FOCUS MINERALS LTD — AGM Information 2013

Nov 27, 2013

Level
2,
159
Adelaide
Terrace East
Perth
WA
6004 PO
Box
3233 East
Perth
WA
6892 T:
+61
8
9215
7888 F:
+61
8
9215
7889 E:
info@focusminerals.com.au

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28 November 2013

The Company Announcements Office Australian Stock Exchange Limited Exchange Centre Level 4, 20 Bridge St Sydney NSW 2000

Dear Sirs

AGM Address

Please find attached a copy of the Focus Minerals Chairman’s AGM Address.

Please note that this Address advises that the Chairman and Acting CEO has indicated that he will offer his resignation to the Board.

Yours sincerely

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PAUL FROMSON

Company Secretary & CFO

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Focus Minerals Ltd. 2013 AGM

Supplementary Address

Don Taig, Chairman & Acting CEO

Fellow
shareholders,

I
acknowledge
that
we
all
continue
to
experience
different
emotions
concerning
the performance
of
Focus
Minerals.
Plainly,
it
was
a
very
disappointing
year
under
review.

The
following
address
is
not
about
making
excuses
for
this
performance
by
any
stretch
of the
imagination.
It
is
about
explaining
to
you
the
context
in
which
the
company
and
its management
were
working,
the
responses
actioned
and
the
pathway
forward.

When
we
were
just
a
Coolgardie
based
explorer,
we
attracted
investors
who
liked
to
follow exploration
companies
and
when
we
found
and
developed
the
Perseverance
deposit
and
set about
refurbishing
the
Three
Mile
Hill
mill,
we
attracted
a
different
group
of
shareholders, who
followed
producers.
Regardless
of
which
category
you
believe
you
best
belong
to, performance
has
not
lived
up
to
the
expectations
you,
or
the
company
had.

Once
we
moved
into
gold
production,
management
were
keen
to
exploit
the
rising
gold price
of
the
period
to
produce
as
many
ounces
as
they
could.
All
gold
producers
were
doing it,
but
the
stronger
ones
were
doing
so
on
the
back
of
strong
reserves,
and
attractive
mine life.
In
addition,
these
companies
also
largely
had
higher
grade
material
developed
for
their future
processing
and
could
therefore
more
easily
manage
the
issue
of
rising
operating costs.

Focus
had
significant
amounts
of
land
–
potentially
too
much
probably
to
fit
the
junior explorer
scenario
–
where
land
acquired
is
usually
developed
on
a
project
basis,
through
to economic
feasibility.
Although
Focus
possessed
all
of
this
land
with
significant
holding
costs, unlocking
the
potential
required
more
money
to
be
spent
at
a
time
when
the
almost depleted
reserves
and
the
resultant
declining
grade
at
Perseverance,
which
had
supported the
rest
of
the
business
for
a
good
three
years
almost,
meant
that
financial
outcomes
and timing,
impacted
resource
development
required
to
fill
the
void.

The
extended
mining
boom
that
the
industry
had
been
through,
also
brought
with
it
the rising
costs
of
mining,
processing
and
administration
that
building
structures
for
the
good times
seem
to
encourage.
No
companies
were
exempt
from
this.
Grade
and
tonnage shielded
many
companies
from
the
consequences
for
some
time,
which
continued
to encourage
mining
companies
to
pursue
ounces.
Many
of
you
will
remember,
as
I
do,
the predictions
of
many
analysts
and
commentators,
that
we
would
see
a
$US
2000/oz
gold price
by
December
2011
as
a
result
of
the
$US1900/oz
price
at
the
time.
Now
these
same commentators
talk
about
pricing
from
anywhere
between
the
current
price
and $US1000/oz.

==> picture [59 x 41] intentionally omitted <==

During
this
same
period,
Focus
took
the
view
that
purchasing
mineable
ounces
could
reduce the
company’s
development
time.
Once
again,
many
other
companies
had
successfully
done the
same
thing
with
their
own
development.

The
potential
impediment
to
this
strategy
at
the
time
though,
was
that
the
industry
was
still moving
in
an
upward
motion,
resulting
in
high
priced
resource
ounces
and
there
were
not many
companies
with
any
concern
for
their
ability
to
raise
funds
in
the
current
market,
that they
were
necessarily
attracted
toward
selling
their
operations
to,
us
or
anyone
else.

Crescent
Gold
was
brought
to
us
as
a
possible
opportunity.
Legal
and
technical
due
diligence was
performed
on
our
behalf
and
evaluated
by
management,
who
in
addition,
had
many discussions
with
Crescent
managers
about
their
mines
and
resources.
Like
all
such
ventures, a
calculated
risk
assessment
was
made
on
costs
and
ounces,
in
particular,
with
a
view
that
a strong
gold
market
would
provide
the
time
to
make
the
necessary
changes
to
achieve Focus’s
aims.

Subsequent
work
by
the
combined
Focus
and
former
Crescent
management
team,
certainly indicated
that
operating
costs
could
be
reduced
with
some
$A350/oz
permanently
removed, a
mining
programme
that
produced
100k+
ounces
of
gold
per
annum
and
an
exploration programme
that
was
focussing
on
high
grade
material,
in
the
Laverton
region.

Coolgardie
continued
along
profitably,
generating
cash
to
provide
investment
at
Laverton for
planned
cost
reduction
and
exploration,
the
development
of
the
high
grade underground
The
Mount
deposit
at
Widgiemooltha
and
targeted
exploration
to
identify near
term,
open
pittable
resources
in
the
Coolgardie
tenements,
along
with
mapping
and drilling
work
at
the
Treasure
Island
tenements.

The
company
was
actually
growing
on
many
fronts
and
basically
backing
a
continuation
of the
rising
gold
price.
However,
there
were
ever
increasing
costs,
the
effects
of
the
Ore Purchase
Agreement
with
Barrick
and
Barrick
Granny
Smith’s
inability
to
maintain
agreed processing
days
through
their
mill.
This
meant
that
the
company
was
carrying
the
cost
of mining,
but
unable
to
process
at
the
required
rate
to
provide
the
income
to
continue
to cover
all
of
the
associated
costs,
whilst
returning
short
term
cash
advanced
by
Focus,
to Focus’s
other
operations
for
their
development
and
fund
growing
working
capital
needs.

It
was
very
clear
to
the
Board
that
a
high
risk/
high
reward
strategy
would
place
the company’s
cash
resources
and
working
capital
under
potential
strain
if
any
of
the
elements of
the
strategy
–
cost
control,
grade,
mine
life
extension,
or
the
gold
price,
failed
in
any material
way.

The
Board
decided
to
seek
a
partner
to
develop
the
company’s
future.
One
that
was
from the
industry
and
understood
the
nuances
of
the
market,
preferably
were
in
gold
mining themselves
and
could
play,
not
only
a
financial
support
role,
but
add
further
value
through their
own
expertise
and
experience.
To
my
pleasant
surprise,
a
number
of
candidates
were identified
and
we
reached
a
point
where
it
was
necessary
for
the
Focus
Board
to
choose
the partner
who,
on
balance,
we
felt
could
add
the
most
overall
value
to
the
company.

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As
you
know,
Shandong
Gold
International
Mining
Corporation
(SDG)
was
chosen
which culminated
in
their
investment
and
your
approval
for
them
to
own
and
control
half
of
the company
in
December
of
last
year.

The
leadership
of
SDG
that
completed
the
investment
transaction
with
FML
are
no
longer involved
with
Focus
and
since
June
2013,
we
have
had
new
directors
and
executives
to
work with.
The
top
management
in
Shandong
Gold
Group
has
also
changed.
These
are
new dynamics
that
we
have
continued
to
work
with
and
I
personally
believe
that
the
new members
of
SDG’s
team,
have
approached
their
involvement
with
Focus
with
a
view
to working
with
the
company
and
the
board
to
see
the
investment
reach
its
potential.
This
is good
for
all
shareholders.

The
disappointing
aspect
for
us
all
though,
has
been
the
enormous
drop
in
the
gold
price within
a
short
time
after
Shandong
Gold
made
their
investment.

There
wouldn’t
be
anyone
on
this
planet
who
would
not
be
disappointed
as
a
result, watching
the
share
price
go
from
5
cents
to
under
2
cents
which
I
extend
these
comments to
all
of
the
company’s
shareholders.

So
what
have
we
done
to
learn
from
the
past
and
react
to
market
realities:-­‐?

• We
  restructured
  and
  changed
  certain
  senior
  and
  operational
  management
  of
  the business

• I
  relocated
  to
  Perth
  to
  review
  in
  depth
  the
  business
  and
  chart
  the
  turnaround strategy
  and
  provide
  leadership

• We
  shifted
  the
  office
  to
  cheaper
  premises

• Immediate
  action
  was
  taken
  at
  Laverton
  to
  suspend
  mining
  and
  place
  the
  area
  under care
  and
  maintenance
  and
  not
  renew
  the
  Ore
  Purchase
  Agreement
  with
  Barrick

• Subsequently,
  mining
  and
  processing
  operations
  were
  also
  suspended
  at
  Coolgardie and
  the
  operations
  also
  placed
  on
  care
  and
  maintenance

• Sadly
  for
  the
  people
  involved,
  redundancies
  had
  to
  be
  instituted
  which
  saw
  the direct
  salaries
  bill
  reduce
  from
  $25m
  to
  $8m
  from
  the
  first
  review
  and
  restructure, with
  a
  6
  month
  payback.

• We
  began
  shifting
  the
  administrative
  side
  of
  the
  business
  to
  an
  outsourced
  model
  on a
  progressive
  basis
  in
  order
  to
  ensure
  that
  we
  did
  not
  jeopardise
  continuity
  and business
  knowledge.
  This
  has
  resulted
  in
  an
  additional
  round
  of
  redundancies
  and direct
  salary
  savings
  of
  a
  further
  $2m
  and
  is
  running
  live
  over
  all
  areas
  selected,
  at the
  end
  of
  November
  this
  year.

• The
  market,
  whilst
  disappointed,
  approved
  of
  these
  actions
  on
  the
  basis
  of
  economic prudence
  as
  did
  a
  large
  number
  of
  shareholders

• We
  invested
  in
  a
  new
  person
  in
  the
  Head
  Office
  to
  run
  Business
  Improvement
  and Development,
  responsible
  for
  challenging
  the
  existing
  managers
  on
  the
  financial aspects
  of
  the
  areas
  of
  the
  business
  they
  control
  and
  to
  lead
  the
  team
  to
  evaluate potential
  corporate
  transactions,
  before
  decisions
  are
  made
  to
  engage
  any
  external

==> picture [59 x 41] intentionally omitted <==

experts
and
incur
costs,
as
well
as
ensuring
that
the
company’s
restart
is
soundly based
and
in
line
with
strategy

• Numerous
  corporate
  issues
  surrounding
  royalties,
  joint
  ventures,
  contracts,
  deferred liabilities
  and
  the
  like,
  have
  been
  negotiated
  or
  close
  to
  finalisation,
  improving
  the future
  outcome
  for
  the
  economics
  of
  the
  Focus
  business.

• Earnest
  discussions
  have
  begun
  with
  third
  parties
  interested
  in
  providing
  mining
  and processing
  services
  to
  certain
  agreed
  service
  levels
  and
  within
  certain
  cost parameters,
  allowing
  Focus
  to
  have
  a
  lower
  cost
  model
  than
  before
  and
  just
  as importantly,
  one
  that
  is
  flexible,
  if
  the
  market
  turns
  down
  in
  the
  future

• We
  released
  to
  the
  market
  our
  3
  point
  turnaround
  strategy
  which
  involves monetising
  any
  of
  our
  existing
  assets
  to
  generate
  cash,
  establish
  the
  outsourced model
  and
  apply
  it
  where
  possible
  to
  our
  exploration
  effort
  and
  search
  for
  and evaluate
  corporate
  transactions
  that
  are
  in
  line
  with
  our
  vision
  of
  “low
  cost
  and
  high future
  value”.

• In
  line
  with
  the
  3
  point
  strategy,
  we
  have
  looked
  at
  and
  seriously
  evaluated
  some corporate
  transactions
  already,
  but
  none
  have
  successfully
  proceeded,
  or
  met
  the criteria
  that
  we
  released
  to
  the
  market
  for
  evaluating
  such
  opportunities
  in
  the
  first place.

• All
  Laverton
  tenements
  have
  been
  reviewed
  in
  order
  to
  rationalise
  our
  holding
  costs and
  decisions
  made
  to
  relinquish,
  or
  trade
  where
  possible,
  tenements
  that
  are
  not considered
  valuable
  to
  the
  business,
  now,
  or
  in
  the
  future.
  Coolgardie
  tenements
  are also
  currently
  being
  reviewed
  for
  the
  same
  outcomes.

• Tenement
  holding
  costs
  and
  care
  and
  maintenance
  expenditure
  are
  now
  the
  two main
  sources
  of
  cash
  outflows
  in
  the
  business
  and
  our
  current
  approach
  is
  under further
  review
  to
  ensure
  our
  model
  is
  correct
  for
  the
  existing
  circumstances.

• Focus
  has
  commenced
  serious
  and
  targeted
  exploration
  once
  more
  with
  regards
  to identifying
  projects
  in
  Laverton
  and
  Coolgardie,
  which
  meet
  the
  criteria
  of
  near
  term mining
  potential,
  higher
  grade,
  low
  cost
  and
  mine
  life
  extension.

• In
  addition,
  we
  are
  in
  discussions
  with
  other
  companies
  that
  are
  seriously considering
  the
  opportunity
  of
  processing
  their
  ore
  through
  the
  strategically positioned
  Three
  Mile
  Hill
  processing
  plant.
  If
  that
  proceeds,
  it
  will
  provide
  the
  base load
  for
  restarting
  the
  mill
  –
  potentially
  during
  the
  second
  quarter
  of
  the
  next calendar
  year,
  whilst
  reserving
  capacity
  for
  Focus’s
  own
  ore,
  producing
  further
  cash income
  to
  add
  to
  the
  process
  of
  business
  renewal,
  which
  existing
  major
  cost reduction
  and
  outsourcing
  programmes,
  have
  also
  done.

During
my
period
as
Acting
CEO,
I
have
been
very
well
supported
by
your
new
management team
and
the
Board
and
I
am
grateful
for
this
support.
No
one
is
saying
that
what
we
have put
in
place
has
been
easy,
and
some
difficult
decisions
have
been
made,
but
they
have been
decisions
which
were
necessary.
The
business
now
has
a
sound
foundation
to
build upon
and
one
which
is
unlikely
to
experience
the
disappointing
swings
of
the
past.
I
have always
believed
in
our
potential
and
I
certainly
still
do.
We
have
had
to
deal
with
the imperatives
of
increasing
costs
and
a
major
correction
to
the
gold
price.
The
responses
we

==> picture [59 x 41] intentionally omitted <==

have
made
so
far
are
beginning
to
have
a
positive
effect
and
I
believe
that
in
a
full
year
of their
operation,
there
is
a
good
prospect
that
they
will
become
completely
apparent.
The true
improvement
in
performance
will
come
from
the
exploitation
of
the
new
operating model,
monetising
the
Three
Mile
Hill
facility
with
outside
ore
and
some
of
our
own, exploration
success
–
which
our
major
shareholder
enthusiastically
supports
-­‐
including possible
Joint
Venturing
with
near
neighbours
and
corporate
transactions
which
meet
the requirements
of
our
strategy
and
improve
the
flexibility
of
the
business
to
deal
with
external difficulties
which
may
arise.
The
benefits
of
hindsight
are
there
for
us
all
to
learn
from
and improve
upon
for
the
future.

You
will
by
now
have
learnt
that
Phil
Lockyer
has
decided
to
retire
and
therefore
not
to
seek re-­‐election
to
the
board.
He
retires
at
the
conclusion
of
this
AGM
and
as
you
know
has
sent his
apologies
to
today’s
meeting.
He
has
been
the
second
longest
serving
director
of
the company
and
has
decided
that
as
he
counts
down
the
days
to
his
70[th] birthday,
he
has reflected
on
his
current
workload
and
has
opted
for
more
family
focussed
days.
I
thank
him sincerely
on
behalf
of
the
company
for
his
genuine
contribution
during
these
years
and
wish him
all
the
very
best
in
retirement.

I
also
thank
the
many
shareholders
who
have
contacted
me
during
my
time
as
Acting
CEO, to
both
express
the
disappointment
they
were
feeling,
but
to
also
express
their
thanks
and support
for
identifying
the
issues
and
putting
a
plan
together
for
their
resolution.

My
thanks
are
returned.

All
this
being
said
and
actions
taken
to
improve
future
performance,
still
requires shareholders
to
have
trust
in
these
changes
and
be
patient
a
while
longer.

I
also
know
I
have
asked
this
of
you
before.

We
will
shortly
move
into
the
formal
business
part
of
the
meeting
and
the
Resolution
which causes
much
interest
for
shareholders
of
public
companies
is
the
one
concerning
the Remuneration
Report.

This
will
be
no
different
for
FML
shareholders
this
year.

A
small
number
of
external
shareholders
have
voted
NO
to
the
resolution,
but
this
year,
the company’s
major
shareholder
–
Shandong
Gold
-­‐
has
also
indicated,
that
they
have instructed
their
proxy
to
register
a
protest
vote
for
the
past
performance
of
the
business
to show
shareholders
they
share
the
concern.
This
will
result
in
a
first
strike
and
put
the company
on
notice
for
the
next
AGM,
which,
by
virtue
of
the
change
in
financial
year
end, will
be
held
within
a
shorter
period
of
elapsed
time,
by
the
end
of
May
2014.

As
a
director,
your
Chairman
and
corporate
head
of
the
business
at
the
time
of
the downturn
in
performance,
I
believe
it
only
appropriate
that
I
announce
to
you
before
the commencement
of
the
formal
business,
that,
assuming
the
voting
on
the
remuneration

==> picture [59 x 41] intentionally omitted <==

report
resolution
reflects
the
proxies
received,
I
intend
to
offer
my
resignation
to
the current
board,
as
both
Acting
CEO
and
Chairman
and
as
a
director
of
the
company.

I
want
to
reassure
shareholders
and
staff,
that
if
the
board
accepts
my
resignation,
I
am taking
this
course
of
action
to
demonstrate
that
I
hear
the
concerns
of
the
shareholders
and wish
to
do
the
right
thing
for
the
benefit
of
the
company
and
all
of
its
owners
and
as
a result,
let
someone
else
try
to
do
the
job
you
seek,
through
the
expressions
of
protest
and concern.

I
know
I
leave
a
sound
base
upon
which
to
build.
I
have
never
believed
in
hanging
around
to get
in
the
way
of
new
thinkers,
hence
why
I
would
step
down
from
the
board
as
well.
I
will however
be
available
to
provide
past
knowledge
and
assistance
if
required,
because
I
want not
only
to
see
Focus
succeed,
but
for
the
partnership
between
Shandong
Gold
and
Focus
to be
a
shining
example
for
others,
of
a
model
for
success.

I
will
continue
to
chart
the
fortunes
of
FML
and
wish
it
and
its
people
to
succeed,
but
from the
sidelines
instead.
My
personal
shareholding
also
wants
to
see
the
success
we
all
covet.

Thank you.

Before
I
begin
the
formal
business,
are
there
any
questions
on
the
accounts,
director’s reports,
auditors’
report
or
my
supplementary
statement?

**Begin

Formal
Business**

Given
that
there
is
such
a
wide
difference
between
shareholdings
and
the
proxy
position regarding
Resolution
2,
I
do
not
think
it
will
be
fair
that
I
declare
resolutions
on
a
show
of hands.
I
have
therefore
decided
to
conduct
a
poll,
but
rather
than
doing
so
and
declaring the
result
for
each
individual
resolution,
we
will
proceed
on
the
basis
of
a
poll
for
all
the resolutions,
which
will
then
not
detain
shareholders
unreasonably
with
the
business
before the
meeting.
To
ensure
complete
independence,
the
company
secretary
has
asked
the auditors
from
PriceWaterhouseCoopers
to
conduct
the
poll
on
our
behalf
and
the
company secretary
will
declare
the
results
at
the
poll’s
conclusion.