FireFly Metals Ltd. — Interim / Quarterly Report 2013

Mar 12, 2013

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Monax Mining Limited and Controlled Entities

Consolidated Half-Year Financial Report

31 December 2012

CORPORATE DIRECTORY

Monax Mining Limited ACN 110 336 733 ABN 96 110 336 733 Incorporated in SA Registered Office 140 Greenhill Road UNLEY SA 5061 Telephone: ( 08) 8373 6271 / (08) 8373 5588 Facsimile: (08) 8373 5917 Email: info@monaxmining.com.au

Share Registrar

Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street ADELAIDE SA 5000 Telephone: 1300 556 161 (within Australia) +61 3 9415 4000 (outside Australia) Facsimile: +61 8 8236 2305 Email: info@computershare.com.au

Auditor

Grant Thornton Chartered Accountants 67 Greenhill Road Wayville SA 5034

Monax Mining Limited and Controlled Entities

Directors’ Report

The directors present their report together with the half-year financial report of Monax Mining Limited (“the Company”) and its controlled entities (“Consolidated entity”) for the period ended 31 December 2012 and the auditor’s independent review report thereon.

Directors

The names of the directors of the Company during the half-year and until the date of this report are:

Robert M Kennedy ( Non-Executive Chairman)

Reginald G Nelson (resigned 1 August 2012)

Glenn S Davis

Gary M Ferris ( Managing Director)

Alternate Directors

Ian R Witton – alternate for Glenn S Davis

Ewan J Vickery – alternate for Reginald G Nelson until 1 August 2012

Principal activities

The consolidated entity’s principal activity is mineral exploration.

Review and results of operations

Monax Mining Limited (“Monax”) is an Adelaide based mineral explorer with projects located on the Gawler Craton region of South Australia. In the six months to December 2012 Monax has been focused on copper gold exploration at Punt Hill and graphite exploration at Waddikee.

Eight Holes were completed at the Company’s flagship project Punt Hill fully funded under the Farm-in Agreement with Antofagasta Minerals Adelaide Pty Limited (“Antofagasta”), a subsidiary of Chilean copper producer Antofagasta plc. Expenditure on the Punt Hill project by Antofagasta totals US$3.76 million. Antofagasta can earn 51% of the project upon reaching US$4 million in expenditure.

In addition, during the period Monax completed its maiden drilling program for graphite at its Waddikee project located on central Eyre Peninsula in July 2012. The drilling program returned high-grade coarse flake graphite at the Wilclo South prospect and further drilling is planned for 2013.

In December 2012, Monax announced its first Designated Project under the Strategic Alliance with Antofagasta. Exploration on the Algebuckina Project will commence in the first quarter 2013 with drilling planned for mid 2013.

Calcrete sampling on the Melton copper-gold Project located on Yorke Peninsula reported encouraging copper and gold results with further sampling planned for early 2013. The Melton Project is a 50:50 joint venture with Marmota Energy Limited (“Marmota”) (ASX:MEU).

In September 2012, Monax reduced its holding in Marmota, by the sale of 3.4 million shares to raise approximately $647,000. This was a strategic decision to provide working capital for Monax to continue the exploration for graphite at its Waddikee project on South Australia’s Eyre Peninsula.

The net profit after income tax for the half-year was $1,911,837 (Dec 2011 loss $1,071,950).

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Monax Mining Limited and Controlled Entities

Directors’ Report (continued)

Likely developments

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

Competent Person Statement

The information in the Half-Year Financial Report that relates to Exploration Results, Mineral Resources, Ore Reserves or targets of Monax Mining Limited 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.

Auditors independence declaration

Section 307C of the Corporations Act 2001 requires the Company’s auditors, Grant Thornton, to provide the directors of Monax Mining Limited with an Independence Declaration in relation to the review of the halfyear financial report. The Independence Declaration is set out on the following page and forms part of this Directors’ Report.

Dated at ……Adelaide…… this ……13th……… day of ……March…… 2013.

Signed in accordance with a resolution of the Board of Directors:

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Robert Michael Kennedy Director

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Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E info.sa@au.gt.com W www.grantthornton.com.au

AUDITOR’S INDEPENDENCE DECLARATION TO THE DIRECTORS OF MONAX MINING LIMITED AND CONTROLLED ENTITIES

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Monax Mining Limited and Controlled Entities for the half-year ended 31 December 2012, I declare that, to the best of my knowledge and belief, there have been:

• a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and

• b no contraventions of any applicable code of professional conduct in relation to the review.

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GRANT THORNTON SOUTH AUSTRALIAN PARTNERSHIP Chartered Accountants

S J Gray Partner

Adelaide, 13 March 2013

Grant Thornton South Australian Partnership ABN 27 244 906 724

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389 Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

Monax Mining Limited and Controlled Entities

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the half-year-ended 31 December 2012

Consolidated Statement of Profit or Loss and For the half-year-ended 31 December 2012	Other Comprehensive Incom
Note	Consolidated Dec 2012 $ Dec 2011 $
Other revenues from ordinary activities 3 Total other revenue Administrative expenses Consultancy expenses Depreciation Employment expenses Impairment of assets Service fees Exploration expenses not capitalised Share of loss from equity accounted investments Profit/(loss) before income tax expense Income tax benefit/(expense) Profit/(loss) for the period Loss attributed to members of the parent entity Items that maybe reclassified to profit or loss: Changes in fair value of available for sale financial assets Income tax relating to these items Other comprehensive income Total comprehensive income for the period Basic earnings per share (cents) Diluted earnings per share (cents)	2,415,311 193,904
	2,415,311 193,904 138,272 127,532 67,314 59, 431 4,908 4,656 111,268 186,123 41,687 667,828 86,982 78,080 - 91,364 53,043 50,840
	1,911,837 (1,071,950) - -
	1,911,837 (1,071,950)
	1,911,837 (1,071,950) (551,700) - - -
	(551,700) - - -
	1,360,137 (1,071,950)
	1.28 (0.72) 1.28 (0.72)

The accompanying notes form part of these financial statements.

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Monax Mining Limited and Controlled Entities

Consolidated Statement of Financial Position

As at 31 December 2012

As at 31 December 2012
Note	Consolidated Dec 2012 $ June 2012 $
Current assets Cash and cash equivalents 6 Trade and other receivables Other current assets Total current assets Non-current assets Plant and equipment Investments accounted for using the equity method 9 Available for sale financial assets 8 Exploration and evaluation expenditure 7 Deferred tax asset Total non-current assets Total assets Current liabilities Trade and other payables Short term provisions Total current liabilities Non-current liabilities Deferred tax liability Long term provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital 12 Reserves Retained losses Total equity	2,625,435 2,409,725 353,452 237,443 24,331 21,244
	3,003,218 2,668,412
	115,510 130,108 1 1,073,829 1,920,800 - 10,494,485 9,886,721 567,239 322,148
	13,098,035 11,412,806
	16,101,253 14,081,218
	636,683 290,694 81,558 38,646
	718,241 329,340
	567,239 322,148 33,596 25,568
	600,835 347,713
	1,319,076 677,053
	14,782,177 13,404,165
	19,683,697 19,683,697 209,090 742,915 (5,110,610) (7,022,447)
	14,782,177 13,404,165

The accompanying notes form part of these financial statements

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Monax Mining Limited and Controlled Entities

Consolidated Statement of Changes in Equity For the half-year ended 31 December 2012

	Issued capital $ Reserves $ Retained losses $ Total $
Balance at 1 July 2011 Transactions with owners in their capacity as owners: Proceeds from the issue of shares during the period Options issued during the period Revaluation of associate to fair value Total comprehensive income Balance as at 31 December 2011 Balance at 1 July 2012 Transactions with owners in their capacity as owners: Options issued during the period Total comprehensive income Balance as at 31 December 2012	19,674,526 1,436,530 (4,016,755) 17,094,301 9,171 - - 9,171 - 36,538 - 36,538 - (756,000) - (756,000)
	19,683,697 717,068 (4,016,755) 16,384,010 - -(1,071,950) (1,071,950)
	19,683,697 717,068(5,088,705) 15,312,060
	19,683,697 742,915 (7,022,447) 13,404,165 - 17,875 - 17,875
	19,683,697 760,790 (7,022,447) 13,422,040 - (551,700) 1,911,837 1,360,137
	19,683,697 209,090(5,110,610) 14,782,177

The accompanying notes form part of these financial statements.

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Monax Mining Limited and Controlled Entities

Consolidated Statement of Cash Flows

For the half-year ended 31 December 2012

Consolidated Statement of Cash Flows For the half-year ended 31 December 2012
	Consolidated Dec 2012 $ Dec 2011 $
Cash flows from operating activities Cash receipts in the course of operations Cash payments in the course of operations Interest received Net cash (used in) operating activities Cash flows from investing activities Payments for plant and equipment Joint venture receipts Payments for mining tenements and exploration Proceeds from sale of investment Proceeds from sale of mining tenements Loans to related entities Payments associated with sale of investments Net cash provided/(used in) by investing activities Cash flows from financing activities Proceeds from issue of shares Net cash provided by financing activities Net increase/(decrease) in cash held Cash at the beginning of the half-year Cash at the end of the half-year	255,290 - (438,939) (566,914) 67,631 106,984
	(116,018) (459,930)
	(3,000) (12,319) 2,649,058 896,250 (2,951,723) (1,181,105) 649,208 - 25,000 - (35,133) - (1,682) -
	331,728 (297,174)
	- 9,171
	- 9,171
	215,710 (747,933) 2,409,725 3,745,989
	2,625,435 2,998,056

The accompanying notes form part of these financial statements.

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Monax Mining Limited and Controlled Entities

Condensed Notes to the Financial Statements

For the half-year ended 31 December 2012

1 Basis of preparation of interim report

Monax Mining Limited (Monax or the Company) is a company domiciled in Australia. The consolidated interim financial report of the Company for the six months ended 31 December 2012 comprises the Company and its subsidiaries (together referred to as the consolidated entity).

The consolidated annual financial report of the consolidated entity for the year ended 30 June 2012 is available upon request from the Company’s registered office at 140 Greenhill Road, Unley SA or at www.monaxmining.com.au.

The interim consolidated financial statements are a general purpose report prepared in accordance with AASB 134 Interim Financial Reporting, and the Corporations Act 2001. This interim financial report is intended to provide users with an update on the latest annual financial statements of the consolidated entity. As such, this interim financial report does not include full disclosures of the type normally included in the annual report. It is recommended that this interim financial report be read in conjunction with the annual financial report for the year ended 30 June 2012 and any public announcements made by Monax during the interim reporting period in accordance with the continuous disclosure requirements of the ASX Listing Rules.

2 Significant accounting policies

The interim financial statements have been prepared in accordance with the accounting policies adopted in the consolidated entity’s last annual financial statements for the year ended 30 June 2012, and have been consistently applied by the entities in the consolidated entity.

New and revised accounting standards applicable for the first time to the current half-year reporting period

The Group has adopted all new and revised Australian Accounting Standards and Interpretations that became effective for the first time and are relevant to the Group, including:

• AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Items of Other Comprehensive Income which requires entities to group items presented in Other Comprehensive Income (OCI) on the basis of whether they are potentially reclassifiable to profit or loss subsequently, and changes the title of ‘statement of comprehensive income’ to ‘statement of profit or loss and other comprehensive income’.

The adoption of the new and revised Australian Accounting Standards and Interpretations has had no significant impact on the Group’s accounting policies or the amounts reported during the current half-year period. The adoption of AASB 2011-9 has resulted in changes to the Group’s presentation of its half-year financial statements.

These financial statements were authorised for issue by the board of directors on 13 March 2013.

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Monax Mining Limited and Controlled Entities

Condensed Notes to the Financial Statements

For the half-year ended 31 December 2012

3		Dec 2012 $ Dec 2011 $
	Other revenues from ordinary activities Included in other revenues from ordinary activities: Interest: other parties Realised gain on sale of investment in associates Gain on reclassification of financial assets Other revenue	60,193 99,655 546,109 - 1,525,632 - 283,377 94,249
		2,415,311 193,904

4 Contingent liabilities

There have been no material changes to the aggregate of contingent liabilities since 30 June 2012.

5 Commitments

There have been no material changes to commitments disclosed in the 30 June 2012 annual report.

6		Dec 2012 $ June 2012 $
	Cash and cash equivalents Cash at bank Deposits at call	860,435 144,725 1,765,000 2,265,000
		2,625,435 2,409,725

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Monax Mining Limited and Controlled Entities Condensed Notes to the Financial Statements

For the half-year ended 31 December 2012

7 Exploration and evaluation expenditure

7 Exploration and evaluation expenditure
	Consolidated
	Dec 2012 $ June 2012 $
Movement: Carrying amount at beginning of year Additional costs capitalised during the year Impairment Carrying amount at end of year Closing balance comprises: Exploration and evaluation - 100% owned Exploration and evaluation phase - Joint Venture	9,886,721 9,983,060 649,451 882,756 (41,687) (979,095)
	10,494,485 9,886,721
	8,892,519 8,359,451 1,601,966 1,527,270
	10,494,485 9,886,721

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.

8 Controlled entities

(a) Entities forming part of the Monax Mining Limited consolidated group are as follows:

	Country of	Percentage	owned (%)
	incorporation
		Dec 2012	June 2012
Parent entity:
Monax Mining Limited	Australia
Subsidiaries of Monax Mining Limited:
Monax Alliance Pty Ltd	Australia	100%	100%

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Monax Mining Limited and Controlled Entities Condensed Notes to the Financial Statements For the half-year ended 31 December 2012

9 Investments in associates

Interests are held in the following associated companies.

Name	Principal activities	Country of	Shares	Ownership	Ownership	Carrying	amount of
		incorporation		interest %		investment
Unlisted				Dec	June	Dec	June
				2012	2012	2012	2012
Marmota Energy Limited	Mineral Exploration	Australia	Ord	-	23.7	-	1,073,828
	Administration	Australia	Ord	50	50	1	1
Groundhog Services Pty Ltd	services
Groundhog Services	Administration	Australia		-	50	-	-
Partnership	services

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

	Dec 2012 $ June 2012 $
Balance at the beginning of the financial year Impairment Share of associated entity’s profit after income tax Sale of investments during period(i) Change in investment status (i) Balance at the end of the financial year	1,073,829 3,260,359 - (756,000) (53,043) (1,430,530) (101,417) - (919,368) -
	1 1,073,829

(i) During the period, the Group sold on market 3.4 million shares in Marmota Energy Limited. This sale combined with the dilutionary share issues made by Marmota has resulted in a reduction in ownership interest to 14.29% effective 26 September 2012.The investment in Marmota is now classified as an Available for Sale Financial Asset and accounted for accordingly.

This transaction has resulted in the recognition of a gain, calculated as follows:

Net gain on disposal: Proceeds of disposal (net of costs) Carrying value of investment at date of disposal Gain on reclassification of financial asset Plus fair value of investment retained Less carrying amount of investment on the date of loss of significant influence Total gain realised and unrealised on investment in Marmota Energy Limited	647,526 (101,417)
	546,109
	2,445,000 (919,368)
	1,525,632
	2,071,740

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Monax Mining Limited and Controlled Entities Condensed Notes to the Financial Statements For the half-year ended 31 December 2012

9 Investments in associates (continued)

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

	Dec 2012 $ June 2012 $
Share of associate’s profit before income tax Share of associate’s income tax expense Share of associate’s profit after income tax expense	(53,043) (1,427,944) - (2,586)
	(53,043) (1,430,530)

(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:

	Dec 2012 $ June 2012 $
Current assets Non-current assets Total assets Current liabilities Non-current liabilities Total liabilities Net assets	330,033 2,909,276 76,655 16,565,177
	406,688 19,474,453 (319,475) (1,030,396) (87,211) (98,852)
	(406,686) (1,129,248)
	2 18,345,205

10 Available for sale financial assets

	Dec 2012 $ June 2012 $
Available for sale investments	1,920,800 -
	1,920,800 -

11 Operating segments

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Consolidated 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 Consolidated 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 Consolidated entity.

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

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Monax Mining Limited and Controlled Entities

Condensed Notes to the Financial Statements

For the half-year ended 31 December 2012

11 Operating segments (continued)

Details of the performance of each of these operating segments for the six month periods ended 31 December 2012 and 31 December 2011 are set out below:

December 2012 Segment revenue Segment results Gross segment result before depreciation, amortisation and impairment Impairment Interest income Gain on sale of associate Share of associate’s net profit/(loss) Impairment of assets Other expenses Profit/(loss) before tax Income tax benefit/(expense) Net profit after tax December 2011 Segment revenue Segment results Gross segment result before depreciation, amortisation and impairment Impairment Interest income Share of associate’s net profit/(loss) Impairment of assets Other expenses Profit/(loss) before tax Income tax benefit/(expense) Net profit after tax	Gawler Craton Kangaroo Island North Queensland $ $ $ 258,378 - 25,000 258,378 - 25,000 - - -	Total $ 283,378 283,378 -
	258,378 - 25,000 94,249 - - 94,249 - - - (14,310) -	283,378 60,193 2,071,740 (53,043) (41,687) (408,744)
		1,911,837 -
		1,911,837
		94,249 94,249 (14,310)
	94,249 (14,310) -	79,939 99,655 (50,840) (653,518) (547,186)
		(1,071,950) -
		(1,071,950)

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Monax Mining Limited and Controlled Entities

Condensed Notes to the Financial Statements

For the half-year ended 31 December 2012

11 Operating segments continued

December 2012 Segment assets Segment asset increases for the period: Capital expenditure Impairment Reconciliation of segment assets to group assets Cash and cash equivalents Trade and other receivables Other current assets Plant and equipment Investments accounted for using the equity method Available for sale financial assets Deferred tax asset Total consolidated assets June 2012 Segment assets Segment asset increases for the period: Capital expenditure Impairment Reconciliation of segment assets to group assets Cash and cash equivalents Trade and other receivables Other current assets Plant and equipment Investments accounted for using the equity method Deferred tax asset Total consolidated assets	Gawler Craton Kangaroo Island North Queensland Total $ $ $ $ 10,392,019 102,466 - 10,494,485 505,298 102,466 41,687 649,451 - - (41,687) (41,687)
	505,298 102,466 - 607,764 2,625,435 353,452 24,331 115,510 1 1,920,800 567,239
	10,392,019 102,466 - 16,101,253
	9,886,721 - - 9,886,721 489,980 65,529 327,247 882,756 - (65,529) (913,566) (979,095)
	489,980 - (586,319) (96,339) 2,409,725 237,443 21,244 130,108 1,073,829 322,148
	9,886,721 - - 14,081,218

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Monax Mining Limited and Controlled Entities

Condensed Notes to the Financial Statements

For the half-year ended 31 December 2012

12 Issued capital

Issued capital
Issued and paid-up share capital 148,814,803 (June 2012: 148,814,803) ordinary shares, fully paid Ordinary shares Balance at the beginning of the period Shares issued during the year - 700,000 (June 2012: 700,000) shares issued to rightsholders as part of an Employee Incentive Scheme - Nil (June 2012: 61,135) shares issued to option holders on the exercise of options at $0.15 Less transaction costs arising from issue of shares net of tax Balance at end of period	Dec 2012 $ June 2012 $ 19,683,697 19,683,697
	19,683,697 19,674,526 - - - 9,171 - -
	19,683,697 19,683,697

As at 31 December 2012, there were 1,900,000 (June 2012: 5,275,000) unissued shares for which the following options and right were outstanding.

• 215,000 unlisted options exercisable at $0.246 by 18 July 2013

• 10,000 unlisted options exercisable at $0.0517 by 23 December 2013

• 425,000 unlisted options exercisable at $0.0917 by 5 March 2015

• 225,000 unlisted options exercisable at $0.051 by 28 July 2016

• 325,000 unlisted options exercisable at $0.053 by 23 July 2017

• 700,000 share rights vesting 1 July 2013

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Monax Mining Limited and Controlled Entities Condensed Notes to the Financial Statements

For the half-year ended 31 December 2012

13 Share based payments

On 23 July 2012, Monax Mining Limited granted share options to an employee. The terms and conditions of the grant made during the six months ended 31 December 2012 are as follows:

2012

Grant date Number of Vesting conditions Contractual life of instruments options 23 July 325,000 On issue 1,826 days

Fair value of share options and assumptions used in determining fair value:

Fair value at grant date $0.055 per option Share price $0.06 Exercise price $0.053 Expected volatility 152% Option life 1,826 days Risk-free interest rate 2.27%

14 Events subsequent to balance date

There has not arisen in the interval between 31 December 2012 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 consolidated entity, the results of those operations, or the state of affairs of the consolidated entity, in future years.

15 Going Concern

The financial report has been prepared on the basis of going concern.

The Consolidated Entity incurred a net loss of $159,903, excluding the one off gain of $2,071,740 outlined in Note 9(a). In addition, the Group incurred a net cash outflow of $433,498 from operations and investing activities excluding the proceeds from the one off sale of Martmota Energy Limited shares of $649,208. The Consolidated Entity’s planned expenditure exceeds its current cash held and the Group continues to be reliant on the completion of a capital raising for continued operations and the provision of working capital.

If the additional capital is not obtained, the going concern basis may not be appropriate with the result that the company and consolidated entity may have to realise its assets and extinguish its liabilities, other than in the ordinary course of business in amounts different from those stated in the financial report.

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Monax Mining Limited and Controlled Entities

Directors’ Declaration

For the half-year ended 31 December 2011

Directors’ declaration

The Directors of the Company declare that:

• (a) the half-year financial statements and notes, set out on pages 5 to 17, are in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of the financial position of the consolidated entity as at 31 December 2012 and of its performance for the half year ended on that date; and

• (ii) complying with Accounting Standard AASB 134: Interim Financial Reporting;

• (b) 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.

Dated at ………Adelaide…… this ………13th…… day of …………March…… 2013.

This declaration is made in accordance with a resolution of the directors:

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Robert Michael Kennedy Director

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Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 T 61 8 8372 6666 F 61 8 8372 6677 E info.sa@au.gt.com W www.grantthornton.com.au

INDEPENDENT AUDITOR’S REVIEW REPORT

TO THE MEMBERS OF MONAX MINING LIMITED AND CONTROLLED ENTITIES

We have reviewed the accompanying half-year financial report of Monax Mining Limited and Controlled Entities (“Group”), which comprises the consolidated financial statements being the statement of financial position as at 31 December 2012, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes comprising a statement or description of accounting policies, other explanatory information and the directors’ declaration of the consolidated Group, comprising both the Group and the entities it controlled at the half-year’s end or from time to time during the half-year.

Directors’ responsibility for the half-year financial report

The directors of Monax Mining Limited and Controlled Entities are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such controls as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement, whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express a conclusion on the consolidated half-year financial report based on our review. We conducted our review in accordance with the Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Group, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Monax Mining Limited and Controlled Entities consolidated Group’s financial position as at 31 December 2012 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Monax Mining Limited and Controlled Entities, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

Grant Thornton South Australian Partnership ABN 27 244 906 724 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation

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A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we complied with the independence requirements of the Corporations Act 2001.

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Monax Mining Limited and Controlled Entities is not in accordance with the Corporations Act 2001, including:

• a giving a true and fair view of the consolidated Group’s financial position as at 31 December 2012 and of its performance for the half-year ended on that date; and

• b complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

Material uncertainty regarding continuation as a going concern

Without qualifying our conclusion expressed above, we draw attention to Note 15 – Going Concern to the half-year financial statements which indicate that the consolidation entity incurred a net loss of $159,903, excluding the one off gain of $2,071,740 outlined in Note 9(a). In addition, the Group incurred a net cash outflow of $433,498 from operating and investing activities excluding the proceeds from the one off sale of Martmota Energy Limited shares of $649,208. These conditions, as set out in Note 15, indicate the existence of a material uncertainty which may cast significant doubt about the consolidated entity’s ability to continue as a going concern and therefore, the consolidated entity may be unable to realise its assets and discharge its liabilities in the normal course of business at the amounts stated in the half-year financial report.

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GRANT THORNTON SOUTH AUSTRALIAN PARTNERSHIP Chartered Accountants

S J Gray Partner

Adelaide, 13 March 2013