FireFly Metals Ltd. — Interim / Quarterly Report 2015

Mar 9, 2015

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Monax Mining Limited and Controlled Entities

Consolidated Half-Year Financial Report

31 December 2014

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 2014 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)

Glenn S Davis Gary M Ferris ( Managing Director)

Alternate Directors

Ian R Witton – alternate for Glenn S Davis

Principal activities

The consolidated entity’s principal activity is mineral exploration.

Review and results of operations

The net (loss)/ profit after income tax for the half-year was $(375,985) (December 2013 $6,658,533).

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 2014 Monax has been focused on copper gold exploration at Punt Hill, base metal exploration at Parndana and diamond exploration on its Margaret Dam tenement.

In November 2014, the strategic alliance between Monax and a wholly owned subsidiary of Chilean copper producer Antofagasta plc (“Antofagasta”) successfully concluded. The three year alliance resulted in two Designated Projects (“DP”). The Millers Creek DP and Musgrave DP are fully funded by Antofagasta.

Monax completed two holes at the Punt Hill Project, fully funded by joint venture partner Antofagasta. Further encouraging copper results were reported from the drill hole at the Groundhog prospect.

In November 2013, Monax signed a Farm-In Agreement with Western Australian Nickel Producer Western Areas Limited (“Western Areas”) for the Western Gawler Craton Project. Under the terms of the Farm-In Agreement, Western Areas can earn an initial 75% interest in the tenements by spending $800,000 within 2.5 years. Upon earning a 75% interest in the tenements, Western Areas has the right to earn a further 15% interest (for a total of 90%) by expending a further $400,000 within 1.5 years. Western Areas have completed a high-resolution aeromagnetic survey over the entire project area and an extensive regional drilling program is planned for mid-2015.

Exploration on the Parndana Project comprised detailed gravity and induced polarisation (“IP”) surveys. Monax completed two drill holes at the project with re-evaluation of the drilling showing that the target was not tested by the drilling. A subsequent soil sampling program outlined a coherent lead-zinc anomaly coincident with a significant resistaive anomaly. Monax is plannibng further drilling to test the soil and IP anomaly.

In November 2014, Monax announced it had outlined a potential kimberlite on its Margaret Dam tenement. Detailed ground magnetic and gravity surveys provided further data which showed a coherent kimberlite target at approximately 80m below the surface. Monax is planning a two hole drilling program to test the target in mid-2015.

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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 this report that relates to Exploration Results is based on information compiled by Mr G M Ferris, who is a Member of the Australasian 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 2012 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 10th……… day of ……March…… 2015.

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

Correspondence to: 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

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the review of Monax Mining Limited for the half-year ended 31 December 2014, 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.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

S J Gray

Partner – Audit & Assurance

Adelaide, 10 March 2015

Grant Thornton Audit Pty Ltd ACN 130 913 594

a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

Monax Mining Limited and Controlled Entities

Consolidated Statement of Profit or Loss and Other Comprehensive Income For the half-year ended 31 December 2014

Consolidated Statement of Profit or Loss and For the half-year ended 31 December 2014	Other Comprehensive Incom
Note	Consolidated Dec 2014 $ Dec 2013 $
Other revenues from ordinary activities 3 Total other revenue Administrative expenses Consultancy expenses Depreciation Occupancy expenses Employment expenses Impairment of assets Service fees Loss on disposal of available for sale asset Other expenses Profit/(loss) before income tax expense Income tax (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)	144,770 47,878
	144,770 47,878 83,214 134,793 33,171 50,848 10,398 10,276 2,123 42,163 116,669 109,933 161,095 6,176,695 76,711 48,717 - 121,991 6,446 -
	(345,057) (6,647,538) (30,928) (10,995)
	(375,985) (6,658,533)
	(375,985) (6,658,533) 132,802 (118,656) - -
	132,802 (118,656) - -
	(243,183) (6,777,189)
	(0.18) (4.4) (0.18) (4.4)

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 2014

As at 31 December 2014
Note	Consolidated Dec 2014 $ Jun 2014 $
Current assets Cash and cash equivalents 6 Trade and other receivables Other assets Total current assets Non-current assets Plant and equipment Investments accounted for using the equity method 9 Available for sale financial assets 10 Exploration and evaluation expenditure 7 Deferred tax asset Total non-current assets Total assets Current liabilities Trade and other payables Provisions Total current liabilities Non-current liabilities Deferred tax liability Provisions Total non-current liabilities Total liabilities Net assets Equity Issued capital 12 Reserves Retained losses Total equity	1,391,219 1,280,943 74,564 353,212 18,738 18,161
	1,484,521 1,652,316
	63,360 82,369 1 1 63,660 91,953 6,438,014 5,796,162 19,097 27,585
	6,584,132 5,998,070
	8,068,653 7,650,386
	313,370 494,427 119,886 86,953
	433,256 581,380
	19,097 27,585 26,507 42,402
	45,604 69,987
	478,860 651,367
	7,589,793 6,999,019
	21,034,163 20,200,206 780,280 647,478 (14,224,650) (13,848,665)
	7,589,793 6,999,019

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 2014

	Issued capital $ Reserves $ Retained losses $ Total $
Balance at 1 July 2013 Transactions with owners in their capacity as owners: Shares issued during the period Cost associated with shares issued during the period (Loss) attributable to members of the parent company Other comprehensive income Total comprehensive income Balance as at 31 December 2013 Balance at 1 July 2014 Transactions with owners in their capacity as owners: Shares issued during the period Cost associated with shares issued during the period (Loss) attributable to members of the parent company Other comprehensive income Total comprehensive income Balance as at 31 December 2014	19,683,697 780,280 (6,936,680) 13,527,297 117,974 - - 117,974 (25,655) - - (25,655)
	19,776,016 780,280 (6,936,680) 13,619,616 - - (6,658,533) (6,658,533) - (118,656) - (118,656)
	- (118,656) (6,658,533) (6,777,189)
	19,776,016 661,624(13,595,213) 6,842,427
	20,200,206 647,478 (13,848,665) 6,999,019 899,152 - - 899,152 (65,195) - - (65,195)
	833,957 - - 833,957
	- - (375,985) 375,895 - 132,802 - 132,802
	- 132,802 (375,985) (243,183)
	21,034,163 780,280(14,224,650) 7,589,793

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 2014

Consolidated Statement of Cash Flows For the half-year ended 31 December 2014
	Consolidated Dec 2014 $ Dec 2013 $
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 Net cash (used in)/provided by investing activities Cash flows from financing activities Proceeds from issue of shares Payments associated with the 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	144,770 127,366 (335,243) (467,858) 254 16,861
	(190,219) (323,631)
	- (27,113) 826,933 473,386 (1,625,762) (748,017) - 335,722 290,000 - 3,307 150,880
	(505,522) 184,858
	899,152 117,974 (93,135) (36,650)
	806,017 81,324
	110,276 (57,449) 1,280,943 1,396,231
	1,391,219 1,338,782

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 2014

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 2014 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 2014 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 2014 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 half-year financial statements have been prepared in accordance with the accounting policies adopted in the Group’s last annual financial statements for the year ended 30 June 2014, except for the application of the following standards as of 1 July 2014:

AASB 1031: Materiality AASB 1055: Budgetary Reporting AASB 2013-1, Amendments to AASB 1049 – Relocation of Budgetary Reporting Requirements AASB 2013-4, Novation of Derivatives and Continuation of Hedge Accounting AASB 2013-5, Investment Entities AASB 2013-9, Conceptual Framework, Materiality and Financial Instruments AASB 2014-2, Amendments to AASB 1053 – Transition to and between Tiers, and related Tier 2 Disclosure Requirements

AASB 2014-1, Amendments to Australian Accounting Standards Part A, B and C

These standards make changes to a number of existing Australian Accounting Standards and are not expected to result in a material change to the manner in which the Group’s financial result is determined or upon the extent of disclosures included in future financial reports.

Management has reviewed the new requirements of the above standards and has concluded that there is no effect on the classification or presentation of balances.

Other mandatory accounting standards issued and required to be adopted by the consolidated entity have not been included above as they are not expected to have a material impact on the Consolidated half-year Financial Statements.

These financial statements were authorised for issue by the board of directors on 10 March 2015.

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Monax Mining Limited and Controlled Entities

Condensed Notes to the Financial Statements

For the half-year ended 31 December 2014

3		Dec 2014 $ Dec 2013 $
	Other revenues from ordinary activities Included in other revenues from ordinary activities: Interest: other parties Other revenue	31,109 16,861 113,661 31,017
		144,770 47,878

4 Contingent liabilities

There have been no material changes to the aggregate of contingent liabilities since 30 June 2014.

5 Commitments

There have been no material changes to commitments disclosed in the 30 June 2014 annual report.

6 Cash and cash equivalents

	Dec 2014 $ Jun 2014 $
Cash at bank Deposits at call	1,376,219 780,943 15,000 500,000
	1,391,219 1,280,943

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Monax Mining Limited and Controlled Entities Condensed Notes to the Financial Statements For the half-year ended 31 December 2014

7 Exploration and evaluation expenditure

7 Exploration and evaluation expenditure
	Consolidated
	Dec 2014 $ Jun 2014 $
Movement: Carrying amount at beginning of year Additional costs capitalised during the year Sale of Interest Impairment Carrying amount at end of year Closing balance comprises: Exploration and evaluation - 100% owned Exploration and evaluation phase - Joint Venture	5,796,162 11,737,172 641,852 679,683 - (330,554) - (6,290,139)
	6,438,014 5,796,162
	1,011,523 432,820 5,426,491 5,363,342
	6,438,014 5,796,162

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

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

	Country of	Percentage	owned (%)
	incorporation
		Dec 2014	Jun 2014
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 2014

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	Jun	Dec	Jun
				2014	2014	2014	2014
Groundhog Services Pty	Administration	Australia	Ord	50	50	1	1
Ltd	services

Groundhog Services Pty Ltd is in the process of being wound up and the assets have been transferred to Groundhogs Services Partnership and its Partners, Monax Mining Limited and Marmota Energy Limited.

10 Available for sale financial assets

	Dec 2014 $ Jun 2014 $
Non-current Available for sale investments	63,660 91,953
	63,660 91,953

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 2014

11 Operating segments continued

Details of the performance of each of these operating segments for the six month periods ended 31 December 2014 and 31 December 2013 are set out below:

December 2014 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 2014 Segment assets Segment asset increases for the period: Capital expenditure (less disposals) Sale of tenement 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	Gawler Craton Kangaroo Island North Queensland Total $ $ $ $ 5,586,434 844,046 7,534 6,438,014 217,396 419,227 5,229 641,852 - - - -
	217,396 419,227 5,229 641,852 - - - 1,391,219 - - - 74,564 - - - 18,738 - - - 63,360 - - - 1 - - - 63,660 - - - 19,097
	5,586,434 844,046 7,534 8,068,653
	5,369,038 424,819 2,305 5,796,162 442,715 227,329 9,639 679,683 (330,554) - - (330,554) (6,282,805) - (7,334) (6,290,139
	(6,170,644) 227,329 2,305 (5,941,011) - - - 1,280,943 - - - 353,212 - - - 18,161 - - - 82,369 - - - 1 - - - 91,953 - - - 27,585
	5,369,038 424,819 2,305 7,650,386

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

For the half-year ended 31 December 2014

11 Operating segments continued

December 2014 Segment revenue Segment results Gross segment result before depreciation, amortisation and impairment Impairment Interest income Other income Other expenses Profit/(loss) before tax Income tax benefit/(expense) Net profit after tax December 2013 Segment revenue Segment results Gross segment result before depreciation, amortisation and impairment Impairment Interest income Loss on sale of available for sale asset Other expenses Profit/(loss) before tax Income tax benefit/(expense) Net profit after tax	Gawler Craton Kangaroo Island North Queensland Total $ $ $ $ 110,184 - - 110,184 110,184 - - 110,184 - - - -
	110,184 - - 110,184 - - - 31,109 - - - 3,477 - - - (489,827)
	110,184 - - (345,057) - - - (30,928)
	110,184 - - (375,985)
	31,017 - - 31,017 31,017 - - 31,017 (6,176,544) - (151) (6,176,695)
	(6,145,527) - (151) (6,145,678) - - - 16,861 - - - (121,991) - - - (396,730)
	(6,145,527) - - (6,647,538) - - - (10,995)
	(6,145,527) - - (6,658,533)

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Monax Mining Limited and Controlled Entities

Condensed Notes to the Financial Statements

For the half-year ended 31 December 2014

• 12 Issued capital

Issued and paid-up share capital 214,073,315 (June 2014: 171,257,603) ordinary shares, fully paid Ordinary shares Balance at the beginning of the period Shares issued during the year - Nil (June 2014: 700,000) shares issued on vesting of share rights - 28,158,294 (June 2014: 3,932,454) shares issued under a non renounceable rights issue - 14,656,421 (June 2014: 17,110,346) shares issued under placement - 997 (June 2014: Nil) shares issued on exercise of options Less transaction costs arising from issue of shares net of tax Balance at end of period	Dec 2014 $ Jun 2014 $ 21,034,163 20,200,206
	20,200,206 19,683,697 - - 591,324 117,974 307,786 436,314 42 - (65,195) (37,779)
	21,034,163 20,200,206

As at 31 December 2014, there were 22,381,397 (June 2014: 975,000) unissued shares for which the following options and right were outstanding.

• 21,406,397 listed options exercisable at $0.042 by 29 July 2015

• 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

13 Events subsequent to reporting date

There has not arisen in the interval between 31 December 2014 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.

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Monax Mining Limited and Controlled Entities Condensed Notes to the Financial Statements For the half-year ended 31 December 2014

14 Going Concern

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

The Consolidated Entity incurred a net loss of $375,985. In addition, the Group incurred a net cash outflow of $695,741 from operations and investing activities. 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.

15 Fair value measurement of assets and liabilities

Fair value hierarchy

AASB 13 requires disclosure of fair value measurements by level of the following fair value hierarchy:

• (a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1)

• (b) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (level 2), and

• (c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)

All financial instruments were valued using level 1 valuation techniques. There were no changes in valuation techniques for financial instruments in the period.

Available for sale financial assets are measured at fair value using the closing price on the reporting dates as listed on the Australian Securities Exchange limited (ASX). The carrying value of trade receivables and payables are assumed to approximate their fair values due to their short term nature.

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Monax Mining Limited and Controlled Entities

Directors’ Declaration

For the half-year ended 31 December 2014

Directors’ declaration

The Directors of the Company declare that:

• (a) the half-year financial statements and notes, set out on pages 6 to 16, 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 2014 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 ………10th…… day of …………March…… 2015.

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

Correspondence to: 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

We have reviewed the accompanying half-year financial report of Monax Mining Limited (“Company”), which comprises the consolidated financial statements being the statement of financial position as at 31 December 2014, 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 of accounting policies, other explanatory information and the directors’ declaration of the consolidated entity, comprising both the Company 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 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 Entity, 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 consolidated entity’s financial position as at 31 December 2014 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, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

Grant Thornton Audit Pty Ltd ACN 130 913 594 a subsidiary or related entity of Grant Thornton Australia Ltd ABN 41 127 556 389

‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide assurance, tax and advisory services to their clients and/or refers to one or more member firms, as the context requires. Grant Thornton Australia Ltd is a member firm of Grant Thornton International Ltd (GTIL). GTIL and the member firms are not a worldwide partnership. GTIL and each member firm is a separate legal entity. Services are delivered by the member firms. GTIL does not provide services to clients. GTIL and its member firms are not agents of, and do not obligate one another and are not liable for one another’s acts or omissions. In the Australian context only, the use of the term ‘Grant Thornton’ may refer to Grant Thornton Australia Limited ABN 41 127 556 389 and its Australian subsidiaries and related entities. GTIL is not an Australian related entity to Grant Thornton Australia Limited.

Liability limited by a scheme approved under Professional Standards Legislation. Liability is limited in those States where a current scheme applies.

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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 is not in accordance with the Corporations Act 2001, including:

• a giving a true and fair view of the consolidated entity’s financial position as at 31 December 2014 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 14 of the half-year financial report, which indicates that the consolidated entity incurred a net loss of $375,985 during the period ended 31 December 2014. In addition, the Group incurred a net cash outflow of $695,741 from operating and investing activities. These conditions, along with other matters as set forth in Note 14, 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, and at the amounts stated in the half-year financial report.

GRANT THORNTON AUDIT PTY LTD Chartered Accountants

S J Gray Partner – Audit & Assurance

Adelaide, 10 March 2015