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FOCUS MINERALS LTD Interim / Quarterly Report 2009

Jan 22, 2009

64932_rns_2009-01-22_1fa63ba6-e5c9-4238-9fe3-07d395f117ba.pdf

Interim / Quarterly Report

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Activities Report for the Quarter Ended 31 December 2008

HIGHLIGHTS

CORPORATE & FINANCIAL

  • Revenue for the Quarter of A$11.1 million generated from the sale of 10,622 oz of gold at an average received price of A $1,044 /oz.

  • Cash and bullion of A$4.1million on hand as at 31 December 2008.

GOLD PRODUCTION

  • Latest milling campaign completed on 21 December for gold production during the Quarter of 9,007 ounces for a project to date total of 17,445 ounces.

  • Current and future milling campaigns to be derived from a blend of Perseverance and Countess ore after development of the Countess deposit during the Quarter.

  • Metallurgical recoveries for Perseverance ore continue to improve – running at 96% for December Quarter with mill recovery and throughputs progressively improving by approximately 30% since first gold pour in April 08.

  • Average direct cash cost of A$673.08/oz for the half year to December 2008 which takes into account additional Perseverance stope development expenditure as well as the milling of lower grade ore from the deposit extremities.

  • Focus targeting gold production of approximately 50,000 ounces in FY09 through Perseverance stoping and progressive development of adjacent Coolgardie deposits including the Countess deposit.

Level 10, Exchange House, 68 St Georges Terrace, Perth, Western Australia 6000 • PO Box Z5422, Perth WA 6831 • Phone: +61 8 9215 7888 • Fax: +61 8 9215 7889

•ABN 56 005 470 799 • [email protected] • www.focusminerals.com.au

Highlights – continued

EXPLORATION & DEVELOPMENT

  • 32% increase in pre-mine Probable Ore Reserve at Perseverance Gold deposit to 100,000 ounces (initial Reserve was 76,000 ounces).

  • 28,700 ounces Probable Ore Reserve defined at nearby Countess Deposit .

  • Step-out drilling at Perseverance encounters further high-grade intersections, to the south of the existing workings, including 5.91m @ 8.14g/t , 7.57m @ 8.26g/t , 1.37m @ 35.47g/t and 2.39m @ 11.15g/t , indicating the possible presence of another high-grade shoot.

  • Step-out drilling at Countess encounters encouraging intersections at depth and along strike to the north, including 17.21m @ 3.34g/t , 12.42m @ 4.09g/t and 9.04m @ 7.51g/t .

  • Work continued on the Scoping Study of a number of nearby open cut projects to take advantage of historically high gold prices. Drilling at one of these projects, the Brilliant deposit, produced good intersections including 23m @ 4.69g/t , 6m @ 6.53g/t , 7m @ 5.64g/t and 11m @ 5.61g/t .

OPERATIONAL REVIEW

GOLD – COOLGARDIE GOLD PROJECT

Production Update

During the Quarter, Focus completed two milling campaigns (its fifth and sixth overall since production commenced in April 2008) and for the Quarter produced 9,007 ounces of gold . This increases total gold production to 17,445 ounces since production began in April 2008.

The most recent completed milling campaign, which commenced on November 18, ran for 34 days and for the first time involved the blending of a small parcel of Countess ore with stoping ore from the Perseverance deposit. Stoping of the Perseverance Deposit commenced late September 2008 and has proceeded extremely well into the December 2008 Quarter. Ground conditions are very competent with mining rates progressively increasing during the Quarter from the 300RL level. Stoping development also commenced on the 275RL level and will contribute to further increases in the mining production rates into the March 2009 Quarter.

The blending of Countess ore represents the first stage in a planned expansion of the project pipeline to include surrounding deposits within the tenement area.

During the Quarter, the Company announced a significant upgrade to the pre-mine ore Reserve for the Perseverance Deposit which now stands at 100,000 ounces . This represents a 32% increase on the initial Ore Reserve estimate of 76,000 ounces and provides a substantial boost to the Perseverance mine life, which now extends out to approximately two years.

Level 10, Exchange House, 68 St Georges Terrace, Perth, Western Australia 6000 • PO Box Z5422, Perth WA 6831 • Phone: +61 8 9215 7888 • Fax: +61 8 9215 7889

A summary of gold production for the December Quarter is shown in Table 1 below.

Table 1 – December 2008 Quarter Gold Production Summary

Quarter Ended
30 September
2008		 Quarter Ended
31 December
2008		 TOTAL
Half Year to
December 2008
Ore Mined (tonnes) 20,043 68,048 88,090
Grade grams Au
/tonne		 6.18 4.12 4.59
Gold Produced * (oz) 3,982 9,007 12,989
Gold Sold (oz) 4,281 10,622 14,903
Average Price Received (A$/oz) $966 $1,044 $1,022
Cash Operating Cost# (A$/oz) $673
Development and Capex (A$) $4,236,000

*Gold production is gold refined during the period.

# Cash operating cost refers to the cost of refined gold and includes all expenditures directly incurred on mining, crushing and processing including site administration costs.

Cash costs increased in the Quarter as mining was directed from the deposit extremities and recovered grade is less than that contained within the central higher grade lodes. It is expected that extraction from the deposit boundary will conclude during January 2009 enabling extraction to commence from the central higher grade zones from February 2009 and will contribute in part to the increased ore feedstock for the February/March 2009 campaign.

Cash costs are expected to reduce in the March 2009 Quarter as mining from the higher grade zones commences.

Production Outlook

Perseverance ore is being processed at the nearby Greenfields Mill under a milling contract with Higginsville Mining Pty Ltd. The next milling campaign is scheduled for approximately 44 days, to conclude at the end of the March Quarter, and will utilise a blend of both Perseverance and Countess ore.

The increased production for the March 2009 Quarter as a result of increased volumes of ore produced through Perseverance stoping. The mine plan currently developed for the Perseverance deposit forecasts an annual production rate for the Financial Year to June 2009 of approximately 50,000 ounces of gold.

Importantly, Focus has seen steady improvements in the milling process as more knowledge is gained in the metallurgical and chemical properties of the Company’s ore. This has been underpinned by an increase in metallurgical recovery rates to 96% due to increasing control of sulphur blends and oxygen levels. Additionally, there has been an increase in mill throughput from 65 tonnes per hour (from the first campaign) to 85 tonnes per hour. Revenue

Level 10, Exchange House, 68 St Georges Terrace, Perth, Western Australia 6000 • PO Box Z5422, Perth WA 6831

• Phone: +61 8 9215 7888 • Fax: +61 8 9215 7889

Revenue for the Quarter was A$11.1million generated from the sale of 10,622 ounces of gold at an average price received of A$1,044/oz.

Countess Deposit – Production Underway

Development of the Countess Deposit has delivered first production ore which was blended with Perseverance ore for the most recent milling campaign. This was subsequent to the Company announcing a Probable Reserve of 28,700 ounces at Countess, which was defined through geological modeling and mining evaluation during the Quarter.

The definition of the gold Reserve at Countess is a milestone achievement for Focus as it is the first gold reserve estimate outside of the Perseverance deposit, providing the Company with a strong pipeline for continued full-scale production.

A Pre-Feasibility Study was undertaken on the Countess Resource in early 2008 which was aimed at determining the economic viability of the new resource and the synergies of potentially mining Countess in conjunction with Perseverance. The Countess Reserve is expected to increase as further drilling is proposed both up and down plunge.

Exploration

Perseverance

During the December 2008 Quarter, further step-out drilling at Perseverance was completed. This drilling targeted depth extensions immediately beneath the current Perseverance mine and the southern extensions of the Perseverance orebody (which had not been closed off). The drilling to test for possible depth extensions was done in time to be included in the reserve update that the Company announced during the Quarter.

The immediate depth potential has now been closed off, however results received from the Reserve update to the south are exciting and indicate the possible presence of another high-grade shoot. Results from this southern area include 5.91m @ 8.14g/t, 7.57m @ 8.26g/t, 1.37m @ 35.47g/t and 2.39m @ 11.15g/t. Additional step out drilling will be done during the March 2009 Quarter to further define this southern area.

Level 10, Exchange House, 68 St Georges Terrace, Perth, Western Australia 6000 • PO Box Z5422, Perth WA 6831 • Phone: +61 8 9215 7888 • Fax: +61 8 9215 7889

Table 2 – Summary of Perseverance step out drill intercepts, October-December 2008

Hole
Number		 Northing Easting RL Azimuth Dip Total
Depth		 From
(m)		 To
(m)		 Width
(m)		 Grade
(g/t Au)
PEGC0179 9907 5400 273 299 -35 121 95.00 96.00 1.00 3.22
98.83 99.19 0.36 7.42
PEGC0181 9918 5406 273 299 -30 120.12 97.90 99.40 1.50 6.30
PEGC0182 9824 5342 272 281 -36 155 102.00 103.00 1.00 1.06
132.44 136.05 3.61 4.71
PEGC0183 9824 5342 272 281 -44 135 102.37 102.68 0.31 9.99
PEGC0184 9824 5342 271 281 -57 180 120.20 122.00 1.80 11.61
128.00 129.00 1.00 1.93
PEGC0185 9824 5343 272 295 -42 155 96.00 100.00 4.00 7.35
127.00 131.00 4.00 1.38
134.00 137.13 3.13 2.67
147.00 155.00 8.00 1.37
PEGC0188 9851 5366 272 299 -41 145 97.45 98.12 0.67 31.76
99.55 100.95 1.40 7.74
104.41 106.54 2.13 7.82
PEGC0190 9869 5378 272 299 -45 160.34 98.27 100.80 2.53 5.87
102.76 103.83 1.07 8.51
PEGC0192 9885 5387 272 299 -41 130.44 109.10 109.60 0.50 2.18
PEGC0193 9902 5397 273 299 -45 146.4 113.00 114.00 1.00 1.09
PEGC0196 9748 5267 288 334 -27 135.1 71.00 73.17 2.17 7.68
107.70 108.00 0.30 149.26
PEGC0197 9748 5267 287 334 -38 140 72.00 75.00 3.00 2.68
77.80 83.71 5.91 8.14
87.00 88.00 1.00 9.11
PEGC0201 9748 5266 288 318 -22 120 59.63 64.13 4.50 1.98
101.87 103.87 2.00 5.54
PEGC0202 9748 5266 287 318 -37 125 67.82 73.87 6.05 5.54
116.50 117.00 0.50 6.10
PEGC0204 9747 5266 290 300 24 125.08 90.87 91.74 0.87 4.81
108.00 109.56 1.56 3.98
PEGC0205 9747 5266 289 300 5 110.27 81.96 86.00 4.04 2.30
PEGC0206 9747 5266 289 300 -15 115 90.68 91.00 0.32 11.18
PEGC0208 9747 5266 287 300 -45 140 67.97 75.54 7.57 8.26
81.00 82.37 1.37 35.47
PEGC0212 9747 5266 287 300 -54 150 76.84 79.23 2.39 11.15
83.23 83.56 0.33 6.23
91.96 93.15 1.19 4.98

Level 10, Exchange House, 68 St Georges Terrace, Perth, Western Australia 6000 • PO Box Z5422, Perth WA 6831 • Phone: +61 8 9215 7888 • Fax: +61 8 9215 7889

•ABN 56 005 470 799 • [email protected] • www.focusminerals.com.au

Countess

Drilling at the Countess Deposit towards the end of 2008 was undertaken to assess the potential at depth and to the north of the defined Reserve (which the Company released during the December 2008 Quarter). In addition, several in-fill holes were completed up dip of the defined Reserve.

While the three in-fill holes indicate that there is little potential up dip from the Reserve, the step-out drill holes at depth and along strike to the north of the defined reserve however were most encouraging, and indicate that the mineralisation is still open at depth and along strike to the north.

Best results from the step out drilling include 17.21m @ 3.34g/t , 12.42m @ 4.09g/t and 9.04m @ 7.51g/t . Additional step out drilling is planned to be conducted during the June 2009 Quarter. (See Table 3 below for all assay results.

Table 3 – Summary of Countess infill and step out drill intercepts, October-December 2008

Hole
Number		 Northing Easting RL Azimuth Dip Total
Depth		 From
(m)		 To
(m)		 Width
(m)		 Grade
(g/t Au)
COGC0009 9321 5096 178 47 -16 140.58 119.82 120.19 0.37 6.99
COGC0010 9321 5096 177 49 -3 131.68 111.87 112.87 1.00 3.71
COGC0011 9320 5097 178 71 -3 170 104.13 107.81 3.68 1.83
116.54 124.73 8.19 1.37
COGC0012 9306 5198 124 27 -24 85.01 26.70 28.99 2.29 1.98
61.60 74.02 12.42 4.09
COGC0013 9306 5159 125 18 -10 104.5 25.94 29.48 3.54 3.02
79.00 82.00 3.00 1.29
COGC0018 9304 5160 124 60 -54 80 55.02 72.23 17.21 3.34
COGC0022 9306 5160 125 45 -61 88.7 76.02 78.86 2.84 8.25
COGC0023 9305 5160 123 32 -47 97.7 72.00 81.04 9.04 7.51

Brilliant

A re-interpretation of the Brilliant Deposit - located 1.5km south east of Coolgardie - during the September 2008 Quarter highlighted a number of potential targets. During the December Quarter a program of Reverse Circulation (RC) drilling was conducted across these targets. Encouraging results have been received from this drilling program and include 23m @ 4.69g/t , 6m @ 6.53g/t , 7m @ 5.64g/t and 11m @ 5.61g/t .

An upgrade of the Inferred Resource commenced at the end of the December 2008 Quarter and is expected to be completed early in the March 2009 Quarter. The updated resource will form the basis for the ongoing Scoping Study to determine the feasibility of bringing this deposit into production in the near future.

The results of the Scoping Study will help direct future drill programs so that the full potential at Brilliant can be realised.

Level 10, Exchange House, 68 St Georges Terrace, Perth, Western Australia 6000 • PO Box Z5422, Perth WA 6831 • Phone: +61 8 9215 7888 • Fax: +61 8 9215 7889

Table 4 – Summary of Brilliant drill intercepts, October-December 2008

Hole
Number		 Northing Easting RL Azimuth Dip Total
Depth		 From
(m)		 To
(m)		 Width
(m)		 Grade
(g/t Au)
TNDC0001 6572380 326516 412 250 -58 60 38.00 43.00 5.00 3.12
TNDC0003 6572395 326515 411 250 -58 76 13.00 18.00 5.00 5.19
56.00 57.00 1.00 4.29
59.00 60.00 1.00 11.83
TNDC0005 6572421 326517 411 250 -60 60 33.00 34.00 1.00 2.15
36.00 37.00 1.00 1.56
46.00 51.00 5.00 2.55
TNDC0007 6572440 326509 410 250 -60 82 36.00 37.00 1.00 1.61
40.00 41.00 1.00 1.18
43.00 46.00 3.00 6.14
49.00 50.00 1.00 2.07
68.00 69.00 1.00 2.53
TNDC0010 6572480 326499 410 250 -60 52 33.00 35.00 2.00 4.89
37.00 41.00 4.00 6.88
43.00 44.00 1.00 1.32
TNDC0011 6572495 326487 410 250 -58 72 13.00 14.00 1.00 1.78
16.00 19.00 3.00 2.93
29.00 30.00 1.00 1.18
31.00 32.00 1.00 1.19
TNDC0012 6572526 326540 414 250 -60 76 14.00 15.00 1.00 1.35
20.00 21.00 1.00 5.39
35.00 36.00 1.00 1.96
53.00 56.00 3.00 3.39
65.00 66.00 1.00 2.02
TNDC0014 6572540 326505 413 250 -60 45 3.00 4.00 1.00 1.06
6.00 7.00 1.00 1.98
TNDC0016 6572565 326495 414 250 -60 68 44.00 45.00 1.00 6.34
59.00 61.00 2.00 10.26
TNDC0024 6572945 326192 407 70 -60 45 3.00 5.00 2.00 1.14
20.00 27.00 7.00 1.64
TNDC0025 6572960 326195 407 250 -55 25 5.00 8.00 3.00 1.55
TNDC0026 6572965 326205 407 250 -55 40 19.00 23.00 4.00 1.71
TNDC0030 6571880 326461 417 275 -60 31 14.00 20.00 6.00 1.22
TNDC0031 6571900 326466 417 270 -60 32 13.00 16.00 3.00 2.08
TNDC0032 6571915 326480 418 270 -60 40 28.00 33.00 5.00 1.26
TNDC0033 6571935 326473 417 270 -60 30 10.00 11.00 1.00 4.49
18.00 19.00 1.00 1.17
TNDC0034 6571945 326495 418 270 -60 55 11.00 12.00 1.00 2.20
34.00 37.00 3.00 1.15
41.00 43.00 2.00 3.01
TNDC0039 6572004 326525 410 250 -80 80 24.00 34.00 10.00 2.85
37.00 38.00 1.00 1.10
62.00 63.00 1.00 1.48
TNDC0048 6572975 326300 406 160 -60 64 24.00 47.00 23.00 4.69

Level 10, Exchange House, 68 St Georges Terrace, Perth, Western Australia 6000 • PO Box Z5422, Perth WA 6831

  • Phone: +61 8 9215 7888 • Fax: +61 8 9215 7889

  • •ABN 56 005 470 799 • [email protected] • www.focusminerals.com.au

TNDC0049 6572956 326315 406 160 -60 55 31.00 38.00 6.00 4.93
TNDC0050 6572960 326305 406 160 -60 50 13.00 15.00 2.00 4.70
30.00 36.00 6.00 6.53
TNDC0052 6572909 326362 406 340 -60 90 49.00 64.00 15.00 2.31
TNDC0060 6572942 326396 405 250 -60 82 60.00 62.00 2.00 3.51
67.00 68.00 1.00 2.21
71.00 73.00 2.00 1.59
TNDC0061 6572966 326348 406 160 -60 85 45.00 47.00 2.00 2.07
50.00 51.00 1.00 1.37
54.00 61.00 7.00 5.64
63.00 65.00 2.00 2.04
72.00 74.00 2.00 2.72
TNDC0062 6572963 326331 406 160 -60 76 15.00 16.00 1.00 1.28
56.00 63.00 7.00 3.58
TNDC0063 6572960 326318 406 250 -60 52 21.00 32.00 11.00 5.61
TNDC0064 6572977 326320 406 240 -60 64 19.00 20.00 1.00 1.12
34.00 44.00 10.00 3.82

Ground EM Targets

Five of the high priority targets from the extensive ground Electro-Magnetic (EM) survey (conducted during the March 2008 Quarter) over the Redemption corridor and the Tindals Area were also drilled during the December 2008 Quarter.

Three of the holes intersected a number of silicified zones of interest within basalt with results including 1m @ 6.39g/t , 2m @ 4.12g/t and 3m @ 2.91g/t (see table below).

Associated within these zones were varying percentages of pyrrhotite and pyrite (either disseminated or as veinlets) as well as quartz and/or quartz-carbonate veining. The other 2 holes didn’t have any significant intercepts; however, one had a zone of strongly altered felsic porphyry with associated carbonate veins and pyrite veinlets, while the other intersected a deeply weathered fault within talc chlorite schists.

Down Hole Electro-Magnetic (DHEM) surveys are to be conducted on all of the holes in the June 2009 Quarter before further drilling of these targets is undertaken.

Table 5 – Summary of EM Target drill intercepts, October-December 2008

Hole
Number		 Northing Easting RL Azimuth Dip Total
Depth		 From
(m)		 To
(m)		 Width
(m)		 Grade
(g/t Au)
TNDC0054 6571450 326249 417 108 -60 100 61.00 62.00 1.00 1.45
TNDC0055 6571372 326148 425 150 -60 298 23.00 24.00 1.00 6.39
27.00 30.00 3.00 2.91
214.00 215.00 1.00 1.00
288.00 289.00 1.00 1.23
TNDC0056b 6571283 325986 418 150 -60 300 107.00 109.00 2.00 4.12
237.00 238.00 1.00 1.05
284.00 286.00 2.00 3.05

Level 10, Exchange House, 68 St Georges Terrace, Perth, Western Australia 6000 • PO Box Z5422, Perth WA 6831 • Phone: +61 8 9215 7888 • Fax: +61 8 9215 7889

CORPORATE

Cash and Bullion

As at the end of the December Quarter, the Company had available cash and bullion for a value of approximately $4.1 million.

ENDS

Released by: On behalf of: Nicholas Read/Jason Cunningham Peter Williams, Managing Director Read Corporate Focus Minerals Ltd Telephone: (+61-8) 9388-1474 Telephone: (+61-8) 9215-7888 www.readcorporate.com.au Web: www.focusminerals.com.au

COMPETENT PERSON’S STATEMENT

The information in this report relating to Resources is based on work supervised by Dr Garry Adams who is a member of the Australasian Institute of Mining and Metallurgy (AusIMM). Dr. Adams has the relevant experience as a “Competent Person” as defined in the 2004 edition of the Australasian Code for Reporting of Mineral Resources and Ore Reserves in relation to the mineralisation being reported. Dr. Adams is Exploration Manager of Focus Minerals Ltd and consents to the inclusion of the material in the form and content in which it appears.

BACKGROUND INFORMATION – FOCUS MINERALS LTD

Focus Minerals Ltd (ASX: FML ) is an Australian-based exploration and development group whose focus is to become a significant gold and nickel producer in the Coolgardie-Kalgoorlie-Widgiemooltha region of Western Australia.

Focus Minerals is the largest landholder in the Coolgardie Gold Belt located in Western Australia, 560km east of Perth and 35km west of the ‘Super Pit’ in Kalgoorlie-Boulder. More than 2.6 million ounces of gold has been produced from the Coolgardie gold belt alone since 1892. Focus holds the mineral rights to more than 210sq km of tenements including an extensive inventory of Measured, Indicated and Inferred gold resources as well as the 1.2mtpa Three Mile Hill processing plant.

Level 10, Exchange House, 68 St Georges Terrace, Perth, Western Australia 6000 • PO Box Z5422, Perth WA 6831 • Phone: +61 8 9215 7888 • Fax: +61 8 9215 7889

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