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
T1
T1 is located in a favourable structural position within the Mallina Shear system and along strike from Mt
Berghaus near the Mt Dove granitoid. It is characterised by a discrete magnetic high. Limited AC drilling by
De Grey Mining returned best results of 1 m at 10.2 g/t Au and 2 m at 5.22 g/t Au.
3.2.2.6 Turner River Gold Project Valuation
The Turner River gold project was the subject of a farm-in arrangement between Landsdowne Resources
Pty Ltd (Landsdowne) and De Grey Mining Ltd (De Grey) whereby Landsdowne could earn a 75% interest in
the tenements by spending $2M over three years. Polymetals acquired Lansdowne in September 2012 and
completed the farm-in expenditure in March 2013. The joint venture terms valuation method indicates a
value of the vendor’s interest at $0.61M at the time of the agreement, although a payment of $4.1M to the
vendor is required on a decision to mine the Wingina Well Mineral Resource.
Polymetals has completed the farm-in expenditure and holds 75% of the rights in these tenements.
The development and evaluation work conducted by Polymetals on the Turner River gold project are
preliminary in nature and do not support a detailed production scenario and DCF valuation.
AMC examined transactions for tenements containing gold Mineral Resources that occurred between 2010
and 2013. These transactions define a range of yardstick values. Transactions in 2012 and 2013 have
tended to indicate lower values per ounce than in 2010 and 2011. AMC has considered this in developing
ranges of values for tenements containing Measured, Indicated and Inferred Resources as follows:
• Measured Resource: $18/oz to $25/oz.
• Indicated Resource: $11/oz to $18/oz.
• Inferred Resource: $4/oz to $11/oz.
Applying these yardstick values to the Turner River gold project indicates a value of $2.9M to $4.7M for
Polymetals 75% interest using this method. As this is a valuation of the current status of the property AMC
has not factored in production royalties or future payments.
AMC examined a number of transactions that indicate a value per unit area. These transactions indicate a
wide range of values, depending on the tenement location, level of exploration activity and the occurrence of
Mineral Resources. AMC considers a range of $2,000/km 2 to $6,000/km 2 to be appropriate for the Turner
River gold project. This indicates a value of $1.2M to $3.7M for Polymetals 75% interest using this method.
In AMC’s opinion the Turner River project is not sufficiently advanced to allow a DCF evaluation method to
be undertaken.
Considering these methods, AMC values the Turner River gold project tenements between $2.1M and
$4.2M.
3.2.3 Turner River Base Metals Project
The Turner River base metals project is located on two exploration licences covering 95 km 2 located about
60 km south-south-east of Port Hedland. The tenements were the subject of a farm-in arrangement between
Landsdowne (now Polymetals) and De Grey whereby Landsdowne could earn a 75% interest in the
tenements by spending $1.5M over three years.
The Turner River base metal Mineral Resources are listed in Table 3.7.
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