Update on Merger with Polymetals - Notice of Meeting

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BDO CORPORATE FINANCE (WA) PTY LTD Polymetals Mining Limited and Southern Cross Goldfields Limited Technical Specialist's Report Figure 3.3 Mt Boppy Geological Domains The resource estimate is a conventional block model with grade estimated using ordinary kriging (OK) with estimation parameters determined from a study of variography. The stope fill was assigned a uniform average value of 3.6 g/t Au reflecting the mean grade of drillhole samples intersecting the fill. Bulk densities were assigned based on mean values for oxide, transition and fresh rock. The resource estimate is classified as Measured, Indicated and Inferred Resources based on confidence in the geological and grade continuity reflecting drillhole spacing. The Mineral Resources are reported at a 2.5 g/t Au cut-off grade (COG). The stope fill is classified as Indicated Resource. The Mt Boppy Mineral Resource has been estimated using accepted industry practice and has been classified and reported in accordance with the JORC Code 3 . AMC considers it appropriate to assign an average grade to the stope fill and while it is classified as Indicated Resource, there is greater uncertainty in local grade estimation in the fill than in the in situ Mineral Resource. The Boppy South Mineral Resource estimate is based on drilling at about 20 m x 20 m spacing completed by Polymetals and previous tenement holders. The resource estimate is a conventional block model with grade estimated using inverse distance squared. The estimate is classified as Indicated and Inferred Resources based on confidence in the geological and grade continuity reflecting drillhole spacing. The Mineral Resource is reported at a 1.0 g/t Au COG. 3.1.2.2 Exploration In addition to resource definition drilling at Mt Boppy, exploration has been carried out on other targets in the exploration licence both by the previous tenement holder and Polymetals. Polymetals drilled 35 drillholes on the other targets in 2012. 3 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, The JORC Code 2004 Edition, Effective December 2004, Prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC) 8
BDO CORPORATE FINANCE (WA) PTY LTD Polymetals Mining Limited and Southern Cross Goldfields Limited Technical Specialist's Report Drilling has been carried out at a number of prospects where gold mineralisation had been identified by previous exploration. Drilling at most prospects generally failed to identify significant mineralisation to encourage resource delineation drilling. Drilling at Boppy South (about 950 m south of Mt Boppy) led to the estimation of a small Mineral Resource. Reprocessing of induced polarisation data collected by previous tenement holders identified three chargeability anomalies not previously tested that have been recently drilled, awaiting assay results. 3.1.3 Mining Mt Boppy was previously mined by open pit methods in the period 2002 to 2005. Polymetals engaged an independent technical specialist to undertake a pit optimisation and design study on the project in 2012. Work included a Whittle pit optimisation which developed an optimum pit shell. The shell formed the basis of a more detailed mine design. The design represents a cutback to the existing pit with a final design depth of 130 m. Measured, Indicated and Inferred Mineral Resources were used in developing the mine plan. Polymetals personnel developed a mine schedule and a financial model based on the 2012 pit design. AMC has reviewed the pit design, mine schedule and financial model. Aside from the 2012 report there is no formal feasibility document describing the project. Polymetals engaged an independent technical specialist to conduct a geotechnical review of the proposed Mt Boppy open pit. In AMC’s opinion the geotechnical report is to an acceptable standard. The independent technical specialist was concerned about the overall safety associated with mining the south-east wall of the open pit due to the proposed steep overall slope and recommended an additional berm be incorporated into the design. This advice has not been followed at this stage. Additional monitoring and mapping would be required in that area with a worst possible outcome of slope failure and ore loss. The Mineral Resource includes an area of material previously mined by underground methods and now assumed to be backfilled. The backfill grade is estimated at a constant gold grade of 3.6 g/t Au. There is a risk this grade is not consistent and that the void is not completely filled. AMC has not discounted this material in its evaluation Polymetals engaged independent technical specialist to undertake a hydrogeological review of the proposed Mt Boppy operation. The report viewed was dated June 2012. In this report a likely pit dewatering volume of 7 L/s to 8 L/s is noted. This is a manageable volume and should not present a significant issue to the proposed operation. The report also concludes: • Ponding of water would occur on the tailings storage facility (TSF) and evaporation dam (at the former TSF location). • Surplus water in excess of the TSF and evaporation dam storage capacity would not be generated. • The evaporation dam will be utilised near the maximum operating level (maximising evaporation) for a period of approximately two years. • Water in the evaporation dam and TSF will draw down post-closure due to evaporative losses. In AMC’s opinion the water issues are manageable as described by the hydrogeological review. Polymetals developed a mining cost model based on a dry hire mining fleet option. Quotes for dry hire of mining equipment were received from local vendors. The mining fleet consists of 120 t class excavators and 85 tonne haul trucks. The support equipment also supplied on a dry hire basis is suitable for the project. In reviewing the mine cost and schedule models AMC has formed the opinion that the productivity assumptions for the mine fleet in the first five months of the operation are overly optimistic. Further, later in the mine schedule, the vertical advance rate is in AMC’s opinion not achievable. To offset the impact of these productivity concerns AMC has, in its modelling of the project, added additional mining costs to the schedule by assuming the mining fleet remains on site for an additional six months. The changes to the mining schedule described here do not affect the ore supply or processing schedule due to the development of ore stockpiles. Due to the use of dry hire mining fleet and the short life of the project there is no capital budgeted for mining operations. Workshop and site establishment capital is included in the dry hire arrangement. 9
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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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- 37 - Glossary In this Explanatory
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- 39 - Peak Litigation The litigati
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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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We calculated the corporate costs o
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SXG share price and trading volume
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On 28 February 2013 SXG announced t
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Control Premium The concept of a pr
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We note that SXG’s EV/resource mu
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The Adjusted Mt Boppy Model was pre
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2013 2014 2015 2016 2017 2018 Gold
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BDO CORPORATE FINANCE (WA) PTY LTD
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