Focus Metals’ objectives and activities, as we move towards 2012, are aimed at positioning our company to meet current challenges and future opportunities in a changing global marketplace.

The specter of another global economic downturn looms large, while an overcapacity of graphite in today’s market risks putting downward pressure on prices even as new demand for green technology applications and graphene developments emerge from the lab and into consumer and industrial products.

Our mission has been to maneuver the company through 2011 and position ourselves for future growth. Our corporate financing done earlier in the year has put us in a position to implement our strategy to the fullest. 2012 will be an exciting year of the company.

This fall, we embarked on a dual strategy: internationally – to promote awareness of Focus Metals’ graphite and graphene advantages as an investment, and; domestically – to bring our mining development activities at our Lac Knife graphite and Kwijibo rare earths and copper resources in Quebec, into NI 43-101 compliance.

We’ve made great strides on both fronts.

The addition of Mr. Tony Brisson to Focus Metals’ management team as Vice President, Exploration, has resulted in expedited activities on the ground and also towards publication before year-end of our Lac Knife and Kwyjibo drilling results and estimated resource calculations.

Warren Buffet famously said that, “Price is what you pay, value is what you get.” Our view remains that we hold the best value of any graphite developer in the world and that the faith our institutional and individual investors have placed in us will be rewarded.

The following is a summary of our recent activities and medium-term observations.

The Market

Graphite’s growing importance as a strategic component for future economic growth and security is changing the nature of our industry. Demand side recognition of graphite’s future critical status has spawned new investment in both graphite discovery and production – with much of those new resources reaching the market within the next 12 to 24 months.

An oversupply from current production is putting downward pressure on price and China, which produces some 70% of the world’s graphite, remains a wild card as total anticipated demand rises over the next five to 10 years.

Our goal, over the coming 24 months is to become the world’s lowest cost technology-grade supplier of flake graphite. Our estimated production costs of $350 ton is a target Focus Metals intends to improve upon by introducing new, environmentally-friendly processing technologies.

With our historic 17% average grading, our enormous cost advantage will permit us to sustain a healthy profit from production, regardless of market conditions.

Adapting now by adopting technologies should leave us well-positioned to meet any change in market conditions. We see our positioning moves as an insurance policy against declining prices.

Domestic Activities

• Lac Knife: work towards the completion of the Lac Knife 43-101 resource estimate is well underway and expected to be published by year-end.
• Kwyjibo: the results from our summer/fall drilling program in partnership with SOQUEM will also be published by year-end.
• Acquisition of claims: additional information related to our purchase of some 200-property claims will soon be made available on the website.
• Off-take agreements: discussions are ongoing with several potential domestic off-take partners
• And on our joint venture: we continue to lay the administrative foundation and functional framework for the development of Grafoid Inc.

International Activities

As an emerging junior mining development and technology innovator, Focus Metals has an obligation to its shareholders and its financial partners to seek the best possible outcome of discussions and negotiations with potential production partners and graphite buyers.

Toward that end, we are bound by confidentiality and non-disclosure agreements with those potential partners and graphite production buyers.

It is well known within the industry, however, that the discussion and negotiation process involves the exchange of a substantial volume of detailed technical information related to a buyer’s individual specifications and requirements.

Discussions continue with a number of potential European and Asian production partners and product buyers.

Raising Focus Metals’ Profile

Early this summer, Focus Metals committed to attend and present at various domestic and international mineral conferences between October and December. Raising our company’s profile and our brand in new investment markets is essential. A majority of investors remain unaware of Focus Metals’ potential.

Similarly, graphite and graphene remain far from achieving top-of-mind recognition among most investment communities.

On December 6th and 7th, Focus Metals has the distinction of being lead sponsor of the first Industrial Minerals Conference on Graphite in London. This conference brings together the key decision-makers of the global graphite community and provides an opportunity for FMS to expand its global network.

The conference follows presentations in the United States, Canada, Germany and the Netherlands.

2012

We plan to continue implementation of our build, grow and promote strategy for the coming year.

It includes:

• A more robust initiative to raise Focus Metals’ profile in the global investment community by positioning Lac Knife as the lowest-cost graphite producer in the world.
• Publication of our Lac Knife NI 43-101 estimated resource calculation and scoping study and conclusion of our project financing.
• Working towards aligning ourselves with key global partners
• Unlocking the value of our other properties and our Grafoid Inc. joint venture, and;
• Working to increase shareholder value

In conclusion, Focus Metals shares have increased in value since the beginning of 2011 by some 45% while the TSX composite index has lost 7.3%. While it’s difficult to predict markets in these unsettled times, we believe our strategy is fundamentally sound, practical and capable of attracting broader, international investor interest in 2012.

Sincerely,

Gary Economo