FOCUS MINERALS LTD — Annual Report 2007

Sep 27, 2007

Focus Minerals Limited (ABN 56 005 470 799)

Annual Financial Report For the year ended 30 June 2007

Contents	Page
Corporate Information	2
Directors’ Report	3 - 8
Corporate Governance Statement	9 - 10
Auditor’s Independence Declaration	11
Consolidated Income Statement	12
Consolidated Balance Sheet	13
Consolidated Cash Flow Statement	14
Consolidated Statement of Changes in Equity	15
Notes to the Financial Statements	16 - 48
Directors’ Declaration	49
Independent Audit Report	50 - 51
ASX Additional Information	52 - 53

Focus Minerals Limited - Financial Report 2007

CORPORATE INFORMATION

ABN 56 005 470 799

Directors

Donald Taig Peter Williams Phillip Lockyer Geoff Rasmussen Charles McCormick

Chairman Managing Director Non-Executive Director Non-Executive Director Executive Director

Company Secretary

K Jon Grygorcewicz

Registered & Head Office

Level 3 105 St George’s Terrace Perth WA 6000

PO Box Z5422

Perth WA 6831

Tel: +61 (0)8 9215 7888 Fax: +61 (0)8 9215 7889

Share Register

Computershare Investor Services Pty Ltd

Level 2 Reserve Bank Building 45 St Georges Terrace Perth WA 6000

Tel: +61 1300 557 010 Fax: +61 (0)8 9323 2033

Bankers

Bank Of Western Australia Limited 108 St Georges Terrace Perth WA 6000

Site Office

270 Egan Street Kalgoorlie WA 6430

PO Box 646 Kalgoorlie WA 6433

+61 (0)8 9021 7600 +61 (0)8 9021 7556

Auditors

Bentleys MRI Perth Partnership Level 1 10 Kings Park Road West Perth WA 6005

Tel: +61 (0)8 9480 2000 Fax: +61 (0)8 9322 7787

Solicitors

Steinepreis Paganin Level 1 Next Building 16 Milligan Street Perth WA 6000

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Focus Minerals Limited - Financial Report 2007

DIRECTORS’ REPORT

Your directors submit the annual financial report of the consolidated entity for the financial year ended 30 June 2007.

Directors

The names of directors who held office during or since the end of the year and until the date of this report are as follows. Directors were in office for this entire period unless otherwise stated.

Names, qualifications, experience and special responsibilities

Donald Taig - Non-Executive Chairman

Age : 50

Qualifications : B. Com., FAICD,FCPA

Mr Taig is a Fellow of both the Australian Institute of Company Directors and the Australian Society of Certified Practising Accountants

Mr Taig gained 11years experience within CRA Ltd’s mining businesses and with Metals Exploration Ltd. Mr Taig also has significant senior management experience particularly within the food industry where he was Managing Director of Goodman Fielder’s Australian baking division and Chief Executive Officer of Bunge Cereal Foods and Chiquita Brands South Pacific.

During the last three years, Mr Taig has also served as a director of the following listed companies:

• Tongaat Hulett Starch (Australia) Pty Ltd * (non executive director: appointed January 2007 - )

• Tolhurst Noall Group Limited (resigned May 2004)

• Clover Corporation Limited (resigned January 2005)

• Prudential Investment Company of Australia Limited (resigned June 2004)

• KH Foods Limited (resigned March 2006)

On 17 August 2007, Mr Taig assumed an executive Chairman’s role responsible for corporate development and investor relations thereby allowing Mr Williams to concentrate entirely on the rapid advancement towards production of the Group’s wholly owned Nepean Nickel Project and the Coolgardie Gold Project (owned 50% by the Group).

• denotes current directorships

Mr Taig is Chairman of the Audit Committee and a member of the Remuneration Committee.

Peter Williams - Managing Director

Age : 61

Mr Williams has an extensive career spanning more than 30 years within the mining industry. Mining experience in the extraction and treatment of copper, iron ore, salt, minerals sands and gold has been gained whilst holding senior operational and management positions within CRA Ltd (Dampier Salt), BHP Limited and others operating in many remote parts of Australia and overseas. In particular experience has been gained in managing large mining operations (both FIFO and residential).

Other directorships: Nil.

Phillip Lockyer - Non- Executive Director

Age : 63

Qualifications :AWASM, DipMetal, MSC

Mr Lockyer has over 40 years experience in the resources industry, as a mining engineer and metallurgist particularly in gold and nickel. He commenced his career with WMC Ltd in Kambalda and progressed through various operations roles where in early 1990’s he was appointed General Manager WA operations. Further senior positions were held with Dominion Mining Ltd as Director Operations & Projects and Resolute Ltd as Director and General Manager Operations. Mr Lockyer has operating a mining consultancy business since 1999.

During the last three years, Mr Lockyer has also served as a director of the following listed companies:

• Perilya Limited * (non executive director: appointed June 2004 -)

• Jubilee Mines NL* (non executive director : appointed May 2004- )

• Ammtec Limited* (non executive director : appointed March 2005- )

• St Barbara Mines Limited* (non executive director : appointed December 2006- )

• denotes current directorships

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Focus Minerals Limited - Financial Report 2007

DIRECTORS’ REPORT

Geoff Rasmussen - Non-Executive Director

Age : 37

Mr Rasmussen was a founding partner in the merchant banking and corporate advisory group, Azure Capital Pty Ltd. Mr Rasmussen was also previously a founding director of Poynton and Partners and GEM Consulting and has working as a senior consultant with McKinsey and Company in USA, Europe South Africa and Central America. In focusing on clients within the mining industry MR Rasmussen has assisted clients in developing corporate strategies, mergers, acquisitions capital raisings and governance covering a range of commodities including oil & gas, gold, iron ore, aluminium, nickel, zinc and mineral sands.

Mr Rasmussen holds non-executive directorships in a number of listed and unlisted companies operating within the resources, healthcare and fast moving consumer goods industries. He is also on the board of a Perth based charity.

Mr Rasmussen is a member of the Audit Committee and Chairman of the Remuneration Committee.

Company Secretary

K. Jon Grygorcewicz

Age : 47

Qualifications : CA, B.Bus

Appointed 1 August 2006

Mr Grygorcewicz was admitted as an Associate member of the Institute of Chartered Accountants in Australia during 1983 He gained diverse commercial experience within the audit and corporate advisory services divisions of Arthur Young Australia. He has also gained extensive experience within the resources and engineering industries having been associated with a number of listed companies in both the exploration and mining of gold, diamonds and oil. Mr Grygorcewicz has also worked with a number of engineering and resource service companies with operations in Australia and South East Asia particularly listing an Australian engineering group on the Singapore Stock Exchange.

Mr Charles (Chuck) McCormick was a director of the Company until his resignation on 17 August 2007.

Interests in the shares and options of the company and related bodies corporate

At the date of this report, the direct and indirect interests of directors in the shares and options of the Company were:

	Ordinary Shares	Options (Unlisted)
Donald Taig	8,591,730	-
Peter Williams	503,614	6,950,000
Phillip Lockyer	253,614	-
Geoff Rasmussen**	4,750,213	3,000,000

** Mr Rasmussen is a director of Azure Capital Pty Ltd and therefore is deemed to have an interest in 3,000,000 options held by Azure Capital Pty Ltd.

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Focus Minerals Limited - Financial Report 2007

DIRECTORS’ REPORT (continued)

Share Options

During the year and to the date of this report no share options were granted to directors or executives of the company.

As at the date of this report, details of unissued ordinary shares under options are as follows:

Issuing Entity Focus Minerals Limited Total options issued	Number of options Exercise price cents per share Expiry date
	3,000,000 5.04 31/7/2008 2,140,000 12.00 6/12/2009 2,140,000 14.50 6/12/2009 2,140,000 17.00 6/12/2009 4,925,000 5.00 30/11/2010 4,925,000 6.00 30/11/2010 19,270,000

Principal Activities

The principal activities of the entities within the consolidated entity during the year were gold, nickel and other base metal mining and exploration in Australia.

There have been no significant changes in the nature of those activities during the year.

Review of operations

Highlights of operations during the period under review are as follows:

• During August 2006 the Group entered into agreement with MC Verde Minerals Pty Ltd to evaluate and process mullock dumps at Nepean Nickel Project. The company received a $10,000 licence fee and will receive 30% of the cash surplus from the sale of any nickel concentrate recovered. No significant resource was determined within the mullock dumps.

• Discovery of the Perseverance gold deposit, a new gold discovery within the Coolgardie Gold Project operated by the Redemption joint venture, owned 50% by the Group. The deposit currently consists of an inferred resource totalling 296,600 tonnes at a grade of 9.4 grams/tonne for 89,600 ozs of gold.

• Upgrades of various gold deposits within the Coolgardie Gold Project whereby total combined gold resource within the Project consists of Measured Resource of 545,000 tonnes at 1.77g/t, Indicated Resource of 8,085,000 tonnes at 1.79g/t and Inferred Resource of 11,657,000 tonnes at 2.96 g/t for a total resource exceeding 1.6 million ozs gold.

• Increase of the Nepean Nickel Project inferred resource to 590,000 tonnes of nickel at 2.2% nickel. Planning for a feasibility study on recommencing mining of the remnant ore blocks and refurbishing the existing underground infrastructure commenced late in the financial period.

• Conclusion of a $12.9 million capital raising programme to fund expansion of exploration and feasibility studies to be conducted at the Coolgardie Gold Project and the Nepean Nickel Projects. A total of 300,000,000 ordinary fully paid shares were issued at an issue price of 4.3 cents per share.

Operating results for the year

Operating loss for the year was $ (2,089,695) (2006: loss $ 1,822,025)

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Focus Minerals Limited - Financial Report 2007

DIRECTORS’ REPORT (continued)

Significant changes in the state of affairs

The following are significant changes in the state of affairs of the consolidated entity to balance date:

Issued shares as at 30 June 2006 Corporate advisory fees at 5 cents Purchase EL26/79 at 4.5 cents Placement issue at 4 cents Placement issue at 4.3 cents Share Purchase Plan at 4.3 cents Placement fees at 4.3 cents Share issue expenses Issued shares as at 30 June 2007	No of shares $
	430,024,467 30,649,946 2,400,000 120,000 400,000 18,000 40,000,000 1,600,000 250,000,000 10,750,000 50,000,519 2,150,000 6,000,000 258,000 - (939,114) 778,824,986 44,606,832

Significant events after balance date

During July 2007, the Redemption joint venture secured priority toll treatment arrangements with Higginsville Mining Pty Ltd to treat ore from the Coolgardie Gold Project in return for an extension, to June 2017, of the sub lease for Higginsville’s Greenfield’s Gold treatment plant located on a mining lease within the Coolgardie Gold Project.

On 30 July 2007 the Redemption joint venture upgraded the Dreadnought gold deposit to an Indicated Resource of 3,020,000 tonnes at 2.02 g/t and an Inferred Resource of 434,000 tonnes at 1.76 g/t for a total of 220,980 ozs gold.

The Redemption joint venture commenced the construction of a 400m decline from the existing Tindals’ underground workings to the Perseverance gold deposit. Construction of the decline was expected to be completed during October 2007.

During August 2007 the Group received mine access approvals to re-enter the underground workings at the Nepean Nickel Project to assess the condition of the underground infrastructure and confirm the extent of remnant ore blocks and extract ore samples for metallurgical testing.

Other than the above, there has not been any matter or circumstance that has arisen after balance date that has significantly affected, or may significantly affect, the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial periods.

Likely developments and expected results

The directors intend to actively pursue and conduct further exploration activities in the Group’s existing tenements with a view to establishing mining operations principally at the Redemption joint venture’s Perseverance Deposit and the Group’s 100% owned Nepean Nickel Project.

Environmental legislation

The Group’s operations are subject to environmental regulation in Australia. The Group continues to comply with these regulations.

Indemnification and insurance of Directors and Officers

(a) The company has agreed to indemnify all the directors and officers for any breach of laws and regulations arising from their role as directors and officers. The agreement provides for the company to pay an amount not exceeding $20,000. The total amount of premiums paid was $31,000.

Remuneration report

This report outlines the remuneration arrangements in place for directors and executives of Focus Minerals Limited (the “company”).

Remuneration philosophy

The performance of the company depends upon the quality of the directors and executives. The philosophy of the company in determining remuneration levels is to set competitive remuneration packages to attract and retain high calibre employees

Remuneration committee

The Remuneration Committee of the Board of Directors of the company is responsible for determining and reviewing compensation arrangements for the directors, the CEO and the senior management team.

The Remuneration Committee assesses the appropriateness of the nature and amount of remuneration of directors and senior executives on a periodic basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team.

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Focus Minerals Limited - Financial Report 2007

DIRECTORS’ REPORT (continued)

Remuneration structure

In accordance with best practice Corporate Governance, the structure of non-executive director and executive remuneration is separate and distinct.

Non-executive director remuneration

The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The Board considers advice from external shareholders as well as the fees paid to nonexecutive directors of comparable companies when undertaking the annual review process.

Each non-executive director receives a fee for being a director of the company.

The remuneration of non-executive directors for the period ended 30 June 2007 is detailed in Table 1 of this report.

Senior manager and executive director remuneration

Remuneration primarily consists of fixed remuneration and an equity component where determined by the directors. Issue of an equity component to directors is subject to the approval of shareholders in general meeting.

Fixed Remuneration

Fixed remuneration is reviewed annually by the Remuneration Committee. The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The Committee has access to external, independent advice where necessary.

Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group.

The fixed remuneration component of specified company executives is detailed in Table 2.

Directors’ Meetings

The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director were as follows:

		Meetings of Committees	Meetings of Committees
	Directors’
	Meetings	Audit	Remuneration
Number of meetings held:	7	1	1
Number of meetings attended:
Donald Taig	7	1	1
Peter Williams	7	-	-
Phillip Lockyer	7	-	-
Geoff Rasmussen	7	1	1
Charles McCormick *	7	1	1

• Mr McCormick resigned as a director on 17 August 2007.

The Directors also approved Group activities pursuant to 8 circular directors’ resolutions throughout the year.

Auditor Independence and Non-Audit Services

Section 307C of the Corporations Act 2001 requires our auditors, Bentleys MRI Perth Partnership, to provide the directors of t Company with an Independence Declaration in relation to the audit of the annual report. This Independence Declaration is set out o page 11 and forms part of this directors’ report for the year ended 30 June 2007.

Non-Audit Services

Bentleys MRI Perth Partnership received amounts for non-audit services totalling $8,033, principally for tax advice and an audit review of tenement expenditure to meet Department of Industry and Resources tenement requirements.

Signed in accordance with a resolution of the directors.

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Donald Taig

Chairman

27 September 2007 Perth, Western Australia

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Focus Minerals Limited - Financial Report 2007

DIRECTORS’ REPORT (continued)

Remuneration of directors and named executives

Table 1: Directors’ remuneration for the year ended 30 June 2007

			Primary Benefits					%
		Salary & Fees	Superannuation	Sub-total	Equity Options	Other	Total	Performance related
Donald Taig	2007 2006	56,200 50,000	- -	56,200 50,000	- -	- -	56,200 50,000	0% 0%
Peter Williams	2007 2006	202,540 160,000	18,229 14,400	220,769 174,400	- 156,630	7,591 11,935	228,360 342,965	0% 45.6%
Phillip Lockyer	2007 2006	30,000 12,500	2,700 1,300	32,700 13,800	- -	- -	32,700 13,800	0% 0%
Geoff Rasmussen	2007 2006	30,000 21,930	- -	30,000 21,930	- -	- -	30,000 21,930	0% 0%
Charles McCormick	2007 2006	150,000 175,804	13,500 10,321	163,500 186,125	- 66,483	11,485 13,025	174,985 265,633	0% 40.1%

Table 2: Remuneration of the named executive who received the highest remuneration for the year ended 30 June 2007

			Primary Benefits	Primary Benefits				%
		Salary & Fees	Superannuation	Sub-total	Equity Options	Other	Total	Performance related
Jon Grygorcewicz	2007 2006	93,009 -	10,106 -	103,115 -	- -	9,220 -	112,335 -	- -
Alec Pismiris	2007 2006	- 29,000	- -	- 29,000	- -	- -	- 29,000	- -
Jack Toby	2007 2006	- 35,155	- -	- 35,155	- -	- -	- 35,515	- -
Andrew Hawker	2007 2006	- 122,442	- 11,020	- 133,462	- -	- -	- 133,462	- -

Table 3: Options granted as part of remuneration

Year ended 30 June 2006	Value of options granted at grant date	Value of options exercised at exercise date	Value of options lapsed at time of lapse	Total value of options granted, exercised and lapsed	Value of options lapsed during year	Value of options included in remuneration for the year	% remuneration consisting of options for the year
Peter Williams	156,630	-	-	156,630	-	156,630	45.6%
Charles McCormick	66,483	-	-	66,483	-	66,483	40.1%
For details on the valuation of the options, including models and assumptions used, please refer to Note 14. There were no alterations to the terms and conditions of options granted as remuneration since their grant date.

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Focus Minerals Limited – Financial Report 2007

CORPORATE GOVERNANCE STATEMENT

The Board of Directors of Focus Minerals Limited is responsible for the corporate governance of the consolidated entity. The Board guides and monitors the business and affairs of Focus Minerals Limited on behalf of the shareholders by whom they are elected and to whom they are accountable.

Focus Minerals Limited’s Corporate Governance Statement is structured with reference to the Corporate Governance Council’s principles and recommendations, which are as follows:

Principle	1.	Lay solid foundations for management and oversight
Principle	2.	Structure the board to add value
Principle	3.	Promote ethical and responsible decision making
Principle	4.	Safeguard integrity in financial reporting
Principle	5.	Make timely and balanced disclosure
Principle	6.	Respect the rights of shareholders
Principle	7.	Recognise and manage risk
Principle	8.	Encourage enhanced performance
Principle	9.	Remunerate fairly and responsibly
Principle	10.	Recognise the legitimate interests of stakeholders

Focus Minerals Limited’s corporate governance practices were in place throughout the year ended 30 June 2007.

Structure of the Board

The skills, experience and expertise relevant to the position of director held by each director in office at the date of the annual report is included in the Directors’ Report. Directors of Focus Minerals Limited are considered to be independent when they are independent of management and free from any business or other relationship that could materially interfere with – or could reasonably be perceived to materially interfere with – the exercise of their unfettered and independent judgment.

In the context of director independence, 'materiality' is considered from both the company and individual director perspective. The determination of materiality requires consideration of both quantitative and qualitative elements. An item is presumed to be quantitatively immaterial if it is equal to or less than 5% of the appropriate base amount. It is presumed to be material (unless there is qualitative evidence to the contrary) if it is equal to or greater than 10% of the appropriate base amount. Qualitative factors considered include whether a relationship is strategically important, the competitive landscape, the nature of the relationship and the contractual or other arrangements governing it and other factors that point to the actual ability of the director in question to shape the direction of the company’s loyalty.

In accordance with the definition of independence above, and the materiality thresholds set, the following directors of Focus Minerals Limited are considered to be independent:

Name Position Donald Taig Chairman Phillip Lockyer Non-Executive Director

There are procedures in place, agreed by the Board, to enable directors in the furtherance of their duties to seek independent professional advice at the company’s expense.

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Focus Minerals Limited – Financial Report 2007

CORPORATE GOVERNANCE STATEMENT (continued)

The term in office held by each director in office at the date of this report is as follows:

Name	Term in Office	Name	Term in Office
Donald Taig	4 years	Geoff Rasmussen	2 years
Peter Williams	3 years	Phillip Lockyer	2 years
Charles McCormick	2 years
Mr McCormick resigned	from the Board on 17 August 2007.

Nomination Committee

The Board has not formally established a Nomination Committee. Board vacancies, composition and the mix of technical and other qualifications are addressed by the full Board.

Audit Committee

The Board has established an Audit Committee, which operates under a charter approved by the Board. It is the Board’s responsibility to ensure that an effective internal control framework exists within the entity. This includes internal controls to deal with both the effectiveness and efficiency of significant business processes, the safeguarding of assets, the maintenance of proper accounting records, and the reliability of financial information as well as non financial considerations such as the benchmarking of operational key performance indicators. The Board has delegated responsibility for establishing and maintaining a framework of internal control and ethical standards to the Audit Committee.

The Committee also provides the Board with additional assurance regarding the reliability of financial information for inclusion in the financial reports. All members of the Audit Committee are non-executive directors.

The members of the Audit Committee during the year were:

Donald Taig – Committee Chairman Geoff Rasmussen For details on the number of meetings of the Audit Committee held during the year and the attendees at those meetings, refer to the Directors’ Report.

Remuneration

It is the company’s objective to provide maximum stakeholder benefit from the retention of a high quality Board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. To assist in achieving this objective, the Remuneration Committee links the nature and amount of executive directors’ and officers’ emoluments to the company’s financial and operational performance.

The expected outcomes of the remuneration structure are:

• retention and motivation of key executives;

• attraction of high quality management to the company; and

• performance incentives that allow executives to share the success of Focus Minerals Limited.

For a full discussion of the company’s remuneration philosophy and framework and the remuneration received by directors and executives in the current period please refer to the remuneration report, which is contained within the Directors’ Report.

There is no scheme to provide retirement benefits, other than statutory superannuation, to non-executive directors.

The Board is responsible for determining and reviewing compensation arrangements for the directors themselves and the chief executive officer and executive team. The Board has established a Remuneration Committee, comprising 2 non-executive directors.

Members of the Remuneration Committee during the year were:

Geoff Rasmussen – Committee Chairman Donald Taig

For details on the number of meetings of the Remuneration Committee held during the year and the attendees at those meetings, refer to the Directors’ Report.

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Focus Minerals Limited – Financial Report 2007

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LEAD AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE CORPORATIONS ACT 2001

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Bentleys MRI Perth Partnership ABN 17 735 344 518

Level 1, 10 Kings Park Road West Perth WA 6005 Australia

PO Box 570 West Perth WA 6872

T 61 8 9480 2000 F 61 8 9322 7787

TO THE DIRECTORS OF FOCUS MINERALS LIMITED

I declare that, to the best of my knowledge and belief, in relation to the audit for the financial year ended 30 June 2007 there have been:

• No contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and

• No contraventions of any applicable code of professional conduct in relation to the audit.

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BENTLEYS MRI PERTH PARTNERSHIP

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MICHAEL HILLGROVE PARTNER

Dated this day at Perth 27[th] September 2007.

Chartered Accountants

A member of Bentleys MRI, an association of independent accounting firms throughout Australia, and a member of Moores Rowland International, an association of independent accounting firms throughout the world. The firms practising as Bentleys MRI and Moores Rowland are independent. The member firms of these associations are affiliated only and not in partnership.

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Focus Minerals Limited – Financial Report 2007

INCOME STATEMENT

FOR THE YEAR ENDED 30 JUNE 2007

NCOME STATEMENT OR THE YEAR ENDED 30 JUNE 2007
Notes Revenue 2(a) Other income 2(b) Depreciation and amortisation expense Finance costs Rental expenses Loan impairment expense Other expenses Loss before income tax expense Income tax benefit 3 Net loss for the period Basic loss per share (cents per share) 5 Diluted loss per share (cents per share) 5	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $
	327,362 179,647 258,577 178,064 134,166 5,296 123,141 5,296
	461,528 184,943 381,718 183,360
	(151,179) (120,764) (114,948) (120,764) (16,187) (29,886) (14,693) (29,886) (81,900) (73,246) (81,900) (73,246) - - (43,277) (300,000) (2,301,957) (1,783,072) (2,255,773) (1,783,072)
	(2,089,695) (1,822,025) (2,128,873) (2,123,608) - - - -
	(2,089,695) (1,822,025) (2,128,873) (2,123,608)
	(0.46) (0.45) (0.46) (0.45)

The accompanying notes form part of these financial statements

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Focus Minerals Limited – Financial Report 2007

BALANCE SHEET AS AT 30 JUNE 2007

Notes Assets Current Assets Cash and cash equivalents 6 Trade and other receivables 7 Inventories 8 Other Total Current Assets Non-Current Assets Receivables 11 Available-for-sale investments 9 Other financial assets 10 Property, plant and equipment 12 Deferred exploration expenditure 13 Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables 15 Financial liabilities 16 Deferred revenue Total Current Liabilities Non-Current Liabilities Other payables 15 Financial liabilities 16 Deferred revenue Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 17 Reserves 17 Retained earnings Total Equity	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $
	13,844,876 2,442,429 13,790,748 2,360,386 544,485 320,277 482,862 304,452 243,027 243,027 243,027 243,027 14,535 14,807 7,867 14,807
	14,646,923 3,020,540 14,524,504 2,922,672
	- 53,100 234,664 53,100 - 1 - 1 - - 7,303,581 7,341,114 802,775 584,312 541,858 584,312 17,100,208 16,293,567 9,739,294 8,932,653
	17,902,983 16,930,980 17,819,397 16,911,180
	32,549,906 19,951,520 32,343,901 19,833,852
	1,660,760 1,011,330 1,595,367 978,497 11,347 - - - 18,750 39,584 18,750 39,584
	1,690,857 1,050,914 1,614,117 1,018,081
	171,000 80,000 111,000 - 25,252 - - - - 25,000 - 25,000
	196,252 105,000 111,000 25,000
	1,887,109 1,155,914 1,725,117 1,043,081
	30,662,797 18,795,606 30,618,784 18,790,771
	44,606,832 30,649,946 44,606,832 30,649,946 561,007 561,007 561,007 561,007 (14,505,042) (12,415,347) (14,549,055) (12,420,182)
	30,662,797 18,795,606 30,618,784 18,790,771

The accompanying notes form part of these financial statements

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Focus Minerals Limited – Financial Report 2007

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2007

Consolidated Notes Balance as at 30 June 2005 Loss attributable to members of the parent entity Shares issued in the period Share issue expenses Option reserve on recognition of equity based payments Balance as at 30 June 2006 Loss attributable to members of the parent entity Shares issued in the period Share issue expenses Option reserve on recognition of equity based payments Balance at 30 June 2007 Parent Notes Balance as at 30 June 2005 Loss attributable to members of the parent entity Shares issued in the period Share issue expenses Option reserve on recognition of equity based payments Balance at 30 June 2006 Loss attributable to members of the parent entity Shares issued in the period Share issue expenses Option reserve on recognition of equity based payments Balance as at 30 June 2007	Ordinary Shares Retained Earnings Option Reserve Total $ $ $ $
	23,412,746 (10,593,322) 303,104 13,122.528 - (1,822,025) - (1,822,025) 7,620,000 - - 7,620,000 (382,800) - - (382,800) - - 257,903 257,903
	30,649,946 (12,415,347) 561,007 18,795,606 - (2,089,695) - (2,089,695) 14,896,000 - - 14,896,000 (939,114) - - (939,114) - - - -
	44,606,832 (14,505,042) 561,007 30,662,797
	Ordinary Shares Retained Earnings Option Reserve Total $ $ $ $
	23,412,746 (10,296,574) 303,104 13,419,276 - (2,123,608) - (2,123,608) 7,620,000 - - 7,620,000 (382,800) - - (382,800) - - 257,903 257,903
	30,649,946 (12,420,182) 561,007 18,790,771 - (2,128,873) - (2,128,873) 14,896,000 - - 14,896,000 (939,114) - - (939,114) - - - -
	44,606,832 (14,549,055) 561,007 30,618,784

The accompanying notes form part of these financial statements

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Focus Minerals Limited – Financial Report 2007

CASH FLOW STATEMENT FOR THE YEAR ENDED 30 JUNE 2007

Note Cash flows from operating activities Receipts from customers Payments to suppliers and employees Other income Interest received Finance costs Net cash provided by/(used in) operating activities 6(iii) Cash flows from investing activities Proceeds from sale of non-current assets Purchase of non-current assets Secured short term deposits Investments Loans to related entities Loans to other entities Net cash inflow on acquisition of subsidiary 6(iv) Purchase of mining tenements Exploration expenditure Net cash provided by/(used in) investing activities Cash flows from financing activities Proceeds from issue of shares Share issue expenses Repayment of borrowings Net cash provided by/(used in) financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at 1 July 2006 Cash and cash equivalents at 30 June 2007 6(i)	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $
	Inflows/(Outflows) Inflows/(Outflows)
	175,463 1,100 107,952 1,100 (2,099,546) (3,585,323) (1,789,376) (3,122,831) 134,558 - 123,533 - 151,899 139,199 150,625 137,616 (16,187) (29,886) (14,693) (29,886)
	(1,653,813) (3,474,910) (1,421,959) (3,014,001)
	1,200 24,686 1,200 24,686 (173,378) (74,620) (101,085) (74,620) (199,055) (1,495,455) (198,304) (1,469,206) - (1) (1) (1) - - (187,306) (515,000) 53,100 (53,100) - (53,100) 35,825 - - - (41,120) (458,956) (41,120) (458,956) (776,253) (351,022) (776,253) (351,022)
	(1,099,681) (2,408,468) (1,302,869) (2,897,219)
	14,896,000 7,620,000 14,896,000 7,620,000 (939,114) (382,800) (939,114) (382,800) - (909,092) - (909,092)
	13,956,886 6,328,108 13,956,886 6,328,108
	11,203,392 444,730 11,232,058 416,888 946,974 502,244 891,180 474,292
	12,150,366 946,974 12,123,238 891,180

The accompanying notes form part of these financial statements

15

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

The financial report is a general-purpose financial report, which has been prepared in accordance with Australian Accounting Standards, Australian accounting interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and Corporations Act 2001.

The financial report covers the economic entity of Focus Minerals Limited and controlled entities and Focus Minerals Limited as an individual entity. Focus Minerals Limited is a listed public company, incorporated and domiciled in Australia.

The financial report of Focus Minerals Limited and controlled entities and Focus Minerals Limited as an individual entity parent entity comply with all Australian equivalents to International Reporting Standards (AIFRS) in their entirety.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(b)

Reporting Basis and Conventions

The financial report has been prepared on an accrual basis and is based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

(c) Basis of Consolidation

The consolidated financial statements comprise the financial statements of Focus Minerals Limited and its controlled entities as at 30 June each year (the Group).

The financial statements of the controlled entities are prepared for the same reporting period as the parent company, using consistent accounting policies.

In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses resulting from intra-group transactions have been eliminated in full. Controlled entities are fully consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group.

(d)

Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

(i) Sale of goods

Revenue is recognised when the significant risks and rewards of ownership of the goods have passed to the buyer and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Risks and rewards of ownership are considered passed to the buyer at the time of delivery of the goods to the customer.

(ii) Rendering of services

Revenue from the rendering of services is recognised by reference to the stage of completion of the contract.

(iii) Interest income

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

(iv) Dividends

Revenue is recognised when the Group’s right to receive the payment is established.

(v) Rental income

Rental income from investment properties is accounted for on a straight-line basis over the lease term. Contingent rental income is recognised as income in the periods in which it is earned. Lease incentives granted are recognised as an integral part of the total rental income

16

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) Borrowing Costs

Borrowing costs are recognised as an expense when incurred. Borrowing costs directly attributable to assets under construction are capitalised as part of the cost of those assets.

(f) Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are initially recognised at their fair value or, if lower, the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation.

Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly against income, unless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the general policy on borrowing costs.

Finance leased assets are depreciated on a straight line basis over the estimated useful life of the asset.

Operating lease payments are recognised as an expense on a straight line basis over the lease term, except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed.

(g) Cash and cash equivalents

Cash and short-term deposits in the balance sheet comprise cash at bank and in hand and short term deposits with an original maturity of three months or less.

For the purposes of the Cash Flow Statement, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(h) Trade and other receivables

Trade receivables, which generally have 30-90 day terms, are recognised and carried at original invoice amount less an allowance for any uncollectible amounts. An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the debts. Bad debts are written off when identified.

(i) Inventories

Inventories are valued at the lower of cost and net realisable value.

Costs incurred in bringing each product to its present location and condition are accounted for as follows:

Raw materials – purchase cost on a first-in, first-out basis; and

Finished goods and work-in-progress – cost of direct materials and labour and a proportion of manufacturing overheads based on normal operating capacity but excluding borrowing costs.

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

(j) Impairment of financial assets

The Group assesses at each balance sheet date whether a financial asset or group of financial assets is impaired.

(i) Financial assets carried at amortised cost

If there is objective evidence that an impairment loss on loans and receivables carried at amortised cost has been incurred, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the financial asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through use of an allowance account.

The amount of the loss is recognised in profit or loss.

17

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(j) Impairment of financial assets (continued)

The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant. If it is determined that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, the asset is included in a group of financial assets with similar credit risk characteristics and that group of financial assets is collectively assessed for impairment. Assets that are individually assessed for impairment and for which an impairment loss is or continues to be recognised are not included in a collective assessment of impairment.

If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed. Any subsequent reversal of an impairment loss is recognised in profit or loss, to the extent that the carrying value of the asset does not exceed its amortised cost at the reversal date.

(ii) Financial assets carried at cost

If there is objective evidence that an impairment loss has been incurred on an unquoted equity instrument that is not carried at fair value (because its fair value cannot be reliably measured), or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument, the amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the current market rate of return for a similar financial asset.

(iii) Available-for-sale investments

If there is objective evidence that an available-for-sale investment is impaired, an amount comprising the difference between its cost (net of any principal repayment and amortisation) and its current fair value, less any impairment loss previously recognised in profit or loss, is transferred from equity to the income statement. Reversals of impairment losses for equity instruments classified as available-for-sale are not recognised in profit. Reversals of impairment losses for debt instruments are reversed through profit or loss if the increase in an instrument's fair value can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.

(k) Exploration and development expenditure

Exploration and development expenditure related to areas of interest is capitalised and carried forward to the extent that;

• i. Rights to tenure of the area if interest are current: and

• ii. Costs are expected to be recouped through the successful development and exploitation of the area of interest or alternatively by sale; or

• iii. Where activities in the area of interest have not yet reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area are continuing.

Such expenditure consists of an accumulation of acquisition costs and direct net exploration and development costs incurred by or on behalf of the Consolidated Entity, together with an appropriate portion of related overhead expenditure.

Feasibility expenditure represents costs related to the preparation of a feasibility study to enable a development decision to be taken in relation to an area of interest.

When an area of interest is abandoned or the directors decide it is not commercial, any accumulated costs in respect of the area are written off in the year in which the decision was made. Each area of interest is reviewed at the end of each accounting period and accumulated costs written of to the extent they are not expected to be recoverable in the future.

(l) Interest in a jointly controlled operation

The Group has an interest in a joint venture that is a jointly controlled operation. A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control. A jointly controlled operation involves use of assets and other resources of the venturers rather than establishment of a separate entity. The Group recognises its interest in the jointly controlled operation by recognising the assets that it controls and the liabilities that it incurs. The Group also recognises the expenses that it incurs and its share of the income that it earns from the sale of goods or services by the jointly controlled operation.

18

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS

FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(m) Income tax

Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance sheet date.

Deferred income tax is provided on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except:

• when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or

• when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred income tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each balance sheet date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(n) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except:

• when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and

• receivables and payables, which are stated with the amount of GST included.

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the balance sheet.

Cash flows are included in the Cash Flow Statement on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(o) Plant and equipment

Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation.

Depreciation is calculated on a straight-line basis over the estimated useful life of the assets as follows: Plant and equipment – over 5 to 15 years

19

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

The assets' residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at each financial year end.

(i) Impairment

The carrying values of plant and equipment are reviewed for impairment at each reporting date, with recoverable amount being estimated when events or changes in circumstances indicate that the carrying value may be impaired.

The recoverable amount of plant and equipment is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cashgenerating unit to which the asset belongs, unless the asset's value in use can be estimated to be close to its fair value.

An impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount.

For plant and equipment, impairment losses are recognised in the income statement in the cost of sales line item. However, because land and buildings are measured at revalued amounts, impairment losses on land and buildings are treated as a revaluation decrement.

(ii) Derecognition and disposal

An item of property, plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal.

Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

(p) Investments and other financial assets

Financial assets in the scope of AASB 139 Financial Instruments: Recognition and Measurement are classified as either financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, or available-forsale investments, as appropriate. When financial assets are recognised initially, they are measured at fair value, plus, in the case of investments not at fair value through profit or loss, directly attributable transactions costs. The Group determines the classification of its financial assets after initial recognition and, when allowed and appropriate, re-evaluates this designation at each financial year-end.

All regular way purchases and sales of financial assets are recognised on the trade date i.e. the date that the Group commits to purchase the asset. Regular way purchases or sales are purchases or sales of financial assets under contracts that require delivery of the assets within the period established generally by regulation or convention in the marketplace.

(iii) Available-for-sale investments

Available-for-sale investments are those non-derivative financial assets that are designated as available-for-sale or are not classified as any of the three preceding categories. After initial recognition available-for sale investments are measured at fair value with gains or losses being recognised as a separate component of equity until the investment is derecognised or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in equity is recognised in profit or loss.

The fair value of investments that are actively traded in organised financial markets is determined by reference to quoted market bid prices at the close of business on the balance sheet date. For investments with no active market, fair value is determined using valuation techniques. Such techniques include using recent arm’s length market transactions; reference to the current market value of another instrument that is substantially the same; discounted cash flow analysis and option pricing models.

All other non-current investments were carried at the lower of cost and recoverable amount.

Recoverable amount

Non-current financial assets measured using the cost basis were not carried at an amount above their recoverable amount, and when a carrying value exceeded this recoverable amount, the financial asset was written down to its recoverable amount.

20

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(q) Trade and other payables

Trade and other payables are carried at the fair value of the consideration to be paid in the future. Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of goods and services.

(r) Interest-bearing loans and borrowings

All loans and borrowings are initially recognised at cost, being fair value of the consideration received net of issue costs associated with the borrowing.

After initial recognition, interest bearing loans and borrowings are subsequently measured at amortised cost using the effective interest rate method. Amortised cost is calculated by taking into account any issue costs, and any discount or premium on settlement.

Gains and losses are recognised in the income statement when the liabilities are derecognised and as well as through the amortisation process.

(s) Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability.

When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

(t) Employee leave benefits

(i) Wages, salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date, They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(ii) Long service leave

The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the reporting date on national government bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

(u) Share-based payment transactions

(i) Equity settled transactions:

The Group provides benefits to employees (including senior executives) of the Group in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a Black Scholes model, further details of which are given in Note 14.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Focus Minerals Limited (market conditions) if applicable.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the vesting period).

21

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(u) Share-based payment transactions (continued)

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The income statement charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share (see Note 5).

(v) Issued capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(w) Restoration ,Rehabilitation and Environmental Costs

Restoration, rehabilitation and environmental Costs necessitated by exploration and evaluation activities are accrued at the time of those activities and treated as exploration and evaluation expenditure.

Restoration, rehabilitation and environmental obligations recognised include the costs of reclamation and subsequent monitoring of the environment.

Costs are estimated on the basis of current undisclosed costs, current legal requirements and current technology, which are discounted to their present value. Estimates are reassessed at least annually. Changes in estimates are dealt with retrospectively, with any amounts that would have been written off or provided against under accounting policy for exploration and evaluation immediately written off.

(x)

Earnings per share

Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for:

• costs of servicing equity (other than dividends) and preference share dividends;

• the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and

• other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(y)

Comparative figures

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

(z) New Standards and Interpretations not yet adopted

The following standards, amendments to standards and interpretations have been identified as those which may impact the entity in the period of initial application. They are available for early adoption at 30 June 2007, but have not been applied in preparing this financial report.

AASB 7 Financial Instruments : Disclosures (August 2005) replaces the presentation requirements of financial instruments in AASB 132. AASB 7 is applicable for annual reporting periods beginning on or after 1 January 2007, and will require extensive additional disclosures with respect top the Group’s financial instruments and share capital.

22

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(z) New Standards and Interpretations not yet adopted (continued)

AASB 2005-10 Amendments to Australian Accounting Standards (September 2005) makes consequential amendments to AASB 132 Financial Instruments : Disclosure and Presentation, AASB 101 Presentation of Financial Statements, AASB 114 Segment Reporting, AASB 117 Leases , AASB 133 Earnings Per Share, AASB 139 Financial Instruments: Recognition and Measurement, AASB 1 First-time adoption of Australian Equivalents to International Financial Reporting Standards, AASB 4 Insurance Contracts, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts arising from the release of AASB 7. AASB 2005-10 is applicable for annual reporting periods beginning on or after 1 January 2007 and is expected to only impact disclosures contained within the consolidated financial report.

AASB 8 Operating Segments replaces the presentation for annual reporting periods beginning on or after 1 January 2009 and it is not expected to have an impact on the financial results of the Company and the Group as the standard is only concerned with disclosures.

AASB 2007-3 Amendments to Australian Accounting Standards arising from AASB 8 makes amendments to AASB 5 Noncurrent Assets Held for Sale and Discontinued Operations, AASB 6 Exploration for and Evaluation of Mineral Resources, AASB 102 Inventories, AASB 107 Cash Flow Statements AASB 119 Employee Benefits, AASB 127 Consolidated and Separate Financial Statements, AASB 134 Interim Financial Reporting, AASB 136 Impairment Assets, AASB 1023 General Insurance Contracts and AASB 1038 Life Insurance Contracts. AASB 2007-3 is applicable for annual reporting periods beginning on or after 1 January 2009 and must be adopted in conjunction with AASB 8 Operating Segments. This standard is only expected to impact disclosures contained within the financial report.

AASB 2007-1 Amendments to Australian Accounting Standards arising from AASB Interpretation II amends AASB 2 Sharebased Payments to insert the transitional provisions of IFRS 2, previously contained in AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards. AASB 2007-1 is applicable for annual reporting periods beginning on or after 1 March 2007 and is not expected to have any impact on the consolidated financial report.

AASB 2007-2 Amendments to Australia Accounting Standards arising from AASB Interpretation 12 makes amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards, AASB 117 Leases, AASB 118 Revenue , AASB 120 Accounting for Government Grants and Disclosure of Government Assistance, AASB 121 The Effects of Changes in Foreign Exchange Rates, AASB 127 Consolidated and Separate Financial Statement, AASB 131 Interest in Joint Ventures, and AASB 139 Financial Instruments Recognition and Measurement. AASB 2007-2 is applicable for annual reporting periods beginning on or after 1 January 2008 and must be applied at the same time as the Interpretation 12 Service Concession Arrangements.

AASB 2007-2 Amendments to Australian Accounting Standards also amends references to “UIG Interpretation” to interpretations. This amending standard is applicable to annual reporting periods ending on or after 28 February 2007.

AASB 2007-4 Amendments to Australian Accounting Standards arising from ED 151 and other Amendments makes consequential amendments to AASB 1 First-time adoption of Australian Equivalents to International Financial Reporting Standards, AASB 2 Share Based Payments, AASB 3 Business Combinations, AASB 4 Insurance Contracts, AASB 5 NonCurrent Assets Held for Sale and Discontinued Operations, AASB 6 Exploration for and Evaluation of Mineral Resources, AASB 7 Financial Instruments : Disclosures, AASB 102 Inventories, AASB 107 Cash Flow Statement, AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors, AASB 110 Events after the Balance Sheet Date. AASB 112 Income Taxes, AASB 114 Segment Reporting, AASB 116 Property, Plant and Equipment, AASB 117 Leases, AASB 118 Revenue, AASB 119 Employee Benefits, AASB 120 Accounting for Government Grants and Disclosure of Government Assistance, AASB 121 The Effects of Changes in Foreign Currency Rates, AASB 127 Consolidated and Separate Financial Statements, AASB 128 Investment in Associates, AASB 129 Financial Reporting in Hyperinflationary Economies, AASB 130 Disclosures of Financial Statement of Banks and Similar Financial Institutions, AASB 131 Interest in Joint Ventures, AASB 132 Financial Instruments: Disclosures and Presentation, AASB 133 Earnings Per Share, AASB 134 Interim Financial Reporting, AASB 136 Impairment of Assets, AASB 137 Provision, Contingent Liabilities and Contingent Assets, AASB 138 Intangible Assets, AASB 139 Financial Instruments: Recognition and Measurement, AASB 141 Agriculture, AASB 1023 General Insurance Contracts, and AASB 1038 Life Insurance Contracts. This standard is applicable to annual reporting periods beginning on or after 1 July 2007. The potential impact on the Company has not yet been determined.

AASB 2007-5 Amendments to Australian Accounting Standard – Inventories Held for Distribution by Not-for-Profit Entities requires inventories held for distribution by not-for-profit entities to be measured at the lower of cost and current replacement costs. AASB 2007-5 is applicable for annual reporting periods beginning on or after 1 July 2007 and is not expected to have an impact on the financial results or disclosures contained within the financial report.

AASB 2007-6 Amendments to Australian Accounting Standards arising from AASB 123 makes amendments to AASB 1 Firsttime Adoption of Australian Equivalents to International Financial Reporting Standards, AASB 101 Presentation of Financial Statements, AASB 107 Cash Flow Statements, AASB 111 Construction contracts, AASB 116 Property, Plant and Equipment, AASB 138 Intangible Assets, Interpretation 1 Changes in Existing Decommissioning, Restoration and Similar Liabilities and Interpretation 12 Service Concession Arrangements. AASB 2007-6 is applicable for annual reporting periods beginning on or after 1 January 2009 and must be applied at the same time as AASB 123 Borrowing Costs. This standard principally removes the references to expensing borrowing costs on qualifying assets.

23

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(z) New Standards and Interpretations not yet adopted (continued)

AASB 2007-7 Amendments to Australian Accounting Standards arising from AASB 2007-4 makes amendments to AASB 1 First-time Adoption of Australian Equivalents to International Financial Reporting Standards, AASB 2 Share-Based Payment, AASB 4 Insurance Contracts, AASB 5 Non-current Assets Held for Sale and Discontinued Operations, AASB Cash Flow Statements and AASB 128 Investments in Associates. AASB 2007-7 is applicable for annual reporting periods beginning on or after 1 July 2007. This standard is only expected to impact disclosures contained within the financial report.

24

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 2: REVENUES AND EXPENSES (a) Revenue Gold sales Rental revenue Services revenue Interest received (b) Other income Net gains on disposal of property, plant and equipment Other (c) Expenses Finance charges payable under finance leases and hire purchase contracts Interest expense Depreciation of non-current assets Exploration expenditure written-off Legal fees Loan impairment expense Mill operating costs Operating lease rental expense Employee share based payment expense	Consolidated Parent 2007 $ 2006 $ 2007 $ 2007 $
	9,899 1,100 9,899 1,100 98,053 39,348 98,053 39,348 67,511 - - - 151,899 139,199 150,625 137,616
	327,362 179,647 258,577 178,064
	(392) 4,144 (392) 4,144 134,558 1,152 123,533 1,152
	134,166 5,296 123,141 5,296
	1,494 356 - 356 14,693 29,886 14,693 29,886 151,179 120,764 141,948 120,764 10,732 807 10,732 807 27,613 202,874 27,613 202,874 - - 43,277 300,000 563,526 294,561 563,526 294,561 81,900 73,246 81,900 73,246 626,456 223,113 626,456 223,113

25

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

	Consolidated	Consolidated	Parent
	2007	2006	2007	2006
	$	$	$	$
NOTE 3: INCOME TAX
Income tax recognised in profit or loss
The prima facie income tax expense on pre-tax accounting loss from
operations reconciles to the income tax expense in the financial
statements as follows:
Accounting loss before income tax	(2,089,695)	(1,822,025)	(2,128,873)	(2,123,608)
Income tax expense
Income tax expense calculated at statutory income tax rate of 30%	(626,909)	(546,608)	(638,662)	(637,082)
Sundry non-deductible expenses	13,713	79,733	13,693	169,731
Deferred tax asset relating to tax losses not brought to account	613,196	466,875	624,969	467,351
Income Tax Benefit	-	-	-	-
Income Statement
Current tax		-		-
Deferred tax asset relating to tax losses	(613,196)	(466,875)	(624,969)	(467,351)
Deferred income tax
Temorary Differences recognised in equity	(79,315)	-	(79,315)	-
Relating to origination and reversal on temporary differences	(253,110)	(230,756)	(238,431)	(217,283)
Current year tax losses not recognised in the current period	945,621	697,631	942,715	684,634
Income tax benefit reported in the income statement	-	-	-	-
Unrecognised Deferred Tax Balances
Unrecognised deferred tax asset losses	8,746,870	7,778,281	7,078,809	6,015,498
Unrecognised deferred tax asset other	313,547	30,373	416,530	28,678
Unrecognised deferred tax liabilities	(5,130,062)	(5,103,683)	(2,921,788)	(2,895,409)
Net unrecognised deferred tax assets	3,930,355	2,704,971	4,573,551	3,148,767

The deferred tax asset arising from the tax losses has not been recognised as an asset in the balance sheet because recovery is not probable.

The tax benefit of losses not brought to account will only be obtained if

(a) assessable income is derived of a nature and amount sufficient to enable the benefits to be realised:

(b) conditions for deductibility imposed by the law are complied with: and

(c) no changes in the tax legislation adversely affect the realisation of the benefit form the deductions.

Tax Consolidation

Focus Minerals Limited and its 100% owned Australian resident subsidiary have not formed a tax consolidated group.

NOTE 4: SEGMENT REPORTING

The Group operates solely in the resources exploration industry within Western Australia. The Group is actively exploring for natural minerals, in particular, gold and nickel in proximity to Coolgardie, Western Australia.

26

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 5: EARNINGS PER SHARE

NOTE 5: EARNINGS PER SHARE	Consolidated	Consolidated
	2007	2006
	Centsper share	Centsper share
Basic earnings per share:
Total Basic EPS	(0.46)	(0.45)
Diluted earnings per share:
Total Diluted EPS	(0.46)	(0.45)
Basic Earnings per share
The earnings and weighted average number of ordinary shares used in the
calculation of basic earnings per share is as follow:	(2,089,695)	(1,822,025)
Weighted average number of ordinary shares for the purposes of basic earnings per
share	455,529,684	406,368,817
Diluted Earnings per share
The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share:	(2,089,695)	(1,822,025)
Weighted average number of ordinary shares for the purposes of diluted earnings
per share	474,799,684	415,788,816
Diluted earnings per share is reflected as being the same as basic
earnings per share as the result is anti-dilutive in nature.

NOTE 6: CASH AND CASH EQUIVALENTS

Cash at bank and on hand Short-term deposits – secured Short-term deposits – unsecured	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $
	270,366 265,724 243,238 209,930 1,694,510 1,495,455 1,667,510 1,469,206 11,880,000 681,250 11,880,000 681,250
	13,844,876 2,442,429 13,790,748 2,360,386

Cash at bank earns interest at floating rates based on daily bank deposit rates.

Short-term deposits are made for varying periods of between one day and six months, depending on the immediate cash requirements of the Group, and earn interest at the respective short-term deposit rates.

Performance bonds have been issued by a bank on behalf of the Group in respect of Western Australian mining tenements. The Group has indemnified the bank against any loss arising from the performance bonds and the indemnity is secured against cash deposits

Secured performance bonds comprise $854,223(2006 : $852,250) attributable to the Group for its directly held mining tenements as joint venture partner in the Redemption joint venture, and $840,287 (2006: $643,205) attributable to Committee Bay Resources Limited as joint venture partner in the Redemption joint venture. The amount attributable to Committee Bay Resources Limited is shown as a liability in Note 15 as amount due to joint venture partner totalling $840,287 (2006: $643,205).

At 30 June 2007, the Group had no available borrowing facilities.

(i) Reconciliation to Cash Flow Statement:

For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand and at bank and investments in money market instruments, net of secured short term deposits.

Cash and cash equivalents as shown in the cash flow statement is reconciled to the related items in the balance sheet as follows:

Cash at bank and short term deposits Short term deposit - secured Cash and cash equivalents	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $ 13,844,876 2,442,429 13,790,748 2,360,386 (1,694,510) (1,495,455) (1,667,510) (1,469,206)
	12,150,366 946,974 12,123,238 891,180

27

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007 NOTE 6 CASH AND CASH EQUIVALENTS (continued) (ii) Cash balances not available for use Short term deposits lodged as security (iii) Reconciliation of profit for the year to net cash flows from operating activities Loss for the year (Gain)/loss on sale or disposal of non-current assets Exploration expenditure written off Equity settled share based payment Loan impairment expense Depreciation expense (Increase)/decrease in assets: Current receivables Other current assets Increase/(decrease) in liabilities: Current payables Other current liabilities Rehabilitation costs Employee benefits Deferred revenue Non-current payables Net cash from operating activities (iv) Net cash on acquisition of subsidiary During the year 50% of the controlled entity, Underground Drilling Services Pty Ltd was acquired. The details of the transaction are : Assets and liabilities acquired Cash and bank balances Trade and other debtors Plant and equipment Trade and other payables Financial liabilities Net Identifiable assets Consideration paid Net cash acquired	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $ 1,694,510 1,495,455 1,694,510 1,469,206
	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $
	(2,089,695) (1,822,025) (2,128,873) (2,123,608) 392 (4,144) 392 (4,144) 10,732 807 10,732 807 - 257,903 - 257,903 - - 43,277 300,000 151,179 120,764 141,947 120,764 (224,208) (320,277) (178,410) (304,452) 272 (4,307) 6,940 (14,807) 407,143 (1,774,628) 586,848 (1,337,461) 48,370 39,584 33,189 39,584 111,000 - 111,000 - (3,164) 26,413 (3,167) 26,413 (45,834) 25,000 (45,834) 25,000 (20,000) (20,000) - -
	(1,653,813) (3,474,910) (1,421,959) (3,014,001)
	35,825 - 53,223 - 205,545 - (261,662) - (32,933) - (2) - 2 - 35,825 -

28

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 6 CASH AND CASH EQUIVALENTS (continued)

Non Cash transactions

During the period the Company issued 2,400,000(2006: 600,000) fully paid ordinary shares at 5 cents per share and totalling $120,000 (2006: $30,000) in consideration for corporate advisory services received.

NOTE 7 CURRENT TRADE AND OTHER RECEIVABLES	Consolidated	Consolidated		Parent
	2007	2006	2007		2006
		$			$
Other receivables	544,485	320,277	482,862		304,452

An allowance for doubtful debts is made when there is objective evidence that a trade receivable is impaired. The amount of the allowance/impairment loss has been measured as the difference between the carrying amount of the trade receivables and the estimated future cash flows expected to be received from the relevant debtors

NOTE 8 INVENTORIES

Spare parts – at cost NOTE 9 AVAILABLE-FOR-SALE FINANCIAL INVESTMENTS At fair value: Unlisted shares	243,027 243,027 243,027 243,027
	- 1 - 1

Available-for-sale investments consist of investments in ordinary shares, and therefore have no fixed maturity date or coupon rate.

The fair value of the unlisted available-for-sale investments has been estimated using valuation techniques based on assumptions that are not supported by observable market prices or rates. Management believes the estimated fair values resulting from the valuation techniques and recorded in the balance sheet and the related changes in fair values recorded in the income statement are reasonable and the most appropriate at the balance sheet date.

NOTE 10 OTHER FINANCIAL ASSETS (NON-CURRENT) Investments in controlled entities – note 1 Amounts receivable from controlled entities- note 2 Impairment expense	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
	- - 3,301,278 3,301,276
	- - 4,302,303 4,339,838 - - (300,000) (300,000)
	- - 4,002,303 4,039,838
	- - 7,303,581 7,341,114

Note 1

On 1 April 2007, the Company acquired a direct 50% interest in Underground Drilling Services Pty Ltd (“UDS”). At 30 June 2007 the Company controlled 50% of the issued capital of UDS and held 1 of 2 directorships of UDS. At balance date, it is considered that the Company has control of UDS and accordingly has consolidated the financial statements of UDS from1 April 2007.

Note 2

The ultimate recoverability of the amount receivable from controlled entity is dependant on the successful and commercial exploitation and or

sale of the controlled entity’s mining tenements at amounts at least equal to the book value.

• As there is no current intention for the loans to controlled entities to be repaid in the near future, the amounts receivable from controlled entities are treated as investment in controlled entities, for accounting purposes.

29

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 11 OTHER RECEIVABLES Other receivable Impairment expense Other receivables	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
	- 53,100 277,941 53,100 - - (43,277) -
	- 53,100 234,664 53,100

Other receivables are to an external party are on minimum fixed repayment amounts and are non interest bearing.

NOTE 12 PLANT AND EQUIPMENT Mining plant & equipment At cost Less accumulated depreciation Movements in carrying amounts Balance at 1 July Additions Acquired on acquisition of subsidiary company Transferred from exploration expenditure Disposals Depreciation expense	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
	1,216,077 804,461 918,274 804,461 (413,302) (220,149) (376,416) (220,149)
	802,775 584,312 541,858 584,312
	584,312 77,050 584,312 77,050 165,559 74,620 101,085 74,620 205,674 - - - - 573,948 - 573,948 (1,591) (20,542) (1,591) (20,542) (151,179) (120,764) (141,948) (120,764)
	802,775 584,312 541,858 584,312

The useful life of the mining plant and equipment was estimated as follows for both 2006 and 2007:

Plant and equipment 5 to 15 years

30

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 13 DEFERRED EXPLORATION EXPENDITURE

OTE 13 DEFERRED EXPLORATION EXPENDITURE
Costs carried forward in respect of: Exploration and evaluation phase – at cost Balance at beginning of year Sale of tenements Purchase of tenements Transfer of plant and equipment value on formation of joint venture Transfer of spare parts value on formation of joint venture Exploration expenditure incurred Expenditure written off Total exploration expenditure	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $
	16,293,567 16,301,371 8,932,653 8,940,457 - - - - 41,120 458,956 41,120 458.956 - (573,948) - (573,948) - (243,027) - (243,027) 776,253 351,022 776,253 351,022
	17,110,940 16,294,374 9,750,026 8,933,460 (10,732) (807) (10,732) (807)
	17,100,208 16,293,567 9,739,294 8,932,653

The recoupment of costs carried forward in relation to areas of interest in the exploration and evaluation phases are dependent on the discovery of commercially viable mineral or other natural resource deposits and their successful development and commercial exploitation or sale of the respective areas.

NOTE 14 SHARE BASED PAYMENTS

During the year the Company issued 9,850,000 options to acquire fully paid ordinary shares in the Company to directors of the Company. The issue of the options was approved by shareholders at the Annual General Meeting held 30 November 2005. The options have an expiry date of 30 November 2010.

The fair value of the equity settled share options granted is estimated as at the date of grant using the Black-Scholes Option pricing model taking into account the terms and conditions upon which the options were granted.

The following table lists the inputs to the model used for the years ended 30 June 2007 and 30 June 2006.

Volatility (%) Risk free interest rate (%) Expected life of option (years) Exercise price (cents) Weighted average share price at grant date (cents)	2007 2006
	- 55% - 5.25% - 2 - 5-6 - 2.0

The expected life of the options is based on historical data and is not necessarily indicative of exercise patterns that may occur. The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome. No other features of options granted were incorporated into the measurement of fair value.

31

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 15 TRADE AND OTHER PAYABLES

Current Trade payables (i) Sundry creditors and accrued expenses Employee benefits Amount due to joint venture partner Non Current Other parties Rehabilitation costs	Consolidated Parent 2007 2006 2007 2006 $ $ $ $
	518,302 111,160 500,923 111,160 267,631 219,261 219,617 186,428 34,540 37,704 34,540 37,704 840,287 643,205 840,287 643,205
	1,660,760 1,011,330 1,595,367 978,497
	60,000 80,000 - - 111,000 - 111,000 -
	171,000 80,000 111,000 -

(i) Trade payables are non-interest bearing and are normally settled on 30-60 day terms.

Information regarding the credit risk of current payables is set out in Note 18.

NOTE 16 FINANCIAL LIABILITIES

Obligations under finance leases and hire purchase contracts (refer Note 19) Current Non current	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $ 11,347 - - - 25,252 - - -
	36,599 - - -

32

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 17 ISSUED CAPITAL AND RESERVES Issued Capital Ordinary shares issued and fully paid at 30 June 2005 Issued 8 August 2005 Issued 8 August 2005 Issued 8 & 23 August 2005 Issued 29 September 2005 Issued 1 February 2006 Issued 15 February 2006 Share issue expenses Ordinary shares issued and fully paid at 30 June 2006 Issued 21 September 2006 Issued 25 September 2006 Issued 1 November 2006 Issued 31 January 2007 Issued 12 June 2006 Issued 22 June 2007 Share issue expenses Ordinary shares issued and fully paid at 30 June 2007	Parent Parent 2007 Shares 2006 Shares 2007 $ 2006 $
	- 248,472,098 - 23,412,746 - 5,000,000 - 300,000 - 23,809,512 - 900,000 - 140,000,000 - 5,880,000 - 11,904,762 - 500,000 - 238,095 - 10,000 - 600,000 - 30,000 - - - (382,800)
	430,024,467 430,024,467 30,649,946 30,649,946 600,000 - 30,000 - 400,000 - 18,000 - 40,000,000 - 1,600,000 - 600,000 - 30,000 - 300,000,519 - 12,900,000 - 7,200,000 - 318,000 - - - (939,114) -
	778,824,986 430,024,467 44,606,832 30,649,946

Fully paid ordinary shares carry one vote per share and carry the right to dividends.

33

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 17 ISSUED CAPITAL AND RESERVES (continued)

Reserves

Option Reserve

Movements in the option reserve as a result of equity settled transactions were as follows:

Balance 1 July Employee share options issued Share issue expenses Balance 30 June	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $
	561,007 303,104 561,007 303,104 - 223,113 - 223,113 - 34,790 - 34,790
	561,007 561,007 561,007 561,007

The share option arises on the grant of share options. Amounts are transferred out of the reserve and into issued capital when the options are exercised.

NOTE:18 FINANCIAL INSTRUMENTS

The Group’s principal financial instruments, other than derivatives, comprise bank loans and overdrafts, debentures, convertible non-cumulative redeemable preference shares, finance leases and hire purchase contracts, and cash and short-term deposits.

The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has various other financial assets and liabilities such as trade receivables and trade payables, which arise directly from its operations. It is, and has been throughout the period under review, the Group’s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group’s financial instruments are cash flow interest rate risk, liquidity risk, commodity risk and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below.

Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 to the financial statements.

Cash flow interest rate risk

The Group’s exposure to interest rate risk relates to the risk that a financial instrument’s value will fluctuate as result of changes tin market interest rates and the effective average interest rates affecting the classes of financial assets and liabilities detailed below.

Commodity price risk

The Group’s exposure to price risk is at present minimal. Upon commencement of production of natural minerals, management of the commodity risk will be assessed by the Board in consultation with commodity experts to determine the appropriate level of protection and financial instrument to be adopted.

34

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE: 18 FINANCIAL INSTRUMENTS (continued)

Credit risk

The Group trades only with recognised, creditworthy third parties. It is the Group's policy that all customers who wish to trade on credit terms are subject to credit verification procedures

In addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.

There are no significant concentrations of credit risk within the Group.

With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, available-for-sale financial assets the Group’s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments.

Since the Group trades only with recognised third parties, there is no requirement for collateral.

Liquidity risk

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts, bank loans, convertible notes and hire purchase contracts.

Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial instruments recognised in the financial statements.

Consolidated 30 June 2007 Financial assets Cash Trade receivables Total financial assets Financial liabilities Trade payables and other payables Amount due to joint venture partner Obligations under finance leases Employee entitlements Deferred revenue Total financial liabilities	Average Effective Interest Rate %	Floating Interest Rate $ Fixed Interest Rate $ Non Interest Bearing $ Total $
	6.27 - - 4.85 8.70 - -	1,964,876 11,880,000 - 13,844,876 - - 544,485 544,485
		1,964,876 11,880,000 544,485 14,389,361
		- - 956,933 956,933 840,287 - - 840,287 36,599 - 36,599 - - 34,540 34,540 - - 18,750 18,750
		840,287 36,599 1,010,223 1,887,109

35

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE: 18 FINANCIAL INSTRUMENTS (continued)

NOTE: 18 FINANCIAL INSTRUMENTS (continued)
Average Effective Interest Rate % Consolidated 30 June 2006 Financial assets Cash 5.27 Trade receivables - Available-for-sale investments - Other financial assets (non-current) Total financial assets Financial liabilities Trade payables and other payables - Amount due to joint venture partner 5.60 Employee entitlements - Deferred revenue Total financial liabilities Average Effective Interest Rate % Parent 30 June 2007 Financial assets Cash 6.27 Trade receivables - Receivables - Other financial assets (non-current) - Total financial assets Financial liabilities Trade payables and other payables - Amount due to joint venture partner 4.85 Deferred revenue - Employee entitlements - Total financial liabilities	Floating Interest Rate $ Fixed Interest Rate $ Non Interest Bearing $ Total $ 2,442,429 - 2,442,429 - - 320,277 320,277 - - 1 1 - - 53,100 53,100
	2,442,429 - 373,378 2,815,807
	- - 410,421 410,421 643,205 - - 643,205 - 37,704 37,704 - - 64,584 64,584
	643,205 - 512,709 1,155,914
	Floating Interest Rate $ Fixed Interest Rate $ Non Interest Bearing $ Total $
	1,910,748 11,880,000 - 13,790,748 - - 482,862 482,862 - - 4,236,967 4,236,967 - - 3,301,278 3,301,278
	1,910,748 11,880,000 8,021,107 21,811,855
	- - 831,540 831,540 840,287 - - 840,287 - - 18,750 18,750 - 34,540 34,540
	840,287 - 884,830 1,725,117

36

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE: 18 FINANCIAL INSTRUMENTS (continued)

Parent 30 June 2006 Financial assets Cash Trade receivables Receivables Available-for-sale investments Other financial assets (non-current) Total financial assets Financial liabilities Trade payables and other payables Amount due to joint venture partner Deferred revenue Employee entitlements Total financial liabilities	Average Effective Interest Rate %	Floating Interest Rate $ Non Interest Bearing $ Total $
	5.27 - - - - - 5.60 - -	- 2,360,386 - 2,360,386 - 304,452 304,452 - 4,092,938 4,092,938 - 1 1 - 3,301,276 3,301,276
		2,360,386 7,698,667 10,059,053
		- 297,588 297,588 643,205 - 643,205 - 64,584 64,584 - 37,704 37,704
		643,205 399,876 1,043,081

NOTE 19: COMMITMENTS AND CONTINGENCIES

Operating lease commitments – Group as lessee

The Group has entered into commercial leases on certain office accommodation. These leases have an average life of 2 years with no renewal option included in the contracts. There are no restrictions placed upon the lessee by entering into these leases.

Future minimum rentals payable under non-cancellable operating leases as at 30 June are as follows:

Office accommodation Within one year After one year but not more than five years More than five years	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $
	69,295 65,800 69,295 65,800 10,129 65,800 10,129 65,800 - - - -
	79,424 131,600 79,424 131,600

37

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 19: COMMITMENTS AND CONTINGENCIES (continued)

Finance lease and hire purchase commitments - Group as lessee

The Group had finance leases for various items of plant and machinery. These leases had terms of renewal but no purchase options and escalation clauses. Renewals are at the option of the specific entity that holds the lease.

Future minimum lease payments under finance leases together with the present value of the net minimum lease payments are as follows:

CONSOLIDATED	2007 2006 Minimum lease payments $ Present value of lease payments $ Minimum lease payments $ Present value of lease payments $
Within one year After one year but not more than five years Total minimum lease payments Less amounts representing finance charges Present value of minimum lease payments PARENT	14,468 11,347 - - 29,596 25,252 - -
	44,064 36,599 - - (7,465) - - -
	36,599 36,599 - -
Within one year After one year but not more than five years Total minimum lease payments Less amounts representing finance charges Present value of minimum lease payments	- - - - - - - -
	- - - - - - - -
	- - - -

The weighted average interest rate impact of the leases for both the Group and the Parent at 30 June 2007 is 8.7% (2006: nil%)

Mining tenement expenditure commitments

The Consolidated Entities and Company have minimum statutory expenditure, including tenement rentals, as conditions of tenure of certain mining tenements.

To secure certain performance obligations attaching to certain mining and exploration tenements, the Consolidated Entity and the Company has lodged bank bonds totalling $1,683,300 (2006: $1,495,455), with the Department of Industry and Resources.

Within one year After one year but not more than five years More than five years	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $
	1,517,380 1,435,020 1,517,380 1,435,020 - - - - - - - -
	1,517,380 1,435,020 1,517,380 1,435,020

38

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 20: INTEREST IN JOINTLY CONTROLLED OPERATION

(a) Redemption joint ventures

The Group has a 50% interest in the Redemption Plant and Equipment joint venture, which is involved in management and operation of the plant and equipment held by the Redemption joint venture.

The Group has a 50% (2006: 90%) interest in the Redemption Exploration joint venture, which is involved in the exploration of the tenements comprising the Coolgardie Gold Project located in the vicinity of Coolgardie, Western Australia.

During the financial period, Committee Bay Resources Limited (“Committee Bay”) concluded earning its 50% interest in the Redemption Exploration joint venture on spending its earn in commitment of A$8,000,000.

The share of the assets, liabilities, revenue and expenses of the jointly controlled operations, which are included in the consolidated financial statements, are as follows:

Current assets Cash and cash equivalents Trade and other receivables Inventories Total current assets Non-current assets Receivables Other Financial Asset Property, plant & equipment Deferred Exploration Expenditure Total Non-current assets Current liabilities Trade and other payables Rehabilitation cost Deferred Revenue Total current liabilities Non-current liabilities Deferred Revenue Total Non-current liabilities	Consolidated 2007 $ 2006 $
	113,490 3,360 446,768 17,527 243,027 243,027
	803,285 263,914
	277,942 53,100 - 1 428,870 469,506 2,269,856 1,795,006
	2,976,668 2,317,613
	396,666 27,846 111,000 - 18,750 39,584
	526,416 67,430
	- 25,000
	- 25,000

39

Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 20: INTEREST IN JOINTLY CONTROLLED OPERATION (continued)

Revenue Cost of sales Depreciation Administrative expenses Finance cost Profit before income tax Income tax expense Net Profit	Consolidated 2007 $ 2007 $
	129,122 56,778 - - (94,242) (87,641) (606,804) (294,561) - -
	(571,924) (325,424) - -
	(571,924) (325,424)

Refer to Note 19 for details on capital commitments and guarantees. There were no impairment losses in the jointly controlled operation.

NOTE 21: CONTROLLED ENTITIES

The consolidated financial statements include the financial statements of Focus Minerals Limited and the subsidiaries listed in the following table.

Country of % Equity Interest Name Incorporation 2007 2006	Investment ($’000) 2007 2006
Austminex Pty Ltd Australia 100% 100% Underground Drilling Services Pty Ltd Australia 50% -	3,301,276 3,301,276 2 -
	3,301,278 3,301,276

On 14 September 2005, Focus Minerals Pty Ltd changed its name to Austminex Pty Ltd.

On 1 April 2007, the Company acquired a controlling interest in Underground Drilling Services Pty Ltd.

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Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 22: RELATED PARTY DISCLOSURE

The following table provides the total amount of transactions that were entered into with related parties for the relevant financial year (for information regarding outstanding balances at year-end, refer to note 10 and note 21):

Related party Consolidated Joint ventures in which the parent is a venturer: Redemption joint venture 2007 2006 Being recharges of salaries and expenses provided to the joint venture Parent Related party Austminex Pty Ltd 2007 2006 Joint venture in which the parent is a venturer: Redemption joint venture 2007 2006 Being recharges of salaries and expenses provided to the joint venture	Sales to related parties $ Purchases from Related Parties $ Amounts Owed by Related parties $ Amounts Owed to Related parties $
	111,964 - 111,964 - 299,767 - 299,767 - - - 4,302,303 - - - 4,339,838 - 111,964 - 111,964 - 299,767 - 299,767 -

Joint venture in which the entity is a venturer

The Group has a 50% interest in the assets, liabilities and output of the Redemption Plant & Equipment joint venture

(2006: -50%).

The Group has a 50% interest in the assets, liabilities and output of the Redemption Exploration joint venture (2006: - 90%).

Terms and conditions of transactions with related parties

Sales to and purchases from related parties are made in arm's length transactions both at normal market prices and on normal commercial terms.

Outstanding balances at year-end are unsecured, interest free and settlement occurs in cash.

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Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 22: RELATED PARTY DISCLOSURE (continued)

For the year ended 30 June 2007, the Group has not made any allowance for doubtful debts relating to amounts owed by related parties due to solid payment history (2006: $nil). An impairment assessment is undertaken each financial year by examining the financial position of the related party and the market in which the related party operates to determine whether there is objective evidence that a related party receivable is impaired. When such objective evidence exists, the Group recognises an allowance for the impairment loss.

NOTE 23: EVENTS AFTER THE BALANCE SHEET DATE

During July 2007, the Redemption joint venture secured priority toll treatment arrangements with Higginsville Mining Pty Ltd to treat ore from the Coolgardie Gold Project in return for an extension, to June 2017, of the sub lease for Higginsville’s Greenfield’s Gold treatment plant located on a mining lease within the Coolgardie Gold Project.

On 30 July 2007 the Redemption joint venture upgraded the Dreadnought gold deposit to an Indicated Resource of 3,020,000 tonnes at 2.02 g/t and an Inferred Resource of 434,000 tonnes at 1.76 g/t for a total of 220,980 ozs gold.

During August 2007, the Redemption Exploration joint venture commenced the construction of a 400m decline from the existing Tindals’ underground workings to the Perseverance gold deposit. Construction of the decline was expected to be completed during October 2007.

During August 2007, the Group received mine access approvals to re-enter the underground workings at the Nepean Nickel Project to assess the condition of the underground infrastructure and confirm the extent of remnant ore blocks and extract ore samples for metallurgical testing.

NOTE 24: AUDITORS' REMUNERATION

The auditors of Focus Minerals Limited are Bentleys MRI Perth Partnership.

Amounts received or due and receivable by Bentleys MRI for: An audit or review of the financial report of the entity and any other entity in the consolidated group Other services in relation to the entity and any other entity in the consolidated group Amounts received or receivable by other auditors of subsidiaries and joint ventures for: An audit or review of the financial report of any other entity in the consolidated group Other services in relation to any other entity in the consolidated group	Consolidated Parent 2007 $ 2006 $ 2007 $ 2006 $
	22,475 14,624 22,475 14,624 8,033 - 8,033 -
	30,508 14,624 30,508 14,624
	5,562 3750 5,562 3750 - - - -
	5,562 3750 5,562 3750

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Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 25: DIRECTORS AND EXECUTIVE DISCLOSURES

(a) Details of Key Management Personnel

(i) Directors
Donald Taig	Chairman (executive)
Peter Williams	Chief Executive Officer
Geoff Rasmussen	Director (non-executive)
Phillip Lockyer	Director (non-executive)
Charles McCormick	Director (executive) – resigned 17 August 2007
(ii) Executives
Alec Pismiris	Company Secretary – appointed 28.11.2005 and resigned 2.8.2006
K.Jon Grygorcewicz	Company Secretary and Chief Financial Officer - appointed 1.8.2006

There were no other changes of the board or key management after the reporting date and the date the financial report was authorised for issue.

(b) Compensation of Key Management Personnel

(i) Remuneration structure

In accordance with best practice Corporate Governance, the structure of non-executive director and executive remuneration is separate and distinct.

Non-executive director remuneration

The Board seeks to set aggregate remuneration at a level that provides the company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.

The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The Board considers advice from external shareholders as well as the fees paid to non-executive directors of comparable companies when undertaking the annual review process.

At present the maximum aggregate remuneration of non-executive directors is $150,000 par annum.

Senior manager and executive director remuneration

Remuneration primarily consists of fixed remuneration and an equity component where determined by the directors. Issue of an equity component to directors is subject to the approval of shareholders in general meeting.

Fixed Remuneration

Fixed remuneration is reviewed annually by the Remuneration Committee. The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The Committee has access to external, independent advice where necessary.

Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating undue cost for the Group.

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Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 25: DIRECTORS AND EXECUTIVE DISCLOSURES (continued)

(b) Compensation of Key Management Personnel (continued)

(ii) Compensation of Key Management Personnel for the years ended 30 June 2007 & 2006

30 June 2007 Directors Donald Taig Peter Williams Phillip Lockyer Geoff Rasmussen Charles McCormick Executives* Jon Grygorcewicz	Salary & Fees $ Superannuation $ Other $ Share Based Payment - Options $ Total $ Total Performance Related $
	56,200 - - - 56,200 - 202,540 18,229 7,591 - 228,360 - 30,000 2,700 - - 32,700 - 30,000 - - - 30,000 - 150,000 13,500 11,485 - 174,985 - 468,740 34,429 19,076 - 522,245 93,009 10,106 9,220 - 112,335 - 93,009 10,106 9,220 - 112,335

* Mr McCormick was appointed a director on 23.12.2005. Salary and benefits received prior to his appointment has presented within this classification.

The Company only employed 1 executive in the period.

30 June 2006 Directors Donald Taig Peter Williams Phillip Lockyer Geoff Rasmussen Charles McCormick Catherine Hobbs Executives* Alec Pismiris Andrew Hawker Jack Toby	Salary & Fees $ Superannuation $ Other $ Share Based Payment – Options $ Total $ Total Performance Related $
	50,000 - - - 50,000 - 160,000 14,400 11,935 156,630 342,965 45.6% 12,500 1,300 - - 13,800 - 21,930 - - - 21,930 - 175,804 10,321 13,025 66,483 265,633 40.1% 45,872 4,128 - - 50,000 - 466,106 30,149 24,960 223,113 744,328 29,000 - - - 29,000 - 122,442 11,020 - - 133,462 - 35,155 - - - 35,155 - 186,597 11,020 - - 197,617

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Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 25: DIRECTORS AND EXECUTIVE DISCLOSURES (continued)

(b) Compensation of Key Management Personnel (continued)

(iii) Contract for Services

Mr Peter Williams, the Managing Director, has a contract of employment with the Company dated 10 March 2005. The contract specifies the duties and obligations to be fulfilled by the Managing Director. The employment contract is continuous from the commencement date of 28 February 2005. Should the contract be terminated by the Company for any reason, other than misconduct, Mr Williams will be entitled to a termination payment equivalent to one year’s salary which currently totals $220,000.

(c) Compensation options: Granted and vested during the year

During the financial year no share options were granted as equity compensation benefits to management personnel. No share options have been granted to the non-executive members of the Board of Directors.

Options issued in the period ended 30 June 2006 were issued free of charge.

30 June 2007 Directors 30 June 2006 Directors Peter Williams Charles McCormick Total

Vested Granted Terms and Conditions for each Grant No. No. Grant Date Fair Value per option at grant date (cents) Exercise price per option (cents) Expiry DateFirst Exercise Date

- - - - - - - Vested Granted No. No. Grant Date Fair Value per option at grant date.- (cents) Exercise price per option - (cents) Expiry Date First Exercise Date 3,475,000 3,475,000 28/2/2006 2.25 5.0 30/11/2010 30/11/2006 3,475,000 3,475,000 28/2/2006 2.25 6.0 30/11/2010 30/11/2007 1,450,000 1,450,000 1/2/2006 2.29 5.0 30/11/2010 30/11/2006 1,450,000 1,450,000 1/2/2006 2.29 6.0 30/11/2010 30/11/2007 9,850,000 9,850,000

Issue of the above options was approved by shareholders at the Annual General Meeting held 30 November 2005.

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Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 25 DIRECTORS AND EXECUTIVE DISCLOSURES (continued)

(d) Option holdings of Key Management Personnel (Consolidated)

30 June 2007 Directors Peter Williams Charles McCormick Total # Includes forfeitures 30 June 2006 Directors Peter Williams Charles McCormick Total # Includes forfeitures	Vested as at 30 June 2007 Balance at beginning of period 1/07/06 Granted as remune- ration Options exercised Net change Other # Balance at end of period 30/06/07 Total Exercise- able Not Exercisable
	6,950,000 - - - 6,950,000 6,950,000 3,475,000 3,475,000 5,900,000 - - - 5,900,000 5,900,000 3,450,000 2,450,000
	12,850,000 - - - 12,850,000 12,850,000 6,925,000 5,925,000
	- 6,950,000 - - 6,950,000 6,950,000 - 6,950,000 3,000,000 2,900,000 - - 5,900,000 5,900,000 1,000,000 4,900,000
	3,000,000 9,850,000 - - 12,850,000 12,850,000 1,000,000 11,850,000

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Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 25 DIRECTORS AND EXECUTIVE DISCLOSURES (continued)

(e) Shareholdings of Key Management Personnel

30 June 2007 Directors Donald Taig Peter Williams Phillip Lockyer Geoff Rasmussen* 30 June 2006 Directors Donald Taig Peter Williams Phillip Lockyer Geoff Rasmussen* Charles McCormick	Balance 1 July 2006 Granted as remuneration Net other changes Balance 30 June 07 Ord Options Ord Options Ord Options Ord Options
	8,377,274 - - - 214,456 - 8,591,730 - 250,000 6,950,000 - - 253,614 - 503,614 6,950,000 200,000 - - - 53,614 - 253,614 - 4,696,599 3,000,000 - - 53,614 - 4,750,213 3,000,000
	13,523,873 9,950,000 - - 575,298 - 14,099,171 9,950,000
	Balance 1 July 2005 Granted as remuneration Net other changes Balance 30 June 06 8,377,274 - - - - - 8,377,274 - - - - 6,950,000 250,000 - 250,000 6,950,000 - - - - 200,000 - 200,000 - 4,696,599 - - - - 3,000,000 4,696,599 3,000,000 18,188,143 3,000,000 - 2,900,000 2,558,103 - 20,746,246 5,900,000
	31,262,016 3,000,000 - 9,850,000 3,008,103 3,000,000 34,270,119 15,850,000

• Mr Rasmussen is a director of Azure Capital Pty Ltd and accordingly is deemed to have an interest in the options. Mr Rasmussen is also a director of Zap Nominees Pty Ltd and accordingly has an indirect interest in the shares.

**Mr Taig is a director of Tizon Pty Ltd and Lugano Enterprises Pty Ltd and accordingly has an indirect interest in the shares.

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Focus Minerals Limited – Financial Report 2007

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2007

NOTE 25: DIRECTORS AND EXECUTIVE DISCLOSURES (continued)

(f) Other transactions and balances with Key Management Personnel

Azure Capital Pty Ltd

Mr Geoff Rasmussen is a director of Azure Capital Pty Ltd (Azure) which acted as lead manager to the capital raising undertaken under the prospectus dated 14 July 2005. For these services Azure received a retainer and underwriting fees totalling $382,800 together with 3,000,000 options over unissued shares. Shareholders approved the issue of the options in General Meeting held 1 July 2005.

Capital Investment Partners Pty Ltd

Mr Pismiris while appointed Company Secretary was also a director of Capital Investment Partners Pty Ltd which provided accounting services and office accommodation. Total fees paid to Capital Investment Partners for these services, in addition to fees paid for company secretarial services, totalled $33,367.

In addition, Capital Investment Partners Pty Ltd been appointed to act as corporate adviser. Fees paid to Capital Investment Partners Pty Ltd for these services totalled $30,000 and was settled by the issue of 600,000 fully paid ordinary shares. Fees for a further $30,000 have been accrued but unpaid as at 30 June 2006.

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Focus Minerals Limited – Financial Report 2007

DIRECTORS’ DECLARATION

1. In the opinion of the directors:

2. a. the financial statements and notes of the company and of the consolidated entity are in accordance with the Corporations Act 2001 including:

   • i. giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their performance for the year then ended; and

   • ii. complying with Accounting Standards and Corporations Regulations 2001; and

3. b. there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

4. This declaration has been made after receiving the declarations required to be made to the directors in accordance with Section 295A of the Corporations Act 2001 for the financial year ended 30 June 2007.

This declaration is signed in accordance with a resolution of the Board of Directors.

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Donald Taig

Director

Dated this 27th September 2007

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Focus Minerals Limited – Financial Report 2007

==> picture [64 x 34] intentionally omitted <==

==> picture [82 x 28] intentionally omitted <==

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Bentleys MRI Perth Partnership ABN 17 735 344 518

Level 1, 10 Kings Park Road West Perth WA 6005 Australia

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF FOCUS MINERALS LIMITED

Report on the Financial Report

PO Box 570 West Perth WA 6872 T 61 8 9480 2000 F 61 8 9322 7787

We have audited the accompanying financial report of Focus Minerals Limited (the “Company”), which comprises the balance sheets as at 30 June 2007, and the income statements, statements of changes in equity, and statements of cash flows for the year ended on that date, a summary of significant accounting policies and other explanatory notes, and the directors’ declaration of the Group comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year.

Directors’ responsibility for the financial report.

The directors of the Company are responsible for the preparation and fair presentation of the financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining internal control relevant to the preparation and fair presentation of the financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditor’s responsibility

Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report.

Chartered Accountants

A member of Bentleys MRI, an association of independent accounting firms throughout Australia, and a member of Moores Rowland International, an association of independent accounting firms throughout the world. The firms practising as Bentleys MRI and Moores Rowland are independent. The member firms of these associations are affiliated only and not in partnership.

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Focus Minerals Limited – Financial Report 2007

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF

FOCUS MINERALS LIMITED

Report on the Financial Report (continued)

We performed the procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001 and Australian Accounting Standards (including the Australian Accounting Interpretations), a view which is consistent with our understanding of the Company’s and the Group’s financial position and of their performance.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

In conducting our audit, we followed applicable independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Auditor’s opinion on the financial report

In our opinion, the financial report of Focus Minerals Limited is in accordance with the Corporations Act 2001, including:

• (i) giving a true and fair view of the Company’s and the Group’s financial position as at 30 June 2007 and of their performance for the financial year ended on that date, and

• (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

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BENTLEYS MRI PERTH PARTNERSHIP

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MICHAEL J HILLGROVE

PARTNER

Dated this day at Perth, on 27[th] September 2007.

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Focus Minerals Limited – Financial Report 2007

ADDITIONAL INFORMATION

Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere in this report. The information was prepared based on share registry information processed up to 26 September 2007.

SPREAD OF HOLDERS

SPREAD OF HOLDERS	SPREAD OF HOLDERS
Spread of Holdings		OrdinaryShares
1 -	1,000	37
1,001 -	5,000	145
5,001 -	10,000	424
10,001 -	100,000	2,240
100,001 -	and over	1,047
Total Number of	Holders	3,893
Number of shareholders holding
less than a marketable parcel:		80

SUBSTANTIAL SHAREHOLDERS

There are no shareholders who have a substantial shareholding.

VOTING RIGHTS

All ordinary shares carry one vote per share without restriction. Options for ordinary shares do not carry any voting rights.

STATEMENT OF QUOTED SECURITIES

Quoted on the Australian Stock Exchange are 778,824,467 fully paid ordinary shares.

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Focus Minerals Limited – Financial Report 2007

TWENTY LARGEST SHAREHOLDERS OF EACH CLASS OF QUOTED SECURITIES ORDINARY FULLY PAID SHARES

No. Shareholder Name 1 ANZ Nominees Limited (Cash Income A/c) 2 HSBC Custody Nominees (Australia) Limited 3 Nefco Nominees Pty Ltd 4 Broadarrow Goldmines Pty Ltd 5 Surfboard Pty Ltd (ARW Super Fund) 6 122 Dean St Pty Ltd (Gavin Mackenzie Superannuation Fund) 7 Blackmort Nominees Pty Ltd (41496 Account) 8 Paticoa Nominees Pty Ltd 9 Sugarmill Pty Limited (The AB No 3 A/c) 10 Mr William Brooks (Brooks Superannuation A/c) 11 Broadarrow Goldmines Pty Ltd 12 Surfboard Pty Ltd (ARW Super Fund No 1 A/c) 13 Ocean View WA Pty Ltd 14 Dr Salim Cassim 15 Zap Nominees Pty Ltd (The Jibber BTML A/c) 16 Lugano Enterprises Pty Ltd 17 Mr John Sutton Hewson & Mrs Rosemary Ann Hewson (Hewson Super Fund A/c) 18 Fortis Clearing Nominees Pty Ltd (Settlement A/c) 19 KRN Construction Services Pty Ltd (KRN Retirement A/c) 20 Marmulla Holdings Pty Ltd (Marmulla Super Fund A/c)

Number of Shares Percentage of Capital 65,417,248 8.40% 62,739,437 8.06% 23,222,849 2.98% 11,644,332 1.50% 9,767,441 1.25% 8,348,242 1.07% 7,450,623 0.96% 7,450,000 0.96% 6,000,000 0.77% 5,435,000 0.70% 5,291,005 0.68% 4,751,929 0.61% 4,680,382 0.60% 4,651,162 0.60% 4,550,966 0.58% 4,129,372 0.53% 4,000,000 0.51% 3,853,000 0.49% 3,728,614 0.48% 3,590,000 0.46%

250,701,602 32.19%

HOLDERS OF SECURITIES OF AN UNQUOTED CLASS

OPTIONS

Option Holder Name Broadarrow Goldmines Pty Ltd Catherine Hobbs Jaguar Enterprises Pty Lt Susan Ruth Panza Azure Capital Pty Ltd Peter Arthur Williams Charles McCormick	Options Expiring 31/7/2008 Options Expiring 6/12/2009 Options Expiring 30/11/2010 - 3,000,000 - - 3,000,000 - - 210,000 - - 210,000 - 3,000,000 - - - - 6,950,000 - - 2,900,000
	3,000,000 6,420,000 9,850,000

53