Focus Minerals Ltd
Annual Report 2020

Plain-text annual report

Focus Minerals Limited ABN 56 005 470 799 Annual Report For the year ended 31 December 2020 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Corporate Directory ABN 56 005 470 799 Directors Dianfei Pei Zhaoya Wang Gerry Fahey Rodney Johns Zaiqian Zhang Lingquan Kong Chairman - Non-Executive, Non-Independent Director - Executive Director - Independent Director – Independent (appointed 4th September 2020) Director – Executive (resigned 9th October 2020) Director – Executive (appointed 14th January 2021) Company Secretary Zaiqian Zhang (resigned 9th October 2020) Nicholas Ong (appointed 19th October 2020) 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 Bankers National Australia Bank 100 St Georges Terrace Perth WA 6000 Solicitors MinterEllison Level 4, Allendale Square 77 St Georges Terrace, Perth, WA 6000 Bank of China Perth Branch Ground Floor, 179 St Georges Terrace Perth WA 6000 Stock Exchange Listing Australian Securities Exchange (ASX) ASX Symbol: FML Industrial and Commercial Bank of China Level 28, 44 St Georges Terrace Perth WA 6000 Page | 2 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Contents Corporate Directory ................................................................................................................................. 2 Chairman’s Report ................................................................................................................................... 4 Operations Review .................................................................................................................................. 5 Ore Reserves and Mineral Resources Tables .................................................................................... 7 Directors’ Report .................................................................................................................................... 17 Auditors Independence Declaration................................................................................................... 32 Consolidated Financial Statements ................................................................................................... 33 Notes to Consolidated Financial Statements ................................................................................... 37 Directors’ Declaration ........................................................................................................................... 65 Independent Auditor’s Report ............................................................................................................. 66 Shareholder Information....................................................................................................................... 70 Interest in Mining Tenements .............................................................................................................. 72 Page | 3 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Chairman’s Report Dear Shareholders, It gives me great pleasure to present to you the 2020 Annual Report for Focus Minerals Limited. I would like to reflect on our many achievements over the past year as we continued to advance our goal to become the next gold producer in Western Australia. Our achievements in 2020 have been significant and value- enhancing, a credit to the Focus team particularly given the challenges faced by the Company, and the mining industry in general, because of COVID-19. During 2020, the Focus team delivered outstanding results from the Pre-Feasibility Study (PFS) for the Coolgardie Gold Project (Coolgardie), which relied only on resources from the Greenfields, Brilliant and Bonnie Vale deposits. The PFS declared a total Ore Reserve of 6.64mt @ 1.97g/t for 422koz of gold that would support a six-year mine life based mostly on open pit operations averaging production of 63koz per annum. Under the PFS, ore would be processed at the refurbished Three Mill Hill Plant at a projected average production cost of A$1,282 per ounce. At an assumed gold price of A$2,200/oz, the PFS indicated a project Net Present Value (NPV7.5%) for Coolgardie of A$183m and an Internal Rate of Return (IRR) of 71%1. The PFS demonstrated the robustness of Coolgardie. Focus will continue to explore and assess other deposits within the precinct such as the CNX and Alicia deposits, with an ambition to extend the mineral resource and therefore the mine life and improve the project economics. The Board will also continue to explore funding options for Coolgardie. During 2020, we also materially advanced our Laverton Gold Project (Laverton). We expanded our tenement footprint as well as completing an extensive exploration drilling program. In total, we completed 5,089m of reverse circulation (RC) and 12,261m of diamond drilling, which resulted in a 21% increase in Laverton’s total mineral resources. The PFS for a Stage 1 development of Laverton was advanced in 2020 and finalised in early 2021. The Stage 1 PFS scenario included refurbishing the Barnicoat Mill and delivered a pre-tax NPV5.0% of A$132M based on mining predominantly oxide and transition materials2. The scope of the Stage 1 PFS only included five Laverton deposits. The focus in 2021 is to continue to convert more resources into a JORC 2012-compliant mineral resource to significantly enhance the scale, economics and value of Laverton. The on-going success at our projects was strengthened during the year by a A$20 million working capital loan facility provided by our major shareholder, Shandong Gold Group Co. Ltd (SD-Gold). The facility was a sign of confidence and trust by SD-Gold in the Focus team’s ability to continue to deliver strong results for all shareholders. The additional working capital allows Focus to advance Coolgardie by carrying out a Definitive Feasibility Study at the same time as maintaining the pace of progress at Laverton. On behalf of the Board of Directors of Focus Minerals, I thank all shareholders for your continued support and patience as we systematically and diligently add value to our two highly prospective gold projects. As we move forwards in 2021, I am confident the strategies and targets we have in place will drive Focus to achieve new milestones on the road to our clear goal of bringing our two core projects into gold production. Yours faithfully, Dianfei Pei Chairman of the Board 1 Refer ASX Announcement dated 22 September 2020 2 Refer ASX Announcement dated 11 March 2021 Page | 4 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Operations Review Overview In 2020, Focus Minerals Ltd reported addition of 28.2MT @ 1.35g/t for 1.225Moz to its combined Laverton and Coolgardie, Measured plus Indicated plus Inferred Mineral Resource Base. Classification Laverton and Coolgardie Total Measured Laverton and Coolgardie Total Indicated Laverton and Coolgardie Total Inferred Laverton and Coolgardie Total Mineral Resource Tonnage (Mt) 2.3 Au Grade (g/t) 2.16 Au Moz 0.16 60.6 33.2 96.1 1.79 2.32 1.98 3.49 2.48 6.13 These additions were delivered by targeted drilling and nine resource updates. In total, 29,558m of drilling was completed comprising 45% Diamond Drilling and 55% RC drilling. Total drilling and resource related expenditure was A $7.35M. This equates to resource additions at A $6.00/oz. Total exploration spend was A $9.841M including: feasibility, tenement management, admin and heritage costs. The Coolgardie PFS update was also completed in the reporting period delivering • Undiscounted pre-tax value A $255M (gold price of A $2,200/oz) • NPV A $183M (7.5% discount rate) • Internal rate of return IRR 71% • JORC 2012 Total Proved & Probable Ore Reserves at 6.64Mt @ 1.98g/t: Classification Proven Reserve Tonnage (Mt) 1.48 Au Grade (g/t) 1.37 Probable Reserve Total Ore Reserves 5.16 6.64 2.15 1.97 Au oz 65,500 356,500 422,000 • Low A $24M CAPEX mill refurbishment to 1.4Mtpa (duration 9 months) • Maximum drawdown A $48M including $28M mill + tails lift CAPEX • 6 years mostly open pit production for average 63 Koz/year It is noted that the 2020 Coolgardie PFS update includes: • 3 deposits from more than 20 significant deposits at Coolgardie. • The combined Indicated Mineral Resources used for the PFS update comprise 7.51MT @ 2.56g/t for 619Koz or 24% of the total Coolgardie Measured, Indicated and Inferred Mineral Resource Base which comprises 34.8Mt @ 2.2g/t for 2.496Moz. • Conversion rate from considered Indicated and Measured Mineral Resources to combined Proved and Probable Ore Reserve was 68.2% During the December quarter 2020 exploration drilling and resource evaluation continued at Coolgardie to improve value and further de-risk the mining scenario documented by the 2020 Coolgardie PFS update. The Laverton Stage 1 PFS was also significantly advanced for completion during the March quarter 2021. Exploration In 2020 Focus completed 59% of drill meters at the Laverton Project and the remainder at Coolgardie Project. Focus reported five Mineral Resource updates to support the Laverton PFS. The Resource updates were compiled for: Karridale, Burtville, Beasley Creek, Beasley Creek South and Wedge. Page | 5 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Laverton Gold Project 2020 Mineral Resource additions comprise: Classification Total Laverton Indicated Mineral Resource Increase Total Laverton Inferred Mineral Resource Increase Total Laverton 2020 Mineral Resource Addition Tonnage (Mt) Au Grade (g/t) Au Koz 15.73 4.94 20.66 1.4 1.1 1.3 688 168 857 Three resource updates were compiled for: Greenfields, Brilliant and Bonnie Vale to support the Coolgardie PFS update. In December, Focus completed a major resource re -evaluation of the CNX deposit at Coolgardie. Coolgardie Gold Project 2020 Mineral Resource additions comprise: Classification Total Coolgardie Measured Mineral Resource Increase Total Coolgardie Indicated Mineral Resource Increase Total Coolgardie Inferred Mineral Resource Increase Total Coolgardie 2020 Mineral Resource Addition Tonnage (Mt) Au Grade (g/t) Au Koz 1.15 1.35 5.02 7.53 1.8 1.3 1.5 1.5 64 56 248 368 The top four reported significant intersections for the year (calculated using 0.5g/t cut off and up to 3m internal dilution) come from resource drilling at Beasley Creek and Beasley Creek South and comprise: • 20BSRD012 - 6.00m @ 31.06g/t from 32m (GxM 186) • 20BSRD010 - 17.00m @ 9.28g/t from 168m (GxM 158) • 20BSRD005 - 10.05m @ 9.13g/t from 252.25m (GxM 92) • 20BSDD065 - 29.00m @ 2.5g/t from 214m (GxM 72) Page | 6 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Ore Reserves and Mineral Resources Tables 2019 / 2020 JORC 2012 Ore Reserves Comparison Table 2019 Reserves 2020 Reserves Change COOLGARDIE GOLD PROJECT Tonnes Grade Au Brilliant Project – Open Pit Reserve Bonnie Vale Project - Underground Greenfields Open Pit Reserve Proven Probable Total Proven Probable Total Proven Probable Total Total Proven Total Coolgardie Total Probable Total Ore Reserves Mt - - 0.625 0.625 1.016 1.016 1.641 1.641 g/t - - 6.16 6.16 1.45 1.45 3.24 3.24 Ounces Tonnes Grade Au g/t '000t - - - 3.72 3.72 123,700 0.86 123,700 0.86 47,100 1.48 0.58 47,100 2.06 170,800 170,800 1.48 5.16 6.64 - 1.58 1.58 5.26 5.26 1.37 1.24 1.34 1.38 2.15 1.98 Page | 7 Tonnes Grade Au g/t '000t Ounces - 188,000 188,000 145,500 145,500 65,500 - 3.72 3.72 0.24 0.24 1.48 23,000 -0.44 88,500 65,500 356,500 422,000 1.04 1.48 3.52 5.00 Ounces - 188,000 188,000 21,800 21,800 65,500 -24,100 41,400 65,500 185,700 251,200 - 1.58 1.58 2.83 2.83 1.37 1.72 1.23 1.38 1.64 1.56 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Mineral Resources Table Coolgardie Gold Project Coolgardie Surface Mineral Resources Prospect JORC Classification Tonnes Grade (g/t) Ounces Reporting Cut-Off Grade (g/t) Alicia JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Big Blow JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Bird in Hand JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Cookes JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Cyanide JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Dreadnought JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Empress JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total JORC 2004 Inferred JORC 2004 Inferred Friendship Griffiths Happy Jack JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Lady Charlotte JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Perseverance JORC 2004 Inferred Tindals Pit JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Undaunted JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Page | 8 681,000 25,000 706,000 281,000 79,000 360,000 210,000 107,000 317,000 120,000 47,000 167,000 34,000 84,000 118,000 1,900,000 145,000 2,045,000 128,000 12,000 140,000 100,000 104,000 249,000 99,000 348,000 137,000 346,000 483,000 53,000 257,000 288,000 545,000 187,000 126,000 313,000 2.0 1.7 2.0 3.4 3.0 3.3 2.0 2.0 2.0 2.4 3.3 2.6 2.2 1.8 1.9 2.0 1.7 2.0 2.0 2.3 2.0 1.4 2.7 2.0 3.1 2.3 1.6 1.5 1.5 2.4 2.7 2.4 2.5 2.0 1.9 2.0 43,000 2,000 45,000 31,000 8,000 39,000 13,500 6,500 20,000 9,000 5,000 14,000 2,500 5,000 7,500 122,000 8,000 130,000 8,000 1,000 9,000 4,500 9,000 16,000 10,000 26,000 7,000 17,000 24,000 4,000 22,500 22,000 44,500 12,000 8,000 20,000 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Prospect JORC Classification Tonnes Grade (g/t) Ounces Reporting Cut-Off Grade (g/t) Brilliant JORC 2012 Indicated JORC 2012 Inferred JORC 2012 Total CNX JORC 2012 Inferred Greenfields JORC 2012 Measured Hillside Lindsays JORC 2012 Indicated JORC 2012 Total JORC 2004 Inferred JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total King Solomon/ Queen Sheba JORC 2004 Inferred Lord Bob JORC 2004 Inferred Norris - Grosmont JORC 2004 Inferred 5,706,000 771,000 6,477,000 2,599,000 1,148,000 1,515,000 2,663,000 437,000 4,350,000 1,490,000 5,840,000 1,400,000 820,000 1,620,000 2.1 2.0 2.1 1.5 1.8 1.5 1.6 4.4 1.7 1.6 1.7 2.0 1.6 2.4 0.5 0.7 0.8 1.0 1.0 1.0 0.8 1.0 392,500 50,000 442,500 123,000 64,500 74,500 139,000 62,000 238,000 77,000 315,000 90,000 42,000 127,000 64,500 991,500 681,000 Measured Indicated Inferred 1,148,000 1.75 15,755,000 1.96 10,752,000 1.97 27,655,000 1.95 1,737,000 Total Total Total Total Coolgardie Surface Page | 9 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Coolgardie Underground Mineral Resources Prospect JORC Classification Tonnes Grade (g/t) Ounces Reporting Cut-Off Grade (g/t) Bird in Hand JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Countess JORC 2004 Measured JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Cyanide JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Empress JORC 2004 Measured JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Griffiths JORC 2004 Inferred Perseverance JORC 2004 Measured JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Tindals JORC 2004 Measured JORC 2004 Indicated JORC 2004 Inferred JORC 2004 Total Brilliant JORC 2012 Indicated JORC 2012 Inferred JORC 2012 Total Quarry Reef JORC 2012 Indicated JORC 2012 Inferred JORC 2012 Total Measured Indicated Inferred 282,000 90,000 372,000 50,000 127,000 0 177,000 516,000 77,000 593,000 13,000 175,000 13,000 201,000 39,000 154,000 438,000 18,000 610,000 51,000 179,000 72,000 302,000 0 3,730,000 3,730,000 658,000 503,000 1,161,000 268,000 2,375,000 4,542,000 3.1 2.8 3.0 3.5 2.9 0.0 3.0 4.7 5.5 4.8 4.1 3.4 7.5 3.7 2.9 5.3 4.5 4.3 4.7 3.4 2.8 3.1 3.0 0.0 2.3 2.3 7.7 3.5 5.9 4.5 5.0 2.3 2.0 2.0 2.0 2.0 2.0 2.0 2.0 1.5 1.5 28,000 8,000 36,000 5,500 12,000 0 17,500 77,000 13,500 90,500 2,000 19,000 3,000 24,000 4,000 26,000 64,000 2,000 92,000 5,500 16,000 7,000 28,500 0 248,500 248,500 162,000 56,000 218,000 39,000 378,000 342,000 Total Coolgardie Underground 7,185,000 3.3 759,000 Coolgardie Total Surface and Underground Mineral Resources Classification Total Measured Resource Total Indicated Resource Total Inferred Resource TOTAL COOLGARDIE Tonnes 1,416,000 18,130,000 15,294,000 34,840,000 Grade (g/t) 2.3 2.3 2.1 2.2 Ounces 103,500 1,369,500 1,023,000 2,496,000 Page | 10 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Mineral Resources Table Laverton Gold Project Laverton Surface Mineral Resources Prospect Admiral Hill Barnicoat Bells Castaway Grouse Sickle Burtville Karridale Craggiemore Euro Mary Mac Mary Mac South West Laverton Apollo Inuendo Eclipse (Garden Well) Gladiator North Rumor Beasley Creek Page | 11 JORC JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2012 JORC 2012 JORC 2012 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2012 JORC 2012 JORC 2012 Classification Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Measured Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Measured Indicated Inferred Total Measured Indicated Inferred Total Indicated Inferred Total Measured Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Tonnes 660,000 1,310,000 1,970,000 340,000 250,000 590,000 594,000 36,000 630,000 247,000 28,000 275,000 447,000 27,000 474,000 390,000 198,000 152,000 740,000 5,095,000 1,554,000 6,649,000 22,149,000 5,584,000 27,733,000 575,000 113,000 688,000 255,000 314,000 569,000 232,000 9,000 241,000 435,000 90,000 525,000 0 1,252,000 116,000 1,368,000 512,000 910,000 560,000 1,982,000 180,000 380,000 560,000 19,000 63,000 152,000 234,000 48,000 123,000 171,000 1,590,000 1,060,000 2,650,000 3,036,000 592,000 3,628,000 Grade (g/t) 1.4 1.1 1.2 1.3 1.0 1.2 2.0 1.4 2.0 1.6 1.8 1.6 1.7 1.3 1.7 1.7 2.6 3.1 2.2 1.0 0.9 1.0 1.4 1.2 1.3 2.2 2.7 2.3 1.7 1.7 1.7 2.2 1.6 2.2 1.6 1.8 1.6 0.0 2.1 1.8 2.1 2.2 2.0 3.0 2.3 2.9 2.3 2.5 2.7 1.8 1.7 1.8 1.7 1.6 1.6 2.1 2.1 2.1 2.2 1.7 2.1 Contained Ounces Reporting Cut-Off Grade (g/t) 30,000 46,000 76,000 14,000 8,000 22,000 38,000 2,000 40,000 13,000 2,000 15,000 24,000 1,000 25,000 21,000 16,000 15,000 52,000 159,000 47,000 206,000 968,500 219,000 1,187,500 40,000 10,000 50,000 14,000 17,000 31,000 16,000 1,000 17,000 22,000 5,000 27,000 0 84,500 6,500 91,000 36,000 59,000 54,000 149,000 17,000 28,000 45,000 2,000 4,000 8,000 14,000 3,000 6,000 9,000 107,000 72,000 179,000 215,500 31,500 247,000 0.8 0.5 0.5 1.0 1.0 1.0 0.6 0.6 1.0 1.0 1.0 1.0 1.0 0.8 1.0 0.8 1.0 1.0 0.6 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Prospect JORC Classification Tonnes Grade (g/t) Contained Ounces Reporting Cut-Off Grade (g/t) Beasley Creek South Telegraph Wedge - Lancefield North South Lancefield JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2004 JORC 2004 JORC 2004 Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Indicated Inferred Total Measured Indicated Inferred 751,000 263,000 1,014,000 638,000 534,000 1,172,000 2,660,000 750,000 3,410,000 72,000 3,000 75,000 921,000 42,427,000 14,000,000 3.6 3.5 3.5 2.1 1.4 1.8 1.7 1.1 1.5 4.0 5.0 4.0 2.0 1.6 1.5 0.8 0.8 0.8 1.0 86,000 29,500 115,500 43,500 24,500 68,000 141,000 27,000 168,000 9,000 1,000 10,000 59,000 2,124,000 661,000 Total Laverton Surface 57,348,000 1.5 2,844,000 Laverton Underground Prospect JORC Classification Tonnes Grade (g/t) Contained Ounces Lancefield Subtotal Subtotal Subtotal Total Laverton Underground JORC 2012 Indicated JORC 2012 Inferred JORC 2012 Total Measured Indicated Inferred 0 3,944,000 3,944,000 0 0 3,944,000 0.0 6.3 6.3 0.0 0.0 6.3 0 793,000 793,000 0 0 793,000 3,944,000 6.3 793,000 Reporting Cut-Off Grade (g/t) 4.0 Classification Total Measured Resource Total Indicated Resource Total Inferred Resource TOTAL LAVERTON TOTAL Laverton Tonnes 921,000 42,427,000 17,944,000 61,292,000 Grade (g/t) 2.0 1.6 2.5 1.8 Ounces 59,000 2,124,000 1,454,000 3,637,000 Page | 12 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Mineral Resources Table – Comparison to Previous Year Coolgardie Gold Project Category Tonnes MT Category Tonnes MT 2019 Grade g/t - 1.70 2.00 Cut Off 1.0 g/t Ounces - 72,500 4,500 - 1,328,000 66,000 1,394,000 1.72 77,000 1.0 g/t - 794,000 90,000 884,000 - 4,523,000 576,000 - 1.63 1.40 1.58 - 2.30 2.40 - 41,000 4,000 1.0 g/t 45,000 1.0 g/t - 330,000 1.0 g/t 44,500 5,099,000 2.28 374,500 1.0 g/t - 155,000 633,000 - 3.70 4.10 - 18,500 3.0 g/t 82,500 788,000 3.99 101,000 3.0 g/t - 519,000 420,000 - 9.10 3.90 - 152,500 2.0 g/t 52,500 939,000 6.79 205,000 2.0 g/t JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 2020 Grade g/t 1.8 1.5 - Change Ounces 64,500 74,500 - Cut Off 0.8 g/t Tonnes MT 1148000 187000 -66,000 Grade g/t 1.75 0.33 -2.00 Ounces 64500 2000 -4,500 Cut Off -0.2 g/t 1,148,000 1,515,000 - 2,663,000 1.62 139,000 0.8 g/t 1,269,000 1.52 62,000 -0.2 g/t - - 2,599,000 - - 1.5 - - 123,000 0.7 g/t - -794,000 2509000 - -1.63 1.48 - -41,000 119000 -0.3 g/t 2,599,000 1.47 123,000 0.7 g/t 1,715,000 1.41 78,000 -0.3 g/t - 5,706,000 771,000 - 2.1 2.0 - - 392,500 0.5 g/t 1183000 50,000 195000 - 1.64 0.88 - 62500 -0.5 g/t 5500 6,477,000 2.12 442,500 0.5 g/t 1,378,000 1.53 68,000 -0.5 g/t - 0 3,730,000 - 0.0 2.3 - 0 - 1.5 g/t -155000 248,500 3097000 - 3.71 1.67 - -18500 -0.5 g/t 166000 3,730,000 2.07 248,500 1.5 g/t 2,942,000 1.56 147,500 -0.5 g/t - 658,000 503,000 - 7.7 3.5 - - 162,000 1.5 g/t 139000 56,000 83000 - 2.13 1.31 - 9500 3500 -0.5 g/t 1,161,000 5.84 218,000 1.5 g/t 222,000 1.82 13,000 -0.5 g/t 9,104,000 2.74 802,500 16,630,000 2.19 1,171,000 7,526,000 1.52 368,500 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2004 JORC 2012 JORC 2012 Measured Indicated Inferred Measured Indicated Inferred Greenfields Total Greenfields CNX Total CNX Measured Brilliant Indicated Inferred Total Brilliant Measured Brilliant UG Indicated Inferred Measured Indicated Inferred Total Brilliant UG Bonnie Vale Quarry Reef UG Total Bonnie Vale Quarry Reef UG Total Coolgardie Resources Updated Page | 13 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Laverton Gold Project Category Tonnes MT Category Tonnes MT 2019 Grade g/t - 1.40 1.80 Ounces - 54,000 41,500 Cut Off 0.8 g/t - 1,207,000 708,000 1,915,000 1.55 95,500 0.8 g/t - 14,406,000 2,326,000 - 1.39 1.32 - 644,000 98,500 0.6 g/t 16,732,000 1.38 742,500 0.6 g/t - 2,016,000 645,000 - 2.41 1.71 - 156,500 35,500 0.8 g/t 2,661,000 2.24 192,000 0.8 g/t - 335,000 127,000 - 2.50 2.40 - 27,000 10,000 0.8 g/t 462,000 2.49 37,000 0.8 g/t - - - - - - - - - - - - NA 2020 Grade g/t - 1.0 0.9 Difference Ounces - 159,000 47,000 Cut Off 0.6 g/t Tonnes MT - 3888000 846000 Grade g/t - 0.84 0.20 Ounces - 105000 5500 Cut Off -0.2 g/t - 5,095,000 1,554,000 6,649,000 0.96 206,000 0.6 g/t 4,734,000 0.73 110,500 -0.2 g/t - 22,149,000 5,584,000 - 1.4 1.2 - 968,500 219,000 0.6 g/t - 7743000 3258000 - 1.30 1.15 - 324500 120500 0.0 g/t 27,733,000 1.33 1,187,500 0.6 g/t 11,001,000 1.26 445,000 0.0 g/t - 3,036,000 592,000 - 2.2 1.7 - 215,500 31,500 - 0.6 g/t 1020000 -53000 - 1.80 2.35 - 59000 -4000 -0.2 g/t 3,628,000 2.12 247,000 0.6 g/t 967,000 1.77 55,000 -0.2 g/t - 751,000 263,000 - 3.6 3.5 - 86,000 29,500 0.8 g/t - 416000 136000 - 4.41 4.46 - 59000 19500 0.0 g/t 1,014,000 3.54 115,500 0.8 g/t 552,000 4.42 78,500 0.0 g/t - 2,660,000 750,000 - 1.7 1.1 - 141,000 27,000 0.8 g/t - 2660000 750000 - 1.65 1.12 - 141000 27000 0.8 g/t JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 NA JORC 2012 3,410,000 1.53 168,000 0.8 g/t 3,410,000 1.53 168,000 0.8 g/t 21,770,000 1.52 1,067,000 42,434,000 1.41 1,924,000 20,664,000 1.29 857,000 Measured Indicated Inferred Measured Indicated Inferred Measured Indicated Inferred Measured Indicated Inferred Burtville Burtville Tolal Karridale Total Karridale Beasley Creek Total Beasley Creek Beasley Creek South Total Beasley Creek South Wedge - Lancefield North Measured Indicated Inferred JORC 2004 JORC 2004 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 JORC 2012 NA Total Wedge - Lancefield North Total Laverton Resources Updated Page | 14 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Competent Persons’ Statement The Coolgardie Gold Project Ore Reserve estimates were undertaken by Dr David Trembath, an employee of Mining One Consultants. Dr Trembath is a member of The Australasian Institute of Mining and Metallurgy with a chartered professional status in mining. Dr Trembath has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr Trembath consents to the inclusion in this Annual Report of the matters based on the information complied by himself in the form and context in which it appears. The information in this announcement that relates to Exploration Results is based on information compiled by Mr Alex Aaltonen, who is a Member of the Australasian Institute of Mining and Metallurgy (AusIMM). Mr Aaltonen is an employee of Focus Minerals Limited. Mr Aaltonen has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The Mineral Resource estimates for Brilliant, Bonnie Vale Quarry Reef, Greenfields, CNX, Beasley Creek South, Wedge – Lancefield North, and Karridale were undertaken by Ms Hannah Kosovich, an employee of Focus Minerals. Ms Hannah Kosovich is a member of Australian Institute of Geoscientists and has sufficient experience to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Aaltonen and Ms Hannah Kosovich consent to the inclusion in the report of the matters based on the information in the form and context in which it appears. The Burtville and Beasley Creek Mineral Resource estimates were undertaken by Mr Michael Job, who is a Fellow of the Australasian Institute of Mining and Metallurgy (FAusIMM). Mr Job is an independent consultant employed by Cube Consulting. Mr Job has sufficient experience that is relevant to the style of mineralization and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Job consents to the inclusion in the report of the matters based on the information in the form and context in which it appears. The information in this Annual Report that relates to Minerals Resources is based on, and fairly represents, information compiled by Hannah Kosovich who is a member of the Australian Institute of Geoscientists. Ms Kosovich is employed by Focus Minerals Limited and has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Ms Kosovich consents to the inclusion in this report of the matters based on the information complied by herself in the form and context in which it appears. Focus Minerals confirms that to the best of its knowledge, Focus is not aware of any new information or data that materially affects the information included in the relevant market announcements and, in the case of estimates of mineral resources or ore reserves, that all material assumptions and technical parameters underpinning the estimates in the relevant market announcements continue to apply and have not materially changed. Page | 15 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Summary of Governance Arrangements and Internal Controls Focus Minerals ensures that the Mineral Resources and Ore Reserve estimates are subject to governance arrangements and internal controls up to a corporate level within the company. Internal and external reviews of the Mineral Resource estimation procedures and results are carried out. An external consultancy firm has been used to generate the ore reserves and was subject to internal reviews within Mining One Consultants. The General Manager – Exploration, is responsible for monitoring the planning, prioritisation and progress of exploratory and resource definition drilling programs across the company and the estimation and reporting of resources. These definition activities are conducted within a framework of quality assurance and quality control protocols covering aspects including drill hole location, sample collection, sample preparation and analysis as well as sample and data security. Focus Minerals reports its Mineral Resources and Ore Reserves on an annual basis, in accordance with the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves (the JORC code) 2004 and 2012 Edition. Mineral Resources are quoted inclusive of Ore Reserves. Competent Persons named by Focus Minerals are members of the Australasian Institute of Mining and Metallurgy and/or the Australian Institute of Geoscientists and qualify as Competent Persons as defined in the JORC Code. Page | 16 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Directors’ Report The Directors present their report on the Group comprising of Focus Minerals Limited – the parent company (referred to as “the Company”) – and its subsidiaries (together referred to as “the Group” or “Focus” or “consolidated entity”) at the end of, or during the year ended 31 December 2020. Directors The directors of the Company at any time during or since the end of the year and up to the date of this report, unless otherwise indicated, are: Name Designation & Independence Status Dianfei Pei Chairman – Non-Executive, Non-Independent Gerry Fahey Director – Independent Zhaoya Wang Director – Executive Rodney Johns*** Director – Independent Lingquan Kong* Director - Executive Zaiqian Zhang** Director – Executive *Mr Kong was appointed as a Director on 14th January 2021. **Mr Zhang resigned as a Director on 9th October 2020. ***Mr Johns appointed as a Director on 4 September 2020. Details of the Directors’ qualifications, experience, special responsibilities, and details of directorships of other listed companies can be found on pages 18 to 19 and in the remuneration report on pages 25 to 30. Page | 17 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Information on Directors, Officers and Senior Management Directors Designation & Independence Status Dianfei Pei Chairman Appointed on 12 January 2016 Non-Executive Non-Independent Experience, Expertise & Qualifications Mr Pei is a mining engineer with over 30 years of relevant experience. He has been in several senior positions within Shandong Gold Group, such as Resident Manager of Ling Long Mine and Chief Health and Safety Inspector of the Group. Currently, he is the Deputy General Manager of Shandong Gold Group. Mr Pei has a Master’s degree in Mining Engineering at University of Science and Technology Beijing. Directorships of other ASX listed companies: None Zhaoya Wang Director Appointed as Director on 17 November 2017 Non-Executive Non-Independent Mr Wang is a mining engineer who began his career at Shandong Gold in 1994. He has served various management positions in three of Shandong Gold’s mine sites. Executive since 19 July 2018 He has a Master’s degree in Project Management at Science and Technology University of Shandong and a bachelor degree in Mining at Inner Mongolia University of Science and Technology in China. Directorships of other ASX listed companies: None Zaiqian Zhang Director Qualifications: CA, AGIS, ACIS, MSc, BSc (Hons) Appointed as Director on 24 November 2017 Executive CFO Appointed as Company Secretary on 16 March 2018 Resigned 9th October 2020 Mr Zhang joined Focus Minerals Ltd in September 2013 as a Senior Accountant. On 24 November 2017, he was promoted to Director and Chief Financial Officer. He is a Chartered Accountant (Chartered Accountants Australia and New Zealand) and a Chartered Secretary (Governance Institute of Australia). He has a master’s degree in Accounting and Finance and an Honours degree in Accounting for Management from Aston University in Birmingham, UK. Directorships of other ASX listed companies: None Page | 18 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Directors Designation & Independence Status Experience, Expertise & Qualifications Gerry Fahey Director Qualifications: BSc (Hons) Geology, FAusIMM, MAIG, MAICD Appointed on 18 April 2011 Independent resource, mine development and Mr Fahey is a geologist with over 40 years’ experience. He was chief geologist for Delta Gold between 1992-2002 where he gained extensive feasibility study experience on projects including Kanowna Belle and Sunrise in Australia and Ngezi Platinum in Zimbabwe. Mr Fahey began his career as a mine geologist in the Irish base-metals industry on projects such as Tynagh, Avoca, and Tara Mines (Navan). On migrating to Australia in 1988, he gained further operational experience in Western Australia and the Northern Territory (Whim Creek and Dominion Mining), prior to joining Delta Gold. He formed FinOre Mining Consultants in 2005, which merged with CSA Global in 2006 and is currently Principal Mining Geologist with CSA Global specialising in mining geology, mine development and training. Mr Fahey is a former member of the Joint Ore Reserve Committee (JORC) and a former Board Member (Federal Councillor) of the Australian Institute of Geoscientists (AIG). Directorships of other ASX listed companies: • Prospect Resources Limited appointed July 2013, ongoing) (Non-Executive Director: Rod Johns Director Qualifications: BAppSc (Extractive Metallurgy) Appointed on 4th September 2020 Independent Mr Johns has extensive experience in the WA gold sector, having held senior positions at Delta Gold, Placer Dome, La Mancha Resources and Echo Resources that included oversight and delivery of growth strategies, new processing plants and mine optimisations. In addition to his current role as a consultant to the WA mining sector, Mr Johns was previously a Non-Executive Director of Beacon Minerals Limited (ASX: BCN). Lingquan Kong Director Qualifications: MEng (Mining Engineering) Appointed on 14th January 2021 Executive Mr Kong joined Focus in September 2019 as the company’s Principal Mining Engineer. Prior to joining Focus, Mr Kong spent five years as a Director and General Manager at Vatukoula Gold Mines in Fiji, focusing on long term mine planning, production management, cost assessment and stakeholder relations. During his time at Focus Minerals, he has been pivotal in managing the pre-feasibility studies for Coolgardie and Laverton, including mine planning and engineering. Directorships of other ASX listed companies: • Cardinal Resources Limited (appointed 1st February 2021). Cardinal Resources Limited was delisted from ASX on 8th February 2021 Note: For director’s special responsibilities during the year ended 31 December 2020, please refer to the Remuneration Report Page | 19 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Senior Management Zhaoya Wang - Chief Executive Officer Please refer to the directors’ section for information about Mr Wang. Zaiqian Zhang - Chief Financial Officer, Company Secretary (Resigned 9th October 2020) Please refer to the directors’ section for information about Mr Zhang. Alex Aaltonen – General Manager Exploration Qualifications: B.Sc Geology (Hons), MAUSIMM Appointed: 19 February 2018 Mr Alex Aaltonen has more than 20 years of mining, resource development and exploration experience. He has worked in geology management and leadership roles in Australia, Eastern Europe, Middle East, Asia and South America. Mr Aaltonen has developed in depth experience in a broad range of deposit styles including gold, gold-copper-polymetallic, IOCGU, uranium, vanadium-polymetallic, tin-tungsten and graphite. Mr Aaltonen has extensive experience in managing and rejuvenating existing projects and or building teams and facilities for new projects. Fengfan Sun – Chief Financial Officer Qualifications: MBus (Financial Accounting) , CPA Appointed: 1st December 2020 Mr Fengfan Sun has many years of invaluable experience in leading and developing successful finance teams in listed and unlisted gold companies. He was employed by Focus as a senior accountant from June 2013 to February 2018 and was appointed as Focus Limited’s Chief Financial Officer in December 2020. Fengfan is responsible for managing the financial aspects of Focus’ strategy which includes financial planning and reporting, capital management, tax, treasury and investor relations. Interests in the Shares and Options of the Company and Related Bodies Corporate At the date of this report, the direct and indirect interests of directors in the shares and options of the Company were: Ordinary Shares Options (Unlisted) Gerry Fahey Dianfei Pei* Zhaoya Wang Zaiqian Zhang Rod Johns Lingquan Kong (appointed 14th January 2021) 12,820 90,519,954 - - - - - - - - - - *Mr Pei holds shares in Focus Limited on behalf of Shandong Gold Mining International Limited for voting rights. In addition, he holds an indirect interest in the Company through Shandong Gold International Mining Corporation Limited. Mr Pei is an executive of Shandong Gold International Mining Corporation Limited. Page | 20 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Directors’ Meetings The number of meetings of directors (including meetings of committees of directors) held during the year and the number of meetings attended by each director was as follows: Board Audit and Risk Committee A 4 4 4 3 1 B 4 4 4 3 1 A 2 2 - - - B 2 2 - - - Remuneration and Nominations Committee B A Technical Committee A B - - - - - - - - - - - - - - - - - - - - Directors Dianfei Pei Gerry Fahey Zhaoya Wang Zaiqian Zhang Rodney Johns A – Number of meetings attended. B – Number of meetings held during the time the director held office or was a member of the relevant committee during the year. Capital Structure Ordinary shares As at the date of this report, the Company had on issue 182,748,565 fully paid ordinary shares. Share Options Options Issued There were no options issued during the year ended 31 December 2020. Options Exercised There were no options exercised during the year ended 31 December 2020. As at the date of this report, there are no unissued ordinary shares under options. Principal Activities The principal activity of the Company during the year was gold exploration in Western Australia. Page | 21 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Review of Operations Overview In 2020, Focus continued its positive momentum towards resuming gold production. During the year, the Company invested $9.8 million (2019: $14.5 million) in its exploration programmes at the Coolgardie Gold Project (Coolgardie) and Laverton Gold Project (Laverton) and delivered pleasing results at both projects. Exploration The Company’s exploration team completed another highly efficient year of mineral resource development and exploration, with 79% of drill holes intersecting more than 0.5 g/t gold. Of 174 holes that intersected mineralisation exceeding 0.5g/t Au, the average grade x width (GxM) at significant intersections (calculated using a 0.5g/t cut-off and up to 3m internal dilution) was 7.9 GxM. Furthermore, many holes intersected multiple intersections delivering average cumulative intersections of 24 GxM. Resource Development Drilling Resource development drilling during the year was conducted at: Laverton: five reverse circulation (RC) holes and 15 RC pre-collars for 1,572m and 66 diamond (DD) holes plus 15 DD tails for 4,077m. Prospect RC metres DD metres Beasley Creek Beasley Creek South Karridale 396m 1176m - Coolgardie: 91 RC holes for 8,854m and seven DD holes for 1066.5m. RC metres DD metres 3300m 1872m 2,412m 470m 288m 512m Prospect Alicia Big Blow Little Blow Brilliant Brilliant North Undaunted CNX Exploration Drilling Exploration was completed at: 2,828m 711m 538m 291m - 576m - - 199m Laverton: 17 RC holes for 2,941m and three DD holes for 1,295m. Prospect RC metres DD metres Burtville North Lake Carey 2,941m - - 1,295m Coolgardie: 11 RC holes for 1,099m. Prospect RC metres DD metres Page | 22 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Bayleys Ada Emu Hill Jackpot 162m 193m 210m 534m - - - - Mineral Resource Updates Nine Mineral Resource updates were completed during 2020. At Laverton, five Mineral Resource updates were completed for the following deposits: • Beasley Creek; • Beasley Creek South; • Karridale; • Burtville; and • Wedge-Lancefield North. The Laverton Mineral Resource updates cumulatively increased the total Indicated and Inferred Mineral Resource by 20.7MT @ 1.29 g/t Au for 857Koz to 42.4Mt @ 1.41g/t Au for 1.9Moz. At Coolgardie, four Mineral Resource updates were completed for the following deposits: • Brilliant; • Greenfields; • Bonnie Vale Quarry Lode; and • CNX. The Coolgardie Mineral Resource updates cumulatively increased total Measured, Indicated and Inferred Mineral Resources by 7.53MT @ 1.52 g/t Au for 368Koz to 34.8Mt @ 2.2 g/t Au for 2.5Moz. Funding During the year, Focus obtained a $20 million loan facility with its major shareholder, Shandong Gold Group Co. Ltd. The unsecured loan has a term of 3 years with an interest rate of 3.5% per annum. The cash injection will allow Focus to further advance feasibility work at both Coolgardie and Laverton. Settlement of Forfeiture Applications During the year, the Company reached a settlement on 102 applications for forfeiture resulting in cash settlement payments of A$580k as well as a write off related capitalised Exploration costs on the 13 transferred tenements totalling $2.3 million. As a result, all the forfeiture applications against the Company have been dismissed. Operating Result The full-year loss after income tax for 2020 was $7.9 million (2019: loss of $2.1 million). The increase is largely due to write off of tenements subject to forfeiture and related settlement payments. In addition, the 2019 result was inclusive of a $3.0 million sale proceeds on a portion of a tenement to FMR Investments Pty Ltd. As at 31 December 2020, the Company has a cash balance (consisting of cash and cash equivalent and short-term deposits) of $19.9 million (2019: $13.9 million). Dividends No dividends have been paid or provided in the year (2019: nil). Significant Changes in the State of Affairs Other than explained in the Review of Operations section above, there have been no significant changes in the state of affairs of the Group to balance date. Page | 23 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Significant Events after Balance Date On 14 January 2021, Lingquan Kong was appointed as Director of the Company. Mr Kong is the Company’s Principal Mining Engineer. The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has limited impact on the Group up to 31 December 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. Other than the above, there has not been any other matter or circumstance that has arisen after balance date that has 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 future periods. Likely Developments and Expected Results The Group has now entered an exploration only phase and it is not possible to predict likely developments and expected results as these will be dependent upon exploration success and conversion of existing resources. Environmental Regulations The Group’s operations hold licences issued by the relevant regulatory authorities. These licences specify the limits and regulate the management associated with the operations of the Group. At the date of this report the Group is not aware of any breach of those environmental regulations which apply to the Group’s operations. The Group continues to comply with its specified regulations. Indemnification and Insurance of Directors and Officers The company has indemnified the directors and executives of the company for costs incurred, in their capacity as a director or executive, for which they may be held personally liable, except where there is a lack of good faith. During the financial year, the company paid a premium in respect of a contract to insure the directors and executives of the company against a liability to the extent permitted by the Corporations Act 2001. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. Indemnity and insurance of auditor The company has not, during or since the end of the financial year, indemnified or agreed to indemnify the auditor of the company or any related entity against a liability incurred by the auditor. During the financial year, the company has not paid a premium in respect of a contract to insure the auditor of the company or any related entity. Page | 24 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Remuneration Report (Audited) This report, prepared in accordance with the Corporations Act 2001, contains detailed information regarding the remuneration arrangements for the Directors and Senior Executives who are the ‘key management personnel’ (KMP) of the Company and the Group. The Board formed the view that the three most senior people in the organisation, being the Chief Executive Officer (CEO), Chief Financial Officer, General Manager – Exploration are, in addition to the directors, the only executives who satisfy the “key management personnel” criteria during the period. The tables disclosing remuneration for this period and comparatives only include these KMPs. The KMP for the year ended 31 December 2020 are listed in the table below: Director Dianfei Pei Gerry Fahey Zhaoya Wang Zaiqian Zhang Rod Johns Capacity Change during the Year Non-Executive, Non-Independent Independent Director, Executive Director, Executive Independent None None None Resigned on 9th October 2020 Appointed on 4th September 2020 Current Executive Capacity Alex Aaltonen Fengfan Sun General Manager – Exploration Chief Financial Officer Change during the Year None Appointed 1st December 2020 Remuneration Objectives It is the Company’s objective to provide maximum stakeholder benefit from the retention of a high-quality Board and executive team by remunerating directors and key executives fairly and appropriately with reference to relevant employment market conditions. The expected outcomes of the remuneration structure are: • Retaining and motivating key executives; and • Attracting high quality management to the Company. Remuneration and Nominations Committee Established The Board is responsible for determining and reviewing compensation arrangements for the directors themselves and the executive team. The Board has established a Remuneration and Nominations Committee, comprising all the non-executive directors. Members of the Remuneration and Nominations Committee during the year were: • Gerry Fahey - Committee Chairman and, • Dianfei Pei. The Remuneration and Nominations Committee did not meet during the year. Compensation of Key Management Personnel Remuneration Structure In accordance with best practice of the Corporate Governance Principles and Recommendations 3rd Edition, the remuneration structures for non-executive directors and executive directors are separate and distinct. Remuneration and Nominations Committee The Remuneration and Nominations Committee assesses the appropriateness of the nature and amount of remuneration of directors and senior executives on a periodic basis by reference to relevant employment market conditions with an overall objective of ensuring maximum stakeholder benefit from the retention of a high quality Board and executive team, subject to the following section relating to non-executive directors. The committee did not meet this year. Page | 25 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Non-Executive Director Remuneration The Board seeks to set aggregate remuneration at a level that provides the Company with the ability to attract and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders. The amount of aggregate remuneration sought to be approved by shareholders and the manner in which it is apportioned amongst directors is reviewed annually. The Board considers advice from external shareholders as well as the fees paid to non-executive directors of comparable companies when undertaking the annual review process. Each non-executive director receives a fee for being a director of the Company. The Company introduced a retirement allowance in 2011 for the long-term service of Directors, tied solely to their current Directors Fee at the time of retirement (Fixed Component). The application of the allowance was backdated to the time the directors commenced in their role. The allowance is as follows: • • • 3 - 5 Years’ Service – 25% of annual fees on retirement 5 - 8 Years’ Service – 50% of annual fees on retirement 8+ Years’ Service – 100% of annual fees on retirement During the year, no one was paid under this benefit. (2019: Nil). The committees of the Board, as of the date of this report their Chair and members are presently as follows: Board Member Position Audit & Risk Technical Remuneration and Nominations Dianfei Pei Gerry Fahey Chair Non-Executive Non-Independent Director Independent Zhaoya Wang Zaiqian Zhang (resigned 9th October 2020) Director Executive Director Executive Rod Johns (appointed 4th September 2020) Director Independent Lingquan Kong (appointed 14th January 2021) Director Executive C=Chairman, M=Member The following fees have applied: M C - - - - M C - - - - M C - - - - • Chairman of the Board • Other non-executive directors $80,000 per annum $50,000 per annum The compensation provided to the Directors in these circumstances is fixed, which reflects the time commitment and responsibilities of their roles. At present, the maximum aggregate remuneration of directors’ fees is $230,000 per annum of which $146,154 (2019: $130,000) has been paid to the directors as fees during the year. Page | 26 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Voting and comments made at the company's 2020 Annual General Meeting ('AGM') At the 2020 AGM, 82.1% of the votes received supported the adoption of the remuneration report for the year ended 31 December 2019. The Company did not receive any specific feedback at the AGM regarding its remuneration practices. Senior Executive and Executive Director Remuneration Remuneration primarily consists of fixed and performance-based remuneration where determined by the Remuneration and Nominations Committee. The Company had established an equity-based scheme that will allow the executive team to share in the success of Focus. Any issue of an equity component to executive directors is subject to the approval of shareholders in general meeting and it is a policy of the current Board that Directors do not participate in equity-based proposals. Fixed Remuneration Fixed remuneration is reviewed by the Remuneration and Nominations Committee. The process consists of a review of relevant comparative remuneration in the market and internally and, where appropriate, external advice on policies and practices. The Committee has access to external, independent advice where necessary. Senior managers are given the opportunity to receive their fixed (primary) remuneration in a variety of forms including cash and fringe benefits such as motor vehicles and expense payment plans. It is intended that the manner of payment chosen will be optimal for the recipient without creating additional cost for the Group. Performance Based Remuneration For the year ended 31 December 2020, the Company did not set any KPIs. During the year ended 31 December 2020, the Company awarded a $20,000 discretionary bonus to Alex Aaltonen and is included as other short-term remuneration. No discretionary bonus was awarded during the 31 December 2019 year. No options were issued during the year (2019: None). At this stage, no LTI programmes are in place. Key Management Personnel Contracts The key terms of the employment contracts for the key management personnel are summarised as follows: Zhaoya Wang – Chief Executive Officer Base Salary: Other Benefits: Term: Termination: $420,000 per annum plus superannuation guarantee Apartment rent is covered by the Company Permanent starting from 19 July 2018 Four weeks’ notice Zaiqian Zhang – Chief Financial Officer and Company Secretary* Base Salary: Term: Termination: $294,000 per annum plus superannuation guarantee Permanent starting from 24 November 2017 Four weeks’ notice *Resigned 9th October 2020 Alex Aaltonen – General Manager – Exploration Base Salary: Term: Termination: $275,000 per annum plus superannuation guarantee Permanent starting from 19 February 2018 Four weeks’ notice Fengfan Sun – Chief Financial Officer Base Salary: Term: Termination: $250,000 per annum plus superannuation guarantee Permanent starting from 1 December 2020 Four weeks’ notice Page | 27 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Remuneration Tables Directors’ remuneration for the year ended 31 December 2020 Short-Term Benefits Post-Employment Benefits % Salary $ Fees $ Other $ Non Monetary benefits $ Super- annuation $ Other $ Total $ Performance Related $ Directors Dianfei Pei Gerry Fahey - - Zhaoya Wang 420,000 80,000 50,000 - Rodney Johns - 16,154 Former Directors Zaiqian Zhang* 336,405 - - - - - - - 53,489 - Total 756,405 146,154 53,489 - 4,750 39,900 1,535 21,699 67,884 - - - - - - 80,000 54,750 513,389 17,688 358,105 1,023,932 *Zaiqian Zhang resigned on 9th October 2020. Salary shown includes termination benefits. Directors’ remuneration for the year ended 31 December 2019 Short-Term Benefits Post-Employment Benefits - - - - - - % Salary $ Fees $ Other $ Non Monetary benefits $ Super- annuation $ Other $ Total $ Performance Related $ Directors Dianfei Pei Gerry Fahey Zhaoya Wang Zaiqian Zhang - - 80,000 50,000 420,000 294,000 - - Total 714,000 130,000 - - - - - - - 53,878 - 53,878 - 4,750 39,900 27,930 72,580 - - - - - 80,000 54,750 513,778 321,930 970,458 - - - - - Page | 28 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Remuneration of the key management personnel for the year ended 31 December 2020 Short-Term Benefits Post-Employment Benefits Salary $ Fees $ Other $ Non Monetary benefits $ Super- annuation $ Other $ Total $ % Performance Related $ Current Executive Alex Aaltonen Fengfan Sun 237,967 20,833 - - 20,000 - - - 22,607 1,979 - - 280,574 22,813 7% - Remuneration of the key management personnel for the year ended 31 December 2019 Short-Term Benefits Post-Employment Benefits Salary $ Fees $ Other $ Non Monetary benefits $ Super- annuation $ Other $ Total $ % Performance Related $ Current Executive Alex Aaltonen 234,217 - - - 22,481 - 256,698 - Relationship between Remuneration and Focus Minerals’ Performance The majority of salary is fixed while small portions of remuneration, such as bonus and share option, are linked to the Company’s performance. Although there is some linkage to the Company’s performance, it is not closely aligned. The following table shows key performance indicators for the Company over the last five reporting periods. (Loss) / profit attributable to the owners of Focus Minerals Ltd (‘$000’s) Basic earnings per share (Cents per share) Dividend declared Share Price as at the end of the year $ $ 2020 2019 2018 2017 Restated 2016 (7,858) (2,063) (4,207) (6,194) (3,184) (4.3) (1.13) (2.30) (3.39) (1.74) n/a n/a n/a n/a n/a 0.34 0.215 0.175 0.32 0.41 Transactions and Balances with Related Parties Shandong Gold International Mining Corporation Limited is the major shareholder of Focus Minerals Limited. During 2020, Shandong provided an unsecured loan facility to Focus Minerals Limited, totalling $20 million. Key terms of the facility agreement are as follows: • • Term: 3 years, principal payable at the end of the term Interest: 3.5% per annum, payable quarterly in arrears As at 31st December 2020, the balance of the loan payable to Shandong Gold was $20 million (2019: $nil). Total interest expense for the year ended 31 December 2020 was $126,389 (2019:$nil). Amount of interest payable at reporting date is $Nil (2019:$nil). As at 31 December 2020, balance owing to Alex Aaltonen of $20,000 (2019:$nil). In addition, there was a payment of director fees to Mr Pei. As at 31 December 2020, the account payable balance for his director fees was nil (2019: $36,167). Details regarding Mr’s Pei’s director’s fees are set out in the Director’s Report. Page | 29 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 All transactions were made on normal commercial terms and conditions and at market rates. Additional disclosures relating to key management personnel Shareholding The number of shares in the company held during the financial year by each director and other members of key management personnel of the consolidated entity, including their personally related parties, is set out below: Ordinary shares Gerry Fahey Dianfei Pei* Balance at Received Balance at the start of as part of Disposals/ the end of the year remuneration Additions other the year 12,820 90,519,954 90,532,774 - - - - - - - - - 12,820 90,519,954 90,532,774 *Mr Pei holds shares in Focus Limited on behalf of Shandong Gold Mining International Limited for voting rights. In addition, he holds an indirect interest in the Company through Shandong Gold International Mining Corporation Limited. Mr Pei is an executive of Shandong Gold International Mining Corporation Limited. This is the end of remuneration report. Page | 30 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Proceedings on Behalf of the Company Other than as disclosed in this report no person has applied for leave of Court to bring proceedings on behalf of the Company or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Company for all or any part of those proceedings. No proceedings have been brought or intervened in on behalf of the Company with leave of the Court under Section 237 of the Corporations Act 2001. Non-Audit Services Details of the amounts paid or payable to the auditor for non-audit services provided during the financial year by the auditor are outlined in note 22 to the financial statements. The directors are satisfied that the provision of non-audit services during the financial year, by the auditor (or by another person or firm on the auditor's behalf), is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001. The directors are of the opinion that the services as disclosed in note 22 to the financial statements do not compromise the external auditor's independence requirements of the Corporations Act 2001 for the following reasons: ● all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity of the auditor; and none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants issued by the Accounting Professional and Ethical Standards Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for the company, acting as advocate for the company or jointly sharing economic risks and rewards. ● Officers of the Company Who are Former Partners of RSM Australia Partners There are no officers of the company who are former partners of RSM Australia Partners. Auditor’s Independence Declaration The auditor’s independence declaration for the year ended 31 December 2020 has been received and can be found on page 32 of the Financial Report. Rounding of Amounts The Company is of a kind referred to in 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 Instrument to the nearest thousand dollars, or in certain cases, to the nearest dollar. Auditor RSM Australia Partners continues in office in accordance with section 327 of the Corporations Act 2001. This report is made in accordance with a resolution of directors, pursuant to section 298(2)(a) of the Corporations Act 2001. On behalf of the directors Dianfei Pei Chairman of the Board 30 March 2021 Jinan, China Page | 31 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Auditors Independence Declaration Page | 32 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Consolidated Financial Statements CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2020 Consolidated Revenue from continuing operations Other Income Employee expenses Depreciation expenses Finance costs Loss on disposal of tenements Care and maintenance costs Corporate and other expenses Loss Before Income Tax For the Year Income Tax Expense Loss After Income Tax For the Year Notes 2(a) 2(b) 2(c) 2(c) 2(c) 2(c) 2(c) 4 Other Comprehensive Income for the year, Net of Tax Total Comprehensive Loss For the Year Total Comprehensive Loss Attributable to: Owners of the Parent Total Comprehensive Loss For the Year Earnings per Share Basic Loss per Share (Cents Per Share) Diluted Loss per Share (Cents Per Share) 5 5 2020 $’000 199 234 (1,400) (371) (752) (2,916) (934) (1,918) (7,858) - (7,858) - (7,858) (7,858) (7,858) (4.30) (4.30) 2019 $’000 745 3,576 (1,256) (523) (744) (1,026) (975) (1,860) (2,063) - (2,063) - (2,063) (2,063) (2,063) (1.13) (1.13) The accompanying notes form part of these financial statements. Page | 33 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2020 Notes Consolidated 31 December 2020 $’000 31 December 2019 $’000 Assets Current Assets Cash and Cash Equivalents Short-term Deposits Trade and Other Receivables Total Current Assets Non-Current Assets Cash and Cash Equivalents -Restricted Cash Inventories Plant and Equipment Right-of-use Assets Exploration and Evaluation Assets Total Non-Current Assets Total Assets Liabilities Current Liabilities Trade and Other Payables Provisions Lease Liabilities Other Current Liabilities Total Current Liabilities Non-Current Liabilities Provisions Borrowing Lease Liabilities Total Non-Current Liabilities Total Liabilities Net Assets Equity Issued Capital Reserves Accumulated Losses Total Equity 6 6 7 6 8 9 10 11 12 13 14 12 15 13 16(a) 16(c) 16(d) 7,795 12,096 252 20,143 13,803 1,291 804 30 94,377 110,305 130,448 749 250 25 101 1,125 29,012 20,000 - 49,012 50,137 80,311 427,167 (7,178) (339,678) 80,311 13,935 - 253 14,188 13,869 1,293 905 145 85,899 102,111 116,299 682 280 122 - 1,084 27,012 - 34 27,046 28,130 88,169 427,167 (7,178) (331,820) 88,169 The accompanying notes form part of these financial statements. Page | 34 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 2020 Issued Capital $’000 Accumulated Losses Reserves $’000 $’000 Total $’000 Balance as at 31 December 2018 427,167 (329,757) (7,178) 90,232 Loss after income tax for the year - (2,063) - (2,063) Balance as at 31 December 2019 427,167 (331,820) (7,178) 88,169 Loss after income tax for the year - (7,858) - (7,858) Balance as at 31 December 2020 427,167 (339,678) (7,178) 80,311 The accompanying notes form part of these financial statements. Page | 35 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2020 Cash Flows from Operating Activities Payments to Suppliers and Employees (Including GST) (3,639) (4,415) Notes Consolidated 2020 $’000 2019 $’000 Royalties Paid Payment of Performance & Other Bonds Other Income Interest Received Settlement of Forfeiture Applications Finance Costs - (30) 256 213 (580) (280) (3) - 531 1,063 - (206) Net Cash Outflow from Operating Activities 6(ii) (4,060) (3,030) Cash Flows from Investing Activities Proceeds from Sale of Non-Current Assets Acquisition of Plant and Equipment Payment to Leases (Increase)/Decrease in Short-term Deposits Payments for Exploration Expenditure - (229) (131) (12,000) (9,821) 1,878 (173) 178 25,053 (13,861) Net Cash (Outflow)/ Inflow from Investing Activities (22,181) 13,075 Cash Flows from Financing Activities Proceeds from Borrowings Repayment of Borrowings Net Cash Inflow from Financing Activities Net (Decrease)/Increase in Cash and Cash Equivalents Cash and Cash Equivalents at the Beginning of the Year Cash and Cash Equivalents at the End of the Year 6(i) 20,167 (66) 20,101 (6,140) 13,935 7,795 - - - 10,045 3,890 13,935 The accompanying notes form part of these financial statements. Page | 36 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Notes to Consolidated Financial Statements Note 1: Summary of Significant Accounting Policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. The financial statements are for the Group consisting of Focus Minerals Ltd (‘the parent entity’) and its subsidiaries (the ‘Group’). (a) Basis of Preparation The financial report is a general-purpose financial report, which has been prepared in accordance with Australian Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001. The parent entity has applied the relief available to it under ASIC Corporations (Rounding in Financial/Directors’ Reports) Instrument 2016/191 and accordingly, amounts in the financial statements and directors’ report have been rounded off to the nearest $1,000, or, in certain cases, to the nearest dollar. The consolidated financial statements are presented in Australian dollars (AUD), which is also the functional currency of the parent company. The financial report covers the consolidated financial statements of Focus Minerals Ltd and controlled entities. Focus Minerals Ltd is a for-profit, listed public company, incorporated and domiciled in Australia. The financial report of Focus Minerals Ltd and controlled entities complies with Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that the financial statements and notes also comply with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The financial report has been prepared on an accrual basis and is based on historical costs, modified, where applicable, by the measurement at fair value of selected financial assets. The financial information for the parent entity, Focus Minerals Ltd, disclosed in Note 20 has been prepared on the same basis as the consolidated financial statements other than investments in subsidiaries, which are held at cost. (b) 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. (c) Principles of Consolidation The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by Focus Minerals Ltd at the end of the reporting period and from time to time during the year. A controlled entity is any entity over which Focus Minerals Limited has control of the entity, demonstrated by the Group’s exposure to, or rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity. In assessing the ability to control, the existence and effect of holdings of actual and potential voting rights are also considered. Where controlled entities have entered or left the Group during the year, the financial performance of those entities are included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 19 to the financial statements. The acquisition method of accounting is used to account for business combinations by the Group (refer to Note 1(ae)). In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the Group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with those adopted by the parent entity. Page | 37 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 (d) Revenue Recognition Revenue is recognised for the major business activities as follows: Revenue from contracts with customers: Revenue from contracts with customers is recognised when a customer obtains control of the promised asset and the Group satisfies its performance obligations under the contract. Revenue is allocated to each performance obligation. The Group considers the terms of the contract in determining the transaction price. The transaction price is based upon the amount the entity expects to be entitled to in exchange for the transferring of promised goods. Interest Income: Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset. Dividends: Revenue is recognised when the Group’s right to receive the payment is established. Rental Income: Rental income from mining leases is accounted for on a straight-line basis over the lease term. Contingent rental income is recognised as income in the periods in which it is earned. (e) Cash and Cash Equivalents Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term, highly liquid deposits with an original maturity of three months or less. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above, net of outstanding bank overdrafts. (f) Trade and Other Receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less allowance for expected for credit losses. Trade receivables are generally due for settlement within 30 days. The Group has applied the simplified approach to measuring expected credit loses, which uses a lifetime expected loss allowance. To measure the expected credit losses, trade receivables have been grouped based on days overdue. Other receivables are recognised at amortised cost, less any allowance for expected credit losses. (g) Non-current assets held for sale Non-current assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use and a sale is considered highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell, except for assets such as deferred tax assets, assets arising from employee benefits, financial assets and investment property that are carried at fair value and contractual rights under insurance contracts, which are specifically exempt from this requirement. An impairment loss is recognised for any initial or subsequent write-down of the asset to fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of an asset, but not in excess of any cumulative impairment loss previously recognised. A gain or loss not previously recognised by the date of the sale of the non-current asset is recognised at the date of derecognition. Non-current assets are not depreciated or amortised while they are classified as held for sale. Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be recognised. Non-current assets classified as held for sale are presented separately from the other assets in the statement of financial position. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the statement of financial. A discontinued operation is a component of the entity that has been disposed of or is classified as held for sale and that represents a separate major line of business or geographical area of operations, is part of a single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired exclusively with a view to resale. The results of discontinued operations are presented separately in the statement of profit or loss and other comprehensive income. (h) Inventories Page | 38 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Raw materials and stores, ore stockpiles and work in progress and finished gold stocks are physically measured or estimated and valued at the lower of cost and net realisable value. Net realisable value less costs to sell is assessed annually based on the amount estimated to be obtained from sale of the item of inventory in the normal course of business, less any anticipated costs to be incurred prior to its sale. Cost comprises direct materials, direct labour and an appropriate proportion of variable and fixed overhead expenditure and depreciation and amortisation relating to mining activities, the latter being allocated on the basis of normal operating capacity. Costs are assigned to individual items of inventory on the basis of weighted average costs. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and the estimated costs necessary to make the sale. Inventories of consumable supplies and spare parts expected to be used in production are valued at the lower of weighted average cost, which includes the cost of purchase as well as transportation and statutory charges, or net realisable value. Any provision for obsolescence is determined by reference to specific stock items identified. During the exploration and development phase, where the cost of extracting the ore exceeds the likely recoverable amount, work in progress inventory is written down to net realisable value. (i) Impairment of Financial Assets The accounting policy for impairment of financial assets is explained in note 1(k). (j) Income Tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Deferred income tax is provided on all temporary differences at the reporting date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences except: • When the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or • When the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised. Unrecognised deferred income tax assets attributable to income tax losses are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profits will be available to allow the deferred tax asset to be recovered. Determination of future taxable profits requires estimates and assumptions as to future events and outcomes, in particular, whether successful development and commercial exploitation, or alternatively sale, of the respective areas of interest will be achieved. This includes estimates and judgements about commodity prices, ore resources, exchange rates, future capital requirements, future operational performance and the timing of estimated cash flows. Changes in these estimates and assumptions could impact on the amount and probability of estimated taxable profits and accordingly the recoverability of deferred tax assets. Page | 39 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date. Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Focus Minerals Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. As a consequence, these entities are taxed as a single entity and the deferred tax assets and liabilities of these entities are set off in the consolidated financial statements. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. In this case, the tax is also recognised in other comprehensive income or directly in equity, respectively. (k) Financial Instruments Financial assets Classification: The Group classifies its financial assets in the following measurement categories: • • those to be measured subsequently at fair value, and those to be measured at amortised cost. The classification depends on whether the financial asset is an equity instrument or a debt instrument, the Group’s business model for managing the financial assets and the contractual terms of the cash flows. Measurement: At initial recognition, the Group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss (FVPL), transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at FVPL are expensed in profit or loss. Equity instruments The Group subsequently measures all equity investments at fair value. Where the Group’s management has elected to present fair value gains and losses on equity investments which are not held for trading, in OCI, there is no subsequent reclassification of fair value gains and losses to profit or loss following the derecognition of the investment. Dividends from such investments continue to be recognised in profit or loss as other income when the Group’s right to receive payments is established. Changes in the fair value of financial assets at FVPL are recognised in other gains/(losses) in the statement of profit or loss as applicable. Impairment losses (and reversal of impairment losses) on equity investments measured at FVOCI are not reported separately from other changes in fair value. Debt instruments Subsequent measurement of debt instruments depends on the Group’s business model for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which the Group classifies its debt instruments: • Amortised cost: Assets that are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest are measured at amortised cost. Interest income from these financial assets is included in finance income using the effective interest rate method. Any gain or loss arising on derecognition is recognised directly in profit or loss and presented in other gains/(losses), together with foreign exchange gains and losses. Impairment losses are presented as separate line item in profit or loss. • FVPL: Assets that do not meet the criteria for amortised cost or FVOCI are measured at FVPL. A gain or loss on a debt investment that is subsequently measured at FVPL is recognised in profit or loss and presented net within Page | 40 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 other gains/(losses) in the period in which it arises. • FVOCI: Assets that are held for collection of contractual cash flows and for selling the financial assets, where the assets’ cash flows represent solely payments of principal and interest, are measured at FVOCI. Movements in the carrying amount are taken through OCI, except for the recognition of impairment gains or losses, interest revenue and foreign exchange gains and losses which are recognised in profit or loss. When the financial asset is derecognised, the cumulative gain or loss previously recognised in OCI is reclassified from equity to profit or loss and recognised in other gains/(losses). Interest income from these financial assets is included in finance income using the effective interest rate method. Foreign exchange gains and losses are presented in other gains/(losses) and impairment expenses are presented as separate line item in profit or loss. Impairment: The Group assesses, on a forward-looking basis, the expected credit losses associated with its debt instruments carried at amortised cost and FVOCI. The impairment methodology applied depends on whether there has been a significant increase in credit risk. For trade receivables, the Group applies the simplified approach permitted by AASB 9, which requires expected lifetime losses to be recognised from initial recognition of the receivables. Financial liabilities Financial liabilities held for trading are measured at FVPL, and all other financial liabilities are measured at amortised cost. (l) Goods and Services Tax (“GST”) Revenues, expenses and assets are recognised net of the amount of GST except: • When the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and • Receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position. Cash flows are included in the statement of cash flow on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority, are classified as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. (m) Plant and Equipment Plant and equipment is stated at cost less accumulated depreciation and any accumulated impairment losses. Such cost includes the cost of replacing parts that are eligible for capitalisation when the cost of replacing the parts is incurred. Similarly, when each major inspection is performed, its cost is recognised in the carrying amount of the plant and equipment as a replacement only if it is eligible for capitalisation. Depreciation Depreciation on mobile plant is calculated on a straight-line basis over the estimated useful life of the assets being 2 – 25 years. Depreciation of underground assets is calculated on a unit of production basis over the period of the life of mine plan. Depreciation of the mill treatment assets is calculated on a straight-line basis over the estimated useful life of the assets, being 10 years. Page | 41 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 The assets’ residual values, useful lives and amortisation methods are reviewed, and adjusted if appropriate, at the end of each reporting period. Impairment The carrying values of plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may be impaired. Where this is the case then the recoverable amount of this plant and equipment is estimated. The recoverable amount of plant and equipment is the higher of fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, recoverable amount is determined for the cash- generating unit to which the asset belongs, unless the asset’s value in use can be estimated to be close to its fair value. Impairment exists when the carrying value of an asset or cash-generating units exceeds its estimated recoverable amount. The asset or cash-generating unit is then written down to its recoverable amount. For plant and equipment, impairment losses are recognised in profit or loss. De-Recognition and Disposal An item of plant and equipment is derecognised upon disposal or when no further future economic benefits are expected from its use or disposal. Any gain or loss arising on de-recognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the year the asset is derecognised. (n) Exploration and Evaluation Expenditure Exploration and evaluation expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest. Such expenditure comprises direct costs and does not include general overheads or administrative expenditure not having a specific nexus with a particular area of interest. Exploration expenditure for each area of interest is carried forward as an asset provided the rights to tenure of the area of interest are current and one of the following conditions is met: • The exploration and evaluation expenditures are expected to be recouped through successful development and exploitation of the area of interest, or alternatively, by its sale; or • Exploration and evaluation activities in the area of interest have not, at the reporting date, reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest is continuing. Exploration expenditure is written off when it fails to meet at least one of the conditions outlined above or an area of interest is abandoned. Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount, or when the cash generating unit that exploration expenditure assets are a part of are tested for impairment. When facts and circumstances suggest that the carrying amount exceeds the recoverable amount the impairment loss will be measured and disclosed in accordance with AASB 136 Impairment of Assets. When a decision is made to develop an area of interest, all carried forward exploration expenditure in relation to the area of interest is transferred to Mine Properties and Development. (o) Mine Properties and Development Page | 42 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Development expenditure represents the accumulated exploration, evaluation, land and development expenditure incurred by or on behalf of the Group in relation to areas of interest in which mining of a mineral resource has commenced. When further development expenditure is incurred in respect of a mine property after commencement of production, such expenditure is carried forward as part of the mine property only when substantial future economic benefits are thereby established, otherwise such expenditure is classified as part of the cost of production. In some circumstances, where conversion of resources into reserves is expected, some resources may be included. Development and land expenditure still to be incurred in relation to the current reserves are included in the amortisation calculation. Where the life of the assets is shorter than the mine life their costs are amortised based on the useful life of the assets. The estimated recoverable reserves and life of the mine and the remaining useful life of each class of asset is reassessed at least annually. Where there is a change in the reserves/resources amortisation rates are correspondingly adjusted. (p) Stripping Costs in the Production Phase of a Surface Mine Production stripping costs (also known as deferred mining costs) are to be capitalised as part of an asset if: • • • There is a probable future economic benefit that will be realised; The costs can be reliably measured; and The component of an ore body for which access has been improved can be identified. The stripping activity asset shall be amortised on a systematic basis, over the expected useful life of the identified component of the ore body that becomes more accessible as a result of the stripping activity. (q) Trade and Other Payables Trade and other payables are recognised originally at fair value and subsequently measured at amortised cost using the effective interest rate method. Trade and other payables represent liabilities for goods and services provided to the Group prior to the end of each reporting period that are unpaid and arise when the Group becomes obliged to make future payments in respect of the purchase of goods and services. Trade and other payables are presented as current liabilities unless payment is not due within 12 months from the reporting date. (r) Provisions Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost. (s) Employee Benefits Wages, Salaries and Annual Leave Liabilities for wages and salaries, including non-monetary benefits, leave-in-lieu (“Toil”) and annual leave expected to be settled within 12 months of the reporting date are recognised in other payables in respect of employees’ services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable. Long Service Leave The liability for long service leave is recognised in the provision for employee benefits and measured as the present value of expected future payments to be made in respect of services provided by employees up to the reporting date Page | 43 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 using the projected unit credit method. Consideration is given to expected future wage and salary levels, experience of employee departures, and period of service. Expected future payments are discounted using market yields at the reporting date on corporate bonds with terms to maturity and currencies that match, as closely as possible, the estimated future cash outflows. Termination Benefits Termination benefits are payable when employment is terminated before the normal retirement date, or when an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits when it is demonstrably committed to either terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal or to providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after the end of the reporting period are discounted to present value. (t) Share-Based Payment Transactions Equity Settled Transactions The Group provides benefits to certain third parties and employees (including senior executives) in the form of share- based payments. Third parties and employees render services to the Group in exchange for shares or rights over shares (“equity-settled transaction”). The cost of these equity-settled transactions with third parties and employees is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using an appropriate model. In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Focus Minerals Ltd (market conditions) if applicable. The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant beneficiary becomes fully entitled to the award (“vesting date”). The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Group’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The profit or loss charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period. No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition. If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately. However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award. The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share (see Note 5). (u) Issued Capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. (v) Restoration and Rehabilitation Costs Page | 44 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, it is more likely than not that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. The mining, extraction and processing activities of the Group give rise to obligations for site restoration and rehabilitation. Restoration and rehabilitation obligations can include facility decommissioning and dismantling, removal or treatment of waste materials, land rehabilitation and site restoration. Provisions for the cost of each rehabilitation program are recognised at the time that environmental disturbance occurs. Restoration and rehabilitation provisions are initially measured at the expected value of future cash flows required to rehabilitate the relevant site, discounted to their present value. The judgements and estimates applied for the estimation of the rehabilitation provisions are discussed in Note 1(z). When provisions for restoration and rehabilitation are initially recognised, the corresponding cost is capitalised into the cost of the related assets and is amortised using the units of production method over the life of the mine. The value of the provision is progressively increased over time as the effect of discounting unwinds, creating an expense recognised in finance costs. At each reporting date the restoration and rehabilitation liability is re-measured to account for any new disturbance, updated cost estimates, inflation, changes to the estimated reserves and lives of operations, new regulatory requirements, environmental policies and revised discount rates. Changes to the restoration and rehabilitation liability are added to or deducted from the related rehabilitation asset and amortised accordingly. (w) Government Grants Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants relating to costs are deferred and recognised in the profit or loss over the period necessary to match them with the costs that they are intended to compensate. If the assets related to government grants have been fully impaired, amortised or depreciated, the grant received is recorded in the statement of profit or loss as other income. (x) Earnings per Share Basic earnings per share is calculated as net result attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element. Diluted earnings per share are calculated as net result attributable to members of the parent, adjusted for: • Costs of servicing equity (other than dividends) and preference share dividends. • The after-tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and • Other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element. (y) Comparative Figures When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year. (z) Critical Accounting Estimates and Judgements The directors evaluate estimates and judgements incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group. • Reserves and Resources Page | 45 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 In order to calculate Ore Reserves and Mineral Resources, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, transport costs, commodity demand, commodity prices and exchange rates. The Group estimates Mineral Resources based on information compiled by Competent Persons (as defined in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as revised in December 2004 (the 2004 JORC code) or, if updated or more recent, is reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012 Edition). Refer to pages 8 to 12 for which JORC code is used for which resources. As economic assumptions used to estimate reserves change and as additional geological data is generated during the course of operations, estimates of reserves and mineral resources may vary from period to period. Changes in reported reserves and mineral resources may affect the Group’s financial results and financial position in a number of ways, including the following: Asset carrying values may be affected due to changes in estimated future cash flows; Depreciation and amortisation charges in profit and loss may change where such charges are determined by the units of production basis, or where the useful economic lives of assets change; and Restoration and rehabilitation provision may be affected due to changes in the magnitude of future restoration and rehabilitation expenditure. • Exploration and Evaluation Expenditure The Group’s accounting policy for exploration and evaluation expenditure results in expenditure being capitalised for an area of interest where it is considered likely to be recoverable by future exploitation or sale or where the activities have not reached a stage which permits a reasonable assessment of the existence of reserves. This policy requires management to make certain estimates as to future events and circumstances, in particular whether an economically viable extraction operation can be established. Any such estimates and assumptions may change as new information becomes available. If, after having capitalised the expenditure under the policy, a judgement is made that recovery of the expenditure is unlikely, the relevant capitalised amount will be written off to profit and loss. • Restoration and Rehabilitation Provision The Group’s accounting policy for the recognition of restoration and rehabilitation provisions requires significant estimates including the magnitude of possible works required for the removal of infrastructure and of rehabilitation works, future cost of performing the work, the inflation and discount rates and the timing of cash flows. These uncertainties may result in future actual expenditure differing from the amounts currently provided. When these factors change or become known in the future, such differences will impact the mine rehabilitation provision in the period in which they change or become known. • Impairment of Assets The Group assesses each Cash-Generating Unit (CGU), to determine whether there is any indication of impairment or reversal. Where an indicator of impairment or reversal exists, a formal estimate of the recoverable amount is made, which is deemed as being the higher of the fair value less costs of disposal and value in use calculated in accordance with accounting policy Note 1(n). These assessments require the use of estimates and assumptions such as discount rates, exchange rate, commodity prices, gold multiple values, future operating development and sustaining capital requirements and operating performance (including the magnitude and timing of related cash flow). (ab) Rounding The company is of a kind referred to in Corporations Instrument 2016/191, issued by the Australian Securities and Investments Commission, relating to ‘rounding-off’. Amounts in this report have been rounded off in accordance with that Corporations Instrument to the nearest thousand dollars, or in certain cases, the nearest dollar. Page | 46 For personal use only Consolidated 2020 $’000 199 199 234 - 234 280 91 371 472 4 126 150 752 1,149 769 1,918 1,400 1,400 2,916 2,916 2019 $’000 745 745 190 3,386 3,576 425 98 523 560 23 161 744 1,022 838 1,860 1,256 1,256 1,026 1,026 Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 2: Revenues and Expenses (a) Revenue from continuing operations Interest income Total revenue from continuing operations (b) Other income Sundry income Sale and sublease of Mill Total other income (c) Expenses Depreciation Expenses Depreciation – Plant and equipment Depreciation – Right-of-use assets Total depreciation expenses Finance Expenses Interest provision – Asset Retirement Obligation Interest expense paid/payable on lease liabilities Interest expense paid/payable on long term borrowings Other Finance Costs Total finance expenses Corporate and other expenses Professional services and consulting fees Corporate expense Total corporate and other expenses Employee Expenses Total Employee Expenses Total Employee Expenses Loss on disposal of tenements Exploration assets Total loss on disposal of tenements Page | 48 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 3: Segment Reporting All 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 each of these business units on a monthly basis. Segment Financial Information for the year ended 31 December 2020 is presented below: 2020 Coolgardie $’000 2020 Laverton $’000 2020 Corporate $’000 2020 Consolidated $’000 Revenue from continuing operations Other income Depreciation Employee expenses Finance cost Care and Maintenance Costs Loss on disposal of tenements and plant and equipment Corporate and Other expenses SEGMENTED LOSS BEFORE TAX Income taxes SEGMENTED LOSS Current Assets Non-Current Assets - Restricted Cash - Inventories - Property, Plant & Equipment - Right-of-Use Assets - Exploration and Evaluation TOTAL ASSETS Current Liabilities Other Non-Current Liabilities TOTAL LIABILITIES NET ASSETS 28 32 (276) - (234) (440) (2,545) (91) (3,526) - (3,526) 644 3,111 1,291 632 - 46,214 51,892 243 12,690 12,933 38,959 90 185 - - (384) (494) (371) (343) (1,317) - (1,317) 142 10,345 - 161 6 48,163 58,817 195 16,143 16,338 42,479 81 17 (95) (1,400) (134) - - (1,484) (3,015) - (3,015) 19,357 347 - 11 24 - 19,739 688 20,178 20,866 (1,127) 199 234 (371) (1,400) (752) (934) (2,916) (1,918) (7,858) - (7,858) 20,143 13,803 1,291 804 30 94,377 130,448 1,125 49,012 50,137 80,311 Page | 49 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Segment Financial Information for the year ended 31 December 2019 is presented below: 2019 Coolgardie $’000 2019 Laverton $’000 2019 Corporate $’000 2019 Consolidated $’000 Revenue from continuing operations Other income Depreciation Employee expenses Finance cost Care and Maintenance Costs Loss on disposal of tenements and plant and equipment Corporate and Other expenses SEGMENTED LOSS BEFORE TAX Income taxes SEGMENTED LOSS Current Assets Non-Current Assets - Restricted Cash - Inventories - Property, Plant & Equipment - Right-of-Use Assets - Exploration and Evaluation TOTAL ASSETS Current Liabilities Other Non-Current Liabilities TOTAL LIABILITIES NET ASSETS . 73 3,443 (422) - (268) (405) (557) (780) 1,084 - 1,084 1,775 3,177 1,293 692 - 44,280 51,217 220 10,943 11,163 40,054 277 133 - - (453) (570) (469) (78) (1,160) - (1,160) 73 10,345 - 204 23 41,619 52,264 321 15,872 16,193 36,071 395 - (101) (1,256) (23) - - (1,002) (1,987) - (1,987) 12,340 347 - 9 122 - 12,818 543 231 774 12,044 745 3,576 (523) (1,256) (744) (975) (1,026) (1,860) (2,063) - (2,063) 14,188 13,869 1,293 905 145 85,899 116,299 1,084 27,046 28,130 88,169 Page | 50 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 4: Income Tax Consolidated 31 December 2020 $’000 31 December 2019 $’000 The prima facie income tax expense on pre-tax accounting loss from operations reconciles to the income tax expense in the financial statements as follows: Accounting loss before tax Tax at the statutory income tax rate of 30% (2019: 30%) (7,858) (2,358) (2,063) (619) Tax effect of amount which we are not deductible/(taxable) in calculating taxable income: Other deductible expense Fixed assets Rehabilitation provision Immediate deduction for exploration costs Unrecognised tax losses Unrecognised capital losses Income tax expense/(benefit) recognised in profit or loss (4,942) (292) 607 (2,078) 4,347 - - (176) (777) 136 (4,022) 5,458 - - The tax rate used in the above reconciliation is the corporate tax rate of 30% payable by Australian corporate entities on taxable profits under Australian tax law. The Company has tax losses arising in Australia. The tax benefit of these losses are available indefinitely for offset against future taxable profits of the companies in which the losses arose, subject to ongoing conditions for deductibility being met. Tax Consolidation The Company and its 100% owned controlled entities have formed a tax consolidated group. Members of the Group have entered into a tax sharing arrangement with effect from 30 June 2013 in order to allocate income tax expense to the wholly owned controlled entities on pro-rata basis. The agreement provides for the allocation of income tax liabilities between the entities should the head entity default on its tax payment obligations. At balance date, the possibility of default is remote. The head entity of the tax consolidated group is Focus Minerals Ltd. Tax Effect Accounting by Members of the Tax Consolidated Group Members of the tax consolidated group have entered into a tax funding agreement with effect from 30 June 2013. The tax funding agreement provides for the allocation of current taxes to members of the tax consolidated group. Deferred taxes are allocated to members of the tax consolidated group in accordance with a group allocation approach which is consistent with the principles of AASB 112 Income Taxes. The allocation of taxes under the tax funding agreement is recognised as an increase/decrease in the controlled entities intercompany accounts with the tax consolidated group head company, Focus Minerals Ltd. Page | 51 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Unrecognised deferred tax balances A net deferred tax balance has not been recognised in respect to the following items. Deferred tax assets unrecognised: Other deductible expenses Plant & equipment Rehabilitation provision Inventory Tax losses (revenue in nature) Capital losses Exploration & evaluation expenditure Total Consolidated 31 December 2020 $’000 31 December 2019 $’000 552 320 8,650 445 148,855 4,338 (28,313) 134,847 124 1,225 8,069 445 144,569 4,338 (25,460) 133,310 The deductible temporary differences and tax losses do not expire under current tax legislation. Deferred tax assets have not been recognised in respect of these items because it is not probable that future taxable profit will be available against which the Company can utilise the benefits thereof. Note 5: Earnings per Share Basic earnings per share: Total Basic EPS Diluted earnings per share Total Diluted EPS Consolidated 2020 Cents per Share 2019 Cents per Share (4.30) (1.13) (4.30) (1.13) Basic Earnings per share Net loss used in the calculation of basic earnings per share $000 (7,858) $000 (2,063) Weighted average number of ordinary shares for the purposes of basic earnings per share 182,748,565 182,748,565 Adjustments for calculation of diluted earnings per share: - - Weighted average number of ordinary shares for the purposes of diluted earnings per share 182,748,565 182,748,565 Page | 52 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 6: Cash, Cash Equivalents, Restricted Cash and Short-Term Deposits Cash and cash equivalents Current – Short-term deposits Non- current – Restricted cash Cash and cash equivalents Consolidated 31 December 2020 $’000 31 December 2019 $’000 7,795 12,096 19,891 13,803 13,935 - 13,935 13,869 Cash at bank earns interest at floating rates based on daily deposit rates. Cash deposits are made for varying periods up to three months, depending on the immediate cash requirements of the Group, and earn interest at the respective commercial short-term deposit rates which is recognised as cash and cash equivalents. Short-term deposits Short-term deposits have original maturity longer than three months and shorter than one year. Restricted cash Performance bonds have been issued by a bank on behalf of the Group in respect of Western Australian mining tenements. The Group has indemnified the bank against any loss arising from the performance bonds and the indemnity is secured against cash deposits. Those are recognised as restricted cash. (i) Reconciliation to Statement of Cashflows For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise cash on hand and at bank and short-term deposits, net of secured short-term deposits. Cash and cash equivalents as shown in the Statement of Cash Flows is: Cash, cash equivalents, restricted cash and short-term deposits Less: Short-term Deposit Less: Restricted cash not available for use Cash and cash equivalents as per statement of cash flows Consolidated 2020 $’000 33,694 (12,096) (13,803) 7,795 2019 $’000 27,804 - (13,869) 13,935 Page | 53 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 (ii) Reconciliation of Loss for the Year to Net Cash Flows from Operating Activities Consolidated 2020 $’000 (7,858) 371 - 2,916 472 (30) 40 17 66 - (54) (4,060) 2019 $’000 (2,063) 523 (1,545) 1,026 538 - 241 (252) (96) (1,500) 98 (3,030) Consolidated 31 December 2020 $’000 20 232 252 31 December 2019 $’000 34 219 253 Net loss for the year Depreciation expense Gain from disposal of non-current assets Loss on disposal of tenements Finance costs (Increase)/decrease in assets: Bonds Current receivables Other assets Increase/(decrease) in liabilities Current payables Prepaid income Provisions Net cash used in operating activities Note 7: Trade and Other Receivables Interest receivable Other receivables Page | 54 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 8: Plant and Equipment Non-current At 31 December 2019 Cost Accumulated depreciation Impairment loss Net book amount Year ended 31 December 2020 Opening net book amount Additions Depreciation expense Depreciation expense capitalised to Exploration Assets disposed Accumulated Depreciation on disposals Closing net book amount At 31 December 2020 Cost Accumulated depreciation Impairment loss Net book amount Non-current At 31 December 2018 Cost Accumulated depreciation Impairment loss Net book amount Year ended 31 December 2019 Opening net book amount Additions Depreciation expense Depreciation expense capitalised to Exploration Assets held for sale Closing net book amount At 31 December 2019 Cost Accumulated depreciation Impairment loss Net book amount Furnitur e & fittings $’000 Plant & Equipmen t $’000 Mill assets $’000 Motor Vehicles $’000 Assets in progress $’000 1,278 (1,231) (2) 45 6,985 (6,332) (25) 628 32,294 (18,938) (13,165) 191 45 10 (4) (11) - - 40 628 8 (172) (28) (5) 5 436 191 - (104) - (430) 430 87 1,288 (1,246) (2) 40 6,988 (6,527) (25) 436 31,864 (18,612) (13,165) 87 532 (441) (50) 41 41 - - (11) - - 30 532 (452) (50) 30 - - - - - 211 - - - - 211 211 - - 211 Total $’000 41,089 (26,942) (13,242) 905 905 229 (280) (50) (435) 435 804 40,833 (26,837) (13,242) 804 Furnitur e & fittings $’000 Plant & Equipmen t $’000 Mill assets $’000 Motor Vehicles $’000 Assets in progress $’000 Total $’000 867 (827) (13) 27 27 30 (1) (12) 1 45 727 (693) (25) 9 9 143 (232) (25) 733 628 1,363 (650) (713) - - - (189) - 380 191 1,278 (1,231) (2) 45 6,985 (6,332) (25) 628 32,294 (18,938) (13,165) 191 143 (42) (50) 51 51 - - (10) - 41 532 (441) (50) 41 - - - - - - - - - - - - - - 3,100 (2,212) (801) 87 87 173 (422) (47) 1,114 905 41,089 (26,942) (13,242) 905 Page | 55 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 9: Right-of-use Assets The Group leases land and buildings for its offices and storage under agreements for two – three years. In some cases, the agreements have options to extend. The leases have various escalation clauses. On renewal, the terms of the leases are renegotiated. Right-of-use Assets: At Cost* Less: Accumulated Depreciation Net Book Value Consolidated 31 December 2020 $’000 31 December 2019 $’000 245 (215) 30 252 (107) 145 * Cost of Right-of-Use asset for the Perth office was adjusted during 2020. Original calculations include an additional rent payment. Note 10: Exploration and Evaluation Assets Consolidated 31 December 2020 $’000 31 December 2019 $’000 Exploration and evaluation Expenditure – at cost 94,377 85,899 Movement Summary: Carrying amount at beginning of the year Add – exploration expenditure Add – rehabilitation liability adjustment classified as Exploration Add back – assets previously classified as held for sale Less – disposal of asset previously classified as held for sale Less – write-off of tenements allowed to lapse, dropped or sold Carrying amount at end of the year 85,899 9,841 1,553 - - (2,916) 94,377 29,155 14,485 - 43,785 (500) (1,026) 85,899 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. - Page | 56 For personal use only  Consolidated 31 December 2020 $’000 655 94 749 31 December 2019 $’000 540 142 682 Consolidated 31 December 2020 $’000 31 December 2019 $’000 280 (30) 250 187 93 280 Consolidated 31 December 2020 $’000 31 December 2019 $’000 203 (24) 179 26,809 1,552 472 - 28,833 29,012 198 5 203 15,533 229 332 10,715 26,809 27,012 Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 11: Trade and Other Payables Trade payables Payroll tax and other statutory liabilities Note 12: Provisions Current Employee benefits Balance at the beginning of the year (Utilised) / Increase in provision during the year Balance at the year end Non-current Employee benefits Balance at the beginning of the year (Utilised)/ Increase in provision during the year Balance at the year end Asset Retirement Obligation (“ARO”) Balance at the beginning of the year Additional provisions recognised Unwinding discount Liabilities previously associated with assets held for sale Balance at the year end Total Page | 57 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 13: Lease Liabilities Current Lease Liabilities Non-current Lease Liabilities Note 14: Other Liabilities Consolidated 31 December 2020 $’000 31 December 2019 $’000 25 - 122 34 Consolidated 31 December 2020 $'000 31 December 2019 $'000 Insurance – Premium Funding loan 101 - Note 15: Borrowing Consolidated 31 December 2020 $'000 31 December 2019 $'000 Related Party Loan 20,000 - Refer to note 17 for further information on financial instruments. During October 2020, the Group executed a $20 million loan facility agreement with Shandong Gold Group Co. Ltd ( its major shareholder). The loan is payable in full after 3 years. Interest is payable quarterly in arrears at 3.5% per annum. The loan is unsecured and was fully drawn down as at 31st December 2020. Note 16: 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 Issued capital 182,748,565 427,167 182,748,565 427,167 As at 31 December 2020 No. of shares $’000 As at 31 December 2019 No. of shares $’000 Share Issue Details There were no shares issued during the past two years. Page | 58 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 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) Capital Management Management controls the capital of the Group in order to ensure the Group can fund its operations; continue as a going concern and ensure compliance with banking covenants. The Group’s debt and capital includes ordinary share capital and financial liabilities supported by financial assets and cash and cash equivalents. There are no externally imposed capital requirements. Management effectively manages the Group’s capital by assessing the Group’s financial risks, adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues. (c) Reserves Acquisition reserve Consolidated 31 December 2020 $’000 31 December 2019 $’000 (7,178) (7,178) (7,178) (7,178) The acquisition reserve resulted from acquisition of Focus Minerals (Laverton) Pty Ltd. (d) Reserves Accumulated losses at beginning of the year Net loss for the year Accumulated losses at end of the year (e) Dividends Consolidated 31 December 2020 $’000 31 December 2019 $’000 (331,820) (7,858) (339,678) (329,757) (2,063) (331,820) No dividends have been paid or provided for during the year ended 31 December 2020 (2019: Nil). (f) Options Options Issued No options were issued in the year ended 31 December 2020 (2019: Nil). Options Exercised There were no options exercised during the year (2019: Nil). Options Lapsed During the year ended 31 December 2020, there were no options expired (2019: Nil). Options Outstanding There were no options outstanding as at 31 December 2020. (2019: Nil). Note 17: Financial Instruments The Group’s financial instruments consist mainly of deposits with banks, local money market instruments, and short-term investments, accounts receivable and payable, convertible notes and derivatives. The main purpose of non-derivative financial instruments is to raise finance for group operations. Page | 59 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Derivatives are used by the Group from time to time for hedging purposes such as forward gold sales agreements. The Group does not speculate in the trading of derivative instruments. Treasury Risk Management Risks are reviewed by the Audit and Risk Committee which consists of non-executive directors and senior staff by invitation. This includes the analysis of financial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. The committee’s overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst minimising potential adverse effects on financial performance. The Audit and Risk Committee operates under policies approved by the board of directors. Risk management policies are reviewed and approved by the Board on a regular basis. These include the use of hedging derivative instruments, credit policies and future cash flow requirements. Financial Risk Exposures and Management The main risks the Group is exposed to through its financial instruments are market risk (including interest rate risk and price risk), credit risk and liquidity risk. Interest Rate Risk The Group’s exposure to risks of changes in market interest rates relates primarily to the Group’s cash balances. The Group’s long-term borrowing is maintained at fixed rate. Credit Risk The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. Credit risk is managed on a group basis and reviewed regularly by the finance department. It arises from exposures to approved customers as well as deposits with financial institutions. The Audit and Risk Committee monitors credit risk by actively assessing the rating quality and liquidity of counter parties: • only approved banks and financial are utilised; • all potential customers are rated for credit worthiness taking into account their size, market position and financial standing. The Group currently holds its cash and cash equivalents with various financial institutions, all of which hold a credit rating of AA. The Group believes the credit risk exposure to these counterparties is manageable. Credit risk for derivative financial instruments arises from the potential failure by counter-parties to the contract to meet their obligations. Liquidity Risk The Group manages liquidity risk by monitoring forecast project and operating cash flows and ensuring that a minimum level of uncommitted cash is available for immediate use and consists of cash on deposit and/or utilised borrowing facilities. At the end of the year the Group held deposits at call of $13.9 million (December 2018: $26.9 million) that are expected to readily generate cash inflows for managing liquidity risk. Sensitivity Analysis Interest Rate Analysis At 31 December 2020, the Group had $13.8 million invested in security deposits and performance bonds and $19.9 million in cash and cash equivalents and short-term deposits. A 1% increase in the interest rate would impact the interest earned by $336,938. Interest rates on short term deposits are less than 1%, so a 1% decrease in the rate would reduce interest earned to nil. Maturities of Financial Liabilities The table below analyses the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities for non-derivative financial liabilities. Contractual maturities of financial liabilities Weighte d average Less than 6 months 6-12 mont hs Between 1 and 2 years Between 2 and 5 years Over 5 years Remaining contractual maturities Page | 60 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 interest rate At 31 December 2020 Non-derivatives Trade payables Related Party Loan Premium Funding Loan At 31 December 2019 Non-derivatives Trade payables $’000 $’000 $’000 $’000 $’000 $’000 - 3.5% 2.31% 749 - 101 - 682 - - - - - - - - - 20,000 - - - - - - 749 20,000 101 682 Fair value of financial instruments Unless otherwise stated, the carrying amounts of financial instruments reflect their fair value. Note 18: Commitments and Contingencies Operating Mining tenement expenditure commitments As at 31 December 2020, the Group has committed, under tenement landholding conditions, to spend a minimum of $3.1 million per annum (2019: $3.4 million). For the Laverton tenements, the commitment for 2020 is $1.9 million (2019: $1.9 million). For the Coolgardie tenements, the commitment for 2020 is $1.2 million (2019: $1.5 million). Contingent Asset On 18th September 2020, Focus Minerals Limited entered an agreement to terminate the Coolgardie Rare Metals Venture with Lithium Australia NL. Under the terms of the agreement, Focus Minerals Limited agreed to transfer 3 prospecting licenses in exchange for a conditional grant of royalty equal to 20% of the statutory royalty paid to the State of Western Australia. As at balance date, the related mining lease application (as conversion of the prospecting licenses) has not been granted, therefore the likelihood, amount and timing of receiving future royalties under the agreement is unknown. Because the royalty income is not virtually certain, no asset has been recognised within these financial statements. Contingent Liability There are no contingent liabilities as at 31 December 2020 (2019: Nil). Note 19: Controlled Entities The consolidated financial statements include the financial statements of Focus Minerals Ltd and the subsidiaries listed below: Name Country of Incorporation % Equity Interest 31 December 2020 31 December 2019 Focus Operation Pty Ltd Focus Minerals (Laverton) Pty Ltd Australia Australia 100% 100% 100% 100% Page | 61 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 20: Parent Entity Set out below is the supplementary information about the parent entity. Results of the parent entity Loss for the year Other comprehensive income Total comprehensive loss for the year Financial position of parent entity at year end Current assets Total assets Current Liabilities Total liabilities Total net asset Total equity of parent entity comprising of: Share capital Option reserve Accumulative losses Total equity Parent Entity 2020 $’000 (7,858) - (7,858) 19,356 101,179 689 20,869 80,310 2019 $’000 (2,063) - (2,063) 12,340 88,942 544 774 88,168 427,167 - (346,857) 80,310 427,167 - (338,999) 88,168 Contingent Liability There are no contingent liabilities as at 31 December 2020 (31 December 2019: Nil). Ultimate Controlling Entity The ultimate controlling entity at 31 December 2020 and 2019 was Shandong Gold Group Co., Ltd which owned 49.53% (31 December 2019: 49.53%) of the company’s shares. Financial Support for controlled entities. The parent entity, Focus Minerals Ltd is providing and will continue to provide financial support to all its controlled entities. Mining tenement expenditure commitment As at 31 December 2020, the parent company has committed, under tenement landholding conditions, to spend a minimum of $1.2 million per annum (2019: $1.4 million). Significant accounting policies The accounting policies of the parent entity are consistent with those of the Group, as disclosed in note 1, except for the following: ● ● ● Investments in subsidiaries are accounted for at cost, less any impairment, in the parent entity. Investments in joint ventures are accounted for at cost, less any impairment, in the parent entity. Dividends received from subsidiaries are recognised as other income by the parent entity and its receipt may be an indicator of an impairment of the investment. Page | 62 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 21: Related Party Disclosure Subsidiaries Interests in subsidiaries are set out in Note 19. Compensation The aggregate compensation made to directors and other members of key management personnel of the consolidated entity is set out below: Short-term employee benefits Post-employment benefits 2020 $ 1,234,848 92,470 1,327,318 2019 $ 1,132,094 95,061 1,227,156 Terms and Conditions of Transactions with Related Parties Sales to and purchases from related parties are made in arm’s length transactions both at normal market prices and on normal commercial terms. Transactions and Balances with Related Parties Shandong Gold International Mining Corporation Limited is the major shareholder of Focus Minerals Limited. During 2020, Shandong provided an unsecured loan facility to Focus Minerals Limited, totalling $20 million. Key terms of the facility agreement are as follows: • • Term: 3 years, principal payable at the end of the term. Interest: 3.5% per annum, payable quarterly in arrears. As at 31st December 2020, the balance of the loan payable to Shandong Gold was $20 million. Total interest expense for the year ended 31 December 2020 was $126,389 (2019:$nil). Amount of interest payable at reporting date is $Nil (2019:$nil). As at 31 December 2020, balance owing to Alex Aaltonen of $20,000 (2019:$nil). In addition, there was a payment of director fees to Mr Pei. As at 31 December 2020, the account payable balance for his director fees was nil (2019: $36,167). Details regarding Mr’s Pei’s director’s fees are set out in the Director’s Report. Note 22: Auditors’ Remuneration During the financial year the following fees were paid or payable for services provided by Accounting Firm RSM Australia, the auditor of the company, its network firms and unrelated firms. RSM Australia Partners - Audit and review of the financial statements PwC - Audit and review of the financial statements Other services RSM Australia Pty Ltd - Tax Services RSM Australia Pty Ltd - Tax Consulting Total Page | 63 2020 $000 56 - 14 20 90 2019 $000 51 11 14 - 76 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Note 23: Significant Events after Balance Date On 14 January 2021, Lingquan Kong was appointed as Director of the Company. Mr Kong is the Company’s Principal Mining Engineer. The impact of the Coronavirus (COVID-19) pandemic is ongoing and while it has limited impact on the Group up to 31 December 2020, it is not practicable to estimate the potential impact, positive or negative, after the reporting date. The situation is rapidly developing and is dependent on measures imposed by the Australian Government and other countries, such as maintaining social distancing requirements, quarantine, travel restrictions and any economic stimulus that may be provided. Other than the above, there has not been any other matter or circumstance that has arisen after balance date that has 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 future periods. Page | 64 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Directors’ Declaration In the directors’ opinion: ● ● ● ● the attached financial statements and notes comply with the Corporations Act 2001, the Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; the attached financial statements and notes comply with International Financial Reporting Standards as issued by the International Accounting Standards Board as described in note 1 to the financial statements; the attached financial statements and notes give a true and fair view of the Group's financial position as at 31 December 2020 and of its performance for the financial year ended on that date; and there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. The directors have been given the declarations required by section 295A of the Corporations Act 2001. Signed in accordance with a resolution of directors made pursuant to section 295(5)(a) of the Corporations Act 2001. On behalf of the directors Dianfei Pei Chairman of the Board 30 March 2021 Jinan, Shandong, China Page | 65 For personal use onlyFocus Minerals Ltd – Annual Report for the year end 31 December 2020 Independent Auditor’s Report Page | 66 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Page | 67 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Page | 68 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Page | 69 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Shareholder Information Additional information required by the Australian Securities Exchange Listing Rules and not disclosed elsewhere in this report. The information was prepared based on share registry information processed up to 22 March 2021. Range of Units Range 1 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 Over Rounding Total Total holders 1,301 1,889 456 545 82 Units 606,774 4,486,789 3,398,440 16,599,239 157,647,353 4,273 182,748,565 % Units 0.33 2.46 1.86 9.08 86.26 0.01 100.00 Unmarketable Parcels Minimum $ 500.00 parcel at $ 0.325 per unit Minimum Parcel Size 1,539 Holders 1,765 Units 1,189,218 Substantial Shareholders As at 22 March 2021, the following had notified the Company as being substantial shareholders: Shandong Gold International Mining Corporation Limited JP Morgan Nominees Australia Pty Ltd HSBC Custody Nominees (Australia) Ltd 90,519,954 ordinary shares 25,320,631 ordinary shares 10,080,018 ordinary shares Voting Rights All ordinary shares carry one vote per share without restriction. Options for ordinary shares do not carry any voting rights. Statement of Quoted Securities Quoted on the Australian Securities Exchange are 182,748,565 ordinary shares. Twenty Largest Shareholders of Each Class of Quoted Securities Ordinary Fully Paid Shares (ungrouped) as at 22 March 2021 Rank Name Units % Units 1 2 3 4 5 6 7 8 9 SHANDONG GOLD INTERNATIONAL MINING CORPORATION LIMITED J P MORGAN NOMINEES AUSTRALIA PTY LIMITED HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED STONE MINING LIMITED CITICORP NOMINEES PTY LIMITED KAHUNA CLOTHING AND TRADING CO PTY LTD BNP PARIBAS NOMINEES PTY LTD SIX SIS LTD BNP PARIBAS NOMINEES PTY LTD MRS ETERNALINA ELLIS 10 SWISS TRADING OVERSEAS CORP Page | 70 90,039,954 25,320,631 10,080,018 4,920,958 4,111,830 2,000,493 1,479,523 1,378,439 1,000,000 883,740 49.27 13.86 5.52 2.69 2.25 1.09 0.81 0.75 0.55 0.48 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Rank Name Units % Units 11 12 13 14 15 16 17 18 19 20 LAMERTON PTY LTD MR GEORGE SCOTT MILLING + MRS STEPHANIE MAY MILLING EAU ROUGE PTY LIMITED PETER ERMAN PTY LIMITED MR DAVID DOSTAL VALLUGA PTY LTD ISANTI HOLDINGS P/L MR CHRISTOPHER DAHL + MRS HAIDEE ELIZABETH DAHL GREEN TAVERN PTY LTD RMAN COLBURN MAYNE Totals: Top 20 holders of ORDINARY SHARES (Total) Total Remaining Holders Balance 843,490 829,299 560,000 550,544 500,000 420,000 410,000 405,765 400,000 400,000 146,534,684 36,213,881 0.46 0.45 0.31 0.30 0.27 0.23 0.22 0.22 0.22 0.22 80.18 19.82 Page | 71 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Interest in Mining Tenements Coolgardie Gold Project - Focus Minerals Ltd and its 100% subsidiaries State Project Tenement Status Interest State Project Tenement Status Interest Bayleys M15/0150 Bayleys M15/0630 Bayleys M15/1434 Bayleys M15/1788 Bayleys P15/5717 Bayleys P15/5995 Bayleys P15/6254 Bayleys P15/6256 Bonnie Vale M15/0277 Bonnie Vale M15/0365 Bonnie Vale M15/0595 Bonnie Vale M15/0662 Bonnie Vale M15/0711 Bonnie Vale M15/0770 Bonnie Vale M15/0852 Bonnie Vale M15/0857 Bonnie Vale M15/0877 Bonnie Vale M15/0981 Bonnie Vale M15/1384 Bonnie Vale M15/1444 Bonnie Vale M15/1760 Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live 100% WA Infrastructure L15/0090 100% WA Infrastructure L15/0095 100% WA Infrastructure L15/0096 100% WA Infrastructure L15/0114 100% WA Infrastructure L15/0116 100% WA Infrastructure L15/0119 100% WA Infrastructure L15/0122 100% WA Infrastructure L15/0123 100% WA Infrastructure L15/0126 100% WA Infrastructure L15/0127 100% WA Infrastructure L15/0130 100% WA Infrastructure L15/0161 100% WA Infrastructure L15/0164 100% WA Infrastructure L15/0168 100% WA Infrastructure L15/0169 100% WA Infrastructure L15/0171 100% WA Infrastructure L15/0172 100% WA Infrastructure L15/0173 100% WA Infrastructure L15/0174 100% WA Infrastructure L15/0175 100% WA Infrastructure L15/0177 Bonnie Vale M15/1853 Pending 0% WA Infrastructure L15/0179 Bonnie Vale P15/5159 Bonnie Vale P15/5702 Bonnie Vale P15/5703 Bonnie Vale P15/5704 Bonnie Vale P15/5713 Bonnie Vale P15/5714 Live Live Live Live Live Live 100% WA Infrastructure L15/0186 100% WA Infrastructure L15/0193 100% WA Infrastructure L15/0194 100% WA Infrastructure L15/0200 100% WA Infrastructure L15/0211 100% WA Infrastructure L15/0283 Bonnie Vale P15/6598 Pending 0% WA Infrastructure L15/0294 Infrastructure G15/0007 Live 100% WA Infrastructure L15/0371 Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Infrastructure G15/0046 Pending 0% WA Infrastructure L15/0403 Pending 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% 0% 0% Infrastructure L15/0027 Infrastructure L15/0028 Infrastructure L15/0034 Infrastructure L15/0042 Infrastructure L15/0051 Infrastructure L15/0059 Infrastructure L15/0063 Infrastructure L15/0077 Infrastructure L15/0078 Infrastructure L15/0088 Live Live Live Live Live Live Live Live Live Live 100% WA Infrastructure L15/0405 Pending 100% WA Infrastructure L15/0421 Pending 100% WA Lake Cowan E15/0986 Live 100% 100% WA Lake Cowan G15/0043 Pending 100% WA Lake Cowan L15/0408 Pending 100% WA Lake Cowan M15/1882 Pending 100% WA Londonderry P15/5732 100% WA Londonderry P15/5964 100% WA Londonderry P15/5966 100% WA Londonderry P15/5967 Live Live Live Live 0% 0% 0% 100% 100% 100% 100% WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA Page | 72 For personal use only WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA Focus Minerals Ltd – Annual Report for the year end 31 December 2020 State Project Tenement Status Interest State Project Tenement Status Interest Londonderry P15/5968 Londonderry P15/5969 Londonderry P15/5970 Londonderry P15/5971 Londonderry P15/5972 Londonderry P15/6118 Londonderry P15/6119 Londonderry P15/6120 Londonderry P15/6121 Londonderry P15/6122 Londonderry P15/6123 Londonderry P15/6176 Londonderry P15/6177 Londonderry P15/6178 Lord Bob M15/0385 Lord Bob M15/1789 Lord Bob P15/5712 Lord Bob P15/5731 Lord Bob P15/5733 Lord Bob P15/5735 Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live 100% WA Three Mile Hill M15/1357 100% WA Three Mile Hill M15/1358 100% WA Three Mile Hill M15/1359 100% WA Three Mile Hill M15/1432 100% WA Tindals M15/0023 100% WA Tindals M15/0237 100% WA Tindals M15/0410 100% WA Tindals M15/0411 100% WA Tindals M15/0412 100% WA Tindals M15/0646 100% WA Tindals M15/0660 100% WA Tindals M15/0675 100% WA Tindals M15/0958 100% WA Tindals M15/0966 100% WA Tindals M15/1114 100% WA Tindals M15/1262 100% WA Tindals M15/1293 100% WA Tindals M15/1294 100% WA Tindals M15/1433 100% WA Tindals M15/1461 Lord Bob P15/5939 Pending 0% WA Tindals P15/5949 Lord Bob P15/6102 100% WA Tindals P15/5987 100% WA Tindals P15/6251 100% WA Tindals P15/6252 100% WA Tindals P15/6253 100% WA Tindals P15/6257 Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 0% 100% WA Tindals P15/6333 Pending 100% WA Lepidolite Hill M15/1874* i Pending Royalty Interest 100% WA Lepidolite Hill P15/5574* 100% WA Lepidolite Hill P15/5575* 100% WA Lepidolite Hill P15/5739* Live Live Live Royalty Interest Royalty Interest Royalty Interest 100% 100% 100% 100% 100% 100% M15/0384 M15/0515 M15/0761 M15/0791 M15/0871 M15/1153 M15/1422 M15/1793 P15/5730 P15/5734 P15/5736 P15/5756 P15/5807 P15/6002 P15/6033 Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Live Norris Norris Norris Norris Norris Norris Norris Norris Norris Norris Norris Norris Norris Norris Norris Norris P15/6605 Pending 0% WA Three Mile Hill M15/0154 WA Three Mile Hill M15/0636 WA Three Mile Hill M15/0645 WA Three Mile Hill M15/0781 WA Three Mile Hill M15/0827 WA Three Mile Hill M15/1341 Live Live Live Live Live Live 100% 100% 100% 100% 100% 100% Page | 73 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 Laverton Gold Project - Focus Minerals Ltd and its 100% subsidiaries State Project Tenement Status Interest WA Admiral Hill-Barnicoat E38/1864 Live 100% WA Admiral Hill-Barnicoat E38/3232* Live 100% WA Admiral Hill-Barnicoat E38/3238* Live 100% WA Admiral Hill-Barnicoat E38/3565* Pending 0% WA Admiral Hill-Barnicoat M38/0264 Live WA Admiral Hill-Barnicoat M38/0318 Live WA Admiral Hill-Barnicoat M38/0376 Live WA Admiral Hill-Barnicoat M38/0377 Live 100% 100% 100% 100% WA Admiral Hill-Barnicoat M38/0387 Live 100% WA Admiral Hill-Barnicoat M38/0401 Live WA Admiral Hill-Barnicoat M38/0507 Live WA Admiral Hill-Barnicoat M38/1032 Live WA Admiral Hill-Barnicoat M38/1042 Live 100% 100% 100% 100% WA Admiral Hill-Barnicoat P38/4519* Pending 0% WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA Burtville Burtville Burtville Burtville Burtville Burtville Burtville Burtville Burtville Burtville Burtville E38/1642 E38/2032 E38/3050 E38/3051 Live Live Live Live E38/3088* Live E38/3217* Live 100% 100% 100% 100% 100% 100% M38/0008 Live 100% M38/0073 Live M38/0089 Live M38/0261 Live M38/1281 Live 91% 91% 100% 100% Central Laverton E38/3424* Live 100% Central Laverton M38/0143 Live Central Laverton M38/0236 Live Central Laverton M38/0270 Live Central Laverton M38/0342 Live Central Laverton M38/0345 Live Central Laverton M38/0363 Live 100% 100% 100% 100% 100% 100% Central Laverton M38/0364 Live 100% Central Laverton M38/1187 Live Central Laverton P38/4163* Live Chatterbox M38/0049 Live Chatterbox M38/0101 Live 100% 100% 100% 100% Chatterbox M38/0535 Live 100% Chatterbox M38/0693 Live Infrastructure G38/0020* Live Infrastructure G38/0024* Live Infrastructure G38/0025* Live 100% 100% 100% 100% State WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA WA Page | 74 Project Tenement Status Interest Infrastructure L38/0052* Live 100% Infrastructure L38/0053* Live 100% Infrastructure L38/0054* Live 100% Infrastructure L38/0055* Live 100% Infrastructure L38/0056* Live 100% Infrastructure L38/0057* Live 100% Infrastructure L38/0063* Live 100% Infrastructure L38/0075* Live 100% Infrastructure L38/0076* Live 100% Infrastructure L38/0078* Live 100% Infrastructure L38/0092* Live 100% Infrastructure L38/0101* Live 100% Infrastructure L38/0108* Live 100% Infrastructure L38/0152* Live 100% Infrastructure L38/0153* Live 100% Infrastructure L38/0160* Live 100% Infrastructure L38/0165* Live 100% Infrastructure L38/0166* Live 100% Infrastructure L38/0173* Live 100% Infrastructure L38/0177* Live 100% Infrastructure L38/0179* Live 100% Infrastructure L38/0183* Live 100% Infrastructure L38/0231* Live 100% Infrastructure L38/0335* Pending Infrastructure L38/0336* Pending Infrastructure L38/0337* Pending Infrastructure L38/0338* Pending Infrastructure L38/0339* Pending 0% 0% 0% 0% 0% Lake Carey E38/2873* Live 100% Lake Carey P38/4099* Live 100% Lake Carey P38/4100* Live 100% Lake Carey P38/4102* Live 100% Lancefield E38/3186* Live 100% Lancefield M38/0037 Live 100% Lancefield M38/0038 Live 100% Lancefield M38/0159 Live 100% Lancefield M38/0547* Live 100% Lancefield M38/1272 Live 100% Lancefield P38/4347* Live 100% Lancefield P38/4348* Live 100% Lancefield P38/4349* Live 100% Prendergast E38/1725 Live 100% For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 State Project Tenement Status Interest WA WA WA WA WA Infrastructure G38/0033* Live 100% Infrastructure L38/0034* Live Prendergast P38/4091 Live 100% 100% Murrin Murrin *M38/0425 Live Au Rights Murrin Murrin *M38/0505 Live Au Rights State WA WA Project Tenement Status Interest Prendergast E38/1869 Live 100% Prendergast E38/2862* Live 100% * see note within Royalty Agreements section for the Laverton Gold Project. Tenement Abbreviations: E P M L G = = = = = Exploration Licence Prospecting Licence Mining Lease Miscellaneous Licence General Purpose Licence ROYALTY AGREEMENTS Coolgardie Gold Project The Parent Entity has entered into the following deeds of assignment for royalty agreements relating to the Coolgardie Gold Project. The material terms of these royalty agreements are set out in the table below: Tenements Royalty M15/645 (portion of) $1.00/tonne crushed and treated M15/660, M15/646, M15/1114, M15/1262, P15/6251, P15/6252 & P15/6257 $0.25/tonne mined and treated (after 2,500,000 tonnes or ore have been mined and treated) M15/646 (portion of) M15/781 & M15/827 M15/365, M15/662, M15/711, M15/770, M15/852, M15/857, M15/981, M15/1384 & M15/1760 2% of all future gold production 0.5% NSR 2.5% NSR M15/660 (portion of), M15/646 (portion of), M15/958 & M15/1114 $10/ounce gold produced (after first 100,000 ounces produced) & 3% NSR on all other metals M15/958 (portion of) M15/1357 & M15/1358 M15/1341 & M15/1359 M15/675 M15/237 M15/1461 E15/986 $0.75/dry tonne mined and treated & $1.50/tonne mined and treated 1.5% NSR on gold & 1% NSR on all other metals 2.5% NSR on gold & 1% NSR on all other metals $1/tonne mined and treated 1.5% NSR $1.00/tonne mined and treated 2.5% NSR P15/6254 (portion of) $1.00/tonne mined and treated. Page | 75 For personal use only Focus Minerals Ltd – Annual Report for the year end 31 December 2020 ROYALTY AGREEMENTS Continued Laverton Gold Project The Parent Entity has entered into the following deeds of assignment for royalty agreements relating to the Laverton Gold Project. The material terms of these royalty agreements are set out in the table below: Tenements M38/376 & M38/377 M38/143 Royalty $1.50/BCM of ore mined between 100,000BCM and 850,000BCM $10/ounce gold produced (after the first 50,000 ounces) All tenements at Laverton owned by Focus Minerals (Laverton) Ltd (all tenements listed in the "Interest in Mining Tenements - Laverton Gold Project" section above except those with an *) 2% NSR M38/37, M38/38, M38/49, M38/101, M38/159, M38/342, M38/363, M38/364, M38/535, M38/693, M38/1272, E38/1642 & E38/1725 3% of the Gross Revenue for the relevant quarter, if Focus has incurred, after the date of agreement and prior to the first production date, at least $2,000,000 but not more than $4,000,000 in Exploration Expenditure; 2.5% of the Gross Revenue for the relevant quarter, if Focus has incurred, after the date of agreement and prior to the first production date, at least $4,000,000 but not more than $6,000,000 in Exploration Expenditure; or 2% of the Gross Revenue for the relevant quarter, if Focus has incurred, after the date of agreement and prior to the first production date, $6,000,000 or more in Exploration Expenditure. $1.50/tonne of ore mined and treated after 100,000 tonnes & $0.58/tonne ore mined and milled for first 500,000 tonnes, $0.05/tonne of ore mined and milled thereafter 3% of the gross value of gold recovered 1.5% NSR $0.75/tonne ore mined M38/1042 M38/73 M38/1272 M38/693 E38/1642 (portion of), E38/2032 (portion of) & E38/3051 (portion of) 1% gross value of gold produced All tenements within a 50km radius of Laverton Gold Plant Feed Bin. A quarterly fee equal to the greater of 1.25% of annual tenement fees or $2,500. A quarterly mining fee relating to gold production from the tenements in a calendar year, of: • • • • • 0 – 50,000oz Au: 0.20% of total gross proceeds of the relevant quarter; 50,001 – 100,000oz Au: 0.24% of the total gross proceeds of the relevant quarter; 100,001 – 150,000oz Au: 0.28% of total gross proceeds of the relevant quarter; 150,001 – 200,000oz Au: 0.33% of total gross proceeds of the relevant quarter; >200,000oz Au: 0.40% of total gross proceeds of the relevant quarter. Scholarship funds payable each calendar year in the amount of $10,000 where the total annual gold production is less than 100,000oz, and $20,000 if the total annual gold production is greater than 100,000oz. i Agreement to transfer title as per deed of settlement announcement 18 September 2020. Transfer not yet registered. Page | 76 For personal use only 

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