Quarterly Report

    Quarterly Report
             



                        MEDUSA MINING LIMITED
                             (AIM: MML)

                     QUARTERLY ACTIVITIES REPORT
                   PERIOD ENDED 30 SEPTEMBER 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  Activities  Report  for  the
period ending 30 September 2008.

Highlights:

Co-O MINE EXPANSION
*      Phase I expansion will raise gold production to 60,000 ozs per
  year. Agsao shaft is approximately 84% completed and ahead of
  schedule with the first development ore expected in Q1 2009.
*      Phase II expansion to raise gold production from 60,000 ozs to
  100,000 ozs per annum in early 2010 has commenced (this is
  independent of Phase I expansion);
*      Power line to the mine is ready to be energised in the next
  few weeks, on schedule.

Co-O MINE PRODUCTION
*      The Company achieved in the quarter an increase of 35% in gold
  production to 6,986 ounces at an average ore grade of 10.42 g/t
  gold and average cash cost of US$243 per ounce.

Co-O RESOURCE - RESERVE ESTIMATIONS
*      Resources increased by 125,000 ozs (17% increase) to 862,000
  ounces at 10.72 g/t gold in 2,500,000 tonnes;
*      Reserve estimate confirms 249,000 ozs at 10.77 g/t gold in
  712,000 tonnes.

LINGIG PORPHYRY COPPER DISCOVERY
*      First drill hole abandoned in bad ground after confirming
  mineralisation of 83.9 metres at 0.3% copper above mineralised
  porphyry as discovered in 1974 (98 metres at 0.27% Cu).  Drilling
  of additional holes is continuing and further assays awaited.

KAMARANGAN PORPHYRY COPPER
*      Copper-gold-magnetite skarn mineralisation confirmed, copper
  and molybdenum mineralisation identified in diorite complex.

CORPORATE
*      Crosby Capital Limited, on 19 September 2008, announced an
  unsolicited, highly conditional off-market takeover offer all of
  the shares in Medusa.


Geoff Davis, Managing Director of Medusa, commented:

"At the Co-O Mine excellent  progress has continued in this  quarter,
with gold production increasing by 35%, the expansion is on  schedule
and the mine  resource was increased  by 17%.  In  addition, we  have
commenced the copper exploration programme with drilling underway  at
our Lingig porphyry copper discovery and the large alteration  system
at Kamarangan."


                                                      31 October 2008
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 / Laura Littley

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   | Comments                 |
|          | produced | grade |  costs   |                          |
|----------+----------+-------+----------|                          |
|          |  (ozs)   | (g/t  | (US$ per |                          |
|          |          | gold) |   oz)    |                          |
|----------+----------+-------+----------+--------------------------|
| 1 Jul to |    6,986 | 10.42 |  US$243  | On-vein development and  |
| 30   Sep |          |       |          | stoping                  |
| 2008     |          |       |          |                          |
+-------------------------------------------------------------------+


An incremental production increase  of 35% to  6,986 ounces at  10.42
g/t gold at a cash cost of US$243 per ounce was achieved as a  result
of the Phase I expansion to date.

Further incremental production increases  are forecast in the  coming
quarters with the full  benefits of the Phase  I expansion to  60,000
ounces annualised production on  track to flow  through in the  third
quarter of 2009.

PHASE I MINE EXPANSION

Expansion works have proceeded well  during the quarter with a  total
of 1,637  metres of  development completed  (previous quarter:  1,388
metres).

(a)     Agsao Shaft (Phase I)

The new surface Agsao Shaft, to an inclined depth of 240 metres  (200
metres vertical)  is 84%  completed to  an inclined  depth of  201.30
metres at the end of September.  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.

This shaft is approximately 3  months ahead of schedule and  provided
ground conditions continue  to be  reasonable, haulage  of the  first
development ore through  the Agsao Shaft  should commence during  the
first quarter of 2009.

(b)     Beta Shaft (Phase I)

The Beta  Shaft  to an  inclined  depth  of 120  metres  (100  metres
vertical) is currently at 63.15 metres inclined depth.  The timing of
the  completion  of  this  shaft   is  being  coordinated  with   the
development driving from  the Agsao  Shaft so  that correct  drainage
levels between the shafts can be set up.

PHASE II EXPANSION

Work on the Phase II expansion  has commenced with the setting up  of
the collar and headframe for the  Baguio Shaft at the western end  of
the mine.  Sinking was commenced in early October.

(a)     Baguio Shaft (Phase II)

The Baguio Shaft is designed to  provide ore from the western end  of
the mine  for  the production  increase  in 2010  to  100,000  ounces
annualised.  It  is  an inclined  shaft  with an  inclined  depth  of
approximately 270 metres  to 100 metres  below adit level.   Provided
ground conditions  are reasonable,  completion is  estimated in  late
2009.

(b)     Ventilation Shaft (Phase II)

The vertical  ventilation shaft  at the  western end  to a  depth  of
approximately  70  metres  to  link  with  upper  level  workings  is
currently at 29.4 metres and is scheduled to be completed before  the
end of the year.

(c)     Hillview Shaft (Phase II)

Drilling is on-going  prior to a  decision on the  final position  of
this high capacity three compartment shaft.

(d)     Mill Expansion

A contract has been let for  the construction of two new leach  tanks
at the mill (commenced in August) which will boost leaching  capacity
to approximately 750 tonnes per day.

Budgets and  quotes are  in  preparation for  the installation  of  a
secondary crushing circuit to reduce the  feed size to the ball  mill
which should  increase ball  mill throughput  to approximately  1,000
tonnes per day depending on rock characteristics.

(e)     Tailings Dam

Tailings dam scoping studies and preliminary costings are underway.



MINE RESOURCE EXPANSION AND DRILLING

On 12  August 2008  the  Company published  a new  resource  estimate
(Tables  II  and  III)  for  the  Co-O  Mine.   As  advised  in   the
announcement, a 0g/t  gold cut-off has  now been adopted  due to  the
very small number of ounces contained at < 3 g/t gold being only 2.7%
of the total resource ounces.

The new estimation increases the  resources by 125,000 ounces or  17%
after allowing for mine  depletion of 19,000  ounces during the  last
year.

Table II. Co-O Mine resource summary


+----------------------------------------------+
| Category    |          > 0 g/t gold          |
|             |--------------------------------|
|             |  tonnes   | g/t gold | ounces  |
|-------------+-----------+----------+---------|
| Indicated   | 1,048,000 |    11.63 | 392,000 |
|-------------+-----------+----------+---------|
| Inferred    | 1,452,000 |    10.06 | 470,000 |
|-------------+-----------+----------+---------|
| Grand total | 2,500,000 |    10.72 | 862,000 |
+----------------------------------------------+


Estimation undertaken by Cube Consulting Pty Ltd (2008)


The Company is  continuing drilling  with four surface  rigs and  two
underground rigs.  Two  additional surface  rigs are  expected to  be
added in late November and one more underground rig.

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

Figure 4  shows  a  composite  plan  view  of  the  vein  system  and
extensions to the southwest as outlined by recent mapping (please see
the link at the end of this announcement).
Table III. Co-O Mine mineral resource estimates for the veins
containing >50,000 ounces


+-------------------------------------------------------------------+
| Vein name   | Category  |              > 0 g/t gold               |
|             |           |-----------------------------------------|
|             |           |  tonnes   | g/t gold | contained ounces |
|-------------+-----------+-----------+----------+------------------|
| Central     | Indicated |   484,000 |    11.17 |          174,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Inferred  |   480,000 |     5.83 |           90,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Sub Total |   964,000 |     8.51 |          264,000 |
|-------------+-----------+-----------+----------+------------------|
| Jereme      | Indicated |    79,000 |    15.55 |           40,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Inferred  |   161,000 |    13.55 |           70,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Sub Total |   240,000 |    14.21 |          110,000 |
|-------------+-----------+-----------+----------+------------------|
| Edphil      | Indicated |   144,000 |     6.76 |           31,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Inferred  |   181,000 |     9.67 |           56,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Sub Total |   325,000 |     8.38 |           87,000 |
|-------------+-----------+-----------+----------+------------------|
| New Catto 1 | Indicated |    22,000 |    49.67 |           35,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Inferred  |    84,000 |    33.99 |           92,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Sub Total |   106,000 |    37.27 |          127,000 |
|-------------+-----------+-----------+----------+------------------|
| New Catto 3 | Indicated |    49,000 |    33.12 |           52,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Inferred  |    47,000 |    51.17 |           77,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Sub Total |    96,000 |    41.89 |          129,000 |
|-------------+-----------+-----------+----------+------------------|
| Other veins | Indicated |   271,000 |     5.85 |           51,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Inferred  |   498,000 |     5.87 |           94,000 |
|-------------+-----------+-----------+----------+------------------|
|             | Sub Total |   769,000 |     5.86 |          145,000 |
|-------------------------+-----------+----------+------------------|
| Grand Total             | 2,500,000 |    10.72 |          862,000 |
+-------------------------------------------------------------------+


   The resource estimations were undertaken by Cube Consulting Pty
Ltd.

MINE RESERVES

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 IV. 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 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 (Table V) 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 an additional 323,000 ounces.
 This potential mining inventory is  based on mineralisation that  is
currently in the Inferred Resource  category and cannot therefore  be
quoted as an Ore Reserve.

Table V. Co-O Mine Potential Mining Inventory estimates for veins
containing >25,000 ounces


+--------------------------------------------+
| Vein name   |         > 3 g/t gold         |
|             |------------------------------|
|             | tonnes  | g/t gold | ounces  |
|-------------+---------+----------+---------|
| Central     | 342,000 |     5.61 |  62,000 |
|-------------+---------+----------+---------|
| Jereme      | 127,000 |    12.29 |  50,000 |
|-------------+---------+----------+---------|
| Edphil      | 137,000 |     8.99 |  40,000 |
|-------------+---------+----------+---------|
| New Catto 1 |  66,000 |    30.88 |  66,000 |
|-------------+---------+----------+---------|
| New Catto 3 |  36,000 |    46.50 |  54,000 |
|-------------+---------+----------+---------|
| Other veins | 241,000 |     6.58 |  51,000 |
|-------------+---------+----------+---------|
| Grand Total | 949,000 |    10.60 | 323,000 |
+--------------------------------------------+


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

EXTENSION OF Co-O VEIN SYSTEM

Surface mapping  to the  west of  the Co-O  Mine has  outlined  veins
extending to the southwest for a further 1,000 metres and still open,
as shown  on  Figure 4  (please  see the  link  at the  end  of  this
announcement).  Drilling is progressing westward and surface work  is
continuing. The  curvature of  the veins  suggests that  they may  be
associated with ring structures in the Co-O caldera.

MINE GRID POWER

The grid  power  line to  the  Co-O Mine  is  completed and  will  be
energised in the next few weeks once repair work is completed on  one
of the standby generators.  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

The  Tambis  project,  currently   comprising  the  Bananghilig   and
Kamarangan prospects,  is  operated  under a  Mining  Agreement  with
Philex  Gold  Philippines  Inc.   over  Mineral  Production   Sharing
Agreement ("MPSA") application  APSA-000022-XIII, which covers  6,262
hectares.


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.


KAMARANGAN GOLD - IRON ORE TARGET

An extensive  area of  weathered  magnetite with  secondary  hematite
skarn mineralisation was located early in the year.  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 and 14 August 2008.

The iron-rich skarn  rocks, as  well as other  skarn types  including
epidote-silica skarns and  sulphide-rich skarns,  and hornfels  rocks
have been  mapped  as covering  an  area approximately  2,000  metres
east-west by > 800 metres  north-south.  The skarns are developed  in
sub-vertical, banded limestones and associated sedimentary rocks.

Figure  2  shows  the  location   of  the  Kamarangan  area  in   the
Tambis-Barobo region.   Figure  5  shows  all  skarn  types  and  the
location of drill holes KAM 1 and 2.  Figures 6 and 7 show conceptual
cross-sections through drill holes KAM 1  and 2 (please see the  link
at the end of this announcement).

Results to  date show  that an  extensive diorite  complex  underlies
mineralised magnetite-copper-gold skarns and  other skarn altered  or
hornfelsed sediments.  The  first two drill  holes were drilled  from
west to east and appear to have drilled down the outer two alteration
shells commonly found in porphyry  systems, the propylitic and  silic
shells.  Some  zones of  hornfelsed rocks  were also  intersected  at
depths of almost 400 metres down hole, supporting the  interpretation
of drilling down the margin of the intrusive complex.

Assays have been  received to  431.7 metres for  KAM 1  and to  401.5
metres for  KAM 2.  Within the  diorite porphyry,  copper values  are
commonly in the range 0.05 to  0.2% with some values to 0.6%  copper.
 Some zones of hornfels also carry similar copper values.  Molybdenum
values are erratic, depending on alteration style, with some sections
ranging from 40-50ppm  (0.004-0.005%) up to  over 200ppm Mo  (0.02%).
 Economic levels of Mo are around 0.05% Mo.  In general molybdenum is
more common in silicic  altered rocks.  Gold  values in the  dioritic
rocks to date are  all below 0.1g/t gold,  however as shown in  Table
VI, good gold grades are contained in the magnetite skarns.

Table VI. Summary of drill hole results from KAM 1 and KAM 2
magnetite skarn intersections.


+------------------------------------------------------------------------------------------------+
|Hole  |  East  |   North   | Azimuth | Dip   |   From   |  Width   | Gold  | Copper | Comments  |
|      |        |           |   (°)   |  (°)  | (metres) | (metres) | (g/t) |  (%)   |           |
|------+--------+-----------+---------+-------+----------+----------+-------+--------+-----------|
|KAM 1 | 612304 |  942837   |   90    |  -60  |     30.30|     11.00|   0.50|    0.66|Magnetite  |
|------+--------+-----------+---------+-------+----------+----------+-------+--------+-----------|
|      |        | including |         |       |     30.30|      3.00|   1.35|    1.49|           |
|------+--------+-----------+---------+-------+----------+----------+-------+--------+-----------|
|      | 612307 |  942736   |   90    |  -60  |          |          |       |    0.15|Weathered  |
|KAM 2 |        |           |         |       |      2.00|     29.00|      -|        |diorite    |
|------+--------+-----------+---------+-------+----------+----------+-------+--------+-----------|
|      |        |           |         |       |     41.00|      3.20|   1.49|    0.52|Magnetite  |
+------------------------------------------------------------------------------------------------+


Drilling to the west (KAM 3) from the KAM 1 drill site is in progress
and KAM 4 is being drilled to the west from 150 metres further south
of KAM 2.


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  (please
see the link at the end of this announcement).

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.

The first new drill hole attempted  to repeat the 1974 bottom of  the
discovery hole  intersection of  150 metres  of 0.4%  copper and  was
designed to drill past the 250 metre previous end of hole.  The  hole
was abandoned due to  broken ground just  below the porphyry  contact
(intersected at 185.90 metres) after penetrating the porphyry for six
metres.  Very poor core  recovery was achieved  around and below  the
porphyry contact.

The results are:

*          The 1974 discovery hole DDH 1 intersected a 98 metre wide
  halo of 0.27% copper mineralisation in the overlying volcanic
  rocks; and

*          New drill hole LIN 1 intersected 89.9 metres at 0.3%
  copper in the overlying volcanic rocks.

Results are awaited for drill hole LIN 2 positioned approximately  60
metres  to  the   south  of   LIN  1  and   which  also   intersected
mineralisation in the overlying volcanic rocks and mineralisation  in
the underlying porphyry.  Drilling is continuing.

Figure 8 shows the geology and the location of discovery hole DDH  1,
new hole LIN 1, and follow-up hole LIN 2 (please see the link at  the
end of this announcement).


ANOLING

The MOA  with  Alcorn Gold  Resources  Inc. covers  MPSA  application
number 039-XIII situated  approximately 8 kilometres  north from  the
millsite as shown on Figure 2 (please see the link at the end of this
announcement).  Processing of the Anoling MPSA is progressing.

Diamond drilling with one rig is continuing. 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.


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  (please
see the link at the end of this announcement).  The granting  process
for the Abacus EP is now being pursued.

Initial ridge and  spur soil  sampling has been  completed with  some
additional infill sampling also undertaken.

* Saugon Project

The Saugon a regional ridge and spur soil sampling programme is still
in progress.

* Bunawan Joint Venture (Medusa earning 70%)

The Company,  through  its Philippines  operating  company,  Philsaga
Mining Corporation  ("Philsaga"), signed  a joint  venture  agreement
("JVA") with  Bunawan Mining  Corporation  ("Bunawan") on  23  August
2007, 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
MPSA application APSA 000003-XIII (together the "Bunawan JV").

The Company  through Philsaga  Mining  Corporation is  continuing  to
fulfil its obligations under the JVA.


COMMUNITY ACTIVITIES

The Company,  in conjunction  with the  Mindanao Philsaga  Foundation
Inc., has budgeted to build two new schools of four class rooms  each
commencing early 2009 with completion planned before the commencement
of the new school year in July 2009.

The recently established micro-loans  system for rice farmers  should
underpin the planting of over 100 hectares of rice in the forthcoming
season.


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  air freighted 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.

CORPORATE

On 19 September 2008, Crosby Capital Limited ("Crosby") of Hong  Kong
announced a proposal  to make an  unsolicited and highly  conditional
takeover offer  ("Offer Announcement")  for  the Company.   The  main
points are:


  * Crosby has proposed an offer price of AUD$1.15 cash per share.
    The offer price represents only a 21.1% premium to the near 12
    month low closing price on Thursday 18 September 2008 the day
    before the announcement of the offer;
  * no Bidder's Statement has yet been provided - Crosby has
    indicated that it proposes to lodge its bidders statement in
    October 2008; and
  * the proposed offer is highly conditional - it is subject to 21
    defeating conditions, details of which are set out in the Offer
    Announcement.  Amongst others, these conditions include;

(i)             a minimum acceptance level of 90%;
(ii)            a detailed investigation and report by an Independent
Expert;
(iii)           market-related events;
(iv)          provision of access and information to Crosby,  whether
or not such information is generally available; and
(v)           no material adverse change.

On 23 September 2008, the Medusa Board conducted an initial review of
the proposed offer as outlined in the Offer Announcement and  advised
shareholders to TAKE  NO ACTION as  the Board believes  the offer  is
inadequate and opportunistic.   When Crosby's  bidder's statement  is
given to  Medusa, the  Company  will review  it and  provide  further
advice and recommendations  to shareholders  in a  timely manner  for
shareholders to make an informed decision.


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.

Cube Consulting Pty Ltd

Information  in  this  report  relating  to  Mineral  Resources   has
been estimated and complied by  Mark  Zammit  of Cube Consulting  Pty
Ltd. Mr Zammit is a member of  The Australasian Institute of Mining &
Metallurgy and  has  sufficient experience  that is  relevant to  the
style of mineralisation and type  of deposit 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 Zammit consents to the  inclusion in the report of  the
matters based on his information in the form and context in which  it
appears.

Cube Consulting is an independent Perth based resource industry
consulting firm specialising in geological modelling, resource
estimation and information technology.

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 Hastie and Mr Onley  are
full-time employees of Golder Associates Pty Ltd.

Messrs Hastie and Onley have 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". Charles  Hastie and Peter Onley  consent
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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