## MONUMENT MINING LIMITED 

Notes to Consolidated Financial Statements 

For the years ended June 30, 2010 and 2009 

## 1. Organization and Nature of Operations 

Monument Mining Limited (the “Company”) is a natural resource company engaged in the acquisition, exploration, development and operation of gold mineral property interests. Its primary activities include construction and operation of a 1,200 tpd (“tonnes of ore per day”) gold treatment plant at the 100% owned Selinsing Gold Project (“Selinsing”) and exploration on the 100% owned Damar Buffalo Reef exploration prospect (note 8). The Company’s head office is located in Vancouver, BC, Canada. Its gold project operations, exploration and development activities are carried out in Malaysia through its wholly owned subsidiaries. 

Although the Company has extracted gold from operations on Selinsing to June 30, 2010, the Company continues to operate in the development stage as the open pit mine has not substantially been put into service. The production phase of an open pit mine commences when the entire gold treatment plant, or both circuits of the plant are fully commissioned and minerals are produced in a saleable form in a sustainable manner. To June 30, 2010, the Company has not yet attained these conditions on Selinsing. 

## 2. Significant Accounting Policies 

These consolidated financial statements have been prepared in accordance with Canadian generally accepted accounting principles (“Canadian GAAP”) with the Canadian dollar as the functional and reporting currency. 

a. Basis of presentation 

The consolidated financial statements include the accounts of the Company and its wholly-owned integrated Malaysian subsidiaries: Polar Potential Sdn. Bhd., Able Return Sdn. Bhd., Selinsing Gold Mine Manager Sdn. Bhd. and Damar Consolidated Exploration Sdn. Bhd. All material intercompany balances and transactions have been eliminated on consolidation. 

b. Use of estimates 

The preparation of financial statements in conformity with Canadian GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as at the balance sheet date, and the reported amounts of revenues and expenses during the reporting period. Significant estimates made in the preparation of these financial statements include determining accrued liabilities, valuation of inventory, valuation of mineral property interests, estimates of useful lives of property, plant and equipment, estimates required to determine whether impairment of long lived assets is required, determination of asset retirement obligations and environmental obligations, estimations made in determining fair value of foreign currencies forward contracts, assumptions used in calculating fair-value of Agents’ options, share purchase warrants and stock-based compensation, allocation of proceeds between common shares and warrants in unit offerings, and valuation allowance for future income tax assets. While management believes the estimates are reasonable, actual results could differ from those estimates used in the preparation of the financial statements and could impact future results of operations and cash flows. 

c. Cash and cash equivalents 

Cash and cash equivalents consist of cash and highly liquid investments, with an original term to maturity of one year or less, that are readily convertible to known amounts of cash. 

d. Inventory 

Inventory classifications include supplies, stockpiled ore, work in progress and finished goods. All inventories are recorded at the lower of cost and net realizable value determined by reference to current resource pricing. The stated value of all inventories include direct mining and processing costs, and attributable overhead and depreciation. 

Supplies inventory consists of consumables used in mining and processing operations and are valued at the lower of cost and net realizable value using the first-in-first-out method. 

Stockpiled ore represents material that has been extracted from the mine and is ready for further processing. Stockpiled ore is measured by estimating the number of tonnes added and removed from the stockpile and is verified based on period surveys. Stockpiled ore is valued based on the current mining costs (including depreciation and amortization) incurred up to the point of stockpiling the ore using the average cost method. Costs include direct labour, mine-site overhead, and depreciation and depletion on Selinsing mine equipment and mineral properties. 

