Management’s Discussion and Analysis (Form 51 -102F)  For the year ended June 30, 2011  Monument Mining Limited For the year ended June 30, 2011, investment in gold bullion, mineral property development, construction and other  capital assets resulted in a cash outflow of $6,556,006 (2010  –  $(4,181,768)). Construction and other capital expenditure  comprised of $3,587,145 (2010 - $7,782,350), which included $879,447 (2010 - $13,113) of costs and deposits for  construction on the Phase III plant expansion and $491,406 (2010 - $nil) for tailing storage facility expansion. Mineral  properties development and acquisition costs of $6,937,594 which was offset by net profits from gold sales of  $3,604,767 charged to mineral properties during July and August, 2010 for a net of $3,332,827 (2010  –  $(11,964,118)).  The Company purchased a gold bullion forward contract for $5,000,800 (2010 - $nil) and received $5,365,575 on the  disposition of gold bullion that was delivered. As at June 30, 2011, the Company had a positive working capital of $63,196,787 compared to $6,961,528 as at June 30,  2010, the increase of $56,235,259 was a direct result of gold sales and the close of a $13 million financing. Accounts  payable increased to $4,903,751 at June 30, 2011 from $3,624,057 at June 30, 2010 primarily attributed to timing  difference.  For the year ended June 30, 2011, shareholders’ equity increased by $39,271,323 primarily due to net income generated  from operations of $31,252,160, shares issued for the Famehub Acquisition at a value of $3,406,900, shares issued for  the exercise of stock options and warrants for proceeds of $2,188,250, an increase of $5,377,692 in contributed surplus  due to warrants issued on the forward gold sale, a fair value increment on the warrants extension and stock-based  compensation. The increase in shareholders’ equity was offset by accumulated other comprehensive loss of $1,326,894  due to the change in functional currency from CAD to US dollar. The Company exercises its best effort to seek and utilize  its capital resources in an efficient manner in order to meet its business commitments including exploration and mineral  property development, acquisitions, capital assets upgrades, etc.  The Company’s capital resources as at June 30, 2011 included cash and cash equivalents. The Company’s primary sources  of funding are though equity financing through the issuance of stock, debt financing and cash flow generated from the  sale of gold. The Company exercises its best effort to seek and utilize its capital resources in an efficient manner in order  to meet its business commitments including exploration and mineral property development, acquisitions, capital asset  upgrades and working capital. On August 11, 2010, a financing totaling CAD 13 million was closed and comprised of the private placement of  $7,653,600 (CAD 8,000,000) in convertible notes (the "Notes") and a $4,753,500 (CAD 5,000,000) forward sale of gold  (the "Forward Sale"). The Notes have a term of five years and one day from the date of the issuance and must be repaid by the Company at  the end of the term in cash at 121.67% of the principal amount. Any early repayment of the Notes will result in a pro- rata adjustment of this repayment amount. The holders of the Notes (the "Noteholders") may, at any time, convert the  Notes into units at a price of $0.38 (CAD 0.40) per unit with each unit comprising one common share of the Company  and one common share purchase warrant. Each whole share purchase warrant is exercisable at $0.48 (CAD 0.50) per  share, expiring five years from the date of issuance of the Notes. In connection with the issuance of the Notes, the Company entered into gold option agreements with each of the  Noteholders (the "Option Agreements") whereby the Noteholders have the option to acquire gold from the Company up  to an amount equal to the balance of the Note outstanding at the price greater of: (i) $1,000 per ounce; and (ii) the gold  price in US dollars as set by the London PM Fix and converted to Canadian dollars at the noon rate of exchange published  by the Bank of Canada on the maturity date of the Notes, less a 5% discount. In addition, as an inducement to enter into  the subscription agreement for the Notes, the Company granted the Noteholders the option to purchase an aggregate of  5,714 ounces of gold at a price of $1,000 (or CAD 1,000) per ounce and 2,857 ounces of gold at a price of $1,250 (or CAD  1,250) per ounce at any time during the term of the Notes commencing 18 months after closing.  The closing of the Forward Sale resulted in the advance of $4,783,500 (CAD 5 million) to Monument. Repayment of the  advance will be made in gold of 5,000 ounces with adjustment reflecting foreign exchange fluctuations between  Canadian and US dollars. The Forward Sale has a term of five years and one day. Warrants for the purchase of 5 million  common shares with the same terms as described in connection with the Notes above were issued to the lender on  1.7  Capital Resources  Convertible Note and Forward Sale of Gold  |  P a g e 25