Update on Merger with Polymetals - Notice of Meeting

Considering the valuation outcomes above, we estimate the fair market value of the Marda Project to be
in the range of $28.22 million to $36.55 million, with a midpoint value of $32.39 million.
10.1.2. Other Exploration Assets
We instructed AMC to provide a market valuation of the major exploration assets of SXG including Copper
Bore and the Evanston Shear Zone.
Marda tenement area
We have instructed AMC to value the Marda tenement area under the Valmin Code which does not host
any Mineral Resources but remains prospective for gold and base metals. AMC has deemed that the most
reliable method to value these resources in using the Comparable Transactions method.
AMC have concluded that the value is between $0.65 million and $1.3 million.
Sandstone
In valuing SXG’s Sandstone Project, AMC has relied on the Comparable Transactions valuation methodology
and the Yardstick valuation methodology. We are satisfied with the valuation methodologies adopted by
AMC which are in accordance with industry practices and compliant with the requirements of the Valmin
Code.
AMC valued the Sandstone Project to be between $3.4 million and $8.3 million. We have adopted the
midpoint value of $5.85 million in our preferred valuation scenario.
SXG has advised us that a potential option to fund the Marda Project would be to sell the Sandstone
tenements. For the purpose of our valuation, we have assumed that the Sandstone tenements are sold at
the values determined by AMC above.
A copy of AMC’s report is attached at Appendix 4.
10.1.3. NAV multiple
The value per share of gold mining companies when valued using the DCF valuation methodology,
including the value of exploration assets, is often lower than the value of the trading price per share.
It is common practice to apply a NAV multiple to the DCF value and value of the exploration assets to
arrive at the value of a company.
Possible reasons for a difference between the value of the mineral assets per share and the traded price
are:
• The potential upside at existing operating or development sites that would allow for an extension
of the life of mine and higher volumes, outside of the announced reserve and resource;
• The potential for actual gold prices exceeding the long-term forecast prices used in the DCF
valuations;
• Gold being perceived as a safe asset investment; and
• The value attributable to the strong management of a company.
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