Abstract: An improved prefabricated building panel for mounting on the exterior of a building including a plurality of spaced, parallel support members or studs preferably formed by metal channels. A five strand layer wire mesh formed by a plurality of interwoven wires arranged at right angles to each other is attached to the support members and spaced therefrom by a plurality of spacers. The wire mesh is encapsulated with cement to form a ferrocement panel and decorative facing tile are secured to an outer face of the ferrocement panel by a layer of grouting. The ferrocement panel provides the structural load bearing component for the prefabricated panel for supporting the facing tile and eliminates the need for a separate substrate which heretofore spanned the support members and provided the structural support. The invention also includes the method steps for forming such a prefabricated panel.