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 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. 24
BDO CORPORATE FINANCE (WA) PTY LTD Polymetals Mining Limited and Southern Cross Goldfields Limited Technical Specialist's Report Table 3.7 Turner River Base Metal Inferred Mineral Resources at 24 April 2013 Location Tonnes (Mt) Zn (%) Ag (g/t) Discovery 1.12 2.6 94 1.0 0.1 0.9 Orchard Tank 1.49 2.7 84 1.1 0.1 0.6 Total 2.61 2.7 89 1.1 0.1 0.7 Pb (%) Cu (%) Au (g/t) 3.2.3.1 Geology The Turner River base metal project is located in an Archaean granite-greenstone terrane. Greenstone belt rocks are comprised of metamorphosed (greenschist facies), mafic to ultramafic intrusive rocks, intermediate to felsic volcanics, some intrusions and various sedimentary rocks including shale, banded ironstone and chert. Greenstone belt rocks wrap around granitic inliers. The project is located within the widely mineralised Mallina Shear. Outcropping silver-gold-zinc-lead mineralisation considered to be polymetallic volcanogenic massive sulphide style (VMS) is found in the Tabba Tabba greenstone belt. High-grade mineralisation intersections have been returned from six outcropping prospects over a 20 km strike length and to depths up to 430 m below surface. The main prospect locations and drilling highlights are shown in Figure 3.7. Figure 3.7 Turner River Base Metal Project Prospect Location The steeply dipping sulphide mineralisation is hosted in foliated, sericite-altered felsic schist that was originally felsic volcanics. Exploration and resource definition has concentrated on the Orchard Tank and Discovery prospects and other prospects along the 20 km long greenstone belt have not been fully investigated. The greenstone belt has been largely covered with geochemistry, geophysics and shallow RAB and AC drilling. 25
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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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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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12. Is the Transaction fair In asse
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