Update on Merger with Polymetals - Notice of Meeting

projects. PLY has discounted the total consideration based on its assessed probability of the liability being
paid.
AMC has valued the Turner River projects based on its current announced resources and stage of
development. We have excluded the liability as we consider AMC’s value to reflect the current value of
the projects and it does not include the potential upside of the project’s value if the milestones were to
be met.
11.1.5. 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.
We have analysed a number of broker reports reporting on ASX listed gold companies with their main
operations in Australia. The broker reports indicated that NAV multiples range between 0.85 and 1.53.
In determining an appropriate NAV multiple to apply to Merged Entity, we have had regard to:
• The funding requirements to realise the value of the Marda and Mt Boppy Projects;
• The volatilities of SXG and PLY prior to the Merger; and
• The proposed management team of the Merged Entity.
Based on the results of our analysis, we consider a NAV multiple of 1.0 to be appropriate for valuing the
Merged Entity.
11.1.6. Sum-of-parts value of the Merged Entity
We have valued the Merged Entity by combining the sum of parts value of each of SXG and PLY as derived
in sections 10.1 for SXG and sections 11.1.1 to 11.1.5 for PLY.
The valuation of the Merged Entity has been prepared on the basis that the Merged Entity will focus its
cash and resources on bringing the Marda Project into production in 2014 followed by the Mt Boppy
Project in 2015. The Marda and Mt Boppy Project cashflows have been discounted using the forecast
discount rate for the Merged Entity of 6.5% as set out in Appendix 3.
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