20 November 2012
Dear Focus Shareholder,
RETURN YOUR PROXY FORM; VOTE IN FAVOUR OF THE PLACEMENT AT A PREMIUM
We are now less than two weeks from the Focus Minerals Ltd (“Focus” or “Company”) Annual General Meeting (“AGM”) on 30 November 2012. Resolution 1 concerning the placement to Shandong Gold International Mining Corporation Limited (“Shandong Gold”) (the “Placement”) is the most significant proposal ever put to shareholders and your Board unanimously recommends that shareholders vote FOR the Placement, and each Director intends to vote all Focus shares they own or control in favour of the Placement, in both cases subject to there being no superior proposal and the Independent Expert not changing its view prior to the AGM. The Placement will raise approximately $225 million through the issue of approximately 4.5 billion new fully paid ordinary Focus shares at 5 cents per share, which represents a strong premium to the market price.
The Explanatory Memorandum previously sent to shareholders contains all of the reasoning used by the Independent Expert appointed by the Company on your behalf to assist your deliberations. That Independent Expert has concluded that in the absence of a superior offer, the Placement is both FAIR and REASONABLE.
The Board and I believe that the full potential of Focus’s assets will only be unlocked with a significant influx of capital.
Significant investment is required to increase gold output and grade, to allow a significant reduction in operating costs. In the medium term this can only be achieved through our own processing facility at Laverton. At the same time, we need to be drilling ahead of our current mining plans to drive the business harder with regards to output right across the business.
The market for capital raisings is poor at the moment and has been for some time. A significant proportion of the Placement monies will be utilised to expand gold processing and for development and production drilling for the next 3 years to keep output levels well in advance of the current “hand to mouth” approach. A proportion of the Placement monies will also be used to aggressively explore areas of significant prospectivity established from current small scale exploration programmes. The balance of Placement monies will be required to cater for these expanded activities with attendant working capital needs.
In recent days I have had the opportunity to talk further with Shandong Gold in general about these matters and to talk about future views if they become the major shareholder. We also discussed that the current Board wanted Focus to move into making dividend payments sooner rather than later. It was pleasing that Shandong Gold expressed their support for establishing a dividend policy and working with the Company to seek to ensure the circumstances could be reached to pay dividends as soon as possible, taking into account the strong growth phase that we would move into, if able to invest the Placement funds as required.
Vote FOR the Placement
Your Board unanimously recommends that shareholders vote FOR the Placement, and each Director intends to vote all Focus shares they own or control in favour of the Placement, in both cases subject to there being no superior proposal and the Independent Expert not changing its view prior to the AGM. The Independent Expert has assessed the Placement as being Fair and Reasonable to shareholders, in the absence of a superior offer. The board considers that it is highly unlikely that a superior offer will emerge at this stage.
If you have not already done so, be a part of creating a very valuable company in your portfolio by Returning Your Enclosed Proxy Form Now. Voting YES to the first 4 Resolutions and NO to the 5th Resolution allows you to follow completely the recommendations of the Board who believe that this presents the best opportunity to see the value of the Company unlocked and a share price that reflects this.
The Explanatory Memorandum previously sent to all shareholders sets out all information relevant to your decision, and you should read it carefully and in its entirety.
If you cannot attend the AGM to vote in person then you can complete and return the enclosed proxy form by mail or fax.
Your proxy form needs to be received by no later than 10am (Perth time) on Wednesday, 28 November 2012. If you have any queries, please contact the Focus Information Line on 1800 850 191.