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 Table 4.3 Mean Comminution Test Parameters 1 Deposit Ore in LOM Schedule (%) UCS (Mpa) Mean Test Work Comminution Parameter Value CWi (kWh/t) RWi (kWh/t) BWi (kWh/t) Golden Orb 11.8 – – – 9.0 1 – – King Brown 4.1 – – 11.4 9.5 0.02 337 Dolly Pot 15.1 32.4 6.9 18.0 17.2 0.49 57 Python 22.4 15.0 5.9 16.3 17.1 0.48 86 Dugite 8.9 11.0 13.3 17.9 17.7 0.26 71 Goldstream 3.7 11.7 6.6 18.1 17.8 0.38 77 Tested by comparative index only. Ai SMC (A*b) AMC considers that the results fall within expectations for hardness of the various ore types based on the geological descriptions and core photos. AMC notes that due to lack of sample availability, the comminution variability testing for the King Brown and Golden Orb deposits is below what would normally be undertaken in a definitive study. However, given the size of Marda and the ability to blend from multiple ore sources, AMC considers that the risks to comminution design and plant throughput are considered to be low. Gravity and Cyanidation Leaching Tests Head analyses of the samples tested show generally low levels of elements detrimental to gold recovery by cyanidation. Some samples were slightly elevated in base metals, but considering the ability to blend with multiple pits AMC does not consider this is a significant risk to processing. Gravity and cyanidation testing was undertaken at grind sizes of P80 150 µm and 75 µm to evaluate grind size dependence. Key points from a review of the gravity and cyanidation testing as noted by AMC are: • All samples tested contain a high proportion of gravity gold and therefore justify the inclusion of an efficient gravity gold recovery circuit. • Overall recovery results from the combined gravity and cyanidation leaching tests are very satisfactory with an arithmetic mean result of all samples at around 94%. Goldstream ore results show the lowest recovery. • The recovery dependence on grind size for the range tested was generally low with the exception of Goldstream which showed a 5% to 10% increase in recovery at the finer size. Blends containing Goldstream ore would therefore benefit from finer grinding. • The mean gold grade of the tested samples is generally higher than the LOM grades of the equivalent ore deposit as presented in the feasibility study mine schedule. The biggest deviations are with the King Brown and Python deposits for which tested samples are around double the scheduled grade. The high grade of these tested ore samples might overstate potential recovery for these scheduled ore types, and therefore there is a risk that recovery will be lower than that tested. • Reagent consumptions are moderate for cyanide and moderate to high for lime. 4.1.8.3 Process Plant Background Information Southern Cross acquired the Sandstone processing facility and plans to utilise as much of the plant as possible for refurbishment and relocation to Marda. The preferred configuration is a single mill option. A used suitable single stage semi-autogenous (SAG) mill is purchased which is fed with primary crushed ore using the relocated primary crusher from Sandstone. Southern Cross plans to refurbish, relocate and install remaining appropriate processing equipment to Marda and upgrade where required. 34
BDO CORPORATE FINANCE (WA) PTY LTD Polymetals Mining Limited and Southern Cross Goldfields Limited Technical Specialist's Report Processing Circuit The key unit operations and equipment utilised for the processing facility are as follows: • Primary crushing using the existing track-mounted Terex-Pegson jaw crusher relocated from Sandstone. • Stacking conveyors relocated from Sandstone which allow stockpiling, or direct feeding the mill via a feed bin and apron feeder. • Single stage milling in a proposed 4.27 m diameter SAG mill powered by a 1.25 MW motor. This mill will need to be sourced externally. Circuit classification using Warman 10" cyclones sourced from Sandstone. • Gravity gold recovery using a new Falcon gravity concentrator. Recovery of gravity gold from concentrate to be undertaken by intensive leaching in a new intensive leach reactor, and subsequent electrowinning in a new dedicated gravity cell. • CIL leaching using nine draft tube style mechanically agitated tanks in series. All tanks to be refurbished and relocated from Sandstone. First tank to be leaching only and remaining eight tanks for leaching plus adsorption of gold to carbon. • Recovery of gold from carbon using an integral 1.5 t carbon capacity elution and electrowinning facility relocated from Sandstone. Carbon reactivation in a new horizontal diesel fired kiln. • Reagent mixing and distribution systems, water systems, diesel storage all relocated from Sandstone. 4.1.8.4 Gold Recovery Based on an assessment of test work results of samples from ore sources treated in the first three years, AMC considers that the mean recovery will be approximately 1% lower than the predicted 95% as presented in the financial model. It is not possible to make predictions on the later years of the project without additional test work on samples from these deposits. 4.1.8.5 Plant Throughput Annual ore throughput in the financial model ramps up to 550 ktpa in the second year of the project which is higher than the current plant design throughput of 480 ktpa as presented in the most recent engineering study. The design used a conservative on-line utilisation of 92% and AMC considers that there is potential to increase availability of the mill above this design figure after commissioning and ramp-up. There is insufficient comminution test information on ore types to be treated in the later years of the project to make a throughput prediction. 4.1.8.6 Capital Estimate Plant and Infrastructure Southern Cross has prepared a capital estimate for plant and infrastructure, based on information provided by independent technical specialists in November 2012. This estimate was prepared to an accuracy level of ±20% and included a 20% contingency. The Southern Cross capital estimate is presented in Table 4.4. The costs presented include the removal, refurbishment, relocation and installation of plant and equipment as well as infrastructure items including camp, roads and airstrip, buildings/work-shops, and water supply. A preliminary estimate for tailings storage requirements is also included. 35
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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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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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APPENDIX 2 - VALUATION METHODOLOGIE
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Page 168 and 169: AMC Consultants Pty Ltd ABN 58 008
Page 170 and 171: BDO CORPORATE FINANCE (WA) PTY LTD
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