Update on Merger with Polymetals - Notice of Meeting

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1.2 Rationale for the Merger
The Merger has been proposed as a “merger of equals” and brings together two highly
complementary companies to create a significant gold exploration and development
company.
The Directors’ key reasons for proposing the Merger and for recommending that SXG
Shareholders vote in favour of Resolution 1 are as follows:
The Merger provides an opportunity to create a diversified Australian gold and base
metals company with potential for annual production of 69,000 ounces of gold and a
pipeline of development assets.
The combination of the Company and Polymetals broadens and strengthens the capital
base through the creation of a superior balance sheet, improving funding capability.
The Merged Group will own a significant exploration portfolio with 4,930 km 2
landholdings in highly prospective locations across Australia.
of
The Merger will generate synergies resulting from the consolidation of corporate
overheads and exploration activities.
The Merger combines capable and experienced boards and management with a proven
track record in driving development assets through to production.
The Merged Group will have a cash balance of $13.2M (pro forma 31 March 2013)
which will enable the Merged Group to continue to advance the Marda Gold Project
towards development.
These reasons are explained in further detail in Section 1.10, together with possible
reasons not to vote in favour of Resolution 1.
1.3 Summary of effect of Merger
If the Merger proceeds, the Merged Group will have the following key characteristics, based
on information current as at the Announcement Date (unless otherwise stated):
SXG Polymetals Merged Group
Shares on issue
(million)
408.9 41.7 6 867.5
Market
12.7 13.8 26.5
capitalisation ($m) 1
Cash ($m) 2 3.4 9.8 13.2
Debt ($m) 2 7.0 0.0 7.0
Ore Reserves (oz.) 3 178,500 75,945 254,449
Mineral Resources 1,266,000 361,000 1,627,000
(oz.) 4
Potential annual
35,000 34,000 69,000
production (oz.) 5
Notes:
1. Based on the share prices as at 3 April 2013 (the Business Day prior to a trading halt by both companies).
2. Based on the cash and debt of each company at the end of March 2013.
3. The estimates reflect the total Ore Reserves of the Company and Polymetals as reported to ASX on
10 May 2012 and 29 January 2013 respectively.