FOCUS MINERALS LTD

(ABN 56 005 470 799)

Annual Financial Report

For the year ended 30 June 2009

	Page
Corporate Information	1
Directors’ Report	2-9
Corporate Governance Statement	10-11
Auditor’s Independence Declaration	12
Consolidated Income Statement	13
Consolidated Balance Sheet	14
Consolidated Statement of Changes in Equity	15
Consolidated Cash Flow Statement	16
Notes to Financial Statements	17-49
Director’s Declaration	50
Independent Audit Report	51-52
ASX Additional Information	53-58

Focus Minerals Ltd – Financial Report 2009

CORPORATE INFORMATION

ABN 56 005 470 799

Directors

Donald Taig Peter Williams Phillip Lockyer Christopher Hendricks

Chairman Managing Director Non-Executive Director Non-Executive Director

Company Secretary K Jon Grygorcewicz

Registered and Head Office

Level 10 Exchange House 68 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 George’s Terrace Perth WA 6000

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

Bankers Investec Bank (Australia) Limited 140 St George’s 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

Grant Thornton (WA) 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

Bank of Western Australia Limited

108 St George’s Terrace Perth WA 6000

Page 1

Focus Minerals Ltd – Financial Report 2009

DIRECTORS’ REPORT

Your directors submit the annual financial report of the consolidated entity for the financial year ended 30th June 2009.

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 : 52 Qualifications: B. Com., FAICD, FCPA

Appointed: 21 March 2003

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

Mr Taig gained eleven years 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.

Other directorships: Nil

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

Phillip Lockyer – Non-Executive Director

Age : 65 Qualifications: AWASM, DipMetal, MSC

Appointed: 7 December 2005

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 the early 1990s 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 been 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:

Swick Mining Services Limited * (non-executive director: appointed February 2008)
CGA Mining Limited * (non-executive director: appointed January 2009)
St Barbara Limited * (non-executive director: appointed December 2006)
Perilya Limited (non-executive director: resigned 2009 )
Jubilee Mines NL (non-executive director: resigned 2008)
- Ammtec Limited (non-executive director: resigned 2007)
denotes current directorships

Mr Lockyer is Chairman of the Remuneration Committee.

Page 2

Focus Minerals Ltd – Financial Report 2009

DIRECTORS’ REPORT contd…

Christopher Hendricks – Non-Executive Director

Aged : 33 Qualifications: CA, DipAcc, MAcc.

Appointed: 11 January 2008

Mr Hendricks is an Associate Director of Azure Capital, and has considerable experience in corporate advisory, mergers and acquisitions and equity capital markets through various financing and corporate banking roles in both Australia and South Africa. Mr Hendricks is a qualified Chartered Accountant, Finsia Graduate and holds a Masters in Accountancy. Mr Hendricks has also provided assurance advisory services to a number of multinational companies.

Other directorships: Nil

Mr Hendricks is Chairman of the Audit Committee.

Peter Williams – Executive Director

Aged: 62

Appointed: 6 December 2004.

Resigned: 23 March 2009.

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, mineral sands and gold has been gained whilst holding senior operational and management positions within CRA Ltd (Dampier Salt), North Ltd (North Parkes and Peak Hill gold mines, Resolute Limited (Bullabulling gold mine), New Hampton Goldfields Ltd (Jubilee gold mine) 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

Mr Peter Williams resigned as Managing Director on 23 March 2009 and was immediately appointed Chief Operating Officer with primary responsibility to manage the refurbishment and commissioning of the Group’s Three Mile Hill treatment facility.

Company Secretary

K Jon Grygorcewicz

Age: 48 Qualifications: CA. B.Bus

Appointed: 1 August 2006

Mr Grygorcewicz is a Chartered Accountant with over 25 years experience with a number of listed companies in Australia, Singapore and Malaysia. Mr Grygorcewicz has experience across exploration for and production of a range of commodities including gold, diamonds and oil. He has further gained experience with engineering and resource service companies with operations in Australia and South East Asia.

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	10,705,366	-
Phillip Lockyer	594,523	-
Christopher Hendricks	190,909	-

Share Options

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

On 17 April 2009, the Company issued 20,000,000 options to subscribe for shares in the Company as payment for the provision of European investor marketing services. 10,000,000 options have an exercise price of 4.5 cents per share with an expiry date of 30 April 2010 and 10,000,000 options have an exercise price of 7 cents per share with an expiry date of 30 April 2011.

On 30 July 2008, 3,000,000 options expired unexercised.

Page 3

Focus Minerals Ltd – Financial Report 2009

DIRECTORS’ REPORT contd…

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

Issuing Entity Focus Minerals Ltd Total Options Issued	Number of Options Exercise Price Cents per Share Expiry Date 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 10,000,000 4.50 30/4/2010 40,000,000 6.875 30/4/2011 10,000,000 7.00 30/4/2011 76,270,000

Options holders do not have any rights to participate in any issues of shares or other interests in the Company or any other entity.

There have been no unissued shares or interests under option of any controlled entity within the Group during or since reporting date.

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:

Mining

Ore drive development concluded during September 2008 and stoping operations commenced at the Perseverance Deposit. With 3 ore drives developed mining extraction rates progressively increased with an average monthly mining production rate towards the end of the year achieving 50,000 per month.
Extension drilling confirmed resource continued at depth resulting in a decision to extend underground mine development with the completion of a 4th production level at RL225, this being at a depth of approximately 200 metres below surface.
Mining activities commenced at the Countess Deposit with a development drive constructed during January 2009. Mining of stopes commenced during March 2009 with a total of 25,000 tonnes being extracted in the period to June 2009.
At period end a total of 103,000 tonnes of ore was stockpiled at surface awaiting processing containing estimated gold of 10,280 ozs.
Scoping studies have commenced on a number of existing open pit resources, including Brilliant, Lindsays and Dreadnought to identify economic ore sources to complement existing high grade ore from Perseverance and Countess. Processing
Processing continued during the year on a campaign basis at the Greenfields Mill. A total of 6 campaigns were processed in the period treating a total of 345,000 tonnes for 41,402 ozs gold extracted with recoveries achieving an average of 93.2%.
Total gold sold in the period was 42,500 ozs for total revenue of $44.4 million at an average gold price of A$1,048/oz.
A total of 987 ozs gold was held by the Group at period end. Three Mile Hill Plant Refurbishment
On 4 May 2009 the Company awarded an Engineering, Construction Procurement and Commissioning (EPCM) contract to Como Engineers Pty Ltd to refurbish and modernise the Three Mile Hill processing plant located 5 kms north of Coolgardie WA. The contract is a specified scope fixed price contract for a total value of $16.95 million. It is expected that the plant will be commissioned during December 2009.
At 30 June 2009 progress on the refurbishment project had achieved an estimated 47% completion with expenditure totalling $6 million.

Exploration & Resource Development

Step out drilling continued throughout the period on the Perseverance and Countess Deposits resulting in a reserve upgrades during December 2008. Reserves were increased on the Perseverance Deposit to 690,000 tonnes at 4.5g/t for 100,000 ozs gold and a maiden reserve for the Countess Deposit of 218,000 tonnes at 4.4 g/t for 28,700 ozs contained gold. Perseverance remains open at depth and to the south and Countess remains open at depth.
A reverse circulation drill program together with a validation program of historical data resulted in a resource upgrade for the Brilliant Deposit for an Indicated Resource of 1.927 million tonnes at 2.2 g/t for 134,400 ozs gold and an Inferred Resource of 1.146 million tonnes at 2.9 g/t for 105,700 ozs gold. The deposit remains open at depth and along strike to the north northeast.
Drilling on the Empress Deposit located within the Tindals Mining Centre, and in the near vicinity of the Countess Deposit, returned mineralisation up to 6.44m at 10.37 g/t. Although open at depth, modelling was commenced on the latest results to bring the Empress Deposit into production in the near term. Development expenditure will be minimal as the deposit is located approximately 50 metres from the existing Countess decline.

Page 4

Focus Minerals Ltd – Financial Report 2009

DIRECTORS’ REPORT contd…

A 5,000m drilling campaign commenced during June 2009 targeting extensions to known deposits within the Tindals Mining Centre. The program will concentrate on the Countess, Perseverance, Empress and Tindals underground deposits to identify under explored depth extensions of the deposits.
Planning and design work commenced on an exploration drive into the German Lode contained within the Mount Deposit. The design will also intersect a number of known but thin veined mineralised structures along the way to enable further testing to be conducted on the mineralisation.

Corporate

Mr Campbell Baird was appointed as Chief Operating Officer on 14 January 2009. Management appointments were reviewed during March 2009 resulting in Mr Williams resigning as Managing Director to take up the appointment as Chief Operating Officer with primary responsibility to undertake the refurbishment of the Three Mile Hill plant. Mr Baird was appointed as Chief Executive Officer on the same date.
Following a strategic decision to upgrade the Three Mile Hill Plant the Company completed a placement to institutional and sophisticated investors totalling $25 million. The placement was undertaken in 2 tranches. The first tranche was placed on 27 February 2009 raising $2 million via the issue of 100 million shares at an issue price of 2 cents per share. The second tranche was completed on 6 April 2009 rising $23 million via the issue of 1,150 million shares at an issue price of 2 cents per share.
Shareholders in General Meeting held 4 April 2009 approved the issue of shares pursuant to the placement.
A Share Purchase Plan (“SPP”) was completed on 5 May 2009 raising $3 million via the issue of 150,000,000 shares at an issue price of 2 cents per share. The SPP closed fully subscribed to existing shareholders.
Net cashflow from operations totalled $13.3 million allowing the Company to retire $11.5 million of borrowings. The convertible note matured on 30 April 2009 and was converted into an unsecured short term loan with $750,000 being repaid during the period. Remaining bank debt at 30 June 2009 totals $7.5 million and will be repaid in 2 instalments on 30 September and 31 December 2009. The unsecured short term debt is being repaid in monthly instalments and will be repaid in full by 30 November 2009.
Gold deliveries under gold forward contracts totalled 22,622 ozs of gold. A total of 9,378 ozs of gold remains to be delivered into gold forward contracts during the September 2009 milling campaign.

Operating result for the year

Consolidated Net Profit for the year was $ 3,146,773 (2008: loss $(4,632,498).

Significant changes in the state of affairs

In conjunction with the Review of Operations section above, the following are significant changes in the state of affairs of the consolidated entity to balance date:

Issued shares at 30 June 2008 Placement issue at 2.0 cents Share Purchase Plan at 2.0 cents Share issue expenses Issued shares at 30 June 2009	No of Shares $ 1,246,143,210 68,068,793 1,250,000,000 25,000,000 150,000,000 3,000,000 - (1,628,557)
	2,646,143,210 94,440,236

Significant events after balance date

On 28 July 2009 the Company announced an inaugural inferred resource at the Hillside deposit of 69,500 ozs gold and increased inferred resources at Empress/Alicia to 49,800 ozs gold, increased inferred resources at Big Blow to 50,900 ozs and increased inferred resources at Happy Jack to 10,900 ozs gold.

On 11 August 2009 the Company announced progressive results from an extension drilling program at the Perseverance deposit

including 5.41m at 33.03 g/t Au.

On 12 August 2009 the Company entered into an Exclusivity Agreement with Matsa Resources Ltd (“Matsa”) to exclusively negotiate the treatment of ore from Matsa’s North Scotia deposit. Treatment of the ore is expected to commence during February 2010 with treatment costs being determined by a formula with reference to ore grade, recovery rates and direct processing costs. As part of the negotiations the Company agreed to take a placement in Matsa of 1,242,236 shares issued at 16.1 cents per fully paid share for a total cost of $200,000.

On 7 September 2009 the Company secured all necessary mining and environmental approvals to commence mining operations at the Mount Deposit. Construction of a decline from existing workings to the German Lode had commenced.

Other than as detailed 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

Refurbishment of the Three Mile Hill treatment plant will continue with commissioning of the plant expected during December 2009. In addition to treating ore from the Group’s mining areas, it is anticipated that ore from external parties within the vicinity of the Three

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Focus Minerals Ltd – Financial Report 2009

DIRECTORS’ REPORT contd…

Mile Hill plant will be treated during the second half of the coming financial year. The Company is expecting to produce an estimated 80,000 ozs of gold during the coming financial year.

The directors intend to continue mining operations at the Tindals Mining Centre, including the Perseverance, Countess and Empress deposits. In addition, trial mining will be conducted at the Mount deposit to identify the prospectivity of mining in particular the German Lode along with a number of the narrow veined lodes.

Active exploration programs will continue on the Group’s mining tenements, in particular, on a number of high priority targets within the Tindals Mining Centre to increase existing the gold reserves. The Company will also continue a number of feasibility studies on the Group’s gold resources to bring into production an open pit resource.

In the event that the price of nickel stabilises at an appropriate base, the Board will reconsider the commencement of mining operations at the Nepean Nickel mine.

Environmental legislation

The Group’s operations are subject to environmental regulation in Australia. There were no breaches by the consolidated entity of any of the environmental regulations which apply to the Group’s operations. The Group continues to comply with these regulations.

Indemnification and Insurance of Directors and Officers

The company has paid premiums to insure the directors and officers of the Group against liabilities for costs and expenses incurred by them in defending legal proceedings arising out of their conduct while acting in the capacity of director or officer of the Group, other than conduct involving a wilful breach of duty in relation to the company. The premiums for the policy totalled $23,000.

REMUNERATION REPORT (AUDITED)

This report outlines the remuneration arrangements in place for directors and executives of Focus Minerals Ltd (“Company”) and the consolidated entity.

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 other officers’ emoluments to the company’s financial and operational performance.

The expended 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 Ltd.

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 two non-executive directors.

Members of the Remuneration Committee during the year were:

Phillip Lockyer – 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’ Meeting section of this Report.

Compensation of Key Management Personnel

Remuneration structure

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

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.

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.

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Focus Minerals Ltd – Financial Report 2009

DIRECTORS’ REPORT contd…

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

At present the maximum aggregate remuneration of directors’ fees for non-executive directors is $150,000 par annum. The remuneration of non-executive directors for the period ended 30 June 2009 is detailed in Table 1 of this report.

Senior executive and executive director remuneration

Remuneration primarily consists of fixed and performance based remuneration where determined by the directors. The Company has not presently established an equity based scheme that will allow the executive team to share the success of Focus Minerals Ltd. Any Issue of an equity component to executive 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 Tables 1 and 2 below.

Performance Based Remuneration

The key performance indicators (KPIs) are set annually, with a certain level of consultation with key management personnel to ensure a common understanding. The KPI’s are specifically tailored to the areas each individual is involved in and has a level of control over. The KPIs target areas the board believes hold greater potential for group expansion and profit, covering financial and non-financial as well as short and long-term goals or achievement of specific projects or tasks. The level set for each KPI is based on budgeted figures for the group and completion of defined projects or tasks within defined timeframes.

Performance in relation to the KPI’s is assessed annually, with bonuses being awarded depending on the number and deemed difficulty of the KPIs achieved. Following the assessment, the KPIs are reviewed by the remuneration committee in light of the desired and actual outcomes, and their efficiency is assessed in relation to the group’s goals and shareholder wealth, before the KPI’s are set for the following year.

In determining whether or not a KPI has been achieved, the Remuneration Committee bases the assessment on audited figures or on verifiable achievement of the relevant KPI.

The performance based remuneration component of specified company executives is detailed in Tables 1 and 2 below.

Contract for Services

Mr Peter Williams, the Chief Operating Officer, has a contract of employment with the Company dated 10 March 2005. The contract specifies the duties and obligations to be fulfilled by Mr Williams. 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 $265,000.

Details of Key Management Personnel

(i) Directors

(i) Directors
Donald Taig	Chairman (executive)
Phillip Lockyer	Director (non-executive)
Christopher Hendricks	Director (non-executive)
Peter Williams	Managing Director - resigned 23 March 2009
ii) Executives
Campbell Baird	Chief Executive Officer – appointed January 2009
Peter Williams	Chief Operating Officer – appointed March 2009
Jon Grygorcewicz	Company Secretary and Chief Financial Officer
Dr. Garry Adams	Geology Manager
Charles McCormick	Business Development Manager
Darren Gibcus	Operations Manager – resigned 31 March 2009

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

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Focus Minerals Ltd – Financial Report 2009

DIRECTORS’ REPORT contd…

Table 1: Directors’ remuneration for the year ended 30 June 2009

		Short-term Benefits	Short-term Benefits	Post Employment Benefits	Post Employment Benefits	Total	%
		Salary & Fees	Other	Super- annuation	Bonus		Performance related
Donald Taig	2009 2008	160,700 153,950	- -	7,411 9,355	- -	168,111 163,305	- -
Phillip Lockyer	2009 2008	30,000 30,000	- -	2,700 2,700	- -	32,700 32,700	- -
Christopher Hendricks	2009 2008	30,000 15,000	- -	- -	- -	30,000 15,000	- -
Peter Williams #	2009 2008	178,862 224,770	17,884 27,585	16,097 20,229	40,000 -	252,843 272,584	12.5% -
Geoff Rasmussen**	2009 2008	- 15,000	- -	- -	- -	- 15,000	- -
Charles McCormick*	2009 2008	- 13,952	- 807	- 1,255	- -	- 16,014	- -

Mr Williams resigned as Managing Director on 23 March 2009 and was appointed Chief Operating Officer from that date. Mr Williams’ remuneration whilst an executive director is disclosed above.
*Mr McCormick resigned as an executive director on 17 August 2007. Mr McCormick continued as an employee of the Company and the balance of his remuneration is shown below.
**Mr Rasmussen resigned as a non-executive director on 11 January 2008.

Table 2: Remuneration of the named executives who received the highest remuneration for the year ended 30 June 2009

		Short-term Benefits	Short-term Benefits	Post Employment Benefits	Post Employment Benefits		Total	%
		Salary & Fees	Other	Super- annuation	Equity Options	Bonus		Performance related
Campbell Baird # _Chief Executive Officer _	2009	91,980	-	29,713	-	-	121,693	-
Peter Williams ## Chief Operating Officer	2009	59,521		5,357	-	-	64,878	-
Charles McCormick* Business Development _Manager _	2009 2008	179,649 153,479	8,923 7,894	16,168 13,814	- -	- -	204,740 175,187	- -
Jon Grygorcewicz Company Secretary/ Chief Financial Officer	2009 2008	163,010 155,965	11,833 3,945	14,752 14,037	- -	20,000 -	209,595 173,947	9.5% -
Gary Adams** Geological Manager	2009 2008	158,411 31,365	14,552 -	16,927 2,823	- -	- -	189,890 34,188	- -
Darren Gibcus** Operations General Manager	2009 2008	255,540 51,860	13,321 -	20,730 4,667	- -	- -	289,591 56,527	- -

Mr Baird was appointed as Chief Operating Officer on 12 January 2009. He was subsequently appointed as Chief Executive Officer on 23 March 2009.
Mr Williams was an executive director until his resignation on 23 March 2009. Remuneration while in his position as executive director is included in Table 1 above.
- Mr McCormick was an executive director until his resignation on 17 August 2007. Remuneration while in his position as executive director is included above.
** Mr Gibcus and Mr Adams became permanent employees of the Group on 1 May 2008.
Mr Gibcus resigned on 30 April 2009.

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.

y each director were as follows.
		Meeting of Committees
	Directors Meetings	Audit	Remuneration
Number of Meetings Held	12	1	1
Donald Taig	12	1	1
Phillip Lockyer	12	-	1
Christopher Hendricks	12	1	-
Peter Williams*	9	-	-

*Mr Williams resigned as a director on 23 March 2009. Mr Williams was entitled to attend 9 meetings during his tenure.
The Directors also approved Group activities pursuant to 5 directors’ resolutions throughout the year.

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Focus Minerals Ltd – Financial Report 2009

DIRECTORS’ REPORT contd…

Auditor Independence and Non-Audit Services

Non-Audit Services

The board of directors, in accordance with advice from the audit committee, is satisfied that the provision of non-audit services during the year is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are satisfied that the services disclosed below did not compromise the external auditor’s independence for the following reasons:

• all non-audit services are reviewed and approved by the audit committee prior to commencement to ensure they do not adversely affect the integrity and objectivity of the auditor; and

• the nature of the services provided do not compromise the general principles relating to auditor independence in accordance with APES 110: Code of Ethics for Professional Accountants set by the Accounting Professional and Ethical Standards Board.

Fees totalling $10, 092 were paid to Grant Thornton for non-audit services, principally taxation services, provided during the year ended 30 June 2009.

Auditor’s Independence Declaration

The auditor’s independence declaration for the year ended 30 June 2009 has been received and can be found on page 12 of this Financial Report.

This Report of the Directors, incorporating the Remuneration Report, is signed in accordance with a resolution of the Board of Directors.

==> picture [161 x 67] intentionally omitted <==

Christopher Hendricks Non-Executive Director

14 September 2009 Perth, Western Australia

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Focus Minerals Ltd – Financial Report 2009

CORPORATE GOVERNANCE STATEMENT

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

Focus Minerals Ltd’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 right so shareholders
Principle	7.	Recognise and manage risk
Principle	8.	Remunerate fairly and responsibly

Focus Minerals Ltd’s corporate governance practices were in place throughout the year ended 30 June 2008.

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 Ltd 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 judgement.

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 Ltd are considered to be independent:

Name	Position
Donald Taig	Chairman
Phillip Lockyer	Non-Executive Director
Christopher Hendricks	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.

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	6 years	Christopher Hendricks	1 year
Phillip Lockyer	3 years

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.

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Focus Minerals Ltd – Financial Report 2009

CORPORATE GOVERNANCE STATEMENT contd…

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 Committee Chairman is an independent non-executive director who is not Chairman of the Board.

The members of the Audit Committee during the year were:

Christopher Hendricks – Committee Chairman
Donald Taig

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

Code of Conduct

The Group has a Code of Conduct and internal policies aimed a providing guidance to directors, executives, employees and contractors engaged by the Group, in the standards of ethical, corporate and personal behaviour required of all Group personnel.

Share Trading Policy

The Group has adopted a share trading policy detailing the objectives and procedures to directors, executives, employees and contractors engaged by the Company, in dealing in the Company’s shares and securities. Principally, dealing in the Company’s shares is prohibited whilst those persons are in possession of insider information. The policy requires that the Chairman acknowledge any proposed dealings prior to dealing in the Company’s shares. The policy further defines specific periods where trade is permitted after the Company has released an announcement where dealings can be transacted.

Page 11

Focus Minerals Ltd – Financial Report 2009

AUDITORS INDEPENDENCE DECLARATION

==> picture [194 x 36] intentionally omitted <==

14 September 2009

10 Kings Park RoadWest Perth WA 6005PO BOX 570West Perth WA 6872 T +61 8 9480 2000 F +61 8 9322 7787 E [email protected] W www.grantthornton.com.au

Auditor’s Independence Declaration To The Directors Of Focus Minerals Limited

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Focus Minerals Limited for the year ended 30 June 2009, I declare that, to the best of my knowledge and belief, there have been:

a no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
b no contraventions of any applicable code of professional conduct in relation to the audit.

GRANT THORNTON (WA) PARTNERSHIP Chartered Accountants

==> picture [108 x 46] intentionally omitted <==

P W Warr

Partner – Audit & Assurance Services

Perth, 14 September 2009

Grant Thornton (WA) Partnership ABN 17 735 344 518, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389. Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia. Liability limited by a scheme approved under Professional Standards Legislation.

Page 12

Focus Minerals Ltd – Financial Report 2009

INCOME STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

Notes Revenue 2(a) Cost of sales Gross Profit Other income 2(b) Depreciation and amortisation expense 2(c) Finance costs 2(c) Rental expenses Loan impairment expense 2(c) Other expenses 2(c) Profit/(loss) before income tax expense Income tax expense 3 Net profit/(loss) for the period Basic profit (loss) per share (cents per share) 5 Diluted profit (loss) per share (cents per share) 5	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	43,618,178 3,305,638 20,460,778 1,852,743 (20,665,979) (1,385,620) (10,332,989) (953,082)
	22,952,199 1,920,018 10,127,789 899,661
	92,215 22,530 29,598 21,899 (10,386,028) (1,412,395) (5,252,531) (737,412) (2,360,212) (1,142,216) (2,353,742) (1,136,980) (124,281) (87,088) (124,281) (87,088) - - - (255,707) (7,027,120) (3,933,347) (5,620,255) (3,618,498)
	3,146,773 (4,632,498) (3,193,422) (4,914,125) - - - -
	3,146,773 (4,632,498) (3,193,422) (4,914,125)
	0.002 (0.53) 0.002 (0.53)

The accompanying notes form part of these financial statements.

Page 13

Focus Minerals Ltd – Financial Report 2009

BALANCE SHEETS AS AT 30 JUNE 2009

Notes Assets Current Assets Cash and cash equivalents 6 Trade and other receivables 7 Inventories 8 Other 9 Other financial assets 10 Total Current Assets Non-Current Assets Other financial assets 10 Plant and equipment 11 Development expenditure 12(b) Deferred exploration expenditure 12(a) Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables 14 Financial liabilities 16 Total current liabilities Non-current liabilities Other payables 14 Provisions 15 Financial liabilities 16 Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 17 Reserves 17 Retained earnings Total Equity	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	21,277,800 7,412,033 18,419,184 6,736,203 223,811 131,803 100,238 49,764 8,886,345 5,117,137 4,443,172 2,558,569 144,405 334,753 106,527 321,325 69,827 - 69,827 -
	30,602,188 12,995,726 23,138,948 9,665,861
	- - 42,035,114 40,560,527 11,565,476 4,007,900 5,869,933 2,087,591 5,252,682 22,779,536 1,236,524 3,256,659 51,475,157 32,761,580 17,223,582 14,146,119
	68,293,315 59,549,016 66,365,153 60,050,896
	98,895,503 72,544,742 89,504,101 69,716,757
	7,193,707 5,546,497 5,439,907 3,977,806 9,362,854 14,242,402 9,332,532 14,237,970
	16,556,561 19,788,899 14,772,439 18,215,776
	20,000 40,000 - - 1,749,608 1,749,608 874,804 874,804 101,414 59,883 54,775 45,467
	1,871,022 1,849,491 929,579 920,271
	18,427,583 21,638,390 15,702,018 19,136,047
	80,467,920 50,906,352 73,802,083 50,580,710
	94,440,236 68,068,793 94,440,236 68,068,793 2,018,449 1,975,097 2,018,449 1,975,097 (15,990,765) (19,137,538) (22,656,602) (19,463,180)
	80,467,920 50,906,352 73,802,083 50,580,710

The accompanying notes form part of these financial statements.

Page 14

Focus Minerals Ltd – Financial Report 2009

STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2009

Consolidated Notes Balance as at 30 June 2007 Loss attributable to members of the parent entity Shares issued in the period Option reserve on recognition of equity based payments Share issue expense Balance as at 30 June 2008 Profit attributable to members of the parent entity Shares issued in the period Option reserve on recognition of equity based payments Share issue expense Balance as at 30 June 2009 Parent Notes Balance as at 30 June 2007 Loss attributable to members of the parent entity Shares issued in the period Option reserve on recognition of equity based payments Share issue expense Balance as at 30 June 2008 Loss attributable to members of the parent entity Shares issued in the period Option reserve on recognition of equity based payments Share issue expense Balance as at 30 June 2009	Ordinary Shares $ Retained Earnings $ Option Reserve $ Total $
	44,606,832 (14,505,042) 561,007 30,662,797 - (4,632,496) - (4,632,496) 24,610,500 - - 24,610,500 - - 1,414,090 1,414,090 (1,148,539) - - (1,148,539)
	68,068,793 (19,137,538) 1,975,097 50,906,352 - 3,146,773 - 3,146,773 28,000,000 - - 28,000,000 - - 43,352 43,352 (1,628,557) - - (1,628,557)
	94,440,236 (15,990,765) 2,018,449 80,467,920
	Ordinary Shares $ Retained Earnings $ Option Reserve $ Total $
	44,606,832 (14,549,055) 561,007 30,618,784 - (4,914,125) - (4,914,125) 24,610,500 - - 24,610,500 - - 1,414,090 1,414,090 (1,148,539) - - (1,148,539)
	68,068,793 (19,463,180) 1,975,097 50,580,710 - (3,193,422) - (3,193,422) 28,000,000 - - 28,000,000 - - 43,352 43,352 (1,628,557) - - (1,628,557)
	94,440,236 (22,656,602) 2,018,449 73,802,083

The accompanying notes form part of these financial statements.

Page 15

Focus Minerals Ltd – Financial Report 2009

CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

Notes Cash flows from operating activities Receipts from customers Payments to suppliers and employees Royalties paid 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 Purchase of investments Loans to related 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 Proceeds from borrowings Borrowing costs 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 Cash and cash equivalents at 30 June 6(i)	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	Inflows/(Outflows) Inflows/(Outflows)
	44,381,330 3,029,778 20,684,584 1,706,029 (28,707,797) (5,082,241) (15,217,337) (4,180,035) (1,215,013) - (607,506) - 100,877 85,175 38,260 27,059 309,853 695,583 283,226 629,576 (1,524,866) (241,196) (1,518,396) (235,960)
	13,344,384 (1,512,901) 3,662,831 (2,053,331)
	2,614 494,932 2,614 - (13,805,856) (4,327,973) (6,982,030) (1,826,663) 1,015,429 (82,877) 997,749 (65,197) (69,827) - (69,827) (5,096,391) - - (1,474,587) (19,573,598) - 271,826 - - (75,000) (21,812,782) (75,000) (5,000) (5,151,991) (9,117,779) (3,002,463) (8,071,396)
	(18,084,631) (34,574,653) (10,603,544) (34,638,245)
	28,000,000 18,002,500 28,000,000 18,002,500 (1,628,557) (1,148,539) (1,628,557) (1,148,539) 4,750,000 13,250,000 4,750,000 13,250,000 - (532,127) - (532,127) (11,500,000) - (11,500,000) -
	19,621,443 29,571,834 19,621,443 29,571,834
	14,881,196 (6,515,720) 12,680,730 (7,119,742) 5,634,646 12,150,366 5,003,496 12,123,238
	20,515,842 5,634,646 17,684,226 5,003,496

The accompanying notes form part of these financial statements.

Page 16

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

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 consolidated financial statements of Focus Minerals Ltd and controlled entities and Focus Minerals Ltd as an individual entity. Focus Minerals Ltd is a listed public company, incorporated and domiciled in Australia. The financial report of Focus Minerals Ltd and controlled entities and Focus Minerals Ltd as an individual entity parent entity comply with Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards.

(b) Reporting Basis and Conventions

The financial report has been prepared on an accrual basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

(c) Basis of Consolidation

The consolidated financial statements comprise the financial statements of Focus Minerals Ltd 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)

Business Combinations

Business combinations occur when control over another business is obtained and results in the consolidation of its assets and liabilities. All business combinations, including those involving entities under common control, are accounted for by applying the purchase method.

The purchase method requires an acquirer of the business to be identified and for the cost of the acquisition and fair values of identifiable assets, liabilities and contingent liabilities to be determined as at acquisition date, being the date that control is obtained. Cost is determined as the aggregate of fair values of assets given, equity issued and liabilities assumed in exchange for control together with costs directly attributable to the business combination. Any deferred consideration payable is discounted to present value using the entity’s incremental borrowing rate.

Goodwill is recognised initially at the excess of cost over the acquirer’s interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognised. Goodwill on acquisition has been recognised in deferred development expenditure. If the fair value of the acquirer’s interest is greater than cost, the surplus is immediately recognised in profit or loss.

(e)

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:

Gold and silver sales

Revenue from the production of gold and silver is recognised when the Group has passed control and risk to the buyer.

Rendering of services

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

Interest income

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

Page 17

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) Revenue Recognition (continued)

Dividends

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

Rental income

Rental income from mining leases 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.

(f)

Borrowing Costs

Borrowing costs, including loan establishment costs, are recognised as an asset an amortised over the life of the loan period.

(g) 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.

(h) 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.

(i)

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.

(j)

Inventories

Raw materials and stores, ore stockpiles and work in progress and finished gold stocks are physically measured or estimated and valued at the lower of cost and net realisable value. Net realisable value less costs to sell is assessed annually based on the amount estimated to be obtained from sale of the item of inventory in the normal course of business, less any anticipated costs to be incurred prior to its sale.

Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure and depreciation and amortisation relating to mining activities, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale.

Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of weighted average cost, which includes the cost of purchase as well as transportation and statutory charges, or net realisable value. Any provision for obsolescence is determined by reference to specific stock items identified.

During the exploration and development phase, where the cost of extracting the ore exceeds the likely recoverable amount, work in progress inventory is written down to net realisable value,

Page 18

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(k) Impairment of financial assets

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

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.

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.

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.

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 the income statement. 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.

(l) Impairment of non-financial assets

At each reporting date, the Group reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and value in use i.e. discounted cash flows, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

(m) Interest in a jointly controlled operation

The Parent 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 Parent recognises its interest in the jointly controlled operation by recognising the assets that it controls and the liabilities that it incurs. The Parent 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.

(n)

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.

Page 19

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(o) Income tax (continued)

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.

(p) Financial Instruments

Recognition and Initial Measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or loss immediately.

Classification and Subsequent Measurement

Finance instruments are subsequently measured at either of fair value, amortised cost using the effective interest rate method, or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled, between knowledgeable, willing parties.

Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

(a) the amount at which the financial asset or financial liability is measured at initial recognition;
(b) less principal repayments;
(c) plus or minus the cumulative amortisation of the difference, if any, between the amount initially recognised and the maturity amount calculated using the effective interest method ; and
(d) (d) less any reduction for impairment.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value with a consequential recognition of an income or expense in profit or loss.

The Group does not designate any interests in subsidiaries, associates or joint venture entities as being subject to the requirements of accounting standards specifically applicable to financial instruments.

Page 20

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(p) Financial Instruments (continued)

i. Financial assets at fair value through profit or loss

Financial assets are classified at ‘fair value through profit or loss’ when they are either held for trading for the purpose of shortterm profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

ii. Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost.

iii. Financial liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost.

Fair Value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the Group assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in the income statement.

Derecognition

Financial assets are derecognised where the contractual rights to receipt of cash flows expires or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are either discharged, cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

(q) Goods and services tax

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.

(r) 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 on mobile plant is calculated on a straight-line basis over the estimated useful life of the assets being 5 -15 years.

Depreciation of underground assets is calculated on a units of production basis.

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

Page 21

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(r) Plant and equipment (continued)

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.

Derecognition and disposal

An item of 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.

(s) Exploration and Evaluation Expenditure

Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest. Such expenditure comprises direct costs and does not include general overheads or administrative expenditure not having a specific nexus with a particular area of interest.

Exploration expenditure for each area of interest is carried forward as an asset provided the rights to tenure of the area of interest are current and one of the following conditions is met:

The exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; and
Exploration and evaluation activities in the area of interest have not at the reporting date 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 of interest are continuing.

Exploration expenditure is written off when it fails to meet at least one of the conditions outlined above or an area of interest is abandoned.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. When facts and circumstances suggest that the carrying amount exceeds the recoverable amount the impairment loss will be measured and disclosed in accordance with AASB 136 Impairment of Assets.

When a decision is made to develop an area of interest, all carried forward exploration expenditure in relation to the area of interest is transferred to development expenditure.

(t) Development Expenditure

Development expenditure represents the accumulated exploration, evaluation, land and development expenditure incurred by or on behalf of the Group in relation to areas of interest in which mining of a mineral resource has commenced.

When further development expenditure is incurred in respect of a mine property after commencement of production, such expenditure is carried forward as part of the mine property only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production.

Amortisation of costs is provided on the unit-of-production method with separate calculations being made for each mineral resource. The unit-of-production basis results in an amortisation charge proportional to the depletion of the estimated recoverable reserves. In some circumstances, where conversion of resources into reserves is expected, some elements of resources may be included. Development and land expenditure still to be incurred in relation to the current reserves are included in the amortisation calculation. Where the life of the assets are shorter than the mine life their costs are amortised based on the useful life of the assets.

The estimated recoverable reserves and life of the mine and the remaining useful life of each class of asset is reassessed at least annually. Where there is a change in the reserves/resources amortisation rates are correspondingly adjusted.

Page 22

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(u) 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.

(v) 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.

(w) 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.

(x) Employee leave benefits

Wages, salaries and annual leave

Liabilities for wages and salaries, including non-monetary benefits and annual 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.

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.

(y) Share-based payment transactions Equity settled transactions

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

The cost of these equity-settled transactions with third parties and 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 using a Black Scholes model, further details of which are given in Note 13.

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 Ltd (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 beneficiary becomes fully entitled to the award (the vesting period).

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.

Page 23

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(y) Share-based payment transactions (continued)

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.

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

(z) 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.

(aa) 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 assessed 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 prospectively, with any amounts that would have been written off or provided against under accounting policy for exploration and evaluation immediately written off.

(ab) 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.

(ac) Comparative figures

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

(ad) Critical Accounting Estimates and Judgements

The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

Key Estimates

Determining ore reserves and remaining mine life

The consolidated entity estimates its ore reserves and mineral resources based on information complied by Competent Persons (as defined in accordance with the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as revised in December 2004 (the JORC code). Reserves determined in this way are taken into account in the calculation of depreciation, amortisation, impairment, deferred mining costs, rehabilitation and environmental expenditure. In estimating the remaining life of the mine for the purpose of amortisation and depreciation calculations, due regard is given, not only to the amount of remaining recoverable gold ounces contained in proved and probable reserves, but also to limitations which could arise from the potential changes in technology, demand and other issues which are inherently difficult to estimate over a lengthy time frame.

Page 24

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(ad) Critical Accounting Estimates and Judgements (continued)

Where a change in estimated recoverable gold ounces contained in proved and probable ore reserves are made, depreciation and amortisation is accounted for prospectively.

The determination of ore reserves and remaining mine life affects the carrying value of a number of the Consolidated Entity’s assets and liabilities including deferred mining costs and the provision for rehabilitation.

Share based payments

The consolidated entity measures the cost of equity settled transactions with directors, employees and third parties with reference to the fair value of equity instruments at the date at which they are granted. The fair value is determined by using the Black Scholes Model with the assumptions in Note 13. The accounting estimates and assumptions relating to equity settled based payments may impact on the income, expenses and liabilities within the next annual reporting period.

Impairment of capitalised exploration and evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the consolidated entity decides to exploit the related lease itself, or if not, whether it successfully recovers the related exploration and evaluation asset through sale.

To the extent that capitalised exploration expenditure is determined not to be made recoverable in future, profits and net assets will be reduced in the period in which the determination is made.

In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent it is determined in the future that this capitalised expenditure should be written off, profits and net assets will be reduced in the period in which this determination is made.

(ae) New Standards and Interpretations not yet adopted

The AASB has issued new, revised and amended standards and interpretations that have mandatory application dates for future reporting periods. The Group had decided against early adoption of these standards. A discussion of those future requirements and their impact on the Group follows:

AASB 8: Operating Segments and AASB 2007-3: Amendments to Australian Accounting Standards arising from AASB 8 [AASB 5, AASB 6, AASB 102, AASB 107, AASB 119, AASB 127, AASB 134, AASB 136, AASB 1023 & AASB 1038] (applicable for annual reporting periods commencing from 1 January 2009). AASB 8 replaces AASB 114 and requires identification of operating segments on the basis of internal reports that are regularly reviewed by the Group’s Board for the purposes of decision making. While the impact of this standard cannon be assessed at this stage, there is the potential for more segments to be identified. Given the lower economic levels at which segments may be defined, and the fact that cash generating units cannot be bigger than operating segments, impairment calculations may be affected. Management does not presently believe impairment will result however.
AASB 101: Presentation of Financial Statements, AASB 2007-8: Amendments to Australian Accounting Standards arising from AASB 101, and AASB 2007-10: Further Amendments to Australian Accounting Standards arising from AASB 101 (all applicable to annual reporting periods commencing from 1 January 2009). The revised AASB 101 and amendments supersede the previous AASB 101 and redefines the composition of financial statements including the inclusion of a statement of comprehensive income. There will be no measurement or recognition impact on the Group.

If an entity has made a prior period adjustment or reclassification, a third balance sheet as at the beginning of the comparative period will be required.

AASB 2008-1: Amendments to Australian Accounting Standard – Share-based Payments: Vesting Conditions and Cancellations [AASB 2] (applicable for annual reporting periods commencing form January 2009). This amendment to AASB 2 clarifies that vesting conditions consist of service and performance conditions only. Other elements of a share-based payment transaction should therefore be considered for the purposes of determining fair value. Cancellations are also required to be treated in the same manner whether cancelled by the entity or by another party.

The Group does not anticipate early adoption of any of the above reporting requirements and does not expect these requirements to have any material effect on the Group’s financial statements.

The Financial Report was authorised for issue on 14 September 2009 by the Board of Directors.

Page 25

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 2: REVENUES AND EXPENSES (a) Revenue Gold sales Silver sales Royalty expense Rental revenue Services revenue Interest received (b) Other income Net gains (loss) on disposal of plant and equipment Other (c) Expenses Finance costs Finance charges payable under finance leases and hire purchase contracts Interest expense Gold put options expired Unrealised gold forward contracts mark to market expense Total finance charges Depreciation & Amortisation Expense Depreciation of non-current assets Amortisation of development expenditure Amortisation of mine development Total amortisation and depreciation Operating lease rental expense Loan impairment expense Other expenses Legal fees Bank charges and borrowing costs Site Administration costs Option expense Employee benefit expense Other	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	44,442,796 2,330,910 20,719,787 1,167,537 30,542 11,259 15,271 5,630 (1,215,013) - (607,506) - 50,000 50,000 50,000 50,000 - 217,886 - - 309,853 695,583 283,226 629,576
	43,618,178 3,305,638 20,460,778 1,852,743
	(8,662) (62,645) (8,662) (5,160) 100,877 85,175 38,260 27,059
	92,215 22,530 29,598 21,899
	13,754 8,872 7,284 3,636 1,511,112 232,324 1,511,112 232,324 227,190 - 227,190 - 608,156 901,020 608,156 901,020
	2,360,212 1,142,216 2,353,742 1,136,980
	1,963,389 216,618 1,041,211 139,524 4,040,268 825,827 2,191,185 412,913 4,382,371 369,950 2,020,135 184,975
	10,386,028 1,412,395 5,252,531 737,412
	124,281 87,088 124,281 87,088
	- - - 255,707
	88,888 57,088 88,888 57,088 1,493,875 266,188 1,493,405 266,008 1,313,193 654,015 656,597 495,219 43,352 - 43,352 - 2,668,956 1,225,984 1,920,877 1,070,512 1,418,856 1,730,072 1,417,136 1,729,671
	7,027,120 3,933,347 5,620,255 3,618,498

Page 26

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 3: INCOME TAX Income tax recognised in profit and loss The prima facie income tax expense on pre-tax accounting from operations reconciles to the income tax expense in the financial statements as follows: Accounting profit (loss) before income tax Income tax expense Income tax expense calculated at statutory income tax rate of 30% Sundry non-deductible expenses Deferred tax asset relating to tax losses not brought to account Income tax expense Income Statement Current Tax Deferred tax asset relating to tax losses Deferred Income Tax Temporary differences recognised in equity Relating to origination and reversal on temporary differences Current year tax losses not recognised in the current period Income tax expense reported in the income statement Unrecognised Deferred Tax Balances Unrecognised deferred tax asset losses Unrecognised deferred tax asset other Unrecognised deferred tax liabilities Net unrecognised deferred tax assets	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 3,146,773 (4,632,498) (3,193,422) (4,914,125)
	944,032 (1,389,749) (958,027) (1,474,237) 328,463 86,981 328,444 86,947 (1,272,495) 1,302,768 629,583 1,387,291
	- - - -
	1,272,495 (1,302,768) (629,583) (1,387,291) - - - - (245,941) (148,227) (245,941) (148,227) (1,219,066) 474,596 (770,099) 473,650 192,512 976,399 1,645,623 1,061,868
	- - - -
	12,251,120 10,665,220 11,515,406 8,362,464 1,794,636 616,692 1,666,875 652,982 (7,975,136) (5,106,839) (5,538,032) (2,832,818)
	6,070,620 6,175,073 7,644,249 6,182,928

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

Tax Consolidation

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

NOTE 4: SEGMENT REPORTING

The Group’s business segment is the mining and exploration of gold and other minerals and operates in one geographical segment being Western Australia. The business segment is based on the Group’s management and internal reporting structure.

Page 27

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 5: EARNINGS PER SHARE

*Basic earnings per share: Total Basic EPS Diluted earnings per share* Total Diluted EPS *Basic Earnings per share* The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share is as follows: Weighted average number of ordinary shares for the purposes of basic earnings per share *Diluted Earnings per share* The earnings and weighted average number of ordinary shares used in the calculation of diluted earnings per share: Weighted average number of ordinary shares for the purposes of diluted earnings per share	Consolidated 2009 Cents per Share 2008 Cents per Share
	0.002 (0.53) 0.002 (0.53)
	3,146,773 (4,632,498) 1,587,513,073 866,746,745
	3,146,773 (4,632,498)
	1,638,821,484 925,526,089

NOTE 6: CASH AND CASH EQUIVALENTS

Cash at bank and on hand Short-term deposits - secured Short-term deposits - unsecured	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 753,850 1,426,631 386,763 795,481 761,958 1,777,387 734,958 1,732,707 19,761,992 4,208,015 17,297,463 4,208,015
	21,277,800 7,412,033 18,419,184 6,736,203

Cash at bank earns interest at floating rates based on daily 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, secured by cash deposits, comprise $761,958 (2008: $1,777,387) attributable to the Group for its 100% directly held mining tenements in the Coolgardie Gold Project. Under the Bank Facility detailed in note 17, the Bank has provided further performance bonds totalling $1,179,500 (2008: $nil). These bonds are secured under the terms of the Bank Facility.

Page 28

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 6: CASH AND CASH EQUIVALENTS (continued)

(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 short term deposits, net of secured short term deposits. Cash and cash equivalents as shown in the cash flow statement is: Cash at bank and short term deposits Short term deposit - secured Cash and cash equivalents (ii) Cash balances not available for use Short term deposits lodged as security (iii) Reconciliation of profit (loss) for the year to net cash flows from operating activities Profit/(Loss) for the year (Gain)/loss on sale or disposal of non-current assets Loan impairment expense Depreciation expense Amortisation expense Borrowing cost expensed Share base payment Unrealised gold forward loss (Increase)/decrease in assets: Current receivables Inventories Other current assets Increase/(decrease) in liabilities Current payables Other current liabilities Rehabilitation costs Employee benefits Deferred revenue Non-current payables Net cash from/(used in) operating activities (iv) Net cash on acquisition of subsidiary During the prior year 100% of the issued capital of Redemption Management Pty Ltd was acquired. The details of the transaction were: Consideration paid Cash consideration Costs of acquisition Cash and bank balances acquired Cash outflow Assets and liabilities held at acquisition date Cash and bank balances Short term deposit – secured Trade and other debtors Inventories Plant and equipment Deferred exploration expenditure Trade and other payables Financial liabilities Net Identifiable assets	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 21,277,800 7,412,033 18,419,184 6,736,203 (761,958) (1,777,387) (734,958) (1,732,707)	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 21,277,800 7,412,033 18,419,184 6,736,203 (761,958) (1,777,387) (734,958) (1,732,707)
	20,515,842	5,634,646 17,684,226 5,003,496
	761,958	1,777,387 734,958 1,732,707
	3,146,773 8,662 - 1,963,578 8,409,136 1,216,385 43,352 600,156 (92,008) (3,769,208) 190,348 3,012,885 (1,507,183) - 141,508 - (20,000)	(4,632,496) (3,193,422) (4,914,125) 61,150 8,662 5,161 - - 255,707 619,649 1,041,307 346,403 825,827 4,204,569 412,913 - 1,216,385 - - 43,352 - 901,020 600,156 901,020 412,682 (50,474) 433,098 (4,874,110) (1,884,603) (2,315,542) (320,218) 214,798 (313,458) 1,653,484 2,091,412 990,016 2,080,202 (705,172) 1,301,609 1,638,608 - 763,804 160,051 75,861 98,813 (18,750) - (18,750) (20,000) - -
	13,344,384	(1,512,901) 3,662,831 (2,053,331)
		30,126,692 20,000,000 1,518,592 (271,826) (21,246,766 271,826 886,703 59,583 307,764 436,445 30,143,956 (1,449,517) (530,068) 30,126,692

Page 29

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 6: CASH AND CASH EQUIVALENTS (continued)

(v) Non Cash Financing and Investing Activities Transactions

2009

Expenses during the period include the value of issued options for an amount of $43,352. The options were issued in consideration for investor promotional activities and were issued for no cash consideration.

2008

The Company issued 140,000,000 ordinary shares at a value of $6,608,000 and a convertible note for a face value of $2,000,000 as part consideration for the acquisition of Redemption Management Pty Ltd.
Borrowing costs include the value of issued options for an amount of $1,404,090. The options were issued for no consideration.

NOTE 7: CURRENT TRADE AND OTHER RECEIVABLES

Other receivables	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	223,811 131,803 100,238 49,764

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

At cost Spare parts Gold bullion Mined ore OTE 9: OTHER CURRENT ASSETS Other assets Prepaid expenses OTE 10: OTHER FINANCIAL ASSETS Current Investments in listed entities Non- Current Investments in controlled entities at cost – note 1 Amounts receivable from controlled entities at cost – note 2 Impairment expense	$ $ $ $ 274,756 486,054 137,378 243,027 1,162,579 2,025,758 581,290 1,012,879 7,449,010 2,605,325 3,724,504 1,302,663
	8,886,345 5,117,137 4,443,172 2,558,569
	$ $ $ $ - 295,838 - 295,838 144,405 38,915 106,527 25,487
	144,405 334,753 106,527 321,325
	$ $ $ $ 69,827 - 69,827 -
	- - 17,005,669 17,005,669
	- - 25,329,445 23,854,858 - - (300,000) (300,000)
	- - 25,029,445 23,554,858
	- - 42,035,114 40,560,527

NOTE 9: OTHER CURRENT ASSETS

NOTE 10: OTHER FINANCIAL ASSETS

Note 1

On 6 March 2008, being the date of effective change of control, the Company acquired a direct 100% interest in Redemption Management Pty Ltd (“Redemption”). On acquisition, Redemption held a direct 50% interest in Underground Drilling Services Pty Ltd. On 11 June 2008, Redemption changed its name to Focus Operations Pty Ltd (“Focus Operations”).

Business Combination

Acquisition of Redemption Management Pty Ltd

The Company) announced on 6 March 2008 that it had entered into an agreement with the shareholders of Redemption Management Pty Ltd (Redemption) to purchase all of the issued capital of Redemption.

Page 30

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 10: OTHER FINANCIAL ASSETS (NON-CURRENT) (continued)

Redemption held a direct 50% joint venture interest in the Redemption Plant and Equipment joint venture and a direct 50% joint venture interest in the Redemption Exploration joint venture and a direct 50% in the issued capital of Underground Drilling Services Pty Ltd. Focus shareholders, in General Meeting held 14 April 2008, approved the acquisition by authorising the issue of Focus shares and a convertible note.

On 30 April 2008 the Company settled the transaction with the shareholders of Redemption and full ownership was assumed from that date. The effective date of the acquisition was 6 March 2008.

The total cost of the combination was $30.1 million comprising 140 million Focus shares (fair value 5.9 cents per share at a 20% discount for escrow period restriction = 4.72 cents per share), an 8.25% redeemable convertible note with a face value of $2 million and $20 million in cash. Other transaction costs on the transaction totalled $1.52 million.

The fair value of identifiable assets and liabilities of Redemption as at the date of acquisition were:

Cash and cash equivalents Secured deposits Receivables Inventories Property, plant and equipment Deferred exploration expenditure Other assets Payables Financial liabilities Provisions Rehabilitation costs Fair value on identifiable net assets Goodwill on acquisition Cost of combination Shares issued at fair value Convertible note Cash paid Direct costs of the acquisition Total cost of the combination The cash outflow on acquisition is as follows: Net cash acquired with the subsidiary Direct costs of the acquisition Cash paid Net cash outflow	Recognised on acquisition $ Carrying Value $ 271,826 271,826 886,703 886,703 31,917 31,917 307,764 307,764 436,446 436,446 13,877,733 13,877,733 27,665 27,665
	15,840,054 15,840,054
	(1,298,336) (1,298,336) (530,068) (530,068) (40,181) (40,181) (111,000) (111,000)
	(1,979,585) (1,979,585)
	13,860,469 16,266,223 30,126,692 6,608,000 2,000,000 20,000,000 1,518,692 30,126,692 271,826 (1,518,692) (20,000,000) (21,246,866)

The goodwill arising on the Redemption transaction pertains to the Directors’ assessment of the commercial benefit to be obtained from the commercial development of the Group’s mining resources and principally from the Perseverance Project. Goodwill has been recognised in Deferred Exploration and Development expenditure.

Under Australian Accounting Standard AASB 3 “Business Combinations” the Group has a period of up to twelve months from the acquisition date to complete the initial accounting for the business combination, including the assessment of the fair values of any tangible or intangible assets acquired. Intangible assets of $16,265,233 were initially allocated to the Development Costs at acquisition date. The Directors have subsequently re-assessed the allocation and have determined an amount of $13,486,586 be transferred from Development Costs to Deferred Exploration and Evaluation Costs (Note 12).

Page 31

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 10: OTHER FINANCIAL ASSETS (NON-CURRENT) (continued)

Note 2

The ultimate recoverability of the amounts receivable from controlled entities 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.

NOTE 11: PLANT AND EQUIPMENT

Mining & Milling plant and equipment At cost Less accumulated depreciation Movements in carrying amounts Balance at 1 July Additions Acquired on acquisition of subsidiary company Disposals Depreciation expense Balance at 30 June	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	19,092,778 5,219,618 9,798,238 2,806,921 (7,527,302) (1,211,718) (3,928,305) (719,330)
	11,565,476 4,007,900 5,869,933 2,087,591
	4,007,900 802,775 2,087,591 541,858 13,901,298 3,944,410 7,019,359 1,897,297 - 436,446 - - (11,276) (556,082) (11,276) (5,161) (6,332,446) (619,649) (3,225,741) (346,403)
	11,565,476 4,007,900 5,869,933 2,087,591

The useful life of the mining plant and equipment was estimated as follows for both 2008 and 2009:

Mobile plant and equipment - 5 to 15 years
Underground assets – units of production basis

NOTE 12: DEFERRED EXPENDITURE

OTE 12: DEFERRED EXPENDITURE
a) DEFERRED EXPLORATION EXPENDITURE – at cost Exploration and Evaluation Expenditure: At Cost Less – accumulated amortisation Net Exploration and Evaluation Expenditure Development Expenditure: At cost Less – accumulated amortisation Net Exploration and Evaluation Expenditure	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	51,475,157 32,761,580 17,223,582 14,146,119 - - - -
	51,475,157 32,761,580 17,223,582 14,146,119
	10,118,994 23,605,363 3,669,572 3,669,572 (4,866,095) (825,827) (2,433,048) (412,913)
	5,252,899 22,779,536 1,236,524 3,256,659

Page 32

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

Reconciliations:

Exploration and Evaluation Expenditure

Carrying amount at beginning of the year plus – exploration expenditure plus – acquired on acquisition of controlled entity plus- Transfer (to)/from Exploration Expenditure – (Note 10) less:_expenditure written off Carrying amount at end of year Development Expenditure Carrying amount at beginning of the year _plus – costs incurred plus- Transfer (to)/from Exploration Expenditure – (Note 10) _less:_amortisation expense Carrying amount at end of year	32,761,580 17,100,208 14,146,119 9,739,294 5,226,991 9,122,779 3,077,463 8,076,397 - 30,143,956 - - 13,486,586 (23,605,363) - - - - - (3,669,572)
	51,475,157 32,761,580 17,223,582 14,146,119
	22,779,536 - 3,256,659 - - - - 3,669,572 (13,486,586) 23,605,363 - - (4,040,268) (825,827) (2,020,135) (412,913)
	5,252,682 22,779,536 1,236,524 3,256,659

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.

During the year the Company increased its JORC compliant resources to 1,880,540 ounces (2008: 1,780,046 ounces). As at 30 June 2009, 48.0% of total development expenditure has been amortised. The remaining amortisation period is dependent upon future production levels and any revision to resources.

NOTE 13: SHARE BASED PAYMENTS

During the year, the Company issued 20,000,000 (2008 : 40,000,000) options as consideration for the provision of investor promotional activities.

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 year ended 30 June 2009.

Volatility (%) Risk free interest rate (%) Expected life of option (years) Exercise price (cents) Weighted average share price at grant date (cents) Imputed value of issued options	2009 2008
	65% 79% 3.9% 7.0% 1 – 2 years 3 yrs 4.5 & 7.0 6.875 2.6 6.5
	$43,352 $1,414,090

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.

NOTE 14: TRADE AND OTHER PAYABLES

Current Trade payables (i) Sundry creditors and accrued expenses Employee benefits	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 5,184,671 2,171,786 3,585,351 1,490,939 1,672,937 3,180,120 1,645,342 2,353,514 336,099 194,591 209,214 133,353
	7,193,707 5,546,497 5,439,907 3,977,806

Page 33

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 14: TRADE AND OTHER PAYABLES (continued)

NOTE 14: TRADE AND OTHER PAYABLES(continued)
	Consolidated				Parent
	2009	2008	2009			2008
	$	$	$			$
Non Current
Other parties	20,000	40,000		-			-

(i) Trade payables are non-interest bearing and are normally settled on 15-30 day terms. Information regarding the credit risk of current payables is set out in Note 18.

NOTE 15: PROVISIONS

Non-Current Rehabilitation costs Balance at 1 July Increase in the period Balance at 30 June	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 1,749,608 111,000 874,804 111,000 - 1,638,608 - 763,804
	1,749,608 1,749,608 874,804 874,804

Provision for Mine Restoration

A provision has been recognised for the costs to be incurred for the restoration of mining and prospecting leases used for the production and exploration of gold and nickel. A discount rate adjusted to reflect the risk inherent in the mining operation has been applied

NOTE 16: FINANCIAL LIABILITIES

OTE 16: FINANCIAL LIABILITIES
	Consolidated		Parent
	2009	2008	2009	2008
	$	$	$	$
Current
Bank loans – note a)	7,250,000	13,250,000	7,250,000	13,250,000
Less borrowing costs
Facility establishment costs	(775,405)	(775,405)	(775,405)	(775,405)
Share option expense – refer Note 13	(1,414,090)	(1,414,090)	(1,414,090)	(1,414,090)
	(2,189,495)	(2,189,495)	(2,189,495)	(2,189,495)
Borrowing costs expensed	1,459,663	243,278	1,459,663	243,278
Net borrowing costs	(729,832)	(1,946,217)	(729,832)	(1,946,217)
Net Bank loans	6,520,168	11,303,783	6,520,168	11,303,783
Gold forward sales payable	1,509,176	909,020	1,509,176	909,020
Finance lease – refer note 20	83,510	29,599	53,188	25,167
Unsecured loan	1,250,000	-	1,250,000	-
Convertible note – note b)	-	2,000,000	-	2,000,000
	9,362,854	14,242,402	9,332,532	14,237,970
Non – current
Finance lease	101,414	59,883	54,775	45,467

Note a) Bank Loan

At 30 June 2008, the Group had established borrowing facilities with Investec Bank (Australia) Limited. The facility commenced on 1 May 2008 and originally expires on 31 October 2009. During the year the Company restructured the Facility with the expiry date extended to 31 December 2009.

Page 34

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 16: FINANCIAL LIABILITIES (continued)

Note a) Bank Loan (continued)

The Facility provided working capital for the Company and in particular, the development costs of the Perseverance Gold Project.

The Facility is secured by:

fixed and floating charge over all the assets and undertakings of the Company, Austminex Pty Ltd and Focus Operations Pty Ltd,
an equitable mortgage over the issued shares owned by the Company in Austminex Pty Ltd and Focus Operations Pty Ltd, and
a mining mortgage over specified mining leases owned by the Company, in Austminex Pty Ltd and Focus Operations Pty Ltd.

The facility is comprised of the following:

Cash Facility Convertible Facility Contingent Instruments Total Facility	30 June 2009
	Drawn Undrawn FacilityLimit
	4,500,000 - 4,500,000 2,750,000 - 2,750,000 1,179,500 470,500 1,650,000
	8,429,500 470,500 8,900,000

The Facility Agreement requires that the Company must comply with certain financial covenants including the following:

Historic Debt Service Cover Ratio	exceeds 1.25
Forward Debt Service Cover Ratio	exceeds 1.25
Loan Life Ratio	exceeds 1.40
Project Life Ratio	exceeds 1.80
Cash Flow Tail Ratio	exceeds 15%.

There were no breaches of financial covenants during the period.

Note b) Convertible Note

As part consideration for the acquisition of Redemption Management Pty Ltd, the Company issued a redeemable 8.25% convertible note at a face value of $2,000,000 Interest was payable on the convertible note at the rate of 8.25% pa payable on the maturity date, 30 April 2009.

The convertible note matured on 30 April 2009 and by mutual consent, was converted into an unsecured loan repayable in monthly instalments with final repayment due on 30 November 2009.

NOTE 17: ISSUED CAPITAL AND RESERVES

Authorised Capital

The Company does not have an Authorised Capital and there is no par value for ordinary shares.

(a) Ordinary shares

a) Ordinary shares
2,646,143,210 (2008 – 1,246,143,210) fully paid ordinary shares On issue at the beginning of reporting period Shares issued during the year - 27 February 2009 - 6 April 2009 - 5 May 2009 - 17 April 2008 - 24 April 2008 - 30 April 2008 On issue at reporting date	Consolidated Group Parent Entity 2009 $000 2008 $000 2009 $000 2008 $000
	94,440,236 68,068,793 94,440,236 68,068,793
	1,246,143,210 778,824,986 1,246,143,210 778,824,986 100,000,000 - 100,000,000 - 1,150,000,000 - 1,150,000,000 - 150,000,000 - 150,000,000 - - 254,545,454 - 254,545,454 - 72,772,770 - 72,772,770 - 140,000,000 - 140,000,000
	2,646,143,210 1,246,143,210 2,646,143,210 1,246,143,210

Page 35

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 17: ISSUED CAPITAL AND RESERVES (continued)

On 27 February 2009 the Company issued 100,000,000 ordinary shares at 2.0 cents per share under a placement of shares This issue of shares was subsequently ratified by shareholders in a General Meeting held on 3 April 2009.

On 6 April 2009 the Company issued 1,150,000,000 ordinary shares at 2.0 cents per share under a placement of shares as approved by shareholders in a General Meeting held on 3 April 2009.

On 5 May 2009 the Company issued 150,000,000 ordinary shares at 2.0 cents per share under a Share Purchase Plan.

Share issue costs totalling $1,628,557 were incurred in the issue of shares by placement and the Share Purchase Plan.

Net funds totalling $26,371,443 from the above issues are to be used as follows:

$18,000,000 in the refurbishment and modernisation of the Company’s Three Mile Hill treatment plant; and
$8,371,443 for the advancement of resource development and exploration within the Coolgardie Gold Project.

At each shareholders’ meeting each ordinary share is entitled to one vote on the calling of a poll, otherwise each shareholder is entitled to one vote on a show of hands.

(b) Options

The Company has issued options to acquire fully paid shares by defined expiry dtaes. The following are outstanding options at 30 June 2009:

Issuing Entity Focus Minerals Ltd Total Options issued	Number of Options Exercise Price Cents per Share Expiry Date 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 40,000,000 6.875 30/4/2011 10,000,000 4.50 30/4/2010 10,000,000 7.00 30/4/2011 76,270,000

(c) Capital Management

Management controls the capital of the group in order to ensure the group can fund its operations, continue as a going concern and ensuring compliance with banking covenants. As required under the banking facilities provided, the Group monitors monthly and reports quarterly on the compliance of financial covenants as listed in Note 16. The group’s debt and capital includes ordinary share capital and financial liabilities supported by financial assets. There are no externally imposed capital requirements.

Management effectively manages the group’s capital by assessing the group’s financial risks, adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

The group has entered into a finance facility with Investec Bank (Australia) Limited to fund the development of the Perseverance Project and bring it into commercial production. The gearing ratios for the group are as follows:

Total borrowings Less cash and cash equivalents Net debt/(net cash) Total equity Total capital Gearing ratio	Consolidated Consolidated Parent Parent 2009 $ 2008 $ 2009 $ 2008 $ 18,427,583 21,638,390 15,702,018 19,136,045 (20,515,842) (5,634,646) (17,684,226) (5,003,496)
	(2,088,259) 16,003,744 (1,982,208) 14,132,549
	80,467,920 50,906,352 73,802,083 50,580,711
	78,379,661 66,910,096 71,819,875 64,713,260
	n/a 24% n/a 22%

Page 36

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 17: ISSUED CAPITAL AND RESERVES (continued)

(d) 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 Other options issued Balance 30 June	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $ 1,975,097 561,007 1,975,097 561,007 - - - - 43,352 1,414,090 43,352 1,414,090
	2,018,449 1,975,097 2,018,449 1,975,097

The share option reserve arises on the grant of share options. Amounts are transferred out of the reserve and into issued capital when the options are exercised. On 31 July 2008 3,000,000 options at an exercise price of 5.04 cents per share lapsed unexercised. These options incurred an expense of $34,789 when issued during September 2005. At 30 June 2009, $337,893 remains within the Option Reserve attributable to options which have lapsed unexercised.

NOTE 18: FINANCIAL INSTRUMENTS

a. Financial Risk Management Policies

The group’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable, loans to and from subsidiaries, leases, convertible notes and derivatives. The main purpose of non-derivative financial instruments is to raise finance for group operations.

Derivatives are used by the group for hedging purposes such as forward gold sales agreements. The group does not speculate in the trading of derivative instruments.

i. Treasury Risk Management
A finance committee consisting of a non-executive director and the Chief Financial Officer meet on a regular basis to analyse financial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts.

The committee’s overall risk management strategy seeks to assist the consolidated group in meeting its financial targets, whilst minimising potential adverse effects on financial performance.

The finance committee operates under policies approved by the board of directors. Risk management policies are reviewed and approved by the Board on a regular basis. These include the use of hedging derivative instruments, credit policies and future cash flow requirements.

ii. Financial Risk Exposures and Management

The main risks the group is exposed to through its financial instruments are interest rate risk, liquidity risk, credit risk and gold price risk.

Interest rate risk

Interest rate risk is managed with a mixture of fixed and floating rate debt. At 30 June 2009 approximately 100% of group debt is fixed. It is the policy of the group to keep between 75% and 100% of debt on fixed interest rates for short term periods up to 180 days.

Liquidity Risk

The group manages liquidity risk by monitoring forecast project and operating cash flows and ensuring that a minimum level of uncommitted cash is available for immediate use and consists of cash on deposit and/or utilised borrowing facilities.

Credit Risk

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the balance sheet and notes to the financial statements.

In respect of the parent entity, credit risk also incorporates the exposure of Focus Minerals Ltd to the liabilities of all members of the closed group.

Credit risk is managed on a group basis and reviewed regularly by the finance committee. It arises from exposures to approved customers as well as deposits with financial institutions.

Page 37

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 18: FINANCIAL INSTRUMENTS (continued)

The finance committee monitors credit risk by actively assessing the rating quality and liquidity of counter parties: � only approved banks and financial are utilised;
all potential customers are rated for credit worthiness taking into account their size, market position and financial standing.

Credit risk for derivative financial instruments arises from the potential failure by counter-parties to the contract to meet their obligations. The credit risk exposure to forward gold sale contracts is the net fair value of these contracts as disclosed in Note 18 (b).

The consolidated group has a material credit risk exposure to Investec Bank (Australia) Limited under financial instruments entered into by the consolidated group. The total exposure is detailed in Note 18 (b) below. Price Risk

The group is exposed to gold price risk through its gold mining operations. The group has entered into gold forward sales contracts and put option contracts for delivery of specified quantities of gold on specific dates at fixed prices.

b . Financial Instruments
i. Derivative Financial Instruments

Derivative financial instruments are used by the consolidated group to hedge exposure to gold price risk. Transactions for hedging purposes are undertaken without the use of collateral as only reputable institutions with sound financial positions are dealt with.

Forward Gold Contracts

The group has entered into forward exchange contracts to sell specified amounts of gold in the future at fixed gold prices. The objective in entering the forward gold contracts is to protect the group against unfavourable price movements for the contracted future sales of gold. The group has also purchased the gold put options to secure a floor price for a portion of the group’s project gold production. The forward gold contracts are at varying fixed prices for deliveries at fixed delivery dates. The put options are at a fixed rate of $850 per oz gold.

The accounting policy in regard to forward gold contracts is detailed in Note 1. At balance date, details of outstanding forward gold sale contracts are:

Sell Gold Settlement Less than 6 months 6 months to 1 year 1 – 2 years Gold Put Options Less than 6 months 6 months to 1 year 1 – 2 years	Average Gold Price A$/oz Consolidated Group Parent Entity Consolidated Group Parent Entity 2009 $000 2008 $000 2009 $000 2008 $000 2009 $ 2008 $ 2009 $ 2008 $ 9,318,695 5,431,207 9,318,695 5,431,207 994 966 994 966 - 19,091,187 - 19,091,187 - 985 - 985 - 7,053,727 - 7,053,727 - 1,007 - 1,007
	9,318,695 31,576,121 9,318,695 31,576,121 994 986 994 986
	Average Gold Price A$/oz Consolidated Group Parent Entity Consolidated Group Parent Entity 2009 $000 2008 $000 2009 $000 2008 $000 2009 $ 2008 $ 2009 $ 2008 $
	1,989,000 5,121,250 1,989,000 5,121,250 850 850 850 850 - 6,022,250 - 6,022,250 - 850 - 850 - 1,989,000 - 1,989,000 - 850 - 850
	1,989,000 13,132,500 1,989,000 13,132,500 850 850 850 850

At 30 June 2009 the group has outstanding forward gold contracts for a total of 9,378 ozs (2008: 32,000 ozs) gold and 2,340 ozs (2008: 15,450 ozs) of gold put options.

Page 38

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 18: FINANCIAL INSTRUMENTS (continued)

ii. Maturity Analysis Consolidated 30 June 2009 Financial assets Cash and cash equivalents Forward contracts - Note 16 Trade receivables Total financial assets Financial liabilities Trade payables and other payables Bank loan – Note 16 Unsecured loan - Note 16 Lease liabilities - Note 16 Total financial liabilities Consolidated 30 June 2008 Financial assets Cash and cash equivalents Trade receivables Total financial assets Financial liabilities Trade payables and other payables Bank loan Unsecured loan Lease liabilities Total financial liabilities	Average Effective Interest Rate %	Floating Interest Rate $ Fixed Interest Rate $ Non Interest Bearing $ Total $
		Payable within 1 year
	2.9% - - - 8.7% 16.0% 9.1% 6.28% - - 8.7% 16.0% 9.1%	21,048,610 228,190 1,000 21,277,800 - - 1,509,176 1,509,176 - - 223,811 223,811
		21,048,610 228,190 1,733,987 23,010,787
		- - 7,193,707 7,193,707 - 7,250,000 - 7,250,000 - 1,250,000 - 1,250,000 184,924 - - 184,924
		184,924 8,500,000 7,193,707 15,878,631
		7,178,298 232,435 1,300 7,412,033 - - 131,803 131,803
		7,178,298 232,435 133,103 7,543,836
		- - 8,249,125 8,249,125 - 13,250,000 - 13,250,000 - 2,000,000 - 2,000,000 - 89,482 - 89,482
		- 15,339,482 8,249,125 23,588,607

Page 39

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 18: FINANCIAL INSTRUMENTS (continued)

Parent 30 June 2009 Financial assets Cash Forward Contracts Trade receivables Total financial assets Financial liabilities Trade payables and other payables Bank loan - Note 16 Unsecured loan - Note 16 Lease liabilities - Note 16 Total financial liabilities Parent 30 June 2008 Financial assets Cash Trade receivables Total financial assets Financial liabilities Trade payables and other payables Bank loan Convertible note Lease liabilities Total financial liabilities	Average Effective Interest Rate %	Floating Interest Rate $ Fixed Interest Rate $ Non Interest Bearing $ Total $
		Payable within 1 year
	2.3% - - - 8.7% 16.0% 9.6% 6.26% - - 11.5% 8.25% 9.65%	18,217,245 201,189 750 18,419,184 - - 1,509,176 1,509,176 - - 100,238 100,238
		18,217,245 201,189 1,610,164 20,028,598
		- - 5,439,907 5,439,907 - 7,250,000 - 7,250,000 - 1,250,000 - 1,250,000 89,482 - - 89,482
		89,482 8,500,000 5,439,907 14,029,389
		6,547,398 187,755 1,050 6,736,203 - - 49,764 49,764
		6,547,398 187,755 50,814 6,785,967
		- - 5,761,628 5,761,628 - 13,250,000 - 13,250,000 - 2,000,000 - 2,000,000 - 70,634 - 70,634
		- 15,320,634 5,761,628 21,082,262

Page 40

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 18: FINANCIAL INSTRUMENTS (continued)

Aggregate fair values and carrying values of financial assets and financial liabilities at balance date.

Consolidated Financial assets Other financial assets Loans and receivables Financial liabilities – at amortised cost (Note 16) Bank loans Gold forward contract payable Finance leases Unsecured loan Convertible note Parent Financial assets Other financial assets Loans and receivables Financial liabilities – at amortised cost (Note 16) Bank loans Gold forward contract payable Finance leases Unsecured loan Convertible note	2009 2008 Carrying Amount $ Net Fair Value $ Carrying Amount $ Net Fair Value $
	69,827 69,827 - - 223,811 223,811 131,803 131,803
	293,638 293,638 131,803 131,803
	7,250,000 7,250,000 13,250,000 13,250,000 1,509,176 1,509,176 909,020 909,020 204,506 204,506 101,615 101,615 1,250,000 1,250,000 - - - - 2,000,000 2,000,000
	10,213,682 10,213,682 16,260,635 16,260,635
	Carrying Amount $ Net Fair Value $ Carrying Amount $ Net Fair Value $
	69,827 69,827 - - 100,238 100,238 49,764 49,764
	170,065 170,065 49,764 49,764
	7,250,000 7,250,000 13,250,000 13,250,000 1,509,176 1,509,176 909,020 909,020 118,856 118,856 79,863 79,863 1,250,000 1,250,000 - - - - 2,000,000 2,000,000
	10,128,032 10,128,032 16,238,883 16,238,883

iii. Sensitivity Analysis

Interest Rate Risk, Gold Price Risk

The group has performed a sensitivity analysis relating to its exposure to interest rate risk, foreign currency risk and price risk at balance date. This sensitivity analysis demonstrates the effect on the current year results and equity which could result from a change in these risks.

Interest Rate Sensitivity Analysis

At 30 June 2009, the effect on profit and equity as a result of changes in the interest rate, with all other variables remaining constant would be as follows:

		Consolidated	Group	Parent Entity
		2009	2008	2009	2008
		$	$	$	$
Change in profit
-	Increase in interest rate by 2%	(145,000)	(39,945)	(145,000)	(39,945)
-	Decrease in interest rate by 2%	145,000	39,945	145,000	39,945
Change in equity
-	Increase in interest rate by 2%	(145,000)	(39,945)	(145,000)	(39,945)
-	Decrease in interest rate by 2%	145,000	39,945	145,000	39,945

Page 41

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 18: FINANCIAL INSTRUMENTS (continued)

Gold Price Risk Sensitivity Analysis

Gold price risk

Gold price risk is the risk that fluctuations in the price of gold will have an adverse effect on current or future earnings. The consolidated entity may use derivative financial instruments to hedge some of its exposure to fluctuations in gold prices. In order to protect against the impact of falling gold prices, the consolidated entity enters into hedging transactions which provide a minimum price to cover non-discretionary operating expenses, repayments due under the consolidated entity’s financing facilities and sustaining capital. The majority of the consolidated entity’s forecast production is unhedged, allowing it to take advantage of increases in gold prices. Call and put options are used by the consolidated entity to manage the gold price risk. As the consolidated entity does not enter into financial instruments for trading purposes, the risks inherent in the financial instruments used are offset by the underlying risk being hedged. The consolidated entity ensures that the level of hedge cover does not exceed the anticipated sales in future periods, that the term of the financial instruments does not exceed the mine life and that no basis risk exists.

The marked to market value of all derivatives making up the hedge position as at 30 June 2009 was a net loss of $1,509,176 (2008: $909,020) based on a gold price of A$1,149. The consolidated entity had the net forward gold contract deliveries outstanding against future production as at 30 June 2009 of A$9,318,695 (2008: $31,576,121)

NOTE 19: COMMITMENTS AND CONTINGENCIES

Mill Refurbishment Contract commitments

On 1 May 2009 the Company contracted Como Engineers Pty Ltd under an EPCM contract to refurbish and modernise the Three Mile Hill treatment plant. The contract is a fixed price fixed scope contract for a total value of $16,965,400. As at 30 June 2009 the Company had paid progress payments totalling $6,000,000 with the remaining amount of $11,000,000 remaining to be paid in monthly progress claims. The contract works are scheduled to conclude 4 November 2009 excluding approved extensions of time.

Operating lease commitments – Group as lessee

The Group has entered into commercial leases on certain office accommodation. These leases have an average life of two 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 2009 $ 2008 $ 2009 $ 2008 $
	101,848 101,848 101,848 101,848 - 70,000 - 70,000 - - - -
	101,848 171,848 101,848 171,848

Finance lease and hire purchase commitments – Group as lessee

The Group has finance leases for various items of plant and machinery. These leases have 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 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	2009 2008 Minimum lease payments $ Present value of lease payments $ Minimum lease payments $ Present value of lease payments $ 96,882 83,510 38,636 29,599 107,624 101,414 62,979 59,883
	204,506 184,924 101,615 89,482 (19,582) - (12,133) -
	184,924 184,924 89,482 89,482

Page 42

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 19: COMMITMENTS AND CONTINGENCIES (continued)

PARENT 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	2009 2008 Minimum lease payments $ Present value of lease payments $ Minimum lease payments $ Present value of lease payments $ 60,893 53,188 31,770 25,167 57,963 54,775 48,093 45,467
	118,856 107,963 79,863 70,634 (10,893) - (9,229) -
	107,963 107,963 70,634 70,634

The weighted average interest rate impact on the leases for both the Group and the Parent at 30 June 2009 is 9.10% (2008: 9.65%).

Mining tenement expenditure commitments and contingencies

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 $1,777,387 (2008: $1,777,387) with the Department of Industry and Resources.

Mining tenement expenditure Within one year After one year but not more than five years More than five years	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	1,645,360 1,582,420 1,645,360 1,582,420 - - - - - - - -
	1,645,360 1,582,420 1,645,360 1,582,420

NOTE 20: INTEREST IN JOINTLY CONTROLLED OPERATION

(a) Joint venture – Coolgardie Gold Project

The Group has a 100% (2008: 100%) interest in the Coolgardie Gold Project, which is involved in the mining and exploration of mining tenements located in the vicinity of Coolgardie, Western Australia. The Coolgardie Gold Project is a jointly owned by the Company and its wholly owned entity, Focus Operations Pty Ltd.

Page 43

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 20: INTEREST IN JOINTLY CONTROLLED OPERATION (continued)

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

Current assets Cash and cash equivalents Trade and other receivables Inventories Total current assets Non-current assets Property, plant & equipment Deferred Exploration Expenditure Total Non-current assets Current liabilities Trade and other payables Financial liabilities Total current liabilities Non-current liabilities Financial liabilities Rehabilitation cost Total Non-current liabilities	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	- - 334,357 560,589 - - 113,876 28,551 - - 4,443,172 2,558,568
	- - 4,891,405 3,147,708
	- - 5,615,265 1,839,771 - - 5,735,963 5,607,475
	- - 11,351,228 7,447,246
	- - 2,241,047 5,468,117 - - 30,321 8,865
	- - 2,271,368 5,476,982
	- - 46,640 28,832 - - 111,000 111,000
	- - 157,640 139,832

Page 44

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 20: INTEREST IN JOINTLY CONTROLLED OPERATION (continued)

Revenue Cost of sales Depreciation and Amortisation Administrative expenses Loan impairment Finance cost Profit before income tax Income tax expense Net Profit	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	- - 20,203,380 1,287,237 - - (10,332,989) (953,082) - - (5,133,235) (673,232) - - (656,597) (561,756) - - - (255,707) - - (6,470) (298)
	- - 4,074,089 (1,156,838) - - - -
	- - 4,074,089 (1,156,838)

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 Ltd and the subsidiaries listed in the following table:

Name Country of Incorporation Austminex Pty Ltd Australia Focus Operations Pty Ltd Australia Underground Drilling Services Pty Ltd Australia	% Equity Interest 2009 2008	Investment 2009 $ 2008 $
	100% 100% 100% 100% 100% 100%	3,301,276 3,301,276 13,704,391 13,704,391 2 2
		17,005,669 17,005,669

On 30 April 2008, the Company acquired a controlling interest in Redemption Management Pty Ltd. (refer business combinations Note 10).

On 11 June 2008, this company changed its name to Focus Operations Pty Ltd.

Page 45

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 22: RELATED PARTY DISCLOSURE

The following table provides the total amount of transactions that were entered into with related parties in the relevant financial year (for information regarding outstanding balances at year-end, refer to note 10 and note 20):

Related party Consolidated Joint ventures in which the parent is a venturer: Redemption joint venture 2009 2008 Being recharges of salaries and expenses provided to the joint venture Parent Related party Austminex Pty Ltd 2009 2008 Underground Drilling Services Pty Ltd 2009 2008 Focus Operations Pty Ltd 2009 2008 Joint venture in which the entity is a venturer	Sales to Related Parties $ Purchases from Related Parties $ Amounts Owed by Related Parties $ Amounts Owed to Related Parties $
	- - - - 50,304 - - - - - 4,340,003 - - - 4,320,003 - - - 60,136 - - - 60,136 - - - 26,935,268 - - - 15,494,913 -

The Group has a 100% interest in the assets, liabilities and output of the Coolgardie Gold Project (2008: 100%)

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.

For the year ended 30 June 2009, the Group has not made any allowance for doubtful debts relating to amounts owed by related parties due to solid payment history (2008: $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.

Azure Capital Pty Ltd

Mr Hendricks is an Associate Director of Azure Capital Pty Ltd (Azure) which acted as lead manager to the capital raising undertaken during March 2009 and April 2008. For these services Azure received a retainer and underwriting fees totalling $1,520,067 (2008: $924,000). In addition, Azure acted as lead manager in arranging the finance facilities provided by Investec Bank (Australia) Limited. For these services Azure received a fee totalling 2009: nil (2008: $139,875).

Page 46

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 23: AUDITORS’ REMUNERATION

The auditors of Focus Minerals Ltd are Grant Thornton (WA) Partnership.

Amounts received or due and receivable by Grant Thornton (WA) Partnership 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: Taxation services	Consolidated Parent 2009 $ 2008 $ 2009 $ 2008 $
	80,000 28,453 80,000 28,453 10,092 11,995 10,092 11,995
	90,092 40,448 90,092 40,448

NOTE 24: DIRECTORS’ AND EXECUTIVE DISCLOSURES

Director and key management remuneration has been included in the Remuneration Section of the Directors’ Report.

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

During the financial years ended 30 June 2009 and 2008, 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.

(b) Options holdings of Key Management Personnel

30 June 2009 *30 June 2009* Directors Donald Taig Peter Williams Phillip Lockyer Christopher Hendricks Campbell Baird Jon Grygorcewicz Charles McCormick Darren Gibcus Dr Garry Adams Total # Includes forfeitures	Vested as at 30 June 2009 Balance at Beginning Of period 1/7/08 Granted as remuneration Options exercised Balance at End of Period 30/06/09 Total Exercise- able Not Exercisable - - - - - - - 6,950,000 - - 6,950,000 6,950,000 6,950,000 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 5,900,000 5,900,000 5,900,000 5,900,000 - - - - - - - - - - - - - - -
	12,850,000 - - 12,850,000 12,850,000 12,850,000 -

Page 47

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 24: DIRECTORS’ AND EXECUTIVE DISCLOSURES (continued)

30 June 2008

30 June 2008
*30 June 2008* Directors Donald Taig Phillip Lockyer Christopher Hendricks Peter Williams Jon Grygorcewicz Charles McCormick Darren Gibcus Dr Garry Adams Total	Vested as at 30 June 2008 Balance at Beginning Of period 1/7/07 Granted as remuneration Options exercised Balance at End of Period 30/06/08 Total Exercise- able Not Exercisabl e - - - - - - - - - - - - - - - - - - - - - 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

(c) Shareholdings of Key Management Personnel

30 June 2009 Directors Donald Taig Phillip Lockyer Christopher Hendricks Campbell Baird Peter Williams Jon Grygorcewicz Charles McCormick* Darren Gibcus Dr Garry Adams Total	Balance 1 July 2008 Granted as remuneration Purchases Balance 30 June 2009 Ord Options Ord Options Ord Options Ord Options
	8,955,366 - - - 1,750,000 - 10,705,366 - 344,523 - - - 250,000 - 594,523 - 190.909 - - - - - 190,909 - - - - - 2,800,000 - 2,800,000 - 864,523 6,950,000 - - 572,500 - 1,437,023 6,950,000 1,462,705 - - - 500,000 - 1,962,705 - 22,324,839 5,900,000 - - - - 22,324,839 5,900,000 - - - - - - - - - - - - - - - -
	34,142,865 12,850,000 - - 5,872,500 - 40,015,365 12,850,000

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

*Mr McCormick is a director and shareholder of Broadarrow Goldmines Pty Ltd and accordingly has a direct interest in the shares.

Page 48

Focus Minerals Ltd – Financial Report 2009

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 24: DIRECTORS AND EXECUTIVE DISCLOSURES (continued)

30 June 2008
Directors
Donald Taig
Peter Williams
Phillip Lockyer
Christopher Hendricks
Jon Grygorcewicz
Charles McCormick*
Darren Gibcus
Dr Garry Adams
Total

Balance
1 July 2007
Granted as
remuneration
Purchases
Balance
30 June 2008
8,591,730
-
-
-
363,636
-
8,955,366
-
503,614
6,950,000
-
-
360,909
-
864,523
6,950,000
253,614
-
-
-
90,909
-
344,523
-
-
-
-
-
190,909
-
190.909
-
553,614
-
-
-
909,091
-
1,462,705
-
20,506,657
5,900,000
-
-
1,818,182
-
22,324,839
5,900,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

30,409,229
12,850,000
-
-
3,733,636
-
34,142,865
12,850,000

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

*Mr McCormick is a director and shareholder of Broadarrow Goldmines Pty Ltd and accordingly has a direct interest in the shares.

NOTE 25: SIGNIFICANT EVENTS AFTER BALANCE DATE

(a) On 28 July 2009 the Company announced an inaugural inferred resource at the Hillside deposit of 69,500 ozs gold and increased inferred resources at Empress/Alicia to 49,800 ozs gold, increased inferred resources at Big Blow to 50,900 ozs and increased inferred resources at Happy Jack to 10,900 ozs gold.
(b) On 11 August 2009 the Company announced progressive results from an extension drilling program at the Perseverance deposit including 5.41m at 33.03 g/t Au.
(c) On 12 August 2009 the Company entered into an Exclusivity Agreement with Matsa Resources Ltd (“Matsa”) to exclusively negotiate the treatment of ore from Matsa’s North Scotia deposit. Treatment of the ore is expected to commence during February 2010 with treatment costs being determined by a formula with reference to ore grade, recovery rates and direct processing costs. As part of these negotiations,the Company agreed to take a placement in Matsa of 1,242,236 shares issued at 16.1 cents per fully paid share for a total cost of $200,000.
(d) On 7 September 2009 the Company secured all necessary mining and environmental approvals to commence mining operations at the Mount Deposit. Construction of a decline from existing workings to the German Lode had commenced.

Page 49

Focus Minerals Ltd – Financial Report 2009

DIRECTORS’ DECLARATION

In the opinion of the directors:
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 2009 and of their performance for the year then ended; and
- ii. complying with Accounting Standards and Corporations Regulations 2001; and
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.
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 2009.

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

==> picture [161 x 66] intentionally omitted <==

Christopher Hendricks

Director

Dated 14 September 2009

Page 50

Focus Minerals Ltd – Financial Report 2009

INDEPENDENT AUDIT REPORT

==> picture [195 x 36] intentionally omitted <==

10 Kings Park Road West Perth WA 6005 PO BOX 570 West Perth WA 6872

Independent Auditor’s Report

T +61 8 9480 2000 F +61 8 9322 7787 E [email protected] W www.grantthornton.com.au

To the Members of Focus Minerals Limited

Report on the Financial Report

We have audited the accompanying financial report of Focus Mineral Limited, (the company) which comprises the balance sheet as at 30 June 2009, and the income statement, statement of changes in equity and cash flow statement for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors’ declaration of the consolidated entity 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 controls 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.

Grant Thornton (WA) Partnership ABN 17 735 344 518, a subsidiary or related entity of Grant Thornton Australia Limited ABN 41 127 556 389.

Grant Thornton Australia Limited is a member firm within Grant Thornton International Ltd. Grant Thornton International Ltd and the member firms are not a worldwide partnership. Grant Thornton Australia Limited, together with its subsidiaries and related entities, delivers its services independently in Australia.

Liability limited by a scheme approved under Professional Standards Legislation.

Page 51

Focus Minerals Ltd – Financial Report 2009

INDEPENDENT AUDIT REPORT

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.

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

Independence

In conducting our audit, we complied with applicable independence requirements of the Corporations Act 2001.

Auditor’s opinion

In our opinion:

a 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 consolidated entity’s financial position as at 30 June 2009 and of their performance for the year ended on that date; and
ii complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

Report on the Remuneration Report

We have audited the Remuneration Report included in pages 6 to 8 of the directors’ report for the year ended 30 June 2009. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.

Auditor’s opinion

In our opinion the Remuneration Report of Focus Minerals Limited for the year ended 30 June 2009, complies with section 300A of the Corporations Act 2001.

==> picture [268 x 31] intentionally omitted <==

GRANT THORNTON (WA) PARTNERSHIP Chartered Accountants

==> picture [108 x 47] intentionally omitted <==

P W Warr Partner – Audit & Assurance Services

Perth, 14 September 2009

Page 52

Focus Minerals Ltd – Financial Report 2009

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 10 September 2009.

SPREAD OF HOLDERS

Spread of Holdings 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 - and over Total Number of Holders	Shareholders 90 128 467 3,138 2,404
	6,227

Number of shareholders holding less than a marketable parcel:

924 shareholders each hold less than 16,130 ordinary shares.

SUBSTANTIAL SHAREHOLDERS

At 30 June 2009 the substantial shareholder disclosed to the Company was:

Registered Holder	Beneficial Holder/s	Number of shares	Percentage of Issued Shares
HSBC Custody Nominees	Baker Steel Capital Managers	265,000,000	10.01%
(Australia) Ltd &	LLP
National Nominees Ltd

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 2,646,143,210 ordinary shares.

Page 53

Focus Minerals Ltd – Financial Report 2009

ADDITIONAL INFORMATION

TWENTY LARGEST SHAREHOLDERS OF EACH CLASS OF QUOTED SECURITIES ORDINARY FULLY PAID SHARES AT 10 SEPTEMBER 2009

No.
Shareholder Name
1
ANZ Nominees Limited – (Cash Income A/C)
2
National Nominees Limited
3
HSBC Custody Nominees (Australia) Limited
4
HSBC Custody Nominees (Australia) Limited – GSCO ECA
5
Mr Gul Chandiram Mahtani + Mr Aveen Gul Mahtani + Mrs Manjit Kaur
6
Citicorp Nominees Pty Limited
7
Matador Mining Pty Ltd
8
Nefco Nominees Pty Ltd
9
Berne No 132 Nominees Pty Ltd (376804 A/c)
10
Dr Salim Cassim
11
Surfboard Pty Ltd – (ARW Super Fund No. 1 A/C)
12
Comsec Nominees Pty Limited
13
Ramsa Pty Ltd – (The Bailey Superfund A/C)
14
Detail Nominees Pty Ltd (Settle A/c)
15
Ms Yong Mei Tan
16
Ramsa Pty Ltd – (The Bailey Superfund A/C)
17
Peter Erman Pty Limited – (Superannuation Fund A/C)
18
Broadarrow Goldmines Pty Ltd
19
Paticoa Nominees Pty Ltd
20
Mr GCB Davies & Mrs CA Davies ( The Davies Super Fund A/c)

Number of Shares
Percentage of
Capital
319,582,502
12.06%
252,220,000
9.52%
193,354,500
7.31%
70,000,000
2.65%
64,480,000
2.44%
60,632,231
2.29%
59,204,515
2.24%
38,279,468
1.45%
36,400,000
1.38%
26,651,162
1.01%
21,029,115
0.79%
16,431,472
0.62%
14,813,636
0.56%
13,000,000
0.49%
12,690,000
0.49%
12,200,000
0.46%
12,000,000
0.45%
11,644,332
0.44%
10,117,218
0.38%
9,500,000
0.36%

1,254,230,151
47.40%

HOLDERS OF SECURITIES OF AN UNQUOTED CLASS	HOLDERS OF SECURITIES OF AN UNQUOTED CLASS
OPTIONS
Option Holder Name	Options Expiring	Options Expiring	Options Expiring	Options Expiring
	6/12/2009	30/11/2010	30/4/2010	30/4/2011
Broadarrow Goldmines Pty Ltd	3,000,000	-		-
Catherine Hobbs	3,000,000	-		-
Jaguar Enterprises Pty Ltd	210,000	-		-
Susan Ruth Panza	210,000	-		-
Azure Capital Pty Ltd	-	-		-
Peter Arthur Williams	-	6,950,000		-
Charles McCormick	-	2,900,000		-
Ludger Kohmascher			10,000,000	10,000,000
Investec Bank (Australia) Limited	-	-		40,000,000
	6,420,000	9,850,000	10,000,000	50,000,000

Page 54

Focus Minerals Ltd – Financial Report 2009

ADDITIONAL INFORMATION

Table of Departures and Explanations (from the Recommendations of the ASX Corporate Governance Council)

During the reporting period from 1 July 2008 to 30 June 2009, the Company has complied with each of the eight Corporate Governance principles and corresponding Best Practice Recommendations as published by ASX Corporate Governance Council and as detailed in the Company’s Corporate Governance Statement. In regard to the following matters the Company departed from those principles and recommendations:

*“Recommendation” Ref* *(“Principle No” Ref followed* *By Recommendation Ref)*	*Departure*	*Explanation*
2.2	The Chairman should be an independent director	The independent Chairman has assumed a limited executive role, limited to corporate development and investor relations. The role is a temporary appointment to assist executive management in accelerating the development of the Group’s mining prospects.
2.4	A separate Nomination Committee has not been formed.	The board comprises three members, each of whom have valuable contributions to make in fulfilling the role of a nomination committee member. A director will excuse himself where there is a personal interest or conflict.
8.1	There has been no formal disclosure of the process for performance evaluation of the board, committees, individual directors and key executives. No formal review has been undertaken.	Given the size of the company and the involvement of all directors, a policy has not been required to date. The directors continually monitor, review and discuss performance and implement changes as necessary.

Page 55

Focus Minerals Ltd – Financial Report 2009

ADDITIONAL INFORMATION

INTEREST IN MINING TENEMENTS

Focus Minerals Ltd – 100% interest

M15/365[4 ] M15/662[4 ] M15/711[4 ] M15/1384 M15/770 M15/1760[4 ] P15/2774[4 ] P15/2775[4 ] P15/2943[4 ] P15/2955[4 ] P15/3200*[4 ] P15/3201[4 ]

The Mount M15/30*4	Kangaroo Hills P15/2665	Tindals M15/23	*Coolgardiectd..*** M15/645*	M15/3654 M15/6624
M15/1423	P15/2666	M15/412	M15/646*	M15/711*4
M15/1431	P15/2667	P15/3170*3	M15/647	M15/1384
	P15/2668	P15/3172*3	M15/660	M15/770
Dreadnought M15/958*4	P15/2669 P15/2670	P15/31733 P15/31743	M15/677 M15/725	M15/17604 P15/27744
M15/1114*4		M15/746	M15/1293	P15/2775*4
L15/213	Londonderry P15/4914	P15/4197	M15/1294 M15/1433	P15/29434 P15/29554
Boundary M15/411	P15/4915 P15/4922	Widgiemooltha P15/4906	M15/1434 M15/1484	P15/3200*4 P15/32014
	P15/4923	P15/4907	P15/2474
Burbanks	P15/4924	P15/4473	P15/3118	Rainbow
P15/4054	P15/4925	P15/4477	P15/3462	P15/2869*4
P15/4347		P15/4478	P15/3484	P15/2919*4
	Lord Bob		P15/3543	P15/2920*4
Almina	M15/631	Bonnievale	P15/3630
P15/4920	P15/2987	M15/277	P15/3699	Tycho
P15/4921	P15/2988	M15/595	P15/3700	M15/40
	P15/4957	M15/877	P15/3721	M15/148
Big Red P15/4919	P15/4918 P15/4908	P15/2741 P15/2890	P15/3849 P15/4126	P15/2886 P15/3235*4
	P15/5042	P15/2921	L15/27	P15/3325
Central Gibralter	M15/1789	P15/3000	L15/28	P15/3394
M15/384	M15/1253	P15/3011	L15/34
M15/1422		P15/3012	L15/42
	Malaga	P15/4942	L15/51
Garden Gully	M15/515	P15/4910	L15/59
M15/675			L15/63
	Nepean	Camel Paddock	L15/77
Golden Web	M15/576	P15/4131	L15/78
M15/761	L15/179	P15/4132	L15/88
M15/791	M15/709	P15/4133	L15/90
M15/871	P15/5026	P15/4134	L15/95
M15/1153	P15/5027	P15/4135	L15/96
	P15/5028	P15/4136	L15/114
Norris	P15/5029	P15/4137	L15/116
M15/391	P15/5030	P15/4138	L15/119
M15/632	P15/5031	P15/4139	L15/122
M15/1302	P15/5032	P15/4140	L15/123
M15/1115	P15/5033	P14/4141	L15/126
M15/1374	P15/5035	P15/4142	L15/127
M15/1778			L15/130
P15/4960	North Miriam	Coolgardie	L15/161
P15/4961	M15/385	M15/73	L15/164
P15/4954		M15/121	L15/177
P15/4958	Sala	M15/150	L15/186
P15/4959	P15/3426*	M15/151	L15/200
P15/5044	P15/3252	M15/152	L15/211
L15/71	P15/3253	M15/153	L15/283
L15/168	P15/5157	M15/154
L15/169	P15/5043	M15/156	Gunga
L15/170		M15/176	P15/2870
L15/171	Buldania	M15/299	P15/2871
L15/172	M63/177*4	M15/410	P15/2872
L15/173	P63/1503*4	M15/491	P15/2873
L15/174		M15/545	P15/2874
L15/175		M15/594
L15/193		M15/630
L15/194		M15/636	Mistery Mint

Page 56

Focus Minerals Ltd – Financial Report 2009

ADDITIONAL INFORMATION

INTEREST IN MINING TENEMENTS contd…

All of the above tenements are situated in Western Australia. Group Entity percentage interest is 100% unless otherwise stated.

Abbreviations:

[1] = Contractual interest in part only [2] = 95% only and subject to royalty payment [3] = 90% only [4] = Subject to royalty payment

Tenement Abbreviations:

E = Exploration Licence P = Prospecting Licence M = Mining Lease L = Miscellaneous Licence

Coolgardie Gold Project

ROYALTY AGREEMENTS

The Parent Entity has entered into seven deeds of assignment for royalty agreements relating to the Coolgardie Gold Project. The material terms of these royalty agreements are set out in the table below:

Tenements Royalty M15/645 $1.00/tonne crushed and treated M15/645 $1.50/tonne mined (after 85,000 tonnes mined) M15/646 $0.25/tonne mined and treated (after 2,500,000 tonnes of ore have been mined and treated) M15/660 P15/3118 P15/3235 P15/3630 P15/3699 P15/3700 MLA15/928 MLA15/1051 MLA15/1262 MLA15/1277 MLA15/1278 P/153462 $1.00/tonne mined and treated M15/646 (portion of) 2% of all future gold produced from area of M15/270, M15/173, M15/297 and GML 15/6507 (which converted into part of M15/646)

Page 57

Focus Minerals Ltd – Financial Report 2009

ADDITIONAL INFORMATION

ROYALTY AGREEMENTS contd…

*Tenements*	*Royalty*
P15/2617	2.50% of the value of the sales received or deemed to have been received by The Parent Entity for
P15/2774	the sale of gold, silver, other minerals, ores, concentrates or other product mined from the tenements
P15/2775	(royalty is payable within 30 days of the expiry of the proceeding calendar quarter after the
P15/2943	commencement of production from the tenements).
P15/2955
P15/3200
P15/3201
M15/365
M5/662
M15/711
M15/1384
MLA15/769
MLA15/770
MLA15/852
MLA15/857
MLA15/981
GML15/6897
P15/2869	0.50% of the value of sales received or deemed to have been received by The Parent Entity for the
P15/2919	sale of gold, silver, other minerals, ores, concentrates or other product mined from the tenements
P15/2920	(royalty is payable within 30 days of the expiry of the proceeding calendar quarter after the
MLA15/781	commencement of production from the tenements).
MLA15/827

Page 58

AI assistant

FOCUS MINERALS LTD — Annual Report 2009

64932_rns_2009-09-14_9482d610-2dc2-4d75-8e20-952ed2f05948.pdf

FOCUS MINERALS LTD

Annual Financial Report

CONTENTS

ABN 56 005 470 799

Directors

Registered and Head Office

Share Register Computershare Investor Services Pty Ltd

Site Office

Auditors

Solicitors

Bank of Western Australia Limited

DIRECTORS’ REPORT

Directors

Names, qualifications, experience and special responsibilities

Donald Taig – Non - Executive Chairman

Other directorships: Nil

Phillip Lockyer – Non-Executive Director

Christopher Hendricks – Non-Executive Director

Other directorships: Nil

Peter Williams – Executive Director

Other directorships: Nil

Company Secretary

K Jon Grygorcewicz

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

Share Options

DIRECTORS’ REPORT contd…

Principal Activities

Review of Operations

Mining

Exploration & Resource Development

DIRECTORS’ REPORT contd…

Corporate

Operating result for the year

Significant changes in the state of affairs

Significant events after balance date

Likely developments and expected results

DIRECTORS’ REPORT contd…

Environmental legislation

Indemnification and Insurance of Directors and Officers

REMUNERATION REPORT (AUDITED)

Members of the Remuneration Committee during the year were:

Compensation of Key Management Personnel

Remuneration structure

Remuneration committee

Non-executive director remuneration

DIRECTORS’ REPORT contd…

Senior executive and executive director remuneration

Fixed Remuneration

Performance Based Remuneration

Contract for Services

Details of Key Management Personnel

(i) Directors

Mr Williams resigned as Managing Director on 23 March 2009 and was appointed Chief Operating Officer from that date. Mr Williams’ remuneration whilst an executive director is disclosed above.

Mr Baird was appointed as Chief Operating Officer on 12 January 2009. He was subsequently appointed as Chief Executive Officer on 23 March 2009.

Mr Williams was an executive director until his resignation on 23 March 2009. Remuneration while in his position as executive director is included in Table 1 above.

Directors’ Meetings

Auditor Independence and Non-Audit Services

Non-Audit Services

CORPORATE GOVERNANCE STATEMENT

Structure of the Board

Nomination Committee

CORPORATE GOVERNANCE STATEMENT contd…

Audit Committee

Code of Conduct

Share Trading Policy

INCOME STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

BALANCE SHEETS AS AT 30 JUNE 2009

STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2009

CASH FLOW STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES

(a) Basis of Preparation

(b) Reporting Basis and Conventions

(c) Basis of Consolidation

(d)

Business Combinations

(e)

Revenue Recognition

FOCUS MINERALS LTD Annual Report 2009