Focus Minerals Sept 2011

Gold : Focus Minerals Ltd (FML)
By : Eagle Research (Keith Goode)
Year Low/High:
Diluted No. Shares
Diluted Mkt Cap :
Net debt (30 June 2012)
AUG 2012 VISIT TO COOLGARDIE, THE MOUNT & LAVERTON
$0.03 - $0.06 8.87bn shares
Recommendation
8.87bn 51.7m options
Share Price
A$293m (out-of-the-money)
Target Price (5%NPV: $0.101)
-$51.0m plus $227.5m in Dec 12 www.focusminerals.com.au
3 December 2012
BUY
$0.033
> $0.07
T:+618 9215 7888
Focus Minerals Ltd (FML) –
Awakening the
Sleeping Giant to produce >200,000ozpa
•
With the 82% takeover of Crescent Gold, Focus Minerals (FML) now has two operational
centres at Coolgardie and Laverton that are aiming to produce >200,000ozpa for at least
10 years. FML has identified a company-making "game changer" at each of its operations
that potentially has the capability to initially supply >50% (possibly even >70%) of the mill
feed for at least 5 years, namely Dreadnought at Coolgardie and Burtville at Laverton.
•
A re-appraisal of Coolgardie's numerous historic mine-workings has identified a number
of "new" near mine targets that have already produced encouraging exploration results,
such as Bayleys / Prices, while the open-cut mining of Dreadnought and Big Blow have
transformed the understanding of them.
•
Although Dreadnought may resemble Alacer's Trident mine at Higginsville, it is the
number of intersecting shear zones and possible extensions in almost all directions from
the current pit (especially NE and SW) that indicate the potential for a significantly larger
open-cut, and the mainstay of the Coolgardie operations, as the underground operations
(currently at Tindals) temporarily wind down.
•
Significant cost reductions have and are being made at Laverton, resulting from
experienced managerial changes, along with a focused review of Laverton's operational
capability and exploration upside potential. As the main Apollo open-cut ends by
December 2012, Burtville is expected to be re-opened and extended for possibly a > 4 to 5
year-life, while delineating the upside capabilities of Barnicoat, Euro and Telegraph.
•
The $227.5m placement of 4.55bn shares @ A$0.05 to Shandong Gold International (a 65%
subsidiary of Shandong Gold Group Ltd, which owns 56.4% of Shandong Gold Mines that
produces almost 1mozpa gold with a market cap of ~$9bn), means that Focus can have
its own plant at Laverton and realise the upside potential in both Coolgardie and Laverton
FINANCIAL ESTIMATES : (Note : This ERA scenario is just one of a number of possible scenarios for Focus Minerals)
Year end June
Attrib Gold Sold
Gold Price Received
Total C1 Cash Cost
Total Cost
NPAT
EPS
No Shares
P/E ratio @ A$0.033
koz
US$/oz
A$/oz
A$/oz
A$m
c
M
x
2012a
DH12f
JH13f
2013f
2014f
2015f
2016f
157
1673
1222
1545
6.2
0.1
4321
86
1694
1209
1556
0.5
0.0
8872
92
1800
967
1351
26.3
0.3
8872
178
1747
933
1380
26.8
0.3
8872
187
1800
855
1227
70.8
0.8
8872
4.1
223
1800
814
1185
94.3
1.1
8872
3.1
241
1800
777
1140
108.0
1.2
8872
2.7
OTHER KEY POINTS:
•
•
FML has a 5%NPV of A$0.101,( at a gold
price of US$1800/oz and an A$ exchange
rate of 1.05US$/A$) and the NPV rises by
~A$0.014 per US$100/oz increase in the
US$ Gold Price.
Cash costs could reduce by at least
$300/oz at Laverton, with the move to
mining at Burtville which has a low SR and
for which the historical WMC royalty is not
applicable, as it was original owned by SGW
(Sons of Gwalia).
:
•
•
Focus has delineated a 10-year life of
mine model for Coolgardie, treating all the
various pits and possible undergrounds in
order, with Greenfields, Alicia and Lady
Charlotte probably next. A similar initial
exercise has also been made at Laverton.
Refurbishing FML's own plant at Laverton
could result in material cost reductions,
as has been seen by Regis expecting $9/t
from its nearby ~2.5mtpa plant that was
designed at 2mpa. FML currently pays $25/t.
This is a research publication of Eagle Research Advisory Pty Ltd ABN 33 098 051 677 as a Corporate Authorised
Representative reference number 384349 of Taylor Collison Limited ABN 53 008 172 450 AFS Licence 247 083.
Corporate Overview
In the past year, since our previous report on Focus Minerals Limited (FML) dated 14 September 2011 at
7Ac, FML completed its off-market takeover of Crescent Mining (CRE), resulting in a holding of 81.57%.
FML was thwarted from compulsory acquisition by the Hong Kong listed Stone Mining which accrued a
14.27% holding through buying on-market, resulting in two major shareholders with a holding of 95.94%.
CRE was subsequently delisted on 14 May 2012, and has been renamed Focus Minerals (Laverton). The
issue of 1 FML -for- 1.18 CRE shares, resulted in the 4.32bn fpo shares, with 51.3m options (all out-ofthe-money, of which 28.2m options are due to expire @ >7.5c on 31 Dec 2012).
At the AGM on 30 November 2012, ~82.4% of the shareholders voted in favour of the $227.5m
placement of 4.55bn shares @ $0.05 to Shandong Gold International (a 65% subsidiary of the
Shandong Gold Group Co., Ltd [which is 100% owned by the Shandong Provincial Govt], the other 35%
being held effectively by the Shandong Provincial Govt). The Shandong Gold Group holds 56.4% of the
Shanghai Stock Exchange listed Shandong Gold Mining Co., Ltd which produced 22.24t (710koz) of gold
in 2011 (and has a target of ~1moz in 2012 - for further detail, see page 14 of this report) with a market
cap of RMB59bn ($9bn). The Shandong Gold Group had a NPAT of $275m (Rmb1.79bn) in 2011.
The placement results in 8.87bn shares in issue and provides Focus with the ability to have its own plant
at Laverton, exploration capabilities, and an acquisition war chest if it wants to use it for that purpose.
FML's share price has weakened in the past year along with most of the rest of the gold share market due
to fund redemptions and uncertainty, combined with large day-trader volumes. Cash costs and margins
are beginning to improve as illustrated by the $8m operating cashflow & $6.7m net cashflow in SQ2012
and expected to reduce further as Coolgardie switches increasingly to open-cuts centred on Dreadnought
(as the Tindals underground closes), and Laverton focus on lower royalty open-cuts like Burtville.
Figure 1. Locations of FML’s Main Project Areas in WA and Projects and Prospects at Coolgardie
a. Locations of FML’s Main Projects in WA
b. Locations of FML's Main Prospects at Coolgardie
Focus Minerals now has two operational mining centres being Coolgardie (which includes The Mount) and
Laverton as shown in Figures 1a and 1b. This report is based on our post Diggers visit to both Coolgardie
(including Coolgardie, regional exploration, The Mount and Treasure Island), and Laverton, together with
previous visit knowledge and presentations, including an ERA report on Crescent Gold dated April 2006.
Coolgardie Operations (FML : 100%)
With the pinch-out of mineralisation at depth in Countess and Perseverance in the Tindals underground,
the old Cyanide orebody is not sufficiently large enough to support underground mining there, so the
underground is to be placed on care and maintenance after it stops production by the end of December
2012. Other underground mining is expected to occur at Coolgardie, once it has been proven up.
Dreadnought Pit
The main production source has become the Dreadnought pit which was delivering ~45,000t of ore per
5m bench and was a hive of activity when we visited it again in early August 2012 as shown in Figure 2b.
Figure 2. 3d View of Dreadnought (from Qantas flight to Perth), and View of Dreadnought Pit
a. 3d View of Dreadnought (from Qantas flight to Perth)
b. View of Dreadnought Pit
2
The Dreadnought pit has always been something of an enigma, which is why it has remained untouched
for so long, with the geological model open to interpretation. Last year when we visited Dreadnought the
initial cuts were being taken with the comment of discovering unexpected high grades in a corner of the
pit. Since then, visible gold specimens have been encountered in the vicinity of the Dreadnought Shear as
shown inset in Figure 2b. Dreadnought is currently the key to achieving Coolgardie's production ounces.
Three recent interpretation changes occurred in 2012, being the discovery of an old plan of underground
workings with arcuate lodes and the Dreadnought Shear, two small ground collapses (indicating stopes)
near Tiddles' grave north of the pit that can be tracked north through the bush to a conjunction called
Metro, and the consideration to drill west compared to previously all drilling to the east.
Figure 3. Section of Dreadnought & Comparative Sections of Trident
a. Cross Section of Dreadnought
b. Comparative Sections of Trident
As shown in Figure 3a, the majority of the drilling at Dreadnought has been to the east, which probably
would not intersect potential east dipping flats that may exist in a remarkable similarity to the inset
sections and 3d schematics through Alacer's Trident mine at Higginsville. Dreadnought's host rock
is mostly gabbros with some komatiite basalt, compared to Trident's mostly gabbros and ultramafic. At
Trident the grades are understandably enhanced when the eastern flats meet the western dipping lodes.
FML already has a proposed programme drilling to the west between the lodes shown in Figure 3a.
Figure 4a shows a recently discovered old plan of the Dreadnought underground workings with the
Dreadnought shear and possibly an arcuate or curving lode caused by the intersection of two lodes
forming an arcuate structure. This arcuate structure is probably an illusion caused by intersecting lodes
forming arcuate mineralisation as we/ERA have seen at Evolution's Edna May operation near Westonia.
Figure 4. Old Plan of Dreadnought and Shears, and View of Dreadnought Pit and Shear
a. Old Plan of Dreadnought and Shears
b. View of Dreadnought Pit and Shear
Following that model infers that there may be repetitions of the arcuate or intersecting lode form, both
length-wise and cross-wise through the Dreadnought pit (and outside of it). The main NE/SW striking
Dreadnought shear can be visually seen crossing the pit (through what was the old Dreadnought west pit),
inset in Figure 4b. It can also be seen that the straight edges of the old east and west Dreadnought pits
are (logically in hindsight) on structures as shown in Figure 5a.
A shear can also be seen in the western wall of the pit conforming to the arcuate pattern, along with old
workings in and beyond the western wall striking in a similar direction. Tracking through the bush NE
along the "Tiddles" line, we saw an old pit area at the "Metro(politan)" exploration target vicinity and an old
shaft as shown in Figure 5b. Recent grab samples in the quartz-rich old pit area apparently ranged mostly
from 3g/t to 6g/t.
3
A cut back had already started on the SW corner of Dreadnought and conceptually the pit may evolve into
a "mega" pit along with a future underground mine, as there are a number of deeper encouraging
intersections. Dreadnought was originally thought to have a gap in its mineralisation between surface and
depth, whereas instead its structure appears to be more complex than envisaged, which should be ideal
for an open-cut especially when it has upside grade potential. At some stage, it is expected to mine
Dreadnought underground.
Figure 5. Topographical Plan of Dreadnought and Shears, and View of Metro Exploration Target Area
a. Topographical Plan of Dreadnought & Metro Target
b. Views of "Metro" Exploration Target Area
Big Blow Pit
The second source of open-cut ore in the past year at Coolgardie has been Big Blow, which is
approaching the end of its current life as an open-cut being based on felsic porphyry lodes in an ultramafic
as shown in Figure 5a. The grade envelope of the mineralisation bears some relationship to the northern
(old New Celebration) end of Alacer's HBJ pit as shown in Figure 5b, where the highest grade lode mined
and followed was the westernmost one. The latest section of HBJ has the southern end mirroring the
north, or in other words the mineralisation tapering back up to the southern end.
Figure 6. Big Blow and Felsic Porphyrys and Compared to Alacer's HBJ Pit
a. Big Blow Pit and Felsic Porphyrys
b. Big Blow 3d Model compared to Alacer's HBJ
The higher grades in the long section of Big Blow are masked by the eastern lodes as shown in the 3d
schematic view. For FML to go underground on Big Blow would depend on the competency of the
ultramafic around its westernmost lode, and southern grade extensions that have a programme to be
drilled.
Figure 7. Long Sections of Alacer's HBJ and Focus' Big Blow Pit
a. Long Section of Alacer's HBJ pit
b. Long Section of Big Blow Pit
4
Greenfields Pit
As the Big Blow pit winds down its production, it is expected to be replaced by ore from the Greenfields
pit. The Greenfields pit historically had a reconciliation issue in that grades realised were ~0.3g/t to 0.4g/t
(or ~25%) higher than expected. Looking at the Greenfields pit (which is literally a stone's throw away
from FML's 3-mile Hill plant), the mineralisation looks relatively uninteresting because it is masked by the
iron staining shown in Figure 8a, and perceived to have an average grade of ~1.6g/t.
Figure 8. Views of Greenfields Pit, and Mineralisation in the Greenfields Pit
a. Views of Greenfields Pit
b. Mineralisation in the Greenfields Pit
However, a closer look after walking down the ramp, instead shows in Figure 8b : (1) quartz veining in the
ultramafic (which has not been modelled); (2) if you peer through the iron-staining murk, a shear zone of
vertical lodes and relatively flat stringers can be seen; (3) shows some flat lodes (or flats) & (4) illustrates
stockwork mineralisation. Greenfields is expected to deliver ~1.6g/t to 1.7g/t, but could be closer to 2.0g/t.
Bayleys / Prices
While there is a sequence of pits to be mined that can result in a ~10-year life for Coolgardie, such as
Alicia, Lady Charlotte etc, and a range of possibles such as "Jolly Britons" (which lies north on strike of
Brilliant and Lindsays, and immediately south of Patricia Jean), although Jolly Britons does not have many
old workings apart perhaps from stockworks at its southern end. Of more interest has been the
observational discovery at Bayleys / Prices.
Bayleys / Prices relates to the respective underground workings shown in plan in Figure 7a that were
reported on 7 June 2012 and in FML's June Quarterly 2012 report, but whose significance appears to
have been overlooked by the market.
Bayleys was an underground mine with workings to a depth of ~450m and was mined on the Lindsays
basalt / ultramafic boundary, while Prices was mined within the ultramafic. Further south is the Kings
Cross open-cut and old workings which went to a depth of 400m and there is underground access from
Kings Cross to Bayleys and then at depth from Bayleys to Prices. With no near surface connection
between Bayleys and Prices as shown in Figure 9b, the inference is that they were developed separately,
whereas the plan does not clearly reflect that.
Figure 9. Plan of Bayleys / Prices Exploration Target, and 3d Schematic of Bayleys / Prices
a. Plan of Bayleys / Prices Exploration Target
b. 3d Schematic of Bayleys / Prices
Even on surface there are clear breaks in the mineralisation due to faulting. Exploration shown inset in
Figure 9a shows grade intersections along the boundary west of Prices (being Bayleys North). There may
also be a Prices South (east of Bayleys). Logically an open-cut could occur over Bayleys North and the
connect with the Prices underground, where according to old long sections there appear to be a number
~13g/t unmined stope areas.
5
As shown in Figure 10a, there are old workings above the area, but no open-cuts, and the access through
the Kings Cross portal appears possible, but the ground conditions also look weak above and around it,
with the western side clearly "sheeted" with rock to stop it from failing as shown in Figure 10b.
Figure 10. View to Above Bayleys / Prices Exploration Target, and View of Kings Cross Open-cut
a. View to Above Bayleys / Prices
b. View of Kings Cross Open-cut
The Mount
The Mount is located west of Widgiemooltha as shown in Figure 1a. Over the past year, operations have
refocused away from producing tonnage, to grade at mineable tonnage according to what can be
extracted from each of the lodes, which has resulted in the current target of ~12,000tpm to 15,000tpm for
~2,000ozpm (or ~24,000ozpa), with on-site management.
The current lodes being mined do vary on each level as they pinch and swell and boudinage (sausagelike), with varying grades. Initially going down the decline there appears to be numerous levels, however,
they are effectively 20m apart with sub levels as shown in Figure 11a. FML takes what it economically can
over the 20m level interval and schematically in 3d as shown in Figure 11b. Apparently the best lode so
far has been the Quackenbruk.
Figure 11. Level Plans of The Mount, and 3d Schematic View with Plans and Sections
a. Level Plans of The Mount
b. 3d Schematic View
As part of the focus on reducing costs and improving grades, FML has started "resue" mining at The
Mount, taking a "chimney-like" cut in the development face as shown in Figure 12a, and then blasting the
surrounding waste separately afterwards. The mineralisation at The Mount is different, due to the
presence of the gangue mineral tourmaline (which as far as we/ERA have encountered is not common in
the Goldfields). Otherwise, the gold is apparently mostly fine grained despite its grade, associated with
sulphides such as pyrite, and contained in quartz infill veins in shears within a basalt host rock.
Most of the lodes at The Mount appeared to be uniformly thin within a defined shear zone as in Figure 12a
of the PES, except for the short strike-lengthed Rostock (RON) averaging ~18g/t to 22g/t over >1m wide
as shown in Figure 12b, and also except for Fuchs to the NE, closer to the contact with the ultramafic.
There is a synform axial plane that both dips and plunges towards the north, with any ore shoots within
the lodes then plunging south. The synform infers that the Mount lode system may be repeated further
SW as shown inset in Figure 1a.
FY2012s production was ~150kt @ 4.3g/t for 20.7koz contained, with head grades mostly in the mid to
high 4's of which the June quarter (JQ12) was ~39kt @ 4.8g/t for 5.93koz contained, the increase in grade
in JQ12 up from 3.6g/t in MQ12 was partly due to resue development mining, with stope extraction issues
pulling them back closer to 3.9g/t in SQ12.
6
Figure 12. Resue Mining on PES Lode, >1m Wide Ore on RON Lode, and Quartz-rich Fuchs Lode
a. Resue Mining 277RL PES Lode
b. >1m Wide Ore 277RL RON Lode
c. Quartz-rich Fuchs Lode 320RL
Ore Reserves and Resources
FML's ore reserves and resources are shown in Table 1, which being grouped under broad headings
does not clearly show what FML may achieve at Coolgardie (or even at Laverton) as some of the mined
ore can be outside of the delineated resources. Although the recent release on 7 August 2012 on Burtville
(which is not included in the table, being Laverton as at 30 June 2011) does provide an insight with its
revised resource of 5.7mt @ 1.3g/t for 235koz (in June 2011, Burtville was 1.85mt @ 1.6g/t for 98koz) and
the increase is only due to drilling the western side of the old SGW pit as shown in Figure 16a.
Table 1. Ore Reserves and Resources at Coolgardie and Laverton
Focus Minerals
as at 30 June 2012
Coolgardie
Tindals
Mount
Lindsays - Bayleys
Three Mile Hill
Norris
Meas & Indicated Resources
Tonnes
Grade
Gold
000t
g/t
000oz
11193
2.5
899
719
5.7
131
4350
1.7
238
2446
1.6
123
Total Coolgardie
18708
Laverton
Burtville
Barnicoat
Central Laverton
Chatterbox
Jasper Hills
Lancefield
Meas & Indicated Resources
1573
1.3
65
2876
1.7
156
2809
1.8
166
4915
2.2
345
1825
1.8
104
2109
6.4
436
2.3
Total Laverton
Total Resources
16107
34815
2.5
2.4
1391
1272
2663
Inferred Resources
Tonnes
Grade
Gold
000t
g/t
000oz
3409
2.3
251
576
5.2
97
3562
2.0
233
1174
1.5
57
2440
2.2
169
Total Resources
Tonnes
Grade
Gold
000t
g/t
000oz
14602
2.4
1150
1295
5.5
228
7912
1.9
471
3620
1.5
180
2440
2.2
169
11161
29869
2.2
807
Inferred Resources
4146
1.3
170
3378
1.3
137
825
1.8
48
3186
2.2
227
843
2.1
58
713
7.0
160
13091
24252
1.9
2.1
800
1607
5719
6254
3634
8101
2668
2822
2.3
2198
Total Resources
1.3
1.5
1.8
2.2
1.9
6.6
235
293
214
572
162
596
29198
59067
2.2
2.2
2072
4270
Note : Coolgardie Proven & Probable Reserves were 2.8mt @ 2.0g/t for 183koz, while Laverton's were 4.8mt @ 2.1g/t for 331koz
Coolgardie Plant
The Coolgardie plant as shown in Figure 13a, treated 1.18mt @ 2.5g/t for ~90koz in FY 2012 (of which
the June Quarter 2012 was 295kt @ 2.75g/t for 24.8koz, ie production of ~90,000ozpa to 100,000ozpa. It
has a gravity circuit recovering ~40% to 60% of the gold and a crushing circuit with a ~2mtpa capacity. It
was thought that since the ~1.2mtpa was being achieved using 75% of the power, that production could
increase to 1.3mtpa to 1.4mtpa. However to achieve 1.8mtpa or 2mtpa would require greater changes.
Figure 13. Views of the Coolgardie and Laverton Plants
a. View of the Coolgardie Plant at 3 Mile Hill
b. Google Earth Plan & Views of Laverton Plant at Barnicoat
Although any such increase, probably depends on the exploration progress & success at Bayleys / Prices.
The current TSF in the old 3 Mile Hill pit is thought to have a remaining life of ~ 3 to 4 years. The area
shown in Figure 13a near the Coolgardie plant to stockpile Greenfields ore is because FML would prefer
to have higher grades especially with the loss of the underground as 1.2mt @ 2g/t is 77koz contained,
and 1.2mt @ 1.6g/t is 62koz contained, though costs should be lower.
7
Laverton Plant
A study on the old Laverton Plant at Barnicoat concluded that it could require ~$12m to $15m to fix it to a
capacity of ~1.4mtpa (2mtpa could cost up to another $20m, although with Shandong's experience and
equipment those costs may reduce). The original plant was refurbished in 2006 (it was the old Sons of
Gwalia plant that had been moved to Barnicoat), however, an inefficient contract crushing unit was used.
Consequently, the Laverton operations entered into a toll treatment agreement with Barrick's Granny
Smith plant to treat a minimum of 1.8mtpa (being 450ktpqtr), with set recoveries, penalty charges and
additional costs, and Barrick's discretion as to how many days' plant usage in a campaign in each quarter.
For FY 2012, 1.91mt were treated @ 1.4g/t for 86.7koz (FML attrib 66.6koz), of which JQ 2012 was 455kt
@ 1.76g/t for 23.5koz (attrib 19.1koz), ie ~87koz to 100kozpa of which FML has an attributable~ 82%.
Laverton Operations (FML : 81.6%)
Focus' Laverton operations are shown in Figure 14a, being the Crescent Gold assets which were formed
from an amalgamation of various interests, mostly by Sons of Gwalia (SGW) in 2002, followed by
Anglogold's in 2005 (for more detail, see our/ERA report on Crescent Gold dated April 2006 and available
on our website : www.eagleres.com.au), & the Metex (MEE) JV in 2009. SGW had a plant at Barnicoat
and was treating a number of pits in the Barnicoat and Burtville areas, but appeared to have lost interest
in about 1996 when SGW acquired a number of mines and companies in the Southern Cross area.
Figure 14. Location Plan of FML's Laverton Operations, and View of Apollo Pit D on the Chatterbox Shear
a. Location Plan of FML's Laverton Operations
b. View South of the Apollo Pit D on the Chatterbox Shear
While MEE had some interests in the Laverton region that grew when it acquired the old Lancefield mine
and Beasley Creek (West Laverton) areas from WMC in 1995, MEE were unsuccessful in exploration,
intersecting low grades near Burtville and low grades at depth at Lancefield, until they discovered the
Chatterbox Shear in Sept Qtr 1996, but were unable to treat it as they had locked themselves into an
agreement with Placer's Granny Smith operation. The Chatterbox Shear has now been treated as a
number of pits, the latest being the Apollo pits in 2011/2012 that are expected to be completed by
December 2012. However, Apollo does also have underground potential, with a syenite identified in the
pit, and deeper grades ~6g/t.
Geology
The Laverton region contains some significant gold orebodies such as Granny Smith, Sunrise Dam and
Wallaby as shown in Figure 15a.
Figure 15. Geological Plan of FML's Laverton Operations, and Topographical Plan of Old Mines at Burtville
a. Geological Plan of Laverton Operations
b. Topographical Plan of Old Mines at Burtville
8
Focus have observed that the NW/SE compression of the sequence of sediments and mafic /ultramafic
rocks shown in Figure 15a has resulted in a series of thrust faults that are often marked by syenites, with
a number of the major orebodies represented at or near syenites and often surrounded by sediments.
One of the locations with this signature that has not been extensively mined is Burtville.
FML's interest in Burtville advanced significantly in 2012 when relatively shallow drilling over the western
end of the historic Sons of Gwalia pit more than doubled the Burtville resources from 98koz to 235koz
(being 5.7mt @ 1.4g/t, or potentially about a 3-year life for the Laverton operation at ~2mtpa). Also, it
has a low SR (<2), and importantly, Burtville is not subject to the WMC royalty (nor is Barnicoat, or Euro).
Open-cut Prospects : Burtville
Burtville was an active mining centre from about 1898, with numerous workings, some of which are shown
in Figure 15b, however, it has been relatively barely mined by modern methods and largely overlooked.
SGW mined an open-cut consisting of 3 interlinked pits there between 1994 and 1996 based on two main
NNW/SSE striking mineralised shear zones, and recorded disappointment that the expected grade of
~1.7g/t was closer to ~1.4g/t.
According to notes we made of Burtville in 1994/95 ..."the grade is low, but so is the strip ratio", which is
still true. Apart from some possible private mining in a re-timbered old head-geared shaft at Merolia
(South Burtville) the area seems to have remained untouched for over 15yrs.
Figure 16. Plan of Burtville showing Identified Mineralised Trends & Views of the Western end of Burtville Pit
a.Plan of Burtville showing Identified Mineralised Trends
b. Views of the Western end of the Burtville Pit
FML's exploration intends to focus on the mineralised trends of the old workings that it has identified in
Figure 16a, while drilling the eastern area of the old SGW pit, following on from the success achieved in
the western end that resulted in the more than doubling of Burtville's ore resources by June 2012 to 5.7mt
@ 1.4g/t for 235koz.
The Burtville orebody consists of numerous mineralised quartz veins that cut through the granodiorite host
rock with the main trend being N/S as shown in the NW wall of the Burtville pit Figure 16b. The Western
wall actually resembles a stockwork with so many thin often horizontal veins. The eastern and western
sides of the pit are separated by a hard granodiorite "dome" shown in Figure 17a.
Figure 17. View East of the old SGW Burtville Pit, and Views of Merolia / South Burtville
a. View East of the old SGW Burtville Pit
b. Views of Merolia / South Burtville
Interestingly most of the historic highest grade areas are still unmined outside of the SGW pit, such as
"Away From Home Leases" : initially 6.5oz/t, averaged 2.2oz/t (1900 to 1909), "Sudden Jerk" ~1.5oz/t
(1902 to 1904), "Bell" ~1oz/t (1901 to 1903), and "Blue Moon" at ~1.8oz/t (but only 63oz from 35t). In its
last few quarters that contained detail on Burtville, SGW reported intersections such as 14m @ 14g/t from
27m, 8m @ 12.3g/t from 2m & 10.3g/t from 54m at its "Blue Moon" prospect in SQ95, followed by
intersections on its extensive "Beacon" flat lying shear prospect mostly at a depths of ~45m (30m to 70m)
with a number of ~2g/t intersections, some 8m @ ~4g/t intersections and grades up to 22m @ 5.6g/t.
9
Most of the SGW intersections in their quarterly reporting records are 3m, 6m or 9m inferring that
composites were taken, probably to reduce assay costs. The original IPO of Crescent noted SGW's Blue
Moon discovery as one of its key targets, but it may have been mislocated as our/ERA conversion of the
SGW grid to the Laverton mine grid shows it to lie further NE of the Govt Mines Depts' location.
SGW also recorded encouraging intersections at Karridale (adjacent west of Merolia, or South Burtville).
South Burtville / Merolia has extensive workings that have only been partly historically RAB drilled to a
depth of only 20m, though some of the shafts were clearly deeper and significant as shown by the retimbered shaft in Figure 17b. Burtville has ~80% gravity gold, and Barrick's Granny Smith has allocated a
recovery of 90% for the deposit. Burtville appears to be capable of supplying up to ~2mtpa in its own
right for at least 5 years.
Barnicoat
Located ~20km NW of Burtville in Figure 14a, and as shown in Figure 18a, Crescent mined Sickle (SE of
Barnicoat), and two small pits NW of the old tailings dam, but not the main Barnicoat line. SGW recorded
intersections in the first 6 to 10m below the floor of the Cock o' the North pit in JQ96 such as 60m @ 2g/t
& 3 separate intersections of 20m to 28m @ ~3g/t. SGW cut-back the Barnicoat pit in 96/97, mining it out
and placing the plant on care and maintenance in June 1998. However, possibly more importantly is the
apparent relatively barely explored parallel western structural trend, especially when viewed from the
perception that the historic pits appear to jog/step across (on faults ?) to the NE.
Figure 18. Plan of Barnicoat showing Mineralised Trends & Gm-m Long Sections of the Barnicoat Area
a. Plans of Barnicoat and Main Identified Mineralised Trends
b. Gm-m Long Sections of the Barnicoat Area
There is ore in the floor of the Barnicoat pits as can be shown in the block models, and in the gm-m long
sections of Figure 18b. Just how much more, depends on exploration. It should also be noted that despite
the intersections, there was no resource as at 30 June 2011 for "Cock o' the North" or "Scotland Yet".
Euro
Crescent mined the colourful "peacock-feather-patterned" (apparently symptomatic of basalt) open-cut
that they renamed Sterling, south of Euro as shown in Figure 19a. The Euro pit still contains
mineralisation with reasonably higher grade intersections as shown inset in the Figure, although
apparently heavily diluted to achieve the reported resource of almost 570kt @ 1.7g/t for 31koz.
Figure 19. View of Euro South and inset section, and Topographical Plan of Euro
a. View of Euro South and inset section
b. Block Models of Cock o' the North & Barnicoat
However, FML's current focus is on the old adjacent workings further north, called Euro (or Central Euro).
The historic workings are very impressive : consisting of stone walling for a 3-compartment underlay or
inclined shaft dipping west, and a series of pits that line up on strike NNW/SSE with the northern edge &
NE wall of the Euro pit as shown in Figure 19b (which may infer that Euro has an offset or 2 structures).
10
Figure 20. View of Main Shaft Wall and 3 Compartment Underlay, and Schematic of at least 4 working levels
a.View of Main Shaft Wall & 3 Compartment Underlay
b. Schematic of at least 4 levels of workings
The stone walling and underlay shaft passing through some flat mineralisation is shown in Figure 20a,
and there are two small pits further SSE showing possible west dipping mineralisation and a flat stope.
The shaft fed into at least 4 levels of workings that appear to have been mostly mined SSE as shown in
Figure 20b. Euro was discovered in 1895 and the underground workings apparently form part of an
anticline on which only the northern limb was mined from 1900 to 1911 producing 35,170oz from 94,825t
fed through a 40-head stamp battery. There are still stamp battery footings and old tailings present.
A proposed drillhole programme is shown in Figure 20b, from which the encouraging results of 4m @
21.9g/t (incl 1m @ 75.6g/t), and 5m @ 13.9g/t (incl 1m @ 61.5g/t) were reported in SQ 2012. Euro may
also be an underground target, should the lode intersected have continuity.
Underground Prospects : Fish
At this stage, most of the other Laverton targets appear to be underground opportunities. During the past
year, open-cut mining occurred mostly at Fish & Apollo, and both of these pits trickled on into the current
2012/13 year, with Fish finishing while we were on site in August 2012. Although Fish was narrow vein
high-grade, (at ~4g/t in the open-cut), its location at ~85km from the plant makes it distance prohibitive.
Figure 21. View South of Fish Pit, and Cross-section through Apollo in "Leapfrog"
a. View South of Fish Pit
b. Cross-section through Apollo (looking North)
Fish has gold mineralisation in a uniform magnetite lode along the centre of the pit, plus some laminated
quartz (usually associated with gold mineralisation) as shown in Figure 21a, and was expected to be
continued underground. Further exploration was anticipated to be conducted prior to considering mining
underground in the 2013/14 FY.
Apollo
The presence of syenite in the floor of the Apollo pit, gives rise to the possibility that Apollo may be
comparable to Barrick's Wallaby deposit (shown inset in Figure 21b), especially with some of the deeper
grade intersections shown in Figure 21b. Wallaby has apparently become an ~7moz orebody with grades
~6g/t to 10g/t, that are hosted in an ~1500m thick conglomerate, intruded by syenites, with gold lodes on
sub-horizontal shear zones/thrust planes. At this stage Apollo deeps is a concept awaiting exploration.
Gladiator South and Gladiator
The original Gladiator (South) pits were mined by the diamond company Ashton before it spun off its
renamed gold division called Aurora. Gladiator South consisted of 3 pits as shown in Figure 22a that
Crescent renamed Murrays (Crescent renamed the pits that it acquired from Barrick/Carbon Energy
[Metex] resulting in great confusion, Focus intends to revert the names back for those it can).
11
Figure 22. View North of Gladiator South Pit, and the Gladiator Area
a. View North of Gladiator South Pit
b. The Gladiator Area
Little information appears to exist over what Gladiator South was mined on, although there are clearly two
felsic dykes (HBJ/New Celebration style - as in Figure 6b of this report) in a BIF (banded iron formation),
traversing the western side of the pits and which were apparently followed / mined on. It can be seen that
while the pits appear to be relatively shallow there is clearly ore in the north wall, and that (as per Google
Earth) a bypass mine road is in place that accommodates mining the northern end of the pit.
However, of more interest is Gladiator as an underground operation or something larger. Gladiator may
not have been mined because it was perhaps considered too deep at that time, although it does contain
encouraging intersections as shown inset in Figure 22b. The trees / vegetation shown as green "wavy
lines" on Google Earth are logically perceived to be following structures. There is clearly a pit on a
structure west of Gladiator and old workings further north (adjacent to the historic cream coloured tailings
failure - which judging by the number of buildings and "mess" was at one stage a fairly sizeable
operation), and apparently otherwise the structure remains untested. It can be seen that there are
numerous targets and it is case of prioritising them.
Lancefield and Telegraph
Crescent announced a rights issue to raise $45m in November 2010 to re-open the old Lancefield gold
mine for ~$33m and produce 50,000ozpa to 70,000ozpa based on initial studies. The rights issue was a
success, resulting in it being oversubscribed and raising a net $47.8m in January 2011. Although CRE
raised a further $8.84m in convertible 7%pa debt in May 2011, little appears to have been spent at
Lancefield with CRE managing to lose ~$50.1m in operating cashflow in FY2011, apparently mostly due
to "excess rainfall", although a number of costs rose in that year to June 2011.
We/ERA don't know what the studies were based on. There were a number of failures (pillars and stopes)
and rock bursts that prompted WMC to withdraw from mining at Lancefield in 1994, and they robbed
(reduced the size of or removed) pillars on retreat. This robbing of pillars on West Lode probably caused it
to stress the faults shown in Figure 23a and produce an "earthquake-like" failure or collapse of the West
Lode (at least for part of the upper levels) initially along the stope boundary, and falling by the stope width
across the ramp as shown in Figure 23b, plus a few other relatively smaller cracks at the base of the ramp
ahead of the portal underground. The other lode mined at Lancefield (Main) was mostly refractory.
Figure 23. Historical Plan and Section of Lancefield, and Views of Lancefield Pit and West Lode Failure
a. Historical Plan and Section of Lancefield
b. Views of Lancefield pit and West Lode Failure
The original Lancefield underground was mined from 1899 to the early 1940s producing 1.59mt @ 10.0g/t
for 531koz, followed by WMC from 1980 to 1994 producing 3.71mt @ 6.5g/t for 787koz. It did not mine
continuously from 1899 to 1959, as records show it as having been dewatered in 1934, with production
12
recommencing from the 11 level (~450m or 1511ft) in 1935, at reserve grades of ~12.5g/t, and it closed in
the early 1940s due to extensive hangingwall failure. Average grades were recording as falling with depth
and Metex drilled some deep drillholes to ~1000m with low grade intersections, however, sections show
the orebody to contain oreshoots and hence the possibility of drillholes intersecting lower grade zones.
Lancefield had a reputation for stressed ground when WMC operated it and closed it at the end of
December 1994 on the basis of weak ground and apparent reducing grades at depth, selling it in a
package to Metex in March 1995 for $2.2m and a royalty. Lancefield had two lodes being Main (or Central
Main) and West Lode. The shallow dipping West Lode had a weak ultramafic footwall and had been
mined by room and pillar (with the pillars recording as punching into the weak ultramafic floor) as shown in
Figure 23a. While the sulphide-rich (As etc) refractory Main Lode (that was treated by roasting the ore)
had a stiff, horizontally stressed, pillow basalt hangingwall/roof. However, the decline is still apparently
mostly open having been sunk initially in a breccia / conglomerate and then later in a competent
hangingwall basalt.
The non-refractory Telegraph mine based on the West Lode structure further north was apparently
initially mostly an underground mine, before WMC had an open-cut on it in the late-1980s, but it has since
partly filled with water and is now the town's water supply (showing that it is potable water). The
Telegraph open-cut has a long circular ramp forming a pillar around an old shaft and apparently some
shallow workings. The pillar should contain mineralisation particularly with an apparent visible stockwork.
Figure 24. View South and North of Telegraph Pit
a. View South of Telegraph Pit
b. View North of Telegraph Pit
Although the pillar may be extracted for open-cut feed, of greater interest is mining Telegraph
underground and what happens (grade-wise) between Lancefield and Telegraph. It has been stated that
the Main lode at Lancefield was apparently absent at Telegraph (or was it ?), and was it all refractory ?, as
Main Lode consisted of a north which had more BIF & black shale, while the south had chert and higher
grades (but was definitely roasted in 1935). As shown in the plan in Figure 25a, the lodes appear to exist
between the pits as it does in the schematic, but does not appear to have been considered according to
the section - possibly due to concern over potentially damaging the decline sited in the hangingwall.
Figure 25. Lancefield and Telegraph : Geology & Topographical Plan, and Long Sections
a. Geol & Topog Plan
b. Schematic Sections through Telegraph
c. Long Section through Lancefield
Interestingly the long axis of the old shaft in the pillar strikes at right angles to the direction of the lodes,
and the access ramp to the pit appears to be over/across the ore zone (according to Figure 25a).
Other Prospects - Admiral Hill and Pieces of Eight
The Admiral Hill and Pieces of Eight pits are located ~20km north of Barnicoat as shown in Figures 14a
and 26a, within felsic volcanics and quartz-rich sediments. The mineralisation is influenced by a syenite
intrusion to the east and a BIF unit (that hosts Barnicoat) to the west. Admiral Hill is influenced by a
copper envelope or zone that has weak quartz veins, with grades increasing with depth from ~0.1%Cu to
1%Cu. Gold grades are encouraging at ~3.6g/t, but treatment is limited by the copper penalties at the
Granny Smith plant and hence Admiral Hill can really only be processed if Focus has its own plant.
13
Figure 26. Topographical and Geological Plan of Admiral Hill area, and Views of Pieces of Eight Pit
a. Topographical & Geological Plan of Admiral Hill area
b. Views of Pieces of Eight Pit
In contrast the free-milling Pieces of Eight ore appears to be influenced by the BIF unit. Although there is
a consideration to continue mining underground, a section of the wall looks blocky & weak in Figure 26b.
Figure 27. View of Admiral Hill South Pit and Malachite Staining
a. View of Admiral Hill South Pit and Malachite Staining
The rest of the line of strike between Pieces of Eight and Castaway is considered to be mostly shallowly
drilled, although Focus recently drilled around the old workings further NW of Pieces of Eight and may
have an open-cut there. Within the Admiral Hill pits, malachite (copper) staining is clearly visible in the
walls, plus malachite chips in the RC mounds on the floor of the open-cut as shown inset in Figure 27a.
Because of penalties and limitations on copper content, the Admiral Hill pits appear unlikely to be treated
through Barrick's Granny Smith plant, so Focus probably needs to repair and upgrade the Barnicoat plant,
and then possibly add a flotation circuit. The question is just how localised is the copper envelope at
Admiral Hill and does the mineralisation arrangement change at depth, given the presence of the nearby
syenite shown inset in Figure 26a. The Pieces of Eight line of strike should not be affected and does not
appear to have any material copper content.
Financial Considerations
In addition to the 2.5% State Royalty and 0.25% Native Royalty, Crescent has two other royalties, namely
Indago (2%) and WMC (that was entered into when Metex acquired the WMC assets and hence do not
affect Burtville, Barnicoat or Euro). Consequently, Laverton's cash costs then depend on Burtville's
grades: 1.4g/t, 1.7g/t or 2g/t, plus cut-backs over old workings.
The cash injection from Shandong Gold International, means that although FML was generating enough
cash to sustain Coolgardie, funding should no longer be an issue, and the possible plant expansions may
be cheaper. Although 4 Chinese gold companies claim it, the Shandong Gold Group was the highest
gold producer in Shandong Province and China with production of 7.7t in MQ2012 and has a target
of 35t for 2012 (~1moz, Chinese mines quote production in t of gold) of gold production from at least 7 mines.
(Note : four of which are in China's top 10, being Jiaojia, Linglong, Sanshandao [6tpa] and Xincheng [3.5tpa]) with
total costs ~$550/oz to $600/oz, and avg u/ground grades typically ~2g/t to 3g/t {International Mining, March 2012}).
Shandong Gold (SD-Gold) has its own plant and mining equipment, shaft sinking, technology division, real
estate, ecological green mines and high quality reputation. SD-Gold was apparently the largest gold
producer in China in MQ2012, & the Shandong Gold Group NPAT in 2011 was ~$275m (Rmb1.788bn).
We have applied a treatment schedule to the pits at both Coolgardie (focusing on Dreadnought and
Greenfields), and Laverton (Burtville and Barnicoat) for at least 3 years, and then provided our usual
sensitivities to the gold price, grades, etc in Table 3. While the life easily appears to be there, higher
grades appear to be the key to achieving >100,000ozpa per operation, while upside potential could come
from a lower plant operating cost after Regis' ~$9/t milled on its new 2mtpa plant (achieving ~2.5mtpa).
At some stage, FML ideally needs to consolidate its shares (possibly on a 30-for-1). It should be
recognised that this production scenario is an ERA scenario, and is just one of a number of
possible scenarios that could occur.
14
Table 2. Production and Cashflow Estimate for Focus Minerals’ Operations at Coolgardie and Laverton
We have left the
Coolgardie mill..
...and mainly
focused on the
Laverton mill to
upgrade...
...but only
reduced
operating costs
to ~$22/t,
whereas Regis
nearby is
apparently
achieving closer
to ~$9/t milled
The NPAT is
lowered by the
high D & A as
illustrated in the
simple cashflow
Our production
models are
our/ERA
estimates of
what may
happen...
...though both
Dreadnought
and Burtville
appear to be in
the early stages
of resource
definition...
We focused on
treating the nonWMC royalty
pits at Laverton
first...
...together with
low strip ratios
We have
provided for tax
at Coolgardie...
Focus Minerals
2012a
The NPV rises
by ~1.4c per
5% increase in
grades
2013f
2014f
2015f
2016f
1694
1.057
1603
9
262
2.0
244
3.1
594
2.4
95.0%
44
4.5
700
2.1
0
0.0
937
1.9
91.0%
51
95
86
137.9
1800
1.050
1714
8
618
2.0
80
4.5
625
2.4
95.0%
45
4
1048
1.9
0
0.0
1048
1.9
91.0%
58
103
92
157.7
1
1747
1.053
1659
8
880
2.0
324
3.5
1219
2.4
95.0%
89
4.25
1748
2.0
0
0.0
1985
1.9
91.0%
109
198
178
295.6
2
1800
1.050
1714
8
945
2.2
197
4.6
1202
2.6
95.0%
96
3.5
1800
1.7
150
4.5
1950
1.9
93.0%
112
208
187
320.9
3
1800
1.050
1714
8
1070
2.4
262
5.1
1202
3.0
95.0%
109
3.5
2200
1.7
200
4.3
2400
1.9
95.0%
140
249
223
382.5
4
1800
1.050
1714
8
840
2.3
462
5.2
1202
3.4
95.0%
125
4
2200
1.7
200
4.3
2400
1.9
95.0%
143
267
241
413.2
1056
1094
1265
1537
1222
1295
202.6
55.6
32.8
251
1545
5.0
6.2
0.00
0.0%
6.2
0.1
39.0
0.9
0.0
4320.8
1304
1344
1126
1266
1209
1306
112.4
25.5
21.5
250
1556
3.5
0.5
0.00
0.0%
0.5
0.0
22.0
0.2
0.0
8871.8
1111
1151
855
955
967
1051
96.7
61.1
27.6
300
1351
3.5
30.0
3.64
0.0%
26.3
0.3
53.9
0.6
0.0
8871.8
1068
1106
823
941
933
1104
209.1
86.6
49.1
276
1380
7.0
30.5
3.64
0.0%
26.8
0.3
75.9
0.9
0.0
8871.8
922
961
798
892
855
927
173.6
147.3
56.2
300
1227
7.0
84.2
13.30
0.0%
70.8
0.8
127.0
1.4
0.0
8871.8
872
911
769
860
814
885
197.5
185.1
66.9
300
1185
7.0
111.1
16.86
0.0%
94.3
1.1
161.2
1.8
0.0
8871.8
768
807
785
875
777
840
202.5
210.7
72.3
300
1140
7.0
131.4
23.37
0.0%
108.0
1.2
180.3
2.0
0.0
8871.8
2012a
DH12f
JH13f
2012f
2013f
2014f
2015f
248.1
0.0
8.0
1.1
259.1
-183.3
0.0
-183.3
-9.1
-192.4
0.0
0.0
-0.7
0.0
0.0
-21.6
-13.6
-46.3
0.0
0.0
-274.7
0.0
-274.7
-15.7
-15.7
0
-15.7
-51.0
Yrs
12
137.9
227.5
0.0
0.5
365.9
-104.8
0.0
-104.8
-8.9
-113.7
0.0
-6.0
-1.0
0.5
0.0
-10.0
-6.0
-5.0
-5.0
-36.0
-182.2
3.5
-178.7
187.2
157.7
0.0
0.0
5.0
162.7
-90.2
0.0
-90.2
-7.5
-97.7
0.0
-6.0
0.0
-3.6
0.0
-10.0
-40.0
-5.0
-5.0
-36.0
-203.4
10.0
-193.4
-30.6
320.9
0.0
0.0
5.0
325.9
-161.3
0.0
-161.3
-14.2
-175.5
0.0
-12.0
0.0
-13.3
0.0
-20.0
-12.0
-20.0
-10.0
0.0
-262.8
3.5
-259.3
66.6
66.6
0
66.6
66.6
382.5
0.0
0.0
5.0
387.5
-182.8
0.0
-182.8
-17.0
-199.8
0.0
-12.0
0.0
-16.9
0.0
-20.0
-12.0
-20.0
-15.0
0.0
-295.7
3.5
-292.2
95.4
95.4
0
95.4
95.4
413.2
0.0
0.0
5.0
418.2
-187.0
0.0
-187.0
-17.9
-204.9
0.0
-12.0
0.0
-23.4
0.0
-20.0
-12.0
-15.0
-15.0
0.0
-302.3
3.5
-298.8
119.4
119.4
0
119.4
119.4
A$m
897
A$ps
0.101
295.6
227.5
0.0
5.5
528.6
-195.0
0.0
-195.0
-16.5
-211.4
0.0
-12.0
-1.0
-3.2
0.0
-20.0
-46.0
-10.0
-10.0
-72.0
-385.6
13.5
-372.1
156.5
156.5
70
226.5
226.5
No Shares
8871.8
1673
1.031
1622
9
367
2.0
666
3.6
1183
2.5
95.1%
90
5
1726
2.1
0
0.0
1908
1.5
92.2%
87
177
157
253.3
Cashflow
Sales Revenue
+ Equity Raised
+ Borrowings
+ Interest Received
Total Receipts
- Total Costs
- Other costs
- Operating Costs
- Royalties Paid
Sub-total
- Other
- Corporate
- Interest Paid
- Tax Paid
- Divs Paid
- Explorn
- Capex
- Sustaining/Other Capex
- Sustaining/Other Capex 2
- Loans Repaid
= Expenditures
- Other
Total Expenditures
Net Cash Flow
Effective Cashflow
Add divs
Underlying Cashflow
Net cash for NPV
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
A$m
...as Laverton's
could have a tax
loss of >$200m
NPV
5.00%
Table 3. Sensitivity Analysis of Focus Minerals
FML has a very
high
sensitivity to
its mill grades
which could
easily be >10%
or 15% higher
JH13f
Gold Price
$0.033
Gold Spot Price
US$/oz
Exchange Rate
A$/US$
Est Gold Price Realised
A$/oz
Coolgardie Production
SR
Open-cut Ore Mined
000t
Head Grade
g/t
Total Underground
000t
Head Grade
g/t
Total Milled
000t
Head Grade
g/t
Recovery
%
Coolgardie Gold Produced
000oz
Laverton Production
SR
Open-cut Ore Mined
000t
Head Grade
g/t
Total Underground
000t
Head Grade
g/t
Total Milled
000t
Head Grade
g/t
Recovery
%
Laverton Gold Produced
000oz
Total Gold Produced
000oz
Attrib Gold Produced
000oz
Total Attributable Revenue
A$m
Costs (Operating & Cash Cost)
Coolgardie Operating Cost C1
A$/oz
Coolgardie (incl royalties)
A$/oz
Laverton Operating Cost C1
A$/oz
Laverton (incl all royalties)
A$/oz
Total C1 Opg Cash Cost
A$/oz
Total incl all royalties
A$/oz
Cost of Sales
A$m
Gross Profit
A$m
D&A
A$m
D&A
A$/oz
Total Cost
A$/oz
Corp & other cost
A$m
NPBT
A$m
Tax Provision
A$m
Tax %
%
NPAT
A$m
EPS
c
Simple Cashflow
A$m
CFPS
c
DPS
c
No Shares
M
Sensitivity Analysis
Gold Price (at A$/US$1.05)
US$1800/oz (A$1714/oz)
US$1900/oz (A$1810/oz)
US$2000/oz (A$1905/oz)
US$1700/oz (A$1619/oz)
Gold Grade (g/t)
Grades unchanged
Grades + 5%
Grades + 10%
Grades -5%
Operating Costs
Sensitivity Analysis
Year
1800
1900
2000
1700
0%
5.0%
+10%
-5%
0%
10%
+10%
Year
NPV
A$
0.101
0.115
0.129
0.087
A$
0.101
0.115
0.129
0.088
A$
0.101
0.106
0.097
NPV
15
DH12f
2013e
2014e
2015e
A/tax Profit (A$m)
26.8
70.8
94.3
34.2
85.3
111.8
41.6
99.8
129.2
19.4
56.3
76.9
A/tax Profit (A$m)
26.8
70.8
94.3
35.8
83.0
108.8
44.3
95.1
123.2
17.5
58.7
79.9
A/tax Profit (A$m)
26.8
70.8
94.3
30.3
77.1
101.0
23.3
64.6
87.6
2013e
2014e
2015e
2013e
2014e
2015e
Earnings per Share (Ac)
0.3
0.8
1.1
0.4
1.0
1.3
0.5
1.1
1.5
0.2
0.6
0.9
Earnings per Share (Ac)
0.3
0.8
1.1
0.4
0.9
1.2
0.5
1.1
1.4
0.2
0.7
0.9
Earnings per Share (Ac)
0.3
0.8
1.1
0.3
0.9
1.1
0.3
0.7
1.0
2013e
2014e
2015e
Management
Board of Directors
Don Taig – Chairman since 2003. Don is an Accountant and was a founder of Focus Minerals. Don has held Managing
Director and CEO positions with a number of other listed companies.
Gerry Fahey – Non-executive Director since 2011. Gerry is a Geologist with over 35 years' extensive experience who
was the Chief Geologist for Delta Gold from 1992 to 2002 covering a period of discovery through to production on a
number of mines, and has mostly been in mining consultancy since then.
Michael Guo - Non-Executive Director since 2012. Michael is a geologist who is Deputy Manager and the Chief
Geologist of Shandong Gold. Michael has held senior geological positions with Zijin, Dahrouge Consulting & Cameco.
Zhongyi Li - Non-Executive Director since 2012. Zhongyi is Exec Chairman of Shandong Gold and has been employed
by the Shandong Gold Group since 2002. Zhongyi previously held a number of managerial real estate positions.
Phil Lockyer – Non-Executive Director since 2005. Phil has over 40 years experience in the resources industry, as a
mining engineer and metallurgist particularly in gold and nickel. Phil commenced his career with WMC Ltd in Kambalda, &
held senior operational management positions with Dominion & Resolute.
Bruce McComish – Non-executive Director since 2011. Bruce is a qualified accountant who has held a number of senior
financial positions around the world with Unilever, North and the NAB. Bruce holds and has held a number of nonexecutive and Chairman positions is listed and private companies.
Dahui Zhang - Non-Executive Director since 2012. Dahui is CEO of Shandong Gold International and has held
directorship / senior managerial positions in China Minmetals, Zijin and Sino Gold where he was financial controller.
Paul Fromson – Company Secretary and CFO since 2012. Paul is a Chartered Accountant with over 30 years'
experience including 18 years with ASX listed resource companies, and has been involved in the gold industry since 1987.
Paul was formerly CFO and Company Secretary at Bauxite Resources Ltd.
Senior Management
Campbell Baird – CEO since 2009. Campbell is a mining engineer with over 20 years of operational and management
experience in gold, iron ore, copper and other base metals. Campbell has held senior positions at SRK Consulting and
was previously general manager operations of Vulcan (now Altona) Resources for 4 years.
Mark Hine - Chief Operating Officer since 2012. Mark is a mining engineer with over 30 years' operating experience.
Mark has been CEO of Golden West Resources, Exec GM Mining at McMahon Contractors & GM at Pasminco Ltd.
Dean Goodwin– Head of Geology since 2010. Dean is a Geologist with over 25 years' experience mostly in WA and has
been involved in a number of WMC's gold discoveries in the Kambalda area. Dean also spent 5 years managing
exploration for Resolute's Australian gold mines before RSG went to Africa. Dean has also held other directorships.
Barend Knoetze - Resident Manager - Coolgardie Operations since 2009. Barend has over 20 years experience in the
mining industry in South Africa and has a strong track record of improving plant throughput and optimising the running
costs of operating plants. Prior to joining Focus, Barend held senior metallurgical positions in Norilsk and LionOre.
Jim Cotton - Resident Manager - Laverton Operations since 2012. Jim is a mining engineer with over 30 years'
experience, and was formerly GM for Golden Stallion Resources.
Dr Garry Adams – Group Geologist since 2007. Garry is a Geologist with over 15 years experience in WA and has been
involved in a number of gold discoveries. Garry has worked in resource evaluation, open-pits, mine & regional exploration.
Chuck McCormick - Business Development Manager since 2003. Chuck has over 30 years' world-wide experience in
the mining industry mostly in Australia and discovered a number of gold mines near Kal. Chuck was a founder of Focus.
Neil Le Febvre - Investor Relations Manager since 2010. Neil has over 20 years' experience in the marketing and
communications industry, and has been the driving force behind Focus' innovative free iPad app.
Chart of Focus Minerals Limited over the past two years (Nov 2010 to Nov 2012) (Source : www.yahoo.com)
FML dropped back
after the Crescent
acquisition...
...with the market
now appearing to
concentrate on the
gradual turnaround
Disclosure
Focus Minerals Limited commissioned Keith Goode (who is a Financial Services Representative with Taylor Collison Ltd ACN 008 172
450, and is a consultant with Eagle Research Advisory Pty Ltd ACN 098 051 677) to compile this report, for which Eagle Research
Advisory Pty Ltd has received a consultancy fee. At the date of this report Keith Goode and his associates held interests in shares
issued by Focus Minerals Limited. At the date of this report, Taylor Collison Limited or their associates within the meaning of the
Corporations Act, may hold interests in shares issued by Focus Minerals Limited.
Disclaimer
Any observations, conclusions, deductions, or estimates of figures that have been made by Keith Goode in this report should be taken as
his work, and not an approved observation, conclusion, deduction or estimate made by Focus Minerals Limited. This publication has
been issued on the basis that it is only for the information and exclusive use of the particular person to whom it is provided. Any
recommendations contained herein are based on a consideration of the securities alone. In preparing such general advice no account
was taken of the investment objectives, financial situation and particular needs of a particular person. Before making an investment
decision on the basis of this advice, investors and prospective investors need to consider, with or without the assistance of a securities
adviser, whether the advice is appropriate in light of the particular investment needs, objectives and financial circumstances of the
investor or the prospective investor. Although the information contained in this publication has been obtained from sources considered
and believed to be both reliable and accurate, no responsibility is accepted for any opinion expressed or for any error or omission that
may have occurred therein. This is a research publication of Eagle Research Advisory Pty Ltd ABN 33 098 051 677 as a Corporate
Authorised Representative reference number 384349 of Taylor Collison Limited ABN 53 008 172 450 AFS Licence 247 083.
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