Update on Merger with Polymetals - Notice of Meeting

2013 2014 2015 2016 2017 2018
Gold price (real) 1,600 1,525 1,420 1,300 1,180 1,185
Source: Consensus Economics & Bloomberg
The Adjusted Mt Boppy Model
We undertook the following analysis on the Adjusted Mt Boppy Model:
• A review of the mathematical structure and internal consistency;
• Appointed AMC as the technical expert to assess the reasonableness of the resources, capital and
operating costs and other mining inputs used in the preparation of the life of mine;
• Conducted independent research on certain economic and other inputs such as commodity prices,
foreign exchange rates, inflation and discount rate applicable to the future cash flows of the Mt
Boppy Project;
• Held discussions with PLY’s management regarding the preparation of the cash flow forecasts in
the Mt Boppy Model and its views;
• Adjusted the Mt Boppy Model to reflect any changes to the technical assumptions as a result of
AMC’s review and any changes to the economic and other input assumptions from our research;
• We have delayed production by one year to the first quarter of 2015, based on SXG’s advice of the
intentions of the Merged Entity, should the Transaction proceed; and
• Performed a sensitivity analysis on the value of the Mt Boppy Project as a result of flexing
selected assumptions and inputs.
Appointment of a technical expert
AMC, expert technical specialist, was engaged to prepare a report providing an assessment on the
following inputs used in the preparation of the Mt Boppy Model;
• The reasonableness of the resources used in the preparation of the Mt Boppy Model;
• Mining physicals (life of mine, production schedule, recovery and grade);
• Operating costs (mining operation, surface haulage, processing, accommodation and messing,
royalties and general and administration);
• Capital costs (mining capital costs, processing capital costs, resource definition, general and
administration); and
• Restoration and rehabilitation provisions.
AMC modelled two cases for the Mt Boppy Project based on different projections for mining and processing
tonnages, gold grades and costs.
• Case 1, ore production, is primarily based on the pit optimisation study scenario using mainly the
Ore Reserves and a small volume of Inferred Mineral Resource also in the production case as
presented by PLY.
• Case 2, ore production, includes that scheduled in Case 1, with the addition of 35 kt of ore added
to the end of the mine lie to simulate the likely conversion of mineral resources to ore reserves
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