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FOCUS MINERALS TO RAISE $227.5M THROUGH PLACEMENT TO SHANDONG GOLD

• Investment by Shandong Gold to provide Focus with a robust balance sheet and the backing and expertise of one of China’s three largest gold producers
• Placement proceeds to support Focus’ goal of becoming a +500,000oz gold producer
• Directors of Focus unanimously recommend shareholders support Placement to Shandong Gold in the absence of a superior proposal and subject to an independent expert opining that the terms of the Placement are reasonable
• Placement price of 5 cents per share represents a premium of:
• Shandong Gold will own 51% of Focus on a fully diluted basis

• 13.6% to the last closing price of 4.4 cents per share
• 28% to the 60 day VWAP of 3.9 cents per share

THE PLACEMENT

Focus Minerals Limited (“Focus”) [ASX: FML], an Australian gold producer and explorer, is pleased to announce that it has entered in to a Share Subscription Deed with Shandong Gold International Mining Corporation Limited (“Shandong Gold”), under which Shandong Gold has agreed to subscribe for new fully paid ordinary Focus shares to raise $227.5 million.

Shandong Gold, a subsidiary of one of China’s three largest gold producers by production, will subscribe for approximately 4.55 billion new fully paid ordinary Focus shares (“New Shares”) at 5 cents per New Share, to raise $227.5 million (“Placement”). The Placement represents a premium of:

• 13.6% to the closing price of Focus shares of 4.4 cents per share on 19 September 2012; and
• 28% to the 60 day VWAP of 3.9 cents per share for the period ending 19 September 2012.

Focus Minerals Chairman Don Taig said: “The investment by Shandong Gold will make Focus Minerals a vastly stronger company with a robust balance sheet, capable of pursuing organic and non-organic growth opportunities. Importantly, the investment represents the commencement of a long-term, mutually beneficial relationship which will allow Focus to unlock the potential of our large tenement holdings and resource base and lays the foundation for Focus to become a significant gold producer.”

Focus has four producing gold mines located at Coolgardie and Laverton in the eastern goldfields region of Western Australia and has 1,650 square kilometres of tenement holdings and an existing mineral resource of 4.3 million ounces[1] of gold.

“Focus has the operations, the people and the skills to grow significantly and for some time the Board has been seeking a like-minded investor with a unique blend of complementary qualities,” said Focus Chief Executive Officer Campbell Baird. “The investment by Shandong Gold will help the senior management of Focus to unlock the Company’s growth potential at an accelerated pace.  Only 4% of our landholding has so far been explored.”

The Placement is subject to a number of conditions, including: Shandong Gold obtaining Chinese regulatory approvals; Foreign Investment Review Board (“FIRB”) approval (under the Australian Government’s foreign investment policy and the Foreign Acquisitions and Takeovers Act 1975 (Cth); Focus shareholder approval for the purpose of section 611 (item 7) of the Corporations Act 2001 (Cth); no material adverse change that has a fundamental and sustained impact occurring in respect of Focus and other customary conditions.  A complete list of the conditions to the Placement are summarised at Annexure D.

A notice of meeting (including an Independent Expert’s Report) will be sent to all Focus shareholders in due course advising the date and location of the meeting.

The Share Subscription Deed contains customary exclusivity provisions, including no shop, no talk and no due diligence provisions as well as a matching right granted to Shandong Gold.  The no talk and no due diligence provisions are subject to a fiduciary out which enables the Focus board to consider unsolicited alternative transactions in circumstances where, on the basis of authoritative expert or objective evidence, failing to do so would be reasonably likely to involve a breach of their fiduciary or statutory duties, or the alternative transaction is more favourable to Focus shareholders. The exclusivity obligations apply during the exclusivity period which expires on the earlier of, the end of the shareholder meeting to approve the Placement and 31 December 2012. The exclusivity provisions of the Share Subscription Deed are extracted at Annexure E.  Focus Minerals has also agreed to pay a break fee of $600,000 to Shandong Gold in certain circumstances, including if Focus shareholders do not approve the Placement or if Focus directors change their recommendation in respect of the Placement.

The timing of the Placement is dependent on the receipt of the necessary approvals. However, it is currently anticipated that payment and allotment will occur in early December 2012. Upon completion of the Placement, Shandong Gold will hold 51% of Focus’ fully diluted share capital.

Following approvals being received in respect of the Placement and the allotment of the New Shares, Focus has agreed to appoint three nominees of Shandong Gold to the Board of Focus. Each nominee will stand for re-election at Focus’ next AGM as required by law and the Focus constitution.  Focus already has, and will retain, four non-executive directors on the Board.

USE OF PROCEEDS

The funds raised from the Placement will establish the foundation for Focus to grow to become a +500,000ozpa gold production company through development of existing gold projects, new discoveries from targeted exploration programmes and the potential for value accretive acquisitions.

In addition to funding ongoing working capital needs, the Placement funds are currently intended to be used to pursue the following growth initiatives:

• Accelerate exploration programmes at its majority-owned Laverton operations, to unlock the significant potential in the 1,200 square km landholding, where Focus has over 110 km in strike of mineralised shear systems that have been sparsely drilled.
• Aggressively pursue continued exploration at Focus’ greenfields exploration project at Treasure Island, where surface anomalies and recently announced drilling results indicate potential for significant gold endowment.
• Increased exploration at Coolgardie’s existing operations and wider tenements, with the objective of increasing the resource position, especially at depth, and extending the current 10 year mine life at steady production rates for the Three Mile Hill Mill processing plant.
• Potentially pursue value accretive acquisition opportunities, placing the company in a strong position in a sector that rewards increased scale through consolidation.

• In addition, the opportunity to evaluate and develop a nickel strategy at Focus’ Nepean nickel mine will be greatly enhanced opening up options with respect to how this asset may be advanced to maximum shareholder returns.

SHANDONG GOLD INTERNATIONAL MINING CORPORATION LIMITED

Shandong Gold International Mining Corporation Limited is a 65%-owned subsidiary of Shandong Gold Group Co., Ltd.  The remaining 35% shares in Shandong Gold are held by Shandong State-owned Assets Investment Holdings Co., Ltd, which is 100% held by the Shandong Provincial government.  Shandong Gold Group Co., Ltd is 100% owned by the Shandong Provincial government, and is a China-based company principally engaged in the exploration, mining, processing, and smelting of gold and non-ferrous metals.  Shandong Gold Group Co., Ltd holds 56.4% of the shares in Shandong Gold Mining Co., Ltd, which is listed on the Shanghai Stock Exchange and has a market capitalisation of approximately RMB 59.1 BN Yuan. During the year ended 31 December 2011, Shandong Gold Mining Co., Ltd produced approximately 22.24 tons (approximately 710,400oz) of gold.

In relation to the Placement, Shandong Gold General Manager, Zhang Dahui said:

“Shandong Gold is very pleased to be investing in Focus Minerals, and we look forward to sharing our expertise with the Board and senior management to help build Focus into a major Australian gold producer. We have been impressed with the Board, management, assets and operations of Focus, and Focus’s plans to become a significant gold mining company.  Our investment in Focus will be substantial – this reflects both our confidence in Focus and our resolve to help build and develop Focus, for the benefit of all shareholders. We are a significant gold producer in China and understand the nature of the opportunities that Focus could realise with a serious investment in exploration of its tenements.”

A letter from the Chairmen of Shandong Gold to the Chairman of Focus Minerals is contained in Annexure A.