FOCUS MINERALS LTD — Annual Report 2015

Mar 30, 2016

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Focus Minerals Limited

ABN 56 005 470 799

Financial Report

For the year ended 31 December 2015

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Contents

Corporate Information .................................................................................................................. 3 Directors’ Report ........................................................................................................................... 4 Auditors’ Independence Declaration ......................................................................................... 20 Financial Statements .................................................................................................................. 21 Notes to Financial Statements ................................................................................................... 25 Directors’ Declaration ................................................................................................................. 54 Independent Auditors’ Report .................................................................................................... 55

These financial statements are the consolidated financial statements of the consolidated entity consisting of Focus Minerals Ltd and its subsidiaries. The financial statements are presented in the Australian currency.

Focus Minerals Ltd is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Focus Minerals Ltd Level 2, 159 Adelaide Terrace East Perth, Western Australia 6004

A description of the nature of the consolidated entity’s operations and its principal activities is included in the review of operations and activities contained in the directors’ report on pages 4 to 19 which are not part of these financial statements.

The financial statements were authorised for issue by the directors on 31 March 2016. The directors have the power to amend and reissue the financial statements.

Through the use of the internet, we have ensured that our corporate reporting is timely and complete. All press releases, financial reports and other information is available on our website: www.focusminerals.com.au

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Corporate Information

ABN 56 005 470 799

Directors

Dianfei Pei Yuhuan Ge Wanghong Yang Gerry Fahey Peter Hepburn-Brown Zaiqian Zhang

Chairman - Non-Executive, Non-Independent Director - Non-Executive, Non-Independent Director – Executive Director - Independent Director - Independent Alternate Director to Dianfei Pei - Executive

Company Secretary

Dane Etheridge

Registered and Head Office

Level 2 159 Adelaide Terrace East Perth WA 6004

PO Box 3233 East Perth WA 6892

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

Share Registry

Computershare Investor Services Pty Ltd Level 11, 172 St Georges Terrace Perth WA 6000

Auditor

PricewaterhouseCoopers 125 St Georges Terrace Perth WA 6000

Bankers

National Australia Bank 100 St Georges Terrace Perth WA 6000

Solicitors

Murcia Pestell Hillard Lawyers Suite 183, Level 6 580 Hay Street, Perth, WA 6000

Bank of China Perth Branch Ground Floor, 179 St Georges Terrace Perth WA 6000

Jackson McDonald 225 St Georges Terrace Perth WA 6000

Industrial and Commercial Bank of China Level 28, 44 St Georges Terrace Perth WA 6000

Stock Exchange Listing

Australian Securities Exchange (ASX) ASX Symbol: FML

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

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” or “consolidated entity”) at the end of, or during the year ended 31 December 2015.

Directors

The directors of the Company at any time during or since the end of the year and up to the date of this report, unless otherwise indicated, are:

Name	Designation & Independence Status
Dianfei Pei	Chairman - Non-Executive, Non-Independent (appointed on 12 January 2016)
Yuhuan Ge	Director - Non-Executive, Non-Independent
Wanghong Yang	Director – Executive, Interim CEO
Gerry Fahey	Director – Independent
Peter Hepburn-Brown	Director – Independent (appointed on 10 April 2015)
Zaiqian Zhang	Alternate Director to Dianfei Pei – Executive
Jisheng Lu	Chairman - Non-Executive, Non-Independent (resigned on 12 January 2016)

Details of the Directors’ qualifications, experience, special responsibilities and details of directorships of other listed companies can be found on pages 5 to 7 and in the remuneration report on pages 13 to 18.

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Information on Directors, Officers and Senior Management

Directors	Designation & Independence Status	Experience, Expertise & Qualifications
Dianfei Pei Appointed on 12 January 2016	Chairman Non-Executive Non-Independent	Mr Pei is a mining engineer with almost 30 years of relevant experience. He has been in several senior positions within Shandong Gold Group, such as Resident Manager of Ling Long Mine and Chief Health and Safety Inspector of the Group. Currently, he is the Executive Chairman of Shandong Gold Non-ferrous Mining and the Executive Chairman of Shandong Gold International Mining. Mr Pei has a Master’s degree in Mining Engineering at University of Science and Technology Beijing. Directorships of other ASX listed companies: Nil
Yuhuan Ge Appointed on 5 July 2013	Director Non-Executive Non-Independent	Mr Ge became Vice Chairman and Deputy General Manager of Shandong Gold International Mining Corporation Limited in 2010. Mr Ge has over 30 years’ experiences in mining with a background in Engineering. From 1982 to 2002 he worked for the Shandong Gold Group in a range of management roles. He has considerable international experience and from 2002 to 2010 he was the Chairman & General Manager of Jinyan Corporation Limited in Venezuela and Chairman of Shandong Gold Jinwang Corporation Limited in Suriname. Directorships of other ASX listed companies: Nil
Wanghong Yang Appointed on 5 July 2013	Director Executive Interim CEO	Mr Yang is the Interim CEO at Focus Minerals Ltd, prior to this role he worked at Shandong Gold International Mining Corporation Limited as Financial Controller. He joined Shandong Gold Group in 2008 as the Group’s Senior Manager of Capital Management before becoming the Deputy General Manager of Shandong Gold International Mining Corporation Limited. Mr Yang began his career with the China Machinery Industry Supply and Sale Corporation, working in a number of management roles between 1986 and 1999. During this time he also spent three years based in Nigeria. In 2000, he joined Success Group Co., Ltd, to coordinate and manage the Group’s investment projects in China prior to joining China Overseas Holdings Limited in 2002. Mr Yang has a Bachelor’s degree in Accounting from Renmin University of China and a Master’s degree in Applied Finance from Macquarie University. Directorships of other ASX listed companies: Nil

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Directors	Designation & Independence Status	Experience, Expertise & Qualifications
Gerry Fahey Appointed on 18 April 2011	Director Independent	Qualifications: M.AIG, M.AusIMN Mr Fahey is a geologist with over 40 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 Fellow of the Joint Ore Reserve Committee (JORC) and a former Board Member (Federal Councillor) for the Australian Institute of Geoscientists (AIG). Directorships of other ASX listed companies:  Prospect Resources Limited (Non-Executive Director: appointed July 2013, ongoing)  Modun Resources Limited (Non-Executive Director: resigned January2014)
Peter Hepburn-Brown Appointed on 10 April 2015	Director Independent	Mr Hepburn-Brown has over 35 years mining experience including senior management and Board positions. He served as the Chairman of MRL Corporation Limited and in the last five years has also been an Executive Director of Medusa Mining Limited. He graduated from the Western Australian School of Mines with Bachelor of Applied Science and also holds a Graduate Diploma of Human Resources from Monash University. Directorships of other ASX listed companies:  MRL Corporation Limited (Non-Executive Chairman, resigned November 2015)  Medusa Mining Ltd (Executive Director, resigned August 2014)
Zaiqian Zhang Appointed on 5 July 2013	Alternate Director Executive	Qualifications: BSc (Hons), MSc Mr Zhang joined Focus Minerals Ltd in September 2013 as a Senior Accountant. Prior to this Mr Zhang served as the Deputy Manager, Department of Investment and Development for Shandong Gold International Mining Corporation Limited. Mr Zhang has a BSc (Hons) Accounting for Management and an MSc Accounting and Finance from Aston University, Birmingham, United Kingdom. Directorships of other ASX listed companies: Nil

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Directors	Designation & Independence Status	Experience, Expertise & Qualifications
Jisheng Lu Appointed as Director on 5 July 2013 Elected as Chairman on 29 November 2013 Resigned on 12 January 2016	Chairman Non-Executive Non-Independent	Mr Lu has over 30 years’ experience in mining industry with a geology background. He worked at the Yinan Gold Mine from 1985 to 2001 where he became the Division Director and Assistant General Manager. Between 2001 and 2009 he was Deputy General Manager of Qingdao Co., Ltd and Changyi Mining Co., Ltd, both are Shandong Gold Group’s subsidiaries. Until December 2012 he was the Deputy General Manager of Shandong Gold Nonferrous Metal Mining Co., Ltd and General Manager of Jinhongling Mining Limited of Inner Mongolia. He then became the Vice Chairman and General Manager of Shandong Gold Non-ferrous Metals Mining Group. Directorships of other ASX listed companies: Nil

Note: For director’s special responsibilities during the year ended 31 December 2015, please refer to the Remuneration Report

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Senior Management

Wanghong Yang – Interim Chief Executive Officer

Mr. Yang joined Focus Minerals Limited on 2 September 2013 as the General Manager – Finance. Following the former Chairman and Acting CEO’s resignation on 29 November 2013, Mr Yang was appointed as the Interim CEO by the Board of Directors.

Please refer to the directors’ section for more information about Mr Yang.

Dane Etheridge – Company Secretary and General Manager of Business Development

Qualifications: BCom (Hons), MAppFin, PhD, CFA, AGIA, F Fin Appointed: 25 March 2014

Dr Etheridge has ten years’ experience in corporate governance and corporate finance gained through a diverse professional background including management consulting, finance academia, corporate advisor and senior management of ASX listed and not for profit organisations.

In his most recent position prior to Focus Minerals, Dr Etheridge played a key role in advising Boards and senior management of large ASX listed and government enterprises with the strategy consulting firm Chauvel Group. He is a Chartered Secretary, a Chartered Financial Analyst charterholder, and a Fellow of the Financial Services Institute of Australasia.

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)
Gerry Fahey	12,820	-
Dianfei Pei*	90,039,954	-
Yuhuan Ge*	90,039,954	-
Wanghong Yang*	90,039,954	-
Zaiqian Zhang	-	-

*Messieurs Pei, Ge and Yang hold indirect interest of the Company through Shandong Gold International Mining Corporation Limited, for whom they are executives.

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

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:

		Board		Audit and Business Risk Committee	Remuneration and Nominations Committee	Remuneration and Nominations Committee	Technical Committee	Technical Committee
	A		B	A B	A	B	A	B
Directors
Jisheng Lu	5		5	1 1	-	-	1	1
Yuhuan Ge	4		5	1 1	-	-	1	1
Wanghong Yang	5		5	- -	-	-	1	1
Gerry Fahey	5		5	1 1	-	-	1	1
Peter Hepburn-Brown	2		2	- -	-	-	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.

Capital Structure

Ordinary shares

As at the date of this report, the Company had on issue 182,748,565 fully paid ordinary shares.

On 22 May 2015, the Company completed a share consolidation through the conversion of 50 fully paid ordinary shares into 1 fully paid ordinary share. The comparison figures, such as earnings per share and number of options, have been restated on the post share consolidation basis.

Share Options

Options Issued

There were no options issued during the year ended 31 December 2015.

Options Exercised

There were no options exercised during the year ended 31 December 2015.

Options Lapsed

There were no options lapsed during the year ended 31 December 2015.

On 28 February 2016, a total of 300,000 options to acquire shares at an exercise price of $2.50 lapsed.

As at the date of this report, there are no unissued ordinary shares under options.

Principal Activities

The principal activity of the Company during the year was gold exploration in Western Australia.

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Overview

In 2015, Focus Minerals continued to support its exploration strategy by investing over $8 million in its drilling campaigns with over 57,000m drilled on the Laverton and Coolgardie tenements. Moreover, the Company was delighted to announce the maiden high-grade resource at Bonnie Vale (117,000oz @ 16.9g/t).

Focus had adopted a simplified and disciplined approach to all of its business activities, achieving cost saving through increasing productivity. The Company conducted internal reviews and obtained a cash refund of $1.742 million from the ATO for unclaimed taxes dating back to 2007. The full-year loss for 2015 was $2.830 million, which was 88% lower than 2014.

Exploration

Focus’ exploration strategy aims to extend and improve the Company’s current known resources and discover new ore bodies. In 2015, the company drilled a total of 776 exploration holes for a total of 57,398.6m across its Laverton and Coolgardie projects.

At Laverton a total of 320 holes for 21,150.5m of drilling was completed. The main focus was the drilling in Karridale area. The best results from the Laverton drilling included:

• 8.0m @ 27.46 g/t Au from 425m in KARC154

• 1.0m @ 60.50 g/t Au from 51m, 3.0m @ 17.33 g/t Au from 69m and 6.0m@3.75 g/t Au from 114m in KARC156

• 2.0m @ 8.78 g/t Au from 145m and 8.1m @ 10.05 g/t Au from183.4m in KARC158

• 3.0m @ 25.13 g/t Au from 274m in KARC163

• 3.1m @ 11.43 g/t Au from 146.9m in KARC165

In addition to the drilling conducted at Laverton during the year, a 603 line kilometre airborne geophysical survey was flown over 9 tenements in the Burtville area. Multiple structural targets in areas of transported regolith cover have been identified from this work.

A separate, two square km, Sub-Audio Magnetic (SAM) ground survey covered the Karridale Project and its extensions. Lines were at 100m spacing in two orthogonal directions (east–west and north–south), with additional 50m infill line spacing collected over KARD154 and its arsenopyrite intersection. The SAM survey highlighted the thrust fault surfaces that delineate the Karridale and Boomerang historic mines, allowing improved drill targeting.

At Coolgardie a total of 304 holes were drilled for 26,683m, this included the exploration work conducted at Bonnie Vale, Brilliant, New Australia, Bayleys extension as well as a regional Slimline RC program.

The Company’s 2015 drilling at Bonnie Vale continued to intercept the high grade gold mineralisation which included:

• 2.0m @ 12.84 g/t Au from 229m in BONC064

• 1.0m @ 10.41 g/t Au from 334m in BONCD065

• 5.5m @ 11.81 g/t Au from 223m in BONCD066

• 1.0m @ 10.43 g/t Au from 111m and 3.7m @ 10.48 g/t Au from 151.3m and 2.5m @ 13.88 g/t Au from 181m in BONDD068

• 2.0m @ 14.18 g/t Au from 118m in BONC070

• 2m @ 17.52g/t Au from 134m in BONC090

• 4m @ 14.31g/t Au from 117m in BONC114

In November 2015, a maiden high grade mineral resource at Bonnie Vale was released. The JORC 2012 Bonnie Vale Mineral Resource tabulation for Indicated and Inferred material above 3.0g/t gold cut-off is shown in Table 1 below for the Main Quarry Reef:

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Classification	Tonnes	Grade (g/t Au)	Resource (Oz)
Indicated	113,000	16.8	61,000
Inferred	102,000	17.0	56,000
Total	215,000	16.9	117,000

Table 1: Bonnie Vale Mineral Resources by Resources Category at 3.0g/t Au cut-off

In addition, a regional slimline RC programme was completed with prospects drilled in the vicinity of the Tindals, Forrest, Norris and Malaga prospects, some new gold mineralisation zones have been identified, in particular the results from Possum south which included 1m @ 25.0 g/t Au from 7m and 1m @ 3.77 g/t Au from 11m in FCSL129.

Operating Result

On 22 May 2015, the Company completed a share consolidation through the conversion of 50 fully paid ordinary shares into 1 fully paid ordinary share.

The Company incurred a loss of $2.830 million for the year ended 31 December 2015 (12 months to 31 December 2014 loss: $23.370 million).

At 31 December 2015, the Company has cash, cash equivalents and short-term deposit (excluding environmental performance bonds) of $57.610 million (31 December 2014: $65.782 million).

Net cash inflow from operations for the year ended 31 December 2015 totalled $0.002 million (12 months to 31 December 2014: $ 8.808 million outflow).

There were no issues of capital during the year ended 31 December 2015. On 28 February 2016, a total of 300,000 options to acquire shares at an exercise price of $2.50 lapsed.

Dividends

No dividends have been paid or provided in the year (2014: nil).

Earnings per Share

arnings per Share
	31 December	31 December
	2015	2014
Basic loss per share (cents per share)	(1.55)	(12.79)
Diluted loss per share (cents per share)	(1.55)	(12.79)

Significant Changes in the State of Affairs

Other than explained in the Review of Operations section above, there have been no significant changes in the state of affairs of the consolidated group to balance date.

Significant Events after Balance Date

Except as otherwise disclosed in this report, there has not been any matter or circumstance that has arisen after the balance date that has significantly affected, or may significantly effect, the operations of the consolidated group, the results of those operations, or the state of affairs of the consolidated group in future financial periods.

Likely Developments and Expected Results

The Company has now entered an exploration only phase and it is not possible to predict likely developments and expected results as these will be dependent upon exploration success and conversion of existing resources.

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Environmental Regulations

The Company’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 Group. At the date of this report the Group is not aware of any breach of those environmental regulations which apply to the Company’s operations. The Group continues to comply with its specified regulations.

Indemnification and Insurance of Directors and Officers

The Company has paid premiums of $20,000 (December 2014: $20,000) to insure the directors and officers of the Company 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 Company, other than conduct involving a wilful breach of duty in relation to the Company.

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Remuneration Report

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 the Company and the consolidated group. The Board formed the view that the two most senior people in the organisation, being the Interim Chief Executive Officer (Interim CEO) and the General Manager – Business Development and Improvement/Company Secretary are, in addition to the directors, the only executives who satisfy the “key management personnel” criteria during the period. The tables disclosing remuneration for this period and comparatives only include these KMP.

The KMP for the year ended 31 December 2015 are listed in the table below:

Directors	Capacity	Change during the Year
JishengLu	Non-Executive, Non-Independent	None1
Yuhuan Ge	Non-Executive, Non-Independent	None
GerryFahey	Independent	None
Peter Hepburn-Brown	Independent	Appointed on 10 April 2015
WanghongYang	Executive, Interim CEO	None
Zaiqian Zhang	Alternate Director, Executive	None
Current Executives	Capacity	Change during the Year
Dane Etheridge	General Manager – Business Development and Improvement and CompanySecretary	None

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.

The expected outcomes of the remuneration structure are:

• Retaining and motivating key executives; and

• Attracting high quality management to the Company.

Remuneration and Nominations 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 and Nominations Committee, comprising of all the non-executive directors.

Members of the Remuneration and Nominations Committee during the year were:

• Gerry Fahey - Committee Chairman

• Jisheng Lu[2]

• Yuhuan Ge

The Remuneration and Nominations Committee did not meet during the year.

Compensation of Key Management Personnel

Remuneration Structure

In accordance with best practice of the Corporate Governance Principles and Recommendations 3[rd] Edition , the remuneration structures for non-executive directors and executive directors are separate and distinct.

1 Mr Jisheng Lu resigned on 12 January 2016 and his position was succeeded by Mr Dianfei Pei on the same day. Page | 13

Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Remuneration and Nominations Committee

The Remuneration and Nominations 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 and Nominations 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. The committee did not meet this year.

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.

The Company introduced a Retirement Allowance in 2011 for the long term service of Directors, tied solely to their current Directors Fee at the time of retirement (Fixed Component). The application of the allowance was back dated to the time the directors commenced in their role.

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

During the year, no Directors were paid under this benefit.

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

The committees of the Board, as of the date of this report their Chair and members are presently as follows:

Board Member	Position	Audit & Business Risk	Technical	Remuneration and Nominations
Jisheng Lu2	Director Non-Executive Non-Independent	M	M	M
Yuhuan Ge	Director Non-Executive Non-Independent	M	M	M
Gerry Fahey	Director Independent	C	C	C
Peter Hepburn-Brown	Director Independent	M	M	M
Wanghong Yang	Director Executive	-	M	-
Zaiqian Zhang3	Alternate Director Executive	-	-	-

C=Chairman, M=Member

The following fees have applied:

	Chairman of the Board	$80,000 per annum
	Other directors	$50,000 per annum

The compensation provided to the Directors in these circumstances is fixed, which reflects the time commitment and responsibilities of their roles.

At present, the maximum aggregate remuneration of directors’ fees is $700,000 per annum of which $213,333 has been paid to the directors as fees during the year.

The remuneration of directors for the year ended 31 December 2015 is detailed in the remuneration table below.

Senior Executive and Executive Director Remuneration

Remuneration primarily consists of fixed and performance based remuneration where determined by the Remuneration and Nominations Committee. The Company had 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 by the Remuneration and Nominations 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.

2 Mr Jisheng Lu resigned on 12 January 2016 and his position was succeeded by Mr Dianfei Pei on the same day.

3 Base salary of $133,250 plus superannuation guarantee. 4-year fixed term contract, starting from 2 September 2013. Termination: 4 weeks’ notice plus entitlements according to Fair Work Act 2009.

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

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.

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 25-50% 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. Maximum amount, actual amount agreed and communicated by the Remuneration and Nominations Committee annually. The decision to agree and award a bonus is at the discretion of the recommendation of the CEO and approval of the Remuneration and Nominations Committee. The decision to agree and award a bonus to the CEO is separately considered by the Remuneration and Nominations Committee.

In determining whether or not a KPI has been achieved, the Remuneration and Nominations Committee bases the assessment on audited figures or on verifiable achievement of the relevant KPI. During the year, it was decided not to award bonuses.

For the year ended 31 December 2015, the Company did not set any KPIs.

The Company has issued share options in previous years 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.

No options were issued during the year. At this stage, no LTI programmes are in place. It is intended to implement an appropriate LTI at a future date.

Key Management Personnel Contracts

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

Wanghong Yang – Interim Chief Executive Officer

Base Salary:	$280,000 per annum plus superannuation guarantee
Term:	Four years starting from 2 September 2013
Termination:	Four weeks’ notice plus three months of salary
ane Etheridge – Company Secretary and GM Business Development and Imp
Base Salary:	$245,000 per annum plus superannuation guarantee
Term:	Permanent starting from 24 June 2013
Termination:	Four weeks’ notice plus three months of salary

Dane Etheridge – Company Secretary and GM Business Development and Improvement

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Remuneration Tables

Directors’ remuneration for the year ended 31 December 2015

				Short-Term Benefits	Short-Term Benefits	Short-Term Benefits	Short-Term Benefits	Post-Employment Benefits	Post-Employment Benefits	Post-Employment Benefits		%
		Salary $		Fees $		Other $		Super- annuation $		Bonus $	Total $	Performance Related $
Directors
Dianfei Pei		-		-		-		-		-	-	-
Yuhuan Ge		-		50,000		-		-		-	50,000	-
Wanghong Yang		280,000		-		-		26,600		-	306,600	-
Gerry Fahey		-		50,000		-		4,750		-	54,750	-
Peter Hepburn-Brown		-		33,333		-		3,167		-	36,500	-
Zaiqian Zhang		126,395		-		-		12,008		-	138,403	-
Former Directors
Jisheng Lu		-		80,000		-		-		-	80,000	-
Total		406,395		213,333		-		46,525		-	666,253	-
Directors’ remuneration for the year ended 31 December 2014.
			Short-Term Benefits				Post-Employment Benefits					%
	Salary $		Fees $		Other $		Super- annuation $		Bonus $		Total $	Performance Related $
Directors
Jisheng Lu	-		80,000		-		-		-		80,000	-
Yuhuan Ge	-		50,000		-		-		-		50,000	-
Wanghong Yang	265,413		25,000		-		27,589		-		318,002	-
Gerry Fahey	-		50,000		-		4,750		-		54,750	-
Zaiqian Zhang	129,150		-		-		12,269		-		141,419	-
Former Director
Bruce McComish4	-		35,000		12,500		3,325		-		50,825	-
Total	394,563		240,000		12,500		47,933		-		694,996	-

Messiers Pei, Ge, Yang and Lu are Shandong Gold Representatives, according to their employment contracts, the directors’ fees belong to Shandong Gold.

Remuneration of the key management personnel for the year ended 31 December 2015

		Short-Term Benefits	Short-Term Benefits	Post-Employment Benefits	Post-Employment Benefits		%
	Salary $	Fees $	Other $	Super- annuation $	Bonus $	Total $	Performance Related $
Current Executive
Dane Etheridge	245,000	-	-	23,275	-	268,275	-

4 Pursuant to his contract and Focus’ policy, Mr McComish was paid $12,500 on his retirement, representing 25 percent of his annual director fees. As a Shandong Gold representative on the Board, Mr McComish received $15,000 plus superannuation from Shandong Gold during the year.

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Remuneration of the key management personnel for the year ended 31 December 2014

		Short-Term Benefits	Short-Term Benefits	Post-Employment Benefits	Post-Employment Benefits		%
	Salary $	Fees $	Other $	Super- annuation $	Bonus $	Total $	Performance Related $
Executive
Dane Etheridge	229,060	-	-	21,761	-	250,821	-
Former Executive
Paul Fromson5	-	-	60,150	-	-	60,150	-

Relationship between Remuneration and Focus Minerals’ Performance

The majority of salary is fixed while small portions of remuneration, such as bonus and share option, are linked to the Company’s performance. Although there is some linkage to the Company’s performance, it is not closely aligned.

The following table shows key performance indicators for the Company over the last five reporting periods, which have been restated to reflect the 50-to-1 share consolidation:

		12 months to 31 December	12 months to 31 December	6 months to 31 December	12 months to 30 June	12 months to 30 June
		2015	2014	2013	2013	2012
(Loss) / profit attributable to the owners of Focus Minerals Ltd (‘$000’s)		(2,830)	(23,370)	(132,872)	(171,523)	6,844
Basic earnings per share	(CPS)	(1.55)	(12.79)	(72.71)	(93.86)	3.75
Dividend payments	$	n/a	n/a	n/a	n/a	n/a
Dividend payout ratio		n/a	n/a	n/a	n/a	n/a
Share Price as at the end of the year/period	$	0.31	0.35	0.60	0.70	1.85
Decrease in share price		(11%)	(41%)	(14%)	(62%)	(47%)
Total KMP incentive as percentage of profit/loss for the year/period	%	-	-	-	0.70%	1.56%

This is the end of remuneration report.

5 Mr Fromson was hired as a consultant after his redundancy, the fee is the remuneration for his service. Page | 18

Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Proceedings on Behalf of the Company

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.

No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under Section 237 of the Corporations Act 2001 .

Non-Audit Services

During the year ended 31 December 2015, there are no non-audit services provided by the Company’s auditor.

Auditor’s Independence Declaration

The auditor’s independence declaration for the year ended 31 December 2015 has been received and can be found on page 20 of the Financial Report.

Rounding of Amounts

The Company is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission, relating to the ‘rounding off’ of amounts in the Directors’ Report. Amounts in the Directors’ Report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

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

Dianfei Pei Chairman of the Board 31 March 2016 Jinan, China

Page | 19

Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Auditors’ Independence Declaration

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Page | 20

Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

Financial Statements

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2015

Revenue from continuing operations Other Income Employee expenses Depreciation Expenses Finance Costs Impairment expense Loss on disposal of tenements and plant and equipment Care and Maintenance Costs Corporate and Other Expenses Loss Before Income Tax Income Tax Expense Loss After Income Tax Other Comprehensive Income for the year, Net of Tax Total Comprehensive Loss Total Comprehensive Loss Attributable to: Owners of the Parent Total Comprehensive Loss Earnings per Share Basic Loss per Share (Cents Per Share) Diluted Loss per Share (Cents Per Share)	Notes	Consolidated 2015 $’000 2014 $’000
	2(a)	2,502 3,372
	2(b)	2,062 1,889
		(1,283) (2,423)
	2(c)	(1,288) (2,300)
		(1,016) (1,344)
	2(c)	- (13,785)
	2(c)	(395) (3,484)
		(1,534) (3,091)
	2(c)	(1,878) (2,204)
		(2,830) (23,370)
	4 5 5	- -
		(2,830) (23,370)
		- -
		(2,830) (23,370)
		(2,830) (23,370)
		(2,830) (23,370)
		(Restated)
		(1.55) (12.79)
		(1.55) (12.79)

The accompanying notes form part of these financial statements .

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Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2015

Assets Current Assets Cash and Cash Equivalents Short-term deposits Restricted Cash Trade and Other Receivables Financial Assets Total Current Assets Non-Current Assets Restricted Cash Inventories Plant and Equipment Exploration and Evaluation Assets Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and Other Payables Interest Bearing Liabilities Provisions Total Current Liabilities Non-Current Liabilities Other Payable Provisions Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued Capital Reserves Accumulated Losses Total Equity	Notes	Consolidated 31 December 31 December 2015 $’000 2014 $’000
	6	1,995 9,210
	6	55,615 56,572
	6	- 132
	7	1,148 2,027
		150 247
		58,908 68,188
	6	16,331 18,991
	8	1,293 1,293
	9	3,480 4,719
	10	50,613 43,261
		71,717 68,264
		130,625 136,452
		260 1,599
		- 160
	11	351 2,492
		611 4,251
		81 -
	11	26,116 25,554
		26,197 25,554
		26,808 29,805
		103,817 106,647
	12 (a)	427,167 427,167
	12 (c)	(6,995) (6,995)
		(316,355) (313,525)
		103,817 106,647

The accompanying notes form part of these financial statements.

Page | 22

Focus Minerals Ltd – Financial Report for the year ended 31 December 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 DECEMBER 2015

	Issued Capital	Accumulated Losses	Reserves	Total
	$’000	$’000	$’000	$’000
Balance as at 31 December 2013				130,017
	427,167	(290,155)	(6,995)
Total Comprehensive loss for the year	-	(23,370)	-	(23,370)
Balance as at 31 December 2014	427,167	(313,525)	(6,995)	106,647
Total Comprehensive loss for the year	-	(2,830)	-	(2,830)
Balance as at 31 December 2015				103,817
	427,167	(316,355)	(6,995)

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The accompanying notes form part of these financial statements.

Page | 23

Focus Minerals Ltd – Financial Report for the year end 31 December 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2015

Cash Flows from Operating Activities Receipts from Customers Payments to Suppliers and Employees (Including GST) Royalties Paid Collection / (Payment) of Performance Bonds Other Income Interest Received Finance Costs Net Cash Inflow/(Outflow) from Operating Activities Cash Flows from Investing Activities Proceeds from Sale of Non-Current Assets Acquisition of Plant and Equipment Proceeds from sale of financial assets Decrease/(Increase) in short-term deposits Exploration Expenditure Net Cash Outflow from Investing Activities Net Decrease in Cash and Cash Equivalents Cash and Cash Equivalents at the Beginning of the Year Cash and Cash Equivalents at the Ending of the Year	Notes	Consolidated 2015 ’$000 2014 ’$000
		- 158
		(7,632) (10,617)
		(11) (620)
		2,792 (922)
		2,234 548
		2,865 3,067
		(246) (422)
	6(ii)	2 (8,808)
	6(i)
		- 1,393
		(49) (17)
		- 267
		957 (56,572)
		(8,125) (8,292)
		(7,217) (63,221)
		(7,215) (72,029)
		9,210 81,239
		1,995 9,210

The accompanying notes form part of these financial statements.

Page | 24

Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Notes to Financial Statements

Note 1: Summary of Significant Accounting Policies

The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the consolidated entity consisting of Focus Minerals Ltd (‘the parent entity’) and its subsidiaries (the ‘Group’).

(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, or, in certain cases, to the nearest dollar.

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. Focus Minerals Ltd is a for-profit, listed public company, incorporated and domiciled in Australia.

The financial report of Focus Minerals Ltd and controlled entities comply with Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

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 financial assets.

The financial information for the parent entity, Focus Minerals Ltd, disclosed in Note 16 has been prepared on the same basis as the consolidated financial statements other than investments in subsidiaries, which are held at cost.

(b) Segment Reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Interim Chief Executive Officer.

(c) Principles of Consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Focus Minerals Ltd at the end of the reporting period and from time to time during the year. A controlled entity is any entity over which Focus Minerals Limited has control of the entity, demonstrated by the Group’s exposure to, or rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. In assessing the ability to control, 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 15 to the financial statements.

The acquisition method of accounting is used to account for business combinations by the Group (refer to Note 1(e)).

Page | 25

Focus Minerals Ltd – Financial Report for the year end 31 December 2015

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 Profit or Loss and Other 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.

The Group treats transactions with non-controlling interests that do not result in a loss of control as transactions with equity owners of the Group. A change in ownership interest results in an adjustment between the carrying amounts of the controlling and non-controlling interests to reflect their relative interests in the subsidiary. Any difference between the amount of the adjustment to non-controlling interests and any consideration paid or received is recognised in a separate reserve within equity attributable to owners of Focus Minerals Ltd. When the Group ceases to have control, joint control or significant influence, any retained interest in the entity is remeasured to its fair value with the change in carrying amount recognised in profit of loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, jointly controlled entity or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets and liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate. If the ownership interest in a jointlycontrolled entity or an associate is reduced but joint control or significant influence is retained, only a proportionate share of the amounts previously recognised in other comprehensive income are reclassified to profit or loss where appropriate.

(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. Revenue is measured at the fair value of the consideration received or receivable. The following specific recognition criteria must also be met before revenue is recognised:

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.

(e) Business Combinations

The acquisition method of accounting is used to account for all business combinations, regardless of whether equity instruments or other assets are acquired. The consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement and the fair value of any pre-existing equity interest in the subsidiary. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net identifiable assets.

The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree over the fair value of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or loss as a bargain purchase.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Where settlement of any part of cash consideration is deferred, the amounts payable in the future are discounted to their present value as at the date of exchange. The discount rate used is the entity’s incremental borrowing rate, being the rate at which a similar borrowing could be obtained from an independent financier under comparable terms and conditions.

Contingent consideration is classified either as equity or a financial liability. Amounts classified as a financial liability are subsequently remeasured to fair value with changes in fair value recognised in profit or loss.

(f) Leases

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

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

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

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

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

(g) Cash and Cash Equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term, highly liquid deposits with an original maturity of three months or less. For the purposes of the Statement of Cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts.

• (h) Trade and Other Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for doubtful debts.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off. A provision for doubtful receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is not material.

The amount of the impairment loss is recognised in profit or loss within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.

They are presented as current assets unless collection is not expected for more than 12 months after the reporting date.

Page | 27

Focus Minerals Ltd – Financial Report for the year end 31 December 2015

(i) 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.

(j) Impairment of Financial Assets

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

Financial Assets Carried at Amortised Cost

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

The amount of the loss is recognised in profit or loss. The Group first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and individually or collectively for financial assets that are not individually significant.

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

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

(k) 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.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

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.

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.

Focus Minerals Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements.

Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively.

(l) 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 the trade-date, the date on which the Company commits itself to either the purchase or sale of the asset.

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.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Classification and Subsequent Measurement

Financial 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:

• the amount at which the financial asset or financial liability is measured at initial recognition;

• less principal repayments;

• 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

• 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 income or an expense in profit or loss.

• 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 management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying value being included in profit or loss.

• 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 using the effective interest rate method.

• Financial Liabilities

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised cost using the effective interest rate method.

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 statement of profit or loss.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

De-recognition

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.

(m) Goods and Services Tax (“GST”)

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 statement of financial position.

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.

(n) 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 3 -15 years.

Depreciation of underground assets is calculated on a unit of production basis over the period of the life of mine plan. 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 the end of each reporting period.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Impairment

The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may be impaired. Where this is the case then the recoverable amount of this plant and equipment is estimated.

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

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

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 statement of profit or loss and other comprehensive income.

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.

(o) 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; or

• 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 is 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, or when the cash generating unit that exploration expenditure assets are a part of are tested for impairment. 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 Mine Properties and Development.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

(p) Mine Properties and Development

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.

In some circumstances, where conversion of resources into reserves is expected, some 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.

(q) Stripping Costs in the Production Phase of a Surface Mine

Production stripping costs (also known as deferred mining costs) are to be capitalised as part of an asset if:

• There is a probable future economic benefits will be realised;

• The costs can be reliably measured; and

• The component of an ore body for which access has been improved can be identified.

The stripping activity asset shall be amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity.

(r) Trade and Other Payables

Trade and other payables are recognised originally at fair value and subsequently measured at amortised cost using the effective interest rate method. Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of each reporting period that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date.

(s) Provisions

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

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

(t) Employee 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 nonaccumulating 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 corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows.

Termination Benefits

Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value.

• (u) Share-Based Payment Transactions

Equity Settled Transactions

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

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.

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

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

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

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 statement of profit or loss 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).

(v) Issued Capital

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

(w) Restoration and Rehabilitation Costs

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The mining, extraction and processing activities of the Group give rise to obligations for site restoration and rehabilitation. Restoration and rehabilitation obligations can include facility decommissioning and dismantling, removal or treatment of waste materials, land rehabilitation and site restoration. Provisions for the cost of each rehabilitation program are recognised at the time that environmental disturbance occurs.

Restoration and rehabilitation provisions are initially measured at the expected value of future cash flows required to rehabilitate the relevant site, discounted to their present value. The judgements and estimates applied for the estimation of the rehabilitation provisions are discussed in Note 1(aa).

When provisions for restoration and rehabilitation are initially recognised, the corresponding cost is capitalised into the cost of the related assets and is amortised using the units of production method over the life of the mine. The value of the provision is progressively increased over time as the effect of discounting unwinds, creating an expense recognised in finance costs.

At each reporting date the restoration and rehabilitation liability is re-measured to account for any new disturbance, updated cost estimates, inflation, changes to the estimated reserves and lives of operations, new regulatory requirements, environmental policies and revised discount rates. Changes to the restoration and rehabilitation liability are added to or deducted from the related rehabilitation asset and amortised accordingly.

(x) Government Grants

Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. If the assets related to government grants have been fully impaired, amortised or depreciated, the grant received is recorded in the statement of profit or loss as other income.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

(y) Earnings per Share

Basic earnings per share is calculated as net result 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 are calculated as net result 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.

(aa) 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.

• Reserves and Resources

In order to calculate ore reserves and mineral resources, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. The consolidated entity estimates its ore reserves and mineral resources based on information compiled by Competent Persons (as defined in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as revised in December 2004 (the JORC code).

As economic assumptions used to estimate reserves change and as additional geological data is generated during the course of operations, estimates of reserves and mineral resources may vary from period to period. Changes in reported reserves and mineral resources may affect the Group’s financial results and financial position in a number of ways, including the following:

Asset carrying values may be affected due to changes in estimated future cash flows;

Depreciation and amortisation charges in profit and loss may change where such charges are determined by the units of production basis, or where the useful economic lives of assets change; and

Restoration and rehabilitation provision may be affected due to changes in the magnitude of future restoration and rehabilitation expenditure.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

• Exploration and Evaluation Expenditure

The Group’s accounting policy for exploration and evaluation expenditure results in expenditure being capitalised for an area of interest where it is considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. This policy requires management to make certain estimates as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to profit and loss.

 Restoration and Rehabilitation Provision

The Group’s accounting policy for the recognition of restoration and rehabilitation provisions requires significant estimates including the magnitude of possible works required for the removal of infrastructure and of rehabilitation works, future cost of performing the work, the inflation and discount rates and the timing of cash flows. These uncertainties may result in future actual expenditure differing from the amounts currently provided. When these factors change or become known in the future, such differences will impact the mine rehabilitation provision in the period in which they change or become known.

 Impairment of Assets

The Group assesses each Cash-Generating Unit (CGU), to determine whether there is any indication of impairment or reversal. Where an indicator of impairment or reversal exists, a formal estimate of the recoverable amount is made, which is deemed as being the higher of the fair value less costs of disposal and value in use calculated in accordance with accounting policy Note 1(n). These assessments require the use of estimates and assumptions such as discount rates, exchange rate, commodity prices, gold multiple values, future operating development and sustaining capital requirements and operating performance (including the magnitude and timing of related cash flow).

• Income Taxes

Judgement is required in assessing whether deferred tax assets and liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from temporary differences, are recognised only when it is considered more likely than not that they will be recovered, which is dependent on the generation of future assessable income of a nature and of an amount sufficient to enable the benefits to be utilised. Refer to Note 4 for details of the judgement applied in the current period in relation to income taxes.

(ab) New Accounting Standards and Interpretations

Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2015 reporting period. The Group’s assessment of the impact of these new standards and interpretations is set out below.

• (i) AASB 9 Financial Instruments (Must be applied for financial years commencing on or after 1 January 2018).

AASB 9 Financial Instruments addresses the classification, measurement and de-recognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2018 but is available for early adoption. The derecognition rules have been transferred from AASB 139 Financial Instruments: Recognition and Measurement and have not been changed. The Group has not yet decided when to adopt AASB 9.

The new hedging rules align hedge accounting more closely with the entity's risk management. As a general rule, it will be easier to apply hedge accounting going forward. The new standard also introduces expanded disclosure requirements and changes in presentation. Management is currently in the process of assessing the impact of the new rules and at this stage.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

• (ii) AASB 15 Revenue from contracts with customers (Mandatory for financial years commencing on or after 1 January 2018)

The AASB has issued a new standard for the recognition of revenue. This will replace AASB 118 which covers contracts for goods and services and AASB 111 which covers construction contracts. The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer – so the notion of control replaces the existing notion of risks and rewards. Management is currently in the process of assessing the impact of the new rules and at this stage.

There are no other standards that are not yet effective and that are expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

Note 2: Revenues and Expenses

(a) Revenue from continuing operations Gold sales Interest income Total revenue from continuing operations (b) Other income Sundry income Finance income Total Other income (c) Expenses Depreciation Expenses Depreciation Total depreciation expenses Corporate and other expenses Professional services and consulting fees Corporate expense Office lease costs Total corporate and other expenses Loss on disposal of tenements and plant and equipment Exploration assets Plant & Equipment Total loss on disposal of tenements and plant and equipment Impairment expense Impairment – Non-current assets Total impairment expense	Consolidated 2015 $’000 2014 $’000
	- 158 2,502 3,214
	2,502 3,372
	2,062 1,868 - 21
	2,062 1,889
	1,288 2,300
	1,288 2,300
	750 432 728 1,378 400 394
	1,878 2,204
	395 2,090 - 1,394
	395 3,484
	- 13,785
	- 13,785

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Note 3: Segment Reporting

All Focus Minerals Limited’s subsidiaries are wholly owned. The Group has three reportable 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 each of these business units a monthly basis. Segment Financial Information for the year ended 31 December 2015 is presented below:

Revenue from continuing operations Other income Depreciation Employee expenses Finance cost Care and Maintenance Costs Loss on disposal of tenements and plant and equipment Corporate and Other expenses SEGMENTED LOSS BEFORE TAX Income taxes SEGMENTED LOSS Current Assets Non-Current Assets - Restricted Cash - Inventories - Property, Plant & Equipment - Exploration and Evaluation TOTAL ASSETS Current Liabilities Other Non-Current Liabilities TOTAL LIABILITIES NET ASSETS Capital Expenditures	2015 2015 2015 2015 Coolgardie Laverton Corporate Consolidated $’000 $’000 $’000 $’000
	14 177 2,311 2,502 710 427 925 2,530 (1,167) - (121) (1,288) (90) (18) (1,175) (1,283) - - (1,016) (1,016) (607) (927) - (1,534) (195) (200) - (395) - - (1,878) (1,878)
	(1,335) (541) (954) (2,830) - - - -
	(1,335) (541) (954) (2,830)
	978 586 57,345 58,909 96 15 16,220 16,331 1,293 - - 1,293 3,410 - 69 3,479 32,289 18,323 - 50,612
	38,066 18,924 73,634 130,624 119 65 428 612 11,780 14,410 6 26,196
	11,899 4,475 434 26,808
	26,167 4,449 73,200 103,816
	4,522 3,267 7 7,796

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Segment Financial Information for the year ended 31 December 2014 is presented below:

Revenue from continuing operations Other income Depreciation Employee expenses Finance cost Care and Maintenance Costs Impairment Loss on disposal of tenements and plant and equipment Corporate and Other expenses SEGMENTED LOSS BEFORE TAX Income taxes SEGMENTED LOSS Current Assets Non-Current Assets - Restricted Cash - Inventories - Property, Plant & Equipment - Exploration and Evaluation TOTAL ASSETS Current Liabilities Other Non-Current Liabilities TOTAL LIABILITIES NET ASSETS Capital Expenditures	2014 2014 2014 2014 Coolgardie Laverton Corporate Consolidated $’000 $’000 $’000 $’000
	168 293 2,911 3,372 859 964 66 1,889 (2,148) - (152) (2,300) (296) (13) (2,114) (2,423) - (1) (1,343) (1,344) (1,452) (1,639) - (3,091) (11,922) (1,863) - (13,785) (2,602) (437) (445) (3,484) (75) (118) (2,011) (2,204)
	(17,468) (2,814) (3,088) (23,370) - - - -
	(17,468) (2,814) (3,088) (23,370)
	523 949 66,716 68,188 706 7,458 10,827 18,991 1,293 - - 1,293 4,536 - 183 4,719 28,004 15,257 - 43,261
	35,062 23,664 77,726 136,452 3,301 360 590 4,251 11,355 14,131 68 25,554
	14,656 14,491 658 29,805
	20,407 9,173 77,067 106,647
	4,024 4,188 80 8,292

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Note 4: Income Tax

Major components of income tax expense for the years ended 31 December 2015 and 31 December 2014 are: Income Statement Current income tax Current income tax charge Deferred tax assets relating to tax losses Deferred income tax Relating to origination and reversal of temporary differences Temporary differences recognised in equity Current year tax loss not recognised in current year Income tax expense (benefit) reported in income statement Statement of changes in equity Deferred income tax Capital raising costs Income tax expenses reported in equity	Consolidated 2015 2014 $’000 $’000
	- - - - - - - - - -
	- -
	- -
	- -

A reconciliation of income tax expense applicable to accounting loss before income tax at the statutory income tax rate to income tax expense at the Company’s effective income tax rate for the years ended 31 December 2015 and 31 December 2014 is as follows:

Accounting loss before tax Tax at the statutory income tax rate of 30% (2014: 30%) Effect of expenses that are not deductible in determining taxable profit Non-taxable income Effect of unused tax losses and tax offsets not recognised as deferred tax assets Previously unrecognised deferred tax assets used to reduce deferred tax liabilities Income tax expense recognised in profit or loss	2015 2014 $’000 $’000
	(2,830) (23,369)
	(849) (7,011) 2 11 (91) (228) 4,228 11,728 (3,290) (4,500)
	- -

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Tax Consolidation

The Company and its 100% owned controlled entities have formed a tax consolidated group. Members of the tax consolidated group have entered into a tax sharing arrangement with effect from 30 June 2013 in order to allocate income tax expense to the wholly owned controlled entities on pro-rata basis. The agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At balance date, the possibility of default is remote. The head entity of the tax consolidated group is Focus Minerals Limited.

Tax Effect Accounting by Members of the Tax Consolidated Group

Members of the tax consolidated group have entered into a tax funding agreement with effect from 30 June 2013. The tax funding agreement provides for the allocation of current taxes to members of the tax consolidated group. Deferred taxes are allocated to members of the tax consolidated group in accordance with a group allocation approach which is consistent with the principles of AASB 112 Income Taxes. The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the controlled entities intercompany accounts with the tax consolidated group head company, Focus Minerals Ltd.

Unrecognised deferred tax balances

nrecognised deferred tax balances
Deferred tax assets unrecognised: Tax losses (revenue in nature) Deferred tax assets – other Capital losses Total	Consolidated 31 December 2015 $’000 31 December 2014 $’000
	125,160 120,447 4,643 7,933 4,310 4,310
	134,113 132,690

Net deferred tax assets have not been brought to account as it is not probable that immediate future profits will be available against which deductible temporary differences and tax losses can be utilised.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

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 used in the calculation of basic earnings per share Weighted average number of ordinary shares for the purposes of basic earnings per share Diluted Earnings per share The earnings used in the calculation of diluted earnings per share Weighted average number of ordinary shares for the purposes of diluted earnings per share	Consolidated 2015 Cents per Share 2014 Cents per Share (Restated)
	(1.55) (12.79) (1.55) (12.79)
	$000 $000 (2,830) (23,370) 182,748,565 182,748,565
	‘$000 ‘$000 (2,830) (23,370) 182,748,565 182,748,565

In May 2015, Focus Minerals Ltd consolidated 9,137,375,877 fully paid ordinary shares into 182,748,565 on a 1 for 50 basis (refer Note 12). The calculation of basic and diluted earnings per share for the year ended 31 December 2014 is adjusted retrospectively after the share consolidation.

Note 6: Cash, Cash Equivalents, Restricted Cash and Short-Term Deposits

Cash and cash equivalents Current – Short-term deposits Current – Restricted cash Non- current – Restricted cash	Consolidated 31 December 31 December 2015 $’000 2014 $’000
	1,995 9,210 55,615 56,572 -132
	57,610 65,914
	16,331 18,991

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

Cash 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 which is recognised as cash and cash equivalents.

Short-term deposits are made longer than three months and shorter than one year.

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. Those are recognised as restricted cash.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

(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. Cash and cash equivalents as shown in the Statement of Cash Flow is:

Cash, cash equivalents, restricted cash and short-term deposits Less: Short-term Deposit Less: Restricted cash not available for use Cash and cash equivalents as per statement of cash flow	Consolidated 2015 $’000 2014 $’000
	73,941 84,905 (55,615) (56,572) (16,331) (19,123)
	1,995 9,210

(ii) Reconciliation of Loss for the Year to Net Cash Flows from Operating Activities

Net loss for the year Depreciation expense Gain from disposal of non-current assets Asset impairment Loss on disposal of tenements and plant and equipment Finance costs/(income) Change in fair value of financial assets (Increase)/decrease in assets: Restrict cash Current receivables Increase/(decrease) in liabilities Current payables Other liabilities Provisions Net cash generated / (used) in operating activities	Consolidated 2015 $’000 2014 $’000
	(2,830) (23,370)
	1,288 2,300 - (1,304) - 13,785 395 3,484 770 922 97 106 2,792 (922) 879 (421) (1,339) 203 (392) (1,085) (1,658) (2,506)
	2 (8,808)

(iii) Non Cash Financing and Investing Activities Transactions

• The Company did not have any transactions in this category during the year ended 31 December 2015 and 2014

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Note 7: Current Trade and Other Receivables

Interest receivable Other receivables	Consolidated 31 December 31 December 2015 $’000 2014 $’000
	405 768 743 1,259
	1,148 2,027

An allowance for doubtful debts is made when there is objective evidence that a trade receivable is impaired. Other receivables decreased by $300,000 as a result of an adjustment to the sale price of the former Crescent Gold Laverton Mine Camp.

Note 8: Inventories

Stores and consumables	Consolidated 31 December 31 December 2015 $’000 2014 $’000
	1,293 1,293
	1,293 1,293

Note 9: Plant and Equipment

Non-current At 31 December 2014 Cost Accumulated depreciation Impairment loss Net book amount Year ended 31 December 2015 Opening net book amount Additions Depreciation expense Closing book amount At 31 December 2015 Cost Accumulated depreciation Impairment loss Net book amount	Furniture & fittings ‘$000 Plant & Equipment ‘$000	Mill assets ‘$000	Construction in progress ‘$000	Motor Vehicles ‘$000 Total ‘$000
	2,004 6,834 (1,758) (4,448) (13) (25)	32,796 (17,631) (13,165)	8,000 - (8,000)	599 50,233 (424) (24,261) (50) (21,253)
	233 2,361	2,000	-	125 4,719
	233 2,361 7 42 (149) (537)	2,000 - (540)	- - -	125 4,719 - 49 (62) (1,288)
	91 1,866	1,460	-	63 3,480
	2,011 6,876 (1,907) (4,985) (13) (25)	32,796 (18,171) (13,165)	8,000 - (8,000)	599 50,282 (486) (25,549) (50) (21,253)
	91 1,866	1,460	-	63 3,480

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Non-current At 31 December 2013 Cost Accumulated depreciation Impairment loss Net book amount Year ended 31 December 2014 Opening net book amount Reclassifications between Plant and Equipment Balance after adjustment Additions Depreciation expense Disposals Impairment loss Closing book amount At 31 December 2014 Cost Accumulated depreciation Impairment loss Net book amount	Furniture & fittings ‘$000 Plant & Equipment ‘$000 Mill assets ‘$000 Construction in progress ‘$000 Motor Vehicles ‘$000 Total ‘$000
	2,138 16,027 39,811 8,000 551 66,527 (1,500) (6,233) (20,967) - (330) (29,030) - (5,872) (11,510) (8,000) - (25,382)
	638 3,922 7,334 - 221 12,115
	638 3,922 7,334 - 221 12,115 (158) (1,017) 1,070 - 105 -
	480 2,905 8,404 - 326 12,115 17 - - - - 17 (245) (539) (1,352) - (164) (2,300) (19) (5) (1,686) - (37) (1,747) - - (3,366) - - (3,366)
	233 2,361 2,000 - 125 4,719
	2,004 6,834 32,796 8,000 599 50,233 (1,758) (4,448) (17,631) - (424) (24,261) (13) (25) (13,165) (8,000) (50) (21,253)
	233 2,361 2,000 - 125 4,719

The mill assets of the Group were shut down from operation in July 2013 and have been under care and maintenance since then.

Note 10: Exploration and Evaluation Assets

Exploration and Evaluation Expenditure: At Cost Less: Accumulated Impairment Net Book Value Movement Summary: Carrying amount at beginning of the year plus – exploration expenditure less – write off of tenements allowed to lapse, dropped or sold Carrying amount at end of the year	Consolidated 31 December 31 December 2015 $’000 2014 $’000
	157,791 150,439 (107,178) (107,178)
	50,613 43,261
	43,261 37,059 7,747 8,292 (395) (2,090)
	50,613 43,261

• The value of the Group’s interest in exploration expenditure is dependent upon:

• the continuance of the Group’s rights to tenure of the areas of interest;

• the results of future exploration;

• the recoupment of costs through successful development and exploitation of the areas of interest, or alternatively, by their sale; and

• no significant changes in laws and regulations that greatly impact the Group’s ability to maintain tenure.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Note 11: Provisions

Current Employee benefits Balance at the beginning of the year (Decrease) / Increase in the year Balance at the year end Provision for onerous electricity contract Balance at the beginning of the year (Decrease) / Increase in the year Balance at the year end Non-current Employee benefits Balance at the beginning of the year (Decrease) / Increase in the year Balance at the year end Provision for onerous electricity contract Balance at the beginning of the year Decrease in the year Balance at the year end Asset Retirement Obligation (“ARO”) Balance at the beginning of the year Increase in the year Balance at the year end	Consolidated 31 December 31 December 2015 $’000 2014 $’000
	358 270 (33) 88
	325 358 2,134 1,866 (2,108) 268
	26 2,134
	351 2,492
	Consolidated 31 December 31 December 2015 $’000 2014 $’000
	68 433 (61) (365)
	7 68 - 2,773 - (2,773)
	- - 25,486 21,797 623 3,689
	26,109 25,486
	26,116 25,554

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Note 12: 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

Issued capital As at 31 December 2013 and 31 December 2014 Share consolidation as at 30 June 2015 As at 31 December 2015	No. of shares $’000 9,137,375,877 427,167 (8,954,627,312) -
	182,748,565 427,167

In May 2015, Focus Minerals Ltd consolidated 9,137,375,877 fully paid ordinary shares into 182,748,565 on a 1 for 50 basis.

Share Issue Details

There were no shares issued during the past two years.

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) 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 ensure compliance with banking covenants. The Group’s debt and capital includes ordinary share capital and financial liabilities supported by financial assets and cash and cash equivalents. 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.

(c) Reserves

) Reserves
Acquisition reserve Share option reserve	Consolidated 31 December 31 December 2015 $’000 2014 $’000
	(7,178) (7,178) 183 183
	(6,995) (6,995)

The acquisition reserve resulted from acquisition of Focus Minerals (Laverton) Pty Ltd.

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.

(d) Dividends

No dividends have been paid or provided for during the year ended 31 December 2015 (the year ended 31 December 2014: Nil).

(e) Options

Options Issued

No options were issued in the year ended 31 December 2015 (year ended 31 December 2014: Nil).

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Options Exercised

There were no options exercised during the year (the year ended 31 December 2014: Nil).

Options Lapsed

During the year ended 31 December 2015, there were no options expired (the year ended 31 December 2014: Nil).

Options Outstanding

As at 31 December 2015 and 31 December 2015, details of unissued ordinary shares under options are as follows:

Issuing Entity Grant date Focus Minerals Ltd 8 April 2013 Total Options on issue	Number of Options Exercise Price Dollar per Share Expiry Date 300,000 2.50 28/02/2016 300,000

Note 13: Financial Instruments

The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, and short-term investments, accounts receivable and payable, 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 from time to time for hedging purposes such as forward gold sales agreements. The Group does not speculate in the trading of derivative instruments.

Treasury Risk Management

Risks are reviewed by the Audit and Business Risk Committee which consists of non-executive directors and senior staff by invitation. This includes the analysis of 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 Audit and Business Risk 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.

Financial Risk Exposures and Management

The main risks the Group is exposed to through its financial instruments are market risk (including interest rate risk and price risk), credit risk and liquidity risk.

Interest Rate Risk

The Company’s exposure to risks of changes in market interest rates relates primarily to the Company cash balances.

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 statement of financial position and notes to the financial statements.

Credit risk is managed on a group basis and reviewed regularly by the finance department. 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.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

The Group currently holds its cash and cash equivalents with various financial institutions, all of which hold a credit rating of AA. The Group believes the credit risk exposure to these counterparties is manageable.

Credit risk for derivative financial instruments arises from the potential failure by counter-parties to the contract to meet their obligations.

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. At the end of the year the Group held deposits at call of $65.8 million (December 2013: $81.2 million) that are expected to readily generate cash inflows for managing liquidity risk.

Maturities of Financial Liabilities

The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities for non-derivative financial liabilities.

Contractual maturities of financial liabilities	Less than 6 months	6-12 months	Between 1 and 2 years	Between 2 and 5 years	Over 5 years	Total contractual cash flow	Carrying amount
	$’000	$’000	$’000	$’000	$’000	$’000	$’000
At 31 December 2015
Non-derivatives
Tradepayables	260	-	-	81	-	341	341
At 31 December 2014
Non-derivatives
Tradepayables	662	-	-	-	-	662	662

Fair Value Measurements

The fair value of financial assets and liabilities must be estimated for recognition and measurement or for disclosure purposes. The disclosure in the table below is based on the following fair value measurement hierarchy:

• (a) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1),

• (b) Inputs other than quoted prices included within level that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) (level 2), and

• (c) Inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3)

The following table presents the Group’s financial assets and liabilities measured and recognised at fair value as at 31 December 2015 and 31 December 2014:

At 31 December 2015	Level 1 $000	Level 2 $000	Level 3 $000	Total $000
Assets
Equitysecurities	150	-	-	150
Total Assets	150	-	-	150
Liabilities	-	-	-	-

At 31 December 2014	Level 1 $000	Level 2 $000	Level 3 $000	Total $000
Assets
Equitysecurities	247	-	-	247
Total Assets	247	-	-	247
Liabilities	-	-	-	-

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

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

	31 December	2015	31 December	2014
Consolidated	Carrying	Net	Carrying	Net
	Amount	Fair Value	Amount	Fair Value
	$’000	$’000	$’000	$’000
Financial assets
Cash and cash equivalents	1,995	1,995	9,210	9,210
Short-term deposit	55,615	55,615	56,572	56,572
Restricted cash	16,331	16,331	19,123	19,123
Other financial assets	150	150	247	247
Trade and other receivables	1,148	1,148	2,027	2,027
Total	75,239	75,239	87,179	87,179
Trade and other payables	341	341	662	662
Total	341	341	662	662

Sensitivity Analysis

Interest Rate Analysis

At 31 December 2015, the Group had $16.331 million invested in security deposits and performance bonds and $55.615 million in cash and cash equivalents and short-term deposit. A 1% increase / (decrease) in the interest rate would impact the interest earned by $719,460/ ($719,460) respectively.

Note 14: 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 has a life of one to five year with renewal options included in some lease contracts. Future minimum rentals payable under non-cancellable operating leases as at 31 December 2015 are as follows:

Office Accommodation Within one year After one year but not more than five years Total	Consolidated 31 December 31 December 2015 $’000 2014 $’000
	295 275 384 619
	679 894

Finance Lease and Hire Purchase Commitments – Group as Lessee

The Group had finance leases for various items of plant and machinery. All leases have been closed out in 2015.

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

	31 December 2015	31 December 2015	31 December 2014	31 December 2014
	Minimum lease payments $’000	Present value of lease payments $’000	Minimum lease payments $’000	Present value of lease payments $’000
CONSOLIDATED
Within oneyear	-	-	160	160
Total minimum leasepayments	-	-	160	160
Less amounts representingfinance charges	-	-	-	-
Present value of minimum leasepayments	-	-	160	160

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Mining tenement expenditure commitments

As at 31 December 2015, the Group has committed, under tenement landholding conditions, to spend a minimum of $3.776 million per annum (31 December 2014: $4.205 million) of which $1.598 million (31 December 2014: $1.652 million) relates to Coolgardie and $2.178 million (31 December 2014: $2.553 million) relates to Laverton on mining and exploration tenements held by the Group.

Contingent Liability

There are no contingent liabilities as at 31 December 2015 (31 December 2014: Nil).

Note 15: Controlled Entities

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

Name	Country of Incorporation	% Equity	Interest
		31 December	31 December
		2015	2014
Austminex Pty Ltd	Australia	100%	100%
Focus Operation Pty Ltd	Australia	100%	100%
Focus Minerals (Laverton) Pty Ltd	Australia	100%	100%

 Austminex Pty Ltd will be deregistered in early 2016

Note 16: Parent Entity

The parent company throughout the year ended 31 December 2015 was Focus Minerals Limited.

Results of the parent entity Loss for the year Other comprehensive income Total comprehensive loss for the year 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 Accumulative losses Total equity	Parent Entity 2015 2014 $’000 $’000
	(3,868) (14,680) - -
	(3,868) (14,680)
	57,345 66,716 73,634 77,726 428 591 434 659 427,167 427,167 182 182 (354,149) (350,281)
	73,200 77,068

Contingent Liability

There are no contingent liabilities as at 31 December 2015 (31 December 2014: Nil).

Operating Lease Commitments – Company as lessee

Operating Lease Commitments in the parent entity are same as group.

Ultimate Controlling Entity

The ultimate controlling entity at 31 December 2015 and 2014 was Shandong Gold Group Co., Ltd which owned 49.35% (31 December 2014: 49.35%) of the company’s shares.

Financial Support for controlled entities.

The parent entity Focus Minerals Ltd is providing and will continue to provide financial support to all its controlled entities.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Mining tenement expenditure commitment

There is no Mining tenement expenditure commitment is the parent entity as at 31 December 2015 (31 December 2014: Nil).

Note 17: Related Party Disclosure

Subsidiaries

Interests in subsidiaries are set out in Note 15.

Key Management Personnel

Short-term employee benefits Post-employment benefits	2015 2014 $’000 $’000
	979,728 936,273 93,075 69,694
	1,072,803 1,005,967

Detailed disclosures relating to key management personnel are set out in the Directors’ Report

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.

Transactions and Balances with Related Parties

Mr Fahey is a Director of CSA Global, which provided technical consulting services to the Group. Technical services provided by CSA Global for the year ended 31 December 2015 totalled $21,802 (year ended 31 December 2014: $52,840).

Note 18: Auditors’ Remuneration

The auditors of Focus Minerals Limited are PricewaterhouseCoopers.

Amounts received or due and receivable by PricewaterhouseCoopers 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: Accounting advice Total	2015 2014 $ $
	55,000 100,000
	- 25,000
	55,000 125,000
Note 19: Significant Events after Balance Date

There are 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 period.

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Directors’ Declaration

In the directors’ opinion:

1. The financial statements and notes, as set out on pages 21 to 53 are in accordance with the Corporations Act 2001 , including:

2. a. Companying with the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

3. b. Giving a true and fair view of the consolidated entity’s financial position as at 31 December 2015 and of its performance for the financial year ended on that date, and

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

Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

The directors have been given the declarations by the Interim Chief Executive Officer and Chief Financial Officer required by section 295A of the Corporations Act 2001 .

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

Dianfei Pei Chairman of the Board 31 March 2016 Jinan, Shandong, China

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

Independent Auditor’s Report

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Focus Minerals Ltd – Financial Report for the year end 31 December 2015

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