nine msn finance report on fml, page-2

Note the part about a share consolidation....

Gold miner Focus Minerals Ltd has announced a $40 million capital raising to help substantially increase production.

Chief executive Campbell Baird said the capital raising would underpin the company's three-year growth plan to become one of the largest gold producers in Western Australia's Goldfields.

"We have put together a major exploration and development program that will see us aggressively expand our business into a rising gold price," Mr Baird said in a statement on Wednesday.

Its current work program would put it "well down the road" to delivering 130,000 ounces of gold in calendar 2012, up from a targeted 100,000 ounces this year.

"It is in 2013 where we are targeting our production output to rise significantly as we look to advancing both the Greater Coolgardie projects ... and also our highly prospective Treasure Island gold project at Lake Cowan," Mr Baird said.

Focus shares were down 0.4 cents, or 4.44 per cent, at 8.6 cents after more than 110.93 million shares changed hands, making it the second most traded stock by volume.

Hartleys resources analyst Mike Millikan said shareholders could be exiting the stock so they could buy back at a lower price of 7.6 cents per share under the share purchase plan (SPP) component of the capital raising.

"They could take a little bit of money off the table and see if they can get some in the SPP," Mr Millikan told AAP.

Under the SPP, existing eligible shareholders can subscribe for up to $15,000 worth of shares, raising as much as $7 million for Focus.

A placement to institutional and sophisticated investors involving the issue of 425 million shares at 7.6 cents per share could raise up to $32.3 million.

Focus investors could be selling the stock because the issue of new shares will dilute their existing holdings, Mr Millikan said.

"There's no doubt that adding another 517 million shares to the register takes them up to 3.392 billion shares, which is a lot of shares, but they may in the future do a consolidation."

Focus said the placement had received strong support from several of the company's institutional shareholders and new and domestic institutional investors had joined the miner's share register.

Mr Millikan said Focus could find some very large gold deposits at Treasure Island, which was near the Gold Fields-operated St Ives gold mine and the massive Super Pit joint venture between Barrick Gold Corporation and Newmont Mining Corporation.

Focus' The Mount project, which recently went into production, had yielded strong gold grades and the outlook for the company would be strengthened if it could extend the mine life at its existing Tindals' operation from four years to 10 years, Mr Millikan said.