ORA BANDA MINING LTD — Interim / Quarterly Report 2004

Mar 14, 2004

MONARCH RESOURCES LIMITED ABN 69 100 038 266

AND CONTROLLED ENTITIES

HALF YEAR FINANCIAL REPORT

31 DECEMBER 2003

MONARCH RESOURCES LIMITED ABN 69-100-038-266

CORPORATE DIRECTORY

BOARD OF DIRECTORS

Dip. Mining, WASM, FAusIMM Colin L Smith Michael L Kiernan $R$ $R$ $R$ B.Ec. B.Comm. CPA David M Macoboy Phillip P Botsis FAICD, AAIBF (Senior)

COMPANY SECRETARY

Frank J Campagna B.Bus. (Acc), CPA

REGISTERED OFFICE

62 Colin Street West Perth WA 6005

Telephone: (61.8) 9481 6422 Facsimile: (61.8) 9481 6433 admin@mrl.com.au E-mail: Web-site: www.mrl.net.au

SHARE REGISTRY

Computershare Investor Services Pty Ltd Level₂ 45 St George's Terrace Perth WA 6000

Telephone: (61.8) 9323 2000 Facsimile: $(618)$ 9323 2033 E-mail: perth.services@computershare.com.au Web-site: www.computershare.com.au

AUDITORS

Ernst & Young

SOLICITORS Steinepreis Paganin

BANKERS Bank of Western Australia Limited

STOCK EXCHANGE LISTING

Shares in Monarch Resources Limited are quoted on Australian Stock Exchange Limited. ASX code: MRS

CONTENTS

Directors' report
Condensed statement of financial performance 3
Condensed statement of financial position 4
Condensed statement of cash flows
Notes to the financial statements
Declaration by directors
Independent review report

DIRECTORS' REPORT

The Directors of Monarch Resources Limited ("Monarch" or "parent entity") present their report on the results and state of affairs of the consolidated entity (consisting of Monarch and its controlled entities) for the half-year ended 31 December 2003.

DIRECTORS

The names of the Directors of Monarch in office during the course of the financial period and at the date of this report are as follows:

Colin Lindsay Smith Michael Laurence Kiernan David Michael Macoboy Phillip Peter Botsis

Unless otherwise indicated, all Directors held their position as a Director throughout the entire financial period and up to the date of this report.

RESULTS OF OPERATIONS

The net loss of the consolidated entity after provision for income tax was \$140,797.

REVIEW OF OPERATIONS

During the half-year ended 31 December 2003 the consolidated entity continued its mineral exploration and evaluation activities on its portfolio of tenements located within Western Australia.

Exploration activities during the period included an aerial magnetic survey over the northern section of the Lake Johnston project and ground geophysical surveys at the Mt Day and Round Top Hill projects.

Monarch acquired a 100% interest in the Londonderry project in August 2003, for a cash consideration of \$30,000. In November 2003, Monarch and Bullion Minerals Limited ("Bullion") jointly entered into an option agreement over the Republican project located 45 kilometres south-east of Kambalda in Western Australia. Under the terms of the option agreement, Monarch and Bullion paid an option fee of \$40,000 (\$20,000 each) for the right to explore the project area until 30 June 2004. The option period can be extended to 31 December 2005 by payment of a further \$40,000. The option may be exercised at any time during the option period for the sum of \$312.500 in cash and \$312.500 in shares in Monarch and/or Bullion.

Monarch and Bullion also entered into a joint venture agreement to jointly explore the Republican project, with each party holding a 50% interest in the joint venture.

During the period, Monarch acquired an additional 2,250,000 shares in the listed oil and gas explorer, Anzoil NL, for a cost of \$51,381. In September 2003, Monarch advanced unsecured loan funds of \$100,000 to Anzoil NL. The Ioan bears interest at 6% per annum and is repayable at the end of March 2004. Subsequent to the end of the period, Monarch sold its entire shareholding in Anzoil NL and received net sale proceeds of \$488,114.

Signed in accordance with a resolution of the Directors.

ML Kiernan Director

Perth. Western Australia 15 March 2004

CONDENSED STATEMENT OF FINANCIAL PERFORMANCE FOR THE HALF-YEAR ENDED 31 DECEMBER 2003

	CONSOLIDATED
	31.12.03	31.12.02
	S	\$
Revenue from ordinary activities	10,435	26,377
Proceeds from sale of investments	89,998
Total revenue	100,433	26,377
Employee and directors' benefits expenses	38,850
Carrying value of investments sold	45,355
Consulting fees	42,400
Corporate advisory and accounting fees	36,575	30,801
Legal fees	15,599	16,363
Provision for diminution in investments		43,384
Regulatory expenses	30,825	7,670
Other expenses from ordinary activities	31,626	15,780
Loss from ordinary activities before income tax expense	(140, 797)	(87,621)
Income tax expense
Net loss attributable to members of Monarch Resources Limited	(140, 797)	(87,621)
Total revenues, expenses and valuation adjustments attributable to members of Monarch Resources Limited recognised directly in equity		(381, 896)
Total changes in equity other than those resulting
from transactions with owners as owners	(140, 797)	(469, 517)
	Cents	Cents
Basic earnings/(loss) per share	(0.33)	(0.28)
Diluted earnings/(loss) per share	(0.33)	(0.28)

CONDENSED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2003

			CONSOLIDATED
	NOTE	31.12.03	30.06.03
		\$	S
CURRENT ASSETS
Cash assets		206,544	781,167
Receivables		143,682	30,399
Other financial assets		491,381	482,005
TOTAL CURRENT ASSETS		841,607	1,293,571
NON-CURRENT ASSETS
Deferred exploration expenditure		2,232,642	1,763,126
TOTAL NON-CURRENT ASSETS		2,232,642	1,763,126
TOTAL ASSETS		3,074,249	3,056,697
CURRENT LIABILITIES
Payables		172,487	76,638
TOTAL CURRENT LIABILITIES		172,487	76,638
TOTAL LIABILITIES		172,487	76,638
NET ASSETS		2,901,762	2,980,059
EQUITY
Contributed equity	2	3,415,106	3,352,606
Reserves		103,148	103,148
Accumulated losses		(658, 792)	(517,995)
TOTAL PARENT ENTITY INTEREST		2,859,462	2,937,759
Outside equity interests		42,300	42,300
TOTAL EQUITY		2,901,762	2,980,059

CONDENSED STATEMENT OF CASH FLOWS FOR THE HALF-YEAR ENDED 31 DECEMBER 2003

	CONSOLIDATED
	31.12.03	31.12.02
	S	S
Cash flows from operating activities
Payments to suppliers and employees	(197, 861)	(65,128)
Interest received	8,808	26,377
Net cash outflow from operating activities	(189, 053)	(38, 751)
Cash flows from investing activities
Payments for mineral exploration expenditure	(323, 337)	(32,611)
Payments for purchase of mining tenements	(60,000)	(550, 652)
Payments for purchase of share investments	(54,731)	(728, 389)
Proceeds on sale of share investments	89,998
Net cash outflow from investing activities	(348,070)	(1,311,652)
Cash flows from financing activities
Proceeds from issues of shares	62,500	2,786,500
Payments for share issue expenses		(381, 896)
Loans to other corporations	(100,000)
Proceeds from borrowings		10,000
Net cash inflow/(outflow) from financing activities	(37,500)	2,414,604
Net increase/(decrease) in cash held	(574, 623)	1,064,201
Cash at the beginning of the financial period	781,167	172,569
Cash at the end of the financial period	206,544	1,236,770

NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2003

$\mathbf{I}$ . STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PREPARATION OF THE HALF YEAR FINANCIAL REPORT

The half-year consolidated financial report is a general purpose financial report which has been prepared in accordance with Accounting Standard AASB 1029 "Interim Financial Reporting", the recognition and measurement requirements of applicable AASB standards, Urgent Issues Group Consensus Views, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. This half-year financial report is to be read in conjunction with the 30 June 2003 annual financial report and any public announcements made by Monarch Resources Limited and its controlled entities during the half-year in accordance with continuous disclosure obligations arising under the Corporations Act 2001.

The half-year financial report has been prepared on the basis of historical costs and does not take into account changing money values or, except where stated, current valuations of non-current assets.

Cost is based on the fair values of the consideration given in exchange for assets. Accounting policies adopted are consistent with those applied in the 30 June 2003 annual financial report, except as specifically noted.

The half-year financial report does not include full note disclosure of the type that would be normally included in an annual financial report.

GOING CONCERN

The condensed statement of financial position of the consolidated entity as at 31 December 2003 discloses a net working capital position including other financial assets of \$669,120. This working capital position may not be sufficient to enable the consolidated entity to continue to pursue its business activities over the next 12 months. The financial statements have been prepared on the basis that the consolidated entity can meet its commitments and can therefore continue normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

Given the stage of the consolidated entity's development, it remains reliant upon equity capital for ongoing funding requirements. The consolidated entity may also undertake a rationalisation of its tenement portfolio, including the joint venture or outright sale of projects within the portfolio. Having regard to the matters set out above, the directors are confident that additional funds can be raised and thus believe that it is appropriate for the financial statements to be prepared on the basis of the consolidated entity continuing as a going concern.

The financial statements do not include any adjustments relating to the recoverability or classification of recorded asset amounts, or to the amounts or classification of liabilities, that might be necessary should the consolidated entity not be able to continue as a going concern.

		CONSOLIDATED
		31.12.03	30.06.03
		\$	S
2.	CONTRIBUTED EQUITY Share capital (a)
	42,870,002 (30.06.03: 42,557,502) ordinary fully paid shares	3,415,106	3,352,606
		3,415,106	3,352,606
	Movements in ordinary share capital (b)	Shares	\$
	Opening balance 1 July 2003	42,557,502	3,352,606
	Exercise of options	312,500	62,500
	Balance 31 December 2003	42,870,002	3,415,106

SEGMENT INFORMATION 3.

The consolidated entity operates predominantly in one business and geographical segment, being mineral exploration in Western Australia, and all of the assets of the consolidated entity are deployed for these purposes. The consolidated entity's primary segmentation is its business segmentation.

CONTINGENT LIABILITIES $\overline{4}$ .

There have been no changes in any contingent liabilities of the consolidated entity since 30 June 2003.

TAX CONSOLIDATIONS 5.

At the date of signing the financial report, the consolidated entity has not yet formally elected to form a tax consolidation group under the Tax Consolidation Regime (TCR). Any decision to enter into the TCR will not have an impact on the half-year financial report as the net future income tax benefit associated with carried forward losses has not been brought to account as an asset in the financial report.

6. SUBSEQUENT EVENTS

In January 2004 the consolidated entity disposed of its shareholding in Anzoil NL for a net consideration of \$488,114.

DECLARATION BY DIRECTORS

In the opinion of the Directors of Monarch Resources Limited:

• $\mathbf{1}$ . the financial statements and notes, set out on pages 3 to 7, 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 December 2003 $(a)$ and of its performance, as represented by the results of its operations and cash flows for the half year ended on that date: and
• (b) complying with Australian Accounting Standard AASB 1029 "Interim Financial Reporting" and the Corporations Regulations 2001; and
• there are reasonable grounds to believe that the parent entity will be able to pay its debts as and when they 2. become due and payable.

Signed in accordance with a resolution of the Directors.

M L Kiernan Managing Director

Perth, Western Australia 15 March 2004

EII FRNST & YOUNG

E Central Park 152 St Georges Terrace Perth WA 6000 Australia

Tel 63 8 9429 2222 Fax: 61 8 9429 2436

CPO Roy M939 Perth, WA, 6843

Independent review report to members of Monarch Resources Limited

Scope

The financial report and directors' responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows and accompanying notes to the financial statements for the consolidated entity comprising both Monarch Resources Limited (the company) and the entities it controlled during the half year, and the directors' declaration for the company, for the half-year ended 31 December 2003.

The directors of the company are responsible for preparing a financial report that gives a true and fair view of the financial position and performance of the consolidated entity, and that complies with Accounting Standard AASB 1029 "Interim Financial Reporting", in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Review approach

We conducted an independent review of the financial report in order to make a statement about it to the members of the company, and in order for the company to lodge the financial report with the Australian Stock Exchange and the Australian Securities and Investments Commission.

Our review was conducted in accordance with Australian Auditing Standards applicable to review engagements, in order to state whether, on the basis of the procedures described, anything has come to our attention that would indicate that the financial report is not presented fairly in accordance with the Corporations Act 2001, Accounting Standard AASB 1029 "Interim Financial Reporting" and other mandatory professional reporting requirements in Australia, so as to present a view which is consistent with our understanding of the consolidated entity's financial position, and of its performance as represented by the results of its operations and cash flows.

A review is limited primarily to inquiries of company personnel and analytical procedures applied to the financial data. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Independence

We are independent of the company, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Statement

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the financial report of the consolidated entity, comprising Monarch Resources Limited and the entities it controlled during the half year ended 31 December 2003, is not in accordance with:

• the Corporations Act 2001, including: $(a)$
• giving a true and fair view of the financial position of the consolidated entity, at $(i)$ 31 December 2003 and of its performance for the half year ended on that date; and
• complying with Accounting Standard AASB 1029 "Interim Financial Reporting" $(ii)$ and the Corporations Regulations 2001; and
• other mandatory financial reporting requirements in Australia. $(b)$

Inherent uncertainty regarding going concern

Without qualification to the statement expressed above, attention is drawn to the following matter.

As a result of the matters described in Note 1 of the financial report relating to going concern, there is significant uncertainty whether the consolidated entity will be able to continue as a going concern without obtaining further funds to continue its exploration and development activities, and therefore whether it will be able to pay its debts as and when they fall due and realise its assets and extinguish its liabilities in the normal course of business at the amounts stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or to the amounts and classification of liabilities that might be necessary should the consolidated entity not be able to continue as a going concern.

Ernst X Young

Ernst & Young

Your Buckingham

G Buckingham Partner Perth 15 March 2004