Monument Mining Limited : Monument's 2012 Second Quarter Results

Feb 29, 2012

Monument's 2012 Second Quarter Results

Gross Revenue of $21.1M from 12,765 Oz Gold Sales at Cash Cost $307/Oz

Vancouver, B.C. Monument Mining Limited (TSX-V: MMY and FSE: D7Q1) "Monument" or the "Company" today announces its second quarter financial results for the period ended December 31, 2011. All amounts are in United States dollars unless otherwise indicated (refer to www.sedar.com for Q2 full financial results).

Second Quarter Highlights include:

• Record gold production of 11,736 ounces at an average cash cost of $307 per ounce;
• Revenue of $21.1 million generated from gold sales of 12,765 ounces at an average price of $1,652 per ounce;
• Net operating income of the Company of $14.8 million or $0.08 per share compared to $10.1 million or $0.06 per share for the same quarter in fiscal 2011;
• 50% increase in cash from operating activities before changes in non-cash working capital over the same quarter in fiscal 2011;
• Strong liquidity position - a positive net working capital of $80.9 million from gold sales and a previous financing.
  President and CEO Robert Baldock stated "Production results for the 2nd quarter of 2012 continued in line with previous quarters and the Company is targeting production of up to 55,000 ounces of gold for the fiscal year ending June 30, 2012. Management is working to further develop the Company's pipeline of projects in 2012 through development and construction projects and continued exploration drilling."
  
  Production and Statistics
  

  	Year ended, Jun 30,  2010	Year ended, Jun 30, 2011	Three months ended Sep 30, 2010	Three months ended Sep 30, 2011	Three months ended Dec 31, 2010	Three months ended Dec 31, 2011
  Mining
  Ore mined (tonnes)	662,330	740,909	203,150	124,736	159,681	128,557
  Waste removed (tonnes)	2,326,502	2,707,598	615,937	719,080	649,584	686,995
  Stripping ratio	3.51	3,65	3.03	5.76	4.07	5.34
  Ore stockpiled (tonnes)	387,545	773,432	499,589	813,175	570,719	859,011
  Process
  Crushed ore (tonnes)	274,786	355,021	91,106	84,993	88,552	82,722
  Ore processed (tonnes)	272,120	351,999	89,834	86,343	87,845	84,182
  Average mill feed grade (g/t)	3.08	4.31	4.08	4.53	4.41	5.25
  Processing recovery rate	58.7%	92.9%	90.0%	95.1%	93.7%	95.3%

  
  Financial Results
  

  	Year ended, Jun 30,  2010 (1)	Year ended, Jun 30, 2011	Three months ended Sep 30, 2010	Three months ended Sep 30, 2011	Three months ended Dec 31, 2010	Three months ended Dec 31, 2011
  Gold produced (oz)	13,793	44,438	9,050	11,846	11,348	11,736
  Gold sold (oz)	13,793	40,438	8,650	8,372	10,148	12,765
  Revenue, ($000) (2)	$16,316	$56,627	$10,863	$14,430	$14,119	$21,084
  Average realized gold price ($/oz)	$1,183	$1,400	$1,256	$1,724	$1,391	$1,652
  Total cash cost ($/oz)	216	242	199	297	262	307
  Net operating income (loss), ($000)(3)	$(2,635)	$35,457	$4,508	$9,925	$10,115	$14,780
  Earnings per share (EPS) - basic	$(0.02)	$0.21	$0.03	$0.06	$0.06	$0.08
  Net income (loss), ($000)	$(3,035)	$37,028	$1,118	$12,038	$4,594	$27,138
  EPS, basic	$(0.02)	$0.22	$0.01	$0.07	$0.03	$0.15
  EPS, diluted	$(0.02)	$0.20	$0.01	$0.06	$0.02	$0.14

  (1) The information on operating results for the year ended June 30, 2010 has not been restated to conform to IFRS and is presented with Canadian GAAP.
  (2) Prior to achieving commercial production in September 2010, gold sales and related production costs were capitalized against the Selinsing Gold Property and construction of the gold treatment plant.
  (3) Net operating income is a non-GAAP measure and represents the Company's income (loss) before other items: the change in fair value of derivative liabilities, net realized gain on forward gold sale, foreign currency exchange gain (loss), Interest income and accretion interest on convertible note.
  
  Operating performance
  
  The financial results show the steady gold production with increased average mill feed grade, processing recovery rates, and more efficient operations. The higher average realized gold price led to higher gold sales. The cash costs were higher this quarter mainly is due to royalty paid on restricted gold deposited as a security pledge on designated metal accounts, which was not required to be paid before. The net income was also impacted by other income comprised of changes in fair value on derivative liabilities and fair value of a forward contract.
  
  For the second quarter of fiscal 2012, the gold production from the Selinsing Gold Project generated an income of $14,779,551 net of operating and corporate expenses, or $0.08 per share, an increase of $4,664,378, or $0.02 per share compared to $10,115,173 or $0.06 per share in the corresponding period in fiscal 2011. The favorable operational results was due to a combination of gold production, the full commercial production period verse the partial commercial production period over the same quarter in fiscal 2011 and increase in the gold price.
  
  The Company produced 11,736 ounces of gold at Selinsing Gold Mine in the second quarter of fiscal 2012, 12,765 ounces of gold were sold at an average realized price of $1,652 for total gross revenue of $21,084,315 compared to gold production of 11,348 ounces, gold sales of 10,148 ounces at an average realized price of $1,391 for total gold sales of approximately $14,119,390 for the corresponding period in fiscal 2010; and gold production of 11,856 ounces, gold sales of 8,372 ounces at an average realized price of $1,724 for total gross revenue of approximately $14,430,298 for the first quarter ended September 30, 2011.
  
  Development
  
  The Phase III gold plant expansion construction at the Selinsing Gold Mine is approximately 50% complete and is progressing as planned targeting completion by May 2012.
  
  The Company acquired the 100% common shares of Star Destiny Sdn. Bhd. ("SDSB") by cash through its wholly-owned Malaysian subsidiary. SDSB is a Malaysian company holding 100% right of the exploration permit pertaining to a total of 750 Hectares of prospective land adjacent to the Mengapur Polymetalic Project in Pahang State, Malaysia. This acquisition brings back under the control of MMSB most of the original area that Malaysian Mining Corporation ("MMC") worked on, and covers the majority of the resource included in the recently filed 43-101 technical report reported below.
  
  In November 2011 the NI43-101 compliant technical report was completed by Walter Dzick, B.Sc., MBA, P. Geo., MAusIMM, and Rod Carlson, B.Sc., M.Sc., MAIG, of Snowden Mining Industry Consultants ("Snowden"), and SEDAR filed on December 2, 2011 as "Monument Mining Limited: Mengapur Project, Pahang State, Malaysia, Project No. V1165", representing a compilation of historic information and data that has been provided to Snowden by the Company. All economic assessments and resource statements included in the Report are considered historic in nature and there is no certainty that any economic assessments will be realized.
  
  On November 23, 2011 the Company, through its wholly-owned subsidiary, MMSB in Malaysia, entered into the Definitive Acquisition Agreement with Diamond Hard Mining Sdn. Bhd., its shareholders and its wholly-owned subsidiaries, CASB and Malaco, all incorporated in Malaysia, to acquire 70% of the Mengapur Polymetalic Project located in Pahang State, Malaysia. Subsequently to the reporting quarter, on February 21, 2012, upon receipt of the TSX-V acceptance, the Company closed the acquisition of a 70% interest in the Mengapur Polymetalic Project located in Pahang State, Malaysia.
  
  The private placement of up to CAD$70,000,000 for the Mengapur acquisition is pending acceptance of the TSX-V, which has been successfully negotiated at more favorable terms at a price of CAD$0.50 cents per unit with each unit comprising a share and a half share purchase warrant, each full warrant being convertible into a full share at an exercise price of CAD$0.70 within three years of closing. All of the shares and warrants will be subject to a hold period of three years.
  
  Please visit our website at www.monumentmining.com for more information.
  
  Robert F. Baldock, President and CEO
  Monument Mining Limited
  Suite 910- 688 West Hastings Street
  Vancouver B.C. Canada V6B 1P1
  
  For further information contact:
  
  Monument Mining Limited:
  Richard Cushing, Investor Relations
  T: + 1 604 638 1661 x 102
  E: [e-mail]
  
  CHF Investor Relations:
  Robin Cook, Senior Account Manager
  T: + 1 416 868 1079 x 228
  E: [e-mail]
  
  Axino AG - Europe:
  Wolfgang Seybold, Chairman
  T: + 49 711 25 35 92 40
  E: [e-mail]
  
  "Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release."
  
  Forward-Looking Statement
  
  This news release contains forward-looking information about Monument Mining Limited ("Monument"), its business and future plans. The use of words such as "would", "estimate", "expect", "may", "will", "project", "should", "believe" and similar expressions are intended to identify forward-looking information. Forward-looking information in this news release is included in statements with respect to, among other things, the completion and the timing of the Company's proposed private placement and the Company's work program on the Mengapur Project. The following are some of the assumptions upon which forward-looking information is based: that general business and economic conditions remain stable; continuing demand for, and stable or improving prices of gold; receipt of regulatory and government approvals in a timely manner; the availability of financing; Monument's ability to procure equipment and operating supplies in sufficient quantities and on a timely basis; Monument's ability to attract and retain skilled personnel; the estimated cash cost per ounce of gold production and the estimated cash flows which may be generated from the operations. Actual results could differ materially from those anticipated in this forward-looking information as a result of risks and uncertainties, including: volatility in the price of gold; risk inherent in mineral exploration and development; competition for capital and skilled personnel; geological technical and drilling problems; general business, economic, competitive, geopolitical and social uncertainties; the actual results of current exploration activities; foreign operations risks; other risks inherent in the mining industry and other risks described in the Management Discussion and Analysis of the Company, which is available under the profile of the Company on SEDAR at www.sedar.com. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking information. The Company does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Your Vote is Important

Your Vote is Important

Please vote by 4 PM Pacific Time on December 28, 2011.

You may vote via the internet at www.proxyvote.com following the instructions found on the enclosed Voting Instruction Form. If you haven't receive your materials, have any questions or require assistance voting your shares, please call our proxy solicitor, Laurel Hill Advisory Group at 1-877-304-0211 or via email at [e-mail].

At the Meeting, shareholders will be asked to approve, among other things, the Company's acquisition of a 70% interest in the Mengapur Polymetalic Project in Malaysia (the "Acquisition") and the concurrent financing of the Acquisition by way of private placement. These items are discussed in detail in the Information Circular disseminated by the Company in connection with the Meeting.

Background to the Acquisition of the Mengapur Project

The Company's mission is to increase shareholder value by seeking to become a diversified mid-tier producer through expansion and development of its existing pipeline of mineral assets and to grow through acquisition of new resource properties with promising economic potential in Southeast Asia. The Company's portfolio of properties currently includes the producing Selinsing gold mine, the advanced Buffalo Reef exploration gold project and several grass root gold prospective properties. The Company has for some time been actively seeking to add to its portfolio consistent with this mission. The Mengapur Project is an exciting opportunity which meets all of our objectives.

The Mengapur Project is a large polymetalic project, previously owned by the Malaysian Mining Corporation, which in the early 1990's had done extensive exploration and development work on the property.

Following successful completion of our due diligence and extensive negotiations, the Company entered into a definitive acquisition agreement (the "Definitive Agreement") in late November to acquire a 70% interest in the Mengapur Project for an aggregate consideration of $60 million. Under the Definitive Agreement, the Company will acquire an interest in approximately 185 hectares within an area that was the subject of extensive historical exploration that had identified significant mineral potential.

In the course of our due diligence review, we examined the historical data contained in a detailed study completed in 1993 on the Mengapur Project, conducted our own limited confirmatory drilling and investigated the results of the limited copper and iron production occurring from the project. The Company also examined the detailed plans contained in the historical study for a long-life open pit mining and processing operation for the production of iron, copper and fertilizer by products. The historical study and the Company's own analysis also considered the potential for silver and gold production from the Mengapur Project.

The Company concluded that the Mengapur Project presented a unique and exciting opportunity, consistent with our mission, and with the potential for long-life revenue generation to leverage our expertise and expand our operations.

Financing the Acquisition and the Mengapur Project

The Acquisition and plans for the subsequent exploration and development of the Mengapur Project require greater financial resources than presently available to the Company. As well, the opportunity to acquire the Project was only available to the Company provided it could make significant up front deposits and complete the Acquisition in an extremely short period of time frame.

In order to raise the needed financing for the Project, management and the Board considered the alternative financing sources available including debt financing, forward sales, public offering, rights offering or other alternatives.

Due to present market uncertainty, the ongoing global financial crisis and in order to minimize financial risk to shareholders, the Company chose the certainty of a committed private placement to finance the acquisition and development of the Mengapur Project. In addition, due to the tight timeframe to close the acquisition demanded by the vendor of the Mengapur Project, the window for equity financing is too narrow to complete a rights offering or a brokered deal. The Company had to seek a guaranteed source of funds to be able to satisfy concerns expressed by the vendor during commercial negotiation. The vendor's main concern from the outset was the low capital base of the Company in undertaking project that is much larger than Selinsing. The arranged financing satisfied all of those concerns.

On December 2, 2011, the Company announced that it would conduct a non-brokered private placement (the "Private Placement") of up to 140,000,000 units consisting of one share and a 3-year 70¢ warrant at a price of $0.50 per unit for gross proceeds of up to $70,000,000. As required by the policies of the TSX Venture Exchange, shareholders will be asked at the Meeting to approve the private placement, as it will result in the subscriber, Tulum Corporation Ltd., holding over 40% of the Company's outstanding shares.

To address the dilution that shareholders would concern, Monument intends to strategize the phases of development of streams of production in order to generate the cash flow to further fund the Mengapur project from off take sales arrangement. By equity financing, Monument shareholders will suffer dilution upfront, but in the medium term the private placement and the Mengapur Acquisition are expected to ultimately build greater value to all shareholders.

The Company does not intend to complete the Acquisition unless the Private Placement is completed concurrently.

The Company is excited about the prospects presented by the Mengapur Project and encourages Shareholders to attend the Meeting and Vote FOR the Acquisition and financing in order to allow us to advance our mission.

Your vote is important, no matter how many or how few shares you may own.TODAY.