The Ostrich Slug is located in the water stage, otherwise known as Mission 3. When attempting to destroy the second underwater missile shooting tower, wait for approximately 20 seconds and fire sparingly so as not to destroy the tower. A portal entranceway will descend into the top portion of the screen allowing access into an alternate pathway that has the Ostrich Slug. Upon finishing this pathway, you will be dropped straight at the boss.
Sincerely,
Mikhail