FOCUS MINERALS LTD — Interim / Quarterly Report 2021

Sep 12, 2021

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Focus Minerals Limited

ABN 56 005 470 799

Interim Financial Report for the half year ended 30 June 2021

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Table of Contents

Corporate Information ............................................................................................................................ 3 Directors’ Report ..................................................................................................................................... 4 Auditor’s Independence Declaration ................................................................................................... 6 Notes to the Consolidated Interim Financial Report .......................................................................11 Directors’ Declaration ...........................................................................................................................16 Independent Auditor’s Review Report ...............................................................................................17

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Corporate Information

ABN 56 005 470 799

Directors

Dianfei Pei Zhaoya Wang Gerry Fahey Rodney Johns Lingquan Kong

Chairman - Non-Executive, Non-Independent Director – Executive Director – Independent Director – Independent Director – Executive

Company Secretary

Nicholas Ong

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

RSM Australia Partners Level 32 – Exchange Tower 2 The Esplanade 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 28, St Martins Tower 44 St Georges Terrace Perth WA 6000

Solicitors

MinterEllison Level 4, Allendale Square 77 St Georges Terrace Perth WA 6000

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

Directors’ Report

The Directors of Focus Minerals Limited (“Focus”) are pleased to present the Interim Financial Report for the half year ended 30 June 2021.

Directors

Dianfei Pei Chairman - Non-Executive, Non-Independent Zhaoya Wang Director – Executive Gerry Fahey Director – Independent Rodney Johns Director – Independent Lingquan Kong Director – Executive (Appointed on 14 January 2021)

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

Principal Activities

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

Review of Operations

Highlights

During the six-month period ended 30 June 2021, Focus Minerals Ltd (“Focus”, “FML” or the “Company”):

• Released Laverton Stage 1 Open Pit PFS Progressive Results - announced to the ASX on 16 April 2021,

• Discovery at Skull Creek - announced to the ASX on 28 April 2021,

• Started of Coolgardie Gold Project approval process - announced to the ASX on 19 May 2021,

• Released Big Blow and Happy Jack Mineral Resource update - announced to the ASX on 21 May 2021,

• Released CNX Mineral Resource update - announced to the ASX on 24 June 2021,

• Discovery of CNX style mineralisation at Green Light - announced to the ASX on 24 June 2021

Coolgardie Gold Project

• Geotech, hydrogeological, material characterisation and metallurgical sampling significantly advanced to progress approvals for:

• Brilliant,

• Greenfields,

• Bonnie Vale,

• CNX,

• Big Blow and,

• Alicia,

• Resource drilling significantly advanced for Mineral Resource update in the second half of 2021 for the growing CNX deposit,

• Resource drilling advanced for maiden Greenlight deposit Mineral Resource (CNX style discovery).

Laverton Gold Project

• Resource and geotech drilling completed at Beasley Creek and Beasley Creek South with Mineral Resource reviews planned for second half 2021,

• Mineral Resource reviews planned for: Wedge Far North, Gladiator West, Mary Mac, Mary Mac Hill, Craigiemore, Bulldog and West Laverton in the second half of 2021,

• Karridale fresh rock metallurgy in progress for feed into follow up economic assessment.

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

Corporate

For the six-month period ended 30 June 2021, Focus incurred a loss of $3.2 million (6 months ended 30 June 2020: $5.4 million).

As at 30 June 2021, the Company has net assets of $77.1 million (31 December 2020: $80.3 million) and a cash balance, including short term deposits and restricted cash of $24.7 million (31 December 2020: $33.7 million).

Auditor’s Independence Declaration

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

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the consolidated entity during the financial half-year.

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, pursuant to section 306(3)(a) of the Corporations Act 2001.

On behalf of the directors

Dianfei Pei Chairman of the Board 10 September 2021 Jinan, Shandong, China

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

Auditor’s Independence Declaration

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2021

FOR THE HALF YEAR ENDED 30 JUNE 2021
	Consolidated
	6 months to 6 months to
	30 June 30 June
	2021 2020
	$’000 $’000
Revenue from continuing operations	49 142
Other Income	10 151
Employee Expenses	(775) (650)
Depreciation Expenses	(165) (199)
Finance Costs	(648) (303)
Loss on disposal of tenements and plant and equipment	(38) (2,434)
Care and Maintenance Costs	(701) (760)
Corporate and Other Expenses	(932) (1,325)
Exploration Expenses	- -
Loss Before Income Tax	(3,200) (5,378)
Income Tax Expense	- -
Loss After Income Tax for the Period	(3,200) (5,378)
Other Comprehensive Income for the Period, Net of Tax	- -
Total Comprehensive Loss for the Period	(3,200) (5,378)
Earnings per Share
Basic Loss per Share (Cents Per Share)	(1.75) (2.94)
Diluted Loss per Share (Cents Per Share)	(1.75) (2.94)

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 2021

CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2021

AS AT 30 JUNE 2021
Assets Current Assets Cash and Cash Equivalents Short-term deposits Trade and Other Receivables Inventories Total Current Assets Non-Current Assets Restricted Cash Plant and Equipment Inventories Right-of-use Assets Exploration and Evaluation Assets Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and Other Payables Provisions Other Current Liabilities Lease Liabilities Total Current Liabilities Non-Current Liabilities Provisions Borrowings Lease Liabilities Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued Capital Reserves Accumulated Losses Total Equity	Notes	Consolidated 30 June 31 December 2021 $’000 2020 $’000
		10,817 7,795
		96 12,096
		196 252
		4 -
		11,113 20,143
		13,746 13,803
		851 804
		1,286 1,291
		249 30
	3	101,235 94,377
		117,367 110,305
		128,480 130,448
		1,549 749
		228 250
		- 101
		87 25
		1,864 1,125
		29,339 29,012
		20,000 20,000
		166 -
		49,505 49,012
		51,369 50,137
		77,111 80,311
	4(a)	427,167 427,167
		(7,178) (7,178)
		(342,878) (339,678)
		77,111 80,311

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 2021

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE HALF YEAR ENDED 30 JUNE 2021

	FOR THE HALF YEAR ENDED 30 JUNE 2021
		Issued Capital Accumulated Losses Reserves Total
		$’000 $’000 $’000 $’000
	Balance as at 31 December 2020	427,167 (339,678) (7,178) 80,311
	Total Comprehensive Loss for the period	- (3,200) - (3,200)
	Balance as at 30 June 2021	427,167 (342,878) (7,178) (77,111)
	Balance as at 31 December 2019	427,167 (331,820) (7,178) 88,169
	Total Comprehensive Loss for the period	- (5,378) - (5,378)
	Balance as at 30 June 2020	427,167 (337,198) (7,178) (82,791)

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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 2021

CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 30 JUNE 2021

			Consolidated
			6 months to 6 months to
			30 June 30 June
			2021 2020
			’$000 ’$000
Cash Flows from Operating Activities
Payments to Suppliers and Employees (Including GST)			(1,972) (1,377)
Royalties Paid			- -
Other Income			16 131
Interest Received			39 160
Finance Costs			(417) (61)
Net Cash Outflow from Operating Activities			(2,334) (1,147)
Cash Flows from Investing Activities
Acquisition of Plant and Equipment			(196) (117)
Proceed from Sale of Non-current Assets			- -
Prepaid Income Payment to Loans Increase/(Decrease) in short-term deposits			- -
			(153) (63)
			12,057 (1,300)
Exploration Expenditure			(6,352) (5,703)
Net Cash (Outflow)/Inflow from Investing Activities			5,356 (7,183)
Net (Decrease)/Increase in Cash and Cash Equivalents			3,022 (8,330)
Cash and Cash Equivalents at the Beginning of the Period			7,795 13,935
Cash and Cash Equivalents at the Ending of the Period			10,817 5,605

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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 2021

Notes to the Consolidated Interim Financial Report

Note 1: Basis of preparation of half-year report

The interim financial report of Focus Minerals Limited (the “Company”), together with its controlled entities (the “Group”) for the half-year reporting period ended 30 June 2021 has been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001. Compliance with AASB 134 ensures compliance with International Reporting Standard IAS 34 ‘Interim Financial Reporting’.

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 2020 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.

Going Concern

The financial statements have been prepared on a going concern basis, which contemplates the continuity of the normal business activity and the realisation of assets and discharge of liabilities in the normal course of business.

As disclosed in the financial statements, the consolidated entity incurred a loss of $3.2m and had net cash outflows from operating activities and exploration expenditure of $2.3m and $6.4m respectively for the half year ended 30 June 2021.

These factors indicate significant uncertainty as to whether the consolidated entity will continue as a going concern and therefore whether it will realise its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.

Notwithstanding the above, the Directors believe that there are reasonable grounds to believe that the consolidated entity will be able to continue as a going concern, after taking into consideration of the following factors:

• The Company plans to issue additional shares in the next 12 months under the Corporation Act 2001 or source other additional funding to support the operations;

• The Company is in negotiations to establish a debt facility with third party lenders; and

• The Company plans to scale down its operations during the next 12 months, including corporate overheads, in order to curtail expenditure, in the event insufficient cash is available to meet projected expenditure.

Accordingly, the Directors believe that the consolidated entity will be able to continue as a going concern and that it is appropriate to adopt the going concern basis in the preparation of the financial report.

The financial report does not include any adjustments relating to the amounts or classification of recorded assets or liabilities that might be necessary if the consolidated entity does not continue as a going concern.

New or amended Accounting Standards and Interpretations adopted

The Group has adopted all the new or amended Accounting Standards and Interpretations issued by the Australian Accounting Standards Board (“AASB”) that are mandatory for the current reporting period.

Any new or amended Accounting Standards or Interpretations that are not yet mandatory have not been early adopted.

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

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 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 2021 is presented below:

Revenue from continuing operations Other Income Employee expenses Depreciation Expenses Finance Costs Loss on disposal of Assets 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 - Inventories - Right-of-Use Assets - Exploration and Evaluation Assets TOTAL ASSETS Current Liabilities Non-Current Liabilities TOTAL LIABILITIES NET ASSETS	6 months to 30 June 6 months to 30 June 6 months to 30 June 6 months to 30 June 2021 2021 2021 2021 Coolgardie Laverton Corporate Consolidated $’000 $’000 $’000 $’000
	6 19 24 49 10 - - 10 - - (775) (775) (108) - (57) (165) (115) (175) (358) (648) (38) - - (38) (262) (439) - (701) (303) (1) (628) (932)
	(810) (596) (1,794) (3,200) - - - -
	(810) (596) (1,794) (3,200)
	287 253 10,573 11,113 3,111 10,345 290 13,746 546 296 9 851 1,286 - - 1,286 - - 249 249 50,859 50,376 - 101,235
	56,089 61,270 11,121 128,480 (977) (429) (458) (1,864) (12,792) (16,272) (20,441) (49,505)
	(13,769) (16,701) (20,899) (51,369)
	42,320 44,569 (9,778) 77,111

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

Segment Financial Information for the six months ended 30 June 2020 is presented below:

Revenue from continuing operations Other Income Employee expenses Depreciation Expenses Finance Costs Loss on disposal of Assets 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 - Inventories - Right-of-Use Assets - Exploration and Evaluation Assets TOTAL ASSETS Current Liabilities Non-Current Liabilities TOTAL LIABILITIES NET ASSETS	6 months to 30 June 6 months to 30 June 6 months to 30 June 6 months to 30 June 2020 2020 2020 2020 Coolgardie Laverton Corporate Consolidated $’000 $’000 $’000 $’000
	19 63 60 142 20 114 17 151 - - (650) (650) (153) - (46) (199) (112) (187) (4) (303) (2,434) - - (2,434) (335) (425) - (760) (484) (320) (521) (1,325) (3,479) (755) (1,144) (5,378)
	- - - - (3,479) (755) (1,144) (5,378)
	364 1,494 5,277 7,135
	3,177 10,345 347 13,869 648 186 9 843 1,293 - - 1,293 - 14 71 85 42,676 46,203 - 88,879
	48,158 58,242 5,704 112,104 (627) (737) (631) (1,995) (11,041) (16,007) (270) (27,318)
	(11,668) (16,744) (901) (29,313)
	36,490 41,498 4,803 82,791

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

Note 3: Exploration and Evaluation Assets

Exploration and evaluation expenditure at cost: Movement Summary: Carrying amount at beginning of the period Add – exploration expenditure Add – rehabilitation liability adjustment classified as Exploration Less – disposal of Assets previously classified as held for sale 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 2021 $’000 2020 $’000
	101,235 94,377
	94,377 85,899 6,896 9,841 - 1,553 - - (38) (2,916)
	101,235 94,377

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.

Note 4: Issued Capital and Reserves

Authorised Capital

The Company does not have an Authorised Capital and there is no par value for ordinary shares.

• (a) Ordinary Shares

a) Ordinary Shares
		As at		As at
		30 June 2021		31 December 2020
	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 2020: 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 2021 (6 months ending 30 June 2020: Nil).

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

Note 5: Contingencies

There have been no changes to contingent liabilities or assets since 31 December 2020.

Note 6: Significant Events After Balance Date

There are no events, matter of circumstance has arisen after balance date that have significantly affected or may significantly affect, the operations of the Group, the results of those operations or the state of affairs of the Group in the future financial periods.

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

Directors’ Declaration

The directors of the Company declare that:

1. The financial statements and notes are in accordance with the Corporations Act 2001 , including:

2. a. Complying with Australian Accounting Standards AASB 134 'Interim Financial Reporting', the Corporations Regulations 2001 and other mandatory professional reporting requirements; and

3. b. Giving a true and fair view of the Group’s financial position as at 30 June 2021 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 pursuant to section 303(5)(a) of the Corporations Act 2001.

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Dianfei Pei Chairman of the Board 10 September 2021 Jinan, Shandong, China

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

Independent Auditor’s Review Report

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Focus Minerals Ltd – Financial Report for the half year ended 30 June 2021

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