Monument Mining Ltd V.MMY

Corrected MD&A

[romara]

This is the proper MD&A for last Reporting Quarter ......  Richard

MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
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This Management’s Discussion and Analysis (“MD&A”) of Monument Mining Limited (“Monument” or the “Company”) as of February 26,
2024 should be read in conjunction with the unaudited condensed interim consolidated financial statements of the Company for the three
(“Q2 2024”) and six months ended December 31, 2023 (“YTD 2024”) and the notes related thereto, which have been prepared in
accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”),
as well as the annual audited financial statements for the year ended June 30, 2023.
This MD&A contains “forward-looking statements” and should be read in conjunction with the Cautionary Statement on Forward-Looking
Statements at the end of this MD&A. Non-IFRS performance measures referred under the section “Non-IFRS Performance Measures” in
the MD&A are subject to risk factors set out in a cautionary note contained herein. All amounts are in United States dollars unless
otherwise noted. References to “C$” or “CAD” are to Canadian dollars, “RM” are to Malaysian Ringgits and “AUD” are to Australian dollars.
Additional information relating to the Company’s activities may be found on the Company’s website at www.monumentmining.com and
at www.sedar.com.
1. EXECUTIVE SUMMARY
1.1 Second Quarter of Fiscal Year 2024 Highlights
• Overall Q2 and YTD 2024 gold production exceeded production in the same quarter and the year to date in FY 2023.
• Significant increase in mining rate resulting in a sustained ore delivery on the stockpile target ahead of the rainy season.
• Continued improvement of the gold flotation plant with greater feed rates and lower downtime.
• Positive cashflow from stabilized sulphide gold production of $2.41 million during Q2, 2024, compared to $2.75 million in Q2 2023
when the oxide production was in transition to the sulphide production:
Main quarterly operating metrics:
- 6,809 ounces (“oz”) of gold produced (Q2 2023: 1,526 oz);
- 6,967 oz gold sold at average realized price of $1,946/oz with revenue from concentrate sales of $11.00 million (Q2 2023: 3,350
oz sold at average realized price of $1,753/oz and revenue of $5.87 million) (refer to section 15 “Non-IFRS Performance Measures”
for further details on the calculation of the average realized gold price);
- Cash cost per ounce sold of $894/oz (Q2 2023: $1,507/oz);
- Gross margin of $4.77 million (Q2 2023: $0.82 million);
- All-in sustaining cost (“AISC”) per ounce sold of $1,175/oz (Q2 2023: $1,627/oz) (refer to section 15 “Non-IFRS Performance
Measures”).
1.2 Company Overview
Monument Mining Limited (TSX-V: MMY, FSE: D7Q1) is an established Canadian gold producer and mining asset developer. The Company
owns a 100% interest in the Selinsing Gold Mine and the Murchison Gold Project portfolios, and a 20% interest in the Tuckanarra project
Joint Venture (JV) as of December 31, 2023. The Selinsing Gold Mine is located in Pahang State, within the Central Gold Belt of Western
Malaysia, and comprises the Selinsing, Buffalo Reef, Felda Land, Peranggih and Famehub projects. Murchison, comprised of the Burnakura
and Gabanintha projects, and the 20% free carrying interest in Tuckanarra, is located in the Murchison region, Western Australia, Australia.
Monument’s primary business activities include gold mining production, development and exploration. The business strategy consists of
four perspectives. The shareholder perspective is to provide a satisfactory return to shareholders. The growth perspective is to increase
its mineral resource inventory to achieve long-term sustainable production. The operational perspective is to maximize production
performance and efficiency and to enhance exploration success. The financial perspective is to have effective budgetary and cost control,
maintain efficient operational excellence and improve the quality of assets by advancing exploration and evaluation projects to production.
The Company’s long-term goal is to become a sustainable dividend paying gold producer.
As a junior gold producer, Monument’s overall strategy is to build incremental gold Resources and Reserves through around mines
exploration, development, production expansion and disciplined acquisitions, as well as to build up market awareness in order for the
market to reflect the Company’s value thus transforming the Company’s upside potential to benefit its shareholders. The Company grows
its value by developing gold assets and building up gold reserves that provide sustainable cash flow therefore creating value for
shareholders that can be reflected in the market capitalization.
The Company sets its near-term goals are summarized as follows:
Optimize sulphide gold concentrate production and mine development at Selinsing;
Upgrade Murchison to a potential cornerstone gold project of the Company; and
Proceed with disciplined acquisition or corporate transaction to increase the Company’s market profile.
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
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Monument has an experienced management team with the demonstrated ability to advance projects from exploration to production, and
effectively and profitably operates producing mines. The Company employs approximately 266 people and is committed to the highest
standards of environmental management, social responsibility, and health and safety for its employees as well as for its neighboring
communities. Monument’s Head Office is located in Vancouver, British Columbia, Canada. It operates through its subsidiaries in Pahang
State, Malaysia and Western Australia, Australia.
1.3 Review of Operations
FY 2024 marked a period of substantial progress and advancements for the Company, as demonstrated by the following Q2 and YTD 2024
operational review:
Q2 2024 has been a good run for the Selinsing sulphide production. It was focused on catching up the stockpiled inventory to support
sustainable mill feed by lifting up mining rates, and a further improvement flotation plant performance. The Company is also focused on
smoothing out the sales process and building up cash reserves in order to restore the accounts payable to normal operational level.
Mining activities during Q2 2024 were focused on the Buffalo Reef (“BR”) pits at full pace. Stages 1 and 2 of BRC2 and BRC3 as well as
Stage 1 of BRC4 were mined during the quarter. Mining operations continued to intensify with ten grade control drilling rigs operational
and performing well; the fleet of eight excavators and around forty dump trucks have shown good availability. A daily mining rate of 32,671
tonnes was achieved during Q2 2024 compared to 24,103 tonnes during Q2 2023. Ore stockpiled was 383,720 tonnes as of the end of the
quarter, ahead of the Monsoon season. Subsequent to December 31, 2023, a new three-year mining contract was negotiated with and
awarded to the long-term mining contractor Minetech Construction Sdn. Bhd. (“Minetech”), with an effective date starting January 1st,
2024, subsequent to the end of the reported period.
Sufficient ore stockpile resulted in192,217 tonnes of throughput in Q2, 2024, an increase of 166% compared to 72,391 tonnes in Q2 2023.
An overall gold recovery achieved 71.10% for Q2 2024 compared to 31.70% during Q2 2023 mainly due to higher-grade transition ore and
fresh sulphide ore being fed into the plant. It produced a total of 6,809 ounces of gold, leading to the sale of 6,967 ounces and yielding a
gross margin of $4.77 million. Feed rates increased to 158 tonnes per hour (“tph”) from 101 tph respectively, in line with expectations.
Availability of the flotation plant also improved at 90% during Q2 2024 as a result of ongoing optimization.
As of December 31, 2023, the cash balance was $4.84 million and 8,179 ounces of gold concentrate held at Selinsing site (December 31,
2022: 28 ounces) were in inventory and available for sale. The focus of the Company is to further improve the cash generation from the
gold concentrate production, which will enhance the ability of the Company to navigate operational and market challenges while laying a
foundation for future exploration, development, and corporate growth. The Company will continue to increase plant production level by
removing certain bottleneck areas that have been identified.
The Company will continue to conduct an extensive review of the operation process, adjust its resources to meet production capacity
requirements and address the constraints and bottlenecks of the concentrate production. It has provided and will continue to provide
training to its management and operators to identify and resolve future challenges.
The Company has entered into several offtake agreements with selected buyers and has shipped and sold a total of 9,780 dry metric
tonnes (“DMT”) of gold concentrate to selected buyers as of December 31, 2023, from inception of sulphide plant conversion. All necessary
export permits have been secured for these buyers, with renewals every six months or upon reaching the permitted quantity, whichever
comes first.
1.3.1 Project Development
The flotation plant achieved the design capacity of 119 tph in early December 2023. Project development continued to lift up sulphide
processing plant performance, adjust reagents, monitor repair and maintenance programs and procurement plans; the mine site
infrastructure development included tailing dumps, finishing off constructions.
During the three months ended December 31, 2023, the total cash expenditure on project development was $2.08 million, compared to
$6.08 million during Q2 2023. The decrease is mostly due to lower development costs for Phase 1 of the Sulphide Project, which were
$1.73 million during Q2 2024 compared to $5.60 million during Q2 2023. Other investing expenditures included $0.08 million for sustaining
the Selinsing production (Q2 2023: $0.04 million) and $0.01 million for property fees at Buffalo Reef and for sampling and geology at
Selinsing (Q2 2023: $0.15 million). Additionally, $0.23 million was spent on Murchison exploration (Q2 2023: $0.29 million), encompassing
$0.20 million for care and maintenance and $0.03 million for exploration activities.
Flotation Plant and Related Facilities
Ongoing plant improvements included an upgrade to the concentrate thickener underflow pipeline to the filter press surge tank. One of
the concentrate thickener overflow pumps was replaced with a bigger pump along with a new pipeline; a standby pump will be installed
once refurbishment work is completed. Modifications to the cleaner flotation circuit were initiated to allow cleaning of the first rougher
concentrate to produce a cleaner final concentrate during processing of transition ore types.
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
3 | P a g e
Flotation recovery continued to be variable due to the inconsistent quality of the transition ores processed. Some daily recoveries of over
80% and sometimes 90% were recorded, with reconciled recovery of 71.10% reported for December 2023. The optimization of the
flotation reagent suite has been ongoing, with a focused approach towards refining the use of key components. Additionally, issues
previously encountered with the flotation air blowers have been successfully resolved, following comprehensive troubleshooting
conducted by Atlas Copco technicians.
Construction of the concentrate shed has been completed and the lighting power supply connected. Roofing was installed over the rougher
and cleaner flotation cells. The one tonne bulk bagging system was delivered to Port Klang and transported to the Selinsing site pending
finalization. The contract for the new flotation tailings hopper was awarded and fabrication initiated; civil works commenced in mid-
December 2023 and installation of the tailings hopper and associated pipework is scheduled in the 1st week of February 2024.
The procurement plan and strategies have been tabled for review focusing on critical spare parts for the sulphide flotation plant and by
allocating resources to enhance this improvement with the aim to avoid any unforeseen stoppage of plant operations.
Pre-stripping and stripping activities
Pre-stripping for the sulphide gold production commenced in July 2022 at Buffalo Reef and Felda Block 7. Mining at Buffalo Reef and Felda
Block 7 area continued and recently reached the high-grade sulphide ore levels. For the three and six months ended December 31, 2023,
total stripping and cutback costs amounted to $1.79 million and $3.05 million, respectively. These costs were recorded under mineral
properties, being amortized using unit-of-production method.
Tailing Storage Facility (TSF) Upgrade
The expansion of the TSF, which was initiated in February 2021, aimed to raise the TSF’s level to 540m RL, which will allow an additional
three-year capacity for the sulphide concentrate production. As of the end of FY 2022, the TSF upgrade project had reached a
commendable completion rate of 92.30%, with the main embankment level at 537.00m RL.
An additional phase of construction resumed in the first quarter of 2024 and achieved levels of 539.25m RL. The additional 0.75m RL
required to reach the required level of 540m RL was achieved in Q2 2024. Total expenditures were $0.29 million during the six months
ended December 31, 2023.
A monitoring system, which comprises 11 prisms installed at the TSF main embankment, has been instrumental in ensuring structural
integrity. Bi-weekly readings indicated a total vertical movement of only 6.30mm for the quarter, with no significant deviations observed.
As of the end of Q2 2024, the total progress of the fill work stands at 100%.
Murchison Project Development
During Q2 2024, the Company continued working on the review of the Murchison Gold Project, including reassessment of the economics
of potential cash flow generation. Also, the Company performed a review of all historical and recent drillhole data for the Gabanintha
tenement holdings, in order to plan infill drilling programmes for completion in subsequent quarters with a view to potentially report NI-
43 101 compliant Resources in the area.
The construction of the new core shed was carried out in December 2023, projected to complete in March 2024 with reviewing the core
conditions and registration. Processing plant, accommodation, catering facilities, offices, and associated infrastructure were maintained
to a high standard ensuring operational readiness for commissioning in the eventuality that production restarts. Accommodations and
catering facilities were fully operational during the quarter and equipped to support administrative, exploration, and mining activities.
1.3.2 Production
Mining
In Q2 2024, mining operations were concentrated in Buffalo Reef and more specifically in BRC2 Stages 1 and2, BRC3 Stages 1 and 2, and
BRC4 Stage 1. A notable increase in production was achieved as a result of good availability of the mining equipment. The total material
mined in Q2 2024 amounted to 3,005,725 tonnes, representing a significant increase from the 2,217,475 tonnes mined during the same
quarter of the previous year. This total included 332,684 tonnes of ore, which is more than three times the 108,860 tonnes of ore mined
in Q2 2023.
Processing
The sulphide flotation plant in Q2 2024 yielded a production of 6,809 ounces of gold. The mill processed 192,217 tonnes of sulphide ore,
achieving a head grade of 1.55g/t and a recovery rate of 71.10%. This performance marks a notable improvement from Q2 2023, where
9,574 tonnes at a head grade of 1.81g/t and a recovery rate of 31.70% were achieved. A key factor in this enhanced recovery has been the
shift from processing old stockpile ore to using newly mined sulphide ore, along with numerous other improvements implemented at the
processing plant.
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
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Financial results from Selinsing gold production
During Q2 2024, revenue from sulphide gold production reached $11.00 million, derived from the sale of 6,967 ounces of gold at an
average realized price of $1,946 per ounce (Q2 2023: $nil). There was no revenue contribution from oxide gold production in this period
(Q2 2023: revenue of $5.87 million for 3,350 oz of gold bullion sold at the average realized price at $1,753 per ounce).
The gross margin from Selinsing production was $4.77 million for Q2 2024 (Q2 2023: $0.82 million from oxide production and nil from
sulphide production). After accounting for operating expenses, non-cash depreciation, and accretion expenses totaling $2.46 million (Q2
2023: $1.82 million), the income from mining operations was $2.31 million (Q2 2023: loss from mining operations of $1.00 million).
The cash cost for sulphide flotation gold production was reported at $894 per ounce for Q2 2024 (Q2 2023: $1,507 per ounce for oxide
production).
During the six months ended December 31, 2023, revenue from sulphide gold production was $17.91 million (YTD 2023: $nil), as a result
of the sale of 11,574 ounces of gold concentrate at a realized gold price of $1,940 per ounce. There was no revenue contribution from
oxide gold production in this period (YTD 2023: revenue of $6.58 million for 3,750 oz of gold bullion sold at the average realized price at
$1,755 per ounce).
The gross margin was at $7.78 million (YTD 2023: $0.88 million from oxide production and $nil from sulphide production). The cash cost
for sulphide flotation production was reported at $875 per ounce (YTD 2023: $1,519 per ounce for oxide production).
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
5 | P a g e
Production and financial results for the three and six months ended December 31, 2023 and 2022, are summarized in Figure 1 below:
Figure 1: Operating and Financial Results
(1) Waste removed of 2,673,041 t for the quarter ended December 31, 2023 including operating waste, cutback and sustaining (For the quarter
ended December 31, 2022, waste removed of 2,108,615 t including operating waste, cutback and TSF construction fill).
(2) Monument realized a weighted average gold price of $1,946/oz for the quarter ended December 31, 2023 (gold sulphide production). For
comparison purposes, Monument realized a weighted average gold price of $1,753/oz for the quarter ended December 31, 2022 (gold oxide
production). Readers should refer to section 15 “Non-IFRS Performance Measures”.
(3) Total cash cost per ounce sold includes production costs such as mining, processing, TSF maintenance, camp administration, royalties, storage,
temporary mine production closure, community development cost and property fees, net of by-product credits. Cash cost excludes amortization,
depletion, accretion expenses, idle production costs, capital costs, exploration costs and corporate administration costs. Readers should refer
to section 15 “Non-IFRS Performance Measures”. The aggregated cash costs per ounce for the quarter is $894/oz (gold sulphide production).
(4) All-in sustaining cost per ounce includes total cash costs, operation expenses, sustaining capital expenditures, corporate administrative expenses
for the Selinsing Gold Mine including share-based compensation, exploration and evaluation costs, and accretion of asset retirement obligations.
Certain other cash expenditures, including tax payments and acquisition costs, are not included. Readers refer to section 15 “Non-IFRS
Performance Measures” for detailed descriptions of each calculation.
(5) Average gold price realized, cash cost per ounce sold and all-in sustaining cost are non-GAAP measures; for a reconciliation from this measure
to the most directly comparable measure specified, defined, or determined under IFRS and presented in our financial statements. Readers should
refer to section 15 “Non-IFRS Performance Measures”.Selinsing, Felda Block 7, Buffalo Reef
December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022
Operating results Unit
Ore mined t 332,684 108,860 589,588 216,251
Wa s te removed (1) t 2,673,041 2,108,615 4,788,251 3,708,652
Stripping ratio 8.03 19.37 8.12 17.15
Ore s tockpiled t 383,720 151,830 383,720 151,830
Gold Oxide Production
Ore proces s ed t - 62,817 - 195,264
Average ore hea d gra de g/t Au - 1.03 - 1.03
Proces s recovery % - 42.10 - 44.90
Gold recovered oz - 1,056 - 3,087
Gold produced oz - 1,498 - 3,563
Gold s old oz - 3,350 - 3,750
Gold Sulphide Production
Ore proces s ed t 192,217 9,574 369,711 9,574
Average ore hea d gra de g/t Au 1.55 1.81 1.68 1.81
Proces s recovery % 71.10 31.70 70.34 31.70
Gold produced oz 6,809 28 14,052 28
Gold s old oz 6,967 - 11,574 -
Gold concentrate s old DMT 869 - 869 -
Financial results
Gold s ales US$’000 10,997 5,871 17,908 6,580
Gros s margin US$’000 4,769 823 7,778 883
Weighted average gold price
London Fix PM US$/oz 1,971 1,749 1,949 1,751
Realized price (2)(5) - oxide production US$/oz - 1,753 - 1,755
Realized price (5) - s ulphide production US$/oz 1,946 - 1,940 -
Cash costs per ounce sold (3)(5)
Cas h cos t per ounce - oxide production US$/oz - 1,507 - 1,519
Cas h cos t per ounce - s ulphide production US$/oz 894 - 875 -
All-in sustaining costs per ounce (4)(5)
Total all-in s us taining cos t per ounce US$/oz 1,175 1,627 1,088 1,646
Three months ended Six months ended
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
6 | P a g e
Figure 2: Gold production and cash costs per ounce Figure 3: Quarterly Average Gold Price
1.3.3 Exploration
Malaysia
There was no exploration drilling undertaken at Selinsing during the quarter to preserve cash during the final stages of the sulphide plant
ramp up. Exploration activities to identify additional oxide and sulphide mineralisation are expected to resume during later stages of
FY2024.
Western Australia
As part of the corporate development plan, the Company has started to review the results from Murchison Gold Project subsequent to
the commencement of concentrate production at Selinsing. This includes reassessing the regional exploration plan based on the previous
two phases of drilling results and assess the scoping study that reviewed by SRK in 2018 and potential cash flow generation. It has also
carried out a new core shed construction targeting completion in March 2024.
1.4 FY2024 Activity Highlights
• On September 22, 2023, the Company reported that the Selinsing Gold Mine in Malaysia achieved commercial production, operating
at 90% of its designed production capacity for 30 consecutive days in August 2023. During this period, the mill's availability was 94%.
• On November 22, 2023, the Company announced the results from its Annual General Meeting of shareholders. Resolutions tabled
at the AGM as proposed in the Information Circular dated October 11, 2023. Each resolution had been approved by more than 79%
of the shares voted.
• On January 18, 2024, the company provided with an operational update of the Selinsing Gold Mine in Malaysia that the sulphide
plant production performance has been further optimized and stabilized; and
• On January 18, 2024, the Company announced the grant of a total of 3.4 million restricted share units and 3.8 million incentive stock
options to its directors, officers and employees rewarding of their milestone achievement of sulphide gold concentrate production
on target.
• On February 2, 2024, subsequent to December 31, 2023, Monument and Odyssey agreed to defer the milestone performance
consideration payment date by an additional two weeks until February 16, 2024. The payment of AUD$1.00 million plus interest
was received on February 23, 2024.
2. PROJECT UPDATE
2.1 Selinsing Gold Portfolio
The Selinsing Gold Portfolio is located in Pahang State, Malaysia. It includes the Selinsing Gold property (“Selinsing”), the Buffalo Reef
property (“Buffalo Reef”), the Felda Land (“Felda”) and the Famehub properties (“Famehub”). Buffalo Reef lies continuously and
contiguously along the gold trend upon which the Selinsing Gold Property is located. Both Felda and Famehub are located east and north
of the Selinsing and Buffalo Reef properties. The 1.0 million tonnes per annum gold processing plant is situated at the Selinsing site, which
provides easy access to all the Company’s gold properties.
Among those properties, Selinsing and Buffalo Reef are primary gold properties acquired on June 25, 2007 and are at the development
and production stage while others are at the exploration and evaluation stage except Felda Block 7.0
500
1,000
1,500
2,000
2,500
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q3 Fiscal
2022
Q4 Fiscal
2022
Q1 Fiscal
2023
Q2 Fiscal
2023
Q3 Fiscal
2023
Q4 Fiscal
2023
Q1 Fiscal
2024
Q2 Fiscal
2024
Total Cash Costs (US$/oz)
Gold Production (Ounces)
Gold production (all) Oxide plant cash cost per ounce
Flotation plant cash cost per ounce1,500
1,600
1,700
1,800
1,900
2,000
Q3 Fiscal
2022
Q4 Fiscal
2022
Q1 Fiscal
2023
Q2 Fiscal
2023
Q3 Fiscal
2023
Q4 Fiscal
2023
Q1 Fiscal
2024
Q2 Fiscal
2024
US$/oz
London Fix PM Monument realized (Gold bullion & Gold Conc)
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
7 | P a g e
The Company acquired exclusive irrevocable exploration licenses over 896 acres of Felda through its subsidiary Able Return Sdn Bhd from
the Settlers, with consent from the Federal Land Development Authority. Pursuant to these agreements with the Settlers, and subject to
regulatory approval, certain portions of Felda can be converted to mining leases upon exploration success at the Company’s discretion.
The exclusive mining permits are automatically assigned for mining to the Company in the event of approval of the mining leases obtained
by those Settlers. In October 2017, a portion of Felda (“Felda Block 7”) was converted into proprietary mining leases.
Famehub was acquired in September 2010 and covers an area of approximately 32,000 acres of prospective exploration land to the north
of Buffalo Reef and east of the Selinsing Gold Mine. Snowden completed a NI 43-101 Technical Report on Famehub dated August 2010.
The Company targets the consolidation of Selinsing, Buffalo Reef and Famehub, which are all situated around the Selinsing Gold Mine, as
a long-term strategic exploration portfolio in order to extend the life of the mine.
2.1.1 Resources and Reserves and Results of the Feasibility Study
According to the Snowden NI 43-101 Report dated January 31, 2019, the Company has Proven and Probable Mineral Reserves of 5.7
million tonnes at the Selinsing Gold Mine, including the Selinsing and the adjacent Buffalo Reef and Felda Block 7 deposits in Pahang State,
Malaysia. All Mineral Reserves and Mineral Resources were updated by Snowden as Independent Qualified Person defined under NI43-
101 standards.
The tables below summarize the estimated Mineral Reserves and Mineral Resources reported by classification and ore type, all expressed
in metric tonnes and troy ounces (1 ounce = 31.1035 g). The updated Mineral Reserves are estimated using an average gold price of $1,300
per ounce.
*Proven Reserve is entirely stockpile material;
**Probable Oxide Reserve comprises oxide ore in Selinsing, Buffalo Reef, Felda deposits, and in Selinsing old tailings; Probable Transition and
Sulphide Reserves comprise ore in Selinsing, Buffalo Reef and Felda deposits.
*Measured Resource is entirely stockpile material;
**Indicated Oxide Resource is a combination of oxide mineralization occurring in Selinsing, Buffalo Reef and Felda deposits plus Selinsing old
tailings material; Indicated Transition and Sulphide Resources comprise mineralization occurring in Selinsing, Buffalo Reef and Felda deposits;
***Inferred Resource comprises mineralization occurring in Selinsing, Buffalo Reef and Felda deposits.
Based on these Reserves, the 2019 Feasibility Study has demonstrated an approximately six-year life of mine (LOM) with a net present
value (NPV) of $27.56 million based on reported oxide and sulphide ore Reserves as of March 2018. Over the six-year LOM, a total of 5.7
million tonnes of ore would be treated at an average grade of 1.45g/t Au for 223koz at a cost of $863.67 per ounce. At a gold price of
$1,300 per ounce, the Selinsing Gold Mine Project would generate net cash flow after tax of $97.00 million from operations, or $45.00
million net of capital expenditure.
The opportunity to consider Inferred Resources was discussed in the Feasibility Study. The Inferred Mineral Resource inside the Reserve
open pit designs potentially contains an additional 20koz of gold. The Inferred Mineral Resource external to the open pit design contains
130koz of gold. Recommendations have been made to initiate further exploration programs aimed at the conversion of Inferred Mineral
Resources into Indicated Mineral Resources. Should those conversions be successful, the Mineral Reserves could potentially be
significantly increased. The Selinsing Gold Mine has a proven record in converting oxide Inferred Mineral Resources to recovered ounces,
even though historical records should not be used as an indicator of future performance.Category
kTonnes g/t Au (kOz) kTonnes g/t Au (kOz) kTonnes g/t Au (kOz) kTonnes g/t Au (kOz)
Proven* 1,265 0.47 19 - - - 45 1.53 2 1,310 0.51 21
Probable** 991 0.91 29 757 1.72 41.9 2,680 2.03 175.1 4,428 1.73 246
P+P 2,256 0.67 48 757 1.72 42 2,725 2.02 177 5,738 1.45 267
Selinsing-Buffalo Reef/Felda Reserves as of March 31, 2018 (Snowden)
OXIDE (above approx. 0.4 g/t Au
cut-off)
TRANSITION (above approx. 0.75
g/t Au cut-off)
SULPHIDE (above approx. 0.75 g/t
Au cut-off)
OXIDE + TRANSITION +
SULPHIDE
Mineral Reserves (based on a US$1,300/oz gold price)Category
kTonnes g/t Au (kOz) kTonnes g/t Au (kOz) kTonnes g/t Au (kOz) kTonnes g/t Au (kOz)
Measured* 1,265 0.47 19 - - - 45 1.53 2 1,310 0.51 21
Indicated** 1,533 0.85 42 1,086 1.49 52 8,052 1.60 415 10,671 1.48 509
M+I 2,798 0.68 61 1,086 1.49 52 8,097 1.60 417 11,981 1.38 530
Inferred*** 349 1.05 11.8 485 1.22 19 5,563 1.79 319 6,397 1.70 350
Mineral Resources, reported inclusive of Reserves (based on a potential US$2,400/oz gold price)
Selinsing-Buffalo Reef/Felda Resources as of March 31, 2018 (Snowden)
OXIDE (above 0.3 g/t Au cut-off) TRANSITION (above 0.5 g/t Au cut-
off)
SULPHIDE (above 0.5 g/t Au cut-
off)
OXIDE + TRANSITION +
SULPHIDE
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
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2.1.2 Production
Mining:
During Q2 2024, mining of Buffalo Reef BRC2 Stages 1 and 2, BRC3 Stages 1 and 2, and BRC4 Stage 1 pits progressed with both transition
and fresh ore delivered to the ROM pad. The introduction of extended hours for drilling and mining, along with the arrival of a new grade
control drill rig in August 2023, increased the onsite rig count to ten. The drilling contractor expanded their team and extended drill hours,
enhancing productivity. Additionally, a 13-tonne capacity emulsion tanker stationed at the mine site enabled blasting up to five days a
week, dependent on drilling progress.
A total of 3,005,725 tonnes of material were mined during Q2 2024, a 36% increase from 2,217,475 tonnes during Q2 2023. This included
332,684 tonnes of ore mined, up by 206% from 108,860 ore tonnes mined during Q2 2023, and 2,673,041 tonnes of waste mined, up by
27% from 2,108,615 during Q2 2023. The substantial increase in total material mined was primarily due to the expansion at Buffalo Reef
and Felda, aimed at accessing high-grade sulphide ore, resulting in increased ore mined and waste removal. Consequently, the stripping
ratio improved to 8.03, down from 19.37 in the same period last year.
Ore stockpiles also achieved a significant increase, reaching 383,720 tonnes as of December 31, 2023, compared to 151,830 tonnes at the
end of the same period last year. This build-up was part of a strategic move to accelerate the daily mining rate and prepare ample stockpiles
before the onset of the Monsoon season.
Processing:
During Q2 2024, the throughput tonnage for the sulphide plant was 192,217 tonnes (Q2 2023: 9,574 tonnes), resulting in the production
of 6,809 ounces of gold at a feed grade of 1.55 g/t from the flotation plant (Q2 2023: 28 ounces). The overall mill availability for the
flotation plant during the quarter was 89.50%, which is still lower than planned. This was primarily due to the frequent failure of the
pressure filter cloths and logistics delays, which continue to be a significant issue. To address this, new and higher permeability filter cloths
have been sourced from both local and international vendors, as well as directly from the filter press supplier McLanahan in the U.S.
Total processing costs for Q2 2024 were $2.38 million compared to $2.63 million during Q2 2023. This amount was entirely attributed to
the sulphide treatment plant (Q2 2023: $nil), as there were no costs incurred for the oxide treatment plant (Q2 2023: $2.63 million). The
cost per tonne of sulphide ore processed was $11.23 during Q2 2024.
Figures 4 and 5 illustrate production results on a consolidated basis including Selinsing, Buffalo Reef, Felda Block 7 and Peranggih.
Figure 4: Gold production and cash costs per ounce Figure 5: Selinsing Gold Mine: Operating Metrics
2.1.3 Development
Project development work at Selinsing includes the Sulphide flotation plant construction, pre-stripping work and flotation test work on
samples of stockpiled transition ore.
Selinsing sulphide project development
Procurement
Routine procurement of spare parts, reagents, and consumables continued throughout the quarter. The bulk bagging system has now
arrived on site and the implementation is expected to occur before the end of the current fiscal year.0
500
1,000
1,500
2,000
2,500
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q3 Fiscal
2022
Q4 Fiscal
2022
Q1 Fiscal
2023
Q2 Fiscal
2023
Q3 Fiscal
2023
Q4 Fiscal
2023
Q1 Fiscal
2024
Q2 Fiscal
2024
Total Cash Costs (US$/oz)
Gold Production (Ounces)
Gold production (all) Oxide plant cash cost per ounce
Flotation plant cash cost per ounce0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
Q3
Fiscal
2022
Q4
Fiscal
2022
Q1
Fiscal
2023
Q2
Fiscal
2023
Q3
Fiscal
2023
Q4
Fiscal
2023
Q1
Fiscal
2024
Q2
Fiscal
2024
Tonnes
Ore mined Ore processed
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
9 | P a g e
R&D Work
Test work was conducted to assess the quality of flotation chemicals provided by alternative vendors. Additionally, flotation test work
aimed to produce separate stibnite and arsenopyrite concentrates, but this achieved limited success. Concentrates with up to 30%
antimony were produced with an 88% recovery rate; however, the overall gold recovery was low.
Flotation construction
The flotation plant's construction was fully completed and commissioned in December 2022. Certain facilities yet to be completed include
the concentrate warehouse which was primarily done during the quarter. The bagging system, while on site, is still pending finalization.
Mine Development
Construction of the TSF main embankment resumed in August 2023 and was completed by December 2023. Total fill work progress was
100.00% at the end of the quarter.
The explosives depot that was completed and commissioned in July 2023, addressed explosives delivery shortages and supported frequent
blasting activities. Additionally, the old core shed was transformed into a larger sample preparation facility, now capable of processing up
to 700 grade control samples daily, with new staff and equipment, including a recently delivered pulveriser.
2.1.4 Exploration
Total exploration expenditures for the three months ended December 31, 2023, excluding development activities at the Selinsing Gold
Portfolio, were $0.01 million, compared to $0.17 million for the same period last year. No drilling exploration activities took place in the
quarter.
2.1.5 Environment, Safety and Health
The Company is committed to comply with Malaysia’s environmental laws within the mandates of government authorities:
• The Department of Minerals and Geoscience (“JMG”) for mining and processing activities including environmental jurisdiction
inside the Company’s project tenements;
• The Department of the Environment, whose jurisdiction lies outside of the Company’s tenements, regarding quality of air and
water discharge; and
• The Department of Safety and Health (“DOSH”), primarily concerned with occupational safety and health, lifting equipment,
pressurized vessels, storage, and handling of hazardous chemicals.
During Q2 2024, the Company recorded no lost time injury at the Selinsing operation and a total of 14 incidents. These incidents comprised
10 property damage or dangerous occurrences, 2 motor vehicle accidents, and 2 cases requiring medical treatment. During YTD 2024, the
Company recorded one lost time injury at the Selinsing operation and reported to DOSH, alongside a total of 25 other incidents. These
incidents comprised 17 property damage or dangerous occurrences, 3 motor vehicle accidents, 2 near misses, 2 cases requiring medical
treatment, and 1 case requiring first aid treatment. All incidents were communicated to staff during safety toolbox meetings to enhance
awareness and prevention.
In line with our commitment to safety, the Health, Safety, and Environment (HSE) department conducted routine inspections across
various departments including mining, the plant, laboratory, and warehouse. These inspections are part of our ongoing efforts to maintain
and improve safety standards at our operations.
2.2 Murchison Gold Portfolio
Western Australia
The Murchison Gold Portfolio was acquired in 2014 and consists of the 100% owned Burnakura and Gabanintha projects as well as the
Tuckanarra gold property in which Monument has a 20% free carried interest. The portfolio is located in the Murchison Gold Field, a highly
prospective historical gold province within the Murchison District of Western Australia. Burnakura and Gabanintha are located 40km
southeast of Meekatharra, and 765km northeast of Perth. Tuckanarra is located approximately 40km southwest of Burnakura. The
Murchison Gold Portfolio includes a number of mining and exploration tenements and lease applications covering approximately 230
square kilometres (including the whole area of Tuckanarra which Monument has a 20% free carried interest) prospective for resource
extension, a fully operational gold processing plant at the Burnakura site, a newly developed camp site and necessary infrastructure.
Underground mining was carried out by the previous owner of the Burnakura gold processing plant for several months and shortly
thereafter it was placed into administration.
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
10 | P a g e
2.2.1 Mineral Resources
The Murchison Gold Project consisted of a historical Indicated Mineral Resource of 300koz Au, and a historical Inferred Mineral Resource
of 344koz Au reported to a 1.0g/t gold lower cut-off, at the time of the acquisition in 2014, within a number of previously operated open
pits and an underground mine. The Tuckanarra JV contains a total of 81koz gold of this historical resource. The Company believes that the
quality of the data supporting the Mineral Resources meets industry standards and considers this historical resource estimate to be
relevant to its ongoing review of the Murchison Gold Project.
The current updated Mineral Resource estimation at Burnakura reported in the SRK NI 43-101 Report dated July 2018, comprised of an
Indicated Mineral Resource of 4.043Mt @ 2.3g/t gold for 293koz and an Inferred Mineral Resource of 1.551Mt @ 1.8g/t gold for 88koz at
a 0.5g/t gold grade cut-off for open pit and 3.0 g/t gold grade cut-off for underground (Figure 6). The Company has continued to improve
its internal mining studies which will contribute towards the preparation of a Preliminary Economic Assessment, in respect of the
Burnakura deposits.
Figure 6: 2018 Mineral Resource estimate breakdown for Burnakura Project
Notes:
(1) Small discrepancies may occur due to rounding.
(2) All Mineral Resources have been reported on a dry tonnage basis.
(3) SRK is unaware of any issues that materially affect the Mineral Resources in a detrimental sense.
(4) Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
(5) Mineral Resources estimated by David Slater (Principal Consultant, SRK), QP.
(6) *Open pit Resources (NOA1-6, ANA, Authaal, Federal City) are constrained in a Lerchs Grossman pit shell.
**Underground Resources (NOA7-8) are constrained to >3g/t Au and 200m vertical depth.
2.2.2 Development
Development work at Murchison is aimed at identifying and testing both regional exploration targets away from known mineralization,
and also extensions to existing Resources, while continuing to assess early production opportunities.
A mine plan was completed by management and an independent review conducted by SRK during fiscal year 2021, with the
recommendations received by the board in May 2021. The scope of the SRK review had been extended to cover geotechnics, hydrology,
environmental compliance, in addition to resource modelling, pit optimization, mine scheduling, and metallurgical recoveries study. From
this, the decision was made to identify further exploration targets and extend the exploration program.
The Company continues to ensure that the plant and other facilities are operationally ready through its care and maintenance program to
ensure efficient commissioning in the future. Site accommodations and catering are fully functional in readiness for the Company’s
personnel and mining contractors when a restart is approved.Deposit Category Lower cut-off
(Au g/t)
Tonnes
(Kt)
Au
(g/t)
Gold
(Koz)
Indicated 0.5 1,030 2.1 68
Inferred 0.5 609 2.3 44
Indicated 0.5 2,141 1.6 107
Inferred 0.5 92 1.5 4
Indicated 0.5 - - -
Inferred 0.5 556 1.4 25
Indicated 0.5 96 1.3 4
Inferred 0.5 259 1.3 11
TOTAL* Indicated 0.5 3,267 1.7 179
Inferred 0.5 1,516 1.8 84
Indicated 3.0 776 4.6 114
Inferred 3.0 35 3.9 4
Indicated 4,043 2.3 293
Inferred 1,551 1.8 88
GRAND-TOTAL
NOA7-8**
ANA
Updated Mineral Resources, Burnakura Gold Project (SRK, July 2018)
NOA1-6
Authaal
Federal City
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
11 | P a g e
2.2.3 Exploration
Monument’s wholly-owned Burnakura and Gabanintha projects together cover approximately 160 km2 of highly prospective gold-bearing
Archean Greenstone terrane, and a significant standalone greenfield discovery would materially change the scope of the Murchison Gold
Project. Alternatively, a number of smaller, shallow, satellite deposits within trucking distance of the Burnakura plant could also provide
meaningful additions to the Company’s existing Mineral Resource base.
An extensive two-year exploration program at Murchison during fiscal years 2022 and 2023 aimed to potentially establish Murchison as a
cornerstone gold project for the Company. The significant findings were announced at Burnakura, and exploration intended to move into
Gabanintha gold project in 2024.
Burnakura
During Q2 2024, the Company continued to review and update internal studies for production opportunities at Burnakura, following the
completion of the Selinsing Sulfide Gold Project during fiscal 2023. During the quarter, construction continued on a new drill core storage
yard located at Burnakura with optimized racking, cutting, and core logging facilities which will be completed during Q3 2024.
Gabanintha
Review of Gabanintha Gold Project historical Resources continued as part of updating internal studies. Historical data received from
regulators in Q2 2024 was reviewed in the quarter. Planning of infill drilling requirements for the existing main pits was completed for
corporate review. No other activities were carried out on this project.
Tuckanarra
Odyssey and Monument are joint venture partners for the Tuckanarra Project development. Odyssey has control over exploration with its
80% equity interest, while Monument has a 20% free carried interest.
On August 3, 2023, the Company was notified by Odyssey that a major milestone had been achieved at the Tuckanarra Gold Project. This
triggered the Performance Payment to become due. Under an amended arrangement between the Company and Odyssey, both parties
agreed to defer the AUD$1.00 million milestone performance consideration payment. This payment was scheduled to be made within six
months after the date of satisfaction of the milestone, specifically by February 2, 2024. In consideration for the deferral of the performance
payment, Odyssey has agreed to pay the Company interest on the outstanding amount. The interest rate will be equal to the US Secured
Overnight Financing Rate plus two percent (2.00%), compounding monthly. This interest will start accruing from the date which is 5
business days after the satisfaction of the milestone and will continue until the performance payment is made. Additionally, the Company
has reserved the right to call back the performance payment at any time with 14 days' notice, at its sole discretion, starting five days after
the date of satisfaction of the milestone performance.
Subsequent to December 31, 2023, Odyssey and Monument agreed upon an additional two-week extension, with payment, plus interest
up to the date of payment, expected to be received on February 16, 2024. The payment of AUD$1.00 million plus interest was received
on February 23, 2024.
The scientific and technical information in Section 2 has been prepared, reviewed and approved by Mr. Roger Stangler, B.Sc., MEng,
FAusIMM, MAIG, a Qualified Person defined in accordance with National Policy 43-101, retained by Golder Associates Pty Ltd.
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
12 | P a g e
3. OVERVIEW OF FINANCIAL PEFORMANCE
3.1 SUMMARY
For the three months ending December 31, 2023, the sulphide treatment plant processed ore primarily from Buffalo Reef and Felda Block
7. The transition to sulphide ore flotation production was fully implemented in Q3 2023. Fluctuations in the operational gross margin are
anticipated due to the shift from CIL production to sulphide flotation, as well as variations in ore grade and recovery rates.
Figure 8: Financial Highlights
The quarterly financial results of the Company are outlined for the past eight quarters in Figure 8 above. The overall financial results of
the Company reflect its income from gold mining operations, ongoing corporate business development, administrative costs and other
income or expenses such as foreign currency exchange gains or losses. The realized gold price is a non-IFRS measurement. Readers should
refer to section 15 “Non-IFRS Performance Measures”.
For the six months ended December 31, 2023, net loss was $0.68 million or a ($0.00) loss per basic and diluted share compared to a net
loss of $3.49 million or a ($0.01) loss per basic and diluted share for the six months ended December 31, 2022.
The decrease in net loss was attributable to the following factors:
• Higher head grade and recovery at the flotation plant;
• Higher gold production and higher realized gold price resulting in increased revenue;
• Improved gross margin from mining operations.
Partially offset by:
• An increase in depreciation and amortization expenses resulting from more gold sold;
• An increase in income tax expenses resulting from an increase in both current income and deferred tax expenses; and
• An increase in foreign exchange loss.Fiscal 2024
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
$ $ $ $ $ $ $ $
Revenues (000’s) 6,160 851 710 5,871 2,629 3,177 6,911 10,997
Weighted average gold price (per ounce)
London Fix PM 1,911 1,873 1,767 1,749 1,881 1,950 1,928 1,971
Realized price - sulphide production na na na na na 1,949 1,932 1,946
Realized price - oxide production 1,911 1,890 1,772 1,753 1,878 1,883 na na
Net earnings (loss) before other items and tax (000’s) (1,957) (342) (703) (1,460) (894) (891) 1,073 1,818
Earnings per share before other items and tax
Basic (0.01) (0.00) (0.00) (0.00) (0.00) (0.00) 0.00 0.01
Diluted (0.01) (0.00) (0.00) (0.00) (0.00) (0.00) 0.00 0.01
Net earnings (loss) after other items and tax (000’s) (2,840) 112 (289) (3,196) (837) (1,951) (85) (595)
Earnings (loss) per share:
Basic (0.01) 0.00 (0.00) (0.01) (0.00) (0.01) (0.00) (0.00)
Diluted (0.01) 0.00 (0.00) (0.01) (0.00) (0.01) (0.00) (0.00)
Fiscal 2023Fiscal 2022
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
13 | P a g e
3.2 Operating Results: Sales and Production Costs
Three months ended December 31, 2023
For the three months ended December 31, 2023, mining operations
before non-cash depreciation and amortization generated gross
margin of $4.77 million, entirely from the sulphide operations, an
increase of $3.95 million from $0.82 million during the three months
ended December 31, 2022, from the oxide operations. Refer to Figure
9 for the evolution of the gross margin over the last eight quarters.
After deduction of non-cash depreciation and amortization of $2.31
million, accretion of $0.05 million and operation expenses of $0.04
million, income from mining operations was $2.31 million, compared
to a loss of $1.00 million in the same period last year.
Gold produced from the sulphide flotation plant was 6,809 oz,
resulting from the processing of 192,217 tonnes of ore at a feed grade
of 1.55 g/t gold and an improving recovery rate of 71.10%.
Sales
Gold concentrate sales generated revenue of $11.00 million for the
three months ended December 31, 2023, entirely from the sulphide
operations. 6,967 ounces of gold were sold at an average realized
price of $1,946 per ounce. Refer to Figure 10 for the revenue over the
last eight quarters.
Figure 9: Gross margin
Figure 10: Selinsing Gold Mine: Revenue
Production Costs
Total production costs for the three months ended December 31,
2023 were $6.23 million compared to $5.05 million during the three
months ended December 31, 2022. The increase was due to higher
mining volumes and greater processing rates achieved by the
sulphide plant at Selinsing.
The cash cost per gold ounce sold from the sulphide operations was
$894 for Q2 2024 (Q2 2023: $1,507 for oxide operations).
Figure 11: Cash production costs by quarter-2,000
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
Q3
Fiscal
2022
Q4
Fiscal
2022
Q1
Fiscal
2023
Q2
Fiscal
2023
Q3
Fiscal
2023
Q4
Fiscal
2023
Q1
Fiscal
2024
Q2
Fiscal
2024
US$/Ounce
Cash cost per ounce Average realized price Margin0
2,000
4,000
6,000
8,000
10,000
12,000
Q3
Fiscal
2022
Q4
Fiscal
2022
Q1
Fiscal
2023
Q2
Fiscal
2023
Q3
Fiscal
2023
Q4
Fiscal
2023
Q1
Fiscal
2024
Q2
Fiscal
2024
Revenue (US$'000)0
100
200
300
400
500
600
700
800
900
1,000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
1,900
2,000
Q3 Fiscal
2022
Q4 Fiscal
2022
Q1 Fiscal
2023
Q2 Fiscal
2023
Q3 Fiscal
2023
Q4 Fiscal
2023
Q1 Fiscal
2024
Q2 Fiscal
2024
Cash Cost (US$/oz)
Mining Processing Royalties Operations, net of silver recovery
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
14 | P a g e
Figure 12: Production costs
Mining
Mining activities continued to focus on Buffalo Reef BRC2 Stages 1 and 2, BRC3 Stages 1 and 2, and BRC4 Stage 1 pits, supplying ore to the
Selinsing sulphide plant during the three months ended December 31, 2023.
For the three months ended December 31, 2023, all mining costs related to the sulphide operations compared to the oxide operations
during the three months ended December 31, 2022. Mining cash cost per ounce was $298 during Q2 2024 compared to $545 during Q2
2023. Total material mined for the sulphide operations during the quarter increased compared to the same period last year for the oxide
operations. Mining production included total material mined of 3,005,725 tonnes (Q2 2023: 2,217,475 tonnes), including 332,684 tonnes
of ore (Q2 2023: 108,860 tonnes) and 2,673,041 tonnes of waste (Q2 2023: 2,108,615 tonnes). The stripping ratio decreased to 8.03 for
the three months ended December 31, 2023 as compared to 19.37 for the three months ended December 31, 2022. The cost of waste fill
related to cutback and TSF upgrade is capital in nature and is not included in the mining operating costs. Total mining costs per tonne
mined in Q2 2024 increased by 5% to $1.75 per tonne from $1.67 per tonne in Q2 2023, mainly resulted from harder materials and higher
diesel and explosives prices.
Processing
The processing costs related to the sulphide flotation production for the three months ended December 31, 2023 were $2.38 million
compared to $2.63 million during the three months ended December 31, 2022 for the oxide operations. The flotation plant processing
cost per tonne during this quarter was $11.23 per tonne, while it was $17.48 per tonne for the same period last year for sole oxide
production. The mill feed for the three months ending December 31, 2023, was 192,217 tonnes of sulphide ore exclusively for flotation
production. The CIL circuit has been on hold since November 2022, although CIL tank cleaning and carbon stripping continued until April
2023.
Royalties
For the three months ended December 31, 2023 total royalties increased to $1.20 million, compared to $0.59 million during the three
months ended December 31, 2022, due to increased gold produced and sold, and greater realized gold price. Royalties are affected by the
average gold spot price and the amount of gold produced and sold in the period.
Operation expenses
For the three months ended December 31, 2023, $0.04 million was incurred to maintain the oxide CIL plant to potentially resume in the
future compared to $nil during the three months ended December 31, 2022.
Non-cash Costs
For the three months ended December 31, 2023, non-cash production expenses amounted to $2.42 million (three months ended
December 31, 2022: $1.82 million). Included therein are depreciation and amortization of $2.37 million (three months ended December
31, 2022: $1.77 million) and accretion of asset retirement obligations of $0.05 million (three months ended December 31, 2022: $0.05
million).
Six months ended December 31, 2023
For the six months ended December 31, 2023, mining operations before non-cash depreciation and amortization generated a gross margin
of $7.78 million, an increase of $6.90 million from $0.88 million for the six months ended December 31, 2022. After deduction of non-cash
depreciation and amortization of $3.78 million (six months ended December 31, 2022: $2.03 million), accretion of $0.11 million (six months
ended December 31, 2022: $0.09 million) and operation expenses of $0.07 million (six months ended December 31, 2022: $nil), income
from mining operations was $3.82 million compared to a loss of $1.24 million during the six months ended December 31, 2022.
There was no gold produced from the CIL plant during the six months ended December 31, 2023, as the CIL plant was placed on care and
maintenance in mid-November 2022. During the six months ended December 31, 2022, 3,563 ounces of gold were produced from 195,264
tonnes of ore processed through the CIL plant at a recovery rate at 44.88%, resulting in a cash cost per gold ounce sold of $1,755.December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022
Production cost breakdown ('000s) $ $ $ $
Mining 2,079 1,824 3,302 2,077
Processing 2,377 2,625 3,986 2,933
Royalties 1,196 588 1,990 661
Operations, net of silver recovery 576 11 852 26
Total production costs 6,228 5,048 10,130 5,697
Three months ended Six months ended
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
15 | P a g e
During the six months ended December 31, 2023, 14,052 ounces of gold were produced from the sulphide flotation, resulting from the
processing of 369,711 tonnes of ore at an average feed grade of 1.68 g/t. An average recovery of 70.34% was achieved thanks to higher
grade transition and fresh sulphide ore fed to the sulphide flotation plant operation. Improvements to the flotation plant were also made
and contributed to the better production metrics. During the six months ended December 31, 2022, 28 ounces of gold were produced
from 9,574 tonnes of ore processed through the flotation plant at an average feed grade of 1.81 g/t and a recovery rate at 31.70%.
Sales
Gold concentrate sales generated revenue of $17.91 million for the six months ended December 31, 2023, compared to $6.58 million for
the six months ended December 31, 2022. 11,574 ounces of gold were sold at an average realized gold price of $1,940 per ounce from the
sulphide operations (six months ended December 31, 2022: $nil), whereas revenue from the oxide operations were $nil compared to
$6.58 million during the six months ended December 31, 2022, as a result of 3,750 ounces of gold sold at an average realized price of
$1,755/oz.
Production Costs
Total production costs for the six months ended December 31, 2023 were $10.13 million compared to $5.70 million during the six months
ended December 31, 2022. The increase was due to higher mining costs and higher processing costs related to an increase in overall mining
volumes and ore processed, with the CIL plant on hold since mid-November 2022 and the sulphide plant in ramp-up, offset by lower cost
per ounce of gold sold.
Cash cost per gold ounce sold from the sulphide operations was $875 (six months ended December 31, 2022: $nil). Cash cost per gold
ounce sold from the oxide operations was $1,519 during the six months ended December 31,2022.
Mining
Mining activities continued to focus on Buffalo Reef and Felda Block 7. During the six months ended December 31, 2023, several open pits
supplied ore to the Selinsing Flotation Plant, including Buffalo Reef BRC2 Stages 1 and 2, BRC3 Stages 1 and 2, and BRC4 Stage 1 pits.
For the six months ended December 31, 2023, all mining costs were related to the sulphide operations and the mining cash cost per ounce
was $285 compared to $554 during YTD 2023 for the oxide operations. Mine production included total material mined of 5,377,840 tonnes
(YTD 2023: 3,924,904 tonnes), comprising 589,588 tonnes of ore (YTD 2023: 216,251 tonnes) and 4,788,252 tonnes of waste (YTD 2023:
3,708,652 tonnes). Based on the current six months’ mining sequence, the stripping ratio decreased to 8.12 for the six months ended
December 31, 2023 as compared to 17.15 for the same period last year. The cost of waste fill related to cutback and TSF upgrade is capital
in nature and is not included in mining operating costs. Cost per tonne mined increased by 12% from $1.83/t to $1.64/t due to higher
drilling and blasting costs for harder materials and higher diesel and explosives prices.
Processing
For the six months ended December 31, 2023, total processing costs related to the sulphide operations and were $3.99 million compared
to $2.93 million related to the oxide operations during the six months ended December 31, 2022. Processing cost per tonne was $11.85/t
for the six months ended December 31, 2023, a 21% decrease from $15.00/t during the six months ended December 31, 2022.
Mill feed for the six months ended December 31, 2023 was 369,711 tonnes of sulphide ore for the flotation operations, compared to
39,353 tonnes of oxide ore, 48,429 tonnes of old tailings and 107,482 tonnes of leachable sulphide ore for the oxide operations and 9,574
tonnes of non-leachable sulphide ore for the flotation operations. The CIL circuit was placed on care and maintenance in mid-November
2022, with CIL tank cleaning and carbon stripping continued until April 2023. Total ore processed by the CIL plant was nil during the six
months ended December 31, 2023 compared to 195,264 tonnes during the six months ended December 31, 2022.
Royalties
For the six months ended December 31, 2023, royalties increased by 201% to $1.99 million compared to $0.66 million during the six
months ended December 31, 2022, due to increased gold sales and greater realized gold price. Royalties paid are affected by the average
gold spot price and the amount of gold produced and sold in the period.
Operation expenses
For the six months ended December 31, 2023, $0.07 million was incurred to maintain the CIL plant for a potential future restart, compared
to $nil during the six months ended December 31, 2022.
Non-cash Costs
For the six months ended December 31, 2023, non-cash production expenses amounted to $3.88 million (six months ended December 31,
2022: $2.13 million). Included therein are depreciation and amortization of $3.78 million (six months ended December 31, 2022: $2.03
million) and accretion of asset retirement obligations of $0.11 million (six months ended December 31, 2022: $0.09 million).
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
16 | P a g e
3.3 Corporate General and Administrative
Figure 13: Corporate Costs (000’s)
Corporate expenses for the three months ended December 31, 2023 were $0.49 million (three months ended December 31, 2022: $0.46
million) It is an increase of $0.03 million, mainly attributable to an increase in professional and consulting fees, offset by a decrease in
general and administration costs.
Corporate expenses for the six months ended December 31, 2023 were $0.93 million compared to $0.92 million for the six months ended
December 31, 2022.
3.4 Other (Loss) Income
For the three months ended December 31, 2023, interest income was $0.08 million compared to $0.09 million during the three months
ended December 31, 2022. Gross revenue royalty income was $nil compared to $0.01 million during the three months ended December
31, 2022. Foreign currency exchange loss was $1.57 million compared to $1.90 million during the three months ended December 31, 2022.
For the six months ended December 31, 2023, interest income was $0.13 million compared to $0.16 million during the six months ended
December 31, 2022. The Company accrued $0.02 million of gross revenue royalty income for the six months ended December 31, 2023
(six months ended December 31, 2022: $0.03 million). Foreign currency exchange loss was $2.22 million compared to $1.46 million during
the six months ended December 31, 2022.
3.5 Income Taxes
Income tax expense for the three months ended December 31, 2023 was $1.11 million (three months ended December 31, 2022:
recoveries of $0.07 million), comprising of current tax expenses of $1.06 million (three months ended December 31, 2022: $nil) and
deferred tax expenses of $0.05 million (three months ended December 31, 2022: $0.07 million). Increased in income tax expense is due
to greater revenue and improved profitability at the mine.
Income tax expense for the six months ended December 31, 2023 was $1.71 million (six months ended December 31, 2022: recoveries of
$0.05 million), comprising of current tax expenses of $1.65 million (six months ended December 31, 2022: $nil) and deferred tax expenses
of $0.06 million (six months ended December 31, 2022: $0.04 million). Increased in income tax expense is due to greater revenue and
improved profitability at the mine.
4. LIQUIDITY AND FINANCIAL CONDITION
The Company’s principal cash requirements are working capital used for business development, general administration, property
maintenance and development, construction of gold treatment plant expansions, production operations at Selinsing and exploration. The
Company’s cash and cash equivalents as of December 31, 2023 was $4.84 million, a decrease of $1.12 million from June 30, 2023. The
Company’s cash and cash equivalents primarily comprised of cash held with reputable financial institutions and are invested in cash
accounts. The funds are not exposed to liquidity risk and there are no restrictions on the ability of the Company to use these funds to meet
its obligations. The Company’s restricted cash of $0.30 million (June 30, 2023: $0.29 million) represented issued letters of credit and fixed
deposits as guarantees for utilities, custom duties, and certain equipment.December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022
$ $ $ $
General and administration 251 265 502 558
Stock-based compensation 1 2 2 4
Legal, accounting and audit 113 79 205 144
Consulting fees 40 23 74 41
Shareholder communications 19 22 40 39
Travel 18 17 40 62
Regulatory compliance and filing 37 41 44 46
Amortization 13 13 26 26
Total Corporate Costs 492 462 933 920
Three months ended Six months ended
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
17 | P a g e
Cash (used in) provided by operating activities
For the three months ended December 31, 2023, the Selinsing Gold Mine generated net cash from operating activities of $2.41 million, a
decrease of $0.34 million compared to $2.75 million during the three months ended December 31, 2022.
For the six months ended December 31, 2023, the Selinsing Gold Mine generated net cash from operating activities of $2.43 million, an
increase of $0.33 million compared to $2.10 million during the six months ended December 31, 2022.
During the three and six months ended December 31, 2023, the improved profitability of the Selinsing mine was offset by an increase in
inventories, negatively impacting cash provided by operating activities by $0.85 million and $3.82 million, respectively. During the three
and six months ended December 31, 2022, reduction in inventory levels provided cash of $3.48 million and $1.65 million, respectively.
Cash (used in) provided by investing activities
For the three months ended December 31, 2023, cash used in investing activities was $2.08 million (Q2 2023: $6.08 million). $1.83 million
(Q2 2023: $5.79 million) were invested at the Selinsing mine for the sulphide project development, including Flotation Plant construction,
tailings storage facility upgrades, cutbacks, and stripping activities, while $0.23 million (Q2 2023: $0.29 million) was invested in the
Murchison exploration and evaluation projects.
For the six months ended December 31, 2023, cash used in investing activities was $3.50 million (YTD2023: $10.31 million). $3.01 million
(YTD2023: $9.69 million) were invested at the Selinsing mine for the sulphide project development, including Flotation Plant construction,
tailings storage facility upgrades, cutbacks, and stripping activities, while $0.46 million (YTD2023: $0.62 million) was invested in the
Murchison exploration and evaluation projects.
Liquidity
Currents assets on December 31, 2023 were $25.93 million (June 30, 2023: $19.23 million). The increase of $6.70 million was primarily
due to an increase in inventory of $7.18 million, a $0.50 million increase in trade and other receivables, offset by a decrease in cash and
cash equivalents by $1.12 million.
Total assets on December 31, 2023 were $134.93 million (June 30, 2023: $133.12 million). In addition to the increase in the current assets
described above, there was an increase in long-term inventory of $0.70 million. This was offset by a decrease of $5.59 million in property,
plant and equipment as a result of the amortization of the flotation plant and mineral properties at Selinsing.
Current liabilities on December 31, 2023 were $11.68 million (June 30, 2023: $9.41 million), including $10.03 million in trade payables, of
which $4.80 million were owed to a major mining contractor, Minetech (June 30, 2023: $5.30 million). During December 2023 and
subsequent to December 31, 2023, the Company made significant payments to Minetech to clear the overdue balance.
As of December 31, 2023, the total liabilities amounted to $21.42 million, compared to $18.94 million on June 30, 2023. This increase of
$2.48 million can be mainly attributed to an increase in income tax payable, as well as in accounts payable related to the mining operations.
On December 31, 2023, current assets exceeded current liabilities by $14.25 million (June 30, 2023: $9.82 million) demonstrating a strong
net working capital position. The Company believes that this is sufficient to provide funding for shorter term items such as general
administration, property care and maintenance, planned exploration, and day-to-day production at Selinsing.
With respect to longer term capital expenditure funding requirements to ensure the Company’s long-term growth, the Company considers
the cash flow generated from its operations as its primary source, complimented by the equity market when necessary, as a source of
funding for major capital projects. Another possible source of capital could be proceeds from the sale of non-core assets. These capital
sources will enable the Company to maintain an appropriate overall liquidity position.
5. CAPITAL RESOURCES
Capital Resources
The Company’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to develop and
operate its current projects and pursue strategic growth initiatives; and maintain a flexible capital structure which lowers its cost of capital.
The Company’s capital resources as of December 31, 2023 included cash and cash equivalents. The Company’s primary sources of funding
are cash flow generated from the sale of gold, debt and equity financing as well as other financial arrangements that can be reasonably
considered and available to provide financial resources to the Company.
The Company continues to assess the viability of a re-start of production at Burnakura, which could potentially provide the Company with
a second source of cash flow from the Australian operations.
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
18 | P a g e
Figure 14: Commitments and Contingencies (000’s)
Lease commitments relate to future contractually obligated payments of a long-term office lease. Mineral property obligations include
exploration expenditures and levies mandated by relevant government authorities to keep tenements in good standing. Purchase
commitments are mainly related to flotation plant construction and operations carried out in Malaysia and exploration expenditures in
Western Australia.
6. OFF BALANCE SHEET ARRANGEMENTS
None.
7. TRANSACTIONS WITH RELATED PARTIES
The Company’s related parties include key management, who have authority and responsibility for planning, directing, and controlling the
activities of the Company, directly or indirectly. Members of key management include six directors (executive and non-executive), the
Chief Executive Officer (“CEO”), the Chief Financial Officer and the Vice President of Business Development who report directly to the CEO.
The remuneration of the key management of the Company, including salaries, director fees and share-based payments is as follows:
Figure 15: Key management compensation (000’s)
Amount due to related parties as at December 31, 2023 was $0.03 million (June 30, 2023: 0.03 million) relating to director fees. Directors’
fees are paid on a quarterly basis. Any unpaid amounts due to directors are recorded in accrued liabilities and are unsecured and bear no
interest.
8. PROPOSED TRANSACTIONS
None.
9. CRITICAL ACCOUNTING ESTIMATES
Refer to Note 3 of the unaudited condensed interim consolidated financial statements as of December 31, 2023. Estimates and judgments
are continually evaluated and are based on historical experience and other factors, including expectations of future events that are
believed to be reasonable under the circumstances. The Company makes estimates and assumptions that affect amounts reported.
Significant estimates and areas where judgment is applied include: accounting for gold prepaid sale arrangements, purchase price
allocation and valuation of deferred exploration assets, ore reserve and mineral resource estimates, determination of useful lives for
property, plant and equipment, inventory valuation, exploration and evaluation expenditures, impairment of non-current assets, provision
for reclamation and remediation obligations, deferred taxes, share-based payments, derivative assets and liabilities, determination of
commencement of commercial production, title to mineral properties, realization of assets, functional currency, business combinations
and own use contracts. Actual results could differ from the Company’s use of estimates and judgements.2024 2025 2026 2027 2028 Total
$ $ $ $ $ $
Lease commitments 35 65 57 55 5 217
Mineral property obligations 421 647 783 600 598 3,049
Purchase commitments
Mine Operations 2,635 48 40 37 5 2,765
Flotation Construction 2 - - - - 2
Total 3,093 760 880 692 608 6,033December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022
$ $ $ $
Salaries 133 134 295 273
Directors’ fees 31 31 61 62
Total compensation 164 165 356 335
Three months ended Six months ended
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
19 | P a g e
10. CHANGES IN ACCOUNTING POLICY INCLUDING INITIAL ADOPTION
The unaudited condensed interim consolidated financial statements for the three and six months ended December 31, 2023, have
consistently adhered to the same accounting policies that were utilized in the audited annual consolidated financial statements for the
fiscal years ending 30 June 2023, and 2022. Starting January 1, 2023, several changes to standards, including amendments to IAS 1, IFRS
Practice Statement 2, IAS 8, and IAS 12, became effective for annual periods. The implementation of these amendments did not
significantly impact the consolidated financial statements.
11. FINANCIAL INSTRUMENTS – RISK EXPOSURE AND OTHER INSTRUMENTS
The Company’s financial instruments are classified and subsequently measured at amortized cost and include cash and cash equivalents,
restricted cash, trade and other receivables, and accounts payable and accrued liabilities. Refer to the consolidated financial statements
as of December 31, 2023 for the details of the financial statement classification and amounts of income, expenses, gains, and losses
associated with the relevant instruments. Details provided include a discussion of the significant assumptions made in determining the
fair value of financial instruments. The Company’s financial instruments are exposed to certain financial risks, including market risk, credit
risk, and liquidity risk as outlined below.
Market risk
Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices.
Market risk is comprised of three types of risk: foreign currency risk, price risk and interest rate risk. The Company mitigates market risk
by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken.
Foreign Currency risk
The Company is exposed to foreign currency risk to the extent financial instruments held by the Company are not denominated in US
dollars. The Company operates in Canada, Australia, and Malaysia whereby operations sell commodities and incur costs in different
currencies. This creates exposure at the operational level, which may affect the Company’s profitability as exchange rates fluctuate. The
Company has not hedged its exposure to currency fluctuations but is actively monitoring and managing its foreign currency risk including
hedging its exposure when necessary.
Exposure to the Canadian dollar is through corporate administration costs. The Company has exposure to the Australian dollar through
the Company’s Australian operations. The Company has exposure to the Malaysian Ringgit through the Company’s Malaysian operations.
Based on the above net exposures as at December 31, 2023 and assuming that all other variables remain constant, a 5% depreciation or
appreciation of the RM against the US dollar would result in an increase/decrease of approximately $0.38 million (December 31, 2022:
increase/decrease of $0.24 million) in the Company’s net income, a 5% depreciation or appreciation of the CAD against US dollar would
result in an increase/decrease of approximately $0.02 million (December 31, 2022: increase/decrease of $0.02 million) in net income and
a 5% depreciation or appreciation of the AUD against the US dollar would result in an decrease/increase of approximately $0.04 million
(December 31, 2022: decrease/increase of $0.01 million) in net income.
Figure 16: Monthly USD to CAD Exchange Rates Figure 17: Monthly USD to RM Exchange Rates
Commodity price risk
The Company’s revenues and cash flows were impacted by the fluctuation of gold prices. For the three months ended December 31, 2023,
gold prices fluctuated within the range of $1,819 to $2,078 per ounce (three months ended December 31, 2022: $1,629 to $1,824 per
ounce) based on London Fix PM prices. For the six months ended December 31, 2023, gold prices fluctuated within the range of $1,819 to
$2,078 per ounce (six months ended December 31, 2022: $1,629 to $1,824). The Company has not hedged its exposure to commodity
price fluctuations.1.20
1.30
1.40
Canadian dollar (CAD)
USD to CAD3.50
3.75
4.00
4.25
4.50
4.75
5.00
Malyasian Ringit (RM)
USD to RM
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
20 | P a g e
The impact on profit or loss before income tax is influenced by changes in commodity prices. The impact on equity is identical to the
impact on profit or loss before income tax. The analysis assumes that the price of gold will fluctuate by +/- 15%, with all other variables
held constant. Such a change would result in an impact on the loss before tax of +/- $1.59 million.
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate due to changes in market interest
rates. Generally, the Company’s interest income will be reduced during sustained periods of lower interest rates as higher yielding cash
equivalents and short-term investments mature and the proceeds are reinvested at lower interest rates. The converse situation will have
a positive impact on interest income.
To limit interest rate risk, the Company uses a restrictive investment policy. The fair value of investments of financial instruments included
in cash and cash equivalents is relatively unaffected by changes in short-term interest rates. Investments are generally held to maturity
and changes in short-term interest rates do not have a material effect on the Company’s operations.
Credit risk
The Company’s credit risk on trade receivables is negligible. This low level of risk is primarily due to our contracts with reputable gold off-
takers, which adds a layer of security to our receivables. Furthermore, 90% or 95% of the sale proceeds for gold concentrate are received
inside 30 days after delivery to the off-takers. This prompt payment schedule further mitigates the risk of default, making our exposure to
credit risk minimal.
The Company is exposed to concentration of credit risk with respect to cash and cash equivalents. The maximum exposure to credit risk
is the carrying amounts as of December 31, 2023. An amount of $0.42 million (June 30, 2023: $0.54 million) is held with a Malaysian
financial institution, $0.07 million (June 30, 2023: $0.02 million) with an Australian financial institution and $4.35 million (June 30, 2023:
$5.40 million) is held with Canadian financial institutions. To mitigate exposure to credit risk, the Company has established policies to limit
the concentration of credit risk to ensure counterparties demonstrate minimum acceptable credit worthiness and to ensure liquidity of
available funds.
Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages liquidity
risk through effective management of its capital structure together with budgeting and forecasting cash flows to ensure it has sufficient
cash to meet its short-term requirements for operations, business development and other contractual obligations. The Company’s cash
and cash equivalents are highly liquid and immediately available on demand for the Company’s use.
12. OUTSTANDING SHARE DATA
The following details the share capital structure as of February 26, 2024.
Figure 18: Share capital structure
(1) Of the 16.69 million RSUs granted under the RSU Plan and outstanding, 12.92 million units for $0.86 million were vested, redeemable
until February 10, 2027; 3.4 million units for $0.37 million were granted and vested on January 18, 2024, redeemable until January 18,
2027; the remaining 0.37 million units for $0.03 million shall be vested over a one-year period from February 10, 2023.
(2) On January 18, 2024, 3.8 million incentive stock options were granted to employees. Each stock option is exercisable at a price of
C$0.145 for a term of five years from the date of grant with a three-year vesting period.Common shares Quantity
Issued and outstanding 327,204,903
Restricted share units (1) Quantity
16,690,126
Stock options (2) Exercise Price (CAD$) Expiry date Quantity
0.145 18-Jan-29 3,800,000
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
21 | P a g e
13. RISKS AND UNCERTAINTIES
Monument Mining Limited is a mineral exploration, development, and gold production company. The exploration for and development of
mineral deposits involves significant risks which even with a combination of careful evaluation, experience and knowledge may not be
eliminated. While the discovery of a mineral deposit may result in substantial rewards, few properties which are explored are ultimately
developed into production. Significant expenses may be required after initial acquisition investment to establish ore reserves, to develop
metallurgical processes and to construct mining and processing facilities at a particular site. It is impossible to ensure that the current
exploration programs planned by the Company will result in the discovery of mineral resources or a profitable commercial mining
operation, and, on an industry statistical basis, it is unlikely that an economic operation will be developed.
Whether a mineral deposit, if ever discovered, will be commercially viable depends on a number of factors, some of which are the
particular attributes of the deposit, such as size, grade, and proximity to infrastructure together with the impact on mineability and
recoverability as well as metal prices which are highly cyclical. Government regulations are a significant factor to consider, including
regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of minerals and environmental protection.
The exact effect of these factors cannot be accurately predicted but the combination of these factors may result in the Company not
receiving an adequate return on invested capital.
The Company has gold production at its Selinsing gold mine. The profitability of production is dependent on various factors that may not
be controllable by the Company.
Readers shall understand that there are no guarantees the Company can be successful due to controllable and uncontrollable risk factors,
including but not limited to the operation performance of the resources, mining, available blending solutions for the mill feeds and gold
recoveries through the new flotation plant. Significant uncontrollable factors include change of market conditions such as the Russia-
Ukraine war that caused rising gas and fuel prices, the geopolitical conflicts between China and other countries that may cause changes
of commodities market shares, the worldwide inflation that triggers the volatility of gold prices, delaying of commercial production due
to worldwide supply chain crisis may adversely impact availabilities of spare parts and lead time of replenishment, and changes in
regulatory restrictions in relation to arsenic level contained in gold concentrate, etc.
Some major risks associated with the business are, but not limited to, the following:
Title to mineral property interests
Although the Company has taken steps to verify the title to its mineral property interests in accordance with industry standards for the
current stage of exploration of such properties, these procedures do not guarantee the Company’s title. Property title may be subject to
administrative delays common in Malaysia, unregistered prior agreements or transfers and title may be affected by undetected defect or
litigation.
To the Company’s best knowledge, title to its mineral properties is in good standing.
Realization of assets
Mineral property interests comprise a significant portion of the Company’s assets. Realization of the Company’s investment in these assets
is dependent upon the establishment of legal ownership, obtaining permits, compliance with governmental requirements, potential
aboriginal claims as well as achieving profitable production from the properties or from the proceeds of their disposal.
Reserves and resource estimates
There is a degree of uncertainty attributable to the estimation of mineral reserves and mineral resources and the corresponding grades.
Mineral reserve and resource estimates are dependent partially on statistical information drawn from drilling, sampling, and other data.
Reserve and resource figures set forth by the Company are estimates and there is no certainty that the mineral deposits would yield the
production of metals indicated by reserve and resource estimates. Declines in the market price for metals may adversely affect the
economics of a mineral deposit and may require the Company to reduce its estimates. Changes in gold recovery rates during milling and
especially the impact of flotation and BIOX® Technology on treatment of gold sulphides may also adversely affect the viability of reserves
and resources.
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
22 | P a g e
Profitability from production
The profitability of mining companies depends in part, on the actual costs of developing and operating mines, which may differ significantly
from estimates determined at the time a relevant mining project was approved or ongoing projections. The development of mining
projects may also be subject to unexpected problems and delays that could increase the cost of development as well as the ultimate
operating cost of relevant projects. Monument’s decision to acquire, develop a mineral property and operate for production is based on
estimates made as to the expected or anticipated project economic returns. These estimates are based on assumptions regarding:
• future gold prices;
• anticipated tonnage, grades, and metallurgical characteristics of the ore to be mined and processed;
• anticipated recovery rates of gold extracted from the ore;
• anticipated material and spares cost associated with production; and
• anticipated capital expenditure and cash operating costs.
Actual cash operating costs, production and economic returns may differ significantly from those anticipated by such estimates.
Environmental
Environmental legislation is becoming increasingly stringent, and costs and expenses of regulatory compliance are increasing. The impact
of new and future environmental legislation that are relevant to the Company’s operations may cause additional expenses and restrictions.
If the restrictions adversely affect the scope of exploration and development on mineral properties, potential for a commercially viable
production may diminish or be negated.
The Company is subject to the laws and regulations relating to environmental matters in all jurisdictions in which it operates, including
provisions relating to property reclamation, discharge of hazardous material and other matters. The Company may also be held liable
should environmental problems be discovered that were caused by former owners and operators of its properties. Environmental liability
may still exist for properties that the Company had a prior ownership or participating interest. The Company conducts its mineral
exploration activities in compliance with applicable environmental protection legislation. The Company is not aware of any existing
environmental problems related to any of its current properties.
Additional funding for mineral property pipelines
The Company will continue to assess targets to increase its mineral resource base. Additional capital may be required from time to time
to provide funding for acquisitions and development in order to carry out its business strategy. The additional capital may come from
public markets, debt financing and cash flows generated from current production, which are largely influenced by global and regional
economies which are out of the Company’s control. Management has successfully mitigated those risks in the past through exercise of
due care, experience, and knowledge; however, those factors do not guarantee such risks will be successfully mitigated in the future.
Operation disruption caused by global pandemics
The Company’s operations involve many risks including global pandemics which are inherent to the nature of the business, global
economic trends and economic, environmental and social conditions in the geographical areas of operation. As a result, the Company is
subject to a number of risks and uncertainties, each of which could disrupt or have an adverse effect on its operating results, business
prospects or financial position. The Company continuously assesses and evaluates these risks, seeking to minimize them by implementing
high operating and health standards and processes to identify, assess, report and monitor risk across the organization.
Foreign operations
The Company's properties are located in Malaysia and Western Australia. The Company has historically received strong support from the
local, state, and federal governments for its gold mine development and operation. However, the political and country risk is considered
external and not within the control of the Company.
The Company's mineral exploration and mining activities may be affected in varying degrees by risks associated with foreign ownership
including inflation, political instability, political conditions, and government regulations. Any changes in regulations or shifts in political
conditions are beyond the Company's control and may adversely affect the Company's business. Operations may be affected by
government regulations with respect to restrictions on foreign exchange and repatriation, price controls, export controls, restriction of
earnings distribution, taxation laws, expropriation of property, environmental legislation, water use, mine safety and renegotiation or
nullification of existing concessions, licenses, permits, and contracts.
The regulations that the Company shall comply with in Malaysia include, but not limited to, the Mineral Enactment Act 2001, Mineral
Development Act 2004, Environmental Quality Regulations 1978, The Planning Guideline for Environmental Noise Limit and Controls,
Factories and Machinery Act 1967, Occupational Safety and Health Act 1994, Income Tax Act 1967, Finance Act 2017, the Goods and
Services Tax Act 2014, the Sales Tax Act 2018 and Employment Act 1955.
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
23 | P a g e
The regulations the Company shall comply with in Western Australia include, but not limited to, Mines Safety and Inspection Act 1994,
Dangerous Goods Safety Act 2004, Environmental Protection Act 1986, Corporations Act – Corporations (Western Australia) Acts 1961 and
1981, Income Tax – Income Tax Act 1962, Fringe Benefit Tax Assessment Act 1986, Payroll Tax Assessment 2002, Goods & Services Act
1999, and Fair Work Act 2009.
Failure to comply with applicable laws, regulations and local practices relating to mineral rights applications and tenure could result in
loss, reduction or expropriation of entitlements, or closure of operations. The occurrence of these various factors and uncertainties cannot
be accurately predicted and could have an adverse effect on the Company's operations or profitability.
14. NON-IFRS PERFORMANCE MEASURES
This Management’s Discussion and Analysis refers to cash costs per ounce sold, weighted average gold price, all-in sustaining costs per
ounce sold (“AISC”), sustaining capital expenditures and exploration and evaluation expenditures included in AISC calculations. These are
measures with no standardized meaning under International Financial Reporting Standards (“IFRS”), i.e. they are non-IFRS measures and
may not be comparable to similar measures presented by other companies. Their measurement and presentation are intended to provide
additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance
with IFRS.
Cash cost per ounce sold
The Company has included the non-IFRS performance measure “cash cost per ounce sold”. This non-IFRS performance measure does not
have any standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other
companies. This measure is used by management to identify profitability trends and to assess cash generating capability from the sale of
gold on a consolidated basis in each reporting period, expressed on a per unit basis. The Company believes that, in addition to conventional
measures prepared in accordance with IFRS, certain investors use this information to evaluate the Company's performance. Accordingly,
unit cash cost per ounce of gold sold is intended to provide additional information and should not be considered in isolation or as a
substitute for performance measures prepared in accordance with IFRS. More specifically, management believes that these figures are a
useful indicator to investors and management of a mine's performance as they provide: (i) a measure of the mine's cash margin per ounce,
by comparison of the cash operating costs per ounce to the price of gold, (ii) the trend in costs as the mine matures and, (iii) an internal
performance benchmark to allow for comparison against other mines. Total cash cost includes mine site operating costs such as mining,
processing, administration, and royalties, offset by sales of silver by-product, and excludes amortization, depletion, reclamation, idle
production costs, capital costs, exploration costs and corporate administration costs.
The following table provides a reconciliation for the cash cost per ounce sold (including both oxide and sulphide plant production) for the
three and six months ended December 31, 2023 and 2022:
Weighted average gold price
The Company reports realized weighted average gold price and weighted average London Bullion Market Association (“LBMA”) Gold Price
per troy ounce of gold published by the LBMA in USD) on a gold ounce sold basis. These non-IFRS performance measures do not have any
standardized meaning prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies.
Realized weighted average gold price from gold sales during the reporting period is computed based on a weighted average of market
value of ounces of gold sold in accordance with the London Fix spot rates. The revenue for each ounce of gold sold is determined by the
gold spot rate and is adjusted pursuant to the underlined offtake arrangement subject to impurities, treatment charges, refining charges,
penalties of the associated gold concentrate. London Fix PM weighted average gold price is calculated weighted average London Fix PM
gold price on gold sales. The Company believes that realized weighted average gold price provides additional information of revenue on a
gold ounce sold basis, which is compared to London Fix PM weighted average gold price as market benchmark.
Working capital
Working capital is the net balance of current assets and current liabilities and is a non-IFRS measurement.(In thousands of US dollars, except where noted) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022
Production costs 6,228 5,048 10,130 5,697
Divided by ounces of gold sold (oz) 6,967 3,350 11,574 3,750
Total cash cost (US$/oz) 894 1,507 875 1,519
Three months ended Six months ended
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
24 | P a g e
All-in sustaining cost per ounce
The Company reports all-in sustaining costs (“AISC”) on a gold ounce sold basis. This performance measure has no standardized meaning
and may not be comparable to similar measures presented by other issuers or used as a substitute for performance measures prepared
in accordance with IFRS. The Company follows the guidance announced by the World Gold Council (“WGC”) in September 2013 and
updated in November 2018. The WGC is a non-profit association of the world’s leading gold mining companies established in 1987 to
promote the use of gold to industry, consumers, and investors. The WGC is not a regulatory body and does not have the authority to
develop accounting standards or disclosure requirements. The WGC has worked with its member companies to develop a measure that
expands on IFRS measures such as operating expenses and non-IFRS measures to provide visibility into the economics of a gold mining
company. All-in sustaining costs are calculated by taking total cash costs and adding sustaining capital expenditures, corporate
administrative expenses at the Selinsing Gold Mine including share-based compensation, exploration and evaluation costs, and accretion
of asset retirement obligations. Sustaining capital expenditures are defined as those expenditures which do not increase annual gold ounce
production at the Selinsing Gold Mine and exclude all expenditures for major growth or infrastructure projects and non-producing projects.
Certain other cash expenditures, including tax payments and acquisition costs, are also excluded. The Company believes that this measure
represents the total costs of producing gold from current operations and provides the Company and other stakeholders of the Company
with additional information of the Company’s operational performance and ability to generate cash flows.
The following table provides reconciliation for AISC of production at the Selinsing Gold Mine for the three and six months ended December
31, 2023 and 2022:(In thousands of US dollars, except where noted) December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022
Production costs 6,228 5,048 10,130 5,697
By-product silver recovery - 2 0 4
Operation expenses 35 - 72 -
Corporate expenses 58 6 63 32
Accretion of asset retirement obligation 53 46 106 92
Exploration and evaluation expenditures 11 177 22 177
Sustaining capital expenditures 1,800 171 2,200 171
All-in sustaining costs 8,185 5,450 12,593 6,173
Divided by ounces of gold sold (oz) 6,967 3,350 11,574 3,750
All-in sustaining costs per gold ounce sold (US$/oz) 1,175 1,627 1,088 1,646
Three months ended Six months ended
MANAGEMENT’S DISCUSSION & ANALYSIS
For the three and six months ended December 31, 2023
(in United States dollars, except where noted)
25 | P a g e
CAUTION ON FORWARD LOOKING STATMENTS
All forward-looking statements, other than statements of historical fact, contained or incorporated by reference in this Management’s
Discussion and Analysis, including, but not limited to, any information as to the future financial or operating performance of Monument,
constitute ‘‘forward-looking information’’ within the meaning of Canadian securities legislation and ‘‘forward-looking statements’’ within
the meaning of the United States Private Securities Litigation Reform Act of 1995 (referred to herein as “forward-looking statements”).
These statements are based on expectations, estimates and projections as of the date of this Management’s Discussion and Analysis.
Forward-looking statements include, without limitation, statements with respect to: possible events; estimates of construction,
commissioning and production of the gold treatment plant at Selinsing Gold Mine Project; exploration results and budgets; mineral reserve
and resource estimates; capital expenditures; strategic plans, including the Company’s near-term goals to convert to convert its current
oxide plant to a sulphide plant, to continue to develop the Murchison Gold Project, and to identify and complete an acquisition to increase
its gold development profile; proposed financing transactions; the timing and amount of estimated future production, including expected
increases in production output at Selinsing; costs of production; mine life; success of exploration, development and mining activities;
permitting timelines; estimates of fair value of financial instruments; currency fluctuations; requirements for additional capital; and
government regulation and permitting of mining operations and development projects;. The words ‘‘plans’’, ‘‘expects’’ or ‘‘does not
expect’’, ‘‘is expected’’, ‘‘budget’’, ‘‘scheduled’’, ‘‘estimates’’, ‘‘forecasts’’, ‘‘guidance’’, ‘‘targets’’, ‘‘models’’, ‘‘intends’’, ‘‘anticipates’’, or
‘‘does not anticipate’’, or ‘‘believes’’, or variations of such words and phrases or statements that certain actions, events or results ‘‘may’’,
‘‘could’’, ‘‘would’’, ‘‘should’’, ‘‘might’’, or ‘‘will be taken’’, ‘‘occur’’ or ‘‘be achieved’’ and similar expressions identify forward-looking
statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that, while considered
reasonable by Monument as of the date of such statements, are inherently subject to significant business, political, economic, and
competitive uncertainties and contingencies. The estimates and assumptions of Monument contained or incorporated by reference in this
Management’s Discussion and Analysis, which may prove to be incorrect, include, but not limited to, the various assumptions set forth
herein, or as otherwise expressly incorporated herein by reference as well as: there being no significant disruptions affecting operations,
whether due to labour disruptions, supply disruptions, power disruptions, damage to equipment or otherwise; permitting, development,
operations, expansion and acquisitions in Malaysia (including, without limitation, land acquisitions for and permitting and construction of
new tailings facilities) being consistent with our current expectations; development of the Phase IV plant expansion on a basis consistent
with Monument’s current expectations; political developments in the Malaysian jurisdiction in which the Company operates being
consistent with its current expectations; the exchange rate between the Canadian dollar, Malaysian ringgit, Australian dollar and the U.S.
dollar being approximately consistent with current levels; certain price assumptions for gold; prices for natural gas, fuel oil, electricity and
other key supplies being approximately consistent with current levels; production and cost of sales forecasts for Selinsing operations
meeting expectations; the accuracy of current mineral reserve and mineral resource estimates for the Company and any entity in which it
now or hereafter directly or indirectly holds an interest; labour and materials costs increasing on a basis consistent with Monument’s
current expectations; that the Company will be able to identify and complete an accretive acquisition to enhance its gold development
profile; and outcomes and costs of ongoing litigation. Known and unknown factors could cause actual results to differ materially from those
projected in the forward-looking statements. Such factors include, but not limited to: fluctuations in the currency markets; fluctuations in
the spot and forward price of gold or certain other commodities (such as diesel fuel and electricity); changes in interest rates that could
impact the mark-to-market value of outstanding derivative instruments; risks arising from holding derivative instruments (such as credit
risk, market liquidity risk and mark-to-market risk); changes in national and local government legislation, taxation, controls, regulations
and political or economic developments in Canada, Malaysia, Australia or other countries in which the Company conducts business or may
carry on business in the future; business opportunities that may be presented to, or pursued by, the Company; the Company’s ability to
successfully integrate acquisitions; operating or technical difficulties in connection with mining or development activities; employee
relations; the speculative nature of gold exploration and development, including the risks of obtaining necessary licenses and permits;
diminishing quantities or grades of reserves; adverse changes in our credit rating; and expected costs, developments and outcomes of
ongoing litigation and other contests over title to properties. In addition, there are risks and hazards associated with the business of gold
exploration, development, and mining, including environmental hazards, unanticipated reclamation expenses, industrial accidents, unusual
or unexpected formations, pressures, cave-ins, flooding, and gold bullion and concentrate losses (and the risk of inadequate insurance, or
the inability to obtain insurance, to cover these risks). Many of these uncertainties and contingencies can affect, and could cause,
Monument’s actual results to differ materially from those expressed or implied in any forward-looking statements made by, or on behalf
of, Monument. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such statements. Forward-looking statements are provided for the purpose of providing
information about management’s expectations and plans relating to the future. All of the forward-looking statements made in this
Management’s Discussion and Analysis are qualified by these cautionary statements and those made in our other filings with the securities
regulators of Canada including, but not limited to, the cautionary statements made in the ‘‘Risk Factors’’ section. These factors are not
intended to represent a complete list of the factors that could affect Monument. Monument disclaims any intention or obligation to update
or revise any forward-looking statements or to explain any material difference between subsequent occurrence of events and such forward-
looking statements, except to the extent required by applicable law.
Other information
Where we say ‘‘we’’, ‘‘us’’, ‘‘our’’, the ‘‘Company’’, or ‘‘Monument’’ in this Management’s Discussion and Analysis, we mean Monument
Mining Limited and/or one or more or all of its subsidiaries, as may be applicable.