France's Marine Monnet finished the first 18 alone in seventh place with a 3-under 69. Defending champion Karrie Webb is currently tied for eighth with Sophie Gustafson of Sweden and Korea's Soo-Yun Kang at minus two.
Munt alternated birdies with pars through the first seven holes Thursday on her way to a front-nine 32. She added birdies on the 10th, 12th and 15th to post an inward 33 and complete her bogey-free round.
Munt, who nearly gave up professional golf after missing the cut at last season's Australian Ladies Masters, went on to win twice on the 2000 Evian Ladies European Tour and placed fourth on the season money list.
Munt played on the LPGA Tour in 1997. In 1998, she began an 18-month stint as caddie for Australia's Crafter on the LPGA Tour. Crafter is a two-time winner of the Ladies Masters (1992, '96) and captured the Australian Open in 1997.
'It was just part of learning and getting better,' Munt said of her experiences on the bag. 'A journey, really. I think a lot of the players did not know how to react to me.
'There was no shame in what I did. I thought that it would help me, so I went and did it.'
England's Nicholas moved into a tie at 4-under with a 15-foot eagle putt at the par-5 18th.
Webb got off to a strong start with three birdies over the first six holes. However, she suffered bogeys at the seventh and 10th holes before closing out the day with a birdie at the last for a 70.
'I don't feel too far out of it,' Webb said. 'I didn't play that well. For a few holes, I felt uncomfortable with my swing.'
Last week, Webb joined England's Laura Davies as the only women golfers to win the same event four years in succession with her victory at the Australian Ladies Masters. Davies took home the title from the LPGA's Standard Register PING from 1994-97.