Focus Minerals Ltd (ASX: FML – “Focus”) is set to accelerate its development as an Australian gold and nickel producer after today releasing a landmark announcement for a A$64 million acquisition, development and funding Strategy which will result in the consolidation of the ownership of the historic Coolgardie Gold Field in Western Australia and an expanded development program in both gold and nickel.

Further to a previous announcement regarding an Exclusivity Agreement with its 50% Joint Venture Partner, Committee Bay Resources (TSXV: CBR – “Committee Bay”), key elements of today’s announcement comprise:

·         an agreement with Committee Bay to acquire its 50% interest in the 1.6Moz Coolgardie Gold Project for $22.0 million in cash – A$1.0M already paid via the Exclusivity Agreement, A$19.0M paid immediately after shareholder approval, A$2.0M deferred until 30 April 2009 as an 8.25% Convertible Note and 140 million shares issued at 5.5 cents per share;

·         the appointment of Perth-based investment bank, Azure Capital -  to manage a A$14 million share placement at 5.5 cents per share, together with a Share Purchase Plan to raise a minimum of A$4.0M; to underpin the acquisition and fast-track the Coolgardie development program; and

·         an A$18.6  million debt facility to be provided by Investec Bank (Australia) Ltd to support the acquisition and provide additional working capital to underpin the Company’s accelerated development strategy in both gold and nickel.

The Committee Bay transaction, which will be subject to shareholder approval and the raising of the necessary finance, will give Focus 100% ownership of the former Redemption Joint Venture assets at Coolgardie, including an extensive resource inventory within multiple deposits totalling 20.6 million tonnes at 2.48g/t Au for 1.65 million ounces, the fully permitted 1.2mtpa Three Mile Hill gold processing facility (currently on care and maintenance), and a highly prospective 210km² tenement package offering an outstanding pipeline of exploration and development opportunities.

The Company’s objective is to become a 100,000 ounce per annum producer at Coolgardie within the next three years.

The combined $36.6 million debt and equity funding package, together with a portion of the strong cash flow generated by the Perseverance gold deposit, will in addition to the RJV acquisition, be utilised for a planned refurbishment of the Three Mile Hill plant as a new centrally located treatment facility at Coolgardie, plus development and exploration funds for adjacent gold prospects, so that the pipeline of prospective ground is developed with continuous production in mind. In addition, the Company will fast track the evaluation and development of its 100% owned Nepean Nickel mine, located 25km south of Coolgardie, together with funds for a deep drilling programme at Nepean – well below the 500 metre level – to further define the prospectivity of areas where no work has previously been carried out, with a view to diversifying the company’s nickel production profile as well.

Committee Bay has agreed to accept approximately 32% of the consideration being 140 million shares in Focus Minerals at 5.5 cents per share, giving it continued exposure to the future upside arising from Focus Minerals’ transition to gold production and the broader development of the Coolgardie Project through being a significant shareholder in the Company.

Acquisition Terms

The total consideration for the acquisition of Committee Bay’s 50% interest in the Redemption Joint Venture is A$29.7 million, comprising A$20.0 million in cash (inclusive of the $1 million already advanced in relation to the Exclusivity Agreement), A$2.0 million as an 8.25% Convertible Note convertible/repayable end April 2009 and the issue of 140 million fully-paid ordinary Focus Minerals shares at an issue price of 5.5 cents each (A$7.7 million).

The consideration translates to a competitive Enterprise Value per resource ounce (EV/oz) of A$36/oz, which compares with the average gold project acquisition multiples in Australia of A$51/oz. This represents an attractive opportunity for Focus to secure 100% ownership of a well-established and high quality gold project at Coolgardie, close to established infrastructure and the regional mining centre of Kalgoorlie and at a time of strong, positive gold price movements.

$64M Development Strategy

Focus today announced an A$18 million equity funding package, comprising a share placement of  327.27 million shares at 5.5 cents each to sophisticated investors to raise A$14 million and a Share Purchase Plan to raise a minimum of A$4 million from existing shareholders. Perth-based merchant bank Azure Capital is acting as Corporate Advisor and Lead Manager to the capital raising.

In addition, the Company is in advanced negotiations for a debt facility of A$18.6 million Senior and Mezzanine debt with specialist international banking group, Investec Bank (Australia) Ltd. Investec has also agreed to look at providing a further debt funding package to support further development of the Nepean nickel project if required.

The balance of funds to complete the “Two Goals – One Focus” strategy, will be generated from a portion of the cash flow from the Perseverance mine, where mobilisation of mining crews and equipment is complete and mining has begun to deliver the Company’s maiden gold pour in April 2008.

The share placement and debt funding package will require shareholder approval at a meeting to be convened in April 2008. Meeting documents are to be mailed to shareholders shortly.

Use of Funds

Of the funds raised (A$36.6 million) and generated (A$19.7 million), which only represents a portion of Perseverance’s revenues,  just over 46% of the funds will be used to fund the acquisition of Committee Bay’s 50% interest in the Redemption Joint Venture, with the remaining A$34.3 million to be used in the following key areas:

–        Three Mile Hill plant refurbishment                                             A$16.0 million

–        Coolgardie Gold Project development and exploration                  A$13.6 million

–        Stamp duty and raising costs                                                      A$ 3.2 million

–        Nepean nickel deep drilling                                                         A$ 1.5 million

A$34.3 million

–        Committee Bay acquisition – cash and convertible

note consideration                         A$22.0 million

                        Total                                                                A$56.3 million

Development Strategy

Focus is gearing up to commence initial gold production at Coolgardie in April at the high-grade Perseverance Project (recently announced upgrade for an Indicated Resource of 118,500 oz at an average grade of 7.5g/t Au) after completing a positive Feasibility Study in December 2007. This Project is forecast to yield production of 76,500 ounces over 21 months with upside to more ounces and a higher gold price. Estimated cash operating costs are A$473 per gold oz.

Ore from Perseverance will be treated through a third party mill, the nearby Greenfields gold plant, however Focus’ broader development strategy is to refurbish the 100% owned Three Mile Hill plant as a centrally located gold treatment facility to provide long-term cost effective processing capability in the region. It is expected that refurbishment will commence in October 2008 and be finished six months later.

The Milling Agreement with the Greenfields Plant has recently been signed (refer ASX release 4 March 2008) and is based upon a priority processing position for up to 480,000 tonnes at favourable milling charges until 2010, followed by a further 7 year extension to the Agreement should Focus wish to continue to use the Greenfields plant.

Other key deposits at Coolgardie will be progressively developed with ore treated at Three Mile Hill plant, commencing with the broader Tindals Mining Centre surrounding the Perseverance deposit. Work is continuing at Tindals at the Countess, Empress and Cyanide (Tindals East) deposits, in order to fast-track further delineation and development of the broader area.

Gold production is targeted to deliver approximately 5,300 ounces in FY2008 (reflecting start-up production from Perseverance from April 2008), increasing to ~65,000 ounces in FY2009, ~75,000 ounces in FY2010 and then ramping up to a sustainable level of 100,000 ounces per annum from FY2011 onwards from projects currently within the development pipeline.

Nickel Development

Focus is also planning to commence an accelerated deep drilling program to test the area below the existing Nepean Nickel Mine workings, with the objective of confirming the potential to develop the mine below the 14th level (500 metres). The Company is aiming to re-commission the Nepean Project towards the end of the second Quarter of 2008, extracting remnant mineralized ore. A bankable feasibility study on this project will be completed by the end of March 2008, when the trial mining will commence and be self funding.  This will allow the Company to acquire more information about mining conditions, before embarking upon the development of a planned decline to access previously untapped ore and provide for much deeper mining.

Gold Exploration

The Redemption Joint Venture acquisition will give Focus 100% ownership of a highly attractive 210km² tenement package covering the prolific Coolgardie Gold Belt. More than 2.6 million ounces of gold has been produced from this belt alone since 1892.

The Company plans to continue an aggressive exploration program, both within known deposits and mineralized systems such as the Tindals Mining Centre, and within the broader Redemption Fault Corridor. An extensive ground EM survey is currently being conducted over the area to develop additional exploration targets and follow up previous targets delineated by VTEM, particularly for high-grade Perseverance-style mineralization.

Exploration drilling is also continuing at Perseverance itself, with down hole EM conductors immediately along strike and down-dip of existing mineralization.

Commenting on the announcement, Focus Minerals’ Chairman, Mr Don Taig, said: “We are very pleased to be in a position to announce the conclusion of an agreement with Committee Bay to acquire their interest in the Coolgardie assets, together with a comprehensive funding and development strategy that will underpin the future of this Company.”

“The combined debt and equity funding package announced today will underpin the Committee Bay acquisition while at the same time giving us the capacity to fast-track our transition to gold and nickel production, while also developing our near term projects to deliver on our goal of becoming a 100,000 oz producer with in-house gold processing capability as soon as possible.”

Mr Taig said he was very pleased to retain Committee Bay as a major shareholder in the company as part of the acquisition terms.

“I’m very pleased that Committee Bay has made the decision to retain significant exposure to the project through the direct equity stake they will have in Focus. This demonstrates their commitment to the ongoing success of the Coolgardie Project and their faith in the upcoming Nepean nickel development activities,” he said.

“The accelerated gold development program and treatment plant refurbishment, combined with our plans to commence nickel production from the Nepean mine in the short term, amounts to a comprehensive strategy designed to transform Focus into a significant mining company,” he added.

ENDS

COMPETENT PERSON’S STATEMENT

The information in this report relating to Resources and Reserves are based on work supervised by Mr Chuck McCormick who is a Fellow of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr McCormick has the relevant experience as a “Competent Person” as defined in the 2004 edition of the Australasian Code for Reporting of Mineral Resources and Ore Reserves in relation to the mineralisation reported on. Mr McCormick is Exploration Manager of Focus Minerals Ltd and consents to the inclusion of the material in the form and content in which it appears.

BACKGROUND INFORMATION – FOCUS MINERALS LTD

Focus Minerals Ltd (ASX: FML) is an Australian-based exploration and development group whose focus is to become a significant gold and nickel producer in the Coolgardie-Kalgoorlie-Widgiemooltha region of Western Australia.

Focus Minerals is the largest landholder in the Coolgardie Gold Belt located in Western Australia, 560km east of Perth and 35km west of the ‘Super Pit’ in Kalgoorlie-Boulder. More than 2.6 million ounces of gold has been produced from the Coolgardie gold belt alone since 1892. Focus holds the mineral rights to more than 210sq km of tenements including Measured, Indicated and Inferred Resources exceeding 1.65 million ounces of gold as well as the 1.2mtpa Three Mile Hill processing plant.

Focus Minerals is also fast tracking development of its wholly-owned Nepean Nickel Project (current estimated resource totalling 591,300t @ 2.2% Ni) located 25km south of Coolgardie. Focus has a view of recommencing mining operations from the historic production centre in 2008.