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Quarterly Report for June 2013

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 18th of May and Milling for campaign 15 completed on 30th 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

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