FOCUS MINERALS LTD — Interim / Quarterly Report 2016

Sep 12, 2016

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Focus Minerals Limited

ABN 56 005 470 799

Interim Financial Report for the half year ended 30 June 2016

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Table of Contents

Corporate Information ...................................................................................................................................................... 3 Directors’ Report ............................................................................................................................................................... 4 Auditor’s Independence Declaration ............................................................................................................................... 6 Interim Financial Report ................................................................................................................................................... 7 Notes to the Consolidated Interim Financial Report .................................................................................................... 11 Directors’ Declaration ..................................................................................................................................................... 17 Independent Auditor’s Review Report .......................................................................................................................... 18

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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

Banks

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

Stock Exchange Listing

Australian Securities Exchange (ASX) ASX Symbol: FML

Industrial and Commercial Bank of China Level 20, St Martins Tower 44 St Georges Terrace Perth WA 6000

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

Directors’ Report

The Directors of Focus Minerals Limited (“Focus”) are pleased to present the Interim Financial Report for the half year ended 30 June 2016.

Directors

Dianfei Pei Chairman – Non-Executive, Non-Independent, appointed on 12 January 2016 Yuhuan Ge Director – Non-Executive, Non-Independent Wanghong Yang Director – Executive Gerry Fahey Director – Independent Peter Hepburn-Brown Director – Independent Zaiqian Zhang Alternate Director to Dianfei Pei – Executive Jisheng Lu Chairman – Non-Executive, Non-Independent, resigned on 12 January 2016

Directors were in office for the whole of the half year and up to the dates of this report, unless otherwise indicated.

Review of Operations

Exploration

Exploration remains as the core function of Focus. Focus is committed to building a robust resource pipeline, stepping towards to economical and sustainable production even in a much weaker gold price environment than the environment we are currently experiencing.

For the first six months in 2016, Focus drilled a total of 23,492m in Coolgardie and Laverton. The drilling programmes were designed to continue our discoveries of high grade gold deposits in Coolgardie and to search for new large scale gold deposits in Laverton.

Coolgardie

During the first half of 2016, the Company drilled 18,334m in its Coolgardie tenements, consisting of reverse circulation drilling of 78 holes for 15,606m and diamond drilling of 10 holes for 2,728m.

The exploration in the Coolgardie region was mainly focused on the targets around Bonnie Vale, Greater Tindals and Possum. At the time of reporting, the working is still on-going, so far the highlights are as follows:

• Bonnie Vale:

• BONC119 1m @ 15.05g/t Au from 272m

• BONCD070 1m @ 10.30g/t Au from 97m

• Possum:

• TND16015 1m @ 13.00g/t Au from 110m

• TND16021 1m @ 7.19g/t Au from 125m

• o TND16024 1m @ 8.99g/t Au from 33m and,

  • 7m @ 10.92g/t Au from 66m (incl. 1m @ 45.90g/t Au from 71m)

• TND16026 1m @ 19.80g/t Au from 212m

• o TND16037 1m @ 11.65g/t Au from 172m

In addition to the drilling activities, the Company conducted a 7.5km 2D2R seismic survey at Tindals, studying known mineralised structures at depth and identifying potential deep targets.

Laverton

For the first half of 2016, Focus drilled 5,158m in its Laverton tenements, all of which was reverse circulation drilling.

The exploration programme provided limited 40m spaced (collar positions) drilling around the historic Karridale and Boomerang underground mines as well as 80m spaced drilling to test for links between the Karridale and Boomerang zones. The highlights are shown below:

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

• Karridale:

• KARC173 7m @ 8.98g/t Au from 150m

• KARD176 2m @ 29.40g/t Au from 168m

• KARC187 4m @ 4.60g/t Au from 98m

• KARC188 7m @ 3.02g/t Au from 81m

• KARC 189 1m @ 7.05g/t Au from 102m

• KARC189 1m @ 6.76g/t Au from 129m

The planned drilling was put on hold due to heavy rain, causing roads to be inaccessible. The Company intends to resume the planned programme in the September quarter of 2016.

Rehabilitation

Focus Minerals is committed to fulfilling its environmental obligations. For the first half of this year, the Company conducted rehabilitation earthwork on historical drilling sites. A total of 414 holes have been rehabilitated, including some dating back to the 1980s.

Corporate

For the six-month period ended 30 June 2016, Focus incurred a loss of $1.882 million (2015: $1.108 million). During the six-month period ended 30 June 2015, the Company received a one-off tax refund of $1.723m, which was treated as Other Income in the 2015 Interim Financial Report. This was the main cause of the significant increase in loss for the current six-month period.

As at 30 June 2016, the Company has net assets of $101.935 million (2015: $103.817 million) and a cash balance of $69.479 million (2015: $79.929 million).[1]

Auditor’s Independence Declaration

The declaration required under Section 307C of the Corporations Act 2001 is set out on Page 6.

Rounding of Amounts

The Company is of a kind referred to in Class Order 2016/191 , 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 is made in accordance with a resolution of the directors.

Dianfei Pei Chairman of the Board 13 September 2016 Jinan, Shandong, China

1 Including cash and cash equivalents, short-term deposit and restricted cash.

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

Auditor’s Independence Declaration

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2016

FOR THE HALF YEAR ENDED 30 JUNE 2016
	Consolidated
	6 months to 6 months to
	30 June 30 June
Notes	2016 2015
	$’000 $’000
Revenue from continuing operations 3(a)	1,074 1,400
Other Income 3(b)	147 1,744
Employee expenses	(591) (700)
Depreciation and Amortisation Expenses	(579) (677)
Finance Costs	(462) (470)
Loss on disposal of tenements and plant and equipment	(24) (148)
Care and Maintenance Costs	(829) (979)
Corporate and Other Expenses	(618) (1,278)
Loss Before Income Tax	(1,882) (1,108)
Income Tax Expense	- -
Loss After Income Tax for the Period	(1,882) (1,108)
Other Comprehensive Income for the Period, Net of Tax	- -
Total Comprehensive Loss for the Period	(1,882) (1,108)
Total Comprehensive Loss Attributable to:
Owners of the Parent	(1,882) (1,108)
Total Comprehensive Loss for the Period	(1,882) (1,108)
Earnings per Share
Basic Loss per Share (Cents Per Share) 4	(1.03) (0.61)
Diluted Loss per Share (Cents Per Share) 4	(1.03) (0.61)

The accompanying notes form part of these financial statements.

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2016

AS AT 30 JUNE 2016
	Consolidated
	30 June 31 December
Notes	2016 2015
	$’000 $’000
Assets
Current Assets
Cash and Cash Equivalents 5	1,873 1,995
Short-term deposit 5	51,500 55,615
Trade and Other Receivables	1,144 1,148
Financial Assets	188 150
Total Current Assets	54,705 58,908
Non-Current Assets
Restricted Cash 5	16,106 16,331
Inventories	1,293 1,293
Plant and Equipment	2,914 3,480
Exploration and Evaluation Assets 6	54,469 50,613
Total Non-Current Assets	74,782 71,717
Total Assets	129,487 130,625
Liabilities
Current Liabilities
Trade and Other Payables	730 260
Provisions	171 351
Total Current Liabilities	901 611
Non-Current Liabilities	81 81
Other Payable
Provisions	26,570 26,116
Total Non-Current Liabilities	26,651 26,197
Total Liabilities	27,552 26,808
Net Assets	101,935 103,817
Equity
Issued Capital 7(a)	427,167 427,167
Reserves	(6,995) (6,995)
Accumulated Losses	(318,237) (316,355)
Total Equity	101,935 103,817

The accompanying notes form part of these financial statements

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 30 JUNE 2016

	FOR THE HALF YEAR ENDED 30 JUNE 2016
		Issued Capital Accumulated Losses Reserves Total
		$’000 $’000 $’000 $’000
	Balance as at 31 December 2015	427,167 (316,355) (6,995) 103,817
	Total Comprehensive Loss for the period	- (1,882) - (1,882)
	Balance as at 30 June 2016	427,167 (318,237) (6,995) 101,935
	Balance as at 31 December 2014	427,167 (313,525) (6,995) 106,647
	Total Comprehensive Loss for the period	- (1,108) - (1,108)
	Balance as at 30 June 2015	427,167 (314,633) (6,995) 105,539

The accompanying notes form part of these financial statements.

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 30 JUNE 2016

			Consolidated
			6 months to 6 months to
			30 June 30 June
			2016 2015
			’$000 ’$000
Cash Flows from Operating Activities
Payments to Suppliers and Employees (Including GST)			(1,625) (4,983)
Royalties Paid			(41) (5)
Other Income			88 1,697
Interest Received			1,123 1,356
Bank charges			(67) (100)
Net Cash Outflow from Operating Activities			(522) (2,035)
Cash Flows from Investing Activities
Proceeds from Sale of Non-Current Assets			- 152
Acquisition of Plant and Equipment			(13) (43)
Decrease/(Increase) in short-term deposits			4,115 (3,707)
Exploration Expenditure			(3,927) (3,049)
Net Cash Inflow/(Outflow) from Investing Activities			175 (6,647)
Cash flows from Financing Activities
Payback from Performance Bonds			225 2,498
Net Cash Inflow from Financing Activities			225 2,498
Net Decrease in Cash and Cash Equivalents			(122) (6,185)
Cash and Cash Equivalents at the Beginning of the Period			1,995 9,210
Cash and Cash Equivalents at the Ending of the Period	5		1,873 3,025

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The accompanying notes form part of these financial statements.

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

Notes to the Consolidated Interim Financial Report for the Half Year Ended 30 June 2016

Note 1: Basis of preparation of half-year report

The interim financial report of Focus Minerals Limited (“the Company”), together with its consolidated controlled entities (“the Group”) for the half-year reporting period ended 30 June 2016 has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the Annual Report for the year ended 31 December 2015 and any public announcements made by Focus Minerals Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The accounting policies adopted are consistent with those of previous financial year and corresponding interim reporting period, unless otherwise noted below.

(a) New and amended standards adopted by the Group

A number of new or amended standards became applicable for the current reporting period, however, the Group did not have to change its accounting policies or make retrospective adjustments as a result of adopting these standards.

• (b) Impacts of standards issued but not yet applied by the Group

Certain new accounting standards and interpretations have been published that are not mandatory for the current reporting period and have not been early adopted by the group. The company's assessment of the impact of these new standards and interpretations is set out below.

• (i) AASB 9 Financial instruments (1 January 2018)

• A finalised version of AASB 9 which contains accounting requirements for financial instruments, replacing AASB 139 Financial Instruments: Recognition and Measurement. The standard contains requirements in the areas of classification and measurement, impairment, hedge accounting and derecognition. The company is yet to assess the full impact of the standard, but do not expect the impact to be material to future reporting periods.

• (ii) AASB 15 Revenue from contracts with customers (1 January 2018) AASB 15 provides a single, principles-based five-step model to be applied to all contracts with customers. Guidance is provided on topics such as the point in which revenue is recognised, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures about revenue are also introduced. Management is currently in the process of assessing the impact of the new standard.

• (iii) AASB 16 Leases (1 January 2019)

• AASB 16 provides a new lessee accounting model which requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. A lessee measures right-of-use assets similarly to other non-financial assets and lease liabilities similarly to other financial liabilities. Assets and liabilities arising from a lease are initially measured on a present value basis. The measurement includes non-cancellable lease payments (including inflation-linked payments), and also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to terminate the lease. AASB 16 contains disclosure requirements for lessees. Management is currently in the process of assessing the impact of the new standard.

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.

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

Note 2: 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.

All of 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 a monthly basis.

Segment Financial Information for the six months ended 30 June 2016 is presented below:

Revenue from continuing operations Other Income Employee expenses Depreciation and Amortisation Expenses Finance Costs Loss on disposal of tenements and plant and equipment Care and Maintenance Costs Corporate and Other Expenses SEGMENT LOSS BEFORE TAX Income tax SEGMENT LOSS Current Assets Non-Current Assets - Restricted Cash - Plant and Equipment - Inventory - Exploration and Evaluation Assets TOTAL ASSETS Current Liabilities Non-Current Liabilities TOTAL LIABILITIES NET ASSETS Capital Expenditures	6 months to 30 June 6 months to 30 June 6 months to 30 June 6 months to 30 June 2016 2016 2016 2016 Coolgardie Laverton Corporate Consolidated $’000 $’000 $’000 $’000
	1 14 1,059 1,074 109 - 38 147 (47) - (544) (591) (523) - (56) (579) (175) (220) (67) (462) - (24) - (24) (343) (486) - (829) - - (618) (618)
	(978) (716) (188) (1,882) - - - -
	(978) (716) (188) (1,882)
	506 595 53,604 54,705 96 15 15,995 16,106 2,900 - 14 2,914 1,293 - - 1,293 35,036 19,433 - 54,469
	39,831 20,043 69,613 129,487 (244) (457) (200) (901) (11,912) (14,630) (109) (26,651)
	(12,156) (15,087) (309) (27,552)
	27,675 4,956 69,304 101,935
	2,760 1,133 - 3,893

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

Segment Financial Information for the six months ended 30 June 2015 is presented below:

Revenue from continuing operations Other Income Employee expenses Depreciation and Amortisation Expenses Finance Costs (Loss)/profit on disposal of tenements and plant and equipment Care and Maintenance Costs Corporate and Other Expenses SEGMENT (LOSS)/PROFIT BEFORE TAX Income tax SEGMENT (LOSS)/PROFIT Current Assets Non-Current Assets - Restricted Cash - Plant and Equipment - Inventory - Exploration and Evaluation Assets TOTAL ASSETS Current Liabilities Non-Current Liabilities TOTAL LIABILITIES NET ASSETS Capital Expenditures	6 months to 30 June 6 months to 30 June 6 months to 30 June 6 months to 30 June 2015 2015 2015 2015 Coolgardie Laverton Corporate Consolidated $’000 $’000 $’000 $’000
	13 117 1,270 1,400 273 428 963 1,744 (49) (13) (638) (700) (614) - (63) (677) (170) (200) (100) (470) (1) (201) 55 (147) (433) (547) - (980) - - (1,278) (1,278)
	(981) (416) 289 (1,108) - - - -
	(981) (416) 289 (1,108)
	423 929 64,123 65,475 705 5,822 10,098 16,625 3,965 - 121 4,086 1,293 - - 1,293 29,619 15,972 - 45,592
	36,005 22,724 74,342 133,071 (470) (455) (809) (1,734) (11,525) (14,260) (13) (25,798)
	(11,995) (14,715) (822) (27,532)
	24,010 8,009 73,520 105,539
	1,658 916 1 2,575

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

Note 3: Revenue and Other Income

(a) Revenue from continuing operations Interest income Total revenue from continuing operations (b) Other income Sundry income Total Other income		Consolidated 6 months to 30 June 6 months to 30 June 2016 $’000 2015 $’000
		1,074 1,400
		1,074 1,400
		147 1,744
		147 1,744
Note 4: 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 6 months to 30 June 6 months to 30 June 2016 Centsper Share 2015 Centsper Share
	(1.03) (0.61) (1.03) (0.61)
	‘$000 ‘$000 (1,882) (1,108) 182,748,565 182,748,565
	‘$000 ‘$000 (1,882) (1,108)
	182,748,565 182,748,565

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

Note 5: Cash and Cash Equivalents, Short Term Deposits and Restricted Cash

Cash and cash equivalents Short term deposits Non- current – restricted cash	Consolidated As at 30 June As at 31 December 2016 $’000 2015 $’000
	1,873 1,995 51,500 55,615
	53,373 57,610
	16,106 16,331

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 but 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.

Note 6: Exploration and Evaluation Assets

Exploration and Evaluation Expenditure: At Cost Less: Accumulated Impairment Net Book Value Movement Summary: Carrying amount at beginning of the period plus – exploration expenditure less – write off of tenements allowed to lapse or dropped Carrying amount at end of period	Consolidated 6 months to 30 June As at 31 December 2016 $’000 2015 $’000
	161,647 157,791 (107,178) (107,178)
	54,469 50,613
	50,613 3,880 (24) 54,469

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 half year ended 30 June 2016

Note 7: 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

		As at		As at
		30 June 2016	31 December 2015
	No. of shares	$’000	No. of shares	$’000
Issued capital	182,748,565	427,167	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 half year period.

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) Dividends

No dividends have been paid or provided for during the 6 months ended 30 June 2016 (6 months ending 30 June 2015: Nil).

Note 8: Related Party Disclosure

Transactions with Related Parties

There are no transactions with related parties during the half year period. (6 months ended 30 June 2015: $21,802).

Note 9: Significant Events after Balance Date

At the date of this report, there are no events that have arisen after balance date that have 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 the future financial periods.

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

Directors’ Declaration

The directors of the Company declare that:

1. The financial statements and notes, as set out on pages 7 to 16 are in accordance with the Corporations Act 2001, including:

2. a. Complying with 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 30 June 2016 and of its performance for the half year ended on that date.

4. In the directors’ opinion, there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.

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

Dianfei Pei Chairman of the Board 13 September 2016 Jinan, Shandong, China

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

Independent Auditor’s Review Report

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2016

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