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 ppm Cu along a 1.3 km strike about 2 km north-west of Southern Gossan. Anomalous gold grades include 250 ppb Au 1.3 km south-east of Southern Gossan and 54 ppb Au west of Southern Gossan. A downhole electro-magnetic survey was also completed over a 10 km trend between Copper Bore and Southern Gossan during 2012. Ten drillholes were surveyed. Of 17 anomalies identified. Six of the identified anomalies are related to base metal sulphide occurrences that have already been drill-tested. A reconnaissance survey west of the Copper Bore trend identified a wide quartz veined shear zone characterised by micaceous schist with up to 10% box-work texture after pyrite. The shear zone appears to strike over 10 km and is up to 50 m wide. Rock chip samples from the shear zone returned a peak result of 3.38 g/t Au from a quartz vein in gabbro. Other exploration targets associated with this shear are thrust-fold structures, which returned 0.5 g/t Au at two separate outcrops 800 m apart. 4.1.6 Mining The Marda mining study utilises Mineral Resource estimates undertaken in 2011 and 2012 following the completion of additional drilling during 2011. Open pit optimisations, designs, and mining schedules have been developed by Southern Cross and its consultants using these resource model estimates. Southern Cross proposes mining ten small open pits using a company owned and managed mining fleet and conventional open pit mining techniques. Mining is planned to commence in the Marda Central, Golden Orb and King Brown areas before commencing at Red Legs in Year 4, and at the two furthest projects (British Hill and Battler) in Year 5. The mining sequence is logically based on the higher value and higher confidence pits early in the schedule with lower value/confidence pits mined at the end of the mine life. A gold processing plant is planned at Marda with a capacity of 500 ktpa. Marda comprises shallow open pits ranging in depths of between 45 m and 100 m. The material to be mined is predominantly oxide mineralisation. The proposed mining fleet comprises a 120 tonne excavator and a truck fleet of three 40 tonne trucks. Blasting is planned across all materials to assist productivity and to provide blasthole grade control samples. Southern Cross plans to lease the mining fleet and associated equipment. Ore haulage from satellite pits will be undertaken using conventional road trains capable of hauling on public and private roads. Southern Cross plans to lease and operate the road train fleet. All maintenance facilities and associated services are to be provided by Southern Cross. The open pit designs incorporate narrow 10 m wide ramps to reduce stripping costs associated with small pits. The geotechnical studies are preliminary, however they did identify the risk of ramp crest failure. Ramp crest failure on narrow ramps would interrupt production although the existence of multiple pits and ore stockpiles offsets this risk to some extent. The overall mining schedule shows a high rate of vertical development. In AMC’s opinion the mining schedule will be difficult to achieve. This risk is offset by the availability of multiple pits and ore stockpiles. Southern Cross added ore dilution and an ore recovery factor to the pit inventory prior to developing the mine schedule. This is standard industry practice. However, in AMC’s opinion, the 0.7 g/t Au grade assigned to the diluting material is too high and has adjusted head grades in the cash flow model. In AMC’s opinion the overall mining costs appear reasonable for Marda. 4.1.7 Ore Reserves The Ore Reserves for Marda were developed as part of the recent feasibility study. The Ore Reserves are based on the development of the ten open pit designs using the current Mineral Resource model. Ore Reserves were calculated at a gold price of $1,475/oz and are shown in Table 4.2. AMC notes that approximately 4% of the inventory supporting the feasibility study is in the Inferred Mineral Resource category. This is not a material concern for the project. 32
BDO CORPORATE FINANCE (WA) PTY LTD Polymetals Mining Limited and Southern Cross Goldfields Limited Technical Specialist's Report Table 4.2 Marda Gold Project – Ore Reserves at October 2012 Pits Proved Probable Total Dry Tonnes (k/t) Grade (g/t Au) Contained Gold (koz Au) Dry Tonnes (k/t) Grade (g/t Au) Contained Gold (koz Au) Dry Tonnes (k/t) Grade (g/t Au) Contained Gold (koz Au) Battler 129.6 3.9 16.1 6.0 5.9 1.1 135.6 4.0 17.2 King Brown 84.5 4.7 12.7 12.1 2.9 1.1 96.6 4.5 13.9 Golden Orb 261.5 3.3 27.4 9.3 2.1 0.6 270.8 3.2 28.1 Goldstream 86.3 2.5 6.9 – – – 86.3 2.5 6.9 Python 525.7 2.0 33.5 2.6 1.5 0.1 528.3 2.0 33.6 Dugite 209.6 2.0 13.3 0.2 1.5 – 209.8 2.0 13.3 Dolly Pot 355.6 1.8 20.8 0.3 1.2 – 355.9 1.8 20.8 British Hill – – – 70.0 4.6 10.4 70 4.6 10.4 Die Hardy 214.8 1.6 10.9 154.1 1.7 8.2 368.9 1.6 19.1 Red Legs 70.1 3.4 7.6 85.1 2.8 7.6 155.2 3.1 15.2 Total 1,937.7 2.4 149.2 339.7 2.7 29.1 2,277.4 2.4 178.5 Source: Southern Cross Marda feasibility study 4.1.8 Metallurgy and Processing 4.1.8.1 Introduction It is proposed that mined ore from Marda will be treated in a nominal 0.5 Mtpa conventional cyanidation treatment facility employing CIL for gold recovery. Ore to be fed to the proposed process facility will be sourced from ten discrete gold resources as described in the geological section of this review. Ore from different resource pits will be blended to suit the requirements of the processing plant. Metallurgical test work programmes on samples of ore from Marda have been undertaken over approximately ten years. During 2012 Southern Cross acquired the Sandstone processing facility. Southern Cross contracted independent technical specialists to undertake an engineering study to prepare cost estimates for a process plant installation involving utilisation of the refurbished plant equipment to be relocated from Sandstone to Marda. 4.1.8.2 Metallurgical Test Work Historical metallurgical test work undertaken between the 1991 and 2011 programmes showed that tested samples from the Marda Central deposits were all relatively free milling ores with cyanidation gold extractions varying between 84% and 97%. Comminution testing of oxide and primary samples indicated that the ore types tested could be classified as moderate to hard. A comprehensive programme of metallurgical test work was undertaken in 2012 on samples from the major ore deposits as part the recent feasibility study. The project assumptions are reasonably based on the test work results. In the first year of plant operation ore to be treated will be from the Dugite, King Brown, Goldstream and Python pits followed by increasing amounts of Python and Golden Orb ore, and then ore from the Redlegs deposit. In later years ore is mined from Redlegs, Die Hardy, British Hill and Battler deposits. AMC notes that only limited test work has been conducted on these deposits. Comminution Testing Results for key comminution parameters derived from both historical and recent comminution testing are presented in Table 4.3, together with the proportion of LOM ore tonnes to be treated in the plant. Parameters tested were Unconfined Compressive Strength (UCS), Crushing Work Index (CWi), Bond Rod Mill Work Index (RWi), Bond Ball Mill Work Index (BWi), Abrasion Index (Ai) and SAG Mill Competency (SMC). 33
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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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- 19 - (i) Other matters The Direct
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- 21 - The purpose of Resolution 2
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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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- 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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As set out in section 12, the Trans
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15. Sources of information This rep
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esponsible for conducting appropria
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Meadowhead Meadowhead Indemnity The
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Update on Merger with Polymetals - Notice of Meeting

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