Update on Merger with Polymetals - Notice of Meeting

10.2. We consider a discount of 15% to be appropriate given the equity funding required compared to the
current market capitalisation of SXG and our research.
We have valued SXG on the basis that the Sandstone tenements are sold and that any proceeds are used to
fund the Marda Project. We have added back the tenement values of between $3.4 million and $8.3
million as derived by AMC.
The Sandstone facility will be re-financed following the sale of Sandstone to be a new $5 million facility
from RMB Australia Holdings Limited. The net effect on the balance sheet is a reduction of $2 million in
cash. We have adjusted the cash balance for this net effect.
In August 2011, SXG entered into an option agreement with Barranco to acquire the Red Legs and Die
Hardy deposits. The option expires in August 2013 and SXG have advised us that they intend on exercising
the option. The consideration payable to Barranco on the exercise of the option is $0.5 million in cash and
20 million SXG shares. We have deducted $0.5 million from the cash balance.
Note b: Trade and other receivables
Trade and other receivables relate to cash on deposit for environmental bonds. The Sandstone bond of
$2.719m has been deducted on the basis that the Sandstone tenements are sold to fund the Marda
Project.
Note c: Plant and Equipment
Plant and equipment relates to the Marda Project and has been excluded from the other assets and
liabilities as it forms an integral part in the value of that project.
Note d: Tenement acquisition costs
The Company’s tenement acquisition expenditure has been reflected through the DCF valuation under
section 11.1.1 and the other exploration assets valuation under sections 11.1.2 and 11.1.3 and has
therefore been excluded in the valuation of other assets and liabilities.
Note e: Sandstone Acquisition Facility and RMB facility
The Sandstone facility will be re-financed following the sale of Sandstone, and subsequent repayment of
the facility, to be a new $5 million facility from RMB Australia Holdings Limited.
10.1.5. Corporate costs
Low M id High
Equity capital raising $ 9,000,000 $ 10,000,000 $ 11,000,000
Share price $ 0.032 $ 0.032 $ 0.032
Discount 15.0% 15.0% 15.0%
Issue price $ 0.027 $ 0.027 $ 0.027
Shares issued 333,333,334 370,370,371 407,407,408
For the half-year ended 31 December 2012, corporate costs for SXG totalled approximately $1.12 million
and were approximately $2.14 million in the 2012 financial year. SXG has advised us that the forecast
annual corporate costs are $2.25 million.
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