Update on Merger with Polymetals - Notice of Meeting

BDO CORPORATE FINANCE (WA) PTY LTD
Polymetals Mining Limited and Southern Cross Goldfields Limited
Technical Specialist's Report
conservative, best-guess estimates for costs of overhaul of existing equipment were used. Estimation errors
have been assigned (e.g. 30% for the Ravensthorpe flotation banks) as there is a degree of uncertainty that
the equipment will be available when the project receives the go-ahead. Preliminary engineering drawings
for the plant were produced by LogiCamms, a small South Australian firm.
The crushing plant and the elution plant and gold room have been included as leased equipment, with the
lease charge included in operating budget. The plant does not contain a gold room or elution circuit therefore
the function of stripping and regenerating carbon will be outsourced. Load-out and receiving facilities have
been designed to permit removal of loaded carbon and return of regenerated carbon by truck-mounted
tanks.
A plant of comparable size and capacity built conventionally using engineering and construction contractors
and new equipment could be expected to cost between $23M and $30M. Successful in-house construction
will depend on Polymetals being able to obtain appropriate equipment for the estimated prices, and being
able to retain the right skills to accomplish construction and commissioning in the allotted time.
AMC notes that some items of capital are estimated on the basis of the availability of secondhand
equipment. A contingency allowance of $1M has been made in case the secondhand equipment is not
available.
AMC notes that in an ASX announcement dated 29 January 2013 Polymetals quoted a capital cost for the
project of $26.6M. Polymetals advised that this was in fact the maximum pre-production negative cash flow.
This is consistent with the financial model reviewed for Mt Boppy project.
Table 3.3
Capital Estimate for Mt Boppy Redevelopment
Area
Capex
(A$)
Estimated
Error
(%)
Contingency
(A$)
Leased
(in Opex)
(A$)
Tailings dam 2,087,947 15 316,442 - -
ROM pad 50,000 25 12,500 - -
3.1.5.5 Operating Costs
Comments
Crusher - - - 266,913 Old crusher to be removed, new equipment to be
leased in Opex
Grinding mills 1,841,775 16 289,095 - Placement of new mill, overhaul and alignment of
existing mill
Leaching plant 1,209,429 17 211,028 - Includes 2 new thickeners, construction and
installation of new MCC, some new agitators,
overhaul of all pumps
Elution, gold room - - - 363,250 Project calls for loaded carbon to be transported
to White Dam for gold recovery
Flotation plant 450,000 30 135,000 - Existing plant (possibly Ravensthorpe) available
for purchase and removal
Reagent mixing 311,150 20 62,230 - -
First fill (carbon, cyanide, 230,760 15 34,614 - -
flotation reagents)
Services (air, water, power) 1,690,369 17 281,001 - Includes new water systems, including an RO
plant
Infrastructure 144,600 25 36,150 - -
Camp 1,060,500 15 159,075 - new camp in Canbelego
Vehicles - - - 737,750 vehicles to be leased
EPCM (provided in-house) 1,465,175 23 330,614 - Salaried positions to be filled in-house where
possible
Owner's cost 1,190,000 10 119,000 - -
TOTAL 11,731,705 1,986,749 1,367,913
TOTAL (incl. Contingency) 13,718,454 17
Basic design parameters for the plant are shown in Table 3.4. The utilisation values of 90% are conservative
and the gold recovery figure of 78% is supported by metallurgical test work.
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