Update on Merger with Polymetals - Notice of Meeting

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In accordance with ASIC Class Order 98/100, amounts in the Pro Forma Financial
Information are rounded off to the nearest thousand dollars, unless otherwise
indicated. All amounts are presented in Australian dollars, unless otherwise noted.
(c)
Pro forma adjustments
Australian Accounting Standards require the Merger to be accounted for as an “in
substance acquisition”, with the Company deemed to be the acquirer.
Acquisition accounting will be applied in accordance with AASB 3: Business
Combinations. The value of the acquisition consideration will be measured based
on the value of SXG Shares at close of trading on the Scheme Implementation Date.
For the purposes of the Pro Forma Financial Information, a value of $0.026 per SXG
Share has been assumed, being the closing price of SXG Shares on 5 April 2013
(being the last trading price before the execution of the Scheme Implementation
Agreement and the announcement of the Merger). Consequently, the value of the
acquisition consideration for accounting purposes may differ from the amount
assumed in the Pro Forma Financial Information.
The following pro forma adjustments to the Historical Financial Information have
been made in order to present the Pro Forma Financial Information:
• the acquisition and funding of the Sandstone Gold Project assets by the
Company;
• the divestment of its 50% interest in the White Dam gold project and associated
Drew Hill exploration tenements by Polymetals in May 2013;
• the acquisition of Polymetals by the Company through the issue of 11 New SXG
Shares for each Polymetals Share, being 458,537,981New SXG Shares in total;
• the cancellation of 914,407 Polymetals Shares currently on issue under
Polymetals’ “loan funded share scheme”;
• the issue of 2,375,000 Polymetals Shares upon the vesting of performance
rights under Polymetals’ performance rights plan as a result of the Scheme;
• the issue of 1,939,058 Polymetals Shares to Meadowhead Investments in
consideration for Meadowhead Investments granting the Meadowhead
Indemnity;
• the inclusion of transaction costs totalling approximately $1.5 million associated
with the Merger, thus reducing the overall cash balance of the Merged Group;
and
• the inclusion of other costs of operating SXG and Polymetals from
31 December 2012 to 31 March 2013, totalling $3.5 million.
(d)
Pro Forma Financial Information
This paragraph contains the Pro Forma Financial Information for the Merged Group,
reflecting the combined businesses of the Company and Polymetals. The Pro
Forma Financial Information is presented to provide SXG Shareholders with an
indication of the Merged Group statement of financial position as if the Merger
occurred as at 31 March 2013.