Update on Merger with Polymetals - Notice of Meeting

eport to be used in our report. At the time we engaged AMC, they had commenced preparation of their
report for Grant Thornton but not yet completed it.
We are satisfied with the use of AMC’s report, for the purpose of our report, for the following reasons:
- BDO reviewed and was satisfied with the competence of AMC and its independence from SXG and
PLY;
- BDO reviewed the initial instructions given to AMC by Grant Thornton and were satisfied that the
instructions were substantially the same as those that would have been given by BDO;
- BDO issued its own instructions to AMC in accordance with the Valmin Code and RG 112;
- BDO critically reviewed AMC’s draft report and considers the assumptions and methodologies to
be reasonable and the source data drawn on to be appropriate;
- AMC amended its draft report following BDO’s review;
- AMC did not issue its final report until BDO was satisfied with the content of the report;
- AMC’s report is dated close to the date of our report; and
- Based on our review, we have reasonable grounds for believing the specialist report is not false or
misleading.
A copy of AMC’s report is attached in Appendix 4.
• QMP
SXG is listed on the ASX. This means there is a regulated and observable market where SXG’s shares can
be traded. However, in order for the QMP methodology to be considered appropriate, SXG’s shares should
be liquid and the market should be fully informed as to SXG’s activities. We have considered these factors
in section 11.2.
• Resource multiple: cross-check
As a cross check to our sum-of-parts and QMP valuations, we have analysed the resource multiple observed
for companies listed on the ASX with gold projects as their primary focus.
Note that we have not employed the FME methodology as SXG has made losses over the past few years.
Therefore there are no historic profits that could be used to represent future earnings. This means that
the use of the FME valuation methodology is not appropriate.
Valuation of the Merged Entity
In our assessment of the value of the Merged Entity, we have chosen to employ the sum of parts
methodology.
The Merged Entity is valued by combining the sum of parts value of each company as derived in section
and adjusted for any forecast synergies in the Merged Entity.
Valuation of SXG
We have adopted the DCF value of the Marda Project as set out in section 10.1 and discounted the value
of the cash flows of the project with the forecast discount rate of the Merged Entity. We have adopted
the other assets and liabilities as set out in the sum of parts valuation in section 10.1.
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