questions for the agm, page-55

Pinto,

my two concerns with this deal have always been
1. giving away control
2. not receiving a premium for that control


Both concerns are addressed in the independant expert report and remain unresolved in the experts eyes also. With this deal we are hoping Shandong are going to be true to their word but as the expert agrees, circumstances change and once we give away control theres no turning back. Shandong can change the board, they can change company direction they can divert funds etc etc etc.


So to answer your question, why would Shandong risk having to pay a premium when they are gifted with this transaction that gives them everything they want without having to pay through the nose? They are looking a gift horse in the mouth.


As for the staff, with so many people losing their jobs in australia and the never ending threat of overseas workers I would think anyone whom is offered the stability to stay at their workplace, a workplace with so much potential, with so much unfinished business, whilst they get to live In a place such as Kalgoorlie with all its ammenities rather than in some bush camp in the midde of the desert... I know where I'd wanna be...



Pinto, look mate I am going to leave it here too because although we both believe in Focus, i don't believe in this deal.

This is how I would have structured it had I been the chairman and had I of been working in the best interests of the shareholders whom employ me.


Sell Shandong 40% at no less than the experts preferred rate of 5.5cents. I would if tried like hell to get a premium though. This deal does not contain a premium. period. Also give Shandong the ability to subscribe to options exercisable at market price or atleast 7.5cents whichever is the higher, with an escrow period of 2years, handing them enough options so that on a fully diluted basis they gain their 51% shareholding.

This deal would work as we get an immediate cash injection, we are told that Shandong have access to cheap debt therefore if we need more money before the 2 year period after which Shandong can exercise their options then we can borrow it. After all that shouldn't be a problem as its one of Shandongs main selling points, they are supposedly a cash cow.

Regardless of what happens, for Shandong to gain control they must pay a minimum 7.5cents for the other 11% which is a catalyst for share price appreciation, it is also the price point that long supportive shareholders where asked to chip in to get things rolling in the drilling department. Thus it would seem fair to reward them seeing as we just diverted their cash into this CRE deal and capitulated the sp ever since, so lets give something back to them as a thankyou.


win, win, win.

Davo