Update on Merger with Polymetals - Notice of Meeting

uildings and water supply. The $38.16 million capital expenditure for 2014 mainly relates to plant and
infrastructure costs incurred in establishing the mine for the six months to 31 December 2014. The cash
inflow of $0.88 million for 2019 in Case 1 and 2021 in Case 2 relates to the sale of plant and equipment of
$2.08 million, offset by mine closure costs of $1.2 million.
DCF Valuation – sensitivities
The estimated value of the Marda Project is derived under the DCF approach. Our valuation is most
sensitive to changes in the forecast gold prices and exchange rate. We have therefore included an analysis
to consider the value of the Marda Project under various pricing scenarios and in applying:
• A change of +/- 5% to commodity prices
• A change of +/- 5% to exchange rate
• A change of +/- 5% to recovery percentage
• A change of +/- 5% to operating expense
• A change of +/- 5% to sustaining capital expenditure
• A real discount rate in the range of 5.0% to 8.0%.
The following tables sets out the valuation outcomes from our DCF analysis.
Marda Case 1
Flex NPV ($m) NPV ($m) NPV ($m) NPV ($m) NPV ($m)
Commodity
Price
Sensitivity analysis
Exchange
rates
Recovery
(%)
Operating
costs
Capital
expenditure
-5% 18.18 37.01 17.60 34.26 30.25
-4% 20.19 35.38 19.72 33.24 29.85
-3% 22.20 33.79 21.85 32.16 29.44
-2% 24.21 32.23 23.97 30.85 29.03
-1% 26.21 30.25 26.10 29.54 28.63
0% 28.22 28.22 28.22 28.22 28.22
1% 30.23 26.23 30.35 26.91 27.82
2% 32.17 24.29 32.34 25.59 27.41
3% 33.65 22.37 33.91 24.28 27.00
4% 35.14 20.50 35.48 22.97 26.60
5% 36.62 18.66 37.06 21.65 26.19
Source: BDO Analysis
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