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Siddharth Rajeev, B.

Tech, MBA, CFA


Analyst

February 24, 2011


Investment Analysis for Intelligent Investors

Monument Mining Ltd. (TSXV: MMY; Frankfurt: D7Q1) – Commercial Production Declared;
Reported Revenues of $6.61 million in September 2010 - FINAL REPORT

Sector/Industry: Junior Mining/Gold www.monumentmining.com


Market Data (as of February 23, 2011) Investment Highlights:
Current Price C$0.70 • The company announced on September 20, 2010, the
Fair Value C$0.90 (↑) commencement of commercial production at the Selinsing Gold
Rating* BUY Project in Malaysia. The facility is currently operating at a rate
Risk* 4 (Speculative) of 30,000 tons per month.
52 Week Range C$0.24 - C$0.74
• As of September 30, 2010, the project had produced 22,843
Shares O/S 172.98 mm
ounces of gold.
Market Cap C$121.08 mm
Current Yield N/A • Q1-2011 (quarter ended September 2010) reported revenues
P/E (forward) N/A were $6.61 million from gold sales of 5,150 oz. Gross profits
P/B 1.95 from mining operations were $5.52 million (based on a cash
YoY Return 118.8% cost of $212/oz).
YoY TSXV 54.6% • The Carbon in Leach circuit (Phase II of development) has been
*see back of report for rating and risk definitions up and operating since July of this year.
4,500,000 $0.80 • In August 2010, the company completed a $13 million financing
4,000,000 $0.70 comprised of $8 million in convertible notes and a $5 million
3,500,000
$0.60
forward sale of gold.
3,000,000 • Subsequent to closing the financing, the company completed an
$0.50
2,500,000 acquisition of an additional 32,000 acres of exploration land in
2,000,000
$0.40
Malaysia along trend and east of the Selinsing Gold Project.
1,500,000
$0.30 • We expect the company to report $42.56 million in revenues
1,000,000
$0.20 and net income of $25.55 million ($0.13 per share) in FY2011.
500,000 $0.10
• We have raised our fair value estimate from $0.50 to $0.90 per
share.
- $0.00
23-Feb-10 24-Jun-10 23-Oct-10 21-Feb-11

Key Financial Data (FYE - June 30)


(C $) 2010 Q1-2011
Cash & Cash Equivalents 3,709,468 18,376,210
Working Capital 6,707,453 25,690,722
Mineral Assets + PPE 50,109,005 52,678,823
Total Assets 60,665,252 81,159,194
Revenues - 6,611,494
Net Income (Loss) (2,936,587) 2,607,888
EPS (0.02) 0.00
Monument Mining is focused on epithermal gold deposits in Malaysia. Commercial production at the Selinsing Gold
Project in Pahang State was achieved in September, 2010. The mine is currently operating at a rate of 30,000 tons per
month and as of September 30, 2010, has produced 22,843 ounces of gold.

 2011 Fundamental Research Corp. www.researchfrc.com Siddharth Rajeev, B.Tech, MBA, CFA

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT


Monument Mining Ltd. (TSXV: MMY) – Update Page 2

Selinsing Project Declaration of Commercial Production: On September 20, 2010, the company
Update announced the official commencement of commercial production at the Selinsing Gold
Project in Pahang State, Malaysia. The newly built gold treatment plant has an operating
capacity of 400,000 tons per annum and as of September 20, 2010, has been operating at an
average monthly mill throughput of 30,000 tons for 30 consecutive days. Total gold
recoveries have averaged 90%.

The key project development milestone achieved since our previous update (released Jan 8,
2010) is certainly the commissioning of the Carbon In Leach (CIL) gold recovery circuit.
This was Phase II of the development program and was originally to be completed by
December, 2009. The delay in commissioning of the CIL circuit was due to the company
being delivered defective agitators (a key component in the CIL circuit). After receipt of
new agitators, the company was able to commission the circuit in July of this year.
Completion of Phase II allowed the company to move towards commercial production.

The company recently completed a 22 hole, 4,000 metre drill program on the Selinsing
deposit aimed at upgrading some (or all) of the 0.39 million ounce inferred gold resource.
Updated estimates for the project are anticipated in March, 2011.

Production - Since the commissioning of the gravity circuit in September 2009, the
company produced and sold 13,793 oz, and generated revenues of $16.32 million and an
operating profit of $13.31 million through June 2010. Subsequently, in Q1-2011 (quarter
ended September 2010), the company produced 9,050 oz and sold 8,650 oz to generate
$10.94 million in revenues. All the revenues prior to commercial production were not
reported as revenues in the income statement, but were offset against capital expenditures in
the cash flow statements. Therefore, Q1 statements include only September 2010 revenues
which is when commercial production was announced. Q1 reported revenues were $6.61
million from gold sales of 5,150 oz. Gross profits from mining operations were $5.52
million (based on a cash cost of $212/oz - which, we believe, is extremely encouraging
considering the expected cash cost over the life of the project is US$346/oz).

Source: Company

 2011 Fundamental Research Corp. www.researchfrc.com Siddharth Rajeev, B.Tech, MBA, CFA

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT


Monument Mining Ltd. (TSXV: MMY) – Update Page 3

As of September 30, 2010 the company had produced a total of 22,843 ounces of gold
from the mine.

Opening The official mine opening ceremony was held in October 2010. About 500 people, including
Ceremony in the Chief Minister of Pahang State, State Cabinet members, state officials, local community
Malaysia leaders and shareholders, participated in the opening ceremony. According to the company,
the Chief Minister said, "Gold mining gave a larger contribution in the economic spill-over
to the local community. We want to assure our investors that the state government will
continue to assist in their business ventures” - which we believe is encouraging.

New Site Images The mine site currently has over 135 employees and mine contractors on site. A few images
of the site follow:

 2011 Fundamental Research Corp. www.researchfrc.com Siddharth Rajeev, B.Tech, MBA, CFA

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT


Monument Mining Ltd. (TSXV: MMY) – Update Page 4

Source: Company
Buffalo Reef and
Now that Phase II construction is complete and commercial production has been achieved at
Famehub
Selinsing, we believe that the focus of the company’s upcoming work will be on further
developing it’s portfolio of exploration properties also within Pahang State, Malaysia. The
 2011 Fundamental Research Corp. www.researchfrc.com Siddharth Rajeev, B.Tech, MBA, CFA

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT


Monument Mining Ltd. (TSXV: MMY) – Update Page 5

company’s exploration portfolio includes Buffalo Reef and the recently acquired Famehub
Property.

Buffalo Reef
The company is currently undertaking a 33 drill hole exploration program for the Buffalo
Reef project. The program is budgeted at $0.8 million and includes 2,500 metres of RC
drilling and 3,200 metres of diamond drilling. The program is an extension to the 2008 drill
program and is aimed at converting the historic and JORC Code compliant resources to NI
43-101 standards. Historic and JORC Code compliant resources stand at approximately
0.19 million ounces.

Figure 1: The Buffalo Reef exploration property in relation to the Selinsing Gold Project.
The Selinsing treatment plant is located at the “Proposed New Plant Site”. This central
location will allow ore from additional surrounding properties to be processed at the
facility. (Source: Company)

Famehub Property
On September 14, 2010, the company announced the completed acquisition of 100% of the
issued and outstanding shares of Famehub Venture Sdn Bhd (“Famehub”), a company
incorporated in Malaysia. The acquisition purchase price was $1.5 million in cash and 14
million common shares of Monument. Famehub holds rights to approximately 32,000 acres
of prospective exploration land to the north of Buffalo Reef, along trend and east of the
Selinsing gold mine (“Famehub Property”).

Also included in the acquisition was a technical information and exploration database
package relating to the Famehub Property. Over AUS$40 million in expenditures has been
put into exploring the Famehub Property by previous operators. The company’s planned
exploration program for the Famehub property will focus on drill targets generated from this
data. The initial program, budgeted at AUS$1.6 million, is expected to span 12 months and
 2011 Fundamental Research Corp. www.researchfrc.com Siddharth Rajeev, B.Tech, MBA, CFA

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT


Monument Mining Ltd. (TSXV: MMY) – Update Page 6

will include 61 drill holes (7,440 metres RC, 1,500 metres diamond drilling).

Figure 2: Claims composing the Famehub Property. Should ore production be achieved at
one of these properties, it would likely be transported to the Selinsing treatment plant to the
southwest for processing. (Source: Company)

Financials At the end of Q1-2011 (quarter ended September 30), the company had $18.38 million in
cash and cash equivalents. Working capital and the current ratio were $25.69 million and
10.43x, respectively. As mentioned earlier, Q1 revenues were $6.61 million. The company
reported net profit (excluding unrealized gains of $1.90 million) of $0.71 million (EPS:
$0.00). Net profit would have been $4.14 million excluding a non-cash loss on
derivative liabilities of $3.43 million. The following table shows the company’s cash and
liquidity position at the end of FY2010.

(C $) 2010 Q1-2011
Cash & Cash Equivalents 3,709,468 18,376,210
Working Capital 6,707,453 25,690,722
Current Ratio 2.85 10.43
LT Debts/ Assets 0% 13%
Cash from financing activities (156,741) 11,257,200

We expect the company to report $42.56 million in revenues and net income of $25.55
million ($0.13 per share) in FY2011.

In August 2010, the company completed a $13 million financing, comprised of $8


million in convertible notes and a $5 million forward sale of gold.

 2011 Fundamental Research Corp. www.researchfrc.com Siddharth Rajeev, B.Tech, MBA, CFA

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT


Monument Mining Ltd. (TSXV: MMY) – Update Page 7

The convertible notes have a term of five years and must be repaid at the end of the term in
cash at 121.67% of the principal amount, with an early repayment option. Each convertible
note can be converted into a unit at a price of $0.40 with each unit comprising one common
share of the company and one common share purchase warrant (exercise price - $0.50 per
share; maturity - five years). The company also granted options to purchase an aggregate of
5,714 ounces of gold at a price of $1,000 per ounce and 2,857 ounces of gold at a price of
$1,250 ounces for the convertible note holders at any time during the term of the notes
commencing 18 months after closing.

The forward sale will be repaid in gold. The forward sale has a term of five years. Warrants
for the purchase of 5 million shares with the same terms as described in connection with the
convertible notes above were also issued.

Stock Options and Warrants: We estimate the company currently has 28.40 million stock
options (weighted average exercise price of $0.38) and 81.18 million warrants (weighted
average exercise price of $0.49) outstanding. All the options and warrants are currently
in the money. The company can raise up to $51 million if all these options and
warrants are exercised.

The company recently made an application to the TSX Venture Exchange to extend the
maturity date of the outstanding warrants from July 2011 to July 2012.

Valuation Our revised DCF valuation is $0.87 per share, up from our previous estimate of $0.48 per
share. A summary of our valuation model is shown below.

DCF Valuation Summary

Resource (in tonnes) 16,177,480


Contained Metal (in troy oz) 695,953
Recovery 90.0%
Mine Life (in years) 13
2011 - $1,350/oz, 2012 - US$1,300/oz, 2013 -
LT Gold Price (in US$/oz)
US$1,150/oz, 2014 - US$1,1000/oz
Average Operating Costs (US$/oz) US$346/oz
Discount Rate 10.0%
LT - C$/US$ 1.10
Net Present Value $185,211,990
Working Capital - LT Debt $19,688,939
Net Value $204,900,929
No. of shares (diluted) 236,000,524
Value per share $0.87
*The number of diluted shares were estimated based on the treasury stock method.
 2011 Fundamental Research Corp. www.researchfrc.com Siddharth Rajeev, B.Tech, MBA, CFA

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT


Monument Mining Ltd. (TSXV: MMY) – Update Page 8

We made the following significant changes to our model:

• Lowered discount rate from 12.5% to 10.0% to account for lower risks (due to the
achievement of commercial production).
• We now use 100% of Selinsing's indicated and inferred resource estimate;
previously, we used to discount inferred resources by 50% for conservatism
• Raised our long-term (2014+) gold price forecast from US$750 to US$1,000/oz
since our previous report on MMY in January 2010 (our near-term forecasts are
provided in the above table).

The sensitivity of our valuation to changes in our long-term gold price forecast is shown
below.

Sensitivity Analysis
Gold (US$/oz) Fair Value ($/share)
$0.87
$700 $0.63
$800 $0.71
$900 $0.79
$1,000 $0.87
$1,100 $0.95
$1,200 $1.03
$1,300 $1.10

Rating We reiterate our BUY rating and raise our fair value estimate from $0.50 to $0.90 per
share. We have also lowered our risk rating from 5 (Highly Speculative) to 4
(Speculative).

Risks The following risks, though not exhaustive, may cause our estimates to differ from actual
results:

• The value of the company is dependent on commodity prices.


• The success of drilling, project development and resource expansion are important
long-term success factors for these projects.
• The company is in early stages of production.
• Our fair value estimate will be negatively impacted if any of the inputs used in our
models moves unfavorably.

 2011 Fundamental Research Corp. www.researchfrc.com Siddharth Rajeev, B.Tech, MBA, CFA

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT


Monument Mining Ltd. (TSXV: MMY) – Update Page 9

Fundamental Research Corp. Equity Rating Scale:


Buy – Annual expected rate of return exceeds 12% or the expected return is commensurate with risk
Hold – Annual expected rate of return is between 5% and 12%
Sell – Annual expected rate of return is below 5% or the expected return is not commensurate with risk
Suspended or Rating N/A— Coverage and ratings suspended until more information can be obtained from the company regarding recent events.

Fundamental Research Corp. Risk Rating Scale:


1 (Low Risk) - The company operates in an industry where it has a strong position (for example a monopoly, high market share etc.) or operates in a regulated industry.
The future outlook is stable or positive for the industry. The company generates positive free cash flow and has a history of profitability. The capital structure is
conservative with little or no debt.

2 (Below Average Risk) - The company operates in an industry where the fundamentals and outlook are positive. The industry and company are relatively less sensitive
to systematic risk than companies with a Risk Rating of 3. The company has a history of profitability and has demonstrated its ability to generate positive free cash flows
(though current free cash flow may be negative due to capital investment). The company’s capital structure is conservative with little to modest use of debt.

3 (Average Risk) - The company operates in an industry that has average sensitivity to systematic risk. The industry may be cyclical. Profits and cash flow are sensitive
to economic factors although the company has demonstrated its ability to generate positive earnings and cash flow. Debt use is in line with industry averages, and
coverage ratios are sufficient.

4 (Speculative) - The company has little or no history of generating earnings or cash flow. Debt use is higher. These companies may be in start-up mode or in a
turnaround situation. These companies should be considered speculative.

5 (Highly Speculative) - The company has no history of generating earnings or cash flow. They may operate in a new industry with new, and unproven products.
Products may be at the development stage, testing, or seeking regulatory approval. These companies may run into liquidity issues, and may rely on external funding.
These stocks are considered highly speculative.

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opinions based upon information that is publicly available and that we believe to be correct, but we have not independently verified with respect to truth or correctness.
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 2011 Fundamental Research Corp. www.researchfrc.com Siddharth Rajeev, B.Tech, MBA, CFA

PLEASE READ THE IMPORTANT DISCLOSURES AT THE BACK OF THIS REPORT