Monument Mining Limited
Annual Report 2013

Plain-text annual report

MONUMENT IS COMMITTED TO INCREASING SHAREHOLDER VALUE by sustainably growing into a diversified mid-tier Canadian gold and metals producer in a safe, profitable and socially responsible manner. “We have one of the lowest cost gold mines in the world, a large polymetallic project in development and a prospective exploration portfolio for future growth. Our goal for the year ahead is cautious steady growth in line with the economic envelope within which we operate”. Robert Baldock, President and CEO CAUTIOUS STEADY GROWTH TABLE OF CONTENTS 1 2013 Highlights 7 Capital Structure & Market Performance 2 President’s Message to Shareholders 8 Selinsing Area Operations 4 Corporate Overview 12 Mengapur Polymetallic Project 5 Financial Performance 15 Corporate Social Responsibility 6 Operating Highlights 16 Corporate Information All dollar amounts in US$ except where noted. GROWTH MONUMENT MINING LIMITED 2013 AN NUAL REPO RT 2013 HIGHLIGHTS FINANCIAL • Gross Revenue from gold sales of $91.3 million, of which $80.3 million directly attributed to fiscal 2013 production • Profit margin generated from gold production of $57.5 million • Net income attributable to shareholders of US$32.8 million or $0.14 earnings per share (basic) • Cash balance of US$41.9 million on June 30, 2013 • Eliminated debt by retiring outstanding convertible loans • Raised CAN$22.3 million from a brokered private placement CAUTIOUS STEADY GROWTH Selinsing Gold Mine PRODUCTION • Increased Gold Production by 19% to a record 52,982 ounces at a cash cost of $400 per ounce • Started mining Buffalo Reef South oxide ore • Updated Selinsing-Buffalo Reef NI 43-101 Technical Report as of August 31, 2012 providing an increased reserve estimate DEVELOPMENT / EXPLORATION • Acquired remaining 30% of Mengapur resulting in 100% ownership of the Project • Commenced exploration on FELDA lands adjacent to the Selinsing and Buffalo Reef properties • Drilled 374 holes totalling 36,917 metres at Selinsing area properties • Drilled 147 holes totalling 33,458 metres at Mengapur 2013 HIGHLIGHTS 1 GROWTH MON UMEN T MINING LIMITED 2013 ANNUA L REPO RT PRESIDENT’S MESSAGE Fiscal 2013 was another fast paced year building toward our goal of becoming a mid-tier gold and base metals producer. Over the course of the fiscal year we have maintained sustainable gold production, and have continued to expand and further develop our property portfolio. At our Selinsing and Buffalo Reef properties, as a result of expansion of the Selinsing Gold plant capacity to 1,000,000 tonne per year from 400,000 tonne per year and commencement of mining at the Buffalo Reef South pit, we closed fiscal 2013 with strong gold production, having produced 52,982 ounces of gold, an increase of 19% from the previous year. Revenues were US$91.3 million which was an increase of 48 per cent over the previous year, of which $80.3 million attributed to fiscal 2013 production. Cash costs continue to be among the lowest in the industry at US$400 per ounce for fiscal 2013. Operating cash flow from production is being reinvested in continued drilling and exploration programs, land acquisitions for near plant exploration future potential mining and plant upgrades. During fiscal 2013 exploration drilling progressed aggressively at Selinsing and Buffalo Reef properties with 374 holes totaling 36,917 metres drilled. A large number of samples are yet to be assayed. In May 2013 we published an updated “NI 43-101 Technical Report, Selinsing Gold Mine and Buffalo Reef Project Expansion (August 2012)” (The “August 2012 NI 41-101 Technical Report”) which extends the life of the mine. A further metallurgical study was performed during fiscal 2013 in order to process refractory sulfide materials. The Phase IV expansion was recommended in the August 2012 NI 43-101 Technical Report and includes the addition of a bio-leach circuit into the existing Carbon in Leach (“CIL”) plant which has a capital cost of approximately $45.8 million and provides a net present value (“NPV”) of $10.7 million and a 21% rate of return. We continue to search for alternatives with lower capital costs in order to maximize returns. During fiscal 2013 we acquired the remaining 30% of the Mengapur Project to give us a 100% ownership. Our development of the Mengapur Project in fiscal 2013 was focused on site establishment and resource drilling. We have completed a number of onsite infrastructure projects at Mengapur, including improved and expanded employee accommodation, research & development (R&D) and assay laboratories, and a new expanded core shed. We have also drilled 33,458 metres in 147 drill holes up to the end of June 2013 at Mengapur and Star Destiny properties. We are very pleased with assay results received to date and are pursuing an updated NI 43-101 compliant resource report, which is targeted for completion in early 2014. This resource report will include a Preliminary Economic Assessment (“PEA”) which will help confirm the economic viability of the project and assist further in guiding the planning and development of the Mengapur project. Fiscal 2013 was both fruitful and challenging. It ended with market volatility, reduced metals prices and soft capital markets in the mining sector. During fiscal 2013 we raised CAD$22.3 million from a brokered private placement to develop our Mengapur Polymetallic project in stages with a strategy towards fast tracking initial production to generate cash flow from potential downstream products. We have also de-risked the Company by maintaining a strong balance sheet with an early retirement of the convertible debt. By the end of fiscal 2013, we had only a forward gold sale of 5,000 ounces on our balance sheet, offset by 5,000 ounces gold already escrowed in our metal account. As a result of our efforts we ended fiscal 2013 with net assets of $242.6 million and 14 cents earnings per share (basic). 2 L ETT ER TO S HAR EHO LDER S MONUMENT MINING LIMITED 2013 ANNUAL REPO RT TO SHAREHOLDERS We thank our supportive Board of Directors and our entire team for this past year’s efforts as we continue to build our team of experienced technical people and engage with the community through our CSR programs. Looking forward to fiscal 2014, we will continue to pursue our primary business objectives to increase shareholders’ value by building up a mineral property pipeline through acquisitions, exploration, development and production while mitigating associated business risks. Our longer-term goal is to become a sustainable dividend paying, mid-tier gold, base metals and industrial mineral producer. At Selinsing, Buffalo Reef and FELDA land area, we look forward to improvement of our operation excellence to achieve sustainable gold production. We will complete assay work for backlogged samples at Selinsing and Buffalo Reef. Based on geological structure study and interpretation of those assay results we will implement further drilling programs to increase gold inventory. We will continue our research and development work to find better alternatives of metallurgical treatment on sulfide ore materials at lower capital costs. At the Mengapur Project, we will undertake further research and development activities to explore the development of a number of marketable potential downstream commodity products, and develop and prove a viable flow sheet circuit for recovery of these products. The initial R&D work will focus on the production of market grade magnetite from fresh rock that underlies the free digging soils to generate cash flow. We will also complete a National Instrument (NI) 43-101 compliant Preliminary Economic Assessment (“PEA”). As the mining industry is undergoing a significant cyclical downturn and in the opinion of many, including Monument management, the volatility and reduced metals prices will be the new “normal” – at least for a reasonable period into the future. We would like to turn around this difficult period as an acquisition opportunity to enhance our mineral property pipelines, targeting both low cost advanced projects and highly prospective properties in districts with rich historical production. As a collective and experienced team we will meet the challenges ahead. These volatile times create challenges, but they also produce opportunities that we stand ready to pursue, if it is appropriate, with caution and discipline. Thank you from all of us in Canada and Malaysia for your support this year and we look forward to making further progress in 2014. Sincerely, ROBERT F. BALDOCK President and CEO LETTER TO SHAREHOLDERS 3 PENINSULAR MALAYSIA GOLD BELTS FROM YEAP, 1993 MON UMEN T MINING LIMITED 2013 A NNU AL REPO RT CORPORATE OVERVIEW Monument Mining Limited (TSX-V:MMY, FSE:D7Q1) is an established Canadian gold producer that owns and operates the Selinsing Gold Mine in Malaysia, with production cash costs among the lowest in the world. Its experienced management team is committed to growth and is advancing several exploration and development projects in Malaysia including the development stage, Mengapur Polymetallic Project. Monument’s primary business objective is to advance its mineral projects from exploration and development to production and to increase its gold and other mineral assets through acquisition of prospective land or gold and other mineral projects at an advanced development stage. The Company’s longer-term goal is to be a sustainable, dividend paying, mid-tier gold, base metals and industrial mineral producer. The Company employs 336 people in Malaysia and is committed to the highest standards of environmental management, social responsibility, and health and safety for its employees and neighboring communities. Monument’s Head Office is located in Vancouver, BC, Canada. It operates through its subsidiaries in Pahang State, Malaysia. As of June 30, 2013, the Company controlled producing and exploration properties covering 39,460 acres. Monument has a large pipeline of quality projects ranging from operating mines to grass roots exploration for future potential. Interest Acres Status Property Selinsing Buffalo Reef (BR) 100% 100% 776 444 Operating Operating EXPLORATION ADVANCED DEVELOPMENT PRODUCTION SELINSING BR OXIDE GOLD BR SULPHIDE FELDA 100% 3,920 Dev/Exploration Famehub 100% 32,000 Exploration SELINSING DEEP FAMEHUB Mengapur (CASB) 100% 457 Development Mengapur (SDSB) 100% 1,853 Development POLYMETALLIC (Fe, Cu, S, Au, Ag, Mo) MENGAPUR 4 C OR PO RAT E OV E RVIE W MONUMENT MINING LIMITED 2013 AN NUAL REPORT FINANCIAL PERFORMANCE During the fiscal year ended June 30, 2013, Monument Mining sold 57,905 ounces of gold at an average price of $1,576 per ounce for $91.3 million in gross revenue, of which $80.3 million related to 2013 production. This is a 48% increase in gross revenue over fiscal 2012 reflecting higher volume of gold sold partly offset by a lower average realized gold price. Net income attributable to common shareholders for fiscal 2013 was $32.8 million or $0.14 per share (basic) compared to $59.6 million or $0.33 per share (basic) for fiscal 2012. 0.4 0.3 0.2 0.1 0 The decrease in comparison to 2012 was caused by one-off -0.1 other losses, including the early retirement of convertible notes, buyout of the gold inducement options in connection with the convertible notes, impairment losses and a legal settlement. Cash provided from operating activities was $54.8 million compared to $43.3 million for the previous year. The difference was mainly due to higher production in 2013 and the timing of gold sales. The increase of working capital excluding derivative liabilities, to $62.4 million, was mainly attributable to cash proceeds generated from operations and the private placements completed during the year. REVENUE (US$ M) 100 90 80 70 60 50 40 30 20 10 0 2010 2011 2012 2013 Gross Revenue for Fiscal 2013 increased by 48% to US$91.3 million, of which $80.3 million related to 2013 production EARNINGS/SHARE (US$) 2010 2011 2012 2013 Fiscal 2013 Earnings/Share is $0.14 NET INCOME (US$ M) 80 60 40 20 0 -20 55 50 40 30 20 10 0 -10 2010 2011 2012 2013 Fiscal 2013 Net Income is $32.8 million OPERATING CASH FLOW (US$ M) 2010 2011 2012 2013 Cash from Operating Activities for Fiscal 2013 increased by 27% to $54.8 million FINANCIAL PERFORMANCE 5 MON UMEN T MINING LIMITED 2013 ANNUA L REPO RT OPERATING HIGHLIGHTS (expressed in US$) Fiscal 2012 Fiscal 2013 Q1 $ Q2 $ Q3 $ Q4 $ Q1 $ Q2 $ Q3 $ Q4 $ Revenues (000’s) 14,430 21,084 12,394 13,801 20,805 19,640 20,325 30,506 Average realized gold price (per ounce) 1,724 1,652 1,698 1,624 1,658 1,730 1,626 1,419 Average London spot gold price (per ounce) 1,702 1,688 1,691 1,609 1,652 1,723 1,632 1,414 Net earnings before other income attributable to common shareholders (000’s) Earnings per share before other income: – Basic – Diluted Net earnings after other income and tax Attributable to common shareholders (000’s) Earnings Per Share: – Basic – Diluted 9,925 14,780 8,431 7,394 13,229 10,268 9,951 14,937 0.06 0.05 0.08 0.07 0.04 0.04 0.04 0.04 0.06 0.06 0.05 0.05 0.04 0.04 0.05 0.05 11,176 26,709 8,116 13,560 10,834 12,457 (5,513) 15,060 0.06 0.05 0.15 0.11 0.04 0.04 0.08 0.07 0.05 0.05 0.06 0.06 (0.02) (0.02) 0.05 0.05 Selected Financial Information (expressed in thousands of US$) BALANCE SHEET Current assets Other assets Total assets Current liabilities Other liabilities Non-controlling interests Equity attributable to shareholders Total liabilities and shareholders’ equity June 30, 2013 $ 74,356 168,197 242,553 11,990 10,969 – 219,594 242,553 June 30, 2012 $ 50,180 161,769 211,949 19,053 22,389 June 30, 2011 $ 68,327 56,416 124,743 4,919 38,808 24,186 – 146,321 211,949 81,016 124,743 Working capital excluding derivative liabilities $ 62,366 $ 31,131 $ 63,407 6 O PE R AT ING H IGH LIGHTS MONUMENT MINING LIMITED 2013 ANNUAL REPO RT CAPITAL STRUCTURE & MARKET PERFORMANCE During fiscal 2013 three transactions increased the number of outstanding and fully diluted shares: • In the first quarter of fiscal 2013 Monument received CAD$12.5 million from the exercise of 24,122,500 stock Shares Outstanding purchase warrants at CAD$0.50 per share. • In the third quarter of fiscal 2013 the Company closed a brokered private placement in two tranches and issued 44,500,000 common shares at CAD$0.50 per share for gross proceeds of CAD$22.3 million, and issued 3,115,000 agent options. Warrants Options Agent Options Fully Diluted • In February 2013 the Company issued 20,000,000 common Share Price shares at an issue price of CAD $0.40 per common share and 20,000,000 common share purchase warrants exercisable at CAD$0.50 per common share to fully convert the CAD$8.0 million convertible notes, thus eliminating debt and de- 52 Week High/Low Market Capitalization risking the Company. CAPITAL STRUCTURE As of June 30, 2013 275,058,030 25,000,000 21,175,501 3,115,000 324,348,531 $0.31 $0.54/$0.28 $85.3 M FISCAL 2013 STOCK CLOSING PRICE (CDN) 0.60 0.50 0.40 0.30 0.20 0.10 0.00 8,000,000 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 0 JUL 12 AUG 12 SEP 12 OCT 12 NOV 12 DEC 12 JAN 13 FEB 13 MAR 13 APR 13 MAY 13 JUN 13 TSX CLOSE FSE CLOSE FISCAL 2013 TRADING VOLUMES JUL 12 AUG 12 SEP 12 OCT 12 NOV 12 DEC 12 JAN 13 FEB 13 MAR 13 APR 13 MAY 13 JUN 13 TSX VOLUME FSE VOLUME STRUCTURE & PERFORMAN CE 7 MON UMEN T MINING LIMITED 2013 ANNUA L REPO RT SELINSING AREA OPERATIONS Property Overview Monument Mining acquired 100% of its primary Selinsing property located at Bukit Selinsing Koyan, approximately 65 kms north of Raub and 30 kms west of Kuala Lipis in 2007. Concurrently it acquired the contiguous Buffalo Reef properties to the north. The Famehub exploration properties, consisting of 32,000 acres in nine project areas, were acquired in 2010 and are located 2 kms to 50 kms northeast of Selinsing. In April 2013 Monument obtained consent from the Federal Land Development Authority (FELDA) of Malaysia to explore and develop 14 blocks totaling 3,920 acres, located adjacent to the east and south of Selinsing and owned by settlers. Geology Gold mineralization at Selinsing and Buffalo Reef is controlled within a steeply east dipping, 200 m thick shear zone that parallels the north-south trending Raub-Bentong Suture – a major tectonic feature that runs through Peninsular Malaysia and hosts the Central Gold Belt of Malaysia. Four resource zones have been identified to date over a 4.2 km strike length. Mineralization occurs in a series of auriferous quartz veins and stockworks of quartz veinlets and as finely disseminated gold within sheared calcareous epiclastic sedimentary rocks of Permian age. SELINSING AREA TENEMENTS MONUMENT TENEMENTS FELDA LANDS EXPLORATION & MINING RIGHTS BUFFALO REEF ORE BODY The mineralized orebody at Selinsing generally strikes 3500 and dips 60-700 to the east. The high grade ore shoots within the main mineralization plunge to the south east and are normally associated with quartz stockwork and quartz carbonate veins within highly deformed sedimentary rock. Gold mineralization at Buffalo Reef is also structurally controlled and occurs within moderately to steeply east-dipping veins and fracture zones, which range in thickness from 1 m up to 15 m in thickness, although local flexures in the veins can host mineralization up to 25 m in thickness. Resource In May, 2013 Monument announced an updated resource estimate in its August 2012 NI 43-101 Technical Report for its Selinsing and Buffalo Reef properties. Estimated at August 31, 2012, the proven and probable reserves are 222.9 kilo-ounces (koz) of gold from 4,890 kilo-tonnes (kt) of material at a grade of 1.4 grams of gold per tonne (g/t). These reserves are within a newly estimated measured and indicated resource of 289.4 koz of gold from 6,307 kt of material at a grade of 1.4 g/t. 8 SE LINS IN G ARE A O PE RAT ION S EXPLORATION ACCESS POWER LINES ROAD / TRACK MEDANG RIDGE TREND BUFFALO REEF NORTH BLOCK 10 BLOCK 1 TAILINGS STORAGE BLOCK 7 BUFFALO REEF SOUTH ADMIN MC 7/2011 DRY DUMP AREA PROCESS PLANT SELINSING MINE NORTH BLOCK 11 RUBBER HILL BLOCK 5 SELINSING PIT BLOCK 9 CENTRE BLOCK 2 BLOCK 14 BLOCK 12 SOUTH 0 250 500 Metres N 420000 421000 422000 424000 0 0 0 3 7 4 0 0 0 2 7 4 0 0 0 1 7 4 0 0 0 0 7 4 0 0 0 9 6 4 MONUMENT MINING LIMITED 2013 ANNUAL REPO RT SELINSING AREA OPERATIONS The inferred resource at Selinsing and Buffalo Reef is an additional 48.0 koz of gold from 1,070 kt of material at a grade of 1.4 g/t. (“Selinsing Gold Mine and Buffalo Reef Project Expansion”, Mark Odell, P.E., Practical Mining LLC, May 2013). The updated mineral resource estimate incorporates a new property-wide geological model which includes a total of 28 new KEY PERFORMANCE INDICATORS Since For Periods Ended June 30, 2013 Fiscal 2013 October 2009 Ore Mined (tonnes) 882,159 2,787,279 Ore Processed (tonnes) 938,498 1,927,297 surface diamond drilling results completed by Monument since Avg head grade (g/t) 2.07 SELINSING AREA TENEMENTS processing rate. the last resource estimate was completed in 2007. Drill hole assays received as of June 8, 2012 were used in this resource and reserve update along with the August 31, 2012 mine face positions as surveyed by Monument staff. The updated reserve estimate allows the operations to continue until the end of 2017 at the current mining rate and 1,000,000 tonne per annum Calculated Gold Content (oz) 54,368 Gold Poured (ounces) Gold Production (ounces) Gold Sold (ounces) Revenue (US$ 000s) Total Cash Cost $/oz 54,434 52,982 57,905 91,277 400* 3.03 161,990 158,379 155,798 149,074 225,929 318* FISCAL 2013 ACCOMPLISHMENTS Mining During fiscal 2013, 882,159 tonnes of ore were mined at the Selinsing operation. This is a 76% increase compared to fiscal 2012. The large increase in ore mined is due to increased equipment availability, drier weather in Q4 fiscal 2013 and substantial contributions of oxide ore from the Buffalo Reef pit. 600 400 200 0 SELINSING COST OF PRODUCTION OPS ROYALTY PROCESS MINING Mining began on the Buffalo Reef South Zone in November 2010 2011 2012 2013 2012 and since then ore has been mined from both the Buffalo Reef South pit and from the main Selinsing pit. Selinsing Processing Plant Mill construction began in October 2008 and Selinsing gold pro- cessing plant began full, commercial operation in September 2010. In fiscal 2013 the gravity and carbon in leach treatment The Average Total Cash Cost* for Fiscal 2013 was $400 per ounce * Total cash cost includes production costs such as mining, processing, tailing facility maintenance and camp administration, royalties, and operating costs such as storage, temporary mine production closure, community develop- ment cost and property fees, net of by-product credits. Cash cost excludes amortization, depletion, accretion expenses, capital costs, exploration costs and corporate administration costs. SELINSING GOLD PRODUCTION plant at Selinsing increased its mill capacity to one million tonnes per annum (“tpa”) from original 400,000 tps as a result of completion of the Phase III expansion in August, 2012. In addition, the tailings facility has been upgraded to accommodate 10 years production from the one million tpa gold treatment plant. 15,000 10,000 5,000 0 Q2 Q3 2010 Q4 Q1 Q2 Q3 Q4 2011 Q1 Q2 Q3 Q4 2012 Q1 Q2 Q3 Q4 2013 SELINSING AREA OPERATIO NS 9 MON UMEN T MINING LIMITED 2013 A NNU AL REPO RT SELINSING AREA OPERATIONS For the fiscal year ended June 30, 2013, 938,498 tonnes of ore were processed, a 157% increase due to the increase in mill capacity as a result of the 2012 plant expansion. The average mill feed grade was 2.07 g/t gold and recovery was 87.0% for a calculated gold content of 54,368 ounces. 54,439 ounces of gold were poured and 52,982 ounces were produced (Defined as good delivery gold bullion according to London Bullion Market Association (“LBMA”), net of gold Dore in transit and refinery adjustment). Phase IV Expansion The Phase IV plant expansion will be needed to process refractory sulfide materials from deeper in the Selinsing and Buffalo Reef deposits. Considerable laboratory scale test work has been completed in fiscal 2013 that indicates metallurgical recoveries of gold in the 90% range from sulfide ores by using a flotation/ bio-oxidation (“Bi-ox”) process. The Phase IV expansion as recommended in the August 2012 NI 43-101 Technical Report includes adding a flotation circuit and a regrind mill circuit, bi-ox tanks, and converting some existing CIL leach tanks to neutralization tanks within the existing plant. The full scale pilot plant is also recommended to be designed to prove scale-up and allow the conversion to a full size bi-ox plant utilizing the pilot plant equipment. The recommended Phase IV has a capital cost of approximately $45.8 million and provides a net present value (“NPV”) of $10.7 million and a 21% rate of return. Subsequent to fiscal 2013, work continues with in-house laboratory research and development to reduce the CAPEX of the Phase IV project. OXIDE SULFIDE OXIDE + SULFIDE Category g/t Au (kOz) g/t Au (kOz) kTonnes kTonnes kTonnes g/t Au (kOz) Reserves (based on a US$1550/oz gold price) Proven 2,360 0.7 Probable P+P 496 2,857 1.7 0.9 54.6 26.7 81.3 266 1,768 2,034 Resources including Reserves (based on a US$1700/oz gold price) Measured 2,361 54.6 0.7 322 Indicated M+I Inferred 588 2,949 268 1.6 0.9 1.2 29.5 84.1 10 3,036 3,358 801 Selinsing-Buffalo Reef Reserve/Resource as of August 31, 2012 (Practical Mining, May 23, 2013) 10 S ELIN S ING ARE A OP E RAT IO NS 2.5 2.1 2.2 2.1 1.9 1.9 1.5 21.4 120.2 141.7 21.7 183.6 205.3 38.0 2,626 2,264 4,890 2,682 3,624 6,307 1,070 0.9 2.0 1.4 0.9 1.8 1.4 1.4 76.0 146.9 222.9 76.3 213.0 289.4 48.0 MONUMENT MINING LIMITED 2013 AN NUAL REPORT SELINSING AREA OPERATIONS Exploration During fiscal 2013 a total of 374 holes totalling 36,917 metres of drilling was completed at the Selinsing area properties: • 141 holes totalling 18,742 metres at Selinsing • 217 holes totalling 16,721 metres at Buffalo Reef, and • 16 holes totalling 1,455 metres at FELDA Drilling was completed north, south and beneath the Selinsing pit and on Buffalo Reef resource areas and focused on defining mineral- ization at depth below the existing pits, within gap zones in between the known resources that contain little drill hole information, and to convert inferred materials to indicated and/or measured materials. Core logging, sample processing and assay analysis are in progress on these completed drill holes. None of these drill results were included in the August 31, 2012 NI 43-101 Technical Report. Many of these drill hole assays will be incorporated into the next resource update. Exploration and drilling will continue at the Selinsing area properties in fiscal 2014 after completion of assaying and interpretation of backlogged drill samples. FELDA Lands On April 2, 2013 Monument obtained a consent letter from the Federal Land Development Authority (FELDA) of Malaysia to explore 14 blocks totaling 3,920 acres owned by local settlers (“FELDA lands”). These FELDA lands are generally located east and south of the existing resources and Monument tenements and will allow additional exploration, infill drilling and development of the Buffalo Reef Central, Buffalo Reef South, and Selinsing resources. The exploration over the FELDA lands allows Monument a chance to grow the resources at the site utilizing the existing facilities to sustain the mining and processing operations well into the future. Exploration drilling began on the FELDA lands during the fourth quarter of fiscal 2013. Grassroots/Future Exploration In addition to potential for extensions of Selinsing and Buffalo Reef mineralization to the east and south on FELDA lands significant exploration potential exists further east along Medang Ridge, a zone parallel to the Selinsing-Buffalo Reef zone. Exploration in the early 1990s identified 3 surface zones of gold mineralization which will be explored by Monument at some future date. On the Famehub properties approximately $40 million of explora- tion data was acquired with the properties resulting in rapid target determination. These targets which include Selinsing-like shear zone targets and intrusive contact targets will also be explored at a future date. FAMEHUB Temau Gajah 14.05 km2 500000 mN PROPERTY LOCATIONS Harimau 6.25 km2 Satak Serau 36.00 km2 Tekai 20.50 km2 Leboh 12.25 km2 Meraga 12.00 km2 Tui Headwater 5.75 km2 Daling 2.50 km2 475000 mN Rubber Hill 3.75 km2 Selinsing & Buffalo Reef Gold Mine Major Roads Rail Line 0 5 10 Kilometres E m 0 0 0 5 2 4 E m 0 0 0 0 5 4 Kuala Lipis 520 L 500 L 480 L 460 L 440 L 420 L 400 L 380 L 550 L 500 L 450 L 400 L 350 L 300 L 250 L TITLE OF DIAGRAM 500 E 600 E 700 E Buffalo Reef South Section 3380N (above) and Selinsing 1960N Section (below) outlining the 0.05 ppm grade shells 600 E 700 E 800 E 900 E 1000 E SELINSING AREA OPERAT ION S 11 MON UMEN T MINING LIMITED 2013 ANNUA L REPO RT MENGAPUR POLYMETALLIC PROJECT Property Overview Mengapur is located in Pahang State, Central Malaysia, approximately 130 kms southeast of Monument’s wholly owned Selinsing Gold Mine and 75 kms northwest of the Malaysian port city of Kuantan. It was historically owned by Malaysian Mining Corpora- tion which defined the historical polymetallic resources in a full bankable feasibility study. The title of Mengapur was subsequently divided and distributed to different owners. Monument acquired 70% of Mengapur from those owners in fiscal 2012, and acquired the remaining 30% interest in fiscal 2013. Geology Mengapur contains a large polymetallic skarn deposit with significant copper, sulphur, iron, gold and silver mineralization hosted in pyroxene and garnet skarn surrounding the Bukit Botak intrusive complex. Oxide and supergene zones overly the main sulfide zone. 7500 7000 6500 6000 5500 A C ZONE BUKIT BOTAK A ZONE B ZONE A’ N 0 500 m 64 65 GARNET + PYROXENE SKARN ADAMELITE INTRUSIVE ROCK CARBONACEOUS LIMESTONE SHALE AND SLATE FAULT A A’ CROSS-SECTION A-A’ A ZONE RESOURCE/RESERVE ZONE 65 STRIKE AND DIP OF BEDDING 41500 42000 42500 43000 43500 12 MEN GAPUR POLYME TA LLIC P R O J EC T MONUMENT MINING LIMITED 2013 ANNUAL REPO RT MENGAPUR POLYMETALLIC PROJECT Historical Resource Project Development Plan The deposit was first discovered with anomalous stream sediment samples in 1979. A historic resource estimate based on 58,000 metres of diamond drilling was published as a “Definitive Feasi- bility Study” (the “Historical Study”) in October 1990 by Normet Engineering Pty Ltd with James Askew Associates completing the ore reserve and resource estimates, both of Perth, Western Australia. This Historical Study is not NI 43-101 compliant and should not be solely depended on. It is relevant as it provides an indication of the mineral potential of the project. The Histori- cal Study outlined 224.409 million tonnes averaging 6.54% sulfur, 0.25% copper, 0.16 g/t gold, and 8.86 g/t silver. This historical estimate is summarized in the “NI 43-101 Technical Report, Mengapur Project (Amended) (January 2012)” prepared by Snowden Mining Industry Consultants. Monument is undertaking a phased development plan to advance the Mengapur project, following the same successful approach it used to bring its Selinsing gold mine into low-cost production. The Mengapur mine is envisioned to be developed as a large multi-commodity open pit mine. R&D programs under -way will explore the development of a number of marketable potential commodity products subsequent to the targeted recovery of magnetite and copper concentrate, and develop and prove a viable flow sheet circuit for recovery of these products. Opportunities exist to produce down-stream, value added, Malaysian made products from a roaster operation, including copper metal, calcine material for the cement and plaster industries, electrical power generation for project power supply and sulfuric acid for sale or as an input component to produce fertilizer. GEOLOGY CROSS-SECTION A-A’ SHOWING THE SP6 DESIGN PIT A NORTHWEST SOUTHEAST A’ 0.10% COPPER GRADE SHELL C ZONE BUKIT BOTAK SOIL 400 200 A ZONE 0.10% COPPER GRADE SHELL SOIL S E R T E M N I I N O T A V E L E 0 LIMESTONE -200 S H A L E S K A R N INTRUSIVE LIMESTONE SKARN 200 600 1,000 1,400 DISTANCE IN METRES MENGAPUR POLYMETALLIC PROJECT 13 MON UMEN T MINING LIMITED 2013 ANNUA L REPO RT MENGAPUR POLYMETALLIC PROJECT Fiscal 2013 Accomplishments In fiscal 2013, the Mengapur Project work included camp development, setup of an SGS on site laboratory, initial refurbishment of the existing 1,000 tpd copper flotation plant and exploration work to define resource in a NI43-101 Preliminary Economic Assessment Technical Report. Construction of additional housing accommodations, including seven separate houses, was initiated in late March by a local contractor and is expected to be completed in early 2014. The camp will house 104 people when completed. Additional power generating sets have been acquired and are being installed at the project to help support the ongoing project work. Diesel storage at the site is being upgraded as is the septic system. An on-site assay laboratory was built to help support the ongoing exploration work. An agreement between the Company and SGS Malaysia, an accredited lab that meets the requirements of MS ISO/IEC 17025, was finalized in January 2013. Under the agreement, SGS will manage and operate the on-site assay lab that will have capacity to process 2,000 samples per month. The assay lab is being constructed in 3 stages. The first stage, sample preparation (crushing and grinding) was completed in June 2013. The second stage will include fire assay, Leco sulfur, and AAS analysis. The third stage will include full use of the ICP equipment. Refurbishment of the existing Mengapur processing plant to process 1,000 tonnes of sulfide ore per day started in March 2013 and was intended to produce a copper concentrate and a magnetite product to generate quick cash flow. The refurbishment is pending further metallurgical test work being conducted in the fiscal 2014 R&D program. This R&D program is initially focused on the production of market grade magnetite from fresh rock that underlies the free digging soils to generate cash flow. It will also pursue metallurgical testing for other potential downstream commodity products and source data to help optimize the process flowsheet and validate the designs for the future processing facilities. Exploration and NI 43 101 Confirmation Drilling During fiscal 2013 Monument drilled 33,458 metres in 147 holes at the Mengapur project. Most of the “Priority 1” drill holes were designed at a 60 to 80m drill hole spacing necessary for possible inclusion in the upcoming NI 43-101 report, and were completed by April 2013. The completed drill holes tested most of the sulfide mineralized zone included in the historical resource and the overlying oxide and transitional (enrichment) zones. Two condemnation drill holes totaling 356 metres were also completed in the area of the proposed Phase 2 plant. The Mengapur drilling program was completed to support an updated NI 43-101 Preliminary Economic Assessment compliant resource report, targeted for completion in early 2014. The drilling was also carried out to assist with the design of the sulfide mining plan and for collection of representative samples for metallurgical testing that will be utilized to assess the requirements of the proposed processing facilities. 14 MEN GAPUR POLYME TA LLIC P R O J EC T MONUMENT MINING LIMITED 2013 ANNUAL REPO RT CORPORATE & SOCIAL RESPONSIBILITY Monument Mining is committed to the highest standards of environmental management, social responsibility, and health and safety for its employees and neighboring communities. People As of June 30, 2013, the Company employed 336 people at its Malaysian operations, an increase of 31% over last year. Of those, 329 are Malaysian. Most are hired locally and live in the surrounding communities with their families. Health & Safety The Company places a strong emphasis on safety procedures and training. The objective is a perfect health and safety workplace for Monument people. During the year there were no fatal injuries with only minor work related accidents. The mine enforces a comprehensive safety program and continues to improve procedures for accident prevention. Environment While pursuing the company’s growth, Monument develops and operates all of its projects in an environmentally responsible and sustainable manner, ensuring a safe and healthy environment. It strives to disrupt as little of the area it works in as possible. It applies the best environmental practice and ensures the highest commitment to environmental protection in managing natural resource utilization to sustain the resource base and prevent degradation of the environment. It adheres to established environmental monitoring and control procedures in compliance with the Environmental Impact Assessment (EIA) plan approved by the Malaysian Government Department on the Environment (DOE) and the Mining Scheme adopted by the Department of Minerals and Geosciences (JMG). During the year ambient air and noise sampling was conducted as per schedule including environmental sampling for water quality in local streams and all results were satisfactory. Community Support Programs Monument strives to support and work with the local communities in which it operates. It participates in community events organized by various NGOs such as volunteer organizations, mosque council, Red Crescent and the native community. CORPORATE & SOCIAL RESPONSIBILITY 15 MON UMEN T MINING LIMITED 2013 A NNU AL REPO RT CORPORATE & SOCIAL RESPONSIBILITY During fiscal 2013, the company advanced the newly acquired Mengapur project as a sustainable mining project which substantially benefited economic development within the Eastern Coridor Economic Region (ECER) where the project is located. As of June 30, 2013 Monument had invested approximately USD 100 million in acquisition costs and for exploration, research and development expenditures. The benefits of the new project can be seen through direct and indirect employment of more than 150 people involved in project exploration and construction of new staff accomodation, lab and core cutting facilities. Employment is expected to increase substantially to over 1,000 people during the major plant construction phases and full operation of the proposed mine. The construction and operating expenditures, as well as various taxes and royalties paid by the company will provide major economic stimulus both locally and nationally. Monument established a new business and community office at the local Maran Town that will spearhead the community development programs that are planned to be implemented in the near future. It will allow the communities to provide and receive feedback for the Mengapur project developments. Working closely with the local and Pahang state governments, and other part- ners, the planned sustainable projects and community programs will help to improve education, health and local living conditions. At Selinsing, the mine operation continues to provide an economic catalyst, through extensive use of local suppliers, which enables the local communities to build better lives. It continues to collaborate with local health clinics and youth organizations to conduct free medical screening and promote healthy living Monument funds local schools for additional academic and co-curriculum activities. The Company is becoming more involved in promoting skills development in Malaysia with the goal of increasing local employment at its operations. Monument provides funding through internship programs with various intitutions of higher learning in the country, thus preparing a skilled workforce for the future. In addition, promising local students are given scholarships to pursue coursework and degrees related to the mining industry and are encouraged to pursue a career with Monument’s operations in the future. Read in conjunction with Monument Mining’s 2013 audited Financial Statements and Management Discussion & Analysis, available at www.sedar.ca and www.monumentmining.com. All dollar amounts in US$ except where noted. 16 COR P ORATE & SOC IA L R E SP ON SI BILIT Y CORPORATE INFORMATION OFFICERS & MANAGEMENT DIRECTORS CORPORATE HEADQUARTERS Robert Baldock Sion, Switzerland Cathy Zhai Vancouver, British Columbia George Brazier Vancouver, British Columbia Suite 910, 688 West Hastings Street Vancouver, BC, V6B 1P1 Canada Telephone 604.638.1661 Fax info@monumentmining.com 604.638.1663 www.monumentmining.com INVESTOR RELATIONS Graham Dickson Vancouver, British Columbia Vancouver Robert Baldock, CA (M), FCPA, FIMC President & CEO Cathy Zhai, B.Sc., CGA CFO & Corporate Secretary Vice President, Corporate Finance Zaidi Harun, B.Sc. Vice President, Business Development Kevin J. Wright, ACSM Project Manager, Mengapur Project Chee Yau Tan, MCSM, M.Sc., MBA General Manager, Selinsing Gold Mine Todd W. Johnson M.Sc Geo, M.Sc Geo Eng, P.E. Vice President, Exploration Zaidi Harun Kuala Lipis, Malaysia Jean-Edgar de Trentinian Geneva, Switzerland Gerald Ruth Toronto, Ontario Frank Wright Vancouver, British Columbia STOCK LISTING AUDITORS TSX Venture Exchange Symbol: MMY Frankfurt Stock Exchange Symbol: D7Q1 REGISTRAR AND TRANSFER AGENT Computershare Trust Company of Canada Vancouver, British Columbia Grant Thornton LLP Vancouver, British Columbia BANKERS Bank of Montreal Vancouver, British Columbia LEGAL COUNSEL DuMoulin Black LLP Vancouver, British Columbia Richard Cushing B.A. (Econ.), CSC Investor Relations Suite 910, 688 West Hastings Street Vancouver, BC, V6B 1P1 Canada Telephone 604.638.1661 Fax info@monumentmining.com 604.638.1663 Toronto Nickolas Kohlmann M. Sc. Geology Senior Manager, Investor Relations Suite 500, 90 Adelaide Street West Toronto, ON, M5H 3V9 Canada Telephone 647.478.3594 nkohlmann@monumentmining.com Europe Wolfgang Seybold Chairman, Axino, AG Königstraße 26, 70173 Stuttgart, Germany Telephone +49.711.25 35 92.40 Fax +49.711.25 35 92.55 wolfgang.seybold@axino.de www.axino.de 

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