This is part 2 of my three part series of reports on the AGM,...

This is part 2 of my three part series of reports on the AGM, and I need to apologise about not getting it out sooner, but have had a whole heap of other things to do today, so I have rushed this a bit (still a long saga).

Whatever I have to say in this report needs to be put into context by pre reading the Chairman’s Address and the CEO’s presentation to the AGM (especially have a look at the updated visuals in the CEO’s presentation).

It would have been helpful if the video of the AGM had also been available at this point in time, as I am going to offer some perspectives (right or wrong) on the tone of the meeting.

Number of shareholders attending was down slightly on last year and well below those attending the 2009 AGM in Kalgoorlie (obviously the Coolgardie location did have an impact, particularly in terms of local representation – think it needs to be held in Kalgoorlie, rather than Coolgardie).

Don Taig opened the meeting by reading his prepared Chairman’s address, however the further he got into the address it was quite apparent there was not only a rise in the angst level of his tone and body language, but also that of the demeanour of the Board and other FML management personnel present in the room (more or less a you versus us Kalgoorlie style confrontation, where decorum could quickly go out the door).

By the time Don got into the first strike remuneration issue, shareholders were looking at each other with some concern regarding the thought that the Board could end up walking, and I think Don picked up on this as he ended his address in a more upbeat manner, along with acknowledging the service of Brad Valiukis, Chief Operating Officer,who is departing the company shortly for overseas after many long years of valuable service (shareholders responded accordingly as many know Brad quite well – Brad will be replaced by Mark Hine the current Chief Operating Officer of Crescent).

Before Don invited Campbell Baird to give his CEO’s presentation some formalities associated with the preceding AGM were undertaken without any drama.

Campbell pretty well stuck to the script in terms of his presentation, although as one other shareholder remarked he looked knackered and not his normal ebullient self.

His presentation was not helped by having trouble in identifying points he wished to make in some of the visuals he used (my comment - if the presenter cannot identify the point in a visual, what chance do the rest of us have?).

For the Treasure Island component of his report, he invited Dean Goodwin, Treasure Island Principal Geologist, to take over.

While sticking fairly well to the script Dean did divert a bit to state that the November Treasure Island update lacked a lay persons understanding of the methodology used in the air core drilling and the significance of the results achieved.

Although a lot of what Dean had to say was in geo speak, the key to understanding the results is the Treasure Island cross section diagram (now provided), which illustrates that some holes have hit the peripheries of a supergene zone that he was hoping to find, and using these results he believes he can zero in with further air core drilling on any ore body contained between them before using diamond drilling for final definition.

With each hole drilled 80 metres apart on an east west orientation and 400 metres apart on a north south orientation, Dean noted that the chances of even one drill hole hitting a major ore body would be quite remote in this round of drilling (better chance of winning lotto).

Will add at this point that it was in the after meeting session that Dean provided further amplification of the results and the way ahead (hemmed into a corner by the Hot Copper crew).

Once Campbell had concluded the remainder of his presentation, Don called for questions noting that Focus has a history of dealing with these in a less traditional mode with answers being provided by the best qualified person and a reassurance being sought on whether the question was answered to the shareholders satisfaction.

First question was on the shareprice (will only say it was not put forward by anyone on the tour group).

Don gave a fairly robust reply with reference to the current share price of other mining companies, impact of the Euro Zone crisis (including the fact that Deutsche Bank had been actively selling down their stake in Focus), current market perception of Focus in relation to the Crescent takeover, the poorer than anticipated September quarterly results.

A number of supplementary questions relating to the Deutsche Bank sell off being the crux of the problem followed which Don handled very diplomatically, however I got the impression that a lot of shareholders were still pointing the finger at Deutsche Bank on the basis that their selling occurred whenever the share price moved marginally higher.

There was one question on consolidation that received a straight statement on the Board’s previously announced position without even a murmur being raised (dealt with in less than 30 seconds).

Question on the comment regarding Stone in the Chairman’s address brought a frank admission from Don that Focus had commenced discussions with Stone on their Crescent stake, resulting in a rash of supplementary questions, most of which could not be answered due to confidentiality reasons – bottom line, things are proceeding nicely at this point in time (my view is that this is a fairly significant event).

Next up was my already submitted written question regarding market guidance associated with the September quarter, however when the Focus formal reply could not be located Campbell had to provide an answer off the cuff.

Think the off the cuff answer was better than any prepared statement, in that they thought that despite the funding diversion it was thought that with a bit more effort they would meet their production guidance, however, a few glitches occurred that would have seen production costs blow out in meeting the target.

It was decided mid quarter to contain costs and hope for the best., the best did not happen, and yes, we stuffed up on our market guidance.

Campbell also noted that they were not making the same mistake again, and hence the revised production target for the December quarter based on the weather events at Coolgardie in October and early November.

Question was put on a likely capital raising, and this received a very emphatic no from Don who pointed out this was why the Board had given management approval to establish a line of credit, although noting that they would need to have a very good reason to spend even a cent of it.

Next year from the Board’s perspective, was to be one of refilling the coffers while consolidating what we now have.

Think I posed the final question of the day which related to variations to previously announced campaign periods and tonnages associated with the Crescent ore purchase agreement with Barrick (had promised that I would put this question as a result of some heavy debate on the topic in October on Hot Copper).

Expected answer I got was that the new figures are commercial in confidence and to ignore all previous released Crescent announcements on target figures.

With questions concluded, Don announced that he would be taking the unusual procedure of having each shareholder present formally cast their applicable votes on Resolution 1 dealing with adoption of the remuneration report in view of their being only 22.3% of shares committed by proxy vote, with Resolution 1 failing on the current proxy vote at a level above 25% of shares voted.

Bit of confusion from assembled shareholders as many thought the 25% was applicable to the total shareholding, whereas it is applicable only to the percentage of those voted shares formally cast.

In the interim period while the formal voting and counting on Resolution1 took place all the other resolutions were voted on and passed, a break was taken for afternoon tea.

The meeting was finally reconvened to receive the news that despite attending shareholders voting almost unanimously for Resolution 1, the 25% trigger rule was not overcome (missed by just over 2%).

Don, then declared the AGM closed, with the after AGM discussions then commencing.

Major points – Stone discussions are obviously promising as it was all very upbeat, further Treasure Island exploration update (in english), no need for capital raising, fill the coffers next year, and although not really mentioned, December quarter looks like coming up short in terms of ore processed (need to keep a close eye on Coolgardie weather in the future).

Sentiment wise, I think the carrot on the stick has moved a bit closer to the donkey’s mouth, but is still out of reach.