FireFly Metals Ltd. — Interim / Quarterly Report 2008

Mar 11, 2008

Consolidated Half Year Financial Report

31 December 2007

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

Share Registrar

Computershare Investor Services Pty Ltd Level 5, 115 Grenfell Street ADELAIDE SA 5000 Telephone: (08) 8236 2300 Facsimile: (08) 8236 2305 Email: info@computershare.com.au

Auditor

Grant Thornton Chartered Accountants 67 Greenhill Road Wayville SA 5034

Directors' Report

The directors present their report together with the half-year financial report of Monax Mining Limited ("the Company") and its controlled entities for the period ended 31 December 2007 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 Glenn S Davis Dr Neville F Alley Michael P Schwarz (Managing Director)

Alternate Directors:

Ewan J Vickery (alternate for Glenn S Davis on 19 July 2007) John C Butler (alternate for Reginald G Nelson on 19 July 2007 and for Glenn S Davis on 18 September 2007) Ian R Witten (alternate for Reginald G Nelson on 18 September 2007)

Principal activities

The consolidated entity's principal activity is copper gold, uranium, nickel and mineral exploration.

Review and results of operations

The six months to December 2007 saw Monax undertaking further geological and geophysical activity which included a continued focus on the Punt Hill iron oxide copper gold (IOCG) project south of Port Augusta, a PACE auger drilling program on the Mt Hope, Brimpton Lake and Moorland tenements and planning for a diamond drill program on the Parndana, Western River and Pioneer Bend tenements.

During the period, Monax's spin off uranium company, Marmota Energy Limited (Marmota) completed its IPO and listed on the Australian Stock Exchange on 21 November 2007. Marmota raised \$15 million and will conduct exploration activity across tenements in excess of 7000 square kilometres in the Gawler and Curnamona Cratons. A major focus of initial work carried out by Marmota will be at the flagship Ambrosia project on the Gawler Craton in which Monax will retain 50% of the equity. As part of the share sale agreement, Monax sold 100% of the equity of Marmosa Pty Ltd to Marmota for 36 million ordinary shares in Marmota, representing 29.86% of Marmota's issued capital.

At the Punt Hill prospect, encouraging results from the geochemical assays from the second drill hole PDDD2 at the Prairie Dog Prospect were received, representing a significant proximial chemical indicator to a large IOCG system. An infill gravity survey was completed at a number of prospects on the tenement and during the period surface induced polarisation surveys have been completed over the Groundhog, Needlenose and Woodchuck prospects leading to the interpretation of a number of previously unrecognised mineralised fault structures. A detailed study of the mineralogy of the Punt Hill drill core has revealed the presence of an early oxidised gold skarn within the alteration system overprinted by iron oxide copper-gold hematite-bornite-chalcocite alteration within the upper parts of the system. In addition the study has identified a chalcocite dominant zone in the western part of the Groundhog and Woodchuck prospects.

During the period Monax received expressions of interest in relation to the 100% owned IOCG project at Punt Hill. Monax continues to assess the alternatives available in relation to the Punt Hill project and remains in ongoing discussions with a number of interested parties regarding this asset. However there is no guarantee that those approaches will result in the board of Monax accepting the terms of any proposal.

A review of the iron ore potential on Monax's tenement package has highlighted the Waddikee tenement on central Eyre Peninsula as being of particular significance. Historical exploration has identified occurrences of

Directors' Report (continued)

high grade hematite (up to 51% Fe) at the Kelly Prospect and magnetite at the Jamieson Tank Prospect (up to 60% Fe). The tenement position covers 1000 sq km with more than 80km of interpreted strike length of prospective banded iron formation. Monax plans to undertake a detailed review of the tenement with a view to generating both hematite and magnetite exploration targets.

The net loss after extraordinary items and income tax for the half-year was \$735,685.

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.

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 following this Report.

March 2008. ............ day of .... Dated at ......... this ... Signed in accordance with a resolution of the Board of Directors: Robert Michael Kennedy Director

Grant Thornton South Australian Partnership ABN: 27 244 906 724 Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 DX 275 Adelaide

T 61883726666 F 61883726677 E info@gtsa.com.au W www.grantthornton.com.au

AUDITOR'S INDEPENDENCE DECLARATION TO THE DIRECTORS OF MONAX MINING LIMITED & 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 for the period ended 31 December 2007, I declare that, to the best of my knowledge and belief, there have been:

• no contraventions of the auditor independence requirements of the Corporations a Act 2001 in relation to the review; and
• no contraventions of any applicable code of professional conduct in relation to the $\mathbf b$ review.

GRANT THORNTON South Australian Partnership Chartered Accountants

S/Gray Partner

Signed in Adelaide on this /2 day of March 2008

Consolidated Income Statement

$\frac{1}{2}$

For the half-year-ended 31 December 2007

		Consolidated
	Note	Dec 2007	Dec 2006
		\$	\$
Other revenues from ordinary activities	4	203,083	105,915
Total revenue		203,083	105,915
Administrative expenses		341,265	191,217
Consultancy expenses		160,286	24,000
Depreciation		12,653	9,644
Employment expenses		363,755	219,496
Occupancy expenses		37,959	38,808
Other expenses from ordinary activities		50,368	22,701
(Loss)/profit from ordinary activities before
related income tax expense		(763, 203)	(399, 951)
Income tax (expense)/benefit relating to ordinary
activities
(Loss)/profit from ordinary activities after related
income tax expense		(763, 203)	(399, 951)
Net (loss)/profit attributable to minority interests		(61, 278)
Net (loss)/profit attributable to members of the
parent company		(701, 925)	(399, 951)
Basic earnings per share (cents)		(1.36)	(0.8)

Consolidated Balance Sheet

As at 31 December 2007

		Consolidated
	Note	Dec 2007	June 2007
		\$	\$
Current assets
Cash assets		15,697,065
Receivables		248,032	3,204,505 122,527
Other		57,608	16,982
Total current assets		16,002,705	3,344,014
Non-current assets
Property, plant and equipment		368,503	255,446
Investments
Exploration, evaluation & development
expenditure		7,510,156	6,259,490
Total non-current assets		7,878,659	6,514,936
Total assets		23,881,364	9,858,950
Current liabilities
Payables		542,115	510,518
Provisions		55,261	47,247
Total current liabilities		597,376	557,765
Non-current liabilities
Provisions		21,904	16,088
Total non-current liabilities		21,904	16,088
Total liabilities		619,280	573,853
Net assets		23,262,084	9,285,097
Equity
Contributed equity		10,703,915	10,715,640
Share options reserves		314,840	314,840
Retained (losses)/profits		(2, 447, 308)	(1,745,383)
		8,571,447	9,285,097
Minority interests		14,690,637
Total equity		23,262,084	9,285,097

Consolidated Statement of Changes in Equity

For the half-year ended 31 December 2007

		\$	$\mathcal{S}$	\$	$\mathfrak{S}$
		Share	Share	Retained	Minority	\$ Total
		Capital	Based	Profits/	Interest
	Note	Ordinary	Payments	(Losses)
			Reserve
Balance at 1 July 2006		6,087,832	50,150	(580, 024)		5,557,958
Options issued during the period			14,200			14,200
(Loss)/profit attributable to shareholders				(399, 951)		(399, 951)
Balance as at 31 December 2006		6,087,832	64,350	(979, 975)		5,172,207
Balance at 1 July 2007		10,715,640		314,840 (1,745,383)		9,285,097
Initial outside equity interest					14,735,723	14,735,723
Options issued during the period
Transaction costs (net of tax)		(11, 724)			16,192	(4, 467)
(Loss)/profit attributable to shareholders			-	(701,925)	(61, 278)	(763, 203)
Balance as at 31 December 2007		10,703,915	314,840	(2, 447, 308)	14,690,637	23,262,084

Consolidated Cash Flow Statement

For the half-year ended 31 December 2007

		Consolidated
	Note	Dec 2007	Dec 2006
		\$	\$
Cash flows from operating activities
Cash payments in the course of operations		(1,093,817)	(622,960)
Cash receipts in the course of operations			18,945
Interest received		113,043	105,839
Net cash provided by/(used in) operating
activities		(980, 774)	(498, 176)
Cash flows from investing activities
Payments for property, plant and equipment		(137, 054)	(86,016)
Payments for mining tenements &
exploration		(1,235,038)	(1,871,101)
Payments for subsidiaries net of cash		14,857,151
acquired
Net cash provided by/(used in) investing
activities		13,485,059	(1,957,117)
Cash flows from financing activities
Proceeds from issue of shares		24,680
Payments associated with capital raising		(36, 405)
Net cash provided by/(used in) financing
activities		(11, 725)
Net increase/(decrease) in cash held		12,492,560	(2,455,293)
Cash at the beginning of the half-year		3,204,505	3,855,709
Cash at the end of the half-year		15,697,065	1,400,416

Condensed Notes to the Financial Statements

For the half-year ended 31 December 2007

$\boldsymbol{1}$ Reporting entity

Monax Mining Limited (the "Company") is a company domiciled in Australia. The Consolidated half-year financial report of the Company as at and for the six months ended 31 December 2007 comprises the Company and its subsidiaries (together referred to as the "consolidated entity").

The annual financial report of the entity as at and for the year ended 30 June 2007 is available at www.monaxmining.com.au

$\overline{2}$ Statement of compliance

The consolidated half-year financial report is a general purpose financial report which has been prepared in accordance with AASB 134: Interim Financial Reporting and the Corporations Act 2001.

The consolidated half-year financial report does not include all of the information required for a full annual financial report, and should be read in conjunction with the annual financial report of the consolidated entity as at and for the year ended 30 June 2007.

$\mathfrak{Z}$ Significant accounting policies

The accounting policies applied by the consolidated entity in this consolidated half-year financial report are the same as those applied by the entity in its financial report as at and for the year ended 30 June 2007.

		Note	Dec 2007 \$	Dec 2006 \$
4	Other revenues from ordinary activities
	Included in other revenues from ordinary activities:
	Interest: other parties		203,083	88,692
	Sundry Income			17,223

5 Contingent liabilities

There have been no changes to contingent liabilities since 30 June 2007.

Condensed Notes to the Financial Statements

For the half-year ended 31 December 2007

6 Controlled entities

$(a)$ Controlled entities consolidated

	Country of incorporation	Percentage owned (%)
		Dec 2007	June 2007
Parent entity:
Monax Mining Limited	Australia
Subsidiaries of Monax Mining Limited:
Marmosa Pty Ltd	Australia		100
Marmota Energy Limited	Australia	29.82	$\overline{\phantom{a}}$

$(b)$ Acquisition and sale of controlled entities

Pursuant to a contract between the Company and Marmota Energy Limited (Marmota), and with the satisfaction of the conditions within the contract, on 21 November 2007 the Company sold 100% of the issued capital in Marmosa Pty Ltd to Marmota in exchange for shares and options in Marmota.

Through the transaction identified in Note 6b, the Company holds 30% of the issued capital of Marmota Energy Limited. Additionally four of the Company's directors have been appointed to the Board of Marmota. As a result, the Company has been consolidated for the purposes of this financial report.

Details of the fair value of assets and liabilities acquired from Marmota as at 21 November 2007 are as follows:

	\$
Cash and cash equivalents	15,371,705
Trade and other receivables	79,197
Exploration and evaluation expenditure	9,851,556
Trade and other payables	(1,054,597)
Net assets	24,247,861
Outside equity interest	14,735,723
Net identifiable assets acquired	9,512,138
Represented by the following purchase consideration:
Fair value of tenement rights	9,489,600
Associated transaction costs:	22,538
	9,512,138

Condensed Notes to the Financial Statements

For the half-year ended 31 December 2007

$\overline{7}$ Events subsequent to balance date

There has not arisen in the interval between 31 December 2007 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.

Directors' Declaration

For the half-year ended 31 December 2007

Directors' declaration

In the opinion of the directors of Monax Mining Limited ("the Company"):

• (a) the half-year financial statements and notes, set out on pages 5 to 10, are in accordance with the Corporations Act 2001, including:
• giving a true and fair view of the financial position of the consolidated entity as at 31 $(i)$ December 2007 and of its performance, as represented by the results of its operations and its cash flows, for the six months ended on that date; and
• (ii) complying with Accounting Standard AASB 134: Interim Financial Reporting and the Corporations Regulations 2001; and
• (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

arch 2008. $\sqrt{\lambda}$ day of ... Dated at . $Q_{4}$ .......... this .......

Signed in accordance with a resolution of the directors:

Robert Michael Kennedy Director

Grant Thornton South Australian Partnership ABN: 27 244 906 724 Level 1, 67 Greenhill Rd Wayville SA 5034 GPO Box 1270 Adelaide SA 5001 DX 275 Adelaide

T 61883726666 F 61883726677 E info@gtsa.com.au W www.grantthornton.com.au

INDEPENDENT AUDITOR'S REVIEW REPORT

TO THE MEMBERS OF MONAX MINING LIMITED AND CONTROLLED ENTITIES

Report on the half-year financial report

We have reviewed the accompanying half-year financial report of Monax Mining Limited (the Company) and the entities it controlled (the consolidated entity), which comprises the consolidated balance sheet as at 31 December 2007, and the consolidated income statement, consolidated statement of changes in equity and consolidated cash flow statement for the half-year ended on that date, a description of accounting policies, and other selected explanatory notes. The consolidated entity comprises both the Monax Mining Limited (the Company) and the entities it controlled during that half-year.

Directors' responsibility for the half-year financial report

The directors of the Monax Mining Limited are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards including the Australian Accounting Interpretations and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor's responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagement ASRE 2410: Review of an Interim 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 financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the Monax Mining Limited's financial position as at 31 December 2007 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 is a trademark owned by Grant Thornton International Ltd (UK) and used under licence by independent firms and entities throughout the world. Grant Thornton member firms in Australia are businesses trading independently under the name Grant Thornton. Grant Thornton Australia Ltd has been incorporated to conduct those businesses as a single national entity, and public notification will be queen upon commenc

INDEPENDENT AUDITOR'S REVIEW REPORT TO THE MEMBERS OF MONAX MINING LIMITED AND CONTROLLED ENTITIES (cont)

Auditor's responsibility (cont)

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:

• giving a true and fair view of the Monax Mining Limited's financial position as at 31 $\mathbf{a}$ December 2007 and of its performance for the half-year ended on that date.
• complying with Accounting Standard AASB 134: Interim Financial Reporting and $\mathbf b$ Corporations Regulations 2001.

GRANT THORNTON South Australian Partnership Chartered Accountants

VGray artnei

Signed in Adelaide on this 2 day of March 2008

Grant Thornton is a trademark owned by Grant Thornton International Ltd (UK) and used under licence by independent firms and entities throughout the world. Grant Thornton member firms in Australia are businesses trading independently under the name Grant Thornton. Grant Thornton Australia Ltd has been incorporated to conduct those businesses as a single national entity, and public notification will be given upon commencement. Liability limited by a scheme approved under Professional Standards legislation.