ASX Announcements

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

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.

Download March 2013 Quarterly Report here

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FOCUS CLOSES THE SUCCESSFUL TAKEOVER OF FOCUS LAVERTON

Focus Minerals Ltd (“Focus”) [ASX: FML] is pleased to announce that at 7.00pm (Melbourne time) on Monday, 22 April 2013, the unconditional recommended off-market takeover offer by Focus announced on 15 March 2013 for all of the remaining Focus Minerals (Laverton) Limited (“Focus Laverton”) shares it did not currently own (“Offer”) closed.

Focus has received acceptances for the Offer which give Focus a total relevant interest in Focus Laverton of 99.185%.

Issue of Focus shares under the Offer

Focus intends to commence issuing the new Focus shares to Focus Laverton holders who have validly accepted the Offer (and who are not Ineligible Foreign Shareholders as defined in Focus’ bidder’s statement dated 19 March 2013) from Friday, 26 April 2013.

Issue of Focus shares following compulsory acquisition

Focus announced on 2 April 2013 that it would commence the compulsory acquisition process under the Corporations Act to acquire all outstanding shares it has not acquired under the Offer.  Focus Laverton shareholders whose shares are compulsorily acquired will receive their consideration at the end of the compulsory acquisition period, which is likely to be approximately four weeks from today.

Focus Reaches 98 per cent interest in Laverton

FOCUS REACHES 98.90% INTEREST IN FOCUS LAVERTON AND WILL PROCEED WITH COMPULSORY ACQUISITION

Focus Minerals Ltd (“Focus”) [ASX: FML] and Focus Minerals (Laverton) Limited (“Focus Laverton”) on 15 March 2013 announced an unconditional recommended off-market takeover offer by Focus for all of the remaining Focus Laverton shares it does not currently own (“Offer”).

Focus is pleased to announce that it now has received acceptances for its unconditional recommended off-market takeover of Focus Laverton which give Focus a total relevant interest in Focus Laverton of 98.90%.

Compulsory Acquisition

Focus will now commence the compulsory acquisition process under the Corporations Act to acquire all outstanding shares it has not acquired under the Offer, in order to move to 100% ownership of Focus Laverton.

Issue of Focus shares under the Offer

Focus Laverton shareholders are free to accept the Offer until its closing date (7.00pm (Melbourne time) on 22 April 2013), and, in doing so, may benefit from receiving their consideration earlier than if those shares are compulsorily acquired. Focus intends to commence issuing the new Focus shares to Focus Laverton holders who have validly accepted the Offer (and who are not Ineligible Foreign Shareholders as defined in Focus’ bidder’s statement dated 19 March 2013) from Friday, 26 April 2013.

Issue of Focus shares following compulsory acquisition

Focus Laverton shareholders whose shares are compulsorily acquired will receive their consideration at the end of the compulsory acquisition period, which is likely to be approximately four weeks after the Offer Close Date.

Other

The consideration being offered to Focus Laverton shareholders is 1 Focus share for every 0.725 Focus Laverton shares.  At the closing price of Focus shares on 14 March 2013 of 2.0 cents per share, the Offer represents an implied offer price of 2.8 cents per Focus Laverton share.[1]

The independent expert appointed by Focus Laverton, BDO Corporate Finance, has opined that the transaction is fair and reasonable to Focus Laverton shareholders.

The Independent Director of Focus Laverton, Mr Geoff Stanley, recommends that all Focus Laverton shareholders accept the Offer, in the absence of a superior proposal.

The transaction will consolidate the Laverton assets into Focus, creating an Australian gold producer with targeted annual gold production of 200,000oz per annum from 2014, a combined Mineral Resource base of 4.3Moz of gold, and outstanding growth potential across two major Western Australian mining regions.

Download full announcement here

FOCUS MINERALS REPORTS ENCOURAGING FIRST ROUND RESULTS FROM COOLGARDIE NEAR MILL PROGRAMME

Focus Minerals Ltd. (ASX: FML) is pleased to announce the first round of results from its near mill exploration programme in Coolgardie, one of a number of new drilling programmes recently commenced.

The aim of the programmes across the group’s significant land holdings in the eastern goldfields region of Western Australia is to bolster Mineral Resources and Ore Reserves at its current operations as well as build a pipeline of future mines near its milling centres.

Highlights of the Coolgardie programme include high-grade intercepts at the Melanie Anne, Boundary and Jolly Britons targets near Focus’ Three Mile Hill plant.  Best intercepts include:

• Melanie Anne: 6m @ 97.0g/t; 34m @ 4.0g/t; 6m @ 5.7g/t; and 5m @ 5.3g/t
• Boundary: 7m @ 5.3g/t; 7m @ 4.0g/t; and 3m @ 5.9g/t
• Jolly Britons: 17m @ 3.7g/t; and 7m @ 6.6g/t.

“Our drilling energies and resources in 2013 are being channelled into developing and growing our near plant  Mineral Resources and Ore Reserves over the next 12 months,” said Focus Minerals Chairman and Acting CEO Don Taig.

“Our goal is to return the business to a stable position of having 2-3 years of Ore Reserves ahead of us which will in turn enable us to make the appropriate key business decisions in relation to mill expansions and recommissioning’s which we know can have a significant impact on the long term economics of our operations.

“These initial results in Coolgardie are encouraging as they continue to underscore the abundance of near surface targets in the region.”

The following summarises each programme:

Melanie Anne Area

Approximately 3,700m were planned to be drilled to determine the along strike and down-dip continuity of known mineralisation around the old workings in the Melanie Anne area. Historic drilling along this trend has delivered intercepts that include 7m @ 11.6g/t (including 2m @ 37g/t), as well as a 1m quartz vein containing 173g/t.

This programme is still in progress, but early results have been very encouraging with best intersections including 6m @ 97g/t (including 3m @ 191.4g/t) and 34m @ 4g/t (Figure 1 and Table 1).

The area contains many historical shafts and shallow workings with evidence of historical drilling around them. Three targets areas were identified, all of which occur at the basalt / dolerite contact where there appears to be dislocations within the dolerite unit, as shown in the aeromagnetics (Figure 2).  The drilling has so far intersected mineralisation within sheared dolerite with small quartz veins and strong biotite alteration (Melanie Anne North, Figure 3), intensely altered sheared dolerite (Melanie Anne West, Figure 3), and within diorite the has intruded into basalt and basalt / dolerite contact (Melanie Anne, Figure 3). Mineralisation in all areas is open along strike and at depth.

Boundary

The RC programme at Boundary (Figure 1) aims to extend known mineralisation down-dip to at least 50-60m below the historic Boundary pit.  A total of 8 holes for 1,371m were completed with best intersections of 7m @ 5.3g/t and 3m @ 5.9g/t (Table 2).

Hole BNDC009 (Figure 4) was designed to test a possible change in dip of the mineralisation associated with the sediment/dolerite contact. The results indicate the mineralisation changing from steeply north to steeply south. This indicates that the historical drilling has potentially been ineffective in testing the mineralisation at Boundary.

Further drilling is being planned to test this theory. The mineralisation within the dolerite remains open at depth (Figure 5).

Jolly Britons

A total 15 RC holes for 1,492m was completed at Jolly Britons (Figure 1) in follow up to a previous RC programme, which delivered a series of high-grade intercepts over a 500m strike interpreted to be associated with a significant mineralised fault structure extending from two major pits along a 6km strike to the south.

The widest and most consistent mineralisation so far appears to be around the Jolly Britons Main Shaft (Figure 6 & 7) where drilling has intersected what is believed to be the main Jolly Britons structure 27m below the surface (Table 3) with the hole containing a high percentage of mineralised quartz and returning a best intersection of 17m @ 3.7g/t. Mineralisation remains open to the south.

Further drilling is being planned to interpret the exact orientation of this structure.

Stone group advises intention to accept offer

MAJOR FOCUS LAVERTON SHAREHOLDER INTENDS TO ACCEPT FOCUS OFFER

• Stone Group has advised Focus that it intends to accept the Offer in respect of its 14.4% holding in Focus Laverton, in the absence of a superior proposal

Focus Minerals Ltd (“Focus”) [ASX: FML] and Focus Minerals (Laverton) Limited (“Focus Laverton”) on 15 March 2013 announced an unconditional recommended off-market takeover offer by Focus for all of the remaining Focus Laverton shares it does not currently own (“Offer”).

On 20 March 2013, Stone Mining Limited (“Stone”) confirmed to Focus that it is Stone’s intention to accept the Offer for all of its shareholding in Focus Laverton, in the absence of a superior proposal. Stone holds 178,384,718 Focus Laverton shares representing a 14.4% shareholding in Focus Laverton.

As foreshadowed in Focus’ Bidder’s Statement, Focus intends to enact its rights to proceed to compulsory acquisition once Stone accepts the Offer and the necessary conditions to proceed to compulsory acquisition are satisfied.

The consideration being offered to Focus Laverton shareholders is 1 Focus share for every 0.725 Focus Laverton shares.  At the closing price of Focus shares on 14 March 2013 of 2.0 cents per share, the Offer represents an implied offer price of 2.8 cents per Focus Laverton share.[1]

The independent expert appointed by Focus Laverton, BDO Corporate Finance, has opined that the transaction is fair and reasonable to Focus Laverton shareholders.

The Independent Director of Focus Laverton, Mr Geoff Stanley, recommends that all Focus Laverton shareholders accept the Offer, in the absence of a superior proposal.

The transaction will consolidate the Laverton assets into Focus, creating an Australian gold producer with targeted annual gold production of 200,000oz per annum from 2014, a combined Mineral Resource base of 4.3Moz of gold, and outstanding growth potential across two major Western Australian mining regions.

Download Bidder’s & Target’s Statements here

FOCUS MINERALS AND FOCUS LAVERTON RELEASE THEIR BIDDER’S AND TARGET’S STATEMENTS

Focus Minerals Ltd (“Focus”) [ASX: FML] and Focus Minerals (Laverton) Limited (“Focus Laverton”) today released their Bidder’s and Target’s Statements for the unconditional recommended off-market takeover offer by Focus for all of the remaining Focus Laverton shares it does not currently own (“Offer”). The Offer was announced to market on 15 March 2013.

The transaction follows the previous takeover offer for Focus Laverton (previously known as Crescent Gold Limited) which closed in October 2011 (“Initial Takeover Bid”), with Focus acquiring 81.57% of Focus Laverton shares.

The consideration being offered to Focus Laverton shareholders is 1 Focus share for every 0.725 Focus Laverton shares.  At the closing price of Focus shares on 14 March 2013 of 2.0 cents per share, the Offer represents an implied offer price of 2.8 cents per Focus Laverton share.[1]

The independent expert appointed by Focus Laverton, BDO Corporate Finance, has opined that the transaction is fair and reasonable to Focus Laverton shareholders.

Mr Don Taig, Chairman and Acting Chief Executive Officer of Focus Minerals said:  “Full ownership of Focus Laverton will allow Focus to be better placed to invest, grow and expand the Laverton operations. Focus has the financial capacity to extract significant value from the Laverton operations for all shareholders of the merged entity.”

The Independent Director of Focus Laverton, Mr Geoff Stanley, recommends that all Focus Laverton shareholders accept the Offer, in the absence of a superior proposal.

Mr Geoff Stanley, the Independent Director of Focus Laverton said:  “The Board of Focus Laverton considers the transaction to be a compelling opportunity for Focus Laverton shareholders to become part of a rapidly growing Australian gold producer. Post-acquisition, Focus Laverton shareholders will be part of an entity with an exciting production and exploration growth profile, strong balance sheet, diversified asset portfolio and an experienced management team.”

The transaction will consolidate the Laverton assets into Focus, creating an Australian gold producer with targeted annual gold production of 200,000oz per annum from 2014, a combined Mineral Resource base of 4.3Moz of gold, and outstanding growth potential across two major Western Australian mining regions.

Mailing of the Bidder’s Statement and Focus Laverton’s Target’s Statement is expected to be completed on Wednesday 20 March 2013. Copies of the Bidder’s Statement and Target’s Statement (including the independent expert’s report) are annexed to this announcement and can also be viewed on www.focusminerals.com,au.  The bid will close on 22 April 2013, unless extended.

Download full announcement here – Recommended Takeover of Remaining Laverton Shares

RECOMMENDED TAKEOVER OF FOCUS LAVERTON BY FOCUS MINERALS 

• Focus offering 1 Focus share for every 0.725 Focus Laverton (previously known as Crescent Gold Limited) shares in an unconditional off-market bid
• The Independent Director of Focus Laverton recommends that all Focus Laverton shareholders accept the Offer, in the absence of a superior proposal and subject to an independent expert opining that the Offer is reasonable (even if not fair)
• Full consolidation to maximise the value of Focus Laverton’s assets
• Focus Laverton shareholders will be given the opportunity to become part of a growing, well capitalised gold producer
• The Offer, if successful and fully accepted, will result in the issue of 314,604,392 Focus shares (equating to only 3.44% of the expanded capital base of Focus)

Focus Minerals Ltd (“Focus”) [ASX: FML] and Focus Minerals (Laverton) Limited (“Focus Laverton”) are pleased to announce an unconditional recommended off-market takeover offer by Focus for all of the remaining Focus Laverton shares it does not currently own (“Offer”).

The transaction follows the previous takeover offer for Focus Laverton (previously known as Crescent Gold Limited) which closed in October 2011 (“Initial Takeover Bid”), with Focus acquiring 81.57% of Focus Laverton shares.

The Independent Director of Focus Laverton, Mr Geoff Stanley, recommends that all Focus Laverton shareholders accept the Offer, in the absence of a superior proposal and subject to an independent expert opining that the Offer is reasonable (even if not fair).

The transaction will consolidate the Laverton assets into Focus, creating an Australian gold producer with targeted annual gold production of 200,000oz per annum from 2014, and a combined Mineral Resource base of 4.3Moz of gold with outstanding growth potential across two major Western Australian mining regions.

OFFER DETAILS

Focus and Focus Laverton have executed a Bid Implementation Agreement (“BIA”), under which Focus agreed to make the Offer.

The consideration being offered to Focus Laverton shareholders is 1 Focus share for every 0.725 Focus Laverton shares.  At the closing price of Focus shares on 14 March 2013 of 2.0 cents per share, the Offer represents an implied offer price of 2.8 cents per Focus Laverton share.[1]

The Offer is expected to open on 20 March 2013, and remain open for acceptances until 22 April 2013, unless extended or withdrawn.

Full particulars of the Offer will be provided in the Bidder’s Statement which is expected to be sent to Focus Laverton shareholders on 20 March 2013.

TRANSACTION HIGHLIGHTS

The Board of Focus Minerals and the Independent Director of Focus Laverton consider that the combination of the two companies will provide significant strategic and financial benefits to both sets of shareholders:

Mr Don Taig, Chairman and Acting Chief Executive Officer of Focus Minerals said:  “Full ownership of Focus Laverton will allow Focus to be better placed to invest, grow and expand the Laverton operations. Focus has the financial capacity to extract significant value from the Laverton operations for all shareholders of the merged entity.”

“There are resource, operating and processing synergies available once 100% ownership is achieved that would lead to increased output and hence improved economic outcomes for the benefit of existing Focus Laverton shareholders and Focus shareholders”, Mr Taig said.

Mr Geoff Stanley, the Independent Director of Focus Laverton said:  “The Board of Focus Laverton considers the transaction to be a compelling opportunity for Focus Laverton shareholders to become part of a rapidly growing Australian gold producer. Post-acquisition, Focus Laverton shareholders will be part of an entity with an exciting production and exploration growth profile, strong balance sheet, diversified asset portfolio and an experienced management team.”

Key compelling benefits for both Focus Minerals and Focus Laverton shareholders include:

• Significant resource growth potential – the combined group will have a very significant Mineral Resource inventory of 4.3Moz.  Both the Laverton and Coolgardie regions have demonstrated the opportunity for significant resource growth on targeted exploration programmes.  Focus brings the immediate funds to accelerate exploration at Laverton, with strong group revenues providing a basis to fund further exploration to expand group resources.
• Significant growing production profile – the combined group will be better positioned to achieve Focus’ targeted gold production of 200,000oz per annum from 2014.
• Greater capacity to unlock the value of Focus Laverton’s assets – if 100% ownership was to result from the Offer and Focus Laverton was to become a wholly owned subsidiary of Focus, Focus will be better placed to drive growth and value from Focus Laverton’s assets for the benefit of both Focus Laverton and Focus shareholders.
• Liquidity for Focus Laverton shareholders – as a Focus shareholder you will benefit from liquidity for your investment due to receiving shares in an ASX listed entity that are freely tradable.

The Offer, if successful and fully accepted, will result in the issue of 314,604,392 Focus shares (equating to only 3.44% of the expanded capital base of Focus).

MANAGEMENT OF POTENTIAL CONFLICTS IN RELATION TO THE OFFER

The Directors of Focus Laverton recognised the potential for conflicts of interest to arise in relation to the Offer in relation to each of Donald Taig and Bruce McComish, who are also executives and/or directors of Focus.  Accordingly, the Offer was evaluated by the Independent Director of Focus Laverton, Geoff Stanley, without the participation of the other Directors.  The Independent Director of Focus Laverton had access to independent legal advice to assist him with his evaluation.

INDICATIVE TIMETABLE

The indicative timetable in relation to the Offer is set out below.

OTHER MATTERS

Focus’ corporate adviser is Hartleys Limited and its legal advisor is King & Wood Mallesons. Focus Laverton’s legal advisor is Corrs Chambers Westgarth.

Download full announcement here

HALF YEAR FINANCIAL RESULTS UPDATE

Focus Minerals Ltd. (ASX: FML), a leading Australian gold producer and explorer, said today its unaudited net loss after tax for the six months ended 31 December 2012 is expected to be approximately $27.4 million. This figure includes losses for minority interests in its Laverton operations of $4.1 million. The expected consolidated loss for Focus for the period is therefore $23.3 million.

The half-year loss of $27.4 million is primarily impacted by the following large expense items:

• Approximately $26 million in amortisation costs, including $22 million for the pre-strip of the Apollo pit complex in Laverton; and
• $15 million in royalty payments, including $9.6 million for an inherited royalty obligation with respect to a long-standing agreement on selected tenements in the Laverton region.

It is important to note that in the second half of FY2013 Focus’ new mining area at Burtville in Laverton is not affected by the historical royalty obligation. Burtville was recently subject to the negotiation of a new commercially competitive mining contract following a tendering process.  It operates at a far lower strip ratio than Apollo, providing economies of scale for mining, and has incurred much lower development costs.

Executive Chairman and Acting CEO Don Taig said:  “In the first half of FY2013 we have incurred a number of one off costs in relation to our Laverton operations which have impacted profitability.  I am now leading an action based review with our management team committed towards restoring our business to profitability and, with the valuable support of our major shareholder Shandong Gold, repositioning the company as a low cost, high value enterprise.”

Gold production for the first half was 90,056oz (80,572oz attributable), an increase from 80,921oz (69,858oz attributable). Revenue for the half was $130 million, up from $104 million.  With the company currently transitioning between primary ore sources at both Laverton and Coolgardie, production for the second half of 2013 is expected to be between 60,000oz and 70,000oz.

Focus has cash and equivalents as at 31 December 2012 of $225.8 million following its Placement to Shandong Gold.

Focus has recently commenced a major exploration and resource development drilling program across its significant tenement holdings in the Eastern Goldfields region of Western Australia, with a goal of rapidly increasing Ore Reserves and identifying future mining areas from more than 40 priority targets. The Company is targeting growth in Ore Reserves to 1 million ounces and in Mineral Resources to 5.5 million ounces in the shortest timeframe possible.