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RETIREMENT OF FOCUS MINERALS DIRECTOR PHIL LOCKYER

Focus Minerals Ltd. (the “Company”) (ASX: FML) wishes to advise shareholders that Mr Phil Lockyer, one of the Company’s longest serving Directors, has decided not to seek re-election at the Company’s AGM and will retire from the Board effective at the close of the AGM today.

Mr Lockyer was appointed to the Board in December 2005 and, through his more than 40 years of experience in senior technical management roles within the industry, has made a significant contribution in assisting the Company through the development of its operations over this time.

“Phil’s deep industry experience has been invaluable to Focus over the years, and on behalf of our shareholders, employees and fellow directors, I would like to thank him for his untiring efforts,” said Focus Minerals Chairman and Acting CEO, Don Taig.

“I would also like to personally thank him for his strong support and counsel to me as Chairman over these years and I wish him well and all the best in his well earned retirement.”

Mr Lockyer is currently the Chairman of the Technical Committee, and has previously chaired the Audit Committee, Remuneration Committee and was a member of the Appointments Committee.

The AGM resolution concerning Mr Lockyer’s re-election as a director will be withdrawn.

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FOCUS SETS OUT PLAN TO REBUILD HIGH-GRADE RESOURCES IN COOLGARDIE; POSITION OPERATION FOR A RETURN TO PRODUCTION

Key points: Commencing four phase exploration programme focusing on two primary systems hosting multiple high-grade targets near Coolgardie Three Mile Hill mill Goal is to develop gold price resilient, high-grade orebodies with excellent potential for underground mining Targeting establishment of a long term mine life in a 24 month programme Focus targets zones adjacent to multiple historic mines that have been mined at gold grades between 3.7g/t through to 16.1g/t

 Focus Minerals Ltd. (ASX: FML) said today that it is initiating a major new exploration programme at its Coolgardie Gold Project focusing on two primary systems that host multiple high-grade targets, with the aim of extending Coolgardie’s mine life to three years.

The 24 month programme has been devised following a change in exploration strategy after the closure of operations in Coolgardie that has enabled the business to focus on a longer-term exploration horizon.

The programme will focus on four priority target areas ranging from resource extensional drilling to conceptual exploration that are all in close proximity to the Three Mile Hill mill.

“Following the closure of the Coolgardie operations, we were able to take a clean sheet approach to our exploration programmes,” said Focus Minerals Chairman and Acting CEO, Don Taig.

“Ever since we went into production at the high-grade underground Perseverance orebody in 2008, we have essentially been chasing our tail on the exploration front with a constant need to weight the focus of our exploration programmes to short-term tonnes to feed the mill.

“We’ve now had our exploration team start afresh with a remit of looking to target high-grade targets that have scale, continuity and underground potential.

“We now have a four phase plan over the next 24 months that will see a really concentrated focus on an area that has had proven, high-grade underground mining success.

Four Initial target areas in the first phase of drilling are:

1.     Brilliant Deeps

The Brilliant trend contains existing resources and known mineralisation along a 2.6km corridor from Brilliant to King Solomon.  A number of initial holes have been designed in a programme to extend the Brilliant resource at depth including testing beneath the State Battery.  Historic drill intercepts include: 8m @ 20.7g/t Au and 7m @ 3.7g/t Au.

2.     Bayleys to Hanover

Bayley’s Reward was the first gold discovery on the Coolgardie field, in 1892.  The Bayleys Line extends over 2.5km with reef-style lodes that have produced over 300,000oz @ 16.1g/t Au.  There has been little exploration beyond the immediate mine area. The initial programme will therefore test the Bayleys Line between Bayleys and Hanover where historic RC drilling has returned 7m @ 19.64g/t and 7m @ 94.76g/t.   Subsequent drilling is then planned along this line at Cosgrove and Golden Bar to test other positions.

3.     Perseverance North

The Perseverance deposit has been successfully mined underground producing in excess of 100,000oz @ 11.7g/t Au. The drill targets that will be tested north of Perseverance have been less well-defined by previous drilling. The exploration programme represents an excellent conceptual model for a style of high-grade mineralisation that remains under-explored in the area.

4.     Kings Cross analogues: Redemption & Lady Luck

The historic Kings Cross mine was developed on a structured that splayed off the Bayleys line, producing 100,000oz at 5.64g/t. There are multiple parallel structures to Kings Cross that also cross-cutting the Bayleys Line, some of which host old workings and anomalous gold in drill results. A small drilling program will therefore test two of the areas rated as having high potential: Redemption and Lady Luck.

 

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FOCUS MINERALS STRATEGIC UPDATE

The Chairman and the Board of Directors of Focus Minerals Ltd would like to provide Shareholders with an update on the company’s restructuring post the suspension of its Laverton and Coolgardie operations, and its plans for growing shareholder value moving forward:

Changing Market Conditions
The resources industry has been experiencing a period of intense turmoil due to the steep fall in the price of gold and other metals in a rising cost environment. This has led to a number of major international gold producers recalibrating their Australian assets and, unfortunately, many smaller operators facing significant funding cash constraints.

Focus has acted decisively during the course of these global headwinds, taking the strategic decision to suspend mining at all operations in order to preserve cash and shareholder value. Our actions over recent months have enabled the Board and management to plan comprehensively for a profitable future rather than trying to reset the business on the run.

Focus has unique strengths; having a large bank balance and the strategic support of major international gold producer Shandong Gold as a cornerstone investor. Shandong Gold understands the industry challenges first hand and maintains its long-term view on its investment in Focus. The company is supporting Focus’ need to make necessary changes and encouraging new growth opportunities.

We expect the price of gold to go through what many will interpret as signs of recovery. In Australian dollar terms, the exchange rate will also have an impact from time to time. This being said, we are of the very strong view that irrespective of what the gold price does in the next year or two, Focus needs to concentrate on the margin it makes from mining and processing its gold resource to maximise the end result for the Company and its shareholders. We have spent a considerable amount of time since my domicile in Perth, restructuring the business to achieve this aim and locking in a business model with a much lower fixed cost base and with people that can manage this new business environment.

The group’s vision is for Focus to become a low cost, high value gold producer. To achieve this we are pursuing a Three Point Plan:
1. Establish a new, low cost operating structure
Focus is establishing an outsourced business model for its operations moving forward. This is possible because of our recent actions allowing us to take a clean sheet approach and restructure the business.

Importantly, we will not be outsourcing management control of the business. We have the opportunity to establish a framework that enables the company to achieve a more stable, predictable cost base, both now and moving forward.

To this end, the business has made further changes to its organisational structure to ensure it is resourced appropriately for this stage of its re-development. This recognises that the immediate future will be built on exploration and business development and we have retained a small and committed group of core leaders and technical experts who can continue to pursue these goals, whilst having the capability to gear the business for future growth.

This team will be supported by a number of outsourced functions. We have already arranged to outsource the payroll system, company secretarial function, human resources capability and investor relations. We intend to outsource as much of our operations as is logical which will include all mining services on a future return to production.

When not undertaking mining and processing activities, the biggest single expense for the business is salaries and wages and on-costs. During the mining boom, this expense grew very fast for all industry participants in an effort to both attract and retain the right staff.

We have moved to arrest this. In addition to the savings made through outsourcing, we have put in place a salary freeze, the Board has volunteered a 10% reduction in remuneration and I have volunteered a 33% reduction in my per diem rate as Acting CEO.

When I took over as Acting CEO in March, group salaries were $22 million per annum. Suspending operations at Laverton and Coolgardie and placing them on to care and maintenance, coupled with this final restructure work in the Head Office, has resulted in Group salaries of less than $5 million per annum. With this new model, it is my expectation that very few additions will be required in the business going forward and this cost will largely move in line with market realities.

We have also acted to ensure our balance sheet appropriately reflects the underlying values for our assets. The market has endured some significant impairment charges from major gold companies and miners this reporting season. Australia’s accounting standards require Focus to undergo a similar review each year. The Company has undertaken an independent review by BDO Corporate of our carrying values, and we expect to book write-downs for the fiscal year ended June 30 2013 of $84.9 million. The operating loss for the year will be in the region of $67 million, plus takeover costs for the acquisition of the remaining minority interests in Laverton of circa $4 million and shutdown and restructuring costs for the operations of $10.5 million. This will take the full year loss to circa $166 million (unaudited). The bulk of these profit and loss matters are non-cash. The annual audit is almost completed.

Allowing for the majority of shutdown costs associated with Coolgardie having now flowed through, our cash in the bank as at 31 July 2013 was $101 million (excluding $15 million in DMP security deposits), which ensures a significant war chest remains in place for the business.

The business is now lean, with low capital expenditure. It has a strong, unencumbered balance sheet moving forward and the right people and support structure in place to enable us to pursue our vision of returning to production as a low cost, high grade gold producer.
2. Business Development
The second pillar in our Three Point Plan is to leverage our financial strength to pursue targeted business development opportunities.

Focus has removed all financial encumbrances from its asset base in order to have the option to offer first ranking priority on any future financing should it choose.

Our strategic partnership with Shandong Gold enhances our access to international capital markets, and Focus has a flexible remit in its business development strategy contemplating a full suite of options including acquisitions, divestments, mergers, and joint ventures.

The most important principle for any business development opportunity is that it must create sustainable value for shareholders. Over the last few years, Focus has not consistently created value. Investment timing, some internal resource allocation decisions, and the massive fall in the gold price have contributed to this.

Moving forward, I and the new management team have recommended to the Board a set of stringent criteria for assessing projects in that they must be:
• High grade assets that can be economic across a range of potential gold prices especially against the consensus view from time to time of the long term gold price and exchange rate position;
• Synergistic to Focus’ existing operations – either adjacent to and releasing value in Focus’ current ground, or within economic trucking distance;
• Australian assets that are in, or very close to, production outside of our immediate footprint; or
• Overseas assets that are in, or close to production.

Importantly, with a well-managed cost base and a strong balance sheet, Focus can act on opportunities with patience, not haste. Indeed, we have already reviewed a number of adjacent opportunities to our current operations. Being careful not to over-extend our financial resources, we have chosen not to acquire any of these opportunities. We remain confident that the current environment will continue to present opportunities that are capable of being value accretive in the short term.
3. Asset Development
Thirdly, Focus will leverage its capital to develop its current assets for a return to production, or for potential sale:

Coolgardie > Targeting a long term, high grade reserve to return to production

In Coolgardie we have reset our exploration goals. With the suspension of mining, we have been able to shift our focus from short-term tonnes to feed the mill, to high-grade targets on which we can build our future.

Coolgardie has a history of proven, high-grade underground mining success. We have developed a three year exploration plan goaled with building a solid, sustainable reserve base that provides at least three years of mining confidence (see Appendix 1).

Critically, we are targeting future Ore Reserves at Coolgardie that are of sufficiently high grade to safeguard the operation against future down-turns in the gold price.

Our exploration plan has been designed with a view to re-starting operations within two years.

Delivering on this would also enable us to lock in highly competitive commercial contracting arrangements before any restart is contemplated to ensure the business has a predictable, sustainable cost base going forward.

As a part of this exploration plan we are kicking off Phase One with four new programmes (approved at the August Board meeting) focusing on targets that range from resource extension to advanced greenfields (see separate ASX announcement 20 September 2013).

During this exploration phase, the Three Mile Hill mill remains a key asset that can continue to be monetised for shareholders. It is one of the only operating mills within a 100km radius around the Coolgardie/Kalgoorlie gold belt with significant spare capacity for processing, and there are a number of developers in the region who have a need to process their ore. We will explore this potential as long as it is economically viable.

Laverton > Multi-option approach: Pursuing business development opportunities in parallel with greenfields methodology to exploration

The Laverton district is one of the best gold endowed regions in Australia. Over 28 million ounces of gold have been produced in recent history and it is home to three world class producing mines.

We mined over 100,000oz of gold in Laverton last year but without full control over our processing arrangements the economics of mining in Laverton have not stacked up and were made worse by the gold price collapse.

Given the exploration potential, and sheer scale of resources in the region, we are pursuing a multi-option approach to how we can best unlock this value in the ground.

On the exploration front, this has seen us return to first principles in the area. We have developed a conceptual model based on the regional stratigraphy, geology and past mapping to develop a set of priority targets where our exploration geologists believe there are the best opportunities for discovering large scale, high-grade deposits.

As a part of this work, we have determined to rationalise our tenement holding. We have, over recent months, removed a lot of the encumbrances that we inherited across some of our Laverton tenements and this has in turn allowed us to drop a number of unprospective tenements to rationalise our minimum expenditure commitments.

This now means we are in a position to steadily pursue nine priority target areas in Laverton that are not exposed to extraneous royalty constraints and, we believe, are highly prospective for discovery (Appendix 2).

In parallel, we are continuing to pursue an active business development path looking to the potential for either pursuing strategic acquisitions in the region, or entering into ventures that would enable us to unlock the value we have in our assets across Laverton.

The Board is pleased with the progress being made so far on this Three Point Plan to set the business up to drive to become a low cost, high value gold producer. The Board has asked me to commit to continue to lead these changes beyond the original date of September 2013 in an unchanged capacity. Accordingly I have given my commitment to the Board and the team to remain in the dual role of Chairman and Acting CEO based in Perth until we have delivered the foundations for the changes we are driving towards as a team and re-established the path for value and growth for our shareholders.

I have discussed with the Board the impact this extension could have upon our Corporate Governance principles. Whilst I know how to handle the two roles and which hat is being worn at different times, we must also be seen to be doing the correct thing as well.

As a result, we have made significant changes to our Committee structure (Appendix 3) which underpins the board’s Governance activities in order to improve the transparency – especially in the key area of Audit and Risk – of this approach. Included as an appendix is the Board structure for your information and the Committee Structure supporting the Board and the responsibilities of each.
With a low cost operating model moving forward, some smart acquisitions, a high-grade focus at Coolgardie, multiple options around our Laverton business, a strong cash balance and the support of our corner stone investor, Focus is well positioned to pursue its vision of returning to production as a low cost, high value gold producer.
The road ahead will still be influenced by market volatility, but we have put the company in the best possible state to seize opportunities that will arise. We are clearly focussed on building a strong and stable platform for future growth. I know this has been a concerning time for shareholders, but the Company remains very sound, well-funded, and well supported through Shandong Gold. The Board thanks its staff, shareholders and partners for their patience, understanding and support.

DON TAIG
Chairman & Acting CEO

Rule 5.3

Appendix 5B

 

Mining exploration entity quarterly report

Introduced 1/7/96.  Origin:  Appendix 8.  Amended 1/7/97, 1/7/98, 30/9/2001, 01/06/10.

 

 

Name of entity

FOCUS   MINERALS LIMITED

 

ABN		Quarter ended (“current quarter”)
56   005 470 799		30 JUNE 2013

 

Consolidated statement of cash flows

Cash flows related to operating activities		Current quarter $A’000	Year to date $A’000
1.1	Receipts from product   sales and related debtors	26,788	214,768
1.2	Payments for    (a)    exploration & evaluation	(3,746)	(15,343)
	(b)  development	(4,332)	(14,419)
	(c)  production	(52,958)	(235,379)
	(d)  administration (e) royalties paid	(5,364) (15,721)	(18,927) (23,431)
1.3	Dividends received	–	–
1.4	Interest and other items   of a similar nature received	1,906	3,581
1.5	Interest and other costs   of finance paid	–	–
1.6	Income taxes paid	–	–
1.7	Other (provide details   if material)	962	2,264
	Net Operating Cash Flows	(52,465)	(86,886)
	Cash flows related to investing activities
1.8	Payment   for purchases of:  (a)  prospects (b)  equity investments (c)  other fixed assets	– – (1,738)	– – (7,475)
1.9	Proceeds   from sale of:          (a)  prospects                              (b)  equity investments                              (c)  other fixed assets	– – –	– – –
1.10	Loans to other entities	–	–
1.11	Loans repaid by other   entities	–	–
1.12	Other (provide details   if material)        – Bonds        – Takeover costs	(170) –	(12,165) –
	Net investing cash flows	–	–
1.13	Total operating and   investing cash flows (carried forward)	(1,908)	(19,640)
1.13	Total operating and   investing cash flows (brought  forward)	(54,373)	(106,526)
	Cash flows related to financing activities
1.14	Proceeds from issues of   shares, options, etc. Share issue costs	–	218,091
1.15	Proceeds from sale of   forfeited shares	–	–
1.16	Proceeds from borrowings	–	–
1.17	Repayment of borrowings	–	–
1.18	Dividends paid	–	–
1.19	Other (provide details   if material)	–	–
	Net financing cash flows	–	218,091
	Net increase (decrease) in cash held	(54,373)	111,565
1.20	Cash at beginning of   quarter/year to date	168,541	2,603
1.21	Exchange rate   adjustments to item 1.20	–	–
1.22	Cash at end of quarter	114,168	114,168

 

Gold on hand – At 30 June 2013 the Company held 1,314 ounces of gold in its metal account with the Perth Mint.

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities

		Current quarter $A’000
1.23	Aggregate amount of payments to the   parties included in item 1.2	149
1.24	Aggregate amount of loans to the parties   included in item 1.10	–
1.25	Explanation necessary   for an understanding of the transactions
	Director   fees & superannuation expense.

Non-cash financing and investing activities

2.1	Details of financing and   investing transactions which have had a material effect on consolidated   assets and liabilities but did not involve cash flows
	Nil
2.2	Details of outlays made   by other entities to establish or increase their share in projects in which   the reporting entity has an interest
	Nil

 

 

 

 

Financing facilities available

Add notes as necessary for an understanding of the position.

		Amount available $A’000	Amount used $A’000
3.1	Loan facilities	10,000	8,000
3.2	Contingent Instrument   Facility	18,000	7,037

Estimated cash outflows for next quarter

		$A’000
4.1	Exploration and   evaluation	1,305
4.2	Development	0
4.3	Production	12,372
4.4	Administration	2,817
	Total	16,494

 

Reconciliation of cash

Reconciliation of cash   at the end of the quarter (as shown in the consolidated statement of cash   flows) to the related items in the accounts is as follows.		Current quarter $A’000	Previous quarter $A’000
5.1	Cash on hand and at bank	114,159	168,542
5.2	Deposits at call	–	–
5.3	Bank overdraft	–	–
	Available cash         (item   1.22)	114,159	168,542
5.4	Other (provide details)   – Bonds	25,431	25,200
	Total: cash at end of   quarter	139,590	193,742

 

Changes in interests in mining tenements

 

		Tenement reference	Nature of interest (note (2))	Interest at beginning of   quarter	Interest at end of   quarter
6.1	Interests in mining   & prospecting tenements relinquished, reduced or lapsed	P38/3766 P38/3702 P38/3708 P38/3709 P39/4648 P39/4782 E38/1930 E39/1296 M38/372 M38/694 P38/3496 P38/3497 P38/3499 P38/3717 P38/3718 P38/3719	Lapsed Lapsed Lapsed Lapsed Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred Transferred	100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%	0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
6.2	Interests in mining *   prospecting tenements acquired or increased	P38/3974 P38/3975 P38/3976 P15/5716 P15/5730 P15/5749 P15/5750 P15/5756	Acquired Acquired Acquired Acquired Acquired Acquired Acquired Acquired	0% 0% 0% 0% 0% 0% 0% 0%	100% 100% 100% 100% 100% 100% 100% 100%

Issued and quoted securities at end of current quarter

Description includes rate of interest and any redemption or conversion rights together with prices and dates.

 

		Total number	Number quoted	Issue price per security   (see note 3) (cents)	Amount paid up per   security (see note 3) (cents)
7.1	Preference +securities  (description)	N/a
7.2	Changes during quarter (a)  Increases (b)  Decreases	N/a
7.3	+Ordinary   securities	9,137,375,877	9,137,375,877
7.4	Changes during quarter (a)       Increases   through issues (b)  Decreases through returns   of capital, buy-backs	300,694,977 13,909,548	300,694,977 13,909,548	1.7 cents 1.6 cents
7.5	+Convertible debt securities (description)	N/a
7.6	Changes during quarter (a)  Increases (b)  Decreases	N/a
7.7	Options  (description and conversion factor)	13,500,000 15,000,000	– –	Exercise price 12.3 cents 5.0 cents	Expiry date 30 June 2014 28 February 2016
7.8	Issued during quarter	15,000,000	–	5.0 cents	28 February 2016
7.9	Exercised during quarter	–	–	–	–
7.10	Expired/cancelled  during   quarter	10,000,000	–	12.3 cents	30 June 2014
7.11	Debentures (totals only)	N/a
7.12	Unsecured notes (totals   only)	N/a

 

 

Compliance statement

 

1             This statement has been prepared under accounting policies which comply with accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

2             This statement does give a true and fair view of the matters disclosed.

 

 

 

Sign here:         Paul Fromson                        Date 17 July 2013

Company Secretary

 

Notes

 

1                  The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position.  An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2                 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in mining tenements acquired, exercised or lapsed during the reporting period.  If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3                 Issued and quoted securities  The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4                 The definitions in, and provisions of, AASB 1022: Accounting for Extractive Industries and AASB 1026: Statement of Cash Flows apply to this report.

 

5                 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities.  If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

 

 

== == == == ==Quarterly Cashflow Report

QUARTERLY ACTIVITIES REPORT: APRIL – JUNE 2013

 

 

GROUP SUMMARY

Key Points

• Focus remains in a strategically strong position with one of the largest bank balances of any gold miner on the ASX ($114.2M in cash and equivalents at 30 June) and the support of a major world gold producer in Shandong Gold
• Production for the period was 25,172oz of gold comprising 13,179oz from the Laverton operations and 11,993oz from the Coolgardie operations
• Exploration and resource development work across Coolgardie delivered some very positive intercepts from follow-up programmes across a suite of near mill targets
• As foreshadowed in the March Quarterly report, Laverton operations transitioned to care and maintenance following the completion of Campaign 15 through the Barrick Granny Smith Mill
• Coolgardie operations achieved a solid turnaround in mining, ramping-up at Greenfields, to increase production by 49% on the March quarter and deliver a reduction in C1 cash costs for the month of June of 21.14% over the March quarter
• Further to a strategic review announced in February, and subsequent to the end of the Quarter, Focus has taken the decision to suspend all mining activity at its Coolgardie operations following a further fall in the gold price (see ASX announcement dated 17 July, 2013)
• The Company remains focused on a strategy for creating long-term wealth for shareholders through the development of larger scale, higher grade ore bodies where it has full control over mining and processing
• This can be achieved either within its existing tenements through a continued focus on resource development and exploration or through the acquisition of synergistic assets that could add value to its existing landholdings

Group Results	Jun-12	Sep-12	Dec-12	Mar-13	Jun-13
Mining
Ore   Mined (tonnes)	778,495	790,648	326,363	454,043	276,137
Grade   (g/t)	2.31	2.02	2.26	1.50	1.86
Gold In   Ore (oz)	57,936	51,410	23,682	21,924	16,537
Processing
Ore   Processed (tonnes)	751,186	796,407	717,222	744,398	651,975
Head   Grade (g/t)	2.11	1.91	1.78	1.03	1.20
Gold   Produced (oz)	48,222	48,959	41,097	24,592	25,172
Sales
Average   price received	1,593	1,553	1,654	1,596	1,374
Total   Revenue ($ ‘000s)	77,292	76,670	68,951	39,189	34,210
Attributable   Revenue ($ ‘000s)	70,415	69,406	61,083	34,316	34,210

 

 

 

 

OPERATIONS   REVIEW

 

LAVERTON OPERATIONS

Key Points

• As foreshadowed in the March Quarterly report, Laverton operations transitioned to care and maintenance following the completion of Campaign 15 through the Barrick Granny Smith Mill
• A core exploration and resource development group has been maintained along with a care and maintenance team at the operation
• The operation will now focus on steadily developing greenfield opportunities and rebuilding the reserve base at targets of a high enough grade and quality to enable the operation to determine potential future restart strategies.

 

Laverton Results	Jun-12	Sep-12	Dec-12	Mar-13	Jun-13
Mining
Ore   Mined (tonnes)	477,238	524,493	181,694	341,747	85,005
Grade   (g/t)	1.89	1.79	1.93	1.35	1.45
Gold In   Ore (oz)	29,020	30,238	11,262	14,814	3,956
Processing
Ore   Processed (tonnes)	455,237	492,146	444,060	516,066	402,895
Grade   (g/t)	1.76	1.83	1.80	1.00	1.08
Gold Produced (oz)	23,456	25,782	25,674	16,556	13,179

 

Safety

Laverton Operations experienced one lost time injury.

Production

As foreshadowed in the March quarterly report, the Laverton operations finished production on 30 May moving to a care and maintenance position, with a continuing focus on exploration and resource development.

The decision to close followed lengthy discussions with Barrick in regards to improving the terms of the processing agreement at its Granny Smith Mill.  Given the current gold price and increasing processing fees faced, the decision was taken to cease mining operations from the close of Campaign 15 in order to protect shareholder value.

Mining ceased on the 18^th of May and Milling for campaign 15 completed on 30^th May with the operations producing 13,179oz of gold for the quarter.

Costs associated with the closure of Laverton included:

Redundancies                             $899,000

Break fees on contracts               $698,000

Other costs                                   $52,000

Total                                         $1,649,000

Moving forward the Laverton operation is focused on its rebuilding its reserve base with a view to positioning the operation to be able to make a decision on returning to production based on having sufficient reserves at a high enough grade, and the ability to fully control its processing operations.

 

COOLGARDIE OPERATIONS

Key Points

• Coolgardie operations achieved a solid turnaround in mining, ramping-up at Greenfields and delivering a reduction in C1 cash costs for the month of June by 21.14% over the March quarter
• Mining at Coolgardie’s small underground operation, The Mount, was suspended in mid-June with the operation proving to be economically unsustainable in its existing guise
• Further to a strategic review announced in February, and subsequent to the end of the Quarter, Focus has taken the decision to suspend all mining activity at its Coolgardie operations following a further fall in the gold price (see ASX announcement dated 17 July, 2013)

Safety

Coolgardie Operations experienced three lost time injuries.

Production

Production continued to steadily ramp up at the new Greenfields open pit with the operations delivering a 49% improvement on the March quarter to deliver 11,993oz of gold.

The ramp up in mining was heavily weighted to the second half of the quarter, with the month of June showing a reduction in C1 cash costs over the March quarter of 21.14% (down to $1,899/oz).  Tonnes mined improved notably over the March quarter with the additional return to mining at Big Blow.

A decision was reached during the quarter to suspend mining at The Mount.  Significant work had been undertaken by management and personnel on site in increasing production levels whilst reducing site operating costs and improving operational efficiencies.  However, their efforts notwithstanding, the recent low gold price compounded by the fixed cost components in running the operation led to the decision to suspend operations.

The Mount will remain suspended until a profitable, long-term operational model is developed from the significant information that has been collected during the initial exploration mining activities and the site is being left in the best possible condition for a future restart.

Subsequent to the end of the Quarter, Focus also took the decision to suspend all other mining activity across its Coolgardie operations given the recent gold price instability and based on the Coolgardie operations having insufficient high-grade ore available to ensure profitability at these gold prices.

The operations will be transitioned to care and maintenance with the assistance of Como Engineers to ensure the mill is left in the best possible position for a future restart.

A focus will remain on exploration across the prioritised targets at Coolgardie where the business is pursuing opportunities to develop higher-grade, larger scale ore bodies that can be more resilient to sensitivity changes in the gold price.

Coolgardie   Results	Jun-12	Sep-12	Dec-12	Mar-13	Jun-13
Mining
Ore   Mined (tonnes)	301,257	266,155	144,669	112,296	191,132
Grade   (g/t)	2.99	2.47	2.67	1.97	2.05
Gold In   Ore (oz)	28,916	21,172	12,420	7,110	12,581
Processing
Ore   Processed (tonnes)	295,949	304,261	273,162	228,332	249,080
Head   Grade (g/t)	2.75	2.42	1.86	1.18	1.67
Contained   Gold (oz)	26,166	23,685	16,353	8,684	13,392
Recovery   %	95%	98%	94%	93%	89%
Gold Produced (oz)	24,766	23,177	15,423	8,036	11,993
Cost   Summary ($/Oz Produced):
Mining   (see Note 1)	839	855	1,108	1,092	976
Processing	250	331	411	942	666
Haulage	40	74	67	123	100
Site   Admin, Safety & Environment	60	48	83	251	157
Cash Cost (excl. Royalties)	1,189	1,308	1,670	2,408	1,899
Royalties	82	43	53	54	62

 

 

 

 

 

 

 

 

 

EXPLORATION & RESOURCE DEVELOPMENT

 

The June quarter saw a primary focus on a number of resource development projects at Coolgardie intended to firm up ore reserves for the medium-term mining schedule, and follow-up on some key regional exploration work near Lancefield in Laverton (Mt Crawford).

Coolgardie

Regional Exploration

Exploration at Coolgardie during the quarter continued to work through priority near-mill targets which included follow-up drilling programs at Jolly Briton and Patricia Jean in the northern area of the Coolgardie tenement package, and also at Melanie Anne in the Tindals area – a total of 42 RC holes for 4,222m.  (See ASX announcements dated 28 March 2013 and 27 June 2012)

Highlights from the drilling included a number of high-grade intersections:

Australasian:     8m @ 3.78g/t from 62m in AUSC002;

Jolly Briton:      4m @ 5.87g/t from 101m in PJJBC028;

Melanie Anne:   11m @ 4.84g/t from 161m in MAC087;

5m @ 6.50g/t from 29m in MAC088;

8m @ 4.53g/t from 91m in MAC094; and

2m @ 35.93g/t from 29m in MAC105.

Full details of significant intersections are listed in Table 1 to Table 3.

Figure 1: Melanie Anne drill collars

                       

 

Resource Development

Resource development drilling at Coolgardie during the quarter consisted of 69 RC holes and two diamond holes for 7,654m. Drill programs included additional definition drilling at Dreadnought, an infill drilling program at CNX (

Table 5) and extensional drilling programs at Brilliant (Table 4) and Cookes Pit (Table 6) deposits. An underground resource development program was also completed at The Mount, consisting of 11 diamond holes for 2,206m.

The two development programs at Dreadnought and CNX were broadly in line with expectations, with both programs designed to improve confidence in the existing resource. The Brilliant drilling (Figure 2) was intended to infill and extend the existing mineral resource beneath the southern half of the current pit, and there were a number of outstanding intersections, including:

• 8m @ 20.68g/t from 142m in BRC103;
• 7m @ 3.66g/t from 142m in BRC121;
• 11m @ 6.63g/t from 27m in BRC109; and
• 12m @ 3.30g/t from 76m in BRC129.

Results of this width and tenor provide great encouragement for the potential of Brilliant to host a future underground operation. Further drilling is being planned, initially to better define near-surface ounces for a potential pit cutback but also to test the orebody at depth.

The small drilling program at Cookes Pit proved inconclusive, and some follow-up drilling is likely in the coming quarter.

Figure 2: Brilliant RC drill collar locations.

 

Figure 3: Brilliant long section.

 

 

At The Mount underground mine the final 11 holes of an underground infill diamond drilling program were completed during the quarter, for a total of 2,206m. The results from this program are now being compiled into a revised resource model, which is due to be completed during the September 2013 quarter. No further drilling is planned at The Mount following the suspension of mining in June.

Laverton

Regional Exploration

15 RC holes were drilled at the Mt Crawford project during the quarter for a total of 1,440m. Seven of these were the last holes of a program started in March, which resulted in an intersection of 3m @ 36.97g/t from 105m in hole CFRC025. The latter eight holes were drilled in late June on M38/159, and no assay results have yet been received.

Full details of significant intersections from the earlier drilling at Mt Crawford are listed in Table 7.

Resource Development

During April the final 20 RC holes of the Burtville resource development program were drilled, for a total of 2,486m. Three diamond holes (244m) were also drilled to gain structural information within specific high-grade mineralisation zones.  Upon completion of this drilling the rigs were demobilised and drill sites rehabilitated in preparation for the cessation of mining operations.

 

Figure 2:  Priority exploration target areas at Laverton.

 

 

 

CORPORATE

 

 

Focus remains in a strategically strong position with $114.2M in cash and equivalents at 30 June and the support of its major shareholder Shandong Gold, a major world gold producer.

 

Revenue

The Focus Group sold 24,903 ounces of gold at an average price of A$1,374/oz, to generate revenue of A$34.2M for the quarter.

 

Expenditure

 

The following major expenditure items were incurred this quarter:

 

Payment of   third party Royalty at Laverton	$12.7 M
Laverton   closure costs operations	$1.6 M
Exploration	$3.7 M
Mine   development	$4.3 M

 

Net Operating Cashflows for the quarter were an outflow $52.5M (including the above items) being a reflection of the loss for the quarter plus a further significant reduction in creditors.

 

 

Focus Minerals (Laverton) ownership

 

During the quarter Focus completed the acquisition of the minority interest in Focus Minerals (Laverton) and is now the 100% owner. The company was then converted to a Pty Ltd company on 30 June in order to reduce administration costs.

 

 

Administration

 

As a further cost cutting measure the head office was moved to less expensive premises during the quarter resulting in a 40% reduction in rental costs per annum.

 

 

Cash

At 30 June 2013, the Focus Group held cash, deposits and bullion comprising:

 

Cash at Bank and Deposits	$114.2 million
Bullion on Hand	$1.7 million
Cash held on bond	$25.4m
Total   Cash and Equivalents	$141.3   million

 

The Company has commenced the process to replace its environmental bonds with an annual fee in line with the proposed changes by DMP. It is expected that this process will be completed by December 2013 for both Coolgardie and Laverton and this will free up in excess of $15m cash from the above “Cash held on bond”.

 

 

ENDS

 

Competent Person’s Statement

The information in this announcement that relates to Exploration Results is based on information compiled by Andrew Paterson who is a member of the Australian Institute of Mining and Metallurgy. Mr Paterson is employed by Focus Minerals Limited and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Paterson consents to the inclusion in this announcement of the matters based on the information compiled by him in the form and context in which it appears.

 

Note for Drill Results Tables below:

All RC drill holes are sampled to 1m intervals. Assay method is by a 40 gram fire assay at Bureau Veritas or ALS in Kalgoorlie for Coolgardie drilling, and Bureau Veritas in Leonora for the Laverton drilling All mineralised intersections are quoted as down-hole lengths with uncut gold values, hence the true thicknesses of mineralised intervals may vary. All gold grades are reported with a nominal cut-off grade of 1g/t Au. NSR = “no significant result” (above 1g/t).

 

 

Table 1: Melanie Anne significant intersections, June quarter 2013.

Hole ID	Northing	Easting	RL	Depth	Dip	Azimuth	From	To	Interval	Grade
	(GDA94)	(GDA94)	(GDA94)	(m)	(°)	(Grid)	(m)	(m)	(m)	(ppm Au)
MAC076	6570134	327378	448	68	-50	0	15	17	2	5.45
							23	27	4	1.50
MAC077	6570133	327392	449	57	-60	0	17	21	4	1.00
MAC078	6570146	327393	448	53	-50	0	26	30	4	1.07
							40	42	2	1.43
MAC083	6570001	327206	445	131	-50	155	46	50	4	1.47
							102	104	2	1.71
MAC084	6570025	327190	444	167	-50	155	60	63	3	1.17
							106	114	8	1.90
MAC085	6570069	327220	442	217	-55	155	158	160	2	1.11
MAC086	6570096	327254	443	251	-58	155	234	235	1	7.41
MAC087	6570105	327282	444	227	-52	155	80	82	2	4.11
							161	172	11	4.84
MAC088	6569975	327028	457	56	-50	335	21	23	2	2.86
							29	30	1	2.33
							33	34	1	30.00
MAC090	6569939	327045	453	110	-50	335	25	29	4	2.51
MAC092	6569956	327082	453	113	-60	335	31	32	1	2.02
							102	104	2	1.31
MAC094	6569971	327109	452	107	-60	335	91	99	8	4.53
MAC095	6569989	327151	449	125	-60	335	15	17	2	1.07
							109	114	5	4.70
MAC096	6570070	327156	446	29	-50	335	12	14	2	1.40
MAC097	6570065	327159	445	35	-60	335	8	23	15	1.91
MAC098	6570014	327177	445	125	-60	335	49	57	8	3.78
							84	90	6	3.11
MAC099	6570085	327193	442	59	-60	335	30	38	8	1.86
MAC100	6570068	327201	442	83	-60	335	58	61	3	1.49
MAC102	6570113	327224	440	59	-60	335	44	48	4	1.77
MAC103	6570095	327232	441	77	-60	335	62	66	4	2.88
MAC104	6570076	327240	443	113	-60	335	19	21	2	4.59
							103	105	2	2.55
MAC105	6570148	327379	447	47	-50	0	29	31	2	35.93
MAC106	6570116	327378	449	59	-50	0	17	20	3	1.70
MAC107	6570153	327410	449	50	-50	0	25	28	3	1.39

 

 

Table 2: Jolly Briton significant intersections, June quarter 2013

Hole ID	Northing	Easting	RL	Depth	Dip	Azimuth	From	To	Interval	Grade
	(GDA94)	(GDA94)	(GDA94)	(m)	(°)	(Grid)	(m)	(m)	(m)	(ppm Au)
PJJBC024	6578274	324541	445	83	-55	295	28	31	3	1.26
							69	70	1	27.29
PJJBC025	6578266	324559	443	86	-55	295	69	74	5	1.61
PJJBC027	6578247	324550	444	106	-55	295	30	32	2	3.06
							63	64	1	5.17
PJJBC028	6578251	324642	445	151	-54	295	101	105	4	5.87
PJJBC033	6578254	324585	445	119	-55	295	45	57	12	1.62
							75	79	4	1.36

 

Table 3: Australasian significant intersections, June quarter 2013.

Hole ID	Northing	Easting	RL	Depth	Dip	Azimuth	From	To	Interval	Grade
	(GDA94)	(GDA94)	(GDA94)	(m)	(°)	(Grid)	(m)	(m)	(m)	(ppm Au)
AUSC001	6570255	326640	444	112	-50	90	66	71	5	1.14
AUSC002	6570232	326633	445	100	-50	90	23	26	3	1.86
							62	70	8	3.78
							67	70	3	8.48

 

Table 4: Brilliant resource development drilling significant intercepts, June Quarter 2013

Hole ID	Northing	Easting	RL	Depth	Dip	Azimuth	From	To	Interval	Grade
	(GDA94)	(GDA94)	(GDA94)	(m)	(°)	(Grid)	(m)	(m)	(m)	(ppm Au)
BRC101	6572560	326488	413	231	-53	249	18	27	9	1.22
							155	158	3	6.14
							213	217	4	3.40
BRC103	6572528	326499	414	231	-51	247	142	150	8	20.68
BRC107	6572479	326502	409	222	-57	255	32	42	10	2.38
BRC109	6572447	326508	410	195	-50	246	27	38	11	6.63
BRC110	6572432	326555	416	200	-58	252	97	103	6	1.91
							179	186	7	2.73
BRC113	6572300	326534	415	80	-72	250	30	33	3	6.78
BRC114	6572276	326531	416	146	-69	251	16	21	5	2.82
BRC116	6572271	326586	420	100	-52	243	84	86	2	11.02
BRC119	6572162	326555	420	131	-48	249	78	85	7	1.91
BRC121	6572118	326617	422	157	-53	251	142	149	7	3.66
BRC122	6572032	326578	421	147	-45	254	87	96	9	2.30
BRC123	6571983	326573	419	105	-50	270	76	88	12	3.30
BRC124	6571960	326587	421	192	-60	270	131	137	6	3.82
BRC125	6571904	326484	417	55	-59	270	31	38	7	1.55
							42	47	5	3.28
BRC126	6571843	326451	417	43	-60	270	39	41	2	5.76
BRC128	6571824	326473	416	75	-61	270	52	54	2	7.86
BRC129	6571742	326438	416	61	-60	270	19	20	1	23.90

 

 

 

 

Table 5: CNX significant intersections, June quarter 2013.

Hole ID	Northing	Easting	RL	Depth	Dip	Azimuth	From	To	Interval	Grade
	(GDA94)	(GDA94)	(GDA94)	(m)	(°)	(Grid)	(m)	(m)	(m)	(ppm Au)
CNXC019	6577721	327252	418	90	-60	50	45	48	3	2.14
							56	60	4	2.12
CNXC020	6577709	327229	416	114	-55	50	43	54	11	2.30
							60	88	28	1.88
							93	96	3	2.84
CNXC021	6577708	327275	420	72	-60	50	2	8	6	4.42
							12	21	9	1.43
							38	41	3	1.75
							49	64	15	2.05
CNXC022	6577695	327258	417	110	-60	50	63	66	3	1.72
							71	74	3	1.42
							80	84	4	1.62
CNXC023	6577704	327290	421	75	-60	50	6	11	5	1.07
							28	30	2	2.34
CNXC024	6577694	327279	420	110	-60	50	38	42	4	1.50
							47	51	4	1.81
							71	72	1	8.67
							85	88	3	3.08
CNXC025	6577679	327293	421	110	-59	50	35	42	7	1.77
							56	58	2	1.05
CNXC026	6577682	327331	425	60	-60	50	40	43	3	1.44
CNXC027	6577669	327314	423	90	-60	50	72	77	5	0.96
CNXC029	6577655	327348	426	60	-60	50	10	17	7	1.33
CNXC031	6577638	327372	427	78	-68	50	2	6	4	1.37
							40	54	14	1.28
							60	62	2	3.15
							70	72	2	4.65
CNXC032	6577601	327357	421	113	-62	50	65	76	11	3.61
							82	93	11	1.83

 

Table 6: Cookes Pit significant intersections, June quarter 2013.

Hole ID	Northing	Easting	RL	Depth	Dip	Azimuth	From	To	Interval	Grade
	(GDA94)	(GDA94)	(GDA94)	(m)	(°)	(Grid)	(m)	(m)	(m)	(ppm Au)
CKC001	6571227	326791	419	-58	270	130	51	54	3	5.5
CKC002	6571239	326779	419	-50	270	119	105	106	1	11.9
CKC004	6571279	326760	419	-60	270	120	40	42	2	3.3
							47	57	10	2.1
CKC006	6571339	326791	422	-60	270	90	68	71	3	2.7
CKC008	6571380	326774	423	-55	270	138	73	75	2	1.6
							93	95	2	3.4
CKC009	6571407	326757	424	-62	270	149	99	103	4	1.8
TTC001	6571434	326637	423	-60	270	89	64	70	6	1.3
TTC002	6571459	326651	424	-60	270	107	63	65	2	2.2
							68	71	3	1.2

 

 

 

Table 7: Mt Crawford significant intersections, June quarter 2013.

Hole ID	Y	X	Z	Hole Depth (m)	From (m)	To (m)	Down hole Interval (m)	Grade g/t Au
CFRC001	6839000	441879	472	120	41	42	1	1.54
CFRC002	6839000	441959	474	120	6 85	7 87	1 2	2.52 3.98
CFRC006	6838799	442179	469	100	30	31	1	2.56
CFRC009	6838402	442019	464	96	25 39	27 41	2 2	1.06 0.98
CFRC011	6838402	442180	468	138	14 21	17 22	3 1	1.17 1.11
CFRC013	6838400	442340	471	78	33	35	2	1.53
CFRC015	6838200	441479	460	78	27 45	28 49	1 4	1.07 1.23
CFRC017	6838200	442400	468	128	9 17	10 18	1 1	2.12 3.7
CFRC020	6838000	442079	462	78	39	43	4	1.07
CFRC024	6838000	442480	465	48	6 13 27	9 15 28	3 2 1	1.19 2.02 1.71
CFRC025	6838000	442558	464	150	105	108	3	36.97
CFRC028	6837800	442119	466	126	52 89	54 90	2 1	1.09 0.99
CFRC031	6837603	442119	469	84	70	71	1	1.05
CFRC033	6837600	442279	470	108	3 17 27	10 18 28	7 1 1	2.05 1.51 1.95
CFRC034	6838000	442474	465	114	13 36	17 37	2 1	1.20 4.25

 Quarterly Report for June 2013

FOCUS TO CEASE PRODUCTION AT COOLGARDIE OPERATION

– PRIORITY ON PRESERVING STRONG CASH POSITION TO CAPITALISE ON OPPORTUNITIES IN CURRENT ENVIRONMENT –

Key points: Existing Coolgardie mining centres remain too marginal in current gold price environment, despite significant operational improvements now being realised Coolgardie mining & processing operations to be suspended Coolgardie operation to consolidate on exploration focus for higher-grade opportunities with a view to restructuring operations for a restart when the gold price environment improves Board and Management focused on transformational opportunities for   business currently being presented in the changing Australian gold market landscape

 

Focus Minerals Ltd. (ASX: FML) said today that it will suspend its Coolgardie operations at the end of July due to further recent declines in the gold price. The decision follows a strategic review of the Coolgardie operations that started in February.

“Despite some significant improvements in mining and processing performance in recent months that the new management team at Coolgardie achieved, the Coolgardie operations in their current guise are unviable in the current economic environment,” said Chairman and Acting Chief Executive Officer Don Taig.

“Given the recent gold price instability we are simply in a position where there is currently insufficient high-grade ore available at Coolgardie to ensure profitability at these gold prices.

“We cannot jeopardise or risk our strong cash position by continuing to operate mines that cannot be profitable on a sustaining basis.”

Preserving Cash to Capitalise on Opportunities in Current Environment

Mr Taig said whilst it was disappointing to be suspending the Coolgardie operations, Focus remained in a strategically strong position with one of the largest bank balances of any gold miner on the ASX and the support of a major international gold producer in Shandong Gold.

“Our goal is to ensure that we use our capital wisely, leveraging our strong financial position in a market that is already presenting growth opportunities,” said Mr Taig.

“We aim to create long-term wealth for shareholders by identifying larger scale, higher grade ore bodies where Focus has full control over mining and processing and the ability to deliver significant mine life and sustainable reinvestment in tenement holdings.

“This is something we can achieve by ensuring we preserve the cash in our business to enable us to explore our current assets or pursue any synergistic acquisition opportunities that could add value to our existing land holdings,” Mr Taig said.

 

The suspension of mining activities will impact 65 roles in the business with the majority of the roles impacted at Coolgardie.   “I would like to recognise the significant work undertaken by the management and personnel on site both past and present,” said Mr Taig.  “As stated in our last quarterly, we changed the management at the mine and they have made a difference but unfortunately the external factors have required us to make this change. The improvements already identified will be recorded to be leveraged from in the future.  We will be offering our fullest support to all our employees impacted by this transition.”

 

Focus Minerals Limited – Focus owns two large gold projects in Western Australia’s Eastern Goldfields.  The company is the largest landholder in the Coolgardie Gold Belt, 35km west of the ‘Super Pit’ in Kalgoorlie, where it has produced from a mix of open pit and underground operations, processing through its own 1.2Mtpa processing plant, Three Mile Hill. 250km to the northeast Focus has 100% controlling interest in the Laverton Gold Project which comprises a significant portfolio of large scale open pit mines, adjacent to Barrick’s Granny Smith operation where it has historically processed ore.  Focus also owns the 1.5Mtpa Barnicoat mill in Laverton which has been on care and maintenance since 2009.

 

For further information please contact:

Don Taig Executive Chairman & Acting CEO Focus Minerals Ltd Phone: +61 8 9215   7888

Neil Le Febvre Investor Relations Manager Focus Minerals Ltd Phone: +61 8 9215   7888

Michael Mullane Media – Cannings   Communications Phone: +61   2 8284 9990

Suspension of Coolgardie Mining Operations

Download Announcement here

 

FOCUS STARTS TRANSITION TO LOW COST, HIGH VALUE GOLD PRODUCER; CEASES OPERATIONS IN LAVERTON DUE TO RISING COSTS AND REDUCING MARGINS

Key points: Strong balance sheet after successful share Placement to China’s Shandong Gold Strong cash position will drive transition to low cost, high value producer to boost shareholder value Rising processing costs for Laverton toll processing arrangement make current and longer-term campaign processing commercially unviable Focus currently evaluating moving Laverton operations to exploration only to rebuild reserves and drill highly prospective green fields targets in readiness for gold price recovery Group has undertaken a ground up review of operations implementing major leadership changes at its Coolgardie site Business to evaluate a number of synergistic opportunities available to it in the region To that end business has removed a number of encumbrances during the quarter to ensure it is able to offer first ranking priority on any future financing.

 

Focus Minerals Ltd. (ASX: FML) said today that, as part of its strategic review of operations initiated two months ago, it will cease mining at its Laverton Gold operations for the immediate future due to the increasing costs it is incurring and the significant effect on revenue from the dramatic fall in the gold price.

These costs have also made the existing campaign processing arrangement commercially unviable.

Focus’ Chairman and Acting CEO, Don Taig, said the Board is currently evaluating options around moving the operations to an exploration only focus to rebuild reserves and drill a number of its highly prospective green fields targets, as well as exploring a number of other synergistic opportunities that are available to it in the region given the Company’s very strong cash balance and cornerstone shareholder.

“The long-term outlook for the gold price, campaign nature of processing, and the escalating processing costs we have been faced with over the past six months at the Granny Smith mill made this a necessary decision for us in protecting the value of the Laverton assets for all shareholders,” said Mr Taig.

“We have a significant, highly prospective landholding in the Laverton region surrounding four major mines with over 20Moz between them. We are not about to deplete our current reserves base just to break even.

“The high cost base in the Australian mining industry and rising mining inflation of the past few years has seen all of the reductions and operational improvements we have been delivering continue to be consumed.  These are pressures that are being felt right across the industry and impacting the competitiveness of Australian mining.  A sharp fall in commodity prices always provides a clear lens for the industry on just how bad this has become.  The high Australian dollar is not assisting business either and it is my view that unless all industry participants – capital, labour and government work quickly and earnestly together – the industry is in for a lean time.”

A New Direction to Boost Shareholder Wealth

Mr Taig said despite the Group’s disappointment in having to cease operations in Laverton he believes the business is in a strategically strong position.

“We have one of the largest bank balances of any gold miner on the ASX and the backing of a major world gold producer in Shandong Gold,” said Mr Taig.

“To that end we have invested in removing a number of encumbrances during the quarter to ensure we are able to offer first ranking priority on any future financing.

“Our collective goal is to ensure we deliver on the most efficient use of capital and that we can leverage our strong financial position in a market which is already presenting growth opportunities for Focus to evaluate. Burning cash in a negative margin environment is not sensible and the Company must look at all options available to exploit the Group’s strong cash position to create long-term wealth for its shareholders.

“Our strategic review is ongoing and the remit of this is such that we are exploring opportunities for continued organic growth through exploration on our assets, and opportunities for acquisitions that could underpin and improve the existing operations and enable Focus to move to a lower cost base with improved scale and productivity.

“A framework for this review is our drive to focusing on opportunities for larger scale, higher grade ore bodies where we have full control over mining, and processing and the ability to deliver significant mine life and sustainable reinvestment in our tenement holdings in good gold bearing addresses.”

Group Operational Restructure & Dealing with Rising Costs

Mr Taig said that on his stepping into the role of Acting CEO at the beginning of February, the team commenced a review of the business both at an operational and strategic level with a goal of optimising current operations, and ensuring the business could use its strong cash position to transition Focus into being the lowest cost, highest value producer it can be.

“Earlier in the March Quarter, in addition to the decisions we have now reached at Laverton, we implemented a group-wide restructuring to right size the workforce, change the role and remit of some departmental areas, and change the leadership at our Coolgardie operation.  The Laverton decision has added further to this restructuring.

“We have also prioritised our energies into increased resource definition to help improve our mid-term planning and to identify future mineable reserves to enable us to make the right decisions on future plant expansion and commissioning.  This has always been a clearly stated opportunity through the investment from Shandong Gold.”

Coolgardie Operational Focus

Mr Taig said the March quarter in Coolgardie had been an aberration in terms of production and costs and compounded by the effects of the gold price fall.  “This has been a very disappointing Quarter for Coolgardie and we have taken strong actions to rectify production,” said Mr Taig.

“Our strategic review is continuing in order to determine our best path forward in driving value from this asset for shareholders.  The opportunity we have at Coolgardie is to determine the best economic outcomes for our operations in this current environment and that may mean changes in how we use the processing plant and where we focus our resources.

“In the immediate term we now have a new Resident Manager, Mining Manager and Chief Mine Geologist.  We have performed a detailed review of operations through an independent consultancy group and that has helped us highlight significant areas for improvements and we are gathering resources to commence an eight week programme to improve the operational planning and workflow with the goal of increasing recovery and output, whilst also improving cost efficiencies.

“We believe we will be able to get Coolgardie back on track providing the existing operations deliver the further productivity improvements required.  We have already invested in mine development, pre-strip and tailings dam expansion projects in order to exploit our planned mining activities and we therefore believe it could sub-optimise the outcome for the business if we did not give these changes a chance to deliver their results.

“As part of this process we are looking to achieve a 20% improvement in productivity in the medium term, translating to fundamental savings at an operating cost level.  The Strategic review therefore at Coolgardie is less black and white compared to Laverton and will be best reviewed in phases to ensure we maximise the outcome with a mind’s eye to our ongoing cash position as a priority focus for the business overall,” Mr Taig said.