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FURTHER RECONNAISSANCE DRILLING AT TREASURE ISLAND IDENTIFIES LARGE EXTENSION TO NEW GOLD SYSTEM

-          Second gold bearing structure on project now estimated to be 4km long

-          Infill drilling program completed; results pending

Focus Minerals Ltd. (ASX:FML) a leading Australian gold producer and explorer, said today that reconnaissance drilling at its Treasure Island Gold Project at Lake Cowan has confirmed that the recently discovered gold bearing system running through the project (see ASX Release dated 24 November 2011) appears to be significantly longer in potential strike length than initial estimates.

The Treasure Island Gold Project on Lake Cowan is located 35km south-south east along strike from the major gold camp of Kambalda St Ives in Western Australia, where over 15 million ounces of gold have been discovered over the last 22 years.

Following the receipt of final assays from a reconnaissance aircore drilling program conducted during the December Quarter, the  newly discovered gold bearing system is now believed to extend for over a 4km strike length through the project, up from an initial 1.2km (Figure 1).

Treasure Island principal geologist Dean Goodwin, who discovered the gold mines of Redoubtable, Santa Anna and Intrepid on Lake Lefroy to the north of Treasure Island in the late 90s, said the latest results also showed the emergence of exciting structural complexities of the gold system.

“This drilling program has enabled us to identify the supergene zone hot spots that point to the potential primary ore zones beneath the lake sediment,” said Mr Goodwin.  “What we are starting to see as we map these is not only a significant increase in the length of the gold system, but also evidence of a lot of structural complexity which is similar to what you see at St Ives.  Complexity is the key to finding substantial gold deposits.”

Mr Goodwin said that since preliminary aircore results were announced to the ASX on 24 November 2011, a further 12 holes had returned composite samples of greater than 50ppb (parts per billion). “This shows a strong signature as to the existence of the gold bearing structures beneath the lake. We’re excited by the potential.”

Infill aircore drilling started in January 2012 on a 80m x 40m spacing and is expected to produce multiple targets, which will then be tested by diamond drilling.  Results from this infill program are expected in approximately one month’s time.

CORPORATE

• Group gold production for the Quarter was 34,211oz, inclusive of an attributable 12,779oz from the Laverton operations.
• Coolgardie delivered revenue of A$33.3M from gold sales of 19,922oz at an average price of A$1,670/oz.
• Laverton delivered gross sales revenue of $26.3M from sales of 15,666oz produced in the December Quarter at an average price of $1,676/oz.
• Capital investment and exploration expenditure at Coolgardie for the Quarter totalled $10.48M, comprising $6.23M of mine capital development and $4.25M of exploration expenditure.
• At the end of the Quarter, Focus had cash and bullion equivalents of $14.3M and remains hedge free.

OPERATIONS

Coolgardie, Western Australia

• Coolgardie Operations produced 21,432oz at a cash cost of $1,076/oz compared to a cash cost of $977/oz in the previous Quarter.  Operating costs were adversely affected by an unscheduled mill reline and shutdown costs incurred during December.
• Second best Quarter on record mining 231,878t @ 3.15g/t for 23,463oz.
  • The Mount delivered its best Quarter since entering production mining 6,047oz, a 29% increase on the September Quarter.
  • The commencement of development of the Big Blow open pit saw the Tindals Open Pits deliver 3,967oz, despite the impact of unseasonal rain which impacted 15 days production during October and November.
  • The Tindals underground mine delivered 13,449oz for the Quarter with the month of December being the strongest in the 2011 Calendar Year for ounces produced.
• 13,859m of infill and resource/reserve extension diamond drilling was completed at Tindals Underground with 5,015m drilled at surface targets at Tindals.
• The Three Mile Hill mill delivered another solid Quarter with 298,876t processed at an average gold recovery of 95.4%.
• During the Quarter, Focus commenced a major capital works program to expand the tailings dam at Three Mile Hill.

Laverton

• The Laverton operations mined 445,120t @ 2.53g/t for gold in ore of 36,229oz in the December Quarter.
• A total of 411,012t @ 1.32g/t was processed over the 32 day campaign under the Ore Purchasing Agreement at Barrick Granny Smith (a daily gold production of 490oz, equivalent to 98,000ozpa based on Crescent’s allocated 200 processing days per calendar year).
• This saw the Laverton operations produce a total of 15,666oz of gold with 12,779oz attributable to Focus.
• Crescent achieved an average gold sale price of A$1,676/oz to deliver gross sales revenue of $26.3m.
• Cash operating costs for the Quarter were $1,467/oz, a reduction of $129 on the September Quarter’s costs of $1,596/oz.
• Commenced pre-strip and development of the Apollo pits, where Crescent has an Ore Reserve of 1.06Mt @ 1.9g/t for 64,000oz.
• Stockpiled 353,800t @ 1.84g/t at the ROM pad at Granny Smith by the end of the Quarter in preparation for Campaign 10.  The 50 day campaign commenced on 8 January 2012.
• Development studies focused on the Apollo, Eclipse, Calypso, Aurora, and Lord Byron deposits with 8,529m of RC and 780m of diamond drilling.

EXPLORATION

Coolgardie

• Drilling in the Undaunted area confirmed depth extensions with best intersections including: 11m @ 5.4g/t; 14m @ 4.8g/t; 4m @ 6.5g/t; 5m @ 6.0g/t; 8m @ 4.8g/t and 2m @ 15.8g/t.
• Drilling at the Norris Project, 15km southwest of Coolgardie identified at least two sub parallel mineralised zones.
• Extensive target generation exercise undertaken across the northern half of the Coolgardie tenement package identifying numerous targets for which Heritage surveys were completed for many of the targets.

Treasure Island

• Preliminary results from aircore programme identified second gold bearing system running through the project.
• In fill reconnaissance drilling commenced late in the Quarter with a second aircore rig on site to test a palaeochannel system to the north of the island.

Laverton

• Regional geochemistry sampling continued on selected tenements and areas plus a small drilling programme located on the southern extensions of the Chatterbox Shear system.

http://www.proactiveinvestors.co.uk/companies/stocktube/1009/Gold-fund-manager-says-the-gap-between-shares-and-bullion-will-start-to-close-this-year-1009.html

Crescent Advises Intended de-listing from ASX