FOCUS MINERALS LTD — Annual Report 2012

Sep 27, 2012

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ASX ANNOUNCEMENT

28 September 2012

FULL-YEAR GROSS PROFIT DOUBLES AFTER LAVERTON OPERATIONS TURN TO PROFIT; GOLD PRODUCTION RISES

Highlights

• Gross Profit doubles to $55.6M (FY11: $27.7M)

• Revenue increases 151% to record $258.3M (FY11: $102.8M)

• Gold production up 143% to 176,632oz[i] (FY11: 72,830oz)

• Sustainable cost savings in place at Coolgardie and Laverton operations

• Laverton turns to profit in 9 months since acquisition

• New leadership team put in place to drive ongoing growth

• 10-year Life of Mine Plan developed for group operations

Focus Minerals Ltd. (ASX: FML), a leading gold producer and explorer with operations in the Eastern Goldfields region of Western Australia, is pleased to announce a doubling of full-year Gross Profit to $55.6 million, up from $27.7 million in the previous corresponding period, as the company benefited from turning around the performance of its recently acquired Laverton gold operations.

The group’s Laverton operations, which comprise large scale open pit mining operations, was acquired by Focus in October 2011 after the all-scrip takeover of Crescent Gold. Focus then injected $17 million of its own cash to open up three new operating areas at Laverton, boosting production to more than 500,000t per quarter from 200,000t per quarter.

The Laverton operations posted a net profit of $3.8 million in the nine month period since being acquired by Focus, turning from a loss of $51 million in FY2011. Since taking control, Focus has reduced operating costs by 23% at Laverton to $1,203/oz from $1,554/oz.

“We’ve managed to turnaround the Laverton operations in a short time frame,” said Focus CEO Campbell Baird. Laverton produced 49,092oz in the second half of FY2012. The strong production rate resulted from higher feed grade (up 5% to 1.89g/t) and improved mine planning.

Laverton operations helped drive Focus’ full-year gold output 143% higher to 176,632oz at a cash cost of $1,222/oz.

Full-year revenue increased to $258.3 million, up from $102.8 million a year earlier. Net profit after tax was $6.8 million, down from $7.6 million in FY2011, reflecting increased levels of mine development across Coolgardie and Laverton.

“We’ve had to invest heavily in the business both at the newly acquired Laverton operations and in Coolgardie where we have developed two new mines during the year. The goal has been to achieve a scale of production where we can leverage our margin to the gold price going forward,” Mr Baird said.

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Focus’ Coolgardie operation produced 89,959oz at a cash cost of $1,194/oz in FY2012. On a like-for-like basis in the June Quarter, gold production in Coolgardie increased 37%.

During the year, Focus ramped up two new production centres at Coolgardie: the Tindals Open Pits and The Mount underground. Focus is currently starting its new Greenfields open pit centre, which will provide the base load for the group’s Three Mile Hill processing plant for the next two years. Greenfields has a reserve of 1.0Mt at 1.7g/t.

Consolidated Results Summary	FY2012	FY2011	% Change
Goldproduced	176,632oz 72,830oz 143%
Revenue	$258.3M	$102.8M	151%
EBITDA	$39.6M	$22.7M	74%
Normalised NPAT	$10.4M	$6.2M	37%
Non recurringcosts – Takeover costs	$(3.5)M	-	-
Net Profit After Tax (NPAT)	$6.8M	$7.6M	(10)%
Net Operating cash flow	$56.0	$30.8M	81%

The Focus Group has developed a new 10-year Life of Mine plan which is based purely on the existing 4.3Moz[i] Mineral Resource base across Coolgardie and Laverton.

“The life of mine plan demonstrates our ability to sustain current production over 10 years and there is further demonstrable upside on exploration success,” said Mr Baird.

Circa $225M Placement to Shandong Gold

Subsequent to the end of FY2012, Focus Minerals announced, that it has entered in to a Share Subscription Deed with Shandong Gold International Mining Corporation Limited (“Shandong Gold”), under which Shandong Gold has agreed to subscribe for new fully paid ordinary Focus shares to raise circa $225 million (see ASX release dated September 20, 2012). The Board is recommending the Placement in the absence of a superior proposal and subject to an independent expert opining that the terms of the Placement are reasonable

The investment by Shandong Gold will enable Focus to pursue organic and non-organic growth opportunities, and represents the start of a long-term, mutually beneficial relationship which will allow Focus to unlock the potential of its large tenement holdings. Only 4% of Focus’ significant land holdings have so far been explored.

Focus’ large landholding in the two major gold precincts of Coolgardie and Laverton provide the potential for the Company to significantly grow its resource base through targeted exploration. “To capitalise on this opportunity for shareholders we clearly need capital to expand reserves and develop more resources hence the strategic placement opportunity we are putting before shareholders,” said Mr Baird.

Primary areas of exploration focus for the group will be Laverton and Burtville, the Greater Coolgardie area and the Treasure Island Gold Project on the Boulder-Lefroy Fault. Mr Baird said the group’s focus in FY2013 will be to deliver consistent and reducing cash costs with attention to operational improvements and efficiencies and stable production from existing mining centres. More specifically, the Company will develop the low strip ratio Burtville mining centre at Laverton to create a third major project area and transition the Coolgardie base load from the Tindals Underground mine to the Greenfields open cut.

Campbell Baird Chief Executive Officer Focus Minerals Ltd Ph: +61 8 9215 7888

Neil Le Febvre Investor Relations Focus Minerals Ltd Ph: +61 8 9215 7888

John Hurst / Kate Prince Media Relations Cannings Corporate Ph: +61 2 8284 9990

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Background of Focus:

Focus Minerals is a leading Australian gold producer. In FY12, the Focus Group delivered a 143% increase in gold production to 176,632oz. Focus operates two significant production centres in Western Australia’s Eastern Goldfields. The company is the largest landholder in the Coolgardie Gold Belt, 35km west of ‘Super Pit’ in Kalgoorlie, where it runs The Tindals Mining Centre underground and open pit operations, and The Mount underground, 85km to the south. Gold is processed at Focus’ 1.2Mtpa processing plant, Three Mile Hill, which is adjacent to the town of Coolgardie. 250km to the northeast Focus also operates, the Laverton Gold Project which comprises a significant portfolio of large scale open pit mines, with ore being processed under an OPA at the nearby Barrick Granny Smith mill.

Mineral Resource Tables

	Tonnes '000t Grade Au g/t Ounces Measured Resources	Tonnes '000t Grade Au g/t Ounces Measured Resources	Tonnes '000t Grade Au g/t Ounces Measured Resources	Tonnes '000t Grade Au g/t Ounces Indicated Resources	Tonnes '000t Grade Au g/t Ounces Indicated Resources	Tonnes '000t Grade Au g/t Ounces Indicated Resources	Tonnes '000t Grade Au g/t Ounces Inferred Resources	Tonnes '000t Grade Au g/t Ounces Inferred Resources	Tonnes '000t Grade Au g/t Ounces Inferred Resources	Tonnes '000t Grade Au g/t Ounces Total Resources	Tonnes '000t Grade Au g/t Ounces Total Resources	Tonnes '000t Grade Au g/t Ounces Total Resources
COOLGARDIEGOLD PROJECT
Tindals Project Total	739	4.7	112,000	9,143	2.6	766,000	3,354	2.8	298,000	13,236	2.8	1,176,000
Mount Project							2,090	5.5	370,000	2,090	5.5	370,000
Lindsays Project				4,350	1.7	238,000	3,562	2.0	233,000	7,912	1.8	471,000
Three Mile Hill Project				1,386	1.9	86,000	138	3.0	13,000	1,524	2.0	99,000
Norris Project							1,870	2.1	124,000	1,870	2.1	124,000
Total Coolgardie	739	4.7 112,000		14,879 2.3 1,090,000			11,014 2.9 1,038,000			26,632 2.6 2,240,000
LAVERTON GOLD PROJECT
Laverton-UG				2,037	6.5	426,000	619	7.1	141,000	2,656	6.6	567,000
Laverton - Surface	1,619	2.2	113,000	12,093	2.0	759,000	10,171	1.8	589,000	23,883	1.9	1,461,000
Total Laverton	1,619	2.2 113,000		14,130 2.6 1,185,000			10,790 2.1 730,000			26,539 2.4 2,028,000
TOTAL COMBINED RESOURCES	2,358	3.0 225,000		29,009 2.4 2,275,000			21,804 2.5 1,768,000			53,171 2.5 4,268,000
Coolgardie Mineral Resource (as at 30 September 2011)
Laverton Mineral Resource (as at 30 June 2011)

Mineral Resources for the Laverton Gold Project are owned by Focus Minerals (Laverton) Limited. Focus owns 81.57% of this subsidiary company.

Competent Person’s Statement

The information in this announcement that relates to Exploration Results and Minerals Resources is based on information compiled by Dr Garry Adams who is a member of the Australian Institute of Geoscientists. Dr Adams is employed by Focus Minerals and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Dr Adams consents to the inclusion in this announcement of the matters based on the information compiled by him in the form and context in which it appears.

i Includes contribution of Focus Minerals (Laverton) Limited @ 81.57% holding from 5 October 2011.

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FOCUS MINERALS LTD

(ABN 56 005 470 799)

Annual Financial Report

For the year ended 30 June 2012

CONTENTS

	Page
Corporate Information	1
Directors’ Report	2 - 13
Auditor’s Independence Declaration	14
Statement of Comprehensive Income	15
Statement of Financial Position	16
Statement of Changes in Equity	17
Statement of Cash Flows	18
Notes to Financial Statements	19 - 58
Director’s Declaration	59
Independent Audit Report	60

Focus Minerals Ltd – Financial Report 2012

CORPORATE INFORMATION

ABN 56 005 470 799

DIRECTORS

Donald Taig Phillip Lockyer Gerry Fahey Bruce McComish

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

COMPANY SECRETARY

Paul Fromson

REGISTERED AND HEAD OFFICE

Level 30 St Martin’s Tower 44 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 REGISTRY

Computershare Investor Services Pty Ltd Level 2 / Reserve Bank Building 45 St George’s Terrace Perth WA 600

AUDITOR

Grant Thornton Audit Pty Ltd Level 1, 10 Kings Park Road West Perth WA 6005

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

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

BANKERS

Investec Bank (Australia) Limited 2 Chifley Square Sydney NSW 2000

SOLICITOR

Mallesons Stephen Jacques Level 10, 152 St Georges Terrace Perth WA 6000

Bank of Western Australia Limited 108 St George’s Terrace Perth WA 6000

STOCK EXCHANGE LISTING

Australian Stock Exchange (ASX) ASX Symbol: FML

National Australian Bank 100 St George’s Terrace Perth WA 600

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

DIRECTORS’ REPORT

The Directors present their report on the Group comprising of Focus Minerals Limited – the parent company (referred to as “the Company”) and its subsidiaries (together referred to as ‘the Group’ or ‘Focus’) at the end of, or during the financial year ended 30 June 2012.

DIRECTORS

The directors of the Company at any time during or since the end of the financial year are:

Donald Taig (Chairman, Independent Non-Executive) Phillip Lockyer (Director, Independent Non-Executive) Gerry Fahey (Director, Independent Non-Executive) Bruce McComish (Director, Independent Non-Executive)

Details of directors’ qualifications, experience, special responsibilities and details of directorships of other listed companies can be found on pages 2 to 3.

INFORMATION ON DIRECTORS, OFFICERS AND SENIOR MANAGEMENT

Directors	Designation & Independence Status	Experience, Expertise & Qualifications	Directorships of other ASX listed companies during the last three years	Special responsibilities during **the year **
Donald Taig Appointed on 21 March 2003	Chairman Independent, Non-Executive	Qualifications: B.Com, FAICD, FCPA Mr Taig is a Fellow of both the Australian Institute of Company Directors and the Australian Society of Certified Practicing Accountants. Mr Taig gained 11 years of experience within CRA Ltd.’s mining businesses and was a director of 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; Chief Executive Officer of Bunge Cereal Foods; Managing Director of Chiquita Brands South Pacific and has been a director of a number of other public and private companies in diverse industries.	•Nil	•Member of the Audit & Risk Committee •Member of the Remuneration Committee
Phillip Lockyer Appointed on 7 December 2005	Director Independent Non-Executive	Qualifications: AWASM, DipMetal, MSC Mr Lockyer is a mining engineer and metallurgist with more than 40 years technical and management experience in nickel and gold operations. His career includes 20 years with WMC Limited in Kambalda in various roles including General Manager of Western Australian operations. In addition he has held a number of other senior roles including Director and General Manager of Operations for Resolute Ltd, and Director of Operations & Projects for Dominion Mining Ltd. He is currently chairman of the Minerals and Energy Research Foundation.	•Non-Executive Director of Western Dessert Areas Limited (Appointed June 2010, ongoing) •Non-Executive Director of Swick Mining Services Limited (Appointed June 2010, ongoing) • 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 )	• Chairman of the Remuneration Committee • Member of the Technical and Operations Committee

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

Gerry Fahey Appointed on 18 April 2011	Director Independent Non-executive	Qualifications: M.AIG, M.AusIMN Mr Fahey is a geologist with 35 years’ experience. He was chief geologist for Delta Gold between 1992-2002 where he gained extensive resource, mine development and feasibility study experience on projects including Kanowna Belle and Sunrise in Australia and Ngezi Platinum in Zimbabwe. Mr Fahey began his career as a mine geologist in the Irish base-metals industry on projects such as Tynagh, Avoca, and Tara Mines (Navan) owned by Noranda and later Outokumpu. On migrating to Australia in 1988, he gained further operational experience in Western Australia and the Northern Territory (Whim Creek and Dominion Mining), prior to joining Delta Gold. He formed FinOre Mining Consultants in 2005, which merged with CSA in 2006. Mr Fahey is a member of the Joint Ore Reserve Committee (JORC) and a Board Member (Federal Councillor) for the Australian Institute of Geoscientists (AIG).	Nil	• Chairman of the Technical and Operations Committee
Bruce McComish – Appointed on 18 April 2011	Director Independent Non-executive	Qualifications: BCA(Hons), FCA, FCPA Mr McComish is the former chairman of stockbroking firm BBY. He has held senior management positions for a number of Australian and international companies including the National Australia Bank, where he served as Chief Financial Officer from 1994 to 1998, and North Limited, where he was the executive general manager of corporate affairs from 1992-1994. Mr McComish worked for Unilever Plc for 18 years in senior financial positions around the world. He holds a Bachelor of Commerce and Administration from Victoria University of Wellington and is a QualifiedAccountant.	•Former Deputy Chairman of Living and Leisure Group (resigned 2012) •Former Non-executive director of Signature Capital Investments Ltd (resigned 2012)	Chairman of the Audit and Business Risk Committee

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

Senior Management

Campbell Baird - Chief Executive Officer

Qualifications: B.Eng (Mining), Masters in International Finance

Appointed: 14 January 2009

Mr Baird is Chief Executive Officer of Focus Minerals. He has been a part of the team who, over the past three years, have transformed Focus from explorer to become a major gold producer. Prior to joining Focus, he was General Manager of Operations for four years at Altona Mining where he assisted in the development of the Kylyahti Copper Mine in Finland. He started his career at Western Mining Corporation at St Ives, then joined Plutonic at Mount Morgans (Laverton), he worked for North Limited at both North Parkes and at the Iron Ore Company of Canada, before joining SRK Consulting in 2000 where he spent 5 years working on some major global mining projects that are now under construction. These include the giant Oyu Tolgoi block cave copper mine in Mongolia, the argyle diamond mine block cave in Australia and the Goro Laterite nickel project in new Calendonia. Campbell has a Bachelor of Engineering (Mining) from the University of New South Wales and a Masters of International Finance from Curtin University.

Mark Hine - Chief Operating Officer

Qualifications: B.Eng (Mining) Appointed: 1 December 2011

Mr Hine was appointed to the role of Chief Operating Officer, for the Focus Minerals group in December 2011. Prior to that Mark commenced in May 2011 as the Chief Operating Officer for Focus Minerals (Laverton) Ltd – formerly Crescent Gold Ltd. Mark is a mining engineer who has more than 30 years’ operating experience. Most recently, he held positions of CEO Golden West Resources Ltd, Executive General Manager Mining at Macmahon Contractors Pty Ltd and General Manager for Pasminco Ltd at the Broken Hill / Elura Mines. He joined Crescent Gold as Chief Operating Officer in April 2011, before being appointed to the role across the group.

Paul Fromson – Chief Financial Officer and Company Secretary

Qualifications B. Com, CPA, ACIS, AICD Appointed 30 April 2012

Mr Fromson is a Certified Practising Accountant, a member of the Australian Institute of Company Directors and a Chartered Company Secretary with a broad range of finance, accounting, taxation and commercial experience. Since 1986 Mr. Fromson has held a number of senior finance roles including board positions and has over eighteen years’ experience with ASX listed resource companies including senior positions with a number of gold exploration companies. He has also worked for one of the previous part owners of the Boddington Gold Mine as their resident representative. Outside of the resources industry, Mr Fromson founded and managed his own successful taxation practice and was also a director of the Makit Hardware chain co-operative for four years. Mr Fromson’s most recent role was Chief Financial Officer and Company Secretary for an ASX listed company where he played a key role in several significant capital raisings and joint ventures with two large Chinese groups.

The details of the relevant interest in the Company of each director and officer are outlined in Note 24 to the financial statements.

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	11,963,259	-
Phillip Lockyer	594,523	-
Gerry Fahey	-	-
Bruce McComish	-	-

Capital Structure

Ordinary shares

As at the date of this report, the Company had on issue 4,320,773,701 fully paid ordinary shares.

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

Share Options

Options Issued

There were no options issued in the 2012 financial year. In the prior year 33,500,000 share options were granted to senior management of the company in accordance with the Group’s Long term Incentive Scheme. Vesting criteria of the Scheme is subject to the Company achieving a Total Shareholder Return for the 12 month period prior to the applicable Vesting Date of at least within the 2nd quartile of Total Shareholder Returns for the Comparable Entities. Comparable Entities have been determined to be 12 gold producing companies listed on established stock exchanges and with operations predominately located within the Western Australian Eastern Goldfields region.

Total Shareholder Return is defined as the change in capital value per share of an entity over a 12 month period, plus dividends per share, expressed as a plus or minus percentage of their opening value. The opening value date for the above options is 1 January 2011.

Subject to achieving the vesting criteria, the above options will vest on 31 December 2012.

Options Exercised

There were no options exercised during the financial year.

Options Lapsed

During the year a total of 10,000,000 options to acquire shares at an exercise price of 12.3 cents, 6,923,077 options to acquire shares at an exercise price of 7.5 cents and 6,923,077 options to acquire shares at an exercise price of 7.8 cents lapsed on cessation of employment.

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

Issuing Entity Focus Minerals Ltd Total Options on issue	Number of Options Exercise Price Cents per Share Expiry Date 14,116,923 14,116,923 23,500,000 7.50 7.80 12.30 31/12/2012 31/12/2012 30/06/2014 51,733,846

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 were no significant changes in the nature of those activities during the year. The company did however expand its operations via the acquisition of Focus Minerals (Laverton) Ltd (formerly Crescent Gold Ltd). The operations of this entity are centred around Laverton Western Australian and are primarily in the gold sector.

Review of Operations

Highlights of operations during the period ended 30 June 2012 are as follows:

Mining

Coolgardie Operations

The Coolgardie operation has undergone a major transformation through FY2012 reducing its reliance on the Tindals Underground Mine and low grade stock piles, to establish two new mining centres: The Mount underground and the Tindals Open Pits, and increase total gold production by 24%.

On a like for like basis for the June Quarter, production in Coolgardie was up 37% as the new operations ramped up through the course of the year to now account for nearly 60% of Coolgardie’s monthly mined tonnes.

The new Tindals Open pits have performed exceptionally well with the Empress pit being mined to completion through the course of the year, and both the Big Blow and Dreadnought pits continuing to develop. The Dreadnought pit in particular is proving to be an exciting mining centre, with the discovery of a number of new structures running through the project area and the business currently evaluating the opportunities for a far larger pit development. Contribution from surface mining at Tindals will continue to increase as the business continues to expand the current Tindals surface Mineral Resource of 10Mt @ 2.3g/t.

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

Laverton Operations

The Laverton operations were acquired as the result of the acquisition of an 81.57% interest in Focus Minerals (Laverton) Ltd – formerly Crescent Gold Ltd. The operations consisted of a number of open pit operations feeding ore to the nearby Barrick Granny Smith mill under an ore purchase agreement.

Through this financial year Focus has injected $17M in working capital to transform the operating fortunes of Laverton and deliver 86,673oz of gold for the financial year. The transformation of the operations was all funded internally from Focus Group cash balances and saw a number of operating changes undertaken.

Early in the calendar year a significant development program was undertaken to ensure steady mill feed for the remainder of the year. Toward the middle of the year the company was able to complete the development work and progressively reduce its mining fleet. This has seen the Laverton operations simplified from four active pits and four diggers to currently one pit and two diggers. The significant spend on development work and subsequent reduction in mining fleet enabled the company to achieve a significant turnaround in cash costs at Laverton.

Exploration & Resource Development

During the period the Group spent a total of $20.1 million (2011: $23.9 million) on exploration activities.

Treasure Island Gold Project - Diamond and aircore drilling at Treasure Island has identified two major mineralised structures running through the project area; one adjacent to Treasure Island, the second approximately 3km to the east across the salt lake.

Greater Coolgardie – Exploration over the Greater Coolgardie area has seen a strong development pipeline beginning to emerge outside the Tindals Mining Centre with Focus achieving exploration success at the Bayleys North, Patricia Jean and CNX deposits which are all within a 10km distance of the Three Mile Hill Plant.

Tindals Mining Centre - Drilling & technical work through FY 2012 has enabled Focus to bring the Greenfields pit back into production with a major cutback planned for the December Quarter 2012.

Laverton - Exploration over the newly acquired Laverton area focused on the Apollo deposit on the Chatterbox shear where Focus achieved a 140% increase in Mineral Resources.

Corporate

The company completed its takeover bid for Focus Minerals (Laverton) Ltd – formerly Crescent Gold Ltd – and currently holds 81.57% of the company. There were 880,258,270 Focus Minerals Ltd shares issued to acquire 81.57% of the shares and all the outstanding options in Focus Minerals (Laverton) Ltd.

There were no other issues of capital during the year. A number of options lapsed due to cessation of employment of a number of staff.

At period end the Group had a debt of $8m. During the financial year the company arranged a $10m facility with Investec Bank and drew down $8m to assist with funding development costs at its newly acquired Laverton operations.

At period end the Group had 4,000 ounces of gold forward selling.

Net cashflow generated from operations totalled $56.0 million (2011: $30.3 million).

Operating result for the year

Consolidated Net Profit for the year was $6.844 million (2011:$7.645 million). Consolidated Net Profit attributable to the owners of the Company was $6.151 million (2011: $7.645 million).

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:

the consolidated entity to balance date:
Issued shares at 30 June 2011 Issued during the period Shares issued to acquire shares and options in Crescent Gold Ltd pursuant to a takeover Issued shares at 30 June 2012	No of Shares $’000 3,440,515,431 145,010 880,258,270 58,900
	4,320,773,701 203,910

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

Significant events after balance date

Proposed Placement to Shandong Gold International Mining Corporation Ltd.

On 20 September 2012 the company issued an announcement for a proposed placement of shares that would result in Shandong Gold owning up to 51% in the Company. The key points of the announcement are reproduced as follows:

“ Focus Minerals Limited (“Focus”) [ASX: FML], an Australian gold producer and explorer, is pleased to announce that it has entered in to a Share Subscription Deed with Shandong Gold International Mining Corporation Ltd (“Shandong Gold”), under which Shandong Gold has agreed to subscribe for new fully paid ordinary Focus shares to raise approximately $225.0 million.

Shandong Gold, a subsidiary of one of China’s three largest gold producers by production, will subscribe for approximately 4.55 billion new fully paid ordinary Focus shares (“New Shares”) at 5 cents per New Share, to raise $225 million (“Placement”). The Placement represents a premium of:

• 13.6% to the closing price of Focus shares of 4.4 cents per share on 19 September 2012; and

• 28% to the 60 day VWAP of 3.9 cents per share for the period ending 19 September 2012.”

The placement will require shareholder approval and the unanimous recommendation of the Board based on an independent report that the transaction is reasonable and there being no superior transaction. The AGM is scheduled for 30 November to allow for sufficient time for the independent experts reports to be completed and a detailed Explanatory Memorandum to be compiled.

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

The directors intend to continue mining operations at the Tindals Mining Centre and the Mount Mine. The Company will also progressively assist Focus Minerals (Laverton) Ltd (81.57% holding) to meet its production targets and financial budgets and expand exploration activities at Laverton. The Company will pursue opportunities to acquire 100% of the issued capital of Focus Minerals (Laverton) Ltd.

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, Greater Coolgardie Area and Laverton to increase existing gold reserves and expand near term production targets. Exploration activities will continue at the greenfields Lake Cowan - Treasure Island Gold Project.

Environmental Regulations

The Group’s operations hold licences issued by the relevant regulatory authorities. These licences specify the limits and regulate the management associated with the operations of the Company. At the date of this report the Company is not aware of any breach of those environmental regulations which apply to the Group’s operations. The Group continues to comply with its specified 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.

REMUNERATION REPORT (AUDITED)

This report, prepared in accordance with the Corporations Act 2001, contains detailed information regarding the remuneration arrangements for the Directors and Senior Executives who are the ‘key management personnel’ (KMP) of Focus Minerals Ltd (“Company”) and the consolidated entity. The Board, in consultation with industry and proxy representatives, formed the view that the three most senior people in the organisation, being the Chief Executive Officer (CEO), Chief Operating Officer (COO) and the Chief Financial Officer (CFO)/Company Secretary are the only three executives who satisfy the “key management personnel” criteria. The tables disclosing remuneration for this year and comparatives only include these KMP as opposed to the prior year where the requirement was to disclose the five highest paid executives.

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

The KMP for the year ended 30 June 2012 are listed in the table below:

Current Non-executive directors	Current Senior Executives
Donald Taig	Campbell Baird–CEO
Bruce McComish	Mark Hine-COO (Note 1)
Gerry Fahey	Paul Fromson-CFO and Company Secretary (Note 2)
Phil Lockyer
Former Non-executive Directors	Former Senior Executives
Christopher Hendricks – resigned 18 April 2011	Brad Valiukas – former COO – resigned 24 January 2012 (Note 1)
	Jon Grygorcewicz – former CFO and Company Secretary – resigned 30April 2012(note2)

Note 1 – Mr Hine was originally employed as the COO of Focus Minerals (Laverton) Ltd (formerly Crescent Gold Ltd). During the year Focus Minerals Ltd took control of this entity via the acquisition of 81.57% of its issued capital and when Mr Valiukas resigned Mr Hine assumed COO responsibilities for the expanded group.

Note 2 - On 17 April 2012 the company announced the resignation of Mr Grygorcewicz and his replacement Mr Fromson as Chief Financial Officer and Company Secretary. The resignation/appointment took effect from 30 April 2012.

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

Remuneration Objectives

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 expected outcomes of the remuneration structure are:

• retention and motivation of key executives;

• attraction of high quality management to the Company; and

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

Remuneration Committee Established

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 of all the non-executive directors.

Members of the Remuneration Committee during the year were:

• Phillip Lockyer – Committee Chairman

• Donald Taig

• Bruce McComish

• Gerry Fahey

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 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 executive 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, subject to the following section relating to non-executive directors.

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

Non-executive director remuneration

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

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

During the period that Focus Minerals was transitioning from junior explorer to mining and processing, successive Board members have agreed to accept less than the comparable market fee for their work as a director, deciding to support the company during this period by avoiding fixed cost market fees.

We have maintained this approach since moving to a cash flow generating company and have instead, asked the directors to increase their work load through the evolution of Board Committees and the mentoring of one, or more of the executive management team.

Instead of seeking to move directors fees up over time to catch up this component of prior support, the Company introduced a Retirement Allowance in 2011 for the long term service of Director’s, tied solely to their current Director’s Fee at the time of retirement (Fixed Component).

The allowance is as follows:

3 - 5 Years’ Service – 25% of annual fees on retirement

• 5 – 8 Years’ Service – 50% of annual fees on retirement

• 8+ Years’ Service – 100% of annual fees on retirement

When this allowance was introduced, the Remuneration Committee was at pains to ensure the size of the benefit to the individual was not significant enough to the individual’s concerned to influence their judgement on Governance matters, or impair the sound functioning of the Board.

In this Annual Report, the only Directors who could benefit from this allowance are Mr Lockyer and Mr Taig.

The committees of the Board, their Chair and members are as follows:

Committee	Chairman of Committee	Other members
Remuneration and Appointments	Phillip Lockyer	Don Taig, Bruce McComish and Gerry Fahey
OH&S and Risk Management	Bruce McComish	Don Taig
Audit Committee	Bruce McComish	Don Taig
Technical Committee	Gerry Fahey	Phillip Lockyer

In addition, the following members of the key management personnel are mentored in their roles by the Directors as follows:

Role	Director Mentor
C Baird - CEO	Don Taig
M Hine - COO	Phillip Lockyer
P Fromson - CFO	Bruce McComish

The compensation provided to the Directors in these circumstances is based upon an hourly fee which represents the variable nature of the time involved and doesn’t load the corporate overhead with another fixed component. As a result, the components of the Director’s remuneration will vary as to work and time and will be made up of 1) Fixed fee for Board meetings at less than market payments established from comparable published specialist remuneration

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

consultants and 2) a variable component based upon work load and time to chair and contribute to Board Committees and mentoring of the Executive Team.

At present the maximum aggregate remuneration of directors’ fees for non-executive directors is $400,000 per annum of which $230,000 is currently paid to directors as fees.

The remuneration of non-executive directors for the period ended 30 June 2012 is detailed in the remuneration table.

Non-Executive Chairman

In a previous Annual Report the Chairman’s role was categorised as Executive Chairman. The reasoning has been canvassed widely with the auditors, the company’s lawyers and proxy houses. All have agreed that this was misleading and the company has reverted to a more normal description from Corporate Governance principles. The Chairman lives in Victoria and due to the need to let the Executive Team grow and mature in their roles has retained corporate responsibility for any mergers and acquisitions activity contemplated by the company from time to time. His Chairman’s fee is adjusted below market accordingly and replaced where this activity is undertaken, with an hourly amount based upon a full 8 hour day not a component thereof. Accordingly, the Chairman’s remuneration will be up or down in any year based upon the level of this activity. In all instances, the Board is quite satisfied that the Company’s outside advisory costs have been lowered due to Mr Taig’s activity and experience in this area.

Senior executive and executive director remuneration

Remuneration primarily consists of fixed and performance based remuneration where determined by the Remuneration Committee. The Company has presently established an equity based scheme that will allow the executive team to share in 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 and it is a policy of the current Board that Directors do not participate in equity based proposals.

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 additional 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. The bonuses applicable to key management personnel are a maximum of 20% of the base salary applicable to each executive and the final amount payable as disclosed in the remuneration table is subject to KPI achievement and Company financial performance.

The Company has issued share options to certain key employees. The options are subject to vesting criteria related to the company’s performance as follows:

Vesting of the options is subject to the Company achieving a Total Shareholder Return for the 12 month period prior to the applicable Vesting Date of at least within the 2nd quartile of Total Shareholder Returns for the Comparable Entities. Comparable Entities have been determined to be 12 gold producing companies listed on established stock exchanges and with operations predominately located within the Western Australian Eastern Goldfields region.

Total Shareholder Return is defined as the change in capital value per share of an entity over a 12 month period, plus dividends per share, expressed as a plus or minus percentage of their opening value.

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

Key Management Personnel Contracts

The key terms of the employment contracts for the key management personnel are summarised as follows:

	CEO	COO	CFO
Term of employment	No fixed term	No fixed term	No fixed term
Maximum bonus - STI	20% of base salary	20% of base salary	20% of base salary
Termination Event Entitlements	In the event of a genuine redundancy directly as a result of a change of control the CEO is entitled to a payout equivalent to 6 months of his base salary for loss of employment.	The COO is entitled to a genuine redundancy payout of between a minimum of 4 and a maximum of 16 weeks based on a sliding scale commencing at 4 weeks with an additional week/s for each completed year of service until the maximum is reached after 10 year’s service.	In the event of a genuine redundancy directly as a result of a change of control the CFO is entitled to a payout equivalent to 6 months of his base salary for loss of employment.
Notice period	3 months notice required by either party except in the event of fraud or other normal termination events	3 months notice required by either party except in the event of fraud or other normal termination events	8 weeks notice required by either party except in the event of fraud or other normal termination events

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. During the year, KPI’s for the award of short term bonuses were measured on achievement of the Group’s profitability and gold production targets, as disclosed in the remuneration tables below.

Remuneration Tables

Directors’ remuneration for the years ended 30 June 2012 and 2011.

Directors		Short-term Benefits	Short-term Benefits	Post Employment Benefits	Post Employment Benefits	Total	%
		Salary & Fees	Other	Super- annuation	Bonus		Performance related
Current directors
Donald Taig	2012 2011	177,300 154,500	- -	15,957 8,505	- -	193,257 163,005	- -
Phillip Lockyer	2012 2011	50,000 71,000	- -	4,500 4,500	- -	54,500 75,500	- -
Gerry Fahey	2012 2011	50,000 -	- -	4,500 -	- -	54,500 -	- -
Bruce McComish	2012 2011	72,267 -	- -	6,774 -	- -	82,041 -	- -
Former directors
Christopher Hendricks resigned 18April 2011	2012 2011	- 41,667	- -	- -	- -	- 41,667	- -

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

Remuneration of the key management personnel for the years ended 30 June 2012 and 2011

		Short-term Benefits	Short-term Benefits	Post Employment Benefits	Post Employment Benefits			%
		Salary & Fees	Other	Super- annuation	Equity Options	Bonus	Total	Performance based
Current Executives
Campbell Baird Chief Executive Officer	2012 2011	378,941 320,527	- -	34,105 28,848	25,700 34,597	22,100 19,500	460,879 403,472	10.37% 13.41%
Mark Hine1 Chief Operating Officer 1	2012 2011	362,901 -	- -	36,001 -	- -	- -	398,902 -	- -
Paul Fromson2 Company Secretary/Chief Financial Officer	2012 2011	49,154 -	- -	4,424 -	- -	- -	53,578 -	- -
Former Executives
Brad Valiukas3 former COO	2012 2011	184,804 258,715	34,755 -	19,762 23,284	- 20,240	- 19,200	239,344 321,439	-% 12.27%
Jon Grygorcewicz4 former Company Secretary/ Chief Financial Officer	2012 2011	192,804 185,199	66,271 15,015	17,393 16,668	- 12,182	15,300 13,500	291,758 242,564	5.24% 10.59%

• 1. Mr Hines was appointed as Chief Operating Officer of in December 2011. He joined Crescent Gold as Chief Operating Officer in April 2011, before being appointed to the role across the Group.
• 1. Mr Fromson was appointed as Company Secretary and Chief Financial Officer in April 2012.
• 1. Mr Grygorcewicz resigned from the position of Chief Operating Officer in April 2012
• 1. Mr Valiukas resigned from the position of Chief Operating Officer in January 2012.

First Strike

At the last AGM held on 28 November 2011 the resolution to approve the Remuneration Report was narrowly defeated on a Poll vote and the Company incurred a so called “first strike”.

Since that time the Company has canvassed shareholders and in particular the Proxy Houses that instructed their clients to vote against the Remuneration Report. The concerns were not based around the level of remuneration for directors and senior executives, rather it was based on the level of disclosure of the basis of remuneration. The Company has therefore improved the disclosure in its Remuneration Report and explained in more detail the roles of the Board and the basis of the remuneration practices of the Company. The Chairman has undertaken to review the Company’s performance in this area annually after the AGM in order to promote a program of continuous improvement in this area.

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 was as follows:

Director		Board		Audit and Risk Committee	Audit and Risk Committee	Remuneration Committee	Remuneration Committee	Technical Committee	Technical Committee
	A		B	A	B	A	B	A	B
Non-Executive
Donald Taig	12		13	8	4	1	1	-	-
Phillip Lockyer	13		13	-	-	1	1	8	8
Gerry Fahey	13		13	-	-	1	1	8	8
Bruce McComish	12		13	8	8	1	1	-	-

A – Number of meetings attended.

B – Number of meetings held during the time the director held office or was a member of the relevant committee during the year.

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Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ REPOR T

Proceedings on Behalf of Company

Prior to Focus Minerals Ltd acquiring an 81.57% interest in Focus Minerals (Laverton) Ltd, the Company had a dispute over a royalty agreement with Indago Resources Ltd. Focus Minerals (Laverton) Ltd has lodged a writ in the Supreme Court of Western Australia to have the royalty agreement set aside. Focus Minerals Ltd has joined this action to protect its interest in the Company and is now managing this legal action on behalf of Focus Minerals (Laverton) Ltd.

Other than as disclosed in this report no person has applied for leave of Court to bring proceedings on behalf of the company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the company for all or any part of those proceedings.

The Company was not a party to any such proceedings during the year.

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 $7,000 (2011: $51,864) were paid to Grant Thornton for non-audit services, principally for taxation services, provided during the year ended 30 June 2012.

Auditor’s Independence Declaration

The auditor’s independence declaration for the year ended 30 June 2012 has been received and can be found on page 14 of this Financial Report.

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

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Don Taig Chairman 28 September 2012 Perth, Western Australia

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Grant Thornton Audit Pty Ltd ABN 91 130 913 594 ACN 130 913 594

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

T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au

Auditor’s Independence Declaration To the Directors of Focus Minerals Ltd

In accordance with the requirements of section 307C of the Corporations Act 2001, as lead auditor for the audit of Focus Minerals Ltd for the year ended 30 June 2012, 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.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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P W Warr Partner – Audit & Assurance

Perth, 28 September 2012

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.

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Focus Minerals Ltd – Financial Report 2012

STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2012

Notes Revenue 2(a) Cost of sales Gross Profit Other income 2(b) Depreciation and amortisation expense 2(c) Finance costs 2(c) Other expenses 2(c) Takeover costs 2(c) Profit before income tax Income tax expense 3 Profit after income tax for the year Other comprehensive income for the year, net of tax Total comprehensive income for the year Total comprehensive income attributable to: Non-controlling interest 8 Owners of the parent Total Comprehensive Income for the year Earnings Per Share Basic profit per share (cents per share) 5 Diluted profit per share (cents per share) 5	Consolidated 2012 $’000 2011 $’000
	258,253 102,752 (202,625) (75,064)
	55,628 27,688 1,370 2,864 (32,800) (15,034) (17) (20) (13,794) (7,853) (3,543) -
	6,844 7,645 - -
	6,844 7,645
	- -
	6,844 7,645
	693 - 6,151 -
	6,844 7,645
	0.15 0.26 0.15 0.25

The accompanying notes form part of these financial statements.

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Focus Minerals Ltd – Financial Report 2012

STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2012

Notes Assets Current Assets Cash and cash equivalents 6 Restricted Cash 6 Trade and other receivables 7 Inventories 9 Other current assets 10 Financial assets 11 Total Current Assets Non-Current Assets Restricted cash 6 Plant and equipment 12 Development expenditure 13 Exploration and evaluation assets 14 Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and other payables 16 Interest bearing liabilities 18 Total current liabilities Non-current liabilities Interest bearing liabilities 18 Provisions 17 Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued capital 19 Reserves 19 Minority interest 8 Retained earnings Total Equity	Consolidated 2012 $’000 2011 $’000
	2,604 30,709 381 - 6,509 1,379 25,559 7,717 623 560 1,347 4,195
	37,023 44,560
	12,885 812 54,064 31,529 53,023 23,520 141,243 77,667
	261,215 133,528
	298,238 178,088
	61,553 22,206 9,455 1,445
	71,008 23,651
	2,404 1,750 8,397 4,454
	10,801 6,204
	81,809 29,854
	216,429 148,233
	203,910 145,010 (1,732) 123 5,000 - 9,251 3,100
	216,429 148,233

The accompanying notes form part of these financial statements.

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Focus Minerals Ltd – Financial Report 2012

STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2012

Consolidated Notes Balance as at 1 July 2010 Total comprehensive income for the period Transactions with owners, recorded directly in equity Shares issued in the period Option reserve on recognition of equity based payments Option reserve transferred to Retained Earnings on lapsed and cancelled options Transfer on exercise of options Share issue expense Balance as at 30 June 2011 Total comprehensive income for the period Non-trolling interest share of total comprehensive income Transactions with owners, recorded directly in equity Acquisition reserve OEI created on partial takeover of Crescent Gold Limited Shares issued in the period Balance as at 30 June 2012	Ordinary Shares $’000 Retained Earnings / (Accumulated Losses) $’000 Reserves $’000 Non Controlling Interest $’000 Total $’000
	102,770 (5,109) 2,026 - 99,687 - 7,644 - - 7,644 43,383 - - - 43,383 - - 100 - 100 - 565 (565) - - 1,438 - (1,438) - - (2,581) - - - (2,581)
	145,010 3,100 123 - 148,233 - - 6,844 (693) - - - 693 6,844 - - - (1,855) - (1,855) - - - 4,307 4,307 58,900 - - - 58,900
	203,910 9,251 (1,732) 5,000 216,429

The accompanying notes form part of these financial statements.

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Focus Minerals Ltd – Financial Report 2012

STATEMENT OF CASHFLOWS FOR THE YEAR ENDED 30 JUNE 2012

Notes Cash flows from operating activities Receipts from customers Payments to suppliers and employees Royalties paid Other income Interest received Finance costs Net cash inflow / (outflow) from operating activities 6(iii) Cash flows from investing activities Proceeds from sale of non-current assets Purchase of investments Acquisition of plant and equipment Mine development expenditure Cash acquired from acquisition of Crescent Gold Secured loan to third party Secured short term deposits Exploration expenditure Net cash (outflow) / inflow in investing activities Cash flows from financing activities Proceeds from issue of shares Share issue expenses Proceeds from borrowings Net cash (outflow) / inflow from financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at 1 July Add: Restricted cash adjustment from opening balance Less: Restricted Cash Adjustment from closing balance Cash and cash equivalents at 30 June 2012 6(i)	Consolidated 2012 $’000 2011 $’000
	248,087 102,017 (183,330) (69,478) (9,106) (2,210) 484 3 589 442 (718) (20)
	56,006 30,754
	- 47 - (195) (13,622) (46,335) (2,747) (16,843) 1,901 - - (3,000) - (10) (21,601) (24,483)
	(79,657) (47,231)
	- 42,303 - (1,501) 8,000 -
	8,000 40,802
	(15,651) 24,325 30,709 6,384 812 - (13,266) -
	2,604 30,709

The accompanying notes form part of these financial statements.

Page | 18

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

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 the Corporations Act 2001.

The parent entity has applied the relief available to it under ASIC Class Order 98/100 and accordingly, amounts in the financial statements and directors’ report have been rounded off to the nearest $1,000.

The consolidated financial statements are presented in Australian dollars (AUD), which is also the functional currency of the parent company.

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)

Principles of Consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Focus Minerals Limited at the end of the reporting period. A controlled entity is any entity over which Focus Minerals Limited has the power to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Control will generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are also considered.

Where controlled entities have entered or left the Group during the year, the financial performance of those entities are included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 20 to the financial statements.

In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the consolidated group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity.

Non-controlling interests, being the equity in a subsidiary not attributable, directly or indirectly, to a parent, are shown separately within the Equity section of the consolidated Statement of Financial Position and Statement of Comprehensive Income. The non-controlling interests in the net assets comprise their interests at the date of the original business combination and their share of changes in equity since that date.

(d) Revenue Recognition

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

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 provided is recognised when the service is provided charged on the per unit rate as agreed in contracts of service.

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

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.

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Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) 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.

(f) 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 Statement of Cash Flow, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

(g) 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.

(h) 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,

(i) 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,

Page | 20

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(i) Impairment of financial assets (continued)

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.

(j) Impairment of financial assets

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.

(k) 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.

(l) Income tax

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

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

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

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

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

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

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

Page | 21

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(l)

Income tax (continued)

Determination of future taxable profits requires estimates and assumptions as to future events and outcomes, in particular, whether successful development and commercial exploitation, or alternatively sale, of the respective areas of interest will be achieved. This includes estimates and judgements about commodity prices, ore resources, exchange rates, future capital requirements, future operational performance and the timing of estimated cash flows. Changes in these estimates and assumptions could impact on the amount and probability of estimated taxable profits and accordingly the recoverability of deferred tax assets.

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.

(m)

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.

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 short-term 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

Page | 22

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(m) Financial Instruments (continued)

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 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.

(n) 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.

(o) Plant and equipment

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

Depreciation

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.

Depreciation of the mill treatment assets is calculated on a straight-line basis over the estimated useful life of the assets being 10 years.

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

Page | 23

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(o) 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 cash-generating 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.

De-recognition 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 de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised.

(p) 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.

(q) 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.

Page | 24

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(q) Development Expenditure (continued)

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.

(r) 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.

(s) 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.

(t) 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.

(u) 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.

(v) 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.

Page | 25

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(v) Share-based payment transactions (continued)

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.

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).

(w) Share 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.

(x) 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.

(y) 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.

(z) Comparative figures

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

Page | 26

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(aa) Going concern

The Directors have prepared the financial statements on a going concern basis which contemplates the realisation of assets and payment of liabilities in the normal course of business. The Group has a low gearing ratio of 0.4% and has minimal debt obligation of 11,859,000.

The Group incurred a net profit of 6,844,000 during the year after depreciation and amortisation expenditure of $32,800,000 ($2011: $7,645,000 after depreciation and amortisation expenditure of $15,034,000). The opening cash balance of $30,709,000 and the operating cash flow of $56,006,000 during the year (2011: $30,754,000) was used for developing the mine operations, exploration and purchase of property, plant and equipment, all of which will provide the Group with future economic benefits.

At 30 June 2012, the Group had net current asset deficiency of $33,985,000 (excluding non-current restricted cash of 12,885,000 associated with environmental bonds and security deposits) which includes cash and cash equivalents of $2,604,000, restricted cash of $381,000, trade and other receivable of $6,509,000, inventories of $25,559,000, financial assets of $1,347,000, trade and other payables of $61,553,000 and interest bearing liabilities of $9,455,000. The payment of trade payables and borrowings are forecasted to be met within agreed terms by operational cash flows and existing cash resources.

Should the consolidated entity be unable to continue as a going concern, it may be required to realise its assets and extinguish its liabilities other than in the normal course of business and at amounts different from those stated in the financial report. The financial report does not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that may be necessary should the Group be unable to continue as a going concern.

Directors continue to manage the Group’s activities with due regard to current and future funding requirements. On this basis the directors believe, the financial statements should be prepared on a going concern basis.

(ab) 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 compiled 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.

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.

Page | 27

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(ab) Critical Accounting Estimates and Judgements (continued)

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.

Rehabilitation provision

The Company notes that the total dollar value of the environmental bonds it has lodged with the Department of Mines and Petroleum in fact exceeds the rehabilitation provision as stated in the accounts at year ended 30 June 2012. The Board is of the view that the Company has a very good track record in this area and is continually monitoring its obligations and undertaking rehabilitation work. It therefore forms the view that the rehabilitation provision in the accounts is adequate.

(ac) Adoption of New and Revised Accounting Standards

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 July 2010:

• AASB 2009-5 Further Amendments to Australian Accounting Standards arising from the Annual Improvements Project;

• AASB 2009-8 Amendments to Australian Accounting Standards – Group cash-settled Share-based Payment Transactions;

• AASB 2009-10 Amendments to Australian Accounting Standards – Classification of Rights Issues;

• AASB Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments;

• AASB 2009-13 Amendments to Australian Accounting Standards arising from Interpretation 19 ; and

• AASB 2010-3 Amendments to Australian Accounting Standards arising from the Annual Improvements

• Project.

The adoption of these standards did not have any impact on the amounts for the current period or prior periods

Page | 28

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 1: STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(ac) New Accounting Standards for Application in Future Periods

New/revised Superseded
	Explanation of amendments	Likely impact
pronouncement pronouncement
AASB 9 Financial Instruments (December 2010) Effective Date: 31 December 2015 AASB 139 Financial Instruments: Recognition and Measurement (in part)	AASB 9 introduces new requirements for the classification and measurement of financial assets and liabilities. These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are: (a) Financial assets that are debt instruments will be classified based on (1) the objective of the entity’s business model for managing the financial assets; and (2) the characteristics of the contractual cash flows. (b) Allows an irrevocable election on initial recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income (instead of in profit or loss). Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument. (c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases. (d) Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows: • The change attributable to changes in credit risk are presented in other comprehensive income (OCI); and • The remaining change is presented in profit or loss. If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss. Otherwise, the following requirements have generally been carried forward unchanged from AASB 139 into AASB 9: • Classification and measurement of financial liabilities; and • Derecognition requirements for	Depending on assets held, there may be movement of assets between fair value and amortised cost categories, and ceasing of impairment testing on available-for-sale financial assets. If the entity holds any financial liabilities at fair value, the portion of the fair value gain or loss attributable to ‘own credit risk’ will be incorporated in OCI, rather than profit or loss.

Page | 29

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

New/revised Superseded
	Explanation of amendments	Likely impact
pronouncement pronouncement
AASB 10 Consolidated Financial Statements Effective Date: 31 December 2013 AASB 127 AASB Int 112 AASB 11 Joint Arrangements Effective Date: 31 December 2013 AASB 131 AASB Int113	financial assets and liabilities. Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7 and AASB 2010-10. AASB 10 establishes a revised control model that applies to all entities.It replaces the consolidation requirements in AASB 127 Consolidated and Separate Financial Statements_and AASB Interpretation 112 _Consolidation – Special Purpose Entities. The revised control model broadens the situations when an entity is considered to be controlled by another entity and includes additional guidance for applying the model to specific situations, including when acting as an agent may give control, the impact of potential voting rights and when holding less than a majority voting rights may give ‘de facto’ control. This is likely to lead to more entities being consolidated into the group. AASB 11 replaces AASB 131 Interests in Joint Ventures and AASB Interpretation 113 Jointly- controlled Entities – Non-monetary Contributions by Ventures. AASB 11 uses the principle of control in AASB 10 to define joint control, and therefore the determination of whether joint control exists may change. In addition, AASB 11 removes the option to account for jointly-controlled entities (JCEs) using proportionate consolidation. Instead, accounting for a joint arrangement is dependent on the nature of the rights and obligations arising from the arrangement. Joint operations that give the venturers a right to the underlying assets and obligations themselves are accounted for by recognising the share of those assets and liabilities. Joint ventures that give the venturers a right to the net assets are accounted for using the equity method. This may result in a change in the accounting for the joint arrangements held by the group.	Entities most likely to be impacted are those that: - have significant, but not a majority equity interests in other entities; - hold potential voting rights over investments, such as options or convertible debt. For entities that have joint ventures that have been previously accounted using proportionate consolidation, they will need to change to equity accounting in most cases. For entities that have joint operations that have been previously accounted using equity accounting, they will need to change to accounting for the share of each asset, liability, income and expense.

Page | 30

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

New/revised Superseded
	Explanation of amendments	Likely impact
pronouncement pronouncement
AASB 12 Disclosure of Interests in Other Entities Effective Date: 31 December 2013 AASB 127 AASB 128 AASB 131 AASB 13 Fair Value Measurement Effective Date: 31 December 2013 None AASB 128 Investments in Associates and Joint Ventures Effective Date: 31 December 2013 AASB 128 (Investments in Associates) AASB 2010-8 Amendments to Australian Accounting Standards – Deferred Tax: Recovery of Underlying Assets [AASB 112] Effective Date: 31 December 2013 AASB Int 121	AASB 12 includes all disclosures relating to an entity’s interests in subsidiaries, joint arrangements, associates and structures entities. New disclosures introduced by AASB 12 include disclosures about the judgements made by management to determine whether control exists, and to require summarised information about joint arrangements, associates and structured entities and subsidiaries with non-controlling interests. AASB 13 establishes a single source of guidance for determining the fair value of assets and liabilities. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted by other Standards. Application of this definition may result in different fair values being determined for the relevant assets. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. Once an entity (using AASB 11) has determined that it has an interest in a joint venture, it accounts for it using the equity method in accordance with AASB 128 (Revised). The mechanics of equity accounting set out in the revised version of AASB 128 remain the same as in the previous version. These amendments address the determination of deferred tax on investment property measured at fair value and introduce a rebuttable presumption that deferred tax on investment property measured at fair value should be determined on the basis that the carrying amount will be recoverable through sale. The amendments also incorporate AASB Interpretation 121_Income Taxes – Recovery_ _of Revalued Non-Depreciable Assets_into AASB 112.	There are some additional disclosures centred on significant judgements and assumptions made around determining control, joint control and significant influence. For financial assets,AASB 13's guidance is broadly consistent with existing practice. It will however also apply to the measurement of fair value for non-financial assets and will make a significant change to existing guidance in the applicable standards. Unlikely to have an impact. Unlikely to have significant impact in Australia, although could have some effect for properties acquired between 20 September 1985 and 19 September 1999. May impact entities with overseas subsidiaries when the capital gains tax rate is lower than the company tax rate.

Page | 31

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

New/revised Superseded
	Explanation of amendments	Likely impact
pronouncement pronouncement
AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements [AASB 124] Effective Date: 31 June 2014 None AASB 2011-7 Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards Effective Date: 31 December 2013 None AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income [AASB 101] Effective Date: 30 June 2013 None	The Standard deletes from AASB 124 individual key management personnel disclosure requirements for disclosing entities that are not companies. This Standard makes consequential amendments to various Australian Accounting Standards arising from the issuance of AASB 10, AASB 11, AASB 12, AASB 127 (August 2011) and AASB 128 (August 2011). Amendments to group items presented in other comprehensive income on the basis of whether they are potentially re-classifiable to profit or loss in subsequent periods (reclassification adjustments, e.g. foreign currency translation reserves) and those that cannot subsequently be reclassified (e.g. fixed asset revaluation surpluses). Name changes of statements in AASB 101 as follows: • One statement of comprehensive income – to be referred to as ‘statement of profit or loss and other comprehensive income’ • Two statements – to be referred to as ‘statement of profit or loss’ and ‘statement of comprehensive income’.	Unlikely to have an impact. Refer to the likely impact of AASB 10, AASB 11, AASB 12, AASB 127 (August 2011) and AASB 128 (August 2011). Impact on separating components in other comprehensive income between reclassification and non-reclassification adjustments. Name changes to statement of comprehensive income.

Page | 32

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

New/revised Superseded
	Explanation of amendments	Likely impact
pronouncement pronouncement
AASB 119 Employee Benefits Effective Date: 31 December 2013 AASB 119 AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and Financial Liabilities Effective Date: 31 December 2013 None AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities Effective Date: 31 December 2014 None Mandatory Effective Date of IFRS 9 and Transition Disclosures1 Effective Date: 31 December 2015 None	The main change introduced by this standard is to revise the accounting for defined benefit plans. The amendment removes the options for accounting for the liability, and requires that the liabilities arising from such plans is recognised in full with actuarial gains and losses being recognised in other comprehensive income. It also revised the method of calculating the return on plan assets. Consequential amendments were also made to other standards via AASB 2011-10. This Standard amends the required disclosures in AASB 7 to include information that will enable users of an entity’s financial statements to evaluate the effect or potential effect of netting arrangements, including rights of set-off associated with the entity’s recognised financial assets and recognised financial liabilities, on the entity’s financial position. This Standard also amends AASB 132 to refer to the additional disclosures added to AASB 7 by this Standard. This Standard adds application guidance to AASB 132 to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement. This Standard amends IFRS 9 to require application for annual periods beginning on or after 1 January 2015, rather than 1 January 2013. Early application of IFRS 9 is still permitted. IFRS 9 is also amended so that it does not require the restatement of comparative-period financial statements for the initial application of the classification and measurement requirements of IFRS 9, but instead requires modified disclosures on transition to IFRS 9.	Only impacts entities that have any defined benefit plans, and the removal of the deferral of gains and losses under the corridor approach. Unlikely to have significant impact on entities. Unlikely to have a significant impact as it addresses inconsistencies in practise. None as the mandatory effective date has been deferred.

Page | 33

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 2: REVENUES AND EXPENSES (a) Revenue Gold sales Silver sales Toll milling income (b) Other income Interest received Rental revenue Net gains (loss) on disposal of mining tenements Realised gold forward contracts and AFS investments MTM gain Net gains on disposal investments Other (c) Expenses Finance costs Finance charges payable under finance leases and hire purchase contracts Depreciation & Amortisation Expense Depreciation Amortisation Total amortisation and depreciation Other expenses Legal fees Option expense Employee benefit expense Corporate Takeover costs	Consolidated 2012 $’000 2011 $’000
	257,463 101,167 790 253 - 1,332
	258,253 102,752
	781 242 442 1,434 - 962 347 - - 24 - 2
	1,370 2,864
	17 20
	9,486 4,698 23,314 10,336
	32,800 15,034
	355 61 708 99 3,506 3,001 9,225 4,692
	13,794 7,853
	3,543 -

`

Page | 34

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 3: INCOME TAX

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 before income tax and OEI 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 of Comprehensive Income 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 of Statement of Comprehensive Income Unrecognised Deferred Tax Balances Unrecognised deferred tax asset losses Unrecognised deferred tax asset other Unrecognised deferred tax liabilities Net unrecognised deferred tax assets	Consolidated 2012 $’000 2011 $’000 6,844 7,644
	2,053 2,293 242 70 (2,295) (2,363)
	- -
	2,295 2,363 (484) (401) (2,712) (6,910) 3,196 4,948
	- -
	76,706 22,588 3,918 2,051 (38,049) (22,811)
	42,575 1,828

The deferred tax asset arising from the tax losses has not been recognised as an asset in the Statement of Financial Position 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

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

Tax Consolidation

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

NOTE 4: SEGMENT REPORTING

During the 2012 financial year, Focus Minerals Ltd acquired 81.57% of Focus Minerals (Laverton) Ltd – formerly Crescent Gold Ltd. In May 2012, Focus Minerals (Laverton) Ltd was delisted from the ASX and several of its Board members including the Managing Director resigned. Focus Minerals Ltd now directly manages all of the Focus Minerals (Laverton) Ltd.’s interests. Due to the ongoing minority interest, Focus Minerals Ltd will implement a formal service level agreement with Focus Minerals (Laverton) Ltd to ensure that costs are shared on an equitable basis for shared services. This will include costs such as shared premises and staff providing Group services.

Page | 35

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 4: SEGMENT REPORTING (continued)

The entity has changed the structure of its internal organisation in a manner that causes the composition of its reportable segments to change, the corresponding information from 2011 restated. The Group has three reportable geographic segments, as described below, which are the Group’s strategic business units. The business units are managed separately as they require differing processes and skills. The Chief Executive Officer reviews internal management reports on a monthly basis. Gold produced is sold through agents at spot pricing or delivered into forward gold contracts. Segment Financial Information for the financial year ended 2012 are presented below:

Revenue from Main Product Sales - Gold Revenue from By Product Sales - Silver TOTAL GROSS REVENUE Cost of Sales Amortization & Depreciation SEGMENTED OPERATING PROFIT / (LOSS) Interest and financing fees Other income Interest income Takeover costs Other expenses1 SEGMENTED PROFIT / (LOSS) BEFORE UNDER NOTED ITEMS Income taxes Non-controlling interest SEGMENTED PROFIT / (LOSS) Current Assets Non-Current Assets - Restricted Cash - Property, Plant & Equipment - Mine Property - Exploration - Other TOTAL ASSETS Current Liabilities Non-Current Liabilities TOTAL LIABILITIES NET ASSETS Equity Reserves Outside Equity Interest Retained Earnings NET EQUITY Capital Expenditures	2012 2012 2012 2012 2012 Coolgardie Laverton Corporate Intercompany Consolidated
	$’000 $’000 $’000 $’000 $’000 145,547 111,916 - - 257,463 510 280 - - 790
	146,057 112,196 - - 258,253 112,099 90,526 - - 202,625 17,869 14,858 73 - 32,800
	16,089 6,812 (73) - 22,828 - 939 - (922) 17 (291) - (299) - (590) - (467) (1,235) 922 (780) - - 3,543 - 3,543 - 2,580 11,214 - 13,794
	16,380 3,760 (13,296) - 6,844 - - - - - - 693 - - 693
	16,380 3,067 (13,296) - 6,151
	12,103 22,211 2,709 37,023 61 11,808 1,016 - 12,885 32,657 21,156 200 51 54,064 32,409 20,614 - - 53,023 59,275 13,380 34,953 32,107 139,715 10,368 9,932 136,762 (155,534) 1,528
	146,873 99,101 175,640 (123,376) 298,238 21,810 37,657 10,086 1,455 71,008 52,720 34,316 5,746 (81,981) 10,801
	74,530 71,973 15,832 (80,526) 81,809
	72,343 27,128 159,808 (42,850) 216,429
	23,363 244,000 203,910 (267,363) 203,910 - 14,950 123 (16,805) (1,732) - - - 5,000 5,000 48,980 (231,823) (44,225) 236,319 9,251
	72,343 27,127 159,808 (42,849) 216,429
	26,778 32,543 - - 59,321

1. For further details, refer to note 2 (c).

Page | 36

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 4: SEGMENT REPORTING (continued)

Segment Financial Information for the financial year ended 2011 are presented below:

Revenue from Main Product Sales - Gold Revenue from By Product Sales - Silver Revenue from Toll Milling TOTAL GROSS REVENUE Cost of Sales Amortization & Depreciation SEGMENTED OPERATING PROFIT / (LOSS) Interest and financing fees Other income Takeover costs Other expenses SEGMENTED PROFIT / (LOSS) BEFORE UNDER NOTED ITEMS Income taxes Non-controlling interest SEGMENTED PROFIT / (LOSS) Current Assets Non-Current Assets - Restricted Cash - Property, Plant & Equipment - Mine Property - Exploration - Other TOTAL ASSETS Current Liabilities Non-Current Liabilities TOTAL LIABILITIES NET ASSETS Equity Reserves Outside Equity Interest Retained Earnings NET EQUITY Capital Expenditures	2011 2011 2011 2011 2011 Coolgardie Laverton Corporate Intercompany Consolidated $’000 $’000 $’000 $’000 $’000
	101,167 - - - 101,167 253 - - - 253 1,332 - - - 1,332
	102,752 - - - 102,752 75,064 - - - 75,064 14,945 - 89 - 15,034
	12,743 - (89) - 12,654 - - 20 - 20 - - (2,864) - (2,864) - - - - - - - 7,853 - 7,853
	12,743 - (5,098) - 7,645 - - - - - - - - - -
	12,743 - (5,098) - 7,645
	40,365 - 4,195 - 44,560 812 - - - 812 52,349 - - - 52,349 2,700 - - - 2,700 77,667 - - - 77,667 (95,739) - 117,674 (21,934) -
	78,154 - 121,869 (21,934) 178,088 22,206 - 1,445 - 23,651 - - 6,204 - 6,204
	22,206 - 7,649 - 29,854
	55,948 - 114,220 (21,934) 148,233
	23,364 - 145,010 (23,364) 145,010 - - 123 - 123 - - - - - 32,584 - (30,914) 1,430 3,100
	55,948 - 114,219 (21,934) 148,233
	34,744 - - - 34,744

Page | 37

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 5: EARNINGS PER SHARE

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 2012 Centsper Share 2011 Centsper Share
	0.15 0.26 0.15 0.25
	6,150,994 7,644,341 4,185,341,251 2,982,670,549
	6,150,994 7,644,341
	4,237,075,097 3,082,186,465

NOTE 6: CASH, CASH EQUIVALENTS & RESTRICTED CASH

NOTE 6: CASH, CASH EQUIVALENTS & RESTRICTED CASH
Current Cash at bank and on hand Short-term deposits – unsecured Non- current Short-term deposits –secured	Consolidated 2012 $’000 2011 $’000
	2,604 381 2,290 28,419
	2,985 30,709
	12,885 812

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

Short-term deposits are made for varying periods up to three months, depending on the immediate cash requirements of the Group, and earn interest at the respective commercial 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. Refer to Note 21.

(i) Reconciliation to Cash Flow Statement

For the purposes of the Statement of Cash Flow, cash and cash equivalents comprise cash on hand and at bank and short term deposits, net of secured short term deposits.

deposits, net of secured short term deposits. Cash and cash equivalents as shown in the Statement of Cash Flow is: Cash and cash equivalents (ii) Cash balances not available for use Short term deposits lodged as security	Consolidated 2012 $’000 2011 $’000
	2,604 30,709
	13,266 812

Page | 38

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 6: CASH AND CASH EQUIVALENTS (continued)

(iii) Reconciliation of profit for the year to net cash flows from operating activities

Net Profit for the year Gain on sale or disposal of investments Gain on sale or disposal of mining tenements Depreciation expense Amortisation expense Share base payment Unrealised gain from gold forward sales contracts Reversal of provision (Increase)/decrease in assets: Current receivables Inventories Other current assets Increase/(decrease) in liabilities Current payables Other current liabilities Employee benefits Net cash from/(used in) operating activities	Consolidated 2012 $’000 2011 $’000
	6,844 7,644 - (24) - (962) 7,037 4,752 25,763 10,336 708 99 (345) - (455) - 1,747 3,233 24,722 (2,814) 978 (2) (13,760) 10,104 386 (2,319) 2,381 707
	56,006 30,754

• (v) Non cash financing and investing activities transactions

2012

• Expenses during the period include the value of issued options for an amount of $708,000.

2011

• Expenses during the period include the value of issued options for an amount of $99,282. The options were issued to senior management staff under the Employee incentive scheme.

• During the period the Company has purchased mining equipment totalling $6,853,474 under hire purchase and finance leases.

NOTE 7: CURRENT TRADE AND OTHER RECEIVABLES

NOTE 7: CURRENT TRADE AND OTHER RECEIVABLES
Trade receivables Other receivables	Consolidated 2012 $’000 2011 $’000
	4,130 2,379 1,177 202
	6,509 1,379

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.

Page | 39

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 8 BUSINESS COMBINATION

Merger with Crescent Gold Limited

On 20 June 2011 the Company jointly announced, with Crescent Gold Limited, an off-market bid by the Company to acquire the issued ordinary shares of Crescent Gold Limited (Crescent). The Bidder’s Statement was lodged with the Australian Investments and Securities Commission on 29 June 2011.

The Offer opened on 30 June 2011 and consisted of one Focus share for every 1.18 Crescent share and option on issue and was conditional, among other conditions, on achieving ownership of 90% of the issued shares of Crescent.

On 18 August 2011 the Company declared the Offer unconditional, this for accounting purposes was considered the date control was passed in accordance with Australian Accounting Standard AASB3 “Business Combination”. The Offer closed on 5 October 2011 and the Company received acceptances totalling 81.57% of Crescent issued ordinary shares. The Company issued 880,258,270 Focus shares in consideration for acceptances received.

Crescent is a gold producer with extensive landholdings in Laverton within the Eastern Goldfields of Western Australia

The merger of Focus Minerals Ltd and Crescent Gold Limited has been accounted as a business acquisition and has been calculated in accordance with the proportional interest method.

The purchase price allocation is as follows:

The purchase price allocation is as follows:
	Note		August 2011
			$’000
Identifiable assets acquired and liabilities assumed
Cash and cash equivalents			1,910
Restricted deposits			9,078
Other receivable and prepayments			3,417
Inventories			2,606
Property, plant and equipment			18,558
Exploration and evaluation expenditure			5,504
Development expenditure			10,624
Trade and other payables			(9,938)
Provisions			(7,027)
Loans and borrowings			(11,366)
Net Assets			23,366
Minority Interest	(a)		4,307
Net Assets Acquired			23,366
Consideration paid			58,900
Excess purchase price allocated to evaluation and exploration assets			37,983
recognised on acquisition
(a) MINORITY INTEREST			Consolidated
		2012	2011
		$’000	$’000
Minority interest (balance on takeover of Crescent)		4,307	-
Non-controlling interest for the year		693	-
		5,000	-

Page | 40

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 9: INVENTORIES At cost: Consumables Ore stockpiles Gold in circuit	Consolidated 2012 $’000 2011 $’000
	3,197 2,524 20,976 1,648 1,386 3,545
	25,559 7,717
NOTE 10: OTHER CURRENT ASSETS Prepaid expenses	Consolidated 2012 $’000 2011 $’000
	623 560
NOTE 11: FINANCIAL ASSETS Current Investments in listed entities – at fair valuea Loans to external partiesb Foreign exchange contract – fair value movementc
	Consolidated 2012 $’000 2011 $’000 1,167 1,195 - 3,000 180 - 1,347 4,195

NOTE 10: OTHER CURRENT ASSETS	Consolidated
	2012	2011
	$’000	$’000
Prepaid expenses	623	560
NOTE 11: FINANCIAL ASSETS	Consolidated
	2012	2011
	$’000	$’000
Current
Investments in listed entities – at fair valuea	1,167	1,195
Loans to external partiesb	-	3,000
Foreign exchange contract – fair value movementc	180	-
	1,347	4,195

• a. Investment in the listed entity – Macphersons Resources Limited (“MRL”) was made for an amount of $1,000,000. The carrying value of the investment reflects the market value of the share price of MRL at year end.

• b. Loans to external parties are secured by registered fixed and floating charge over the assets and operations of Crescent Gold Limited. The loan carries an interest rate of 7% pa. Refer also to Note 25. However at part of the consolidated entity, this loan is eliminated.

• c. The Company entered into two forward contracts to sell 4000 ounces of gold at a weighted average price of $1,613 per ounce. The carrying value reflects the fair value movement based on the price of gold at $1,568 per ounce at 30 June 2012.

NOTE 12: PLANT & EQUIPMENT At cost Less: Accumulated Depreciation Carrying value Movement Summary Cost: At Cost (opening balance) Additions Acquisitions through business combination At Cost (closing balance) Depreciation: At Cost (opening balance) Depreciation expense Acquisitions through business combination At Cost (closing balance) Total	Consolidated 2012 2011 $'000 $'000
	82,411 41,603 (28,347) (10,074)
	54,064 31,529
	41,603 33,097 13,463 8,506 27,345 -
	82,411 41,603
	(10,074) (5,322) (9,486) (4,752) (8,787) -
	(28,347) (10,074)
	54,064 31,529

Page | 41

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 13: DEVELOPMENT EXPENDITURE At Cost Less: Accumulated amortisation Net Exploration and Evaluation Expenditure Movement Summary: Cost: Opening balance Additions Acquisitions through business combinationa Closing balance Accumulated amortisation: Opening balance Amortisation expense Acquisitions through business combinationa Closing balance a. Acquisition through business combination – refer Note 8. NOTE 14: EXPLORATION & EVALUATION ASSETS Exploration and Evaluation Expenditure: At Cost Net Development Expenditure Movements: Exploration and Evaluation Expenditure Carrying amount at beginning of the year plus – exploration expenditure plus – tenements acquired plus – excess purchase price allocated plus- Transfer (to)/from Development Expenditure Carrying amount at end of year		Consolidated 2012 $’000 2011 $’000
		117,619 53,119 (64,596) (29,599)
		53,023 23,520 53,119 36,276 42,193 16,843 22,307 -
		117,619 53,119 (29,599) (21,567) (23,314) (8,032) (11,683) -
		(64,596) (29,599) Consolidated 2012 $’000 2011 $’000
		141,243 77,667
		- 2,700 77,667 55,803 20,089 23,943 5,504 540 37,983 - - (2,619)
		141,243 77,667

Page | 42

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 15: SHARE BASED PAYMENTS

During the year, the Company issued nil options to senior executive staff under the employee incentive scheme. During 2011 the Company issued 33,500,000 options to senior executive staff under the employee incentive scheme.

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

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

Volatility (%) Risk free interest rate (%) Expected life of option (years) Exercise price (cents) Weighted average share price at grant date (cents) Discount factor Imputed value of issued options	2012 2011
	70% 70% 5.35% 5.35% 3.25 yrs 3.25 yrs 12.3 cents 12.3 cents 8.7 cents 75% 8.7 cents 75%
	$57,900 $99,284

Subject to the vesting criteria being met, the options will vest on 31 December 2012. Accordingly, the option value has been proportionally expensed over the vesting period with $57,900 expensed at 30 June 2012. A further $25,618 is to be expensed annually from 30 June 2013 to 30 June 2014.

Vesting criteria of the Scheme is subject to the Company achieving a Total Shareholder Return for the 12 month period prior to the applicable Vesting Date of at least within the 2nd quartile of Total Shareholder Returns for the Comparable Entities. Comparable Entities have been determined to be 12 gold producing companies listed on established stock exchanges and with operations predominately located within the Western Australian Eastern Goldfields region.

Total Shareholder Return is defined as the change in capital value per share of an entity over a 12 month period, plus dividends per share, expressed as a plus or minus percentage of their opening value. The opening value date is 1 January 2011.

The discount factor has been determined based on the historical Total Shareholder Return performance of the Company relative to the Comparable Entities over the past 3 years as a likelihood of achieving the vesting performance criteria.

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.

Page | 43

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 16: TRADE AND OTHER PAYABLES Current Trade payables Sundry creditors and accrued expenses Employee benefits	Consolidated 2012 $’000 2011 $’000
	49,117 15,261 9,307 5,503 3,129 1,442
	61,553 22,206

(i) Trade payables are non-interest bearing and are normally settled on 15-45 day terms. Information regarding the credit risk of current payables is set out in Note 20.

NOTE 17: PROVISIONS Non-Current Employee benefits Balance at 1 July Increase in the period Balance at 30 June Rehabilitation costs Balance at 1 July Increase in the period Balance at 30 June	Consolidated 2012 $’000 2011 $’000
	- - 225 -
	225 - 1,750 1,750 6,422 -
	8,172 1,750
	8,397 1,750

Provision for Mine Restoration

A provision has been recognised for the costs to be incurred for the restoration and rehabilitation 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.

Page | 44

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 18: FINANCIAL LIABILITIES Current Bank loansa Finance lease – refer note 21 Non – current Finance lease – refer note 21	Consolidated 2012 $’000 2011 $’000
	8,000 1,445 1,455 -
	9,455 1,445
	2,404 4,454

Note a) Banking facility

At 30 June 2012, the Group has a Contingent Instrument Facility. The Facility provides bankers’ guarantees to meet tenement requirements and to secure services supply contracts.

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 at 30 June 2012:

Contingent Instruments	Drawn Undrawn Facility Limit
	$3,102,300 $397,700 $3,500,000

The Facility Agreement requires the Company to maintain a minimum bank balance of $3 million. There were no breaches of the financial covenants during the period.

At 30 June 2012, the Group has an interest bearing loan facility with Investec.

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,

The facility is comprised of the following at 30 June 2012:

Contingent Instruments	Drawn Undrawn Facility Limit
	$8,000,000 $2,000,000 $10,000,000

Page | 45

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 19: 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
Issued capital Shares on issue at the beginning of reporting period Shares issued during the year - 23 August 2011 - 24 August 2011 - 26 August 2011 - 29 August 2011 - 30 August 2011 - 31 August 2011 - 01 September 2011 - 08 September 2011 - 14 September 2011 - 16 September 2011 - 30 September 2011 - 03 October 2011 - 5 October 2011 - 6 October 2011 - 27 April 2011 - 18 April 2011 - 31 March 2011 - 22 March 2011 - 04 March 2011 - 07 March 2011 Shares on issue at reporting date	Company 2012 $’000 2011 $’000
	203,910 145,010
	No. of shares 2012 No. of shares 2011
	3,440,515,431 2,862,543,210 705,051,845 17,754,555 2,512,861 5,723,899 14,451,598 15,387,371 37,300,103 24,836,939 30,391,642 148,563 669,607 14,923,378 10,858,449 247,460 26,000,000 517,104,911 1,867,310 14,000,000 16,000,000 3,000,000
	4,320,773,701 3,440,515,431

Share Issue Details

On 20[th] June 2011, the Company jointly, with Crescent Gold Limited, announced an-off market bid by the Company to acquire the issued ordinary shares of Crescent Gold Limited (Crescent). The Bidder’s Statement was lodged with the Australian Investments and Securities Commission on 29 June 2011.

The Offer opened on 30 June 2011 and consisted of one Focus share for every 1.18 Crescent share and option on issue and was conditional, among other conditions, on achieving ownership of 90% of the issued shares of Crescent.

On 18 August 2011, the Company declared the Offer unconditional; this for accounting purposes was considered the date control was passed in accordance with AASB3 – Business Combinations.

Page | 46

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 19: ISSUED CAPITAL AND RESERVES (continued)

The Offer closed on 5 October 2011 and the Company received acceptances totalling 81.57% of Crescent issued ordinary shares. The Company issued 880,258,270 Focus shares during the financial year in consideration for acceptances, as shown below:

• Issued 675,746,689 shares on 23 August 2011 at an issue price of $0.067 per share;

• Issued 29,305,156 shares on 22 August 2011 and 23 August 2011 at an issue price of $0.065 per share;

• • Issued 17,754,555 shares on 25 August 2011 at an issue price of $0.063 per share;

• Issued 2,512,861 shares on 26 August 2011 at an issue price of $0.065 per share;

• Issued 5,723,899 shares on 29 August 2011 at an issue price of $0.065 per share;

• Issued 14,451,598 shares on 30 August 2011 at an issue price of $0.066 per share;

• • Issued 15,387,371 shares on 31 August 2011 at an issue price of $0.069 per share; - Issued 37,300,103 shares on 01 September 2011 at an issue price of $0.070 per share; - Issued 24,836,939 shares on 08 September 2011 at an issue price of $0.068 per share;

• Issued 30,391,642 shares on 14 September 2011 at an issue price of $0.069 per share;

• Issued 148,563 shares on 16 September 2011 at an issue price of $0.072 per share;

• Issued 669,607 shares on 30 September 2011 at an issue price of $0.072 per share;

• Issued 14,923,378 shares on 03 October 2011 at an issue price of $0.072 per share;

• Issued 10,858,449 shares on 05 October 2011 at an issue price of $0.072 per share;

• Issued 247,460 shares on 06 October at an issue price of $0.072 per share;

Crescent is a gold producer with extensive landholdings in Laverton within the Eastern Goldfields of Western Australia. The merger of Focus Minerals Ltd and Crescent Gold Ltd has been accounted for as a business acquisition and has been calculated in accordance with proportional interest method.

Voting Entitlements

At each shareholder’s 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 dates. The following are movements in options throughout the period and the outstanding options at 30 June 2012:

Issuing Entity Focus Minerals Ltd Total Issued Options at 1 July 2011 Expired options Options Exercised Options Lapsed unexercised Options issued Executive incentive options Total options on issue Total Options issued		Number of Options Exercise Price Cents per Share Expiry Date 75,580,000 - - - - 6,923,077 6,923,077 10,000,000 23,846,154 - - 7.5 7.8 12.3 - - 31/12/2012 31/12/2012 30/06/2014 - 14,116,923 14,116,923 23,500,000 7.50 7.80 12.30 31/12/2012 31/12/2012 30/6/2014 51,733,846

Page | 47

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 19: ISSUED CAPITAL AND RESERVES (continued)

(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 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 (net of cash and cash equivalents)	Consolidated 2012 $’000 2011 $’000
	11,859 5,899 (2,604) (30,709)
	9,255 (24,810)
	216,429 148,233
	225,684 123,423
	4% N/a

(d) Reserves

Option Reserve

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

Balance 1 July Reserve adjustments from Crescent takeover Employee share options issued Amount transferred to issued capital on exercise of options Amount transferred to Retained Earnings on lapsed or expired options Balance 30 June	Consolidated 2012 $’000 2011 $’000
	123 2,026 (1,855) - - - 99 (1,438) (565)
	(1,732) 122

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.

Refer Note 19 (b) for movement of issued options.

Page | 48

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 20: FINANCIAL INSTRUMENTS

a. Financial Risk Management Policies

The group’s financial instruments consist mainly of deposits with banks, local money market instruments, shortterm 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 2012 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.

The Audit and Business Risk 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 not have a material credit risk exposure as, at balance date, no financial instruments are outstanding by the consolidated group. The total exposure is detailed in Note 18 (b) below.

Page | 49

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 20: FINANCIAL INSTRUMENTS (continued)

Price Risk

The group is exposed to gold price risk through its gold mining operations. The Audit and Business Risk Committee assesses the price risk and may enter into gold forward sales contracts for delivery of specified quantities of gold on specific dates at fixed prices. At balance date no financial instruments are outstanding by the consolidated group.

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 may enter into hedging transactions which provide a minimum price to cover non-discretionary operating expenses, repayments due under the consolidated entity’s financing facilities and to provide for 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 have also been 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 gold production anticipated in future periods and that the term of the financial instruments does not exceed the mine life and that no residual basis risk exists.

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 accounting policy in regard to forward gold contracts is detailed in Note 1.

At balance date, details of outstanding forward gold sale contracts are:

Gold forward sales contracts Less than 6 months 6 months to 1 year 1 – 2 years	Consolidated Group Consolidated Group Average Gold Price/oz 2012 $’000 2011 $’000 2012 Oz 2011 Oz
	6,452 - 1,613 - - - - - - - - -
	6,452 - 1,613 -

Page | 50

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 20: FINANCIAL INSTRUMENTS (continued)

At 30 June 2012 the group has 4,000 ounces as unsettled forward gold contracts (2011: nil) and no outstanding gold put options.

ii. Maturity Analysis

Consolidated 30 June 2012 Financial assets Cash and cash equivalents Restricted cash Other financial assets Trade receivables Total financial assets Financial liabilities Trade and other payables Interest bearing liabilities – note 18 Total financial liabilities Consolidated 30 June 2011 Financial assets Cash and cash equivalents Other financial assets Trade receivables Total financial assets Financial liabilities Trade payables and other payables Interest bearing liabilities – note 18 Total financial liabilities		Average Effective Interest Rate %	Floating Interest Rate $’000 Fixed Interest Rate $’000 Non Interest Bearing $’000 Total $’000
			Payable within 1 year
		- - - - - 8.9%	- - 2,604 2,604 - - 381 381 - - 1,347 1,347 - - 6,509 6,509
			- - 10,841 10,841
			- - 61,553 61,553 - 9,455 - 9,455
			- 9,455 61,553 71,008
		5.2% 7.0% - - 8.9%	30,708 812 1 31,521 - 3,000 1,195 4,195 - - 1,379 1,379
			30,708 3,812 2,575 37,095
			- - 22,206 22,206 - 5,899 - 5,899
			- 5,899 22,206 28,105

Page | 51

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 20: 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 Interest bearing liabilities – note 18	2012 2011 Carrying Amount $’000 Net Fair Value $’000 Carrying Amount $’000 Net Fair Value $’000
	1,347 1,347 1,195 1,195 6,509 6,509 4,379 4,379
	7,856 7,856 5,574 5,574
	11,859 11,859 5,899 5,899
	11,859 11,859 5,899 5,899

iii. Sensitivity Analysis

Interest Rate Risk, Gold Price Risk

The group has performed a sensitivity analysis relating to its exposure to gold 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.

Gold Price Sensitivity Analysis

At 30 June 2012, the effect on profit and equity as a result of changes in the Australian dollar gold price and based on gold sold within the year with all other variables remaining constant would be as follows:

Gold Sold – ozs Average Gold price achieved Change in profit - Increase in A$ gold price by 10% - Decrease in A$ gold price by 10% Change in equity - Increase in A$ gold price by 10% - Decrease in A$ gold price by 10%	Consolidated 2012 $’000 155,213 $1,614 2011 $’000 72,720 $1,391
	25,046 10,115 (25,046) (10,115) 25,046 10,115 (25,046) (10,115)

Interest Rate Analysis

At 30 June 2012, the Group had $13,266,000 invested in security deposits and performance bonds. A 1% increase / (decrease) in the interest rate would impact the interest earned by $132,000 / ($132,000) respectively.

Page | 52

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 21: COMMITMENTS AND CONTINGENCIES

Operating lease commitments – Group as lessee

The Group has entered into commercial leases on certain office and regional residential accommodation. These leases have a life of one to five year with renewal options included in some lease 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 2012 $’000 2011 $’000
	504 492,538 1,305 1,810,904 - -
	1,809 2,303,442

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:

	2012 2011 Minimum lease payments $’000 Present value of lease payments $’000 Minimum lease payments $’000 Present value of lease payments $’000
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	2,617 2.001 1,900 1,445 2,790 2,460 4,952 4,454
	5.407 4,461 6,852 5,899 (473) - (953) -
	4,461 5,303 5,898 5,899

The weighted average interest rate impact on the leases for both the Group and the Parent at 30 June 2012 is 8.9% (2011: 8.9 %).

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 $15,079,000 (2011: $3,340,000) with the Department of Mines and Petroleum.

Mining tenement expenditure commitments

The Group has committed, under tenement landholding conditions, to spend a minimum of $6,621,260 of which $4,866,600 relates to Laverton (2011: $1,770,720 for Coolgardie and $4,664,960 for Laverton) per annum on mining and exploration tenements held by the Group.

Page | 53

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 22: CONTROLLED ENTITIES

The consolidated financial statements include the financial statements of Focus Minerals Ltd and the subsidiaries listed below:

Name Country of Incorporation Austminex Pty Ltd Australia Focus Operation Pty Ltd Australia Underground Drilling Services Pty Ltd Australia Focus Minerals (Laverton) Ltd1 Australia Laverton Nickel Pty Ltd Australia Uranium West Holding Ltd Australia Uranium West Ltd Australia	% Equity Interest 2012 2011
	100% 100% 100% 100% 100% 100% 81.57% - 81.57% - 81.57% - 81.57% -

1. The trading name for Crescent Gold Ltd was changed to Focus Minerals (Laverton) Ltd on 24 July 2012.

NOTE 23: PARENT ENTITY

The parent company throughout the financial year ended 30 June 2012 was Focus Minerals Limited.

Results of the parent entity Profit for the period Other comprehensive income Total comprehensive income for the period Financial position of parent entity at year end Current assets Total assets Current Liabilities Total liabilities Total equity of parent entity comprising of: Share capital Option reserve Accumulated losses Total equity	Parent Entity 2012 2011 $’000 $’000
	(13,312) 1,717 - -
	(13,312) 1,717
	2,709 38,515 175,639 149,724 10,086 14,808 15,832 19,671 203,910 145,010 123 123 (44,225) (15,080)
	159,808 130,053

The parent entity has commitments of $504,000 (2011: $2,239,292) and is jointly and severally liable for the mining tenement expenditure commitments.

Page | 54

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 24: RELATED PARTY DISCLOSURE

The following table provides the total amount of transactions that were entered into with related parties in the relevant financial year.

Parent Related party Austminex Pty Ltd 2012 2011 Underground Drilling Services Pty Ltd 2012 2011 Focus Operations Pty Ltd 2012 2011 Focus Minerals (Laverton) Ltd1 2012 2011	Sales to Related Parties $’000 Purchases from Related Parties $’000 Amounts Owed by Related Parties $’000 Amounts Owed to Related Parties $’000
	- - 4,379 - - - 4,379 - - - - - - - 60 - - - 31,331 - - - 10,406 - - - 17,922 - - - - -

1. The trading name for Crescent Gold Ltd was changed to Focus Minerals (Laverton) Ltd on 24 July 2012

Joint venture in which the entity is a venturer

The Group has a 100% interest in the assets, liabilities and output of the Coolgardie Gold Project (2011: 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.

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

For the year ended 30 June 2012, the Group has not made any allowance for doubtful debts relating to amounts owed by related parties due to solid payment history (2010: $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.

Mr Lockyer is a non-executive director of Swick Mining Services Limited (Swick). During the year the Group contracted with Swick to provide drilling services for the Group’s surface exploration programs. These services were awarded to Swick after undertaking a tender process. Drilling services provided by Swick for the year totalled $5,166,558 (2011: $3,600,892) determined in accordance with a schedule of rates established during the tender process.

Page | 55

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 25: AUDITORS’ REMUNERATION

The auditors of Focus Minerals Limited are Grant Thornton Audit Pty Ltd.

Amounts received or due and receivable by Grant Thornton Audit Pty Ltd. 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 Financial modelling	Consolidated 2012 $’000 2011 $’000
	180 87 7 - 8 44
	187 139

NOTE 26: DIRECTORS’ AND EXECUTIVE DISCLOSURES

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

(a) Compensation options:

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 2012 30 June 2012 Directors Donald Taig Phillip Lockyer Gerry Fahey Bruce McComish Campbell Baird Paul Fromson1 Mark Hine2 Jon Grygorcewicz3 Brad Valiukas4 Total	Balance at Beginning Of period 1/7/2011 Granted as remuneration Options Exercised/ lapsed Balance at End of Period 30/6/2012	Vested as at 30 June 2012 Total Vested Not Vested
	- - - - - - - - - - - - - - - - 25,000,000 - - 25,000,000 - - - - - - - - 6,461,538 - (6,461,538) - 17,384,616 - (17,384,616) -	- - - - - - - - - - - - 25,000,000 - 25,000,000 - - - - - - - - - - - -
	48,846,154 - (23,846,154) 25,000,000	25,000,000 - 25,000,000

1. Paul Fromson was appointed at Company Secretary and Chief Financial Officer in April 2012.

2. Mark Hine was appointed as Chief Operating Officer in December 2011.

3. Jon Grygorcewicz resigned as Chief Financial Officer in April 2012.

4. Brad Valiukas resigned as Chief Operating Officer in January 2012.

Page | 56

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 26: DIRECTORS’ AND EXECUTIVE DISCLOSURES (continued)

(b) Options holdings of Key Management Personnel (continued )

30 June 2011 30 June 2011 Directors Donald Taig Phillip Lockyer Gerry Fahey Bruce McComish Campbell Baird Jon Grygorcewicz Total	Balance at Beginning Of period 1/7/2010 Granted as remuneration Options Exercised/ lapsed Balance at End of Period 30/6/2011	Vested as at 30 June 2011 Total Vested Not Vested
	- - - - - - - - - - - - - - - - 15,000,000 10,000,000 - 25,000,000 6,461,538 - - 6,461,538	- - - - - - - - - - - - 25,000,000 - 25,000,000 6,461,538 - 6,461,538
	21,461,538 10,000,000 - 31,461,538	31,461,538 - 31,461,538

(c) Shareholdings of Key Management Personnel

	Balance 1 July 2011	Balance 1 July 2011	Granted as remuneration	Granted as remuneration		Purchases	Purchases		Balance 30 June 2012	Balance 30 June 2012
30 June 2012	Shares	Options	Shares	Options		Shares	Options		Shares	Options
Directors
Donald Taig	11,963,259	-		-	-		-	-	11,963,259	-
Phillip Lockyer	594,523	-		-	-		-	-	594,523	-
Gerry Fahey	-	-		-	-		-	-	-	-
Bruce McComish	-	-		-	-		-	-	-	-
Campbell Baird	6,394,736	25,000,000		-	-		-	-	6,394,736	25,000,000
Jon Grygorcewicz	2,175,550	6,461,538		-	-		-	-	2,175,550	6,461,538
Paul Fromson	-	-		-	-		-	-	-	-
Mark Hine	-	-		-	-		-	-	-	-
Total	21,128,068	31,461,538		-	-		-	-	21,128,068	31,461,538

Page | 57

Focus Minerals Ltd – Financial Report 2012

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2012

NOTE 26: DIRECTORS’ AND EXECUTIVE DISCLOSURES (continued)

(c) Shareholdings of Key Management Personnel (continued)

30 June 2011 Directors Donald Taig Phillip Lockyer Gerry Fahey Bruce McComish Campbell Baird Jon Grygorcewicz Total	Balance 1 July 2010 Granted as remuneration Purchases Balance 30 June 2011 Shares Options Shares Options Shares Options Shares Options
	11,305,366 - - - 657,893 - 11,963,259 - 594,523 - - - - - 594,523 - - - - - - - - - - - - - - - - - 5,600,000 15,000,000 - 10,000,000 794,736 - 6,394,736 25,000,000 2,162,705 6,461,538 - - 12,845 - 2,175,550 6,461,538
	19,662,594 21,461,538 - 10,000,000 1,465,474 - 21,128,068 31,461,538

NOTE 27: SIGNIFICANT EVENTS AFTER BALANCE DATE

Proposed Placement to Shandong Gold International Mining Corporation Limited.

On 20 September 2012 the company issued an announcement for a proposed placement of shares that would result in Shandong Gold owning up to 51% in the Company. The key points of the announcement are reproduced as follows:

“ Focus Minerals Limited (“Focus”) [ASX: FML], an Australian gold producer and explorer, is pleased to announce that it has entered in to a Share Subscription Deed with Shandong Gold International Mining Corporation Limited (“Shandong Gold”), under which Shandong Gold has agreed to subscribe for new fully paid ordinary Focus shares to raise $225 million.

Shandong Gold, a subsidiary of one of China’s three largest gold producers by production, will subscribe for approximately 4.55 billion new fully paid ordinary Focus shares (“New Shares”) at 5 cents per New Share, to raise $225 million (“Placement”). The Placement represents a premium of:

• 13.6% to the closing price of Focus shares of 4.4 cents per share on 19 September 2012; and

• 28% to the 60 day VWAP of 3.9 cents per share for the period ending 19 September 2012.”

The placement will require shareholder approval and the unanimous recommendation of the Board based on an independent report that the transaction is reasonable. The AGM is scheduled for 30 November to allow for sufficient time for the independent experts reports to be completed and a detailed Explanatory Memorandum to be compiled.

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.

Page | 58

Focus Minerals Ltd – Financial Report 2012

DIRECTORS’ DECLARATION

1. In the opinion of the Directors of Focus Minerals Limited (the “Company”):

2. (a) the financial statements and notes set out on pages 15 to 58 and the remuneration disclosures that are contained in pages 7 to 12 of the Remuneration report in the Directors’ report, are in accordance with the Corporations Act 2001, including:

   • (i) giving a true and fair view of the Group’s financial position as at 30 June 2011 and of their performance, for the financial year ended on that date; and

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

   • (iii) complying with International Financial Reporting Standards as disclosed in Note 1.

3. (b) the remuneration disclosures that are contained in page 7 to 12 of the Remuneration report in the Directors’ report comply with Australian Accounting Standard AASB 124 Related Party Disclosures and

4. (c) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

5. The Directors have been given the declarations required by Section 295A of the Corporations Act 2001 from the Chief Executive Officer and Chief Financial Officer for the financial year ended 30 June 2011.

Signed in accordance with a resolution of the Directors:

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---

Don Taig

Director Dated 28 September 2012

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Grant Thornton Audit Pty Ltd ABN 91 130 913 594 ACN 130 913 594

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

T +61 8 9480 2000 F +61 8 9322 7787 E info.wa@au.gt.com W www.grantthornton.com.au

Independent Auditor’s Report To the Members of Focus Minerals Ltd

Report on the financial report

We have audited the accompanying financial report of Focus Minerals Ltd (the “Company”), which comprises the consolidated statement of financial position as at 30 June 2012, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information 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 of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determines is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. The Directors also state, in the notes to the financial report, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, the financial statements comply with International Financial Reporting Standards.

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. Those standards require us to 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.

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 | 60

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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 Company’s preparation of the financial report that gives a true and fair view 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 Company’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Directors, as well as evaluating the overall presentation of the financial report.

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

Electronic presentation of audited financial report

This auditor’s report relates to the financial report of Focus Minerals Ltd and controlled entities for the year ended 30 June 2012 included on Focus Minerals Ltd’s web site. The Company’s Directors are responsible for the integrity of Focus Minerals Ltd’s web site. We have not been engaged to report on the integrity of Focus Minerals Ltd’s web site. The auditor’s report refers only to the statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the audited financial report to confirm the information included in the audited financial report presented on this web site.

Independence

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

Auditor’s opinion

In our opinion:

• a the financial report of Focus Minerals Ltd is in accordance with the Corporations Act 2001, including:

• i giving a true and fair view of the consolidated entity’s financial position as at 30 June 2012 and of its performance for the year ended on that date; and

• ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and

• b the financial report also complies with International Financial Reporting Standards as disclosed in the notes to the financial statements.

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Report on the remuneration report

We have audited the remuneration report included in pages 7 to 12 of the directors’ report for the year ended 30 June 2012. 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 on the remuneration report

In our opinion, the remuneration report of Focus Minerals Ltd for the year ended 30 June 2012, complies with section 300A of the Corporations Act 2001.

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GRANT THORNTON AUDIT PTY LTD Chartered Accountants

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P W Warr Partner - Audit & Assurance

Perth, 28 September 2012

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