Update on Merger with Polymetals - Notice of Meeting

Post Transaction
If the Transaction is approved, the Sproule Interests will hold approximately 26% of the issued capital of
the Merged Entity allowing them to block special resolutions. The Sproule Interests will be the largest
shareholder of the Merged Entity. Consequently, a premium for control should be expected in this
Transaction. A single shareholding block of this size may also deter any potential bidders from making a
takeover offer for the Merged Entity, thereby depriving Shareholders from receiving a takeover premium
for their shares.
13.3 Consequences of not Approving the Transaction
Potential decline in share price
We have analysed movements in SXG’s share price since the Transaction was announced. A graph of SXG’s
share price since the announcement is set out below.
SXG share price and trading volume history
Share Price ($)
0.04
0.04
0.03
0.03
0.02
0.02
0.01
0.01
0.00
1.8
1.6
1.4
1.2
1.0
0.8
0.6
0.4
0.2
-
Volume (millions)
Volume
Closing share price
Source: Bloomberg
On the day of the Scheme was announced on 8 April 2013, SXG shares closed 15% higher at $0.030 and
continued to increase in the days following, closing at $0.034 on 12 April 2013. Since 12 April 2013, the
share price has steadily declined closing at $0.017 on 28 May 2013.
Over the three month period analysed above, SXG’s share price has declined by 51% from $0.035 on 1
March 2013 to $0.017 on 28 May 2013 compared to a 12% decline in the gold spot price over the same
period from approximately US$1,576 per ounce to US$1,390 per ounce.
Given the above analysis it is possible that if the Transaction is not approved then SXG’s share price is
unlikely to decline.
13.4 Advantages of Approving the Transaction
Shareholder approval of the Transaction is a condition precedent of the Scheme and will be an important
factor in determining whether the Merger proceeds. We have considered the following advantages when
assessing whether the Transaction is reasonable.
The Transaction is fair
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