Update on Merger with Polymetals - Notice of Meeting

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AMC Consultants Pty Ltd ABN 58 008 129 164 Ground Floor, 9 Havelock Street WEST PERTH WA 6005 T +61 8 6330 1100 F +61 8 6330 1199 E amcperth@amcconsultants.com POLYMETALS MINING LIMITED AND SOUTHERN CROSS GOLDFIELDS LIMITED TECHNICAL SPECIALIST'S REPORT BDO CORPORATE FINANCE (WA) PTY LTD AMC NUMBER 213052 June 2013 ADELAIDE +61 8 8201 1800 BRISBANE +61 7 3839 0099 MELBOURNE +61 3 8601 3300 PERTH +61 8 6330 1100 TORONTO +1 416 640 1212 VANCOUVER +1 604 669 0044 MAIDENHEAD +44 1628 778 256 www.amcconsultants.com
BDO CORPORATE FINANCE (WA) PTY LTD Polymetals Mining Limited and Southern Cross Goldfields Limited Technical Specialist's Report 19 June 2013 The Directors BDO Corporate Finance (WA) Pty Ltd 38 Station Street SUBIACO WA 6008 Dear Sirs POLYMETALS AND SOUTHERN CROSS GOLDFIELDS TECHNICAL SPECIALIST'S REPORT On 8 April 2013, Polymetals Mining Limited (Polymetals) and Southern Cross Goldfields Limited (Southern Cross) announced, inter alia, that subject to certain conditions: • Polymetals and Southern Cross have entered into an agreement to combine the two companies under a merger structured as a Polymetals Scheme of Arrangement (Scheme). • The merger will be implemented as a "merger of equals" by way of the Scheme under which Polymetals shareholders will be offered Southern Cross shares. As advised by Southern Cross, as a result of the Scheme, Southern Cross shares will be issued to Polymetals' largest shareholder which will result in the shareholder and its associates holding more than 20% of the issued capital in the Merged Entity (Transaction). The directors of Southern Cross have engaged BDO Corporate Finance (WA) Pty Ltd (BDO) to prepare an Independent Expert Report (IER) in relation to the Transaction. The IER is to be included with a Notice of Meeting to be sent to Southern Cross shareholders. The directors of Southern Cross have also engaged AMC Consultants Pty Ltd (AMC) to provide BDO with a Technical Specialist's Report (TSR) on the mineral assets of Polymetals and Southern Cross (Assets). The TSR will be appended to the IER. In relation to the TSR, BDO has instructed AMC to undertake a technical review and prepare a technical valuation of the exploration assets and where appropriate to develop production cases for the mineral assets of Polymetals and Southern Cross. The scope of the TSR as advised by BDO to AMC includes: • A description of the mineral assets. • Examination of geology, Mineral Resources and Ore Reserves, development plans, mining aspects, processing methods, production schedules, capital costs and operating costs, and exploration potential for each operation or development project. • Valuation of the exploration properties to the extent they are not covered by the life-of-mine production cases for the operations and development projects. Separately and prior to receiving instruction from BDO, Polymetals has engaged Grant Thornton Corporate Finance Pty Ltd (Grant Thornton) to prepare an Independent Expert Report in relation to the proposed merger. AMC was engaged on 18 April 2013 by Polymetals to provide an independent technical specialist's report under instruction from Grant Thornton on the mineral assets of Polymetals and Southern Cross. BDO has confirmed that it is satisfied with the instruction provided by Grant Thornton to AMC in relation to the TSR, and that this instruction satisfies BDO’s requirements in its role as Expert. The technical content of this TSR is essentially the same as the report provided to Grant Thornton. This TSR has been prepared specifically for the Transaction. For each of the operations and development projects reviewed, AMC has provided production cases including capital and operating cost projections, with pre-tax revenues to BDO to allow BDO to calculate net present values for the respective projects. AMC believes the production cases are based on reasonable grounds. i
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ASX ANNOUNCEMENT / MEDIA RELEASE Fr
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ABN 71 124 374 321 U16,162 Colin St
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3. Access to the cash reserves of P
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Disclaimer and Important Notice •
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SXG - Well Placed • • •
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SXG and PLY - Key Merger Metrics
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Indicative Merger Timetable •
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A Diversified Portfolio of Australi
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Marda Project • Rare greenfields
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Northern Gold Corridor Targets - Dr
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WA Gold Assets - Turner River • P
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Mt Boppy - A Near-Term Production O
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ASX Code: Investor Presentation J
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Pro Forma Gold Reserve Statement Pr
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ABN 71 124 374 321 U16,162 Colin St
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- 3 - Notice of General Meeting Not
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- 5 - Proxy appointment, voting and
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- 7 - 1.2 Rationale for the Merger
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- 9 - 1.5 Implementation of the Mer
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- 11 - in terms of assets and marke
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- 13 - (a) You may not agree with t
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- 15 - (b) the Technical Specialist
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- 17 - (a) Identity of the person r
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- 19 - (i) Other matters The Direct
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- 21 - The purpose of Resolution 2
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- 23 - Schedule 1 - Information abo
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- 25 - Woodside Energy Ltd and Dire
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- 27 - Stephen Jones (Chief Financi
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- 29 - In accordance with ASIC Clas
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- 31 - million SXG Options which ha
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- 33 - Schedule 2 - Terms & Conditi
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- 35 - the Company out of profits o
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- 37 - Glossary In this Explanatory
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- 39 - Peak Litigation The litigati
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- 41 - Annexure A Refer enclosed In
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Financial Services Guide 21 June 20
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TABLE OF CONTENTS 1. Introduction 1
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2. Summary and Opinion 2.1 Purpose
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The respective advantages and disad
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elieves that there are sufficient r
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Existing SXG PLY Capital structure
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Sandstone Exploration Potential In
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5.3 Historical Balance Sheet Southe
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in tenement acquisition costs also
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The current SXG unlisted options on
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Drew Hill - White Dam Gold Project
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6.4 Historical Statement of Compreh
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At 31 March 2013, PLY have recorded
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Gold Demand/Supply Mined Metric ton
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• On 9 August 2012, Regis Resourc
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eport to be used in our report. At
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eport to be used in our report. At
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Funding assumptions SXG has receive
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AMC modelled two cases for the Mard
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Marda Project Case 2 Units 31-Dec-1
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uildings and water supply. The $38.
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Considering the valuation outcomes
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Southern Cross Goldfields Limited V
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Page 138 and 139: Polymetals Mining Limited Value of
Page 140 and 141: projects. PLY has discounted the to
Page 142 and 143: The Merged Entity - SXG Low Preferr
Page 144 and 145: Note f: Minority discount Following
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Page 156 and 157: APPENDIX 2 - VALUATION METHODOLOGIE
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Page 162 and 163: Merged Entity Determining the corre
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Page 166 and 167: APPENDIX 4 - TECHNICAL SPECIALIST V
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BDO CORPORATE FINANCE (WA) PTY LTD
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