FOCUS MINERALS LTD — Interim / Quarterly Report 2017

Sep 7, 2017

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Focus Minerals Limited

ABN 56 005 470 799

Interim Financial Report for the half year ended 30 June 2017

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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

Stock Exchange Listing Australian Securities Exchange (ASX) ASX Symbol: FML

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

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 2017

Directors’ Report

The Directors of Focus Minerals Limited (“Focus”) are pleased to present the Interim Financial Report for the half year ended 30 June 2017.

Directors Dianfei Pei Chairman – Non-Executive, Non-Independent 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

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

For the first half of 2017, Focus Minerals substantially advanced its priority targets in both Coolgardie and Laverton. For the six-month period, the Company drilled a total of 45,952m, consisting 35,458m of reverse circulation (RC) drilling and 10,494m of diamond drilling. In addition to the drilling activities, Focus conducted a geophysics survey in its tenement holdings.

In Coolgardie, the Company drilled a total of 28,677m, consisting 19,498m of RC drilling and 9,179 diamond drilling. The drilling targets were primarily concentrated on Brilliant. On 7 April 2017, the Company announced the Brilliant mineral resource increased by 26% to 475,500oz with the grade of 2.5g/t.

During the six-month period, Focus also completed a detailed gravity survey at Lake Cowan. The survey included 3,370 stations on a nominal 100m x 50m grid spacing. The data gathered by this survey is currently being interpreted.

In Laverton, Focus drilled a total 17,275m, consisting of 15,960m of RC drilling and 1,315m of diamond drilling. The majority was drilled in the Karridale area. Following the revision of the Lancefield Royalty, Focus’ exploration team returned to Lancefield after a two-decade long hiatus. For the first 6 months of 2017, Focus conducted 2,218m of RC drilling and 1,315m of diamond drilling at Lancefield.

Rehabilitation

For the first half of this year, the Company conducted rehabilitation earthwork on previous drilling sites. A total of 229 holes have been rehabilitated and over 2,900t of materials were removed to maintain compliant with the relevant environmental requirements.

Corporate

For the six-month period ended 30 June 2017, Focus incurred a loss of $2.429 million (2016: $1.882 million). The increase in the loss was caused by the following:

1. Decrease in the cash balance led to lower interest income, resulting a lower Revenue from Continuing Operation (2017: $857,000; 2016: $1,074,000)

2. During the first half of 2017, Focus surrendered non-core tenements, which had a total accounting value of $379,000. As a result of the surrender, the $379,000 was written-off and booked as a loss.

As at 30 June 2017, the Company has net assets of $98.204 million (2016: $100.633 million) and a cash balance of $58.524 million (2016: $64.436 million).[1]

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 2017

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 ASIC Legislative Instrument 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.

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Dianfei Pei Chairman of the Board 8 September 2017 Perth, Western Australia

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2017

Auditor’s Independence Declaration

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2017

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2017

FOR THE HALF YEAR ENDED 30 JUNE 2017
	Consolidated
	6 months to 6 months to
	30 June 30 June
Notes	2017 2016
	$’000 $’000
Revenue from continuing operations 3(a)	857 1,074
Other Income 3(b)	65 147
Employee expenses	(673) (591)
Depreciation and Amortisation Expenses	(394) (579)
Finance Costs	(467) (462)
Loss on disposal of tenements and plant and equipment	(379) (24)
Care and Maintenance Costs	(860) (829)
Corporate and Other Expenses	(578) (618)
Loss Before Income Tax	(2,429) (1,882)
Income Tax Expense	- -
Loss After Income Tax for the Period	(2,429) (1,882)
Other Comprehensive Income for the Period, Net of Tax	- -
Total Comprehensive Loss for the Period	(2,429) (1,882)
Total Comprehensive Loss Attributable to:
Owners of the Parent	(2,429) (1,882)
Total Comprehensive Loss for the Period	(2,429) (1,882)
Earnings per Share
Basic Loss per Share (Cents Per Share) 4	(1.33) (1.03)
Diluted Loss per Share (Cents Per Share) 4	(1.33) (1.03)

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 2017

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2017

AS AT 30 JUNE 2017
	Consolidated
	30 June 31 December
Notes	2017 2016
	$’000 $’000
Assets
Current Assets
Cash and Cash Equivalents 5	1,930 3,332
Short-term deposit 5	40,500 45,000
Trade and Other Receivables	1,303 1,572
Financial Assets	- 37
Total Current Assets	43,733 49,941
Non-Current Assets
Restricted Cash 5	16,094 16,104
Inventories	1,293 1,293
Plant and Equipment	2,037 2,430
Exploration and Evaluation Assets 6	65,682 59,469
Total Non-Current Assets	85,106 79,296
Total Assets	128,839 129,237
Liabilities
Current Liabilities
Trade and Other Payables	2,220 659
Prepaid Income	1,500 1,500
Provisions	253 210
Total Current Liabilities	3,973 2,369
Non-Current Liabilities
Provisions	26,662 26,235
Total Non-Current Liabilities	26,662 26,235
Total Liabilities	30,635 28,604
Net Assets	98,204 100,633
Equity
Issued Capital 7(a)	427,167 427,167
Reserves	(7,178) (7,178)
Accumulated Losses	(321,785) (319,356)
Total Equity	98,204 100,633

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 2017

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 30 JUNE 2017

	FOR THE HALF YEAR ENDED 30 JUNE 2017
		Issued Capital Accumulated Losses Reserves Total
		$’000 $’000 $’000 $’000
	Balance as at 31 December 2016	427,167 (319,356) (7,178) 100,633
	Total Comprehensive Loss for the period	- (2,429) - (2,429)
	Balance as at 30 June 2017	427,167 (321,785) (7,178) 98,204
	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

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 2017

CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE HALF YEAR ENDED 30 JUNE 2017

			Consolidated
			6 months to 6 months to
			30 June 30 June
			2017 2016
			’$000 ’$000
Cash Flows from Operating Activities
Payments to Suppliers and Employees (Including GST)			(1,447) (1,625)
Royalties Paid			- (41)
Other Income			68 88
Interest Received			1,192 1,123
Bank charges			(67) (67)
Net Cash Outflow from Operating Activities			(254) (522)
Cash Flows from Investing Activities
Acquisition of Plant and Equipment			- (13)
Sale of financial assets			52 -
Decrease in short-term deposits			4,500 4,115
Exploration Expenditure			(5,710) (3,927)
Net Cash (Outflow)/Inflow from Investing Activities			(1,158) 175
Cash flows from Financing Activities
Net payback from Performance Bonds			10 225
Net Cash Inflow from Financing Activities			10 225
Net Decrease in Cash and Cash Equivalents			(1,402) (122)
Cash and Cash Equivalents at the Beginning of the Period			3,332 1,995
Cash and Cash Equivalents at the Ending of the Period	5		1,930 1,873

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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 2017

Notes to the Consolidated Interim Financial Report for the Half Year Ended 30 June 2017

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 2017 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 2016 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 assessed the impact is not likely 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 at which revenue is recognised, accounting for variable consideration, costs of fulfilling and obtaining a contract and various related matters. New disclosures are also introduced. The company assessed the impact is not likely to be material to future reporting periods.

• (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 2017

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 2017 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 2017 2017 2017 2017 Coolgardie Laverton Corporate Consolidated $’000 $’000 $’000 $’000
	1 - 856 857 51 - 14 65 (45) - (628) (673) (390) - (4) (394) (180) (220) (67) (467) - (379) - (379) (335) (525) - (860) - - (578) (578)
	(898) (1,124) (407) (2,429) - - - -
	(898) (1,124) (407) (2,429)
	382 887 42,464 43,733 84 15 15,995 16,094 2,028 - 9 2,037 1,293 - - 1,293 41,860 23,822 - 65,682
	45,647 24,724 58,468 128,839 (2,125) (1,438) (410) (3,973) (10,996) (15,503) (163) (26,662)
	(13,121) (16,941) (573) (30,635)
	32,526 7,783 57,895 98,204
	3,673 2,540 - 6,213

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2017

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 2017

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 2017 $’000 2016 $’000
		857 1,074
		857 1,074
		65 147
		65 147
ote 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 2017 Centsper Share 2016 Centsper Share
	(1.33) (1.03) (1.33) (1.03)
	‘$000 ‘$000 (2,429) (1,882) 182,748,565 182,748,565
	‘$000 ‘$000 (2,429) (1,882)
	182,748,565 182,748,565

Note 4: Earnings per Share

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2017

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 2017 $’000 2016 $’000
	1,930 3,332 40,500 45,000
	42,430 48,332
	16,094 16,104

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 2017 $’000 2016 $’000
	172,860 166,647 (107,178) (107,178)
	65,682 59,469
	59,469 6,592 (379) 65,682

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 2017

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 2017	31 December 2016
	No. of shares	$’000	No. of shares	$’000
Issued capital	182,748,565	427,167	182,748,565	427,167

Share Issue Details

There were no shares issued during the half year period (6 months ended 30 June 2016: Nil).

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 2017 (6 months ending 30 June 2016: 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 2016: Nil).

Note 9: Contingent Liability

There are no contingent liabilities as at 30 June 2017 (2016: Nil).

Note 10: 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 2017

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 2017 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 8 September 2017 Perth, Western Australia

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2017

Independent Auditor’s Review Report

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2017

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