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ASX RELEASE

For Immediate Release 17 October 2011

2011 Annual Report, Notice of Annual General Meeting and Proxy Form

Attached are electronic copies of the Monax Mining Limited 2011 Annual Report, Notice of Annual General Meeting and Proxy Form which have been mailed to shareholders.

Yours faithfully

Virginia Suttell Company Secretary

2011 Annual Re ort p

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Annual General Meeting

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The 2011 Annual General Meeting will be held at Business SA, 136 Greenhill Road, Unley, South Australia on 16th November 2011 commencing at 11:00am.

A formal notice is mailed to shareholders with the distribution of this report.

ABN 96 110 336 733

MONAX MINING LIMITED 2011 ANNUAL REPORT 3

Chairman’s Report	4
Review of Operations	6
Introduction	6
Projects	8
Punt Hill	8
Waddikee	10
Yorke Peninsula	12
Pretender Creek	14
Percyvale	16
Corporate Governance Statement	18
Glossary of Terms	25
2011 Financial report	27
Directors’ Report	28
Auditor’s Independence Declaration	41
Statement of Comprehensive Income	42
Statement of Financial Position	43
Statement of Changes in Equity	44
Statement of Cash Flows	45
Notes to the Financial Statements	46
Directors’ Declaration	77
Independent Auditor’s Report	78
Shareholder Information	80
Tenement Status	84
Corporate Directory	85

Dear Fellow Shareholders

It gives me great pleasure to present to you the seventh annual report for Monax Mining Limited (“Monax”) for the 2010-11 financial year.

And let us not forget the exciting announcements by Rex Minerals relating to its Hillside deposit located on the eastern Yorke Peninsula.

I am also pleased to provide shareholders with a summary of the previous financial year and the future exploration programs the Company is undertaking in line with our new strategic focus presented at last year’s meeting.

Junior exploration companies face many challenges including access to capital, but Monax has undertaken prudent exploration during the year with much of the exploration expenditure provided by the Company’s strategic partners - Antofagasta (“Antofagasta”) PLC and OM Manganese (Limited) (OMM).

Monax has achieved two significant milestones on the Company’s flagship Punt Hill copper-gold project. The Punt Hill project is under a farm-in agreement with major international copper producers Antofagasta. During August and September 2011, Monax completed a heritage clearance at Punt Hill, successfully clearing six sites for drill testing with the Kokatha Uwankara, the Native Title claimants for the area.

Monax also successfully negotiated a Part 9B Native Title Mining Agreement for Exploration with the Kokatha Uwankara. The Agreement has been signed by all parties and has been registered by PIRSA. This is an important step for future exploration on the project with a drilling program planned for late 2011.

The recent purchase of the Carrapateena deposit by OZ Minerals Ltd, has increased the focus on the eastern Gawler Craton as a premier copper exploration target.

The eastern Gawler Craton has now produced three major discoveries within the past 10 years with Prominent Hill, Carrapateena and Hillside.

Monax increased its tenement position on the highly prospective Yorke Peninsula with the purchase of EL 3922 (Webling Bay). Historical drilling on the tenement reported some highly encouraging high-grade copper intercepts including 5.3m @ 1.66% copper and 3.5m @ 1.18% copper.

The second phase of drilling on the Melton copper-gold joint venture reported 3m @ 1.3% copper and 39 g/t silver including 1m @ 2.25% copper and 112 g/t silver.

Exploration also commenced on our newly added Queensland projects during the 2010-11 financial year.

Drilling on the Percyvale gold project, in Queensland’s Far North, provided some encouraging results. Drilling has commenced on the Cape York bauxite project and the Company eagerly awaits the results expected within the coming weeks.

Chairman’s Report

MONAX MINING LIMITED 2011 ANNUAL REPORT 5

Within the past 12 months, the level of government intervention within the minerals industry has dramatically increased. The introduction of mineral resources rent tax and the carbon tax will have a substantial impact on how Australia is viewed in the industry worldwide.

Governments at both the State and Federal level have also changed rules and regulations in regard to land access, which is affecting companies’ exploration programs. The introduction of new guidelines for landowner engagement and compensation as a result of issues within other sectors of the industry has increased not only the workload for companies but also increased the timelines for drilling programs.

The Board believes the Company is well positioned with major international partners in Antofagasta and OM Manganese, a wholly-owned subsidiary of ASX-listed OM Holdings.

Monax continues to be exposed to uranium via its strategic holding in Marmota Energy. Marmota has concentrated its exploration efforts at the highly promising Junction Dam project, located 18km east of the Honeymoon Uranium Mine, in South Australia’s Far North.

I take this opportunity to thank the small but dedicated staff of Monax and Groundhog Services Pty Ltd (our joint services company with Marmota) and my fellow Directors, who provided commitment to the Company.

Finally I’d like to thank all of our shareholders for your continuing support and your Board will continue to work hard to create further shareholder value in the upcoming year.

Robert M Kennedy CHAIRMAN

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During the 2010/2011 year, Monax focused on South Australian projects with major exploration programs undertaken at Punt Hill, Waddikee and Melton.

At Punt Hill, exploration comprised a major gravity survey which outlined up to eight high priority targets. Monax is planning on drilling up to five of these targets in late 2011 as part of the farm-in agreement with major Chilean copper producer, Antofagasta PLC (“Antofagasta”), through its wholly-owned subsidiary Antofagasta Minerals S.A. Drilling at the Waddikee manganese project recorded the highest grade manganese on the project to date with 52m @ 21.1% Mn intersected at the Hodgins prospect. Further encouraging copper results were recorded at the Melton area on the Yorke Peninsula project.

FIGURE 1: LOCATION OF MONAX’S KEY PROJECTS

Review of Operations

MONAX MINING LIMITED 2011 ANNUAL REPORT 7

Hi hli hts g g

Punt Hill Copper-Gold Project

Farm-in agreement signed with Antofagasta PLC. Antofagasta to spend minimum of US$1.5 million in first two years on exploration.
Monax expands its tenement position with grant of EL 4548 (Yeltacowie).
Major gravity survey comprising >8000 new gravity stations completed.
Gravity survey outlines up to eight high priority targets.
Heritage clearance undertaken with representatives of the Kokatha Uwankara, the Native Title claimants for the Punt Hill area, facilitating access for the drilling program.

Yorke Peninsula Copper-Gold Project

Second phase of diamond drilling completed at Miranda prospect with copper sulphide intersected.
Monax acquires EL 3922 to add to its tenement portfolio on Yorke Peninsula.

Cape York Bauxite Project

Monax tenements granted in March-April 2011.
Monax purchases selected tenements from Delminco.
Drilling planned to commence in October 2011.

Percyvale Gold Project

Part 9B Native Title Agreement signed.
Drilling of up to five targets planned to commence in October 2011.
Age-dating of host rocks confirm Punt Hill is part of the same mineralising event as Olympic Dam and Prominent Hill.
Monax renewed Option Agreement over four granted mining leases.
RC drilling program completed on four mining leases.

Waddikee Manganese/Iron Project

52m @ 21.1% Mn recorded from Hodgins prospect.
Modelling of geophysical data highlighted significant potential magnetite-rich zones at Francis, Polinga, Jamieson Tank and Bunora prospects; drilling is planned for late 2011.

Disclaimer: The information in the Annual Report that relates to Exploration results, Mineral Resources, Ore Reserves or targets is based on information compiled by Mr G M Ferris, who is a Member of the Australian Institute of Mining and Metallurgy. Mr Ferris is employed full time by the Company as Managing Director and, has a minimum of five years relevant experience in the style of mineralisation and type of deposit under consideration and qualifies 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 Ferris consents to the inclusion of the information in this report in the form and context in which it appears.

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Punt Hill Co er-Gold Pro ect pp j

(MONAX 100%; ANTOFAGASTA EARNING 51%)

The Punt Hill project is located within the highly prospective Olympic Iron Oxide Copper Gold (IOCG) Province on the eastern margin of the Gawler Craton (Figure 2). This province is host to the world class Olympic Dam and Prominent Hill mines, as well as the recently discovered Carrapateena and Hillside deposits.

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The Punt Hill tenement is adjacent to Carrapateena, which was recently purchased by OZ Minerals Ltd. Previous drilling by Monax recorded significant copper in the Groundhog area (Plate 1).

During the current year, Monax signed an option agreement over the Punt Hill project (comprising EL’s 4548 and 4642) with a major international copper mining company, Antofagasta PLC (“Antofagasta”), through its wholly-owned subsidiary Antofagasta Minerals S.A.

Under the Agreement, Antofagasta can earn a 51% interest in the Punt Hill project by expending US$4 million over 4 years. Once Antofagasta has obtained this 51% interest, Monax has the ability to remain at 49% by co-funding exploration or development costs, or can elect to have its interest diluted. Antofagasta can earn a further 19% equity in the project by expending a further US$5 million on exploration and development of the project tenements. If a development decision is made, Antofagasta will pay Monax a success fee of US$10 million.

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Figure 2
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Review of Operations

MONAX MINING LIMITED 2011 ANNUAL REPORT 9

During the year Monax completed a major regional and detailed gravity survey. The survey comprised over 8,000 new gravity station measurements, which takes the total gravity station measurements to ~14,800 across the project area. Processing of the data has highlighted up to eight high priority targets and drilling is planned for late October 2011. The planned drilling program will comprise approximately 3,000m of RC/diamond drilling and will test four targets.

Target 6 is one of the eight priority anomalies which have been identified as a result of the detailed gravity survey and data processing. An example of the completed 3D model of Target 6, with a preliminary proposed diamond drill hole (DDH_6), is shown below in Figure 3. The dimensions of the modelled shell of Target 6 gravity anomaly are in excess of 800 metres in diameter and 1 kilometre thickness. DDH_6 is projected to 600 metres in depth.

Monax signed a Native Title Mining Agreement for Exploration with the Kokatha Uwankara, which is a major step in the exploration process. A successful clearance was undertaken in August 2011 which facilitated access for the drilling program.

Research work underaken by PIRSA on the Punt Hill project included age dating of a sample of the alteration and mineralisation. The sample yielded an age of 1577±15 Ma, which confirms the skarn alteration and mineralisation event occurred at ~1580 Ma. This is an important result as it confirms that the Punt Hill mineral system belongs to the geological event that resulted in the formation of the Olympic Dam deposit and other IOCG deposits within the Olympic IOCG Province.

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Figure 3

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Plate 1

Figure 2: Geological setting of Monax’s Punt Hill project. Figure 3: 3D inversion model of target 6, showing proposed diamond drill hole DDH_6.

Plate 1: Bornite (blue) and chalcopyrite (bronze) copper mineralisation within drill hole GHDD1.

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Waddikee Manganese/ Iron Project

(OM (MANGANESE) LIMITED EARNING A 60% INTEREST IN MANGANESE AND IRON)

Waddikee is located on central Eyre Peninsula approximately 10km from the township of Kimba. The Waddikee project is the subject of a farm-in agreement with OM (Manganese) Ltd (OMM), a wholly-owned subsidiary of OM Holdings Limited (ASX:OMH). OMM is required to fund A$2 million over four years to acquire a 60% participating interest in manganese and iron only.

The Waddikee project is prospective for manganese and iron and exploration undertaken by Monax and OMM on the tenement has provided encouraging results for both commodities. Since 2008, Monax as operator has drilled a total of 196 holes for 10,952 metres. The bulk of the drilling has been concentrated at the Jamieson Tank project.

Manganese

Geological mapping, auger drilling and RC/aircore drilling has confirmed manganese over a strike length of 5km at Jamieson Tank (Figure 4). A total of 159 RC/aircore holes totalling 8,898 metres have been completed at Jamieson Tank with 37% of drill holes reporting >14% manganese.

Preliminary heavy liquid beneficiation work undertaken after the initial drilling program at Jamieson Tank showed that the manganese content could be raised from a head grade of 20.3% Mn to 42.5% Mn at a Mn recovery of >80%.

The best results from Jamieson Tank include:

2m @ 34.0% Mn (JTRC034)
10m @ 17.5% Mn (JTRC069 26-36m)
7m @ 17.1% Mn (JTRC121 22-29m)
5m @ 19.2% Mn (JTRC119 14-19m)

In April 2011, six holes were drilled at the Hodgins prospect located in the north of EL 4662 to follow up high grade surface samples grading up to 37% Mn. The best intersections from the drilling include:

10m @ 29.2% Mn (HRC05 46-56m EOH)
20m @ 23.8% Mn (HRC05 22-42m)
11m @ 20.8% Mn (HRC03 9-20m)
14m @ 16.8% Mn (HRC01 32-46m)

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Figure 4

Review of Operations

MONAX MINING LIMITED 2011 ANNUAL REPORT 11

Iron

The Waddikee project is also highly prospective for iron. Figure 4 shows the total magnetic intensity image for the tenement and clearly shows long, linear magnetic features. These magnetic features are interpreted to represent magnetite-rich horizons within the basement rocks.

Monax has not directly targeted iron in exploration to date, but has reported significant intersections of iron including:

44m @ 34.6% Fe (PRC001 m)
34m @ 35.6% Fe (JTRC166 4-38m)
11m @ 46.6% Fe (PRC010 13-24m)

Initial rock chip sampling for iron outlined three major areas of surface iron at Bunora Siding, Lambell and Kelly Tank prospects (see Figure 4). No follow-up drilling has been undertaken within these areas.

Figure 4: Location of Waddikee Project tenement. Figure 5. Geophysical model of the Waddikee Project showing high magnetite shells. (Red = highest magnetite content).

20m @ 32.1% Fe (JTRC054 5-25m)
16m @ 34.6% Fe (JTRC043 m)
12m @ 33.6% Fe (PRC010 34-46m)

As part of a new exploration strategy for Waddikee, Monax engaged a geophysical consultant to process and model the high-quality magnetic geophysical data over the project, aimed at assessing the potential for iron mineralisation. The modelling has shown significant magnetic features in the area of the Francis, Polinga and Jamieson Tank prospects (Figure 5). Further modelling will be undertaken at a refined scale to provide targets for drilling in early 2012.

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Figure 5
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Yorke Peninsula Co er-Gold Pro ect pp j

The Yorke Peninsula area is a major copper province located within the Olympic IOCG Province and with the discovery by Rex Minerals of the Hillside deposit, has become a much sought after exploration destination within South Australia. Monax has three areas of interest on the Yorke Peninsula (see Figure 6).

Webling Bay

(100% Monax)

In August 2011, the Company announced it had purchased EL 3922 located on the west coast of Yorke Peninsula (Figure 6).

Historical drilling on EL 3922 recorded anomalous copper in three holes. Hole KD11 reported 5.3m @ 1.66% Cu (97102.3m) and 2.3m @ 1.06% Cu (108.3 – 110.6m). Hole KD16 reported 3.5m @ 1.18% Cu (169.5 – 173m). Hole KD04 recorded 10m @ 0.37% Cu (224 - 234m). The holes are located within a prominent NNE-SSW trending zone with mineralisation hosted by iron altered metasediments.

Monax is planning soil sampling/calcrete sampling followed by shallow aircore drilling at the end of the 2011 cropping season.

Melton

(50:50 joint venture with Marmota Energy Limited)

The Melton Project is located on the northern Yorke Peninsula and contains a 15km section of the highly prospective Pine Point Fault Zone (PPFZ). Drilling at the Rex Minerals, Hillside deposit has highlighted the correlation between magnetite and copper mineralisation. Rex Minerals announced an inferred resource of 217Mt @ 0.7% Cu and 0.2 g/t Au for 1.5 million tonnes of copper and 1.4 million ounces of gold.

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Figure 6

Initial exploration under the Monax:Marmota joint venture comprised a regional high resolution aeromagnetic survey. The aeromagnetic survey defined five potential magnetic anomalies within the project area and the three easternmost anomalies were considered as high priority targets.

Review of Operations

MONAX MINING LIMITED 2011 ANNUAL REPORT 13

Two drilling programs have been completed with the majority of the holes targeting the Miranda anomaly. The alteration system is interpreted to be related to the intrusion of an extensive mafic body into the metasedimentary host rocks. Zones of sulphides were observed within the drillcore.

The best intersections include:

21m @ 0.11% Cu (hole MIRDD01 from 451m)
4m @ 0.15% Cu (hole MIRDD04 from 432m)
4m @ 0.12% Cu (hole MIRDD04 from 463m)
3m @ 0.26% Cu (hole MIRDD04 from 487m)
1m @ 0.21% Cu (hole MIRDD05 from 438m)
3m @ 0.25% Cu (hole MIRDD06 from 373m)
3m @ 0.57% Cu (hole MIRDD06 from 468m)
2m @ 0.4% Cu (hole MIRDD06 from 476m)
2m @ 0.2% Cu (hole MIRDD07 from 423m)
3m @ 1.3% Cu and 39 g/t Ag (hole MRDD08 467-470m); including 1m @ 2.25% Cu and 112 g/t Ag (467-468m)

Drill hole MRDD08 provided highly encouraging results with 3m @ 1.31% Cu and 39 g/t Ag reported between 467-470m. A six metre zone from 461-467m reported anomalous copper up to 0.6%. Sampling was not fully representive and therefore this six metre section will be submitted for analysis.

Coonarie

(Monax 100% of all minerals excluding uranium)

EL 3907 is located immediately to the south of the Rex Minerals tenement package and is located along the southern extent of the PPFZ. Monax has not undertaken any work on this tenement, but has commenced an assessment of the potential of this tenement.

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Plate 2

Figure 6: Location of the Yorke Peninsula Project. Plate 2: Diamond drilling at Miranda anomaly, Melton Project. Plate 3: Drillcore from MIRDD08.

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Plate 3

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Pretender Creek Bauxite Project

(CAPE YORK, FAR NORTHERN QLD – MONAX 100%)

The Pretender Creek project is located on the Cape York Peninsula, in northern Queensland (Figures 1 & 7). The Pretender Creek project comprises five granted tenements with bauxite present within the tenements as topographic highs.

Exploration for bauxite has shown that these topographic highs are also characterised by anomalous radiometric responses, greatly assisting in exploration for potential bauxite resources (Figure 8).

The Pretender Creek project is located outside of the main current bauxite producing area located in the Aurukun and Weipa areas, but the area does contain known bauxite. Work by CRA Exploration in the 1970’s discovered two small bauxite deposits on the adjoining tenements which are currently held by Gulf Alumina Pty Ltd. CRA Exploration defined three separate bauxite zones containing 16.6 million tonnes of ore with a gross

bauxite inferred resource of 128 million tonnes estimated. The bauxite has an average alumina content of 52% and reactive silica of 8-12%.

Monax’s tenements contain extensive areas of topographic highs which are clearly seen on satellite imagery. Figure 7 shows Monax’s tenement position and areas of potential bauxite interpreted from satellite imagery and radiometric data. Plate 3 shows a sample of bauxite with characteristic bauxite pisolites from EPM 18304 area that assayed 44.5% Al2O3. Plate 4 shows pisolitic bauxite present at the surface within EPM 17005 that assayed 38% Al2O3.

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Figure 7
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MONAX MINING LIMITED 2011 ANNUAL REPORT 15

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Figure 8

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Plate 4

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Plate 5

Figure 7: Location of Pretender Creek project showing zones of interpreted bauxite. Figure 8. EPM 18304. Left hand image shows radiometric response of bauxite plateau; right hand image shows Google Earth image of the same area showing prominent bauxite plateaus.

Plate 4: Pisolitic bauxite from EPM18304 that assays 44.5% Al2O3 Plate 5: Pisolitic bauxite at the surface within EPM 17005.

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Perc vale Gold Pro ect y j

(NORTHERN QLD – MONAX 100%)

The Percyvale project comprises four granted mining leases which are currently under an option agreement. Historical surface sampling and mining records show all four leases contain high-grade gold. Monax also has six current mining lease applications in the Percyvale/Gilberton area.

ML 3366 – Union

ML 30103 – Homeward Bound

ML 3366 is located approximately 10km northwest of Percyvale Homestead and was historically the largest mine in the region. The Union Lease covers three lines of lode, the Union, Cranky Dick and Walkers, with only the Union reef worked to any great extent. The Union Mine was developed to a depth of 152m with a historical sample from a stope reporting 96.5 oz/t gold.

Previous rock chip sampling reported some spectacular results including:

184 g/t Au, 973 g/t Ag and 22.4% Cu
114 g/t Au, 845 g/t Ag and 15.8% Cu
167 g/t Au and 1730 g/t Ag
88.1 g/t Au, 1970 g/t Ag and 12.3% Cu
63.7 g/t Au, 1110 g/t Ag and 28.8% Cu.

Rock chip sampling by Monax on the Cranky Dick line of lode reported gold up to 28.4 g/t.

ML 30199 - Percy West

ML 30199 is located approximately 5.5km southwest of Percyvale Homestead. Mineralisation is hosted by quartz veins within a highly altered rhyolite intruded into granodiorite. Previous rock chip sampling reported gold up to 608 g/t. Plate 6 shows a sample of gold collected on ML 30199.

The Homeward Bound Lease is located approximately 13km west-southwest of Percyvale Homestead and covers an area of old workings. The ore at Homeward Bound was very rich, averaging 6.39 oz/t in the oxide zone and 4.82 oz/t in the upper sulphide zone. The ore was also rich in silver (69.7 oz/t), copper (up to 7%) and lead (up to 5%), within the upper sulphide zone. The workings are scattered over 1km in length. Between 1890 -1903, a total of 159.5 tonnes of ore yielded 1015.68 ozs of gold (grade of 6.36 oz/t).

Limited rock chip sampling of mullock from the old mine by Monax reported gold up to 71.7 g/t, silver up to 1258 g/t, copper up to 17%, zinc up to 15.5% and lead up to 3.9%.

ML 30139 – Josephine

The Josephine ML is located approximately 9km southsouthwest from Percyvale Homestead and covers an outcropping gossan. Previous rock chip sampling reported gold between 0.53 to 10.5 g/t, with samples also reporting anomalous copper (up to 1.2%), lead (up to 0.8%) and silver (59 g/t max). Rock chip sampling of costeans by Monax reported gold up to 119 g/t, silver up to 830 g/t, copper up to 5.6% and lead up to 11.4%.

In July 2011, Monax completed 17 RC holes for a total of 760m at Percyvale. The best results include:

1m @ 8.94 g/t Au (hole UN04 29-30m)
1m @ 4.12 g/t Au (hole UN01 24-25m)
5m @ 1.6 g/t Au (hole PW01 26-31m)
1m @ 3.6 g/t Au (hole HB01 11-12m)

Review of Operations

MONAX MINING LIMITED 2011 ANNUAL REPORT 17

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Lease No. Name Expiry Date Size (ha)
ML 3366 Union 31 July 2016 23.60
ML 30199 Percy West 30 June 2016 32.00
ML 30139 Josephine 31 October 2014 6.36
ML 30103 Homeward Bound 30 September 2013 2.63
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Plate 6

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Plate 7

Plate 6: Drilling on the Union mining lease, July 2011. Plate 7: Gold within quartz from ML 30133 (Percy West) (sample collected by leaseholder)

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The following statement sets out a summary of the Company’s corporate governance practices that were in place during the financial year and how those practices relate to the revised Corporate Governance Principles and Recommendations issued by the Australian Stock Exchange Corporate Governance Council (“ASX Recommendations”).

These recommendations are not intended to be prescriptions to be followed by all ASX listed companies, but rather guidelines designed to produce an effective, quality and integrity outcome. The Corporate Governance Council has recognised that a “one size fits all” approach to Corporate Governance is not required. Instead it states aspirations of best practice for optimising corporate performance and accountability in the interests of shareholders and the broader economy.

A company may consider that a recommendation is inappropriate to its particular circumstances and has flexibility not to adopt it and explain why.

In ensuring the highest standard of ethical behaviour and accountability, the Board has included in its corporate governance policies, those matters contained in the ASX Recommendations where applicable. However, the Board also recognises that full adoption of the above ASX Recommendations may not be practical nor provide the optimal result given the particular circumstances and structure of the Company. The Board is, nevertheless, committed to ensuring that appropriate Corporate Governance practices are in place for the proper direction and management of the Company. This statement outlines the main Corporate Governance practices of the Company disclosed under the ASX Recommendations, including those that comply with best practice and which unless otherwise disclosed, were in place during the whole of the financial year ended 30 June 2011.

Principle 1 – Lay solid foundations for management and oversight

Recommendation 1.1 – Recommendation followed

The Board is governed by the Corporations Act 2001, ASX Listing Rules and a formal constitution adopted by the Company in 2004.

The role of the Board is to provide leadership and direction to management and to agree with management the aims, strategies and policies of the Company for the protection and enhancement of long-term shareholder value.

The Board takes responsibility for the overall Corporate Governance of the Company including its strategic direction, management goal setting and monitoring, internal control, risk management and financial reporting.

The Board has an established framework for the management of the entity including a system of internal control, a business risk management process and appropriate ethical standards. In fulfilling its responsibilities, the Board is supported by an Audit and Corporate Governance Committee, to deal with internal control, ethical standards and financial reporting and a Remuneration and Nomination Committee to monitor the composition of the Board and review the compensation of the Company’s Executive Directors and senior management with the overall objective of motivating and appropriately rewarding performance.

Corporate Governance Statement

MONAX MINING LIMITED 2011 ANNUAL REPORT 19

The Board appoints a Managing Director responsible for the day to day management of the Company including management of financial, physical and human resources, development and implementation of risk management, internal control and regulatory compliance policies and procedures, recommending strategic direction and planning for the operations of the business and the provision of relevant information to the Board.

Recommendation 1.2 and 1.3 – Recommendations followed

The Remuneration and Nomination Committee meets at least annually and the recommendations are made in line with the Company’s present circumstances and goals to ensure maximum shareholder benefits from the attraction and retention of a high quality Board and senior management team. The Remuneration and Nomination Committee met twice during the financial year to review the performance of and recommend appropriate remuneration for Executive Directors and senior management including any equity participation by such Executive Directors and senior management. The Board evaluates the performance of the Managing Director and Company Secretary on a regular basis and encourages continuing professional development.

Principle 2 – Structure the board to add value

Recommendation 2.1 – Recommendation followed

The composition of the Board consists of five directors of whom four, including the Chairman, are non-executives. Messrs Kennedy, Nelson, Alley and Davis are Independent Directors. In addition, two alternate directors were appointed during the year for Messrs Nelson and Davis.

The Board is of the opinion that the current structure of the Board is appropriate given the size and nature of the Company. The Board considers that all Directors bring an independent judgement to bear on Board decisions and that the Board’s expertise and experience adds considerable value to the Company.

Recommendation 2.2 – Recommendation followed

The Chairman, Mr Kennedy is an Independent Director.

Recommendation 2.3 – Recommendation followed

Mr Kennedy’s role as Chairman of the Board is separate from that of the Managing Director who is responsible for the day to day management of the Company and is in compliance with the ASX Recommendation that these roles not be exercised by the same individual.

Recommendation 2.4 – Recommendation followed

The Company has an established Remuneration and Nomination Committee currently consisting of two Independent Directors, Messrs Nelson and Kennedy. Mr Nelson acts as Chairman of this committee (refer also to Principle 8 below).

Recommendation 2.5 – Recommendation not followed

The Board recognises that as a result of the Company’s size and the stage of the entity’s life as a publicly listed junior exploration company, the assessment of the Board’s overall performance and its own succession plan is conducted on an informal basis. Whilst this is at variance with the ASX Recommendations, for the financial year ended June 2011, the Directors consider that at the date of this report an appropriate and adequate process for the evaluation of Directors is in place.

Recommendation 2.6 – Recommendation followed

The names of the directors of the Company and terms in office at the date of this Statement together with their skills, experience, expertise and financial interests in the Company are set out in the Directors’ Report section of this report.

Messrs Kennedy, Nelson, Alley and Davis are considered to be independent.

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The Company has no relationships with any of the Independent Directors which the Company believes would compromise the independence of these directors.

The Company’s constitution specifies the number of directors must be at least three and at most ten. The Board may at any time appoint a director to fill a casual vacancy. Directors appointed by the Board are subject to election by shareholders at the following annual general meeting and thereafter directors (other than the Managing Director) are subject to re-election at least every three years. The tenure for executive directors is linked to their holding of executive office.

Formal deeds were entered into by the Company with directors in May 2005 whereby all directors, with the consent of the Chairman, are entitled to take such legal advice as they require at any time and from time to time on any matter concerning or in relation to their rights, duties and obligations as directors in relation to the affairs of the Company.

An assessment of the Board’s overall performance and its own succession plan is conducted on an informal basis and was done so during the previous year by the Chairman.

Principle 3 – Promote ethical and responsible decision making

Recommendation 3.1 – Recommendation followed

The Company requires all its directors and employees to abide by the standards of behaviour and business ethics in accordance with the law. In discharging their duties, Directors of the Company are required to:

Exercise their powers in good faith for a proper purpose and in the best interests of the Company;
Not improperly use their position or information obtained through their position to gain a personal advantage or for the advantage of another person to the detriment of the Company;
Disclose material personal interests and avoid actual or potential conflicts of interests;
Keep themselves informed of relevant Company matters;
Keep confidential the business of all Directors’ meetings;
And observe and support the Board’s Corporate Governance practices and procedures.

All Directors have signed deeds with the Company which require them to comply with all the obligations of a director under the Corporations Act 2001. Directors also are required to provide the Company with details of all securities registered in the director’s name or an entity in which the director has a relevant interest within the meaning of section 9 of the Corporations Act 2001 and details of all contracts, other than contracts to which the Company is a party, to which the director is a party or under which the director is entitled to a benefit, and that confer a right to call for or deliver shares in the Company and the nature of the director’s interest under the contract.

Directors are required to disclose to the Board any material contract in which they may have an interest. In accordance with Section 195 of the Corporations Act 2001, a director having a material personal interest in any matter to be dealt with by the Board, will not be present when that matter is considered by the Board and will not vote on that matter, subject to the discretion of the Board.

Act in good faith and in the best interests of the Company;
Exercise the care and diligence that a reasonable person in that role would exercise;

Corporate Governance Statement

MONAX MINING LIMITED 2011 ANNUAL REPORT 21

Recommendation 3.2 – Recommendation followed

Directors, officers and employees are not permitted to trade in securities of the Company and have an obligation not to inform at any time whilst in possession of price sensitive information not readily available to the market. Section 1043A of the Corporations Act 2001 also prohibits the acquisition and disposal of securities where a person possesses information that is not generally available and which may reasonably be expected to have a material effect on the price of the securities if the information was generally available. A securities trading policy has been established and all employees and Directors are obliged to comply.

Recommendation 3.3 – Recommendation followed

A summary of the Company’s Code of Conduct and Share Trading Policy can be found at www.monaxmining.com.au .

Principle 4 – Safeguard integrity in financial reporting

Recommendation 4.1 – Recommendation followed

Monax was not a Company required by ASX Listing Rule 12.7 to have an Audit Committee during the year although it is an ASX Recommendation. Notwithstanding the Listing Rule requirement, an Audit and Corporate Governance Committee was set up prior to the Company’s ASX listing in 2005 to oversee corporate governance, internal controls, ethical standards, financial reporting, and external accounting and compliance procedures.

The main responsibilities of the Audit and Corporate Governance Committee include:

Reviewing, assessing and making recommendations to the Board on the annual and half year financial reports;
Overseeing establishment, maintenance and reviewing the effectiveness of the Company’s internal controls and ensuring efficacy and efficiency of operations, reliability of financial reporting and compliance with applicable Accounting Standards and ASX Listing Rules;
Liaising with and reviewing reports of the external auditor; and
Reviewing the performance and independence of the external auditor and where necessary making recommendations for appointment and removal of the Company’s auditor.

Recommendation 4.2 – Recommendation not followed

The Audit and Corporate Governance Committee currently consists of two Independent Board directors, Messrs Davis and Kennedy, and is chaired by Mr Davis.

The Board believes that given the size of the Company and the stage of the entity’s life as a publicly listed junior exploration company and the current Board structure, the establishment of an audit committee in line with ASX Recommendation 4.2 as recommended by ASX Recommendation 4.3 cannot be justified by the perceived benefits of doing so. The existing composition of the Audit and Corporate Governance Committee is such that review and authorisation of the integrity of the Company’s financial reporting and the independence of the external auditor is via the exercise of independent and informed judgement.

Recommendation 4.3 – Recommendation followed

The Board has adopted a formal Charter for the Audit and Corporate Governance Committee. The Charter details the Audit Committee’s role and responsibilities, composition and membership requirement.

Recommendation 4.4 – Recommendation followed

Mr Kennedy is a qualified Chartered Accountant. Details of these Directors’ qualifications and attendance at meetings are set out in the Directors’ Report section of this report.

The Committee meets at least three times per annum and reports to the Board. The Managing Director, Company Secretary and external auditor may, by invitation, attend meetings at the discretion of the Committee.

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Principle 5 – Make timely and balanced disclosure

Recommendation 5.1 and 5.2 – Recommendations not followed

The Company operates under the continuous disclosure requirements of the ASX Listing Rules and ensures that all information which may be expected to affect the value of the Company’s securities or influence investment decisions is released to the market in order that all investors have equal and timely access to material information concerning the Company. The information is made publicly available on the Company’s website following release to the ASX.

Due to the size of the Company and the stage of life of the entity as a publicly listed junior exploration company, the Board does not believe a formal policy for continuous disclosure is required. However, a summary describing how the Company will ensure its compliance with continuous disclosure requirements is posted on the Company’s website www. monaxmining.com.au .

Principle 6 – Respect the rights of shareholders

Recommendation 6.1 and 6.2 - Recommendations not followed

The Board aims to ensure that shareholders are informed of all major developments affecting the Company’s state of affairs. In accordance with the ASX Recommendations, information is communicated to shareholders as follows:

The annual financial report which includes relevant information about the operations of the Company during the year, changes in the state of affairs of the entity and details of future developments, in addition to the other disclosures required by the Corporations Act 2001;
the half yearly financial report lodged with the Australian Stock Exchange and Australian Securities and Investments Commission and sent to all shareholders who request it;
notifications relating to any proposed major changes in the Company which may impact on share ownership rights that are submitted to a vote of shareholders;
notices of all meetings of shareholders;
publicly released documents including full text of notices of meetings and explanatory material made available on the Company’s website at www.monaxmining.com.au ; and
disclosure of the Company’s Corporate Governance practices and communications strategy on the entity’s website.

The Board encourages full participation of shareholders at the Annual General Meeting to ensure a high level of accountability and identification with the Company’s strategy and goals. Important issues are presented to the shareholders as single resolutions. The external auditor of the Company is also invited to the Annual General Meeting of shareholders and is available to answer any questions concerning the conduct, preparation and content of the auditor’s report. Pursuant to section 249K of the Corporations Act 2001 the external auditor is provided with a copy of the notice of meeting and related communications received by shareholders.

Due to the size of the Company and the stage of life of the entity as a publicly listed junior exploration company, the Board does not believe a formal policy for shareholder communication is required. However, a summary describing how the Company will communicate with its shareholders is posted on the Company’s website www.monaxmining.com.au .

Corporate Governance Statement

MONAX MINING LIMITED 2011 ANNUAL REPORT 23

Principle 7 – Recognise and manage risks

Recommendation 7.1, 7.2 & 7.4 – Recommendations

not followed

The Board recognises that there are inherent risks associated with the Company’s operations including mineral exploration and mining, environmental, heritage and native title, legal and other operational risks. The Board endeavours to mitigate such risks by continually reviewing the activities of the Company in order to identify key business and operational risks and ensuring that they are appropriately assessed and managed. No formal report in relation to the Company’s management of its material business risks is presented to the Board.

Due to the size of the Company and the stage of life of the entity as a publicly listed junior exploration company, and the inherent risks associated with the industry it operates in, the Board does not believe formal policies for oversight and management of risk are required. The Board with the assistance of the Audit and Corporate Governance Committee conducts a formal review of the risk profile of the Company annually and monitors risk informally throughout the year. A summary describing how the Company manages risk by procedures established at Board and executive level can be found posted on the Company’s website www.monaxmining.com.au .

Recommendation 7.3 – Recommendation followed

In accordance with ASX Recommendation 7.3 the Chief Executive Officer and Chief Financial Officer are required to provide assurances that the written declarations under s295A of the Corporations Act are founded on a sound framework of risk management and internal control and that the framework is operating effectively in all material respects in relation to financial reporting risks. Both the Chief Executive Officer and Chief Financial Officer provide said assurances at the time the s295A declarations are provided to the Board.

Principle 8 – Remunerate fairly and responsibly

Recommendation 8.1 – Recommendation followed

The Company established a Remuneration and Nomination Committee to monitor the composition of the Board and review the compensation of the Company’s Executive Directors and senior management with the overall objective of motivating and appropriately rewarding performance. The Committee makes recommendations to the Board who is ultimately responsible for the Company’s remuneration policy.

The Remuneration and Nomination Committee currently consists of two Independent Directors, Messrs Nelson and Kennedy. Mr Nelson acts as Chairman of this committee. Details of the number of and attendance at Committee meetings can be found in the Directors’ Report.

The Board believes that given the size of the Company and the stage of the entity’s life as a publicly listed junior exploration company that the cost of establishing a formal remuneration and nomination committee charter cannot be justified by the perceived benefits of doing so.

Recommendation 8.2 & 8.3 – Recommendations followed

In accordance with ASX Recommendation 8.2 the Company’s remuneration practices are set out as follows.

The Company’s Constitution specifies that the total amount of remuneration of non-executive directors shall be fixed from time to time by a general meeting. The current maximum aggregate remuneration of non-executive directors has been set at $300,000 per annum. Directors may apportion any amount up to this maximum amount amongst the non-executive directors as they determine. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in performing their duties as directors.

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Recommendation 8.2 & 8.3 – Recommendations followed (continued).

Non-executive director remuneration is by way of fees and statutory superannuation contributions. Non-executive directors do not participate in schemes designed for remuneration of executives nor do they receive options or bonus payments and are not provided with retirement benefits other than salary sacrifice and statutory superannuation.

The remuneration of the Managing Director is determined by the Board on the recommendation of the Remuneration and Nomination Committee as part of the terms and conditions of his employment which are subject to review from time to time. The remuneration of employees is determined by the Managing Director subject to the approval of the Board.

The Company’s remuneration structure is based on a number of factors including the particular experience and performance of the individual in meeting key objectives of the Company. The Remuneration and Nomination Committee is responsible for assessing relevant employment market conditions and achieving the overall, long term objective of maximising shareholder benefits, through the retention of high quality personnel.

During the previous financial year, the Company engaged the services of an external remuneration consultant to conduct a review of and benchmark remuneration for Non-executive and Executive Directors and key management personnel. The Remuneration and Nomination Committee conducted an inhouse benchmarking review of executive remuneration during the financial year.

The Company does not presently emphasise payment for results through the provision of cash bonus schemes or other incentive payments based on key performance indicators of Monax given the nature of the Company’s business as a publicly listed mineral exploration entity and the current status of its activities. However the Board may approve the payment of cash bonuses from time to time in order to reward individual executive performance in achieving key objectives as considered appropriate by the Board.

From time to time, the Company may grant retention rights as considered appropriate by the Remuneration and Nomination Committee and the Board, as a long term incentive for Key Management Personnel. These rights are subject to shareholder approval at the Annual General Meeting. The intention of this remuneration is to facilitate the retention of Key Management Personnel in order that the goals of the business and shareholders can be met. Under the terms of the issue of retention rights, the rights will vest over a period of time, with a proportion of the rights vesting each year.

The objective of the Plan is to align the interests of employees and shareholders by providing employees of the Company with the opportunity to participate in the equity of the Company as an incentive to achieve greater success and profitability for the Company and to maximise the long term performance of the Company.

The non-executive directors are not eligible to participate in the Plan. Details of options issued to employees during the 2011 financial year together with details of the terms of the Plan are disclosed in the Remuneration Report section of the Directors’ Report.

Details of options and retention rights issued to employees during or since the end of the financial year including to the Managing Director are set out in the Remuneration Report section of the Directors’ Report.

The employment conditions of the Managing Director are formalised in a contract of employment. The Managing Director’s contract may be terminated at any time by mutual agreement or without notice in instances of serious misconduct.

Further details of Directors’ and Executives’/Officers’ remuneration, superannuation and retirement payments are set out in the Remuneration Report section of the Directors’ Report.

Corporate Governance Statement

MONAX MINING LIMITED 2011 ANNUAL REPORT 25

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Ag Symbol for the element silver.
Alteration A geological term indicating change in the mineralogical composition of rocks often brought about by pressure
changes, contact with hydrothermal fluids and weathering processes.
Amphibolite Metamorphic rock composed of amphibole and plagioclase, often from the alteration of basic igneous rocks.
Anomaly A departure from the norm usually determined by systematic measurement across an area. In mineral exploration
it is generally applied to geochemical or geophysical values above or below the norm.
Archaean An interval of geological time before about 2.5 billion years ago.
Au Symbol for the element gold.
Basalt A volcanic rock formed from lava and rich in calcium, magnesium and iron minerals, but relatively low silica.
Basement Much older rocks underlying younger rocks. In the Gawler Craton area, the basement is usually the cratonic rocks.
Base metal A metal commonly used in industry by itself rather than in an alloy eg. copper, lead, zinc.
Basin A depression often due to subsidence in which rock materials are laid down, eg. lava, sediments.
Bauxite The principal ore of aluminium. A mixture of aluminium oxides and hydroxides that form from intense chemical
weathering of a soil in tropical environments.
Bornite A brownish-bronze, lustrous copper ore with the composition Cu5FeS4 that tarnishes to purple when exposed to air.
Calcrete A surficial calcareous layer formed in the soil or near surface sediments.
Cambrian The earliest period of the Palaeozoic Era, spanning from approximately 545 million to 490 million years ago.
Chalcopyrite A yellow mineral, essentially CuFeS2, that is an important ore of copper.
Cover Surficial sediments mantling older rocks and part of the regolith.
Craton A large, tectonically stable part of the Earth’s crust eg. Gawler Craton, Yilgarn Craton.
Crust Outermost layer of the Earth.
Cu Symbol for the element copper.
Diamond core/drilling Drilling with a diamond impregnated drill bit used to recover continuous core.
Diorite A group of plutonic rocks, intermediate in composition between acid and basic rocks, commonly composed of
dark coloured amphibole, acid plagioclase, pyroxene and small amounts of quartz.
Dolomite A carbonate mineral composed mainly of calcium and magnesium, often containing iron. The term is commonly
applied to the carbonate rock dominated by these minerals.
Domain A region where the geological fabric, in particular the magnetic fabric, is distinctive from surrounding regions.
Directors The board of directors of the Company.
EL Exploration Licence granted by a Government Department (PIRSA) for mineral exploration.
ELA Exploration Licence Application made by a company to a Government Department (PIRSA)
for mineral exploration.
Electromagnetic An exploration technique, involving a survey carried out along equally spaced lines that measures changes in the
survey (EM) Earth’s magnetic field at different times after the application of an electrical field. May identify anomalies where
the rocks are conductive (such as some ore bodies) that present drill targets.
Epithermal Usually applied to a hydrothermal mineral formed in a temperature range 50-200ºC within about the upper
kilometre of the Earth’s crust.
EPM Exploration Permit Minerals – Application or granted tenement from the Queensland Department of
Mines and Energy.
Extrusive An igneous rock that has been erupted onto the Earth’s surface.
Fault A fracture in rocks in which rock on one side has moved relative to rock on the other.
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Glossary of Terms

	Fe	Symbol for the element iron.
	Felsic	Light coloured igneous rocks rich in silica.
	Gabbro	A coarse-grained, basic, igneous rock, resulting from the slow crystallisation of magmas of basaltic composition.
	Geochemical survey	An exploration technique involving a systematic survey of the variation of chemical elements in rocks or regolith in an area and oftenproducinganomalies thatpresent drill targets.
	Geophysical survey	An exploration technique involving a systematic survey of the variation in the physical properties of the rocks or regolith (eg. electrical resistivity/conductivity, magnetism, gravity) to help in understanding the geology or defningdrill targets in an area.
	GIS	Geographic Information Systems is a technology used to view and analyse data from a geographic perspective. GIS links location to information and layers that information to give a better understanding of how it interrelates. Maps of the underlying geographic information can be constructed and used as "windows into the database" to supportqueries, analysis, and editingof the information.
	Gneiss	A banded metamorphic rock in which crystalline rock is interspersed with faky micaceous minerals.
	Gossan	An iron-rich, weathered product overlying a sulphide deposit.
	Granite	A plutonic felsic igneous rock composed of quartz, feldspar and mica.
	Graphitic	Rocks rich in graphite.
	Gravity survey	A geophysical survey technique in which the force of gravity is systematically measured over an area, often producinganomalies, which may present drill targets.
	Igneous	Rocks formed by crystallisation from molten materials.
	Intrusive rocks	An igneous rock that was intruded whilst molten into the Earth’s crust eg. dyke, pluton, sill.
	IOCG	Iron-oxide copper-gold.
	IP (Induced Polarisation) survey	A geophysical technique carried out by passing a pulsating electrical current through the ground and measuring the effect of rocks and minerals in its path and locating anomalies that may present drill targets. Often used to detect thepresence of metallic sulphides.
	Iron formation	A sedimentary rock containing signifcant iron as oxide, carbonate or silicate.
	Lodegold	Gold contained within defnite boundaries such as a vein.
	Mafc	A dark coloured rock composed of ferro-magnesian minerals.
	Magnetite	Iron oxide mineral with a formula generally Fe3O4.
	Manganese	A silver coloured metal usually occurring as the mineral pyrolusite (MnO2), which is the principal ore of manganese.
	Mesoproterozoic	An interval of geological time in the Proterozoic extending from 1.6 to 1.0 billion years ago.
	Mesozoic	A period of geological time extending from 251 million to 65 million years ago and known as the age of the reptiles.
	Metamorphism	Changes to rocks generally brought about by heat and pressure within the Earth’s crust resulting in rocks such as schist andgneiss.
	Metasediment	Metamorphosed sedimentary rock in which the original texture is well preserved.
	ML	Mining Lease granted by a Government department.
	Neoproterozoic	An interval of geological time in the Proterozoic extending from 1.0 billion to 545 million years ago.
	Ni	Symbol for the element nickel.
	Palaeoproterozoic	The older part of the Proterozoic extending from 2.5 billion to 1.6 billion years ago.
	PIRSA	The Department of Primary Industries and Resources South Australia, the geological survey and regulatory authorityin SA.
	Pisolitic	A rock made up of pea-like rounded grains, commonly in ferricrete, laterite and bauxite.
	PPM	An abbreviation for parts per million.
	Precambrian	All of geological time preceding the Cambrian (>545 million years ago).
	Proterozoic	The latest part of the Precambrian spanning approximately 2.5 billion to 550 million years ago.
	Pyrite	The mineral iron sulphide, often associated with copper and gold.
	Quartz	A very common mineral, silicon oxide (SiO2).
	Quaternary	The second period of the Cainozoic that encompasses the last 1.8 million years and includes the Pleistocene and Holocene.

	REE	Rare Earth Elements.
	Resource	A well-defned estimate of mineralisation.
	Skarn	A coarse-grained metamorphic rock formed by the contact metamorphism of carbonate rocks. Skarn typically containsgarnet,pyroxene, epidote and wollastonite.
	Sulphide	Mineral consisting of a chemical combination of sulphur with a metal(s).
	Vein	Mineral or metal deposited along a fracture eg. lode gold.
	Volcanism/volcanic	Volcanic activity/rock or feature formed by volcanic activity.

MONAX MINING LIMITED 2011 ANNUAL REPORT 27

2011 Financial Report Monax Mining Limited

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The Directors present their report together with the financial report of Monax Mining Limited for the year ended 30 June 2011 and the auditor’s report thereon.

Directors

The Directors of Monax Mining Limited (‘the Company’) at any time during or since the end of the financial year are as set out below. Details of Directors’ qualifications, experience and special responsibilities are as follows:

Mr Robert Michael Kennedy ASAIT, Grad. Dip (Systems Analysis), FCA, ACIS, Life member AIM, FAICD.

Non-executive Chairman. Mr Kennedy is a chartered accountant and consultant to Kennedy & Co, Chartered Accountants, a firm he founded. He joined Monax Mining Limited in August 2004 as Non-executive Chairman. Chairman of Beach Energy Limited (since 1995 and a Director since 1991), Flinders Mines Limited (since 2001), Ramelius Resources Limited (since 1995), Maximus Resources Limited (since 2004), ERO Mining Limited (since 2006), Marmota Energy Limited (since 2006) and Somerton Energy Limited (since 2010). His special responsibilities include membership of the Audit and Corporate Governance Committee and the Remuneration and Nomination Committee. Mr Kennedy brings to the Board his expertise in finance and management consultancy and extensive experience as chairman and non-executive director of a range of listed public companies including in the resource sector. Mr Kennedy leads the development of strategies for the development and future growth of the Company.

Interest in Shares and Options – 4,464,488 ordinary shares of Monax Mining Limited and options to acquire a further 558,062 shares.

Mr Reginald George Nelson BSc, Hon Life Member Society of Exploration Geophysicists, FAusIMM, FAICD.

Non-executive Director. Board member since 3 August 2004. Mr Nelson is an exploration geophysicist with a career spanning four decades in the petroleum and minerals industries. He was awarded honorary Life Membership of the Society of

Exploration Geophysicists in 1989 and the Prime Minister’s Centenary Medal in 2002 for services to mining. He has wide experience in technical, corporate and government affairs. He was Chairman of the Australian Petroleum Production and Exploration Association (APPEA) from 2004 to 2006 and is a Director of the APPEA Executive Committee and remains a member of its Council. He was recently awarded the Reg Sprigg Medal for outstanding contribution to the oil and gas industry at the 2009 APPEA Conference in Darwin.

Special responsibilities include membership of the Remuneration and Nomination Committee.

Other listed company directorships are: Managing Director of Beach Energy Limited (since 1992), Ramelius Resources Limited (since 1995), Marmota Energy Limited (since 2007) and Sundance Energy Australia Limited (since 2010).

Interest in Shares and Options – 2,145,659 ordinary shares of Monax Mining Limited.

Mr Glenn Stuart Davis LLB, BEc

Non-executive Director. Board member since 3 August 2004. Mr Davis is a solicitor and partner of DMAW Lawyers, a firm he founded. Mr Davis brings to the Board his expertise in the execution of large legal and commercial transactions and his expertise and experience in corporate activity regulated by the Corporations Act and ASX Ltd. He also has specialist skills and knowledge about the resources industry.

Special responsibilities include membership of the Audit and Corporate Governance Committee.

Other listed company directorships are: Deputy Chairman of Beach Energy Limited (since June 2009 and a Director since July 2007) and Director of Marmota Energy Limited (since 2007).

Interest in Shares and Options – 2,775,455 ordinary shares of Monax Mining Limited.

Directors’ Report

MONAX MINING LIMITED 2011 ANNUAL REPORT 29

Dr Neville Foster Alley Phd., PSM

Non-executive Director. Board member since 27 January 2005. Dr Alley is an internationally known earth science researcher and was awarded the Verco Medal for his contribution and leadership in the earth sciences and the Public Service Medal (PSM) in 2005 for outstanding contribution to the geology and minerals industry. He has extensive experience at senior levels in Government in Canada and as Director, Minerals, MESA and PIRSA and has a high level understanding of Government policy, regulation and legislation. He made a significant contribution in setting the SA Government’s strategies for reinvigorating the minerals industry and led the development of Government initiatives such as TEISA and PACE. Dr Alley has worked closely with Aboriginal people and the community in developing a higher profile for the resources industry.

Other listed company directorships are: InterMet Resources Limited (since 2004 until August 2008), Beach Energy Limited (since July 2007), Marmota Energy Limited (since 2007) and ERO Mining Limited (from January 2011 until June 2011) and is a Visiting Research Fellow, School of Earth and Environmental Sciences, The University of Adelaide.

Interest in Shares and Options – 3,022,727 ordinary shares of Monax Mining Limited.

Mr Gary Michael Ferris BSc (Hons), AusIMM.,GAICD

Managing Director. Board member since 1 September 2009. Mr Ferris is a geologist with more than 18 years experience in exploration and management and holds an Honours Degree in Geology from the University of Adelaide and a Masters Degree from the Centre for Ore Deposits and Exploration Studies, University of Tasmania.

Mr Ferris brings extensive experience in adding to the value of Monax’s asset base and the execution of effective exploration programs.

Mr Ferris was formerly Managing Director of InterMet Resources Limited until August 2008.

Interest in Shares and Options – 1,000,000 ordinary shares of Monax Mining Limited and options to acquire 3,000,000 shares of Monax Mining Limited.

Mr Ewan John Vickery LLB

Alternate Director for Reginald George Nelson (appointed 7 February 2011; previously appointed 19 March 2009 ceased 25 June 2010) Mr Vickery is a corporate and business lawyer with over 30 years experience in private practice in Adelaide. He has acted as an advisor to companies on a variety of corporate and business issues including capital and corporate restructuring, native title and land access issues, and as a lead native title advisor and negotiator for numerous mining and petroleum companies. Mr Vickery is a Director of Flinders Mines Limited (since 2001), Maximus Resources Limited (since 2004) and ERO Mining Limited (2006 until January 2011).

Interest in Shares and Options – 55,300 ordinary shares of Monax Mining Limited.

Mr Ian Roy Witton SAIT, FCPA, FAICD

Alternate Director for Glenn Stuart Davis (appointed 28 January 2011; previously appointed 13 March 2009 ceased 24 June 2010) Mr Witton is an independent non-executive director and has been a director for 25 years. Originally trained as an auditor, he was subsequently CEO and later Managing Director for 27 years of a licensed investment dealer developing and managing investment funds, savings, loans and a retirement village. He is also a director of a pharmacy and optical company and a public charitable trust fund. His principal experience is in funds and investment management, strategic development, risk management and corporate governance. Mr Witton is an Alternate Director of ERO Mining Limited (previously March 2009 ceased 30 September 2009 and currently since August 2010).

Interest in Shares and Options – 148,923 ordinary shares of Monax Mining Limited and options to acquire a further 12,366 shares.

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Directors’ Meetings

The Company held 15 meetings of Directors (including committees of Directors) during the financial year. The number of Directors’ meetings and number of meetings attended by each of the Directors of the Company (including committees of Directors) during the financial year were as follows:

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DIRECTORS’ MEETINGS AUDIT AND CORPORATE REMUNERATION AND
GOVERNANCE COMMITTEE NOMINATION COMMITTE
MEETINGS MEETINGS
NO. ELIGIBLE NO. NO. ELIGIBLE NO. NO. ELIGIBLE NO.
TO ATTEND ATTENDED TO ATTEND ATTENDED TO ATTEND ATTENDED
Director
Robert Michael Kennedy 10 10 3 3 2 2
Reginald George Nelson 10 9 - - 2 2
Glenn Stuart Davis 10 10 3 3 - -
Neville Foster Alley 10 10 - - - -
Gary Michael Ferris 10 10 - - - -
Ewan John Vickery 1 1 - - - -
Ian Roy Witton 1 1 - - - -
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Messrs Kennedy and Davis are members of the Audit and Corporate Governance Committee and Messrs Nelson and Kennedy are members of the Remuneration and Nomination Committee.

Messrs Vickery and Witton were present in meetings in the capacity of Alternate Directors.

Company Secretary

The following person held the position of Company Secretary at the end of the financial year.

Virginia Katherine Suttell – B.Comm.,ACA.,GAICD., GradDipACG. Appointed Company Secretary and Chief Financial Officer on 21 November 2007. She is a Chartered Accountant with 18 years experience working in public practice and commerce.

Principal activities

The company’s principal activity is mineral exploration.

Directors’ Report

MONAX MINING LIMITED 2011 ANNUAL REPORT 31

Review and results of operations

The 2011 year has been a period of consolidation with the signing of a major farmin agreement for the Company’s flagship Punt Hill project with Chilean copper mining company Antofagasta PLC.

During the year Monax has undertaken a significant gravity survey at Punt Hill which has produced up to eight priority drill targets. In August 2011, Monax undertook a successful heritage clearance with the Kokatha Uwankara Native Title claimants and gained clearance for six drill sites over new targets. Drilling is planned to commence in October 2011.

The Company also continued drilling on the Waddikee manganese project with further good results at Jamieson Tank and high-grade manganese reported from the Hodgins prospect. A second drilling program at the Melton project was completed with copper reported from three holes.

Due to the delay in the grant of the Cape York tenements, limited field exploration was undertaken during the year. Reconnaissance surface sampling showed Al2O3 up to 44.5% which is highly encouraging and drilling is planned for October 2011 after Aboriginal heritage clearances.

Preparation of Financial Statements

In preparing the financial statement at 30 June 2011 the following entities have not been consolidated on the grounds that they are no longer deemed to be controlled in accordance with Australian Accounting Standards. Monax Mining Limited holds 24.1% of Marmota Energy Limited which does not represent control however it has been determined that significant influence remains by virtue of this shareholding.

Comparatives reflect the comparable position of Monax Mining Limited as a standalone entity at 30 June 2010. The financial statements contain a reconciliation of the reported 2010 consolidated statement of financial position to that reported in this annual report.

Results

During the year, the Company continued exploration activities at its tenements. Total cash expenditure on exploration and evaluation activities totalled $1,758,102.

The loss of the Company after providing for income tax amounted to $117,648 (2010: $3,074,601).

Dividends

No dividends have been paid or provided by the Company since the end of the previous financial year.

State of affairs

There have been no significant changes in the state of affairs of the Company during the year.

Events subsequent to reporting date

On 1 July 2011, 700,000 share rights vested and resulted in the issue of 500,000 fully paid ordinary shares to the Managing Director and 200,000 fully paid ordinary shares to the Company Secretary.

On 28 July 2011, 225,000 share options were granted to employees under the Monax Mining Limited Employee Share Option Plan. The exercise price of the options is 5.1 cents with an expiry date of 28 July 2016.

Marmota Energy Limited
Groundhog Services Pty Ltd

These entities have been equity accounted from 1 January 2011 in the 30 June 2011 financial statements and are recognised as investments in associates.

There has not arisen in the interval between 30 June 2011 and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Company, the results of those operations, or the state of affairs of the Company, in future years.

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Likely developments

Further information about likely developments in the operations of the Company and the expected results of those operations in future years has not been included in this report because disclosure of the information would be likely to result in unreasonable prejudice to the Company.

Environmental regulation and performance statement

The Company’s operations are subject to significant environmental regulations under both Commonwealth and South Australian legislation in relation to discharge of hazardous waste and materials arising from any mining activities and development conducted by the Company on any of its tenements. To date the Company has only carried out exploration activities and there have been no known breaches of any environmental obligations.

Indemnification and insurance of officers

Indemnification

The Company is required to indemnify the Directors and other officers of the company against any liabilities incurred by the Directors and officers that may arise from their position as Directors and officers of the Company. No costs were incurred during the year pursuant to this indemnity.

The Company has entered into deeds of indemnity with each Director whereby, to the extent permitted by the Corporations Act 2001, the Company agreed to indemnify each Director against all loss and liability incurred as an officer of the Company, including all liability in defending any relevant proceedings.

Insurance premiums

Since the end of the previous year the Company has paid insurance premiums in respect of Directors’ and officers’ liability and legal expenses insurance contracts.

The terms of the policies prohibit disclosure of details of the amount of the insurance cover, the nature thereof and the premium paid.

Options

At the date of this report unissued ordinary shares of Monax Mining Limited under option are:

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----- Start of picture text -----

EXPIRY DATE EXERCISE PRICE NO. OF OPTIONS VESTED UNVESTED AMOUNT PAID
/ PAYABLE BY
RECIPIENT ($)
13/02/2012 $0.666 150,000 150,000 - -
18/07/2013 $0.246 215,000 215,000 - -
23/12/2013 $0.0517 10,000 10,000 - -
31/07/2012 $0.10 3,000,000 3,000,000 - -
30/11/2011 $0.15 18,309,654 18,309,654 - -
05/03/2015 $0.0917 400,000 400,000 - -
28/07/2016 $0.051 225,000 225,000 - -
----- End of picture text -----*

All options may be exercised at any time before expiry. Option holders will receive one ordinary share in the capital of the Company for each option exercised.

Directors’ Report

MONAX MINING LIMITED 2011 ANNUAL REPORT 33

These options do not entitle the holder to participate in any share issue of the Company or any other body corporate.

There were no amounts unpaid on shares issued.

Proceedings on behalf of the Company

No person has applied to the Court for leave to bring proceedings on behalf of the Company or to intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or part of those proceedings. The Company was not a party to any such proceedings during the year.

Remuneration Report - audited

Remuneration policy

The remuneration policy of Monax Mining Limited has been designed to align key management personnel objectives with shareholder and business objectives by providing a fixed remuneration component and offering other incentives based on performance in achieving key objectives as approved by the Board. The Board of Monax Mining Limited believes the remuneration policy to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage the Company, as well as create goal congruence between directors, executives and shareholders.

Non-audit services

There were no non-audit services provided by the external auditors during the year ended 30 June 2011.

Auditor of the Company

The auditor of the Company for the financial year was Grant Thornton.

Auditor’s Independence Declaration

The auditor’s independence declaration as required by section 307C of the Corporations Act 2001 for the year ended 30 June 2011 is set out immediately following the end of the Directors’ report.

The Company’s policy for determining the nature and amounts of emoluments of board members and other key management personnel of the Company is as follows.

The Company’s Constitution specifies that the total amount of remuneration of Non-executive Directors shall be fixed from time to time by a general meeting. The current maximum aggregate remuneration of Non-executive Directors of Monax Mining Limited has been set at $300,000 per annum. Directors may apportion any amount up to this maximum amount amongst the Non-executive Directors as they determine. Directors are also entitled to be paid reasonable travelling, accommodation and other expenses incurred in performing their duties as Directors. The remuneration of the Managing Director is determined by the Non-executive Directors on the Remuneration and Nomination Committee and approved by the Board as part of the terms and conditions of his employment which are subject to review from time to time. The remuneration of other executive officers and employees is determined by the Managing Director subject to the approval of the Board.

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Remuneration Report - audited (cont.)

Remuneration policy (cont.)

Non-executive Director remuneration is by way of fees and statutory superannuation contributions. Non-executive Directors do not participate in schemes designed for remuneration of executives nor do they receive options or bonus payments and are not provided with retirement benefits other than salary sacrifice and statutory superannuation.

The Company does not presently emphasise payment for results through the provision of cash bonus schemes or other incentive payments based on key performance indicators of Monax given the nature of the Company’s business as a mineral exploration entity and the current status of its activities. However the Board may approve the payment of cash bonuses from time to time in order to reward individual executive performance in achieving key objectives as considered appropriate by the Board.

From time to time, the Company may grant retention rights as considered appropriate by the Remuneration and Nomination Committee and the Board, as a long term incentive for key management personnel. These rights are subject to shareholder approval at the Annual General Meeting in the year of grant. The intention of this remuneration is to facilitate the retention of key management personnel in order that the goals of the business and shareholders can be met. Under the terms of the issue of the retention rights, the rights will vest over a period of time, with a proportion of the rights vesting each year.

The Company also has an Employee Share Option Plan approved by shareholders that enables the Board to offer eligible employees options to acquire ordinary fully paid shares in the Company. Under the terms of the Plan, options to acquire ordinary fully paid shares may be offered to the Company’s eligible employees at no cost unless otherwise determined by the Board in accordance with the terms and conditions of the Plan. The objective of the Plan is to align the interests of employees and shareholders by providing employees of the Company with the opportunity to participate in the equity of the Company as an incentive to achieve greater success and profitability for the Company and to maximise the long term performance of the Company.

The employment conditions of the Managing Director, Mr Ferris is formalised in a contract of employment. The base salary as set out in the employment contract is reviewed annually. The Managing Director’s contract may be terminated at any time by mutual agreement. The Company may terminate the contract without notice in instances of serious misconduct. Ms Suttell is employed by Groundhog Services Partnership to act as Chief Financial Officer and Company Secretary of Monax Mining Limited and Marmota Energy Limited. The employment conditions are set out in a contract of employment and include a three month notice period. Mr Ferris was appointed 1 September 2009 and employment conditions include a three month notice period.

Directors’ Re ort p

REMUNERATION REPORT - AUDITED

MONAX MINING LIMITED 2011 ANNUAL REPORT 35

Shares issued on exercise of remuneration options

No shares were issued to Directors as a result of the exercise of remuneration options during the financial year.

Share rights granted

During the 2011 financial year a total of 2,100,000 retention rights with a fair value of $153,300 were granted to key management personnel.

Directors’ interests in shares and options

Directors’ relevant interests in shares and options of the Company are disclosed in Note 5 to the accounts.

Remuneration of Directors and key management personnel

This report details the nature and amount of remuneration for each key management person of the entity and for the executives receiving the highest remuneration.

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Remuneration Report - audited (cont.)

(a) Directors and key management personnel

The names and positions held by Directors and key management personnel of the entity during the whole of the financial year are:

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DIRECTORS POSITION
Mr RM Kennedy Chairman - Non-executive
Mr RG Nelson Director - Non-executive
Mr GS Davis Director - Non-executive
Dr NF Alley Director - Non-executive
Mr GM Ferris Managing Director - Executive
Mr EJ Vickery Alternate Director (from 7 February 2011)
Mr IR Witton Alternate Director (from 28 January 2011)
Key management personnel
Ms VK Suttell Chief Financial Officer / Company Secretary
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(b) Directors’ remuneration

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2011 PRIMARY DIREC- SALARY, NON CASH SUPER LONG OPTIONS TOTAL PROPORTION
BENEFITS TORS’ FEES & CASH BONUS CONTRI- SERVICE / RIGHTS $ OF REMU-
FEES LEAVE ITEMS $ BUTIONS LEAVE $ NERATION
$ $ $ $ $ RELATING TO
PERFORM-
ANCE
Directors
Mr RM Kennedy 73,395 - - - 6,605 - - 80,000 -
Mr RG Nelson 41,973 - - - 3,777 - - 45,750 -
Mr GS Davis [1] 45,750 - - - - - - 45,750 -
Dr NF Alley 36,697 - - - 3,303 - - 40,000 -
Mr GM Ferris - 224,801 - - 15,199 - 58,892 298,892 19.7%
Mr EJ Vickery [2] 1,835 - - - 165 - - 2,000 -
Mr IR Witton [2] 1,835 - - - 165 - - 2,000 -
201,485 224,801 - - 29,214 - 58,892 514,392 11.5%
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Director’s fees for Mr Davis are paid to a related entity of the Director.
Messrs Vickery and Witton received remuneration for their services as alternate directors.

Directors’ Re ort p

REMUNERATION REPORT - AUDITED

MONAX MINING LIMITED 2011 ANNUAL REPORT 37

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2010 PRIMARY DIREC- SALARY, NON CASH SUPER LONG OPTIONS TOTAL PROPORTION
BENEFITS TORS’ FEES & CASH BONUS CONTRI- SERVICE / RIGHTS $ OF REMU-
FEES LEAVE ITEMS $ BUTIONS LEAVE $ NERATION
$ $ $ $ $ RELATING TO
PERFORM-
ANCE
Directors
Mr RM Kennedy 70,413 - - - 6,337 - - 76,750 -
Mr RG Nelson 40,252 - - - 3,623 - - 43,875 -
Mr GS Davis [1] 43,875 - - - - - 43,875 -
Dr NF Alley 35,207 - - - 3,168 - - 38,375 -
Mr GM Ferris - 187,949 - 4,000 12,051 - 183,000 387,000 1%
Mr MP Schwarz - 32,872 4,718 - 2,410 - - 40,000 -
Mr EJ Vickery [2] 2,000 - - - - - - 2,000 -
Mr IR Witton [2] 2,000 - - - - - - 2,000 -
193,747 220,821 4,718 4,000 27,589 - 183,000 633,875 0.6%
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Director’s fees for Mr Davis are paid to a related entity of the Director.
Messrs Vickery and Witton received remuneration for their services as alternate directors.

(c) Key management personnel remuneration

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2011 PRIMARY BENEFITS SALARY, NON CASH SUPER LONG OPTIONS TOTAL PROPORTION
FEES & CASH BONUS CONTRI- SERVICE / RIGHTS $ OF REMU-
LEAVE ITEMS $ BUTIONS LEAVE $ NERATION
$ $ $ $ RELATING TO
PERFORM-
ANCE
Key management personnel
excluding Directors
Ms VK Suttell 100,574 4,326 - 7,600 - 23,558 136,058 17.3%
100,574 4,326 - 7,600 - 23,558 136,058 17.3%
----- End of picture text -----**

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Remuneration Report - audited (cont.)

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2010 PRIMARY BENEFITS SALARY, NON CASH SUPER LONG OPTIONS TOTAL PROPORTION
FEES & CASH BONUS CONTRI- SERVICE / RIGHTS $ OF REMU-
LEAVE ITEMS $ BUTIONS LEAVE $ NERATION
$ $ $ $ RELATING TO
PERFORM-
ANCE
Key management personnel
excluding Directors
Ms VK Suttell 78,135 - 2,000 6,923 - 14,875 101,933 16.5%
78,135 - 2,000 6,923 - 14,875 101,933 16.5%
----- End of picture text -----**

** Ms Suttell was appointed as a Company Secretary and Chief Financial Officer on 21 November 2007. Until 30 June 2010, Ms Suttell was employed by Groundhog Services Pty Ltd to act as Company Secretary and Chief Financial Officer for Marmota Energy Limited and Monax Mining Limited. Effective 1 July 2010, Ms Suttell is employed by the Groundhog Services Partnership.

Mr Ferris was appointed Managing Director of Monax Mining Limited on 1 September 2009. Pursuant to his service agreement, Mr Ferris is paid a total package of $252,000 per annum inclusive of superannuation guarantee contributions on an ongoing employment basis with a three month notice period. On commencement of employment, Mr Ferris was granted 3,000,000 options for ordinary shares with a fair market value of $183,000. There were neither post employment retirement benefits previously approved by members of the Company in a general meeting nor any paid to Directors of the Company.

(d) Director related entities

Information of amounts paid to director related entities is set out in Note 23 to the financial statements.

(e) Post-employment/retirement benefits

There were no post employment retirement benefits paid or payable to directors and key management personnel.

Options and rights granted

Apart from the options granted to directors in their capacity as employees of the Company under the Employee Share Option Plan and share rights as detailed below, no other options or rights were granted to directors or key management personnel of the company during the financial year.

Directors’ Re ort p

REMUNERATION REPORT - AUDITED

MONAX MINING LIMITED 2011 ANNUAL REPORT 39

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OPTIONS GRANT DETAILS FOR THE YEAR ENDED 30 JUNE 2011 OVERALL
DATE NO. VALUE EXERCISED EXERCISED LAPSED LAPSED VESTED VESTED UNVESTED LAPSED
$ NO. $ NO. $ NO. % % %
KEY MANAGEMENT PERSONNEL (NOTE 1) (NOTE 2) (NOTE 3) (NOTE 4)
Monax Mining Limited
Mr G Ferris 17.12.2009 3,000,000 183,000 - - - - 3,000,000 100% - -
Ms V Suttell 05.03.2010 175,000 14,875 - - - - 175,000 100% - -
3,175,000 197,875 3,175,000
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Note 1 - The value of options granted as remuneration and as shown in the above table has been determined in accordance with applicable accounting standards.

Note 2 - All options exercised resulted in the issue of ordinary shares in Monax Mining Limited on a 1:1 basis. All persons exercising options paid the relevant exercise price in its entirety.

Note 3 - The value of options that has been exercised during the year as shown in the above table was determined as at the time of exercise.

Note 4 - The value of options that has lapsed during the year due to vesting conditions not being satisfied has been determined at the time of their lapsing as if vesting conditions have been satisfied.

During the year, share rights were granted to key management personnel as detailed below:

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RETEN- GRANT DETAILS FOR THE YEAR ENDED 30 JUNE 2011 OVERALL
TION
RIGHTS DATE NO. VALUE EXERCISED EXERCISED LAPSED LAPSED VESTED VESTED UNVESTED LAPSED
$ NO. $ NO. $ NO. % % %
KEY MANAGEMENT PERSONNEL
Monax Mining Limited
Mr G Ferris 17.11.2010 1,500,000 109,500 - - - - - - - -
Ms V Suttell 17.11.2010 600,000 43,800 - - - - - - - -
2,100,000 153,300 - - - - -
----- End of picture text -----

*Retention rights vest one third on each of 1 July 2011, 1 July 2012 and 1 July 2013.

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Remuneration Report - audited (cont.)

Description of options/rights issued as remuneration

Details of the options granted as remuneration to those key management personnel listed in the previous table are as follows:

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GRANT ISSUER ENTITLEMENT ON DATES EXERCISABLE EXERCISE VALUE PER AMOUNT
DATE EXERCISE PRICE OPTION / PAID /
RIGHT AT PAYABLE BY
GRANT DATE RECIPIENT
Options
Monax Mining 1:1 Ordinary shares in
23.12.2008 Limited Monax Mining Limited From issue date to 23.12.2013 $0.0517 $0.029 -
Monax Mining 1:1 Ordinary shares in
18.07.2008 Limited Monax Mining Limited From issue date to 18.07.2013 $0.246 $0.155 -
Monax Mining 1:1 Ordinary shares in
05.03.2010 Limited Monax Mining Limited From issue date to 05.03.2015 $0.0917 $0.085 -
Rights
Monax Mining 1:1 Ordinary shares in One third vesting on each of 1 July
17.11.2010 Limited Monax Mining Limited 2011, 1 July 2012 and 1 July 2013 $0.00 $0.073 -
----- End of picture text -----

Option values at grant date were determined using the Black-Scholes valuation model.

Retention rights values at grant date were determined using the binomial valuation model.

The Report of Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors:

Robert Michael Kennedy Director

Dated at Adelaide this 19th day of September 2011

Directors’ Re ort p

REMUNERATION REPORT - AUDITED

MONAX MINING LIMITED 2011 ANNUAL REPORT 41

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 



Auditor’s Independence Declaration

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NOTE 2011 2010
$ $
Other revenue 2 344,622 240,317
Total revenue
Administration expenses 3 221,287 221,822
Consulting expenses 3 83,882 118,654
Depreciation expense 3 15,221 17,691
Employment expenses 3 352,403 476,967
Service fees 158,408 128,124
Impairment of assets 3 74,008 2,289,402
Profit/(loss) before income tax expense (560,587) (3,012,343)
Income tax benefit/(expense) 4 442,939 (62,258)
Profit/(loss) after income tax expense (117,648) (3,074,601)
- -
Other comprehensive income
Total comprehensive income for the period (117,648) (3,074,601)
Basic earnings per share (cents) 7 (0.079) (0.264)
Diluted earnings per share (cents) 7 (0.079) (0.264)
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The accompanying notes form part of these financial statements.

Statement of Com rehensive Income p

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 43

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NOTE 2011 2010
$ $
Current assets
Cash and cash equivalents 8 3,745,989 807,700
Trade and other receivables 9 318,691 491,533
Other current assets 10 20,891 19,283
Financial assets 11 - 4,000,000
Total current assets 4,085,571 5,318,516
Non-current assets
Plant and equipment 12 143,678 178,215
Exploration and evaluation expenditure 15 9,983,060 8,864,116
Financial assets 13 3,260,359 2,160,001
Deferred tax asset 971,999 647,999
Total non-current assets 14,359,096 11,850,331
Total assets 18,444,667 17,168,847
Current liabilities
Trade and other payables 16 337,946 118,119
Short term provisions 17 24,978 22,900
Total current liabilities 362,924 141,019
Non-current liabilities
Deferred tax liability 971,999 647,999
Long term provisions 17 15,443 6,330
Total non-current liabilities 987,442 654,329
Total liabilities 1,350,366 795,348
Net assets 17,094,301 16,373,499
Equity
Issued capital 18 19,674,526 19,674,526
Reserves 1,436,530 598,080
Retained earnings (4,016,755) (3,899,107)
Total equity 17,094,301 16,373,499
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The accompanying notes form part of these financial statements. Refer Note 27

Statement of Financial Position

AS AT 30 JUNE 2011

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ISSUED RESERVES RETAINED TOTAL
CAPITAL $ EARNINGS $
$ $
Balance at 1 July 2009 13,866,800 378,955 (824,506) 13,421,249
Shares issued during the period 5,952,995 - - 5,952,995
Transaction costs associated with the issue of shares net of tax (145,269) - - (145,269)
Fair value of options issued to employees - 219,125 - 219,125
- -
Total comprehensive income (3,074,601) (3,074,601)
Balance at 30 June 2010 19,674,526 598,080 (3,899,107) 16,373,499
- - - -
Proceeds from the issue of shares during the period
Transaction costs associated with the issue of shares net of tax - - - -
Fair value of options issued to employees - 82,450 - 82,450
Revaluation of associate to fair value - 756,000 - 756,000
- -
Total comprehensive income (117,648) (117,648)
Balance at 30 June 2011 19,674,526 1,436,530 (4,016,755) 17,094,301
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The accompanying notes form part of these financial statements.

Statement of Chan es in E uit g q y

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 45

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NOTE 2011 2010
$ $
Cash flows from operating activities
Cash receipts in the course of operations 68,780 47,448
Cash payments in the course of operations (655,902) (903,136)
Income tax rebate/refund 118,939 304,914
Interest received 336,358 66,844
Net cash (used in)/provided by operating activities 22(b) (131,825) (483,930)
Cash flows from investing activities
Payments for plant and equipment (7,517) (3,475)
Payments for exploration and evaluation assets (1,758,102) (1,492,533)
Cash advance joint venture activities 843,540 -
Loans to related entities (7,807) -
-
Security deposit (15,000)
Net cash (used in)/provided by investing activities (929,886) (1,511,008)
Cash flows from financing activities
Proceeds from issue of shares - 5,952,995
-
Payment of transaction costs associated with capital raising (207,527)
Net cash provided by/(used in) financing activities - 5,745,468
Net (decrease)/increase in cash held (1,061,711) 3,750,530
Cash at the beginning of the financial year 4,807,700 1,057,170
Cash at the end of the financial year 22(a) 3,745,989 4,807,700
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The accompanying notes form part of these financial statements.

Statement of Cash Flows

FOR THE YEAR ENDED 30 JUNE 2011

1 Statement of significant accounting policies

The financial report includes the financial statements and notes of Monax Mining Limited (‘Company’).

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year as well as unused tax losses.

Current and deferred income tax (expense)/benefit is charged or credited directly to equity instead of the profit or loss when the tax relates to items that are credited or charged directly to equity.

(a) Basis of preparation

This general purpose financial report has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standard Board (AASB) and the Corporation Act 2001.

The following report covers Monax Mining Limited, a listed public company, incorporated and domiciled in Australia.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in a financial report containing relevant and reliable information about transactions, events and conditions. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards. Material accounting policies adopted in the preparation of this financial report are presented below and have been consistently applied unless otherwise stated.

The financial report has been prepared on an accruals basis and is based on historical costs, modified where applicable, by the measurement at fair value of selected non current assets, financial assets and financial liabilities.

(b) Income tax

The income tax expense/(benefit) for the year comprises current income tax expense/(income) and deferred income tax (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income calculated using applicable income tax rates enacted at reporting date.

Deferred tax assets and liabilities are ascertained based on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax assets also result where amounts have been fully expensed but future tax deductions are available. No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the Statement of Comprehensive Income except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the Company will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

(c) Plant and equipment

Each class of plant and equipment is carried at cost or fair value less, where applicable, any accumulated depreciation and impairment losses.

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 47

(c) Plant and equipment (cont.)

Plant and equipment

Plant and equipment are measured on the cost basis less depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Depreciation

All fixed assets are depreciated on a straight line basis over their useful lives to the economic entity commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:

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CLASS OF FIXED ASSET DEPRECIATION RATE
Plant and equipment 5% – 33%
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The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the Statement of Comprehensive Income. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

(d) Exploration and evaluation expenditure

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal and rehabilitation of the site in accordance with clauses of the mining permits. Such costs are determined using estimates of future costs, current legal requirements and technology on an undiscounted basis.

Any changes in the estimates for the costs are accounted on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs are determined on the basis that the restoration will be completed within one year of abandoning the site.

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(e) Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged as expenses in the periods in which they are incurred.

(f) Financial instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the provisions to the instrument. For financial assets this is equivalent to the date that the Company commits itself to either the purchase or sale of the asset.

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through the profit or loss’, in which case the costs are expensed to the Statement of Comprehensive Income immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at either of fair value, amortised cost using the interest rate method or cost. Fair value represents the amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties. Where available, quoted prices, in an active market are used to determine fair value.

The Company does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments:

(i) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Loans and receivables are included in current assets except for those not expected to mature within 12 months after the end of the reporting period.

(ii) Financial liabilities

Non-derivative financial liabilities are subsequently measured at amortised cost.

(iii) Available-for-sale financial assets

Available-for-sale financial assets are non derivative financial assets that are either not suitable to be classified into other categories of financial assets due to their nature, or they are designated as such by management. They comprise the investments in the equity of other entities where there is neither a fixed maturity nor determinable payments.

Impairment

At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired.

(g) Impairment of assets

At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the Statement of Comprehensive Income.

(h) Employee benefits

Provision is made for the Company’s liability for employee benefits arising from services rendered by employees to reporting date. Employee benefits that are expected to be settled within one year are measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Employee benefits payable later than one year are measured at the present value of the estimated future cash outflows to be made for those benefits. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows.

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 49

(h) Employee benefits (cont.)

In determining the liability, consideration is given to employee wage increases and the probability that the employee may satisfy vesting requirements. Those cash flows are discounted using market yields on national government bonds with terms to maturity that match the expected timing of cash flows.

Equity settled compensation

The net amount of GST recoverable from, or payable to, the ATO is included as a current asset or liability in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis. The GST components of cash flows arising from investing and financing activities which are recoverable from, or payable to, the ATO are classified as operating cash flows.

The Company operates equity settled share-based payment employee share option schemes. The fair value of options is ascertained using the Black-Scholes pricing model which incorporates all market vesting conditions. The fair value of retention rights is ascertained using the binomial valuation model.

(m) Interests in joint ventures

The Company’s share of the assets, liabilities, reserves and expenses of joint venture operations are included in the appropriate items of the financial statements. Details of the Company’s interests are shown at Note 14.

(i) Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(j) Cash and cash equivalents

Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.

(n) Investments in associates

Associate companies are companies in which the Company has significant influence through holding, directly or indirectly, 20% or more of the voting power of the company. Investments in associate companies are recognised in the financial statements by applying the equity method of accounting. The equity method of accounting recognises the initial investment at cost and adjusted thereafter for the Company’s share of postacquisition reserves and profits/(losses) of its associates. Details of the Company’s interest in associates is shown at Note 13.

(k) Revenue

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

All revenue is stated net of goods and services tax (GST).

(o) Trade and other payables

Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services received by the Company during the period which remains unpaid. The balance is recognised as a current liability with the amount being normally paid within 30 days or recognition of the liability.

(l) Goods and services tax

Revenues, expenses and assets are recognised net of the amount of goods and services tax (GST), except where the amount of GST incurred is not recoverable from the Australian Tax Office (ATO). In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated in the Statement of Financial Position inclusive of GST.

(p) Earnings per share

(i) Basic earnings per share

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company, excluding any costs of servicing equity other than ordinary shares, by the weighted average number of ordinary shares outstanding during the financial year, adjusted for bonus elements in ordinary shares issued during the year.

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(p) Earnings per share (cont.)

Key judgements – exploration and evaluation expenditure

(ii) Diluted earnings per share

Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take into account the after income tax effect and other financing costs associated with dilutive potential ordinary shares and the weighted average number of additional ordinary shares that would have been outstanding assuming the conversion of all dilutive potential ordinary shares.

(q) Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (Refer Note 27)

(r) Critical accounting estimates and judgements

The Directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends of economic data, obtained both externally and within the Company.

Key estimates – impairment

The Company assesses impairment at each reporting date by evaluating conditions specific to the Company that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined.

The Company capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded.

The entity capitalises expenditure relating to exploration and evaluation where it is considered likely to be recoverable or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. While there are certain areas of interest from which no reserves have been extracted, the directors are of the continued belief that such expenditure should not be written off since feasibility studies in such areas have not yet concluded.

(s) Carbon tax impact

On 10 July 2011, the Commonwealth Government announced the ‘Securing a Clean Energy Future – the Australian Government’s Climate Change Plan’. Whilst the announcement provides further details of the framework for a carbon pricing mechanism, uncertainties continue to exist on the impact of any carbon pricing mechanism on the Company as legislation must be voted on and passed by both houses of Parliament. In addition, as the Company will not fall within the ‘Top 500 Australian Polluters’, the impact of the Carbon Scheme may be through indirect effects of increased prices on many production inputs and general business expenses as suppliers subject to the carbon pricing mechanism may pass on their burden to their customers in the form of increased prices.

(t) Adoption of the new and revised accounting standards

During the current year the Company adopted all of the new and revised Australia Accounting Standards and Interpretations applicable to its operations which became mandatory.

Recently issued accounting standards to be applied in future reporting periods

The accounting standards that have not been early adopted for the year ended 30 June 2011, but will be applicable to the Company in future reporting periods are detailed below. Apart from these standards, we have considered other accounting standards that will be applicable in future reporting periods, however they have been considered insignificant to the Company.

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 51

(t) Adoption of the new and revised accounting standards

(cont.)

i) Consolidated Financial Statements

IFRS 10: “Consolidated Financial Statements” was issued by the IASB in May 2011 and replaces both the existing IAS 27: “Consolidated and Separate Financial Statements” and SIC 12: “Consolidation- Special Purpose Entities”. The new standard revises the definition of control and related application guidance so that a single control model can be applied to all entities. This standard will apply to the Company from 1 July 2013 and it is believed there will be insignificant impact.
ii) Joint Arrangements
IFRS 11: “Joint Arrangements” was issued by the IASB in May 2011 and provides for a more realistic reflection of joint venture arrangements by focusing on the rights and obligations of the arrangement, rather than its legal form. The standard addresses inconsistencies in the reporting of joint arrangements by requiring a single method to account for interest in jointly controlled entities. This standard is applicable from 1 July 2013, with early adoption permitted. Management is assessing the impact on the Company, but at this stage it is believed there will be insignificant impact.
iii) Disclosure of Interests in Other Entities
IFRS 12: “Disclosure of Interests in other Entities” was issued by the IASB in May 2011 and is a new and comprehensive standard on disclosure requirements for all forms on interests in other entities, including subsidiaries, joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles. This standard is applicable from 1 July 2013 and management is currently assessing the impacts of the standard, which will be limited to disclosure impacts only. There have also been consequential amendments to IAS 28: “Investments in Associates” as a result of above new standard. These amendments are applicable from 1 July 2013.

iv) Fair Value Measurement

IFRS 13: “Fair Value Measurements” was issued by the IASB in May 2011 and provides a precise definition of fair value, as a single source of fair value measurement and prescribes disclosure requirements for use across IFRS. The requirements do not extend the use of fair value accounting, but provide guidance on how it should be applied where its use is already required or permitted by other standards within IFRS. The standard will apply to the Company from 1 July 2013 and at this stage it is believed there will be no impact.

v) Other

In addition to the above recently issued accounting standards that are applicable in future years, we note the following new accounting standards that are applicable in future years:

AASB 124: “Related Party Disclosures”;
AASB 2009-12: “Amendments to Australian Accounting Standards”;
AASB 2010-4: “Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project”;
AASB 2010-5: “Amendments to Australian Accounting Standards”;
AASB 2010-8: “Amendments to Australian Accounting Standards- Deferred Tax: Recovery of Underlying Assets” and
AASB 2011-4: “Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements”.

(u) Authorisation for issue of financial statements

The financial statements were authorised for issue by the Board of Directors on 19 September 2011.

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NOTE 2011 2010 $ $

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2 Revenue from ordinary activities

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Other revenues:
From operating activities
Interest received from other parties 260,464 192,869
Share of associate’s net profit 20,358 -
Other revenue 63,800 47,448
Total revenue from ordinary activities 344,622 240,317
3 Profit from ordinary activities before
income tax has been determined after
Expenses
Administration expenses
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Expenses Administration expenses
ASX fees	20,239	35,700
Share registry fees	26,530	47,619
Insurance	31,559	30,097
Audit and other services	35,337	24,750
Other	107,622	83,656
	221,287	221,822
Consulting expenses
Legal fees	11,970	10,851
Corporate consulting	64,312	95,834
Accounting and secretarial services	7,600	11,969
	83,882	118,654
Depreciation expenses
Plant and equipment	15,221	17,691
Employment expenses Salaries and wages	378,941	398,644
Directors’ fees	215,500	206,874
Superannuation	29,070	35,276
Provisions	11,191	(17,006)
Share-based payments	82,450	219,125
Other	12,299	30,463
Reallocation to exploration costs	(377,048)	(396,409)
	352,403	476,967

Impairment of assets	74,008	2,289,402

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 53

	NOTE	2011 $	2010 $
4 Income tax beneft/(expense) The components of tax expense comprise:

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Current income tax 442,939 (62,258)
Deferred income tax - -
- -
Tax portion of capital raising costs
Income tax benefit/(expense) reported in the statement of comprehensive income 442,939 (62,258)
The prima facie income tax on profit from ordinary activities before income tax is
reconciled to the income tax as follows:
Prima facie income tax benefit/(expense) calculated at 30% on loss from ordinary
activities 168,176 903,703
Tax losses utilised 178,026 -
-
Deferred tax asset in respect of tax losses not brought to account (216,882)
Impairment expense previously brought to account (22,202) (686,821)
Research and development tax offset 118,939 -
- -
Over provision in the prior year
-
Tax portion of capital raising costs (62,258)
Income tax benefit/(expense) attributable to loss from ordinary activities 442,939 (62,258)
Income tax losses
Deferred tax asset arising from carried forward tax losses not recognised at
reporting date as the asset is not regarded as meeting the probable criteria
- tax losses at 30% (3,611,956) (3,902,864)
Temporary differences 12,126 8,769
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5 Key management personnel disclosures

Refer to the Remuneration Report contained in the Directors’ Report for details of the remuneration paid or payable to each member of the Company’s key management personnel for the year ended 30 June 2011. The totals of remuneration paid to key management personnel during the year are as follows:

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2011 2010
$ $
Short term employee benefits 531,186 497,421
Post employment benefits 36,814 34,512
- -
Other long term benefits
- -
Termination benefits
Share-based payments 82,450 203,875
650,450 735,808
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Detailed remuneration disclosures are provided in the remuneration report.

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5 Key management personnel disclosures (cont.)

(a) Directors and key management personnel

The names and positions held by Directors and key management personnel of the Company during the financial year are:

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DIRECTORS POSITION
Mr RM Kennedy Chairman – Non-executive
Mr RG Nelson Director – Non-executive
Mr GS Davis Director – Non-executive
Dr NF Alley Director – Non-executive
Mr GM Ferris Managing Director – Executive
Mr EJ Vickery Alternate Director (from 7 February 2011)
Mr IR Witton Alternate Director (from 28 January 2011)
Key management personnel
Ms VK Suttell Chief Financial Officer / Company Secretary
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(b) Directors and key management personnel equity remuneration, holdings and transactions

(i) Options provided as remuneration and shares issued on exercise of such options

Details of options provided as remuneration and shares issued on the exercise of such options together with the terms and condition of the options can be found in the remuneration report.

(ii) Share holdings

The number of shares in the company held during the financial year by each director of Monax Mining Limited and other key management personnel of the Company, including their personal related parties, are set out below. There were no shares granted during the year as remuneration.

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 55

5 Key management personnel disclosures (cont.)

(b) Directors and key management personnel equity remuneration, holdings and transactions (cont.)

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SHARES IN MONAX MINING BALANCE RECEIVED OPTIONS NET BALANCE TOTAL
LIMITED 1/07/10 AS REMU- EXERCISED CHANGE 30/06/11 HELD IN
NERATION OTHER [1] ESCROW
30/06/11
Held by Directors in own name
- - - - - -
Mr RM Kennedy
Mr RG Nelson - - - - - -
Mr GS Davis 72,727 - - - 72,727 -
- - - - - -
Dr NF Alley
Mr GM Ferris - - - - - -
- - - - - -
Mr EJ Vickery
Mr IR Witton - - - - - -
72,727 - - - 72,727 -
Held by Directors’ personally related entities
Mr RM Kennedy 4,464,488 - - - 4,464,488 -
Mr RG Nelson 2,145,659 - - - 2,145,659 -
Mr GS Davis 2,702,728 - - - 2,702,728 -
Dr NF Alley 3,108,919 - - - 3,108,919 -
Mr GM Ferris - - - 500,000 500,000 -
Mr EJ Vickery 55,300 - - - 55,300 -
Mr IR Witton 98,923 - - 50,000 148,923 -
Total held by Directors 12,648,744 - - 550,000 13,198,744 -
Key management personnel excluding Directors
Ms VK Suttell 38,727 - - - 38,727 -
Total 12,687,471 - - 550,000 13,237,471 -
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5 Key management personnel disclosures (cont.)

(b) Directors and key management personnel equity remuneration, holdings and transactions (cont.)

(iii) Option holdings

The number of options over ordinary shares in the company held during the financial year by each director of Monax Mining Limited and any other key management personnel of the Company, including their personal related parties are set out below.

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OPTIONS IN MONAX OPTION BALANCE RE- OPTIONS NET BALANCE TOTAL TOTAL
MINING LIMITED CLASS 1/07/10 CEIVED EXER- CHANGE 30/06/11 VESTED EXERCIS-
AS CISED OTHER 30/06/11 ABLE
REMUN- 30/06/11
ERATION
Held by Directors in own name
- - - - - - -
Mr RM Kennedy
Mr RG Nelson - - - - - - -
Mr GS Davis - - - - - - -
- - - - - - -
Dr NF Alley
Mr GM Ferris - - - - - - -
- - - - - - -
Mr EJ Vickery
Mr IR Witton - - - - - - -
- - - - - - -
Directors’ personally related entities
Mr RM Kennedy (k) 558,062 - - - 558,062 558,062 558,062
Mr RG Nelson - - - - - - -
Mr GS Davis - - - - - - -
- - - - - - -
Dr NF Alley
Mr GM Ferris (i) 3,000,000 - - - 3,000,000 3,000,000 3,000,000
- - - - - - -
Mr EJ Vickery
Mr IR Witton (k) 12,366 - - - 12,366 12,366 12,366
Total held by Directors 3,570,428 - - - 3,570,428 3,570,428 3,570,428
Key management personnel excluding Directors
Ms VK Suttell (g) 75,000 - - - 75,000 75,000 75,000
(j) 175,000 - - - 175,000 175,000 175,000
Total 3,820,428 - - - 3,820,428 3,820,428 3,820,428
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Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 57

5 Key management personnel disclosures (cont.)

(b) Directors and key management personnel equity remuneration, holdings and transactions (cont.)

(iii) Option holdings (cont.)

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OPTIONS IN MONAX OPTION BALANCE RE- OPTIONS NET BALANCE TOTAL TOTAL
MINING LIMITED CLASS 1/07/09 CEIVED EXER- CHANGE 30/06/10 VESTED EXERCIS-
AS CISED OTHER 30/06/10 ABLE
REMUN- 30/06/10
ERATION
Held by Directors in own name
- - - - - - -
Mr RM Kennedy
Mr RG Nelson - - - - - - -
Mr GS Davis - - - - - - -
- - - - - - -
Dr NF Alley
Mr GM Ferris - - - - - - -
Mr MP Schwarz - - - - - - -
- - - - - - -
Mr EJ Vickery
Mr IR Witton - - - - - - -
- - - - - - -
Directors’ personally related entities
Mr RM Kennedy (e) 350,000 - - (350,000) - - -
(k) - - - 558,062 558,062 558,062 558,062
Mr RG Nelson (e) 350,000 - - (350,000) - - -
Mr GS Davis (e) 350,000 - - (350,000) - - -
Dr NF Alley (e) 400,000 - - (400,000) - - -
Mr GM Ferris (i) - 3,000,000 - - 3,000,000 3,000,000 3,000,000
Mr MP Schwarz (f) 750,000 - - (750,000) - - -
(h) 250,000 - - (250,000) - - -
- - - - - - -
Mr EJ Vickery
Mr IR Witton (k) - - - 12,366 12,366 12,366 12,366
Total held by Directors 2,450,000 3,000,000 - (1,879,572) 3,570,428 3,570,428 3,570,428
Key management personnel excluding Directors
Ms VK Suttell (g) 75,000 - - - 75,000 75,000 75,000
(j) - 175,000 - - 175,000 175,000 175,000
Total 2,525,000 3,175,000 - (1,879,572) 3,820,428 3,820,428 3,820,428
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(e) Unlisted options exercisable at $0.40 by 30/06/2010

(f) Unlisted options exercisable at $0.26 by 12/04/2011

(g) Unlisted options exercisable at $0.246 by 18/07/2013

(i) Unlisted options exercisable at $0.10 by 31/07/2012

(j) Unlisted options exercisable at $0.0917 by 05/03/2015

(k) Listed options exercisable at $0.15 by 30/11/2011

(h) Unlisted options exercisable at $0.0517 by 23/12/2013

Net change other refers to shares purchased and/or sold during the financial year and shares no longer held by Directors or their related entities.

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5 Key management personnel disclosures (cont.)

(b) Directors and key management personnel equity remuneration, holdings and transactions (cont.)

(iv) Share rights holdings

The number of rights over ordinary shares in the company held during the financial year by each director of Monax Mining Limited and any other key management personnel of the Company, including their personal related parties are set out below.

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RIGHTS PERIOD OPENING RECEIVED EXERCISED NET BALANCE TOTAL TOTAL EX-
BALANCE AS REMU- CHANGE PERIOD VESTED ERCISABLE
NERATION OTHER END PERIOD PERIOD
END END
Mr RM Kennedy 2011 - - - - - - -
2010 - - - - - - -
Mr RG Nelson 2011 - - - - - - -
2010 - - - - - - -
Mr GS Davis 2011 - - - - - - -
2010 - - - - - - -
Dr NF Alley 2011 - - - - - - -
2010 - - - - - - -
Mr GM Ferris 2011 - 1,500,000 - - 1,500,000 - -
2010 - - - - - - -
Ms VK Suttell 2011 - 600,000 - - 600,000 - -
2010 - - - - - - -
Total - 2,100,000 - - 2,100,000 - -
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Other key management personnel transactions

There have been no other transactions involving equity instruments other than those described in the tables above. For details of other transactions with key management personnel, refer to Note 23: Related parties.

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2011 2010
$ $
6 Auditors’ remuneration
Audit services:
Auditors of the Company – Grant Thornton
Audit and review of the financial reports 35,300 24,750
35,300 24,750
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Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 59

7 Earnings per share

(a) Classification of securities

All ordinary shares have been included in basic earnings per share.

(b) Classification of securities as potential ordinary shares

150,000 unlisted options exercisable at $0.666 by 14/02/2012 215,000 unlisted options exercisable at $0.246 by 18/07/2013 10,000 unlisted options exercisable at $0.0517 by 23/12/2013 3,000,000 unlisted options exercisable at $0.10 by 31/07/2012 425,000 unlisted options exercisable at $0.0917 by 05/03/2015 18,309,658 listed options exercisable at $0.15 by 30/11/2011

Options granted to employees under the Monax Mining Limited Employee Share Option Plan are considered to be potential ordinary shares and have been included in the determination of diluted earnings per share to the extent to which they are dilutive.

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2011 2010
$ $
(c) Earnings used in the calculation of earnings per share
Profit/(loss) after income tax expense (117,648) (3,074,601)
d) Weighted average number of shares outstanding during the year used
in calculating earnings per share
Number for basic earnings per share
Ordinary shares 148,053,668 116,140,759
Number for diluted earnings per share
Ordinary shares and options 148,061,894 116,265,401
8 Cash and cash equivalents
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8 Cash and cash equivalents

Cash at bank	480,989	192,700
Deposits at call	3,265,000	615,000
	3,745,989	807,700

9 Trade and other receivables

Current

Current
Trade debtors	98,387	129,133
Loan to related party	129,807	122,000
Other debtors	90,497	240,400
	318,691	491,533

Other debtors represent accrued interest receivable, research and development tax offset receivable and GST refunds. Receivables are not considered past due and/or impaired.

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2011 2010
$ $
10 Other current assets
Prepayments 20,891 19,283
11 Financial assets
Held-to-maturity investments
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||||
|---|---|---|
|Held-to-maturity investments|
|Fixed interest short term deposit|-|4,000,000|
|12 Plant and equipment|
|Plant and equipment|

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At cost 367,902 360,386
Accumulated depreciation (224,224) (182,171)
Net book value 143,678 178,215
Reconciliations
Reconciliations of the carrying amounts for each class of plant and equipment
are set out below:
Plant and equipment
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||||
|---|---|---|
|Carrying amount at beginning of year|178,215|219,848|
|Additions|7,517|3,476|
|-|-|
|Disposals|
|Accumulated depreciation|(42,054)|(45,109)|
|Carrying amount at end of year|143,678|178,215|
|13 Investments in associates|

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Interests are held in the following associated companies.

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NAME PRINCIPAL ACTIVITIES COUNTRY SHARES OWNERSHIP CARRYING AMOUNT OF
OF INCOR- INTEREST INVESTMENT
PORATION
UNLISTED 2011 2010 2011 2010
Marmota Energy Limited Mineral exploration Australia Ord 23.9 24.0 3,260,358 2,160,000
Groundhog Services Pty Ltd Administration services Australia Ord 50 50 1 1
Groundhog Partnership Administration services n/a n/a 50 - - -
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Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 61

13 Investments in associates (cont.)

As discussed in Note 27 Marmota Energy Limited and Groundhog Services Pty Ltd are no longer consolidated. The de-consolidation was effective 1 January 2011. In accordance with Australian Accounting Standards the investment in Marmota Energy Limited has been marked to market value on de-consolidation and equity accounted for the six months ended 30 June 2011. The corresponding comparative is recognised at fair market value with reference to its quoted price on the ASX on 30 June 2010.

(a) Movements during the year in equity accounted investments in associated entities

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2011 2010
$ $
- -
Balance at the beginning of the financial year
New investments during the year 3,240,001 -
Share of associated entity’s profit after income tax 20,358 -
Balance at the end of the financial year 3,260,359 -
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Refer Note 27, equity accounted investments from 1 January 2011.

(b) Equity accounted profits of associates are broken down as follows:

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2011 2010
$ $
Share of associate’s profit before income tax 20,358 -
- -
Share of associate’s income tax expense
Share of associate’s profit after income tax expense 20,358 -
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(c) Summarised presentation of aggregate assets, liabilities and performance of associates

The Company’s share of the results of its principle associates and its aggregated assets and liabilities are as follows:

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NOTE 2011 2010
$ $
Current assets 6,636,556 10,117,280
Non-current assets 21,733,893 18,142,911
Total assets 28,370,449 28,260,191
Current liabilities (795,738) (812,987)
Non-current liabilities (98,143) (107,056)
Total liabilities (893,881) (920,043)
Net assets 27,476,568 27,340,148
(d) Market value of listed investment in associate 2,052,000 2,160,000
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14 Interests in unincorporated joint ventures

Monax Mining Limited has the following interests in unincorporated joint ventures

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NO STATE AGREEMENT NAME PARTIES SUMMARY
1 SA Ambrosia Farm-in Marmosa Pty Ltd (MSA) MOX gives MSA the right to explore for all minerals in
& Joint Venture and Monax Mining the area covered by Exploration Licence EL 4510 (formerly
Agreement Limited (MOX) EL 3358). During the financial year MSA has achieved its
second earn in and has a 50% interest.
2 SA Mineral Rights Marmosa Pty Ltd (MSA) MSA transfers to MOX 100% of its interests in minerals
Transfer & Joint and Monax Mining other than uranium and 30% of its interests in uranium
Venture Agreement Limited (MOX) for areas covered by the following Exploration Licences:
EL 3907, EL 3909 and EL 3910. MSA and MOX enter into a
joint venture to explore for uranium.
3 SA Farm-in Agreement OM ( Manganese ) MOX gives OMM the exclusive right to conduct
Limited (OMM) and exploration for all minerals except uranium and non-
Monax Mining Limited ferrous minerals (subject to an election by OMM in
(MOX) accordance with the agreement) on area covered by
Exploration Licence EL 4662 (formerly EL 3357). Once
OMM has spent $2 million it will have earned 60%
interest. Minimum expenditure of $250,000 in the first
year must be spent before OMM can withdraw from the
agreement and the $4 million must be incurred within 4
years.
4 SA Melton Joint Monax Mining Limited MEU will have the right to explore for all minerals in the
Venture (MOX) and Marmota area covered by Exploration Licences EL 4000 and EL 3911.
Energy Limited (MEU) MEU and MOX operate a 50:50 joint venture
5 SA Punt Hill Farm-in Monax Mining Limited MOX gives AMS the right to explore for all minerals
Agreement (MOX) and Antofagasta in the area covered by Exploration Licences EL 4642
Minerals SA (AMS) (formerly EL 3457) and EL 4548. AMS has the right to
earn 51% interest in the tenement by expending
US$4 million over 4 years.
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NOTE 2011 2010
$ $
15 Exploration and evaluation expenditure
Costs carried forward in respect of areas of interest in:
Exploration and evaluation phase (i) 9,983,060 8,864,116
Total exploration and evaluation expenditure 9,983,060 8,864,116
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The ultimate recoupment of costs carried forward for exploration phase is dependent on the successful development and commercial exploitation or sale of the respective areas.

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 63

15 Exploration and evaluation expenditure (cont.)

(i) Reconciliation

A reconciliation of the carrying amount of exploration and/or evaluation phase expenditure is set out below.

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2011 2010
$ $
Carrying amount at beginning of year 8,864,116 9,720,382
Additional costs capitalised during the year 1,192,952 1,433,136
Impairment of exploration asset (74,008) (2,289,402)
Carrying amount at end of year 9,983,060 8,864,116
16 Trade and other payables
Trade creditors 31,867 46,528
Other creditors and accruals 277,512 61,189
Amounts payable to Director related entities 28,567 10,402
337,946 118,119
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Details of amounts payable to Director related entities are detailed in Note 23.

17 Provisions

17 Provisions
Current
Employee benefts	24,978	22,900
Non-current
Employee benefts	15,443	6,330

Provision for long service leave

A provision for long service leave has been recognised for employee benefits. In calculating the present value of future cash flows in respect of long service leave, the probability of long service leave being taken is based on historical data. The measurement and recognition criteria relating to employee benefits has been included in Note 1 to this report.

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2011 2010
$ $
Provisions
Opening balance at beginning of year 29,230 46,236
Additional provisions 11,191 (17,006)
Balance at end of year 40,421 29,230
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18 Issued capital

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2011 2010
$ $
Issued and paid-up share capital
148,053,668 (2010: 148,053,668) ordinary shares, fully paid 19,674,526 19,674,526
(a) Ordinary shares
Balance at the beginning of year: 19,674,526 13,866,800
Shares issued during the year:
Nil (2010: 34,887,449) shares issued to shareholders as part of a Share Purchase
Plan and Placement at $0.075 - 2,616,558
Nil (2010: 36,619,158) shares issued to shareholders as part of a Rights Issue and
Placement at $0.075 - 2,746,437
Nil (2010: 5,900,000) shares issued to shareholders as part of a Placement at $0.10 - 590,000
- -
Nil (2010: 4) shares issued to option holders on the exercise of options at $0.15
-
Less transaction costs arising from issue of shares net of tax (145,269)
Balance at end of year 19,674,526 19,674,526
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Holders of ordinary shares are entitled to receive dividends as declared from time to time and are entitled to one vote per share at shareholders’ meetings.

Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. In the event of winding up of the Company ordinary shareholders rank after all creditors and are fully entitled to any proceeds of liquidation.

(b) Options/rights

For information relating to the Monax Mining Limited Employee Share Option Plan including details of any options issued, exercised and lapsed during the financial year, refer to Note 19. For information relating to share options and share rights issued to executive Directors during the financial year, refer to Note 5.

At 30 June 2011, there were 24,209,654 (30 June 2010: 22,109,654) unissued shares for which the following options/rights were outstanding.

150,000 unlisted options exercisable at $0.666 by 14/12/2012

215,000 unlisted options exercisable at $0.246 by 18/07/2013

10,000 unlisted options exercisable at $0.0517 by 23/12/2013

3,000,000 unlisted options exercisable at $0.10 by 31/07/2012

425,000 unlisted options exercisable at $0.0917 by 05/03/2015

18,309,654 listed options exercisable at $0.15 by 30/11/2011

2,100,000 share rights vesting 1/3 each of 01/07/2011, 01/07/2012 and 01/07/2013

(c) Capital Management

Management effectively manages the company’s capital by assessing the Company’s financial risks and adjusting its capital structure accordingly. These responses include share issues. There have been no changes in the strategy adopted by management to control the capital of the Company since the prior year. Capital is shown as issued capital in the Statement of Financial Position.

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 65

19 Share-based payments

Share-based payment arrangements are in line with the Monax Mining Limited Employee Share Option plan and retention rights scheme, details of which are outlined in the directors’ report.

(i) Options

Listed below are summaries of options granted:

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2011 2010
MONAX MINING LIMITED NUMBER OF WEIGHTED NUMBER OF WEIGHTED
OPTIONS AVERAGE OPTIONS AVERAGE
EXERCISE EXERCISE
PRICE PRICE
$ $
Outstanding at the beginning of the year 3,800,000 0.0584 1,825,000 0.330
Granted – December 2009 - - 3,000,000 0.061
Granted – March 2010 - - 425,000 0.085
Exercised - - - -
- - - -
Expired
- - -
Lapsed (1,450,000)
Outstanding at year-end 3,800,000 0.0584 3,800,000 0.0584
Exercisable at year-end 3,800,000 3,800,000
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On 5 March 2010, 425,000 share options were granted to employees under the Monax Mining Limited Employee Share Option Plan to take up ordinary shares at an exercise price of $0.0917 each. These options are exercisable on or before 5 March 2015.

On 17 December 2009, 3,000,000 share options were granted to Mr GM Ferris to take up ordinary shares at an exercise price of $0.10 each. The options are exercisable on or before 31 July 2012.

On 23 December 2008, 260,000 share options were granted to employees under the Monax Mining Limited Employee Share Option Plan to take up ordinary shares at an exercise price of $0.0517 each. These options are exercisable on or before 23 December 2013. 250,000 of these options have lapsed.

On 18 July 2008, 365,000 share options were granted to employees under the Monax Mining Limited Employee Share Option Plan to take up ordinary shares at an exercise price of $0.246 each. These options are exercisable on or before 18 July 2013. 150,000 of these options have lapsed.

On 15 February 2007, 450,000 share options were granted to employees under the Monax Mining Limited Employee Share Option Plan to take up ordinary shares at an exercise price of $0.666 each. These options are exercisable on or before 14 March 2012. 300,000 of these options have lapsed.

The options are non-transferable except as allowed under the Monax Mining Limited Employee Share Option Plan and are not quoted securities. At reporting date, no share options had been exercised.

All options granted to executive directors and key management personnel are over ordinary shares in Monax Mining Limited which confer a right of one ordinary share for every option held.

The life of the options is based on the days remaining until expiry.

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19 Share-based payments (cont.)

(i) Options (continued)

No options were granted to Executive Directors and key management personnel as share-based payments during the year.

The options hold no voting or dividends rights and are unlisted. The options lapse six months subsequent to the cessation of employment with the Company. There are no vesting conditions attached to the options.

The fair value of the options granted was calculated by using the Black Scholes option pricing model applying the following inputs.

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MARCH DECEMBER DECEMBER JULY FEBRUARY
2010 2009 2008 2008 2007
Weighted average fair value (Black Scholes) $0.085 $0.061 $0.029 $0.155 $0.545
Weighted average exercise price $0.0917 $0.10 $0.05 $0.246 $0.666
Weighted average life of the option 1,825 days 956 days 1,825 days 1,825 days 1,825 days
Underlying share price $0.10 $0.08 $0.03 $0.19 $0.83
Expected share price volatility 122% 151% 201% 117% 69.84%
Risk free interest rate 4.00% 3.75% 4.25% 7.25% 5.0%
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The life of the options is based on the days remaining until expiry. Volatility is based on historical share prices.

(ii) Retention Rights

On 17 November 2010, a total of 2,100,000 retention rights were granted to two senior executives/key management personnel subsequent to shareholder approval at the Annual General Meeting. The retention rights, being an entitlement to shares in the Company, will vest over three years with one third vesting on each of 1 July 2011, 1 July 2012 and 1 July 2013, at which time shares will be issued to the executives. The fair value of these rights at grant date was $153,300 of which $82,450 was recognised during the 2011 financial year in the share based payments reserve and Statement of Comprehensive Income. At reporting date, none of the 2,100,000 rights had vested. The fair value of the rights was determined by obtaining an independent valuation and considering the market price of the underlying shares at the date the rights were granted and assuming that all holders continued to be employees of the Company, adjusted for the risk that vesting conditions are not met.

Each right is issued for no consideration. Once exercisable, a right entitles the holder to one fully paid ordinary share in Monax Mining Limited. The aggregate value of rights at the grant date is $153,300 of which $82,450 was expensed in the 2011 financial year. $70,850 is to be expensed in subsequent years. In accordance with the requirements of the Australian Accounting Standards, remuneration includes a proportion of the notional value of equity compensation granted or outstanding during the year. The notional value of equity instruments which do not vest during the reporting period is determined at the grant date and is progressively allocated over the vesting period. The amount included as remuneration is not related to or indicative of the benefit (if any) that individuals may ultimately realise should the rights vest. The notional value of rights as at grant date has been determined in accordance with AASB 2. The calculations are performed using an appropriate valuation methodology. The total minimum value of rights if vesting conditions are not met is nil.

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 67

19 Share-based payments (cont.)

Expenses arising from share-based payment transactions

Total expenses arising from share-based payment transactions recognised during the period as part of employee benefits expense were as follows:

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2011 2010
$ $
Options issued under employee option plan - 219,125
Retention rights issued 82,450 -
82,450 219,125
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20 Financial risk management

The Company’s financial instruments consist mainly of deposits with banks, accounts receivable and payable.

The totals for each category of financial instruments, measured in accordance with AASB 139 as detailed in the accounting policies to these financial statements, are as follows:

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NOTE 2011 2010
$ $
Financial assets
Cash and cash equivalents 3,745,989 807,700
Held-to-maturity investments
- Fixed interest securities - 4,000,000
Loans and receivables 318,691 491,533
4,064,680 5,299,233
Financial liabilities
Trade and other payables 337,946 118,119
337,946 118,119
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Financial risk management policies

The Board of Directors are responsible for monitoring and managing financial risk exposures of the Company.

Specific financial risk exposures and management

The main risks the Company is exposed to includes liquidity risk, credit risk and interest rate risk.

(a) Liquidity risk

Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities.

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20 Financial risk management (cont.)

(a) Liquidity risk (cont.)

The Company manages liquidity risk by monitoring forecast cash flows, only investing surplus cash with major financial institutions; and comparing the maturity profile of financial liabilities with the realisation profile of financial assets.

The Board meets on a regular basis to analyse financial risk exposure and evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. The Board’s overall risk management strategy seeks to assist the Company in managing its cash flows. Financial liabilities are expected to be settled within 12 months.

(b) Credit risk exposures

Credit risk represents the loss that would be recognised if counterparties failed to perform as contracted.

The maximum exposure to credit risk on financial assets, excluding investments, of the entity which have been recognised in the Statement of Financial Position, is the carrying amount, net of any provision for doubtful debts.

No receivables are considered past due or impaired at reporting date.

(c) Interest rate risk

Exposure to interest rate risk arises on financial assets and liabilities recognised at reporting date whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments.

The company has no long term financial liabilities upon which it pays interest. Cash is held in an interest yielding cheque account and on short term call deposit where the interest rate is both fixed and variable according to the financial asset.

Interest rate risk is managed with a mixture of fixed and floating rate cash deposits. At 30 June 2011 approximately 87.5% of Company deposits are fixed. It is the policy of the Company to keep between 90% and 100% of surplus cash in high yielding deposits.

(d) Sensitivity analysis

Interest rate

The Company has performed a sensitivity analysis relating to its exposure to interest rate risk at reporting date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks. It should be noted that the company does not have borrowings and any impacts would be in relation to deposit yields on cash investments.

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 69

20 Financial risk management (cont.)

(d) Sensitivity analysis (cont.)

Interest rate sensitivity analysis

At reporting date, the effect on loss and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

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2011 2010
$ $
Change in loss
Increase in interest rates by 2% 74,920 96,140
Decrease in interest rates by 2% (74,920) (96,140)
Change in equity
Increase in interest rates by 2% 74,920 96,140
Decrease in interest rates by 2% (74,920) (96,140)
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(e) Net fair values of financial assets and liabilities

Fair values are amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

The net fair values of financial assets and liabilities are determined by the entity on the following bases:

(i) Monetary financial assets and financial liabilities not readily traded in an organised financial market are carried at book value and where relevant adjusted for any changes in exchange rates.

(ii) Non-monetary financial assets and financial liabilities are recognised at their carrying values recognised in the Statement of Financial Position.

The carrying amount of financial assets and liabilities is equivalent to fair value at reporting date.

21 Commitments and contingent liabilities

(a) Exploration expenditure commitments

In order to maintain current rights of tenure to exploration tenements, the entity will be required to outlay in the year ending 30 June 2012 amounts of approximately $1,308,000 to meet minimum expenditure requirements pursuant to various joint venture requirements and those specified by the State Government of South Australia. These obligations are subject to renegotiation when application for a mining lease is made and at other times. These obligations are not provided for in the financial report.

(b) Operating lease commitments

Effective 1 July 2008, Groundhog Services Pty Ltd will provide company secretarial and financial services, tenement management, office administration, logistical support and office accommodation. Groundhog has entered into a non-cancellable operating lease commencing in August 2008 for a five year period for office and warehouse accommodation.

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21 Commitments and contingent liabilities (cont.)

(c) Contingent liabilities

As at 30 June 2011, there were no contingent liabilities.

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NOTE 2011 2010
$ $
22 Notes to the statements of cash flows
(a) Cash at the end of the financial year consists of the following:
Cash at bank and at call 8 3,745,989 807,700
Financial assets 11 - 4,000,000
3,745,989 4,807,700
(b) Reconciliation of profit from ordinary activities after income tax
to net cash outflow from operating activities
Profit/(Loss) from ordinary activities after income tax (117,648) (3,074,601)
Add/(less) items classified as investing/ financing activities
-
Share of associate net (profit)/loss (20,358)
Add/(less) non cash items
Depreciation 15,221 17,691
Share-based payments 82,450 219,125
Impairment of asset 74,008 2,289,402
Income tax expense/ (benefit) (324,000) 62,258
Changes in operating assets and liabilities
(Increase)/decrease in prepayments (1,608) 3,743
(Increase)/decrease in receivables 172,842 (47,868)
(Decrease)/increase in accounts payable (23,923) 63,326
- -
(Decrease)/increase in loans
(Decrease)/increase in provisions 11,191 (17,006)
Net cash provided by/(used in) operating activities (131,825) (483,930)
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Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 71

23 Related parties

Directors’ transactions with the Company

A number of Directors of the Company, or their Director related entities, held positions in other entities during the financial year that result in them having control or significant influence over the financial or operating policies of those entities.

The terms and conditions of the transactions with Directors and their Director related entities were no more favourable to the Directors and their Director related entities than those available, or which might reasonably be expected to be available, on similar transactions to Non-director related entities on an arm’s length basis.

The aggregate amounts recognised during the year (excluding re-imbursement of expenses incurred on behalf of the Company) relating to Directors and their Director related entities were as follows:

DIRECTOR	TRANSACTION	NOTE	2011 $	2010 $
GS Davis	Payments to an entity of which the Director is a partner in respect of legal fees		18,980	35,674
RM Kennedy, GS Davis, NF Alley and RG Nelson	Payments to a Director related entity for exploration and joint logistics.	(i)	456,091	557,205
GM Ferris	Payments to a Director related entity for administration services.	(ii)	368,726	302,094

(i) This amount relates to the exploration undertaken on behalf of Monax Mining Limited by Marmota Energy Limited for access and participation in projects in South Australia.

(ii) This amount relates to the provision of administration and logistical services by Groundhog Services Pty Ltd.

Amounts receivable from and payable to Directors and their Director related entities at reporting date arising from these transactions were as follows:

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2011 2010
$ $
Current receivables
Trade debtors - -
Loan to related party 129,807 122,000
129,807 122,000
Current payables
Trade creditors - -
Amounts payable to associates 28,567 10,402
28,567 10,402
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Amounts payable to associates represents amounts payable to Marmota Energy Limited and Groundhog Services Pty Ltd, both associated companies.

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24 Operating segments

Segment information

Description of segments

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the entity that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The entity has identified its operating segments to be Gawler Craton, Kangaroo Island and North Queensland based on different geological regions and the similarity of assets within those regions. This is the basis on which internal reports are provided to the Board of Directors for assessing performance and determining the allocation of resources within the entity.

The entity operates primarily in one business, namely the exploration of minerals.

Basis of accounting for purposes of reporting by operating segment

Accounting policies adopted

Unless stated otherwise, all amounts reported to the Board of Directors, being the chief operating decision maker with respect to operating segments, are determined in accordance with accounting policies that are consistent to those adopted in the annual financial statements of the Company.

Details of the performance of each of these operating segments for the financial years ended 30 June 2011 and 30 June 2010 are set out below:

(i) Segment information

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JUNE 2011 GAWLER CRATON KANGAROO ISLAND NORTH TOTAL
QUEENSLAND
2011 2010 2011 2010 2011 2010 2011 2010
$ $ $ $ $ $ $ $
Segment revenue 63,800 47,448 - - - - 63,800 47,448
Segment results
Gross segment result before
depreciation, amortisation
and impairment 63,800 47,448 - - - - 63,800 47,448
Depreciation and
amortisation - - - - - - - -
- - - -
Impairment (74,008) (2,289,402) (74,008) (2,289,402)
63,800 47,448 (74,008) (2,289,402) - - (10,208) (2,241,954)
Interest income 260,464 192,869
Share of associates’ net profit 20,358 -
Other expenses (831,201) (963,258)
Profit/(loss) before tax (560,587) (3,012,343)
Income tax benefit/(expense) 442,939 (62,258)
Net profit/(loss) after tax (117,648) (3,074,601)
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Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 73

24 Operating segments (cont.)

(ii) Segment assets

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JUNE 2011 GAWLER CRATON KANGAROO ISLAND NORTH TOTAL
QUEENSLAND
2011 2010 2011 2010 2011 2010 2011 2010
$ $ $ $ $ $ $ $
Segment assets 9,396,742 8,725,201 - - 586,318 138,915 9,983,060 8,864,116
Segment asset increases for
the period:
Capital expenditure 671,540 1,033,578 74,008 260,643 447,403 138,915 1,192,951 1,433,136
- - - -
Impairment (74,008) (2,289,402) (74,008) (2,289,402)
671,540 1,033,578 - (2,028,759) 447,403 138,915 1,118,943 (856,266)
Reconciliation of segment
assets to company assets
Cash and cash equivalents 3,745,989 807,700
Trade and other receivables 318,691 491,533
Other current assets 20,891 19,283
Financial assets – current - 4,000,000
Plant and equipment 143,678 178,215
Financial assets – non
current 3,260,359 2,160,001
Deferred tax asset 971,199 647,999
Total assets 18,444,667 17,168,847
(iii) Segment liabilities
Segment liabilities 3,734 44,836 - - 24,423 - 28,157 44,836
Reconciliation of
segment liabilities to
company liabilities
Trade and other payables 309,789 73,283
Short term provisions 24,978 22,900
Deferred tax liability 971,999 647,999
Long term provisions 15,443 6,330
Total liabilities 1,350,366 795,348
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25 Events subsequent to reporting date

On 1 July 2011, 700,000 share rights vested and resulted in the issue of 500,000 fully paid ordinary shares to the Managing Director and 200,000 fully paid ordinary shares to the Company Secretary.

Other than the matters noted above, there has not arisen in the interval any matters or circumstances, since the end of the financial year which significantly affected or could affect the operations of the Company, the results of those operations, or the state of the Company in future years.

26 Reserves

Reserves include the share options reserve recording items recognised as expenses on valuation of employee share options and share rights, and the revaluation of associate entity fair value.

27 Comparative Information

Marmota Energy Limited
Groundhog Services Pty Ltd

These entities have been equity accounted from 1 January 2011 in the 30 June 2011 financial statements and are recognised as investments in associates.

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 75

27 Comparative Information (cont.)

Total equity is reconciled below:

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$
2010
CONSOLIDATED
Current assets
Cash and cash equivalents 2,933,248
Trade and other receivables 641,115
Other current assets 54,739
Financial assets 11,500,000
Total current assets 15,129,102
Non-current assets
Plant and equipment 757,470
Exploration and evaluation expenditure 17,007,681
Total non-current assets 17,765,151
Total assets 32,894,253
Current liabilities
Trade and other payables 565,842
Short term provisions 81,471
Total current liabilities 647,313
Non-current liabilities
Capitalised lease incentive 65,782
Long term provisions 47,604
Total non-current liabilities 113,386
Total liabilities 760,699
Net assets 32,133,554
Equity
Issued capital 19,674,526
Reserves 598,080
Retained earnings (6,293,050)
13,979,556
Minority interests 18,153,998
Total Equity 32,133,554
Less: Equity in entities no longer consolidated:
- Marmota Energy Limited (16,408,052)
- Groundhog Services Pty Ltd (2)
- Correction to recognise deferred tax asset in Monax Mining Limited eliminated on consolidation 647,999
Monax total equity 30 June 2010 16,373,499
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28 Company details

The registered office of the Company is:

140 Greenhill Road UNLEY SA 5061

The principal place of business is

Unit I, 5 Butler Boulevard Burbridge Business Park ADELAIDE AIRPORT SA 5950

Notes to the Financial Statements

FOR THE YEAR ENDED 30 JUNE 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 77

1 The Directors of Monax Mining Limited declare that:

(a) the financial statements and notes, as set out on pages 27 to 76, are in accordance with the Corporations Act 2001, and:
(i) giving a true and fair view of the financial position as at 30 June 2011 and of the performance for the year ended on that date of the entity; and
(ii) complying with Accounting Standards; and
(iii) Monax Mining Limited complies with International Financial Reporting Standards as described in Note 1.
(b) The Chief Executive Officer and Chief Financial Officer have declared that:
(i) The financial records of the Company for the financial year have been properly maintained in accordance with s286 of the Corporations Act 2001;
(ii) The financial statements and notes for the financial year comply with the accounting standards; and
(iii) The financial statement and notes for the financial year give a true and fair view;
(c) In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors.

Dated at Adelaide this 19th day of September 2011

Robert Michael Kennedy Director

Directors’ Declaration

FOR THE YEAR ENDED 30 JUNE 2011

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    



         



    

   

 

Independent Auditor’s Report

MONAX MINING LIMITED 2011 ANNUAL REPORT 79

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Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report is set out below.

The information is current at 20 September 2011

Distribution of Equity Securities

Ordinary Share Capital

Fully paid ordinary shares are held by 1,845 individual shareholders.

Options

Options are held by 343 individual option holders.

Rights

Rights are held by 2 individual right holders.

Substantial shareholders

There are no substantial holding notices given to the Company.

Voting rights

Fully paid ordinary shares

Subject to any rights or restrictions attached to any class of shares, at a meeting of members, on a show of hands, each member present (in person, by proxy, attorney or representative) has one vote and on a poll, each member present (in person, by proxy, attorney or representative) has one vote for each fully paid share they hold.

Distribution of equity security holders

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CATEGORY HOLDERS HOLDERS HOLDERS HOLDERS HOLDERS HOLDERS HOLDERS HOLDERS HOLDERS HOLDERS
OF OF OF OF OF OF OF OF OF OF
ORDI- 30/11/2011 13/02/2012 18/07/2013 23/12/2013 31/07/2012 5/03/2015 28/07/2016 SHARE SHARE
NARY $0.15 $0.666 $0.246 $0.0517 $0.10 $0.0917 $0.051 RIGHTS RIGHTS
SHARES OPTIONS OPTIONS OPTIONS OPTIONS OPTIONS OPTIONS OPTIONS VESTING VESTING
1/07/2012 1/07/2013
1 – 1,000 279 62 - - - - - - - -
1,001 – 5,000 328 106 - - - - - - - -
5,001 –
10,000 258 47 - - - - - - - -
10,001 –
100,000 745 97 - 3 1 - 2 2 - -
100,001 and
over 235 26 1 - - 1 2 1 2 2
No. of
security
holders 1,845 338 1 3 1 1 4 3 2 2
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The number of shareholders holding less than a marketable parcel of ordinary shares is 763. The number of option holders holding less than a marketable parcel of listed options is 289.

On market buy-back

There is no current on-market buy-back.

Shareholder Information

AS AT 20 SEPTEMBER 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 81

Twenty largest shareholders

The names of the 20 largest holders of fully paid ordinary shares constituting a class of quoted equity securities on the Australian Stock Exchange Limited including the number and percentage held by those holders at 20 September 2011 are as follows.

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NAME NUMBER OF FULLY PERCENTAGE HELD
PAID ORDINARY %
SHARES HELD
Alexandra Resources Pty Ltd 4,933,333 3.32
Havilah Resources NL 4,916,667 3.31
Mr David Ian Kerr & Mrs Cheryl Dorothea Kerr 4,428,219 2.98
Triple Eight Gold Pty Ltd 4,021,734 2.70
Mr Neville Foster Alley & Mrs Bronwen Dianne Ireland 3,022,727 2.03
Mr Rodolfo Antonio Messina Gomez 2,813,104 1.89
Mr Meng Zhai 2,713,058 1.82
Aloren (No 148) Pty Ltd 2,702,728 1.82
Town Group Pty Ltd 2,700,000 1.82
Fahey Services Pty Ltd 2,650,000 1.78
Mr Reg Nelson & Mrs Susan Nelson 2,145,659 1.44
Mr Harry Santavas and Mrs Vicki Santavas 1,950,000 1.31
Teckcorp Pty Ltd 1,850,000 1.24
JP Morgan Nominees Australia Limited 1,825,280 1.23
N & R Smart Pty Ltd 1,815,000 1.22
Argil Pty Ltd 1,700,338 1.14
Miss Tamara Kate Maddock 1,700,000 1.14
P Ford Superannuation Pty Ltd 1,700,000 1.14
Mr Neil Henry Scriven and Ms Robyn Julie McDonald 1,548,628 1.04
McKell Place Nominees Pty Ltd 1,412,000 0.95
52,548,475 35.32
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Twenty largest option holders

The names of the 20 largest holders of options constituting a class of quoted equity securities on the Australian Stock Exchange Limited including the number and percentage held by those holders at 20 September 2011 are as follows.

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NAME NUMBER OF FULLY PERCENTAGE HELD
PAID ORDINARY %
SHARES HELD
National Nominees Limited 4,116,667 22.48
Mr Matthew Burford 1,785,000 9.75
Jacobs Corporation Pty Ltd 1,740,485 9.51
Mr Steven John Larkins and Mrs Ann Kathleen Larkins 1,000,000 5.46
Triple Eight Gold Pty Ltd 502,717 2.75
Davco Group Pty Ltd 500,000 2.73
Colin John Hough 500,000 2.73
Petard Pty Ltd 360,000 1.97
Mr Daniel Marshall 352,461 1.93
Mr Sergio Capitano 333,334 1.82
Mr Allan Harvey Moffatt 314,293 1.72
Ms Yamin Zhou 311,919 1.70
Proto Resources & Investments Ltd 300,000 1.64
ARCO Four Investments Pty Ltd 293,082 1.60
Mr Daniel Joseph Foley 200,000 1.09
Mr Andrew Kenneth Bruce Mortimer 200,000 1.09
Mr Mladen Marusic 198,334 1.08
Mr Peter Gebhardt and Mrs Carlene Gebhardt 173,082 0.95
Mr Harry Santavas and Mrs Vicki Santavas 166,667 0.91
Mr Stig Hakan Hellsing and Mrs Patricia Anne Hellsing 160,000 0.87
13,508,041 73.78
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Shareholder Information

AS AT 20 SEPTEMBER 2011

MONAX MINING LIMITED 2011 ANNUAL REPORT 83

Unquoted equity securities

Options

Details of options on issue which are unquoted are as follows.

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EXPIRY DATE EXERCISE PRICE NUMBER OF OPTIONS NUMBER UNQUOTED NUMBER OF HOLDERS
13/02/2012 $0.666 150,000 150,000 1
13/07/2013 $0.246 215,000 215,000 3
23/12/2008 $0.0517 10,000 10,000 1
31/07/2012 $0.10 3,000,000 3,000,000 1
05/03/2015 $0.0917 425,000 425,000 4
28/07/2016 $0.051 225,000 225,000 3
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Rights

Details of rights on issue which are unquoted are as follows:

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VESTED DATE EXERCISE PRICE NUMBER OF RIGHTS NUMBER UNQUOTED NUMBER OF HOLDERS
01/07/2012 Nil 700,000 700,000 2
01/07/2013 Nil 700,000 700,000 2
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South Australia

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PROJECT TENEMENT NO . STATUS AREA AREA TYPE DETAILS
Punt Hill EL 4642 Granted 887 km [2] JV with Antofagasta
PUNT HILL
Yeltacowie EL4548 Granted 390 km [2] JV with Antofagasta
WADDIKEE Waddikee EL 4662 Granted 999 km [2] JV with OMM
Coonarie EL 3907 Granted 628 km [2] JV with Marmota Energy
YORKE Melton EL 3911 Granted 28 km [2] JV with Marmota Energy
PENINSULA North Melton EL 4000 Granted 137 km [2] JV with Marmota Energy
Webling Bay EL 3922 Granted 82 km [2]
Western River EL 4154 Granted 40 km [2]
KANGAROO
Western River Cove EL 4530 Granted 69 km [2]
ISLAND
Parndana EL 4581 Granted 100 km [2]
Ambrosia EL 4510 50% Monax; 50% 854 km [2] JV with Marmota Energy
AMBROSIA
Marmosa P/L
PHAR LAP Phar Lap EL 3909 Granted 459 km [2] JV with Marmota Energy
MULYUNGARIE Mulyungarie EL 3910 Granted 17 km [2] JV with Marmota Energy
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Queensland

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PROJECT TENEMENT NO . STATUS AREA AREA TYPE DETAILS
Pretender Creek C EPM 16963 Granted 98 sub blocks Option agreement Delminco
Kendall River EPM 17005 Granted 100 sub blocks Option agreement Delminco
CAPE YORK Pretender Creek EPM 18304 Granted 76 sub blocks
Holroyd River South EPM 18403 Granted 94 sub blocks
Holroyd River North EPM 18404 Granted 95 sub blocks
Vickars ML 30220 Application 45.8 hectares
Four Gees #1 ML 30221 Application 48.5 hectares
Four Gees #2 ML 30222 Application 46.6 hectares
Comstock ML 30223 Application 46.0 hectares
Mt Hogan #2 ML 30224 Application 45.3 hectares
PERCYVALE
Mt Hogan #1 ML 30225 Application 47.0 hectares
Union ML 3366 Granted 23.6 hectares Option agreement Allyn Zabel
Percy West ML 30199 Granted 32 hectares Option agreement Allyn Zabel
Josephine ML 30139 Granted 6.36 hectares Option agreement Allyn Zabel
Homeward Bound ML 30103 Granted 2.63 hectares Option agreement Allyn Zabel
Mutchilba EPM 19088 Application 86 sub blocks
STANNARY
Stannary Hills EPM 19115 Competing 70 sub blocks
HILLS
application
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Tenement Status

MONAX MINING LIMITED 2011 ANNUAL REPORT 85

PRINCIPAL REGISTERED OFFICE

Monax Mining Limited 140 Greenhill Road UNLEY SA 5061 GPO Box 1373 ADELAIDE SA 5001

T (08) 8373 5588 F (08) 8373 5917 E [email protected] W www.monaxmining.com.au

GLENN STUART DAVIS

LLB, BEc Non-executive Director

VIRGINIA KATHERINE SUTTELL

BComm, ACA, GradDip ACG, GAICD Company Secretary

STOCK EXCHANGE CODE

EXPLORATION OFFICE

Unit I, 5 Butler Boulevard Burbridge Business Park ADELAIDE AIRPORT SA 5950

T (08) 8375 3900 F (08) 8375 3999

Shares: MOX Options: MOXO Listed on Australian Stock Exchange Limited Home Exchange: Adelaide Level 30, 91 King William Street Adelaide SA 5000

Postal Address

PO Box 247 EXPORT PARK SA 5950

DIRECTORS AND SENIOR MANAGEMENT

Robert Michael Kennedy ASAIT, Grad. Dip. (Systems Analysis) FCA, ACIS, FAIM, FAlCD Non-executive Chairman

SHARE REGISTRAR

Location of Share Register Computershare Investor Services Pty Limited Level 5, 115 Grenfell Street ADELAIDE SA 5000

T 1300 556 161 (within Australia) +61 3 9415 4000 (outside Australia) F +61 8 8236 2305

E [email protected]

Gary Michael Ferris BSc (Hons), MSc, AusIMM Managing Director

Neville Foster Alley Phd, PSM Non-executive Director

Reginald George Nelson BSc (MATHS), FAusIMM, FAICD Non-executive Director

AUDITORS

Grant Thornton Chartered Accountants 67 Greenhill Road WAYVILLE SA 5034

LAWYERS

DMAW Lawyers Level 3, 80 King William Street ADELAIDE SA 5000

Corporate Directory

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ABN 96 110 336 733

Notice of Annual General Meeting 2011

Notice is hereby given that the Annual General Meeting of Monax Mining Limited (‘Company’) will be held at Enterprise House, 136 Greenhill Road, Unley SA on Wednesday, 16 November 2011 at 11:00am (Adelaide time).

AGENDA

ORDINARY BUSINESS

3. Re-election of Mr RM Kennedy as a Director

1. Financial Report

To receive and consider the Company’s financial statements and independent audit report for the year ended 30 June 2011.

The Annual Financial Report is available at the website of the Company (www.monaxmining.com.au), under “Investors”, “Corporate Reports”, “Annual Reports”.

To consider, and if thought fit, pass the following resolution as an ordinary resolution:

‘That, Mr RM Kennedy being a director of the Company who retires by rotation in accordance with clause 47.1.2 of the Company’s constitution, and being eligible, is re-elected as a director of the Company.’

SPECIAL BUSINESS

2. Adoption of Remuneration Report

4. Employee Share Option Plan

To consider and put the following resolution to a non-binding vote:

To consider, and if thought fit, pass the following resolution as an ordinary resolution:

‘That the Remuneration Report required by section 300A of the Corporations Act 2001 , as contained in the Company’s Directors’ Report for the year ended 30 June 2011 be adopted.’

Voting Prohibition Statement

Monax shall disregard any votes cast in respect of Resolution 2 by key management personnel or their closely related parties (or any person voting on their behalf). However, the Company will not disregard a vote on Resolution 2 if:

it is cast by a person as proxy for a member who is entitled to vote, in accordance with the directions on the proxy form; or
it is cast by the Chairman of the meeting as proxy for a member who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

‘That, with effect from the closure of this meeting and for the purposes of Exception 9 of ASX Listing Rule 7.2, section 260C(4) of the Corporations Act 2001 and for all other purposes, approval is given for the Company to continue to administer and issue securities under the employee incentive scheme called the Monax Mining Limited Employee Share Option Plan.’

The terms and conditions of the Monax Mining Limited Employee Share Option Plan are summarised in the explanatory memorandum accompanying the notice convening this meeting.

ASX Voting Exclusion

The Company will disregard any votes cast in relation to this resolution by a director of the Company or their associates, except the directors who are ineligible to participate in any employment incentive scheme. However, in

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respect of this resolution, the Company need not disregard a vote if:

it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or
it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement

The Company shall disregard any votes cast in respect of Resolution 4 by key management personnel or their closely related parties (or any person voting on their behalf). However, the Company will not disregard a vote on Resolution 4 if:

OTHER BUSINESS

6. To transact any further business that may be lawfully brought forward

Further information regarding the business to be transacted at the Annual General Meeting is set out in the explanatory memorandum accompanying the notice convening this meeting. This notice should be read in conjunction with the accompanying explanatory memorandum which forms part of this notice.

By order of the Board

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Virginia Suttell Company Secretary

Date: 6 October 2011

it is cast by a person as proxy for a member who is entitled to vote, in accordance with the directions on the proxy form; or
it is cast by the Chairman of the meeting as proxy for a member who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

5. Amendments to Constitution

To consider, and if thought fit, pass the following resolution as a special resolution:

‘That, pursuant to section 136(2) of the Corporations Act 2001 , with effect from the closure of this meeting, the Constitution of the Company be amended in the manner set out in Annexure A to the notice convening this meeting.’

The amendments to the Constitution of the Company are described generally in the explanatory memorandum accompanying the notice.

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NOTES

A member entitled to attend and vote at this meeting is entitled to appoint a proxy to attend and vote on the member’s behalf. If the member is entitled to cast two or more votes at the meeting, the member may appoint up to two proxies to attend and vote on the member’s behalf.

If a member appoints two proxies, each proxy must be appointed to represent a specified proportion or number of the member’s votes. Absent this specification, each proxy will need to exercise half the votes.

A proxy need not be a member of the Company.

To appoint a proxy, a proxy form must be signed by the member or the member’s attorney duly authorised in writing. If the member is a corporation, the proxy form must be signed in accordance with section 127 of the Corporations Act 2001 (Cth).

For the purpose of the meeting, shares in the Company will be taken to be held by those persons who are registered holders at close of business on Monday, 14 November 2011. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the meeting.

The Constitution of the Company provides that 10 shareholders present in person, by proxy, attorney or body corporate representative shall be a quorum for a general meeting of the Company.

Corporate representatives are requested to bring appropriate evidence of appointments as a representative in accordance with the Constitution of the Company. Attorneys are requested to bring a Power of Attorney pursuant to which they are appointed. Proof of identity will also be required for corporate representatives and attorneys.

To be effective, a proxy form (and, if it is signed by an attorney, the authority under which it is signed or a certified copy of the authority) must be received by the Company not later than 48 hours prior to the commencement of the meeting. Proxy form and authorities may be sent to Computershare Investor Services Pty Ltd, GPO Box 242, Melbourne VIC 3001, or in person to Computershare at Level 5, 115 Grenfell Street, Adelaide SA 5000, or by facsimile to Computershare on (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555 or to the Company on +61 8 8375 3999.

Members who forward their proxy forms by fax must make available the original executed form of the proxy for production at the meeting, if called upon to do so.

Custodian Voting – For Intermediary Online subscribers only (Custodians), please visit www.intermediaryonline.com to submit your voting intentions.

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ABN 96 110 336 733

Explanatory Memorandum

Accompanying the Notice of Annual General Meeting to be held on 16 November 2011.

1. Financial Report

The Annual Financial Report together with the Directors’ Report and Auditor’s Report will be laid before the meeting in accordance with section 317 of the Corporations Act 2001 (Cth) (‘Corporations Act’). Members will be given the opportunity to ask questions or make comments about the management of the Company and may also ask questions of the Auditor’s representative relevant to the conduct of the audit and preparation and content of the Auditor’s Report.

2. Remuneration Report

In accordance with section 250R of the Corporations Act, the Company submits to shareholders for consideration and adoption by way of a non-binding resolution its Remuneration Report for the year ended 30 June 2011. The Remuneration Report is a distinct section of the Directors’ Report that deals with the remuneration of Directors and Key Management Personnel of the Company and can be located on pages 33 to 40 in the 2011 Annual Report and also on the Company’s website at: www.monaxmining.com.au.

The Remuneration Report sets out the Company’s remuneration arrangements for its Directors, Officers and Senior Management. Shareholders will be given reasonable opportunity at the meeting to discuss the report.

The Directors recommend shareholders vote in favour of the non-binding ordinary resolution. The Chairman intends to vote undirected proxies in favour of the resolution.

3. Re-election of Mr RM Kennedy as a Director

At the date of the Notice of Annual General Meeting, the Board of Directors of the Company comprises five directors. Mr Kennedy is required by the Company’s constitution to retire at the meeting. A retiring director is eligible for re-election.

Mr Kennedy offers himself for re-election by shareholders at the meeting. A brief description of the candidate is as follows:

Mr Robert Michael Kennedy ASAIT, Grad., Dip (Systems Analysis), FCA, ACIS, Life member AIM, FAICD.

Non-executive Chairman . Mr Kennedy is a chartered accountant and a consultant to Kennedy & Co, Chartered Accountants, a firm he founded. He joined Monax in August 2004 as a non-executive director and has been the Chairman of Monax since that date. He is also a director of ASX listed companies Beach Energy Ltd (since 1991) Ramelius Resources Limited (since 1995), Flinders Mines Limited (since 2001), Maximus Resources Limited (since 2004), Marmota Energy Limited (since 2007), ERO Mining Limited (since 2006) and Somerton Energy Limited (since 2010). His special responsibilities include membership of the Audit and Corporate Governance Committee and the Remuneration and Nomination Committee. Mr Kennedy brings to the Board his expertise in finance and management consultancy and extensive experience as chairman and nonexecutive director of a range of listed public companies.

Mr Kennedy leads the development of strategies for the development and future growth of Monax. He has participated in the Diggers & Dealers Mining Industry conferences for the last 3 years. He also conducts the review of the Board including the Managing Director in his executive role.

Apart from his attendance at Board and Committee meetings Mr Kennedy leads the Board’s external engagement of the company meeting with industry participants Government and the Media. He is a regular attendee of Audit Committee functions of the major accounting firms. During the year he attended the Masterclass of the Australian Institute of Directors with members of top ASX200 company boards. He has been appointed the Chairman of the University of Adelaide’s Institute of Minerals

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and Energy Resources, is a mentor in the AICD’s diversity program and is a regular presenter on topics relating to directors with the AICD and the CSA. In the area of Community Engagement he regularly attends functions held by institutions.

He was recently awarded Entrepreneur of the Year in the Ernst & Young Central Region awards in the listed category.

In assessing Mr Kennedy’s independence, the Board (excluding Mr Kennedy), took into account his stamina, his ability to think independently across a wide range of issues and his relentless availability. Whilst Mr Kennedy has been appointed to a number of Resource Industry Boards, due to his extensive knowledge of the industry, the time required across these companies in no way impedes on his dedication to his role as Chairman of Monax. In taking all of these issues in to account, the Board (excluding Mr Kennedy), were unanimous in declaring Mr Kennedy as independent.

The Directors (with Mr Kennedy abstaining) recommend shareholders vote in favour of the resolutions. The Chairman intends to vote undirected proxies in favour of the resolution.

4. Employee Share Option Plan

This resolution proposes shareholder approval for the purposes of Exception 9(b) of ASX Listing Rule 7.2 for the establishment of the Monax Mining Limited Employee Share Option Plan ( ESOP ) and the issue of securities under the ESOP. The two main purposes of the ESOP are to give an incentive to the employees and directors to provide dedicated and ongoing commitment and effort to the Company and for the Company to reward employees and directors for their efforts. The ESOP contemplates the issue of options to subscribe for fully paid ordinary shares in the Company, to employees and directors of the Company.

Listing Rule 7.1 places certain restrictions on the extent to which a listed company may issue certain securities including options. The effect is that shareholder approval is required before the company may issue securities representing

more than 15% of the capital of the Company within a 12 month period. However, certain issues are exempt from that Listing Rule and are effectively disregarded for the purposes of counting the number of securities which a company may issue.

Exempt issues include an issue of securities to persons participating in an employee option scheme where shareholders have approved the issue of securities under the scheme as an exemption from Listing Rule 7.1. Shareholder approval must be given in a general meeting held not more than 3 years before the date of issue where the notice of meeting contains or is accompanied by certain prescribed information (set out below) (Exception 9 of Listing Rule 7.2).

Any securities issued to directors under the ESOP will still require specific shareholder approval for that issue under Listing Rule 10.14.

In order to take advantage of the exemption from Listing Rule 7.1 and allow the Company greater flexibility to issue securities, shareholders are requested to approve the issue of securities under the ESOP as an exemption from Listing Rule 7.1. This approval will be effective from the date of the resolution.

If approval is given, securities issued under the ESOP will be exempt from counting towards the 15% limit under Listing Rule 7.1.

Under section 260A(1) of the Corporations Act 2001, a company must not financially assist a person to acquire shares in the company or its holding company unless an exception applies. The relevant exception is set out under section 260C(4) which provides that financial assistance will be exempted if it is given under an employee share scheme that has been approved by a resolution passed at a general meeting.

Under the ESOP, the Company may provide free options to eligible employees and directors. This may be considered ‘financial assistance’ within the meaning of the Corporations Act 2001. Accordingly, shareholder approval is sought for the purposes of section 260C(4) of the Corporations Act 2001.

In accordance with Exception 9(b) of Listing

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Rule 7.2, shareholders are provided with the following information.

Summary of Terms and Conditions of the ESOP

The key terms of the ESOP are as follows:

Employees and directors of the Company will be eligible to participate in the ESOP. The Directors, in their absolute discretion, will determine which employees and directors may participate.
The entitlements under the ESOP will be in the absolute discretion of the Directors.
Options will be granted free of charge.
The exercise price of the options will be determined by the Directors but will not be less than the market price (as defined in the ESOP) at the time the Directors resolve to issue the options.
The directors may limit the number of options which may be exercised in any one year.
Each option entitles the holder to subscribe for and be allotted one share.
All unexercised options expire 5 years from the date of grant.

available at the Annual General Meeting.

The Directors recommend shareholders vote in favour of the resolution. The Chairman intends to vote undirected proxies in favour of the resolution.

5. Amendments to Constitution

The Directors are proposing that the Company constitution be amended in the manner set out in Annexure A to the notice convening this meeting. The Directors recommend the proposed amendments to ensure the Company constitution reflects the current legislative requirements and is relevant to the Company.

The principal proposed amendments to the Constitution are summarised below.

Clause 7.2

Inserting a new clause 7.2, so that any fractions arising out of a share conversion may be dealt with by the Board in one, or a combination, of ways, for example, by:

making a cash payment or disregarding fractional entitlements; or
vesting fractional entitlements to be dealt with as determined by the Board.

Various

If an employee ceases to be an employee of the Company all options which have not been exercised will lapse.

Since the 2008 Annual General Meeting, the following options have been issued under the ESOP:

260,000 options on 23 December 2008;
425,000 options on 5 March 2010; and
225,000 options on 28 July 2010.

Listing Rule 14.9 requires approval be given by an ordinary resolution of the Company.

Copies of the rules of the ESOP are available for inspection at the Company’s registered office during business hours, or may be obtained free of charge by contacting the Company Secretary. The rules of the ESOP will also be made

Amending outdated references to “ASTC” and the “ASTC Settlement Rules” and adopting the recent name changes of some ASX entities following the transfer of market supervision to the Australian Securities and Investments Commission.

Clause 29

The proposed changes would allow the Company to sell the securities of shareholders holding an Unmarketable Parcel (as defined by the ASX Listing Rules) and to remit the proceeds of sale to those shareholders. The Company would be able to sell these shares on-market or place them with particular investors. However, the shareholder would have the option to retain their particular shareholding (but to retain their shares, the shareholder must take positive action and

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complete and return a form).

The Company would bear the transaction costs associated with the share sale, but apart from that there would be no capital outlay for the Company.

Clause 45.1

Reducing the maximum number of Company directors from 10 to 5.

Clause 69.1

Replacing the existing clause 69.1 with the following:

“Subject to the Corporations Act 2001, and the terms of issue of shares, the Directors may resolve to pay any dividend they consider appropriate and fix the time for payment. The Company does not incur a debt merely by fixing the amount or time for payment of a dividend. A debt arises only when the time fixed for payment arrives. The decision to pay a dividend may be revoked by the Directors at any time before then.”

On 28 June 2010, the Corporations Amendment (Corporate Reporting Reform) Act 2010 (Cth) ( CRR Act ) changed the circumstances in which a dividend may be paid. The CRR Act replaced the profits test in section 254T of the Corporations Act 2001 with a three-tiered test. A company must not pay a dividend unless:

the company’s assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend;
it is fair and reasonable to the company’s shareholders as a whole; and
it does not materially prejudice the company’s ability to pay its creditors.

Except as discussed above, the Directors consider the proposed changes will not materially alter the effect of the Company’s existing constitution or the rights of shareholders.

If you would like a copy of the Company’s proposed amended constitution (which will be

made available at no charge), please contact the Company Secretary. Alternatively, a copy of the Company’s proposed amended constitution will be released to the ASX shortly after the Annual General Meeting.

The Directors recommend shareholders vote in favour of the proposed amendments to the Company’s constitution. The Chairman intends to vote undirected proxies in favour of the resolution.

UNDIRECTED PROXIES

If a member appoints the chairperson of the meeting as the member's proxy and does not specify how the chairperson is to vote on a resolution, except as expressly stated, the chairperson advises that he intends to vote each such proxy, as proxy for that member, in favour of the resolution on a poll. Therefore, the Company recommends that shareholders who submit proxies should consider giving 'how to vote' directions to their proxy holder (including the chairperson) on each resolution.
If you complete a proxy form that authorises the chairperson of the meeting to vote on your behalf as proxy holder, and you do not mark any of the boxes so as to give him directions about how your vote should be cast, then your proxy will automatically become a directed proxy in favour of the resolution to adopt the Remuneration Report, and the chairperson will vote accordingly. If you wish to appoint the chairperson as your proxy holder but you do not want to put him in the position to cast your votes in favour of the Remuneration Report, you should complete the appropriate box on the proxy form, directing him to vote against or abstain from voting on that resolution.

Definitions

Key management personnel ( KMP ) of the Company are, as adopted from the Australian Accounting Standards Board, those persons

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having authority and responsibility for planning, directing and controlling the activities of the Company, directly and indirectly, including any director (whether executive or otherwise) of the Company.

Closely related parties of the Company’s KMP include certain family members, dependants and companies they control.

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Annexure A

Insert the following clause 7.2:

7.2 The Board may do anything it thinks appropriate and necessary to give effect to a resolution converting shares including, if a shareholder becomes notionally entitled to a fraction of a share as a result of the conversion:
7.2.1 make a cash payment or disregard fractional entitlements so as to adjust the rights of shareholders between themselves; or
7.2.2 vest fractional entitlements in a trustee to be dealt with as determined by the Board.

Amend clause 24.2 by removing the struck out text and inserting the underlined text as follows:

24.2 If the Company is admitted to the official list of ASX, the Company must not prevent, delay or interfere with the generation of a ~~proper SCH transfer~~ Proper Transfer or the registration of a paper-based transfer in registrable form. However, the Company may ask ~~SCH~~ ASX Settlement to apply a holding lock to prevent a ~~proper SCH transfer~~ Proper Transfer, or refuse to register a paper-based transfer, where permitted by the Corporations Act 2001 or the Listing Rules. The Company must do so if the Corporations Act 2001 or the Listing Rules so require.

Replace clause 29 with the following:

29. Unmarketable Parcel

29.1 In this clause:
29.1.1 Effective Date means the date immediately following the expiry of the period referred to in the notice given by the Company to Unmarketable Parcel Holders in accordance with this clause 29;
29.1.2 Unmarketable Parcel means a parcel of shares of a single class registered in the same name or the same joint names which is less than:
- (a) the number that constitutes a marketable parcel of shares of that class under the Listing Rules; or
- (b) subject to the Corporations Act 2001, the Listing Rules and the ASX Settlement Rules, any other number determined by the Directors from time to time.

29.1.3 Unmarketable Parcel Holder means a Member holding an Unmarketable Parcel.

29.2 The Company may give written notice to an Unmarketable Parcel Holder advising of the Company’s intention to sell its Unmarketable Parcel under this clause 29. If the Company does so, the notice must:
29.2.1 state that it intends to sell the Unmarketable Parcel; and
29.2.2 specify a date at least six weeks (or any lesser period permitted under the Corporations Act 2001 or the Listing Rules) after the notice is given by which the Unmarketable Parcel Holder may give the Company written notice that the Unmarketable Parcel Holder wishes to retain the holding.

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29.3 The Company must not sell an Unmarketable Parcel if, in response to a notice given by the Company under clause 29.2, the Company receives a written notice within the specified time referred to in clause 29.2(b) that the Unmarketable Parcel Holder wants to keep the Unmarketable Parcel.
29.4 If an Unmarketable Parcel Holder has given written notice to the Company that it wishes its shares to be exempted from this clause, it may at any time before the Effective Date revoke or withdraw that notice and the provision of this clause will then apply to the shares held by that Unmarketable Parcel Holder.
29.5 Subject to clause 29.3, on and from the Effective Date, the Company may sell or otherwise dispose of the shares held by each Unmarketable Parcel Holder on any terms and in that manner and at those times which the Directors determine. For the purpose of selling or disposing of those shares, each Unmarketable Parcel Holder irrevocably:
29.5.1 appoints the Company as its agent to sell all the shares it holds;
29.5.2 appoints the Company and each Director and Secretary from time-to-time jointly and severally as its attorney in its name and on its behalf to effect a transfer document for its shares and to otherwise act to effect a transfer of its shares; and
29.5.3 appoints the Company as its agent to deal with the proceeds of sale of those shares in accordance with this clause.
29.6 A sale of shares under this clause 29 includes all dividends payable on and other rights attaching to them.
29.7 The Company will pay all costs and expenses of the sale and disposal of Unmarketable Parcels under this clause 29.
29.8 Once the name of the new holder of the share sold or disposed of in accordance with this clause is entered in the register of shareholders for those shares, the title of the new holder of those shares is not affected by any irregularity or invalidity on connection with the sale or disposal of those shares and the validity of the sale may not be impeached by any person.
29.9 The remedy of any Unmarketable Parcel Holder who is aggrieved by the sale or disposal of its shares under this clause is limited to a right of action in damages against the Company to the exclusion of any other right, remedy or relief against any other person.
29.10 A written statement declaring that the person making the statement is a Director or Secretary of the Company and that the shares of an Unmarketable Parcel Holder have been dealt with in accordance with this clause, is conclusive evidence of the facts stated in the statement as against all persons claiming to be entitled to those shares.
29.11 The Company’s receipt of the sale proceeds of the shares of the Unmarketable Parcel Holder is a good discharge to the purchaser of all liability in respect of the purchase of those shares and the purchaser will not be bound to see to the application of the money paid as consideration.

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29.12 The Company will receive the proceeds of the shares of each Unmarketable Parcel Holder and will deal with those proceeds as follows. It must:
29.12.1 pay the proceeds into a separate bank account which it opens and maintains for that purpose;
29.12.2 hold the proceeds in trust for the Unmarketable Parcel Holder;
29.12.3 as soon as practicable, notify the Unmarketable Parcel Holder in writing of the receipt and that the proceeds are being held by the Company pending receipt of the share certificate (if any) for those shares sold or disposed of or, if those certificates have been lost or destroyed, a statement and undertaking in accordance with the Corporations Act 2001, and seeking instructions from the Unmarketable Parcel Holder as to how the proceeds are to be dealt with;
29.12.4 if the shares sold were certificated, not pay the proceeds of sale out of the trust account until it has received the certificate for them or, if that certificate has been lost or destroyed, evidence of its loss or destruction and a statement and undertaking in accordance with the Corporations Act 2001;
29.12.5 subject to clause 29.12.4, deal with the sale proceeds as instructed by the Unmarketable Parcel Holder on whose behalf they are held; and
29.12.6 if the whereabouts of the Unmarketable Parcel Holder are unknown or no instructions are received from the Unmarketable Parcel Holder within 2 years of the proceeds being received by the Company, deal with those proceeds according to the applicable laws dealing with unclaimed moneys.
29.13 The power of the Company to sell lapses if a takeover (as defined in the Listing Rules) is announced after the Company gives a notice under clause 29.2 and before the Company enters into an agreement to sell the share. The procedures set out in this clause 29 may be started again after the close of offers under the takeover.
29.14 The provisions of this clause 29 may be invoked only once in any 12 month period.

Amend clause 45.1 by removing the struck out text and inserting the underlined text as follows:

45.1 There must be at least 3 directors and at most ~~10~~ 5 directors.

Replace clause 69.1 with the following:

69.1 Subject to the Corporations Act 2001, and the terms of issue of shares, the Board may resolve to pay any dividend they consider appropriate and fix the time for payment. The Company does not incur a debt merely by fixing the amount or time for payment of a dividend. A debt arises only when the time fixed for payment arrives. The decision to pay a dividend may be revoked by the Board at any time before then.

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Amend clauses 103.7 and 103.8 by removing the struck out text and inserting the underlined text as follows:

103.7 the Company must not exercise any power in contravention of the Corporations Act 2001 or the Listing Rules or the ~~ASTC~~ ASX Settlement Rules.
103.8 a reference to the Listing Rules and the ~~ASTC~~ ASX Settlement Rules applies only while the Company is admitted to the official list of ASX.

Delete the following definitions in clause 104:

~~ASTC means ASX Settlement and Transfer Corporation Pty Ltd ACN 008 504 532;~~

~~ASTC Settlement Rules means the operating rules of ASTC for the purposes of the Corporations Act 2001;~~

Insert the following definitions in clause 104:

ASX Settlement means ASX Settlement Pty Limited (ABN 49 008 504 532);

ASX Settlement Rules means the operating rules of ASX Settlement and, to the extent that they are applicable, the operating rules of each ASX and ASX Clear Pty Limited (ABN 48 001 314 503);

Board means the Directors acting collectively under this document;

Proper Transfer means a transfer which is under the scope of and which complies with (or is taken to comply with) the ASX Settlement Rules.

Amend the following definitions in clause 104 by removing the struck out text and inserting the underlined text as follows :

ASX means ~~Australian Stock Exchange~~ ASX Limited (ABN 98 008 624 691) and any successor body;

CHESS Rules means the ~~ASTC~~ ASX Settlement Rules and the provisions of the Corporations Act 2001, and the Listing Rules about the electronic share registration and transfer system;

159151

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ACN 110 336 733

Lodge your vote:

By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

For Intermediary Online subscribers only (custodians) www.intermediaryonline.com

For all enquiries call:

(within Australia) 1300 556 161 (outside Australia) +61 3 9415 4000

Proxy Form

 For your vote to be effective it must be received by 11:00am (Adelaide time) Monday 14 November 2011

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the information tab, "Downloadable Forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

 Turn over to complete the form



View your securityholder information, 24 hours a day, 7 days a week:

www.investorcentre.com

Review your securityholding

Update your securityholding

Your secure access information is:

SRN/HIN:

 PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

916CR_0_Sample_Proxy/000001/000001

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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ’ X ’) should advise your broker of any changes.

Proxy Form

Please mark to indicate your directions

Appoint a Proxy to Vote on Your Behalf

I/We being a member/s of Monax Mining Limited hereby appoint

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the Chairman of the Meeting

OR

 PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of Monax Mining Limited to be held at Enterprise House, 136 Greenhill Road, Unley SA on Wednesday, 16 November 2011 at 11:00am (Adelaide time) and at any adjournment of that meeting.

Important for Items 2 & 4 - If the Chairman of the Meeting is your proxy or is appointed as your proxy by default

Important for Item 2 - If you do not mark any of the boxes in step 2 below on Item 2 you are directing the Chairman of the Meeting to vote in accordance with the Chairman’s voting intentions as set out below and in the Notice of Meeting even though Item 2 is connected directly or indirectly with the remuneration of a member of key management personnel . Please note you can direct the Chairman of the Meeting to vote for, against or abstain from voting on Item 2 by marking the appropriate box in step 2 below.

Important for Item 4 - You authorise the Chairman of the Meeting to exercise your proxy on Item 4 even though the item is connected directly or indirectly with the remuneration of a member of key management personnel. For Item 4, this authority is also subject to you marking the box in the section below.

Important for Item 4: If the Chairman of the Meeting is your proxy and you have not directed him/her how to vote on Item 4 below, please mark the box in this section. If you do not mark this box and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Item 4 and your votes will not be counted in computing the required majority if a poll is called on this item. The Chairman of the Meeting intends to vote undirected proxies in favour of Item 4 of business.

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I/We acknowledge that the Chairman of the Meeting may exercise my proxy even if he/she has an interest in the outcome of that Item and that votes cast by him/her, other than as proxy holder, would be disregarded because of that interest.

 PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your Items of Business behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.

ORDINARY BUSINESS

Item 2 Adoption of Remuneration Report Item 3 Re-election of Mr RM Kennedy as a Director

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SPECIAL BUSINESS

Item 4 Employee Share Option Plan Item 5 Amendments to Constitution

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The Chairman of the Meeting intends to vote all available proxies in favour of each item of business.

SIGN Signature of Securityholder(s) This section must be completed.

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----- Start of picture text -----

Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact
Contact Daytime / /
Name Telephone Date
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MO X

1 6 1 1 1 1 A

AI assistant

FireFly Metals Ltd. — Annual Report 2011

48548_rns_2011-10-16_9c7b23c3-bc5a-4f38-9c89-920996d721a4.pdf

ASX RELEASE

2011 Annual Report, Notice of Annual General Meeting and Proxy Form

2011 Annual Re ort p

Annual General Meeting

Contents

Dear Fellow Shareholders

Chairman’s Report

Review of Operations

Hi hli hts g g

Punt Hill Copper-Gold Project

Yorke Peninsula Copper-Gold Project

Cape York Bauxite Project

Percyvale Gold Project

Waddikee Manganese/Iron Project

Punt Hill Co er-Gold Pro ect pp j

Review of Operations

Waddikee Manganese/ Iron Project

Manganese

The best results from Jamieson Tank include:

Review of Operations

Iron

Yorke Peninsula Co er-Gold Pro ect pp j

Webling Bay

(100% Monax)

Melton

(50:50 joint venture with Marmota Energy Limited)

Review of Operations

Coonarie

(Monax 100% of all minerals excluding uranium)

Pretender Creek Bauxite Project

Review of Operations

Perc vale Gold Pro ect y j

ML 3366 – Union

ML 30103 – Homeward Bound

Previous rock chip sampling reported some spectacular results including:

ML 30199 - Percy West

ML 30139 – Josephine

Review of Operations

Principle 1 – Lay solid foundations for management and oversight

Recommendation 1.1 – Recommendation followed

Corporate Governance Statement

Recommendation 1.2 and 1.3 – Recommendations followed

Principle 2 – Structure the board to add value

Recommendation 2.1 – Recommendation followed

Recommendation 2.2 – Recommendation followed

Recommendation 2.3 – Recommendation followed

Recommendation 2.4 – Recommendation followed

Recommendation 2.5 – Recommendation not followed

Recommendation 2.6 – Recommendation followed

Principle 3 – Promote ethical and responsible decision making

Recommendation 3.1 – Recommendation followed

Corporate Governance Statement

Recommendation 3.2 – Recommendation followed

Recommendation 3.3 – Recommendation followed

Principle 4 – Safeguard integrity in financial reporting

Recommendation 4.1 – Recommendation followed

Recommendation 4.2 – Recommendation not followed

Recommendation 4.3 – Recommendation followed

Recommendation 4.4 – Recommendation followed

Principle 5 – Make timely and balanced disclosure

Recommendation 5.1 and 5.2 – Recommendations not followed

Principle 6 – Respect the rights of shareholders

Recommendation 6.1 and 6.2 - Recommendations not followed

Corporate Governance Statement

Principle 7 – Recognise and manage risks

Recommendation 7.1, 7.2 & 7.4 – Recommendations

not followed

Recommendation 7.3 – Recommendation followed

Principle 8 – Remunerate fairly and responsibly

Recommendation 8.1 – Recommendation followed

Recommendation 8.2 & 8.3 – Recommendations followed

Recommendation 8.2 & 8.3 – Recommendations followed (continued).

Corporate Governance Statement

Glossary of Terms

2011 Financial Report Monax Mining Limited

Directors

Mr Robert Michael Kennedy ASAIT, Grad. Dip (Systems Analysis), FCA, ACIS, Life member AIM, FAICD.

FireFly Metals Ltd. Annual Report 2011