fml - the australian today, page-2

GOLD is having its day in the sun and while many juniors scramble to cash in on this unique opportunity, Focus Minerals is pushing ahead with an aggressive growth strategy, increased its production of the precious metal immediately and significantly.

Chief executive Campbell Baird is a planning engineer by trade, and likes to operate to a roadmap.

But he also knows that when opportunity comes knocking, don't knock it back.

Mr Baird said the company's mantra this year was to aggressively expand into a rising gold price, a task the company was confident it could achieve after putting in the hard yards through 2009 and last year.

By the end of 2010, the company had one operating mine and had refurbished its own mill, so Mr Baird and chief operating officer Brad Valiukas were ready for the next challenge.

"Around Christmas, Brad and I sat around and spoke about where we were headed next," he recalled.


"Three years ago, we set the scene that we were going to be a gold producer and producing into our own mill, so we raised money in 2009, refurbished our own mill and away we went.
"We knew the gold price was going to be strong . . . over the next few years, so we knew (there was now) the opportunity for a gold miner to take advantage of that strong gold price."

The strong belief in the strength of the gold price and its role as a safe haven as global markets declined was the driving force for Mr Baird to accelerate the company's growth strategy, but not even he could have planned for the acquisition opportunity that was about to come his way, taking the company on a new route on his roadmap.

"We sat down and mapped out 2011 and 2012, and 2011 involved opening up a number of other mines in Coolgardie, delivering on those mines and proving to the market that Coolgardie was more than a one-trick pony," he said.

"We also planned to aggressively start exploring.

"We thought if we delivered on that strategy in 2011, we should see a significant market re-rating for Focus, and at that point we will be looking at participating in M&A."

The company's strategy was to target merger and acquisition opportunities next year, but what the company had not planned for was for the market to buy into Focus's strategy and vision at a time when Laverton-focused Crescent Gold wasn't so fortunate with its own strategy.

"Crescent was a company that had become quite weak in its market capitalisation through some things that had gone wrong with the operation," Mr Baird said.

"While it wasn't our strategy to do it until next year, the opportunity was too good to miss, so we were able to strike while the iron was hot."

Focus Minerals made a friendly bid for Crescent Gold on June 21 to create a $460 million mid-tier miner.

The two West Australian goldfields-focused companies agreed on the deal, which saw Focus offer one of its shares for 1.18 Crescent shares.

The move may have been ahead of the plan for Focus. But the junior company that had produced 17,000 ounces of gold in 2008 was given the opportunity to form a company that is now targeting 100,000oz next year.

Mr Baird had gone from the head of a small company to being in charge of 600 direct and indirect reports. "When I joined Focus Minerals in January 2009, we had 25 employees.

"It is an extraordinary experience, that instantaneous growth. But it is also important not to lose focus on where you came from.

"We have been spending time at our Coolgardie operation and talking about what is next."

Integrating two companies was not an easy task and Focus had to use some funds targeted for its Coolgardie project to help out the new assets in its stable, but it was a sacrifice Mr Baird was happy to pay.

"When we sat down together, they needed money to keep going and survive, so we lent them money, which meant we diverted funds from our growth program in Coolgardie. We believe that our growth speed in Coolgardie was more than supplemented by acquiring a company with a producing asset."

The $11m loan also gave Focus a foothold in the company to help it secure the successful takeover.

Mr Baird said it would take a good nine months to integrate the two companies and start realising synergies, but he was excited about what lay ahead, saying that Crescent's Laverton project was on the cusp of becoming a fantastic project, while Focus was on the cusp of becoming a "great company".

"We say we are going to do 100,000oz a year, so let us go forward and do that.

"We are starting with 25,000oz in the March quarter for 2012 and we'll keep going from there.

"Once we deliver on our plan we hope to see a significant re-rating from the $260m market capitalisation today. I hope we start to go up to the $500m market cap and then that gives us the opportunity to look around at the next value opportunities for us."

Growing a successful gold company will also open Focus up to being a takeover target, but Mr Baird is confident that if he can prove to investors the management team can deliver on growth, he can win their support to keep growing the company.

"I like to think that if we can demonstrate to the market that we can successfully do this, then if investors are faced with the choice of being taken over, they will say 'no', that this is not the sort of company they want to see taken over."