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 Berghaus deposits. AMC considers the study to be at a scoping level. This is a green-fields project so there is no historical cost or operating data available. The Measured, Indicated and Inferred Resources were optimised using Whittle software to generate pit shells for further evaluation. Two processing scenarios were considered being heap leach and carbon-in-pulp (CIP). The heap leach project had the best economics due to its lower capital cost. In AMC’s opinion the mining cost assumptions and other input parameters to the optimisation process are reasonable. A gold price of $1,600 was assumed. The pit optimisation process generated two pit shells for the Amanda deposit, one for Wingina and three for Berghaus. Detailed pit designs and mine scheduling were not undertaken for the project. Ore Reserves are not reported for the Turner River gold project. 3.2.2.3 Processing Preliminary spreadsheet modelling was undertaken by Polymetals utilising either heap leach or CIP processing. Heap leach was the preferred processing route. Limited metallurgical test work was undertaken to demonstrate the ore is generally amenable to heap leach processing. However, a full programme of test work would be required to quantitatively establish the parameters required for a heap leach model. These would include • ROM ore size distribution for optimal leach solution percolation. • Leach solution chemistry and addition rates. • Expected recoveries through time. Capital and operating costs were developed in-house by Polymetals and are preliminary in nature. Operating costs were estimated at $14.15/t heap leach and $37/t ore in CIP. Capital costs for the heap leach option are estimated in the range $20M to $25M. In AMC‘s opinion the operating and capital costs are reasonable. 3.2.2.4 Environmental Turner River is a small project for which detailed environmental investigations are yet to be completed. However, a number of potentially significant environmental issues have been identified. These are discussed below. Statutory Approval The scale and nature of impacts of the project make it likely that environmental assessment will be via the Mining Proposal process managed by the Department of Mines and Petroleum (DMP). Preliminary discussions have been held with the DMP on this basis. A licence issued by the Department of Environment and Conservation (DEC) under Part V of the EP Act will be required, to cover processing, tailings storage and water discharge aspects. Project schedule calls for submission of a Mining Proposal in Q1 2014, with final approval in Q4 2014. Provided the requisite field investigations (see below) are completed by early 2014, this timeline is considered to be realistic; the DMP claims to complete its assessment of proposals within 30 days of completion of all material relevant to that assessment. Water Management The project is located in a proclaimed groundwater area so that detailed hydrogeological studies will be required to quantify impacts in terms of both quantity and quality of the groundwater resource. Other projects in the region have involved comparable scrutiny for the water and environmental regulators, and the small scale of this project provides some confidence that impacts will be localised and manageable impacts identified. 22
BDO CORPORATE FINANCE (WA) PTY LTD Polymetals Mining Limited and Southern Cross Goldfields Limited Technical Specialist's Report Preliminary studies indicate a requirement to discharge excess pit water to the broader environment. Depending on quantities involved, discharge proposals will be closely scrutinised by water and environmental regulators, reflecting a preferred “no discharge” strategy of those regulators. Stygofauna are known to occur in groundwater in this region, so studies covering several seasons will be necessary. However, recent experience indicates that, with adequate investigations, manageable impacts can be shown to be probable. Conservation and Diversity No significant flora or vegetation issues are likely to be identified from field studies. Any impacts on threatened flora species are likely to be insignificant on both local and regional scales. Rehabilitation and Closure To facilitate closure and rehabilitation planning, requirements for establishment of analogue sites (to guide closure prescriptions), soils studies and other investigations have been identified. As part of the Mining Proposal process, a closure plan will be required at the time of submission of the proposal. The project poses no obvious major environmental challenges (importantly, sulphur levels in the predominantly oxidised mine material are reportedly low, with consequent low risks of acid and metalliferous drainage), so technical closure challenges appear to be unlikely. 3.2.2.5 Turner River Exploration Mt Berghaus North-east Extended Lansdowne has tested similar geology to the Mt Berghaus deposit, in what appears to be the extension of the Mallina Shear, and identified moderate to strong induced polarisation (IP) anomalies overlying magnetic anomalies. Edkins and Amanda West These prospect areas lie between the Wingina Well and Amanda deposits along the Tabba Tabba Shear. Significant gold intersections from these prospects include 3 m at 29.4 g/t Au from 20 m (Edkins ERC012) and 7 m at 19.5 g/t Au from 41 m (Amanda West, TRC023). Brierly Structure Extensive gold-arsenic anomalism identified by drilling by De Grey Mining coincides with a prominent eastwest striking structure, the Brierly structure, identified by airborne geophysics. This structure may link the Mallina and Tabba Tabba Shears. Approximately 5 m to 15 m of transported cover overlies a sequence of deeply weathered Mallina sediments and diorite intrusions. A broad geochemical anomaly >200 ppb gold has been identified. Mineralisation is associated with pyrite and quartz veining. Lansdowne completed follow-up drilling in 2001 and an IP survey obtained a strengthening anomaly to the west and south of anomalous drill results. Kasy Structure The Kasy structure is a northeast trending structure that runs parallel to the Mt Berghaus mineralised structure. Interpretation by the Geological Survey of Western Australia (GSWA) indicates that the host rocks in the area are similar to those in the Mt Berghaus area. The structure may represent a brittle fault with oblique structures cross-cutting the main feature. 23
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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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- 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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- 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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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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AMC and management of PLY advise th
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Mt Boppy Case 2 Mt Boppy Project Ca
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Mt Boppy Case 2 Sensitivity analysi
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Polymetals Mining Limited Value of
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projects. PLY has discounted the to
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The Merged Entity - SXG Low Preferr
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Note f: Minority discount Following
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Update on Merger with Polymetals - Notice of Meeting

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