240 metres (200
metres vertical),  was 50%  completed  to an  inclined depth  of  120
metres at the end of  June. The bottom of this  shaft will be at  the
2950 metre level and will be connected to the Beta internal  inclined
shaft at the same 2950 metre level.

Provided ground conditions continue to be reasonable, ore  production
through the Agsao  Shaft is on  track to commence  during the  second
quarter of 2009.

PHASE II EXPANSION

As previously  announced  in the  March  2008 quarterly  report,  the
Company is planning to expand production to 100,000 ounces annualised
in 2010  through the  initiation  of the  Phase II  expansion,  which
primarily comprises the sinking of the vertical Hill View Shaft. Hole
MD 74  was drilled  as  a siter  hole for  the  Hill View  Shaft.  It
encountered poor ground conditions in  the upper levels resulting  in
the loss  of 280  metres  of PQ  sized casing.  As  a result,  a  new
position for the  Hill View Shaft,  which was due  to start in  July,
will be  chosen  once  additional drilling  has  been  completed  and
suitable ground conditions  have been delineated.  It is  anticipated
that this will not cause any  delays to the production schedule as  a
new inclined ore haulage  shaft to the 3050  metre level, the  Baguio
Shaft, has been commenced  at the western end  that will provide  ore
while the  Hill  View Shaft  is  being  sunk. This  will  reduce  the
pressure on the Hill View shaft to provide ore haulage whilst sinking
is carried out.

Hole MD 74 intersected 3 low angle veins, including the  intersection
of 1.05 metres at 7.53 g/t gold located approximately 15 metres below
the 3100 metre level listed in  Table 2.  Development is underway  to
intersect this vein. Two other intersections  of between 1 and 3  g/t
gold in  low angle  veins were  made  at 301  metres and  476  metres
vertical depth demonstrating that other low angle, gold-bearing veins
are present in the Co-O system.

The Phase  II expansion  will  also include  the sinking  of  another
internal shaft to an  inclined depth of 120  inclined metres off  the
bottom  of  the  Agsao  Shaft.  Commencement  date  will  depend   on
completion and commissioning of the Agsao Shaft and the  availability
of open stopes for the underground disposal of waste rock.

MINE RESOURCE EXPANSION DRILLING

Since publication  of the  Co-O resource  and reserve  estimate on  4
September 2007, the Company has continued drilling with four  surface
rigs and recently two  underground rigs. A  new resource and  reserve
update is expected in mid-August.

Figure 3 shows the current three dimensional model of the vein system
(please see the link at the end of this announcement).

Table II lists the diamond drilling  results greater than 3 g/t  gold
from the Co-O Mine for drill holes MD 46 to MD 80 and for underground
drill hole DBH 03. Previous announcements  on the Co-O drilling on  9
July, 15  May  and 28  February  2007 contain  information  regarding
drilling and surveying  techniques, comments  on vein  interpretation
and  methodologies  and  assaying  protocols.  The  latter  are  also
described below.

Table II. Drill hole results greater than 3 g/t gold for holes MD 46
to 80 east and west of the Oriental Fault.  (Results since 7 April
2008 are marked with "#")


+-----------------------------------------------------------------------------------+
|Hole                | East  | North |Dip|Azimuth(°)|  From  | Width  |  Grade   |  |
|                    |       |       |(°)|          |(metres)|(metres)| (uncut)  |  |
|                    |       |       |   |          |        |        |(g/t gold)|  |
|--------------------+-------+-------+--------------+--------+--------+-------------|
|EAST                |       |       |       |      |        |        |             |
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 46               |614,047|912,472|    -48|    41|  489.30|    0.85|         8.51|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  501.40|    0.40|         4.50|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  542.90|    1.40|        20.62|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 48               |       |       |       |      |        |        |             |
|(Agsao Shaft pilot  |614,257|912,704|    -60|   253|  212.45|    1.95|        22.02|
|hole)               |       |       |       |      |        |        |             |
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 49               |614,129|912,487|    -50|    40|  449.85|    2.05|         6.61|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  463.90|    1.00|         4.24|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 55               |614,134|912,495|    -45|    35|  361.60|    3.45|        12.48|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  421.20|    0.70|        12.23|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  486.25|    0.70|         3.89|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 64               |614,175|912,505|    -45|    41|  405.80|    1.00|         3.19|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 67               |614,173|912,504|    -52|    43|  278.00|    0.80|         7.20|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  398.30|    1.30|         6.55|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 71               |614,360|912,502|    -55|    11|  574.40|    1.15|         7.81|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 80               |614,294|912,937|    -60|   206|  271.30|   10.20|    13.53 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  277.50|    1.00|         8.33|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  298.05|    0.65|         3.73|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      | #316.05|    0.25|    52.00 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      | #324.00|    0.45|    27.40 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      | #330.05|    1.35|     7.96 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      | #335.90|    0.60|     3.45 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      | #347.10|    2.60|     4.72 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      | #359.25|    0.25|    17.33 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      | #389.50|    0.25|     8.07 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      | #408.85|    3.55|     8.32 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      | #422.00|    1.05|     4.22 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      | #610.65|    0.30|     6.64 (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|WEST                |       |       |       |      |        |        |             |
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 47               |613,805|912,788|    -55|    30|  153.30|    1.10|         7.01|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 51               |613,749|912,798|    -53|    17|  130.50|    1.30|         6.50|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  155.75|    0.25|        41.06|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 52               |613,754|912,816|    -50|    14|   75.25|    0.55|         3.53|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  157.60|    0.30|         5.31|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  170.40|    0.30|        14.93|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 54               |613,830|912,745|    -47|    29|  174.00|    1.80|        14.59|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 56               |613,809|912,706|    -54|    29|  390.85|    1.00|         3.11|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 57               |613,739|912,767|    -54|    16|  152.55|    0.45|        39.64|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  191.90|    3.45|        26.26|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  194.80|    0.40|        18.47|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 58               |613,739|912,767|    -58|    16|  176.10|    0.40|        43.46|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  207.00|    0.70|         7.45|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  280.40|    0.90|         6.18|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 61               |613,662|912,804|    -47|   347|  249.10|   14.60|         5.29|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  308.20|    1.45|        12.64|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 62               |613,723|912,767|    -56|     2|  184.65|    2.10|         9.07|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  238.55|    0.60|  3.28 (*)   |
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 65               |613,663|912,802|       |      |  115.60|    0.65|        25.42|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  153.05|    2.75|         8.80|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 68               |613,723|912,766|    -57|   344|  370.40|    3.40|         6.07|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  612.30|    3.10|        15.37|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 72               |613,607|912,785|    -54|   347|   56.50|    1.35|        18.29|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  146.60|    4.30|        15.20|
|                    |       |       |       |      |        |        |          (*)|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  169.50|    3.00|        18.94|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  188.90|   34.70|        16.70|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |  incl|  188.90|   15.90|        32.85|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |  incl|  209.80|    2.65|             |
|                    |       |       |       |      |        |        |         7.17|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |  incl|  217.90|    3.90|             |
|                    |       |       |       |      |        |        |         4.11|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 74               |       |       |       |      |        |        |             |
|(Hill View Shaft    |613,747|912,843|    -90|     0|  217.95|    1.20|        29.04|
|Siter hole)         |       |       |       |      |        |        |             |
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  229.65|    1.05|             |
|                    |       |       |       |      |        |        |         7.53|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  476.90|    0.35|             |
|                    |       |       |       |      |        |        |         3.00|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 75               |613,735|912,727|    -54|   135|  181.00|    0.20|             |
|                    |       |       |       |      |        |        |         6.48|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  240.75|    0.90|             |
|                    |       |       |       |      |        |        |         8.71|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 77               |613,734|912,727|    -54|   358|   92.35|    0.60|        13.81|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  212.45|    0.45|         6.01|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  214.50|    0.60|        10.52|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  220.55|    0.45|         5.18|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  230.40|    1.75|        22.53|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  237.65|    1.40|         5.60|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  247.65|    1.20|         5.66|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|                    |       |       |       |      |  313.00|    0.90|         5.76|
|--------------------+-------+-------+-------+------+--------+--------+-------------|
|MD 78               |613,568|912,747|    -50|   347|  258.20|    1.20|     4.97 (*)|
+-----------------------------------------------------------------------------------+


Notes:
(i)(*) denotes Philsaga assays;
(ii)Independent laboratory McPhar assays are quoted in preference  to
Philsaga assays;
(iii)Grid coordinates based on the Philippine Reference System 92;
(iv)Intersection lower  cut-off grade  is  3 g/t  gold in  line  with
current resource estimation parameters;
(v)Some previously reported intersection  widths and grades may  have
changed as a result of check assaying by McPhar.


MINE GRID POWER

The grid power  line to  the Co-O Mine  is expected  to be  energised
before November, subject to the  delivery of the main transformer  on
the date advised  by the  manufacturer. It is  anticipated that  this
will reduce power costs at the mine to approximately 25% of the  cost
of the current diesel generated power.

TAMBIS-BAROBO AREA

Soil sampling

Processing of the ridge and spur soil samples is still in progress.


KAMARANGAN GOLD - IRON ORE TARGET

An extensive  area of  weathered  magnetite with  secondary  hematite
skarn mineralisation has  been located.  The area is  also marked  by
extensive alluvial  gold workings  from previous  artisinal  sluicing
operations. Detailed  descriptions and  results are  contained in  an
announcement dated 29 February 2008.

The iron-rich skarn  rocks, as  well as other  skarn types  including
epidote-silica skarns and  sulphide-rich skarns have  been mapped  as
covering an area approximately 1,200 metres by 1,000 metres in  area.
The skarns are developed in flat-lying banded limestones.

Figure  2  shows  the  location   of  the  Kamarangan  area  in   the
Tambis-Barobo region. Figure 5 shows all gold assays above 1g/t  gold
for all skarn types, Figure 6  shows the location of the iron  assays
and Figure 7  shows copper assays  above 0.05% copper  for all  skarn
types. Please see the  link at the end  of this announcement for  all
these images.

Drilling is in progress and the first results should be available in
early to mid-August.

Gold potential

The widespread occurrence  of gold  assays on Figure  5, which  shows
only samples  returning  over 1  g/t  gold, indicates  there  may  be
substantial open-pit  gold targets  associated  with the  skarns,  in
particular the epidote-silica skarns and the iron-rich skarns. Twenty
one iron-rich samples  that were  assayed for iron  also returned  an
average of 9.5 g/t gold.

Iron ore potential

Twenty one iron-rich, weathered surface samples were assayed for iron
(Figure 6) and averaged 37.54% iron.  Only the Dumaag area of  skarns
was assayed for  iron, with the  other outcrops appearing  physically
similar at Layap Layap and Palm  Oil. These other outcrops also  have
returned anomalous copper and gold assays.

Copper potential

The common occurrence  of high  background copper  assays of  >500ppm
(0.05% copper) as shown on Figure  7 is suggestive of a major  copper
source probably below the iron-rich  skarns. It should be noted  from
Figure 2 that the  skarn area is situated  almost central to a  large
aeromagnetically defined  alteration  zone.  The  nearby  outcropping
Sopon diorite intrusive to the north of Kamarangan is "fertile" as it
carries visible disseminated chalcopyrite (copper sulphide).


BANANGHILIG

Drilling has  been completed  at the  Bananghilig area  for the  time
being. Detailed compilation of the results is in progress and subject
to the compilation demonstrating  good continuity of  mineralisation,
an initial resource estimate may be undertaken later in the year.

LINGIG PORPHYRY COPPER DISCOVERY

The Lingig prospect is covered by a Mines Operating Agreement ("MOA")
over MPSA  application number  APSA 024-XIII  comprising two  parcels
situated to the  north and to  the east (the  Lingig porphyry  copper
prospect) of the Co-O Mine and millsite as shown on Figure 2.

Detailed information  on  the  Lingig porphyry  copper  prospect  was
provided in a release dated 13 November 2007 and in the December 2007
quarterly report.

On 10 June 2008, the Company announced that permits had been  granted
and drilling has commenced. Initial results are expected late  August
2008.

The first new drill hole will  repeat and drill past the 1974  bottom
of the  discovery hole  intersection of  150 metres  of 0.4%  copper,
which had increasing grades at depth.

The key points of the 13 November 2007 announcement were:

* a 150 metre intersection of 0.4% copper ended in high grade
  mineralisation;
* higher grade mineralisation of 0.65% copper encountered in the
  bottom 52 metres of the hole; and
* a 98 metre wide halo of 0.27% copper mineralisation in the
  overlying volcanic rocks  suggests an intense mineralising system.

Figure 2 shows the  location of the Lingig  discovery to the east  of
the Company's main tenement block, Figure 8 shows the geology and the
location of discovery hole DDH 1, and Figure 9 shows the graphic  log
of discovery hole  DDH 1  (please see  the link  at the  end of  this
announcement for these images).

Discovery Drill Hole DDH 1

After passing through 100  metres of propylitically and  argillically
altered  doleritic   and   basaltic   rocks   with   erratic   copper
mineralisation,  drill  hole  DDH  1  intersected  disseminated   and
stringer   style   pyrite   and   chalcopyrite   (copper    sulphide)
mineralisation for  98 metres  in increasingly  argillically  altered
basaltic  and   doleritic   rocks  before   entering   higher   grade
mineralisation in phylitically altered  quartz diorite porphyry.  The
graphic log of the drill hole is shown in Figure 9.

Table III: Summary of intersections in drill hole DDH 1


Depth (metres)  Intersection       Host rocks, alteration &
                                   mineralisation
0      to 100   Erratic values to  Propylitically    (chlorite    and
                0.89% Cu           epidote) and argillically  altered
                                   dolerite    and    basalt     with
                                   disseminated and stringer  pyrite,
                                   rare chalcopyrite.
100  to 198     98 metres @ 0.27%  Propylitically  and   argillically
                Cu                 (clay) altered dolerite and basalt
                                   with  a   moderate   increase   of
                                   disseminated and  stringer  pyrite
                                   and chalcopyrite.
198  to  250    52 metres @ 0.65%  Phylitically               altered
                Cu                 (silica-sericite)  quartz  diorite
                                   porphyry  with  disseminated   and
                                   stringer pyrite  and  chalcopyrite
                                   increasing with depth.
incl. 248  to   2 metres @ 4.93%
250             Cu,
[End of Hole]   0.4 g/t Au,10 g/t
                Ag
TOTAL: 100  to  150 metres @ 0.40%
250             Cu


A further  four  holes  were  drilled  to the  south  of  DDH  1  and
intersected  minor   copper   mineralisation.   DDH   5   intersected
increasing amounts of copper, including 18.80 metres at 0.34% copper,
and several two to four metre intersections of 0.34 to 0.69% copper.


ANOLING

The Mines Operating Agreement ("MOA") with Alcorn Gold Resources Inc.
covers  Mining  Production  Sharing  Agreement  ("MPSA")  application
number 039-XIII situated  approximately 8 kilometres  north from  the
millsite as shown on Figure 2.  Processing of the Anoling MPSA is  in
progress.

Diamond Drilling and Geology

The two parallel Alcorn and  Hope veins, when undeformed, consist  of
banded quartz carbonate with minor  pyrite and base metal  sulphides.
The veins are controlled by  shear zones with subsequent  brecciation
of the vein  material in some  places and pinch  and swell  features.
Both veins are open to the east.

Work in Progress

Underground exploration will continue from  both the Rose and Rose  2
shafts and to the  east from the Loring  Vent Shaft. The  underground
exploration between the  two Rose  shafts is designed  to verify  the
drill results and to assess mining conditions.

Drilling  is  continuing  with  two  rigs  along  strike  to  outline
additional zones  of mineralisation  that could  justify  underground
exploration and assessment.

OTHER PROJECTS

ABACUS PROJECT
The MOA with Abacus Consolidated  Resources and Holdings Inc.  covers
Exploration Permit ("EP") application number 000028-XIII situated  to
the north of the  Co-O mine and  millsite as shown  on Figure 2.  The
granting process for the Abacus EP is now being pursued.

The ridge  and  spur soil  sampling  described in  the  Tambis-Barobo
section above has been completed and results are awaited.

SAUGON PROJECT
The Saugon Exploration Permit has  been renewed and a regional  ridge
and spur soil sampling programme is progressing well.

BUNWAN MINING CORPORATION JV (Medusa earning 70%)
The Company,  through  its Philippines  operating  company,  Philsaga
Mining Corporation  ("Philsaga"), signed  a joint  venture  agreement
("JVA")  on   23  August   2007  with   Bunawan  Mining   Corporation
("Bunawan"), the Philippine  operating company of  ASX listed  Sierra
Mining Limited ("Sierra"),  whereby Philsaga  will earn  a 70%  joint
venture  interest   in   Exploration   Permit   application   ("EPA")
000037-XIII and  Mineral  Production  Sharing  Agreement  application
("APSA") 000003-XIII (together the "Bunawan JV").

The Company is proceeding  with achieving the  granting of the  above
tenements.


COMMUNITY ACTIVITIES

The construction of new  class rooms at the  Company owned school  at
the millsite was completed in time for commencement of the new school
year.

The Company's  Foundation,  Mindanao  Philsaga  Foundation  Inc.,  is
commencing a  programme  of  micro-loans to  rice  farmers  in  areas
adjacent to the Company's operations which will allow rice farmers to
increase their profitability. The Company would welcome donations  to
the fund from interested parties  who should contact the Company  for
further details.


SAMPLING AND ASSAYING PROTOCOLS

Samples are taken from mainly HQ sized and some NQ sized drill  core.
The selected sample intervals are halved by diamond saw and half  the
core is 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 ¼ 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.

The majority of samples  which contain more than  0.5 metres at  more
than 2  g/t  gold are  re-assayed  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
sample 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, as McPhar is an  independent
laboratory,  McPhar  assays  are  given  priority  over  the  Company
laboratory's results.



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.

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