Focus Minerals Ltd Stock Market Press Releases and Company Profile

Perth, Feb 24, 2009 AEST (ABN Newswire) - Focus Minerals Limited (ASX:FML) The Capital Raising will allow Focus to accelerate growth and development of the Coolgardie Gold Project, where the Company is aiming to establish a long-term sustainable production base of 100,000 ounces per annum.

The decision to undertake the Capital Raising to fast-track the refurbishment and modernisation of the Company's 1.2Mtpa Three Mile Hill treatment facility (Plant Refurbishment) follows recent increases in the Company's gold resource base - including a significant upgrade at the Company's Brilliant Deposit and ongoing successful exploration and development programs.

This decision is supported by the current strong gold price environment, which is creating unprecedented opportunities for gold producers to make significant margins. The Board has determined that this strategy represents the best option for the Company in terms of enhancing shareholder wealth, rather than utilizing cash flow from existing operations - which would effectively delay the implementation of this growth strategy by 12-14 months.

Perth-based corporate advisory firm Azure Capital Pty Ltd has been appointed as Corporate Advisor and Lead Manager to all aspects of the Capital Raising and Patersons Securities Limited will act as Broker to the Capital Raising.

Capital Raising

Subject to obtaining the necessary shareholder approval, the Capital Raising comprises of:

(a) the placement to institutional and "sophisticated" investors 1,250 million shares at an issue price of A$0.02 each to raise $25,000,000; and

(b) the offer of up to 150,000,000 shares at an issue price of A$0.02 each to shareholders pursuant to the Company's Share Purchase Plan to raise up to A$3,000,000.

The issue of shares under the SPP Offer will occur after completion of the Share Placement using the Company's capacity under Listing Rule 7.1.

The Share Purchase Plan will be processed in priority of receipt until the allocation has been completed. Details of the SPP Offer and entitlement forms will be mailed to shareholders shortly. Azure Capital have also agreed to place any shortfall arising on the SPP Offer on a best endeavours basis.

USE OF FUNDS

A significant proportion of the funds raised (approximately A$18 million) will be used to fund the Plant Refurbishment.

Funds raised will also be applied to ongoing exploration across the extensive 210km2 tenement holding, whereby Focus currently has an estimated 111,000 ounces of gold in Probable Reserves (depleted basis as at 31 December 2008) at the Perseverance and Countess deposits and approximately 1.8 million ounces in the Measured, Indicated and Inferred JORC-compliant resource contained in several surrounding deposits, including the recently upgraded Brilliant Deposit.


The breakdown of the allocation of funds is as follows:

- Plant refurbishment A$18.0 million

- Resource development A$ 4.6 million

- Advanced exploration and definition A$ 3.8 million

- Capital Raising Costs A$ 1.6 million

Total A$28.0 million

THREE MILE HILL REFURBISHMENT

The Plant Refurbishment will underpin Focus' expansion plans, giving the Company much greater flexibility in combination with the arrangements currently in place with Higginsville Mining's nearby Greenfields processing plant.

With recent upgrades to the Company's overall resource base, including an increase in Probable Reserves at the Perseverance and Countess Deposit, the Board has decided that an increase in processing capacity is required in order to sustain greater levels of production expected in the near future. The re-commissioning of the Three Mile Hill plant is expected to provide an efficient and cost-effective means of ramping up production as new deposits are brought into production.

It is expected that the Plant Refurbishment will take between 8 and 10 months resulting in an annual milling capacity of 1.68 million tonnes per annum in combination with the Greenfields treatment facility.

DEVELOPMENT PIPELINE

To complement the Plant Refurbishment, Focus will immediately undertake a major resource definition and extension program to ensure resources are brought on line to feed the 1.2Mtpa capacity of Three Mile Hill on its re-commissioning.

Initially, priority will be given to the development of additional resources at the currently producing Perseverance and Countess Deposits, with a drilling programme expected to be completed shortly at Perseverance, targeting southern extensions to the high-grade orebody.

In the medium term, Focus will step up exploration and pre-feasibility studies at other nearby high-grade deposits including Empress (Inferred Resource of 47,000oz at 4.68g/t Au), The Mount (Indicated Resource of 370,000oz at 5.50g/t Au) and Cyanide (Indicated Resource of 65,000oz at 5.54g/t Au). These deposits are targeted for production by the first Quarter of 2010.

Following this, the Brilliant, Dreadnought and Lindsays Deposits will be developed to provide additional ore to feed the Three Mile Hill Plant, which is expected to be in operation from early 2010.

HEDGING AND DEBT

Only a small portion of production (26,000 ounces) remains to be delivered into existing hedge contracts, with the balance being sold into the spot market. It is expected that the outstanding hedge position will be fully closed out by September this year.

Additionally, the Company is expected to be entirely debt free by December 2009, including Convertible Note obligations to Focus' former Joint Venture partner Committee Bay Resources and repayment of an A$18.6 million debt facility held with Investec Bank (Australia) of which A$12.25 million is currently outstanding.

KEY SENIOR MANAGEMENT APPOINTMENTS

As part of Focus' strategic expansion plans, Managing Director Mr Peter Williams has resolved to relocate to Coolgardie in the role of Chief Operations Officer to oversee the Plant Refurbishment, as well as the continuing extensive programme of exploration and development within the various high-priority targets within the Coolgardie Gold Project.

Mr Williams' considerable experience in the management and development of mineral assets, as well as his intimate knowledge of the Coolgardie operation underpinned his decision, which was supported by the Board as an important strategic move to oversee the smooth development of Three Mile Hill.

Mr Campbell Baird, who currently holds the position of Chief Operating Officer, will assume the position of Chief Executive Officer in order to oversee the company's rapid growth into a mid tier gold producer.

For additional background information on Mr Baird, please refer to ASX release dated 14 January 2009.

SUMMARY

The Board has resolved to fast-track the development of the Company's resource base and production profile through the re-commissioning of the Three Mile Hill plant as a result of a number of compelling factors, which are outlined above.

Commenting on the Capital Raising and development plans, Focus Chairman Don Taig said: "These funds will provide Focus with the opportunity to substantially ramp-up production at Coolgardie, elevating us to a new level in terms of our position among gold producers in Australia.

"Our priority now is to ensure that the Three Mile Hill plant is completed on time and within budget and, to this end, the decision by Peter Williams to relocate full-time to Coolgardie was unanimously supported by the Board,'" he added.

"Peter has undertaken to relinquish his role as Managing Director to concentrate on the task of refurbishing the Three Mile Hill plant as well as bringing near-term ground into production. Peter's vast experience, built up over 30 years in the industry, places him in the best position to undertake this role and I thank him for placing the interests of Focus Minerals above his own personal interests," he said.

"I would also like to welcome Campbell Baird to the position of Chief Executive Officer. Campbell has a wealth of experience and I have no doubt that he will add significant value to Focus with his commercial expertise and attention to detail."

A Notice of Meeting to seek the necessary shareholder approval is currently being prepared and will include an explanatory memorandum. These materials will be distributed to shareholders as soon as practically possible.

About Focus Minerals Ltd

Focus MineralsWith over 3.8Moz of Mineral Resource, Focus Minerals Limited (ASX:FML) has a highly strategic portfolio of assets across Australia's two leading gold producing districts – the Kalgoorlie/Coolgardie belt and Laverton – and the financial muscle to continue to unlock further potential for growth.

abnnewswire.com 


Contact

Peter Williams
Managing Director
Focus Minerals Ltd
Telephone: +61-8-9215-7888
Web: www.focusminerals.com.au



ABN Newswire
ABN Newswire This Page Viewed:  (Last 7 Days: 2) (Last 30 Days: 19) (Since Published: 3462)