Focus Minerals Ltd (ASX – FML) Editorial

Introduction

Focus Minerals Limited (FML) is a classic growth and high potential story in
investment terms. The total of the current developments at this company has
institutional and savvy investors sitting up, taking notice and some have now
begun committing investment funds. FML is now reaching dual income stream
status. They have bought out their gold resource partners adding over 800,000
ounces of gold reserves and more importantly they have a high potential ground
position.

Potential investors should take note that credit conditions are rough in the market
place at present and this is adversely impacting the junior mining sector. FML
has however just completed a capital raising in the midst of this general market
situation which is a very positive indicator. The fact is that sophisticated
investors and institutions took up positions securing their investment in FML at
this time and only after considerable due diligence on their part.

Their highly prospective 210km2 tenement position is located in the Coolgardie-

Kalgoorlie-Widgiemooltha region of Western Australia which also offers an
outstanding pipeline of exploration and development opportunities. Yet this
ground has only been sparsely explored to date due to dispersed (widely held)
ownership by many parties which previously hindered significant systematic
exploration and economic development.

FML now controls an extensive gold resource inventory within multiple deposits
totaling 20.8 million tonnes at 2.46g/t Au for 1.649 million ounces Au and an
Inferred Resource of 591,300 tonnes at 2.2% nickel for over 13,000 tonnes of
nickel at their Nepean nickel mine within a vastly under explored nickel belt.

Further to the announcement of commencement of initial gold production on 29

April 2008, the Company has delivered a total of 3,400 ounces of gold to the end
of April 2008. The initial campaign treatment of Perseverance ore has now been
completed and the Company looks forward to the next treatment campaign
towards the end of May 2008.

FML is finally in complete charge of their own destiny – right now it is very much
a case of the shackles of limitation being lifted. This current transitional period to
dual commodity producer is certainly a very significant step in the evolution of
this company as they can now realize the value of their infrastructure, proven
resources and strategic position in the Coolgardie Region.

FML has completed a capital raising, is now generating cash flow from gold
production at a highly favorable $473 per ounce cash cost. FML is therefore in a
position to achieve rapid development of the Nepean Nickel from here on out.
That is to say they can finally unwrap the value of this company making asset.

The strategy is to complete a Bankable Feasibility Study (Now almost complete as

of May 7th 2008) which assesses the viability of a portal decline to the 7 Level
from which deeper exploration would be highly cost effective. This is highly likely
to generate a positive outcome due to recent drill results.

Back in early April FML released a report detailing near surface high grade nickel
intercepts in a Basalt Pinch Out Zone to the south of the mine. This zone offers
an excellent opportunity to gain additional cash flow early in the declines
development phase enhancing the viability of the strategy and project
development phase.

Overview & Recent History in brief

FML geologist Chuck McCormick knew the Coolgardie Region was endowed with
considerable resources of both nickel and gold. He carefully selected the
tenements and arranged their consolidation based on 30 years of experience in
the area. In the process FML also took control of the fully permitted 1.2mtpa
Three Mile Hill gold processing facility which is a highly valuable strategic asset
due to the limited spare production facilities in the area. Other valuable
infrastructure in place includes the roads, tailings stockpiles, a massive tailings
dam and underground infrastructure at their gold and nickel operations.

Gold: The Coolgardie Gold Belt is located 560km east of Perth and 35km west
of the ‘Super Pit’ in Kalgoorlie-Boulder. More than 2.6 million ounces of gold has
been produced from the Coolgardie gold belt alone since 1892. The tenements
were mostly owned by small operators that were undercapitalized and unable to
fully explore the potential.

Nickel: Their highly prospective 210km2 tenement position contains the

historic Nepean nickel mine which produced 32,303 tonnes of mined nickel at an
average recovered grade of 2.99% Ni over a 17 year period to 1987. There is
also an extant crown pillar with remnant nickel ore and drilling has identified 30
kilometres of strike potential containing five volcanic formations containing
untapped nickel potential.

Large scale sulphide deposits have become increasingly rare – future nickel
production will be dominated by laterlite ores. By comparison laterlite production
has a very high start up cost ($2-$3B) and processing methods remain relatively
complex, the ores are mostly lower grade and have lower recovery rates than
sulphide ores. Recently the alternate, and cheaper option of heap leaching
technology for laterlite nickel ores has been assessed to contain significant cost
increases at the Heron Resources Jump-up Dam Project resulting in a “back to the
drawing board” decision. However the robust high grade FML nickel sulphide
resource is a completely different ore type and situation therefore faces no such
problems whatsoever.

The style of mineralization and geology bear striking resemblance to the Western
Areas (ASX-WSA) Forrestania Project – Flying Fox deposit. This project has been
the key driver for WSA which now has a market capitalization of over $1.5B.
Historic evidence is strong – these type of deposits are commonly found in
clusters. The Independence Group (ASX-IGO) Long Nickel Mine is another classic
look alike to the FML nickel sequence. Exploration has already indicated multiple
deposits and now deep drilling is expected to confirm the value of the Coolgardie
Nickel asset.

Therefore the FML nickel asset is more than attractive – it will also fall in the
lower quartile of production costs enabling FML to continue profitable nickel
mining with a healthy cost buffer.

FML Evolution

2007 saw a modest capital raising to increase planning, exploration and fast track
FML towards production. This was not an instant transformation as the goal is
considerable – to become a significant nickel and gold producer. CBR were never
going to be able to manage a mine in Coolgardie from Canada and therefore it
now makes sense for them to now take a back seat via equity and some cash
reimbursement for their successful involvement. They see the upside to the
project and resources which is why they will be maintaining a significant stake in
FML.

There have been other major evolutionary steps along the way however by any
benchmark, it is important to be very clear about this, the current developments
are the most significant by far. Gone is the seemingly slow development period –
FML was always a turn key” operation with infrastructure in place yet prudent
planning towards long term sustainable production still takes time. The
management team is prudent and cautious and in the long run it is this wisdom
which has clearly amplified the prospects of this company.

Not only has the gold price risen substantially while they defined additional
resources to ensure a viable long term production cycle – their nickel sulphide
resource is becoming rarer as time marches on. The nickel potential is little
understood by the market at this time and only the larger investors and the more
astute investor are aware of what FML is holding at Coolgardie. The extant
resource is high grade – simple to process and profitable. The infrastructure in
place enables FML to access remnant ore immediately. Resource upside is highly
significant and clearly indicated from geological work completed to date.

Careful strategic planning has culminated in a low risk startup gold strategy for
FML. Current toll processing is being conducted just 3 kilometers from the
Perseverance deposit on very favorable terms. This mill is processing at full
capacity and therefore the usual startup processing risk has been eliminated.
This strategy enables FML to gain early cash flow and ramp up production in an
orderly manner at their fully owned Three Mile Hill gold processing facility. This
facility is a significant strategic asset in an area where gold production facilities of
this magnitude are in short supply.

Debt and Hedging

FML has now undertaken a 32,000 ounce hedge contract at $990 per ounce (and
17,000 oz in put options) as part of the loan requirements. In our analysis this is
insignificant in reserve terms and also allows for a robust margin at that level. To
be clear, hedge word is an unpopular term and is a concern of gold investors yet
circumstances have changed and lessons have been learned by the industry. The
perception of investors may need some modification to understand the new
parameters of this practice in its current form.

The traps of yesteryear have been researched and have been studiously avoided
by FML. Premature sunset clauses which wreaked havoc on some companies are
not be a part of the FML hedge contract. In the late 90’s and early 00’s when the
price of gold was near the cost of production hedges were entered into by many
companies in a climate of low and falling prices. In this case however FML
production costs have room to rise by 30% to $AUD650 per ounce in the next two
years during the hedge period and the profit margin would still be nearly 30%.
And this is after a sharp correction in the AUD gold price at the time of writing.

The Company has established a debt facility totaling A$18.65 million Senior and
Mezzanine debt with specialist international banking group, Investec Bank
(Australia) Ltd.

As part of the debt facility the Company has issued 40 million call options to
Investec to acquire shares in the Company at an exercise price of 6.85c at
Investec’s behest at any time prior to the expiry date on 30 April 2011.

Conclusion

FML appears to have achieved a relatively low risk production startup program
with minimal debt and a manageable hedge position. They have a significant and
proven ground position, a robust reserve base, extensive infrastructure and an
excellent management team. They are focused on two viable projects, gold and
nickel which offer diversity. They now enjoy a range of institutional support to
assist the advance their aims.

Go to www.focusminerals.com.au for further details.

Disclaimer
This presentation is intended to provide general information and is not intended to constitute
legal, financial, accounting, tax, investment consulting or other professional advice or services.
Whilst the information has been collected with reasonable care, Focus Minerals Ltd and GoldOz do
not guarantee or give any warranty as to its correctness. Although the information has been
obtained from sources considered and believed to be both reliable and accurate, no responsibility
is accepted for any opinion expressed or for any error or omission in that information. Focus
Minerals Ltd nor GoldOz shall not be liable for any special, direct, incidental, consequential or
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presentation or information.