TARGET'S STATEMENT. issued by. Primary Gold Limited ACN in relation to the off-market takeover bid by

Transcription

1 TARGET'S STATEMENT issued by Primary Gold Limited ACN in relation to the off-market takeover bid by HGM Resources Pty Ltd ABN a wholly owned subsidiary of Hanking Australia Investment Pty Ltd ABN to acquire all of your shares in Primary Gold Limited for $ cash per share. The Independent Directors of Primary Gold Limited unanimously recommend that you ACCEPT the Offer from HGM Resources Pty Ltd in the absence of a Superior Proposal. THIS IS AN IMPORTANT DOCUMENT If you do not understand it or are in doubt as to how to act, you should consult your lawyer, accountant, stockbroker or financial adviser immediately.

2 LETTER FROM THE CHAIRMAN Dear Fellow Shareholder On 21 February 2018, Primary Gold Limited (ACN ) (PGO) announced that it had entered into the Bid Implementation Agreement with Hanking Australia Investment Pty Ltd (ACN ) (Hanking Australia), and on 6 March 2018, HGM Resources Pty Ltd (ACN ) (HGM), a wholly-owned subsidiary of Hanking Australia, made an off-market all-cash takeover offer for all of the Shares in PGO (Offer). As at 7:30pm (AEST) on 19 March 2018 (being the latest practicable date prior to the lodgement of this Target s Statement with ASIC), HGM and its associates have Voting Power in PGO of 13.20%, and HGM has received acceptance instructions under the Institutional Acceptance Facility in respect of an additional 10.82% of Shares. This Target's Statement sets out your Independent Directors' formal response to the Offer. The Offer Price of $ values the total equity of PGO at approximately $37.2 million on a diluted basis (including vested and 'in the money' Options only) and represents a: 47.4% premium to the ASX closing share price of $ on 16 February 2018, being the last trading day prior to the announcement of the Offer; 48.2% premium to the 10-day VWAP to 16 February 2018 of $0.0388; and 35.4% premium to the 30-day VWAP to 16 February 2018 of $ In order to consider the Offer in detail and comply with the requirements under the Corporations Act, the Independent Directors engaged BDO Corporate Finance (WA) Pty Ltd to prepare an Independent Expert's Report. A copy of the Independent Expert's Report accompanies this Target's Statement in Annexure A and the Independent Directors encourage Shareholders to consider its contents carefully. The Independent Expert has concluded that the Offer is not fair but reasonable. Please refer to Annexure A to review the Independent Expert's Report in full. In making their recommendation to Shareholders, your Independent Directors are also conscious that additional funding may be required in the near term to commence operations at the Coolgardie Gold Project and complete the Pre-Feasibility Study at the Mt Bundy Gold Project. Whilst assessment of funding options was well under way when the Offer from HGM was announced, the Independent Directors unanimously recommend that you ACCEPT the Offer in the absence of a Superior Proposal on the basis that: 1. the Offer Price represents a significant premium to the current trading price of Shares and the trading price of Shares in the period leading up to the Offer; 2. the Independent Expert has concluded that the Offer is not fair but reasonable to the Shareholders of PGO; 3. as at the date of this Target's Statement, the Offer is the only takeover offer capable of acceptance by Shareholders and the Independent Directors have received no notice of any Competing Proposal and are not otherwise aware of any circumstances that could result in a Superior Proposal emerging; 4. the all-cash Offer provides an opportunity for an immediate cash return to Shareholders and to avoid the risks and uncertainties associated with remaining a PGO Shareholder; 5. under the Offer you will not incur brokerage fees; and 6. there are risks in not accepting the Offer. Page i

3 The Independent Directors intend to ACCEPT the Offer for all Shares they hold or otherwise control, in the absence of a Superior Proposal. The Offer opened for acceptance on 6 March 2018 and is currently scheduled to close at 7pm (AEST) on 17 April 2018, unless otherwise varied. Shareholders can ACCEPT the Offer by following the instructions in the Bidder's Statement and on the Acceptance Form. Alternatively, if you are an Eligible Participant, you can accept into HGM's Institutional Acceptance Facility while the Offer remains subject to Conditions. Please refer to HGM's First Supplementary Bidder's Statement for an explanation of how this facility operates. The Independent Directors recommend that you read this Target's Statement in its entirety and in conjunction with the Bidder's Statement you have received from HGM. If you have any questions in relation to your position as a Shareholder I encourage you to seek either financial or legal advice without delay. Yours faithfully Garry Mills Executive Chairman and Managing Director Page ii

4 The Independent Directors unanimously recommend that you ACCEPT the Offer, in the absence of a Superior Proposal, by completing, signing and returning the relevant Acceptance Form enclosed with the Bidder's Statement in accordance with the instructions on the relevant Acceptance Form, given that: 1. The Offer provides a significant premium for your Shares. 2. The Independent Expert has concluded that the Offer is not fair but reasonable. 3. The Independent Directors are not aware of any Superior Proposal. 4. The all-cash Offer provides an opportunity for an immediate cash return to Shareholders and avoids the risks and uncertainties associated with remaining a PGO Shareholder. 5. Under the Offer you will not incur brokerage fees. 6. There are risks in not accepting the Offer. The full basis for the Independent Directors' recommendation is provided in Section 1.3 of this Target's Statement. Page iii

5 Table of Contents Section Page No Letter from the Chairman... i Important Information... v Key Points... vi Important Dates... vi Reasons Why You Should ACCEPT the Offer... vi Frequently Asked Questions... vii 1. Recommendations of the Independent Directors Why you should accept the Offer Important information for the Shareholders to consider Your choices as a Shareholder Key features of the Offer Risks Information relating to PGO Information relating to HGM, Hanking Australia and China Hanking Information relating to the Directors Other material information Authorisation Glossary of terms Annexure A Independent Expert's Report Annexure B PGO ASX Announcements Corporate Directory Page iv

6 IMPORTANT INFORMATION Important Information This is an important document. If you do not understand it or are in doubt as to how to act, you should consult your lawyer, accountant, stockbroker or financial adviser immediately. Shareholder Information If Shareholders have any queries in relation to the Offer, they may call the Company on +61 (08) on weekdays between 9.00am and 5.00pm (Perth time) or visit PGO's website at HGM has established an Offer Information Line which Shareholders may call on (toll free within Australia) or (not toll free from outside Australia) if they have any queries in relation to the Offer. Nature of this document This document is a Target's Statement issued by Primary Gold Limited (ACN ) (PGO) under Part 6.5 Division 3 of the Corporations Act by in response to the offmarket takeover bid made by HGM Resources Pty Ltd ACN (HGM) for all the Shares in PGO. A copy of this Target's Statement was lodged with ASIC and given to ASX on 21 March Neither ASIC or ASX nor any of their respective officers take any responsibility for the content of this Target's Statement. No account of personal circumstances The recommendations of the Independent Directors contained in this Target's Statement do not take into account the individual investment objectives, financial situation or particular needs of each Shareholder. You may wish to seek independent professional advice before making a decision as to whether to accept or accept the Offer. Defined terms This Target's Statement uses a number of capitalised terms that are defined in Section 12, which also contains some of the rules of interpretation that apply to this Target's Statement. Forward-looking statements This Target's Statement contains various forward-looking statements. Statements other than statements of historical fact may be forward-looking statements. Shareholders should note that such statements are subject to inherent risks and uncertainties in that they may be affected by a variety of known and unknown risks, variables and other factors, many of which are beyond the control of PGO. Actual results, values, performance or achievements may differ materially from results, values, performance or achievements expressed or implied in any forward-looking statement. These forward looking statements are based on present economic and business conditions, and on a number of assumptions regarding future events and actions that, as at the date of this Target's Statement, are considered reasonable. None of PGO, its officers, any person named in this Target's Statement with their consent or any person involved in the preparation of this Target's Statement makes any representation or warranty (express or implied) as to the accuracy or likelihood of fulfilment of any forward-looking statement, or any results, values, performances or achievements expressed or implied in any forward-looking statement, except to the extent required by law. Shareholders should not place undue reliance on any such statement. The forward-looking statements in this Target's Statement on behalf of PGO only reflect views held as at the date of this Target's Statement. Notice to foreign shareholders The distribution of this Target's Statement may, in some countries, be restricted by law or regulation. Persons who come into possession of this Target's Statement should inform themselves of and observe those restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. This Target's Statement has been prepared in accordance with Australian law and the information contained in this Target's Statement may not be the same as that which would have been disclosed if this Target's Statement had been prepared in accordance with laws and regulations outside of Australia. Disclaimer as to information Except where disclosed otherwise, the information on HGM, Hanking Australia and China Hanking in this Target's Statement has been obtained from the Bidder's Statement and other publicly available information. PGO and its Independent Directors are unable to verify the accuracy or completeness of the information on HGM, Hanking Australia or China Hanking (as applicable). Subject to the Corporations Act, neither PGO, nor its officers make any representation or warranty, express or implied, regarding such information and disclaim any responsibility in respect of that information. Similarly, this Target's Statement contains references to the Bidder's Statement. Neither PGO nor any Independent Director takes any responsibility for the contents of the Bidder's Statement or any part of the Bidder's Statement. Parts and sections of the Bidder's Statement referred to in this Target's Statement do not form part of this Target's Statement. Resources The statements in this Target's Statement about PGO's resource estimates have been extracted without material amendment from reports and statements previously filed by PGO with ASX. Maps and diagrams Any diagrams, charts, maps, graphs and tables appearing in this Target's Statement are illustrative only and may not be drawn to scale. Unless stated otherwise, all data contained in diagrams, charts, maps, graphs and tables is based on information available at the date of this Target's Statement. Privacy statement PGO has collected your information from the Share Register for the purpose of providing you with this Target's Statement. The type of information that PGO has collected about you includes your name, contact details and information on your shareholding in PGO. The Corporations Act requires the name and address of Shareholders to be held in a public register. PGO has also provided or will provide personal information about its Shareholders to HGM in accordance with the Corporations Act and the ASX Settlement Operating Rules. Page v

7 KEY POINTS HGM is offering $ in cash for each Share you hold. As at 7:30pm (AEST) on 19 March 2018 (being the latest practicable date prior to the lodgement of this Target s Statement with ASIC), HGM and its associates have Voting Power in PGO of 13.20%, and HGM has received acceptance instructions under the Institutional Acceptance Facility in respect of an additional 10.82% of Shares. Your choices are to: 1. ACCEPT the Offer and sell all of your Shares off-market to HGM at the Offer Price. The Independent Directors recommend that you ACCEPT the Offer in the absence of a Superior Proposal. 2. Sell your Shares on- or off-market to a third party (unless you have previously accepted the Offer and not validly withdrawn your acceptance). 3. Reject the Offer and do nothing. The Offer is off-market. If you do accept the Offer or otherwise sell your Shares, you will not be able to participate in any Superior Proposal or other offer that may emerge, subject to you being entitled to withdraw your acceptance in accordance with the Corporations Act. The Offer will expire on 7pm (AEST) on 17 April 2018 (unless extended or withdrawn by HGM beforehand). IMPORTANT DATES Event Date Bidder's Statement lodged with ASIC, ASX and served on PGO 2 March 2018 Offer Period commenced 6 March 2018 Date of this Target's Statement 21 March 2018 Close of the Offer Period (unless extended or withdrawn) 17 April 2018 Note: Please refer to Section 5 for further information regarding extension, variation and/or withdrawal of the Offer. REASONS WHY YOU SHOULD ACCEPT THE OFFER The Offer provides a significant premium for your Shares. Section 2.1(a) The Independent Expert has concluded that the Offer is not fair but reasonable. The Independent Directors are not aware of any Superior Proposal. The all-cash Offer provides an opportunity for an immediate cash return to Shareholders and avoids the risks and uncertainties associated with remaining a PGO Shareholder. Under the Offer you will not incur brokerage fees. There are risks in not accepting the Offer. Section 2.1(b) Section 2.1(c) Section 2.1(d) Section 2.1(e) Section 2.1(f) Page vi

8 FREQUENTLY ASKED QUESTIONS This Section is not intended to address all issues relevant to you. This Section should be read together with all other parts of this Target's Statement. Question Answer Further Information Takeover Documents What is the Bidder's Statement? What is the Target's Statement? The Offer Who is making the Offer? What is the Offer for my Shares? The Bidder's Statement is the document from HGM (and is supplemented by the First Supplementary Bidder's Statement) containing the Offer. You should have received a copy of the Bidder's Statement prior to this Target's Statement. This document is the Target's Statement. The Target's Statement contains PGO's formal response to the Offer and includes the recommendations of the Independent Directors in relation to the Offer. The Independent Directors encourage you to review the information in this Target's Statement and the Bidder's Statement carefully before making a decision as to whether to accept the Offer. HGM Resources Pty Ltd (ACN ) (HGM), a wholly owned subsidiary of Hanking Australia Investment Pty Ltd (ACN ) (Hanking Australia), which is a subsidiary of China Hanking Holdings Limited (China Hanking). China Hanking is a diversified international mining company listed on the Hong Kong Stock Exchange (HKSE:03788) with operations and investments in Australia, China and Indonesia. For the half year ended 30 June 2017, China Hanking generated profit of approximately $160 million. In Australia, China Hanking currently operates through its local subsidiaries, including Hanking Australia and HGM. Dr Mark Qiu is a director of HGM, Hanking Australia and China Hanking, and a non-executive director of PGO. Dr Mark Qiu has not participated in the Independent Director's response to HGM's Offer. HGM is offering, via an off-market takeover bid, to acquire all of the fully paid ordinary shares in PGO at $ cash for each Share. The Offer has been open for acceptance since 6 March 2018 and will remain open until 7pm (AEST) on 17 April 2018, unless extended or withdrawn by HGM. - - Section 8 Bidder's Statement section 2 Section 5 Bidder's Statement paragraphs 1 and 2 of schedule 1 Page vii

9 Question Answer Further Information What are the conditions of the Offer? Can HGM vary the Offer? Your Choices What choices do I have as a Shareholder? What is the Independent The Offer is conditional upon the satisfaction or waiver of each of the Conditions, comprising: a Minimum Acceptance Condition that HGM acquire a Relevant Interest in more than 50% of Shares on a Fully Diluted Basis; FIRB approval; no Material Adverse Event in relation to PGO; the S&P/ASX All Ordinaries Gold (Sub-Industry) index not falling by 10% for five consecutive Business Days; the spot price of gold not falling below $1,500 per ounce for five consecutive Business Days; and other customary conditions set out in the Bid Implementation Agreement. If the Conditions are not satisfied before the Offer closes or waived within the prescribed period, then the Offer will lapse and all acceptances of the Offer will be void. If this occurs, you will continue to hold your Shares and be free to deal with them as if the Offer had not been made. Yes, HGM can vary the Offer by increasing the consideration offered, waiving any of the Conditions or extending the Offer Period. The Independent Directors have been advised that HGM has no present intention to vary its Offer, but that HGM reserves its right to do so. As a Shareholder you can: ACCEPT the Offer and sell all of your Shares offmarket to HGM and receive $ cash consideration for each Share. The Independent Directors recommend that you ACCEPT the Offer, in the absence of a Superior Proposal; or sell your Shares on-market or off-market to a third party (unless you have previously accepted the Offer and not validly withdrawn your acceptance); or reject the Offer by doing nothing. While the Offer remains subject to Conditions, Eligible Participants can accept into the Institutional Acceptance Facility. The Independent Expert has valued the Shares on a control basis at between $0.068 and $0.107 per Share, with a preferred value of $0.088, and has concluded that the Offer is not fair but reasonable to the Sections 5.3 and 5.4 Bidder's Statement schedule 2 and paragraphs 6 and 7 of schedule 1 Section 5.5 Bidder's Statement paragraph 10 of schedule 1 Section 4 and 5.8 HGM's First Supplementary Bidder's Statement Annexure A Page viii

10 Question Answer Further Information Expert's conclusion? Shareholders. The Independent Expert's Report is in Annexure A. What are the Independent Directors recommending? What do the Independent Directors intend to do with their Shares and Options? The Independent Directors unanimously recommend that you ACCEPT the Offer, in the absence of a Superior Proposal, for the reasons set out in this Target's Statement. Each of the Independent Directors holds Shares and has agreed to accept, or to procure the acceptance of, the Offer, in respect of all of the Shares controlled or held by or on behalf of that Independent Director or his associates, in the absence of a Superior Proposal. As at the date of this Target's Statement, the Independent Directors have not yet made a decision on whether they will exercise their vested and in-themoney Options during the Offer Period and (in the absence of a Superior Proposal for PGO) accept, or to procure the acceptance of, the Offer in respect of the Shares issued on the exercise of those Options. Sections 1 and 2.1 Section 1.4 Acceptance of the Offer How do I accept the Offer? What are the consequences of accepting the Offer now? If I accept the Offer now, can I withdraw my acceptance? Can I be forced to sell my Shares? When does the Offer close? To accept the Offer, you should carefully follow the instructions in paragraph 3 of schedule 1 of the Bidder's Statement and the Acceptance Form. Please note that you can only accept the Offer in relation to all of your Shares. If you accept the Offer now and do not validly withdraw your acceptance: you will not be able to participate in any Superior Proposal made by a third party; and you will not be able to sell your Shares. You may only withdraw your acceptance in the following limited circumstances: if the Offer is still subject to any of the Conditions and HGM varies the Offer in a way that extends by more than 1 month the time it has to provide consideration under the Offer. You cannot be forced to sell your Shares unless HGM proceeds to compulsory acquisition. If HGM proceeds to compulsory acquisition you will receive the same consideration as if you had accepted the Offer. The Offer is presently scheduled to close at 7pm (AEST) on 17 April 2018, but the Offer Period can be extended in certain circumstances in accordance with the Corporations Act. Section 4(a) Bidder's Statement paragraph 3 of schedule 1 Sections 2.1(c), 2.2(b) and 3.9 Section 5.7 Section 5.11 Bidder's Statement section 4.2 Sections 5.2 and 5.5 Page ix

11 Question Answer Further Information When will I be paid if I accept the Offer? If you accept the Offer, you will have to wait for the Offer to become unconditional before HGM will pay you the Offer consideration. You will receive your Offer consideration within 21 days after the later of the date that you accept the Offer and the Offer becoming or being declared unconditional. Section 4(a) Bidder's Statement paragraph 8 of schedule 1 Additional Information Will there be any costs associated with accepting the Offer? What are the tax implications of accepting the Offer? Can overseas Shareholders accept the Offer? How do I get updates on the Share price? Further enquiries No brokerage or stamp duty will be payable as a result of your acceptance of the Offer. However, if you hold your Shares through CHESS or through a bank, custodian or other nominee, you should ask your Controlling Participant (normally your stockbroker) or nominee whether it will charge any transaction fees or service charges in connection with acceptance of the Offer. A general outline of the tax implications for certain Australian resident Shareholders of accepting the Offer is set out in Section 10.5 of this Target's Statement and section 7 of the Bidder's Statement. You should not rely on these outlines as advice on your own affairs. They do not deal with the position of particular Shareholders. You should seek your own personal, independent financial and taxation advice before making a decision as to whether to accept or accept the Offer for your Shares. The Bidder's Statement does not constitute an offer in any jurisdiction in which, or to any person to which, it would not be lawful to make such an offer. It is your sole responsibility to satisfy yourself that you are permitted by any foreign law applicable to you to accept the Offer. Payment of any consideration under the Offer is subject to paragraph 8 of schedule 1 of the Bidder's Statement. It is very likely that the market trading price for Shares will vary during the Offer Period. You can check the market price for all ASX listed securities by visiting The ticker code for Shares is PGO. For further information in relation to the Offer: call the Offer Information Line established by HGM on (toll free within Australia) or (not toll free from outside Australia); Section 2.1(e) Bidder's Statement paragraph 11 of schedule 1 Section 10.5 Bidder's Statement - section 7 Bidder's Statement "Important Notices" and paragraph 8 of schedule Page x

12 Question Answer Further Information see the Bidder's Statement for the full terms and conditions of the Offer; and consult your broker, financial adviser, accountant, lawyer, taxation specialist and/or any other professional adviser. Page xi

13 1. Recommendations of the Independent Directors 1.1 Summary of the Offer The consideration being offered by HGM under the Offer is $ in cash for each Share you own. The Offer is a cash offer and is conditional upon the satisfaction or waiver of each of the Conditions, including the Minimum Acceptance Condition (as described in further detail in Section 5.3). 1.2 Directors of PGO As at the date of this Target's Statement, the directors of PGO are: Mr Garry Mills Executive Chairman and Managing Director; Mr Tony Patrizi Non-Executive Director; and Dr Mark Qiu Non-Executive Director. PGO established an Independent Board Committee comprising Messrs Mills and Patrizi to consider matters in relation to the Offer. Dr Qiu is not a member of the Independent Board Committee due to his relationship with HGM and its associates (Dr Qiu is a director of HGM, Hanking Australia and China Hanking). Given his relationship with HGM, Dr Qiu does not consider it is appropriate for him to make any recommendation in relation to the Offer. Accordingly, Dr Qiu has not participated in the consideration given by the Independent Directors to the Offer. 1.3 Independent Directors' recommendation After taking into account each of the matters in this Target's Statement (including the Independent Expert's Report) and in the Bidder's Statement, each of the Independent Directors recommend that you ACCEPT the Offer, in the absence of a Superior Proposal. In making this recommendation, each Independent Director has considered the merits of the Offer and weighed up the factors for and against acceptance. A summary of the reasons for the Independent Directors' recommendation is provided in Section 2. When making your decision, you should: read the whole of this Target's Statement (including the Independent Expert's Report) and the Bidder's Statement in their entirety; carefully consider the terms and conditions of the Offer, as set out in schedules 1 and 2 of the Bidder's Statement and summarised in Section 5 below, and be aware that the Offer is conditional upon the Conditions being satisfied or waived, including the Minimum Acceptance Condition; carefully consider the choices available to you as a Shareholder, including the risks in not accepting the Offer as set out in Section 2.1(f) and the consequences of becoming a minority Shareholder, as set out in Section 3.5; Page 1

14 have regard to your individual risk profile, portfolio strategy, tax position and financial circumstances; and obtain personal advice from your broker, financial adviser, accountant, lawyer, taxation specialist and/or any other professional adviser in regard to the Offer and the effect of accepting the Offer. The Independent Directors' recommendation is given as at the date of this Target's Statement. The Independent Directors reserve the right to change their recommendation should new circumstances arise such as, for example, a change in the opinion of the Offer by the Independent Expert to not fair and not reasonable in any subsequent version of the Independent Expert's Report which may be published. 1.4 Intentions of the Independent Directors in relation to the Offer Each of the Independent Directors holds or controls Shares and Options as set out in Section 9.1. Each of the Independent Directors intends to accept, or to procure the acceptance of, the Offer, in respect of all of the Shares controlled or held by or on behalf of that Director or his associates, in the absence of a Superior Proposal and subject to the Independent Expert continuing to conclude that the Offer is not fair but reasonable, within 5 Business Days after this Target's Statement and the Independent Expert's Report have been released to the ASX. As at the date of this Target's Statement, the Independent Directors have not yet made a decision on whether they will exercise their vested and in-the-money Options during the Offer Period and (in the absence of a Superior Proposal for PGO) accept, or to procure the acceptance of, the Offer in respect of the Shares issued on the exercise of those Options. 1.5 Further developments Should there be any developments during the Offer Period (for example, the emergence of a Superior Proposal from another bidder) which would alter the Independent Directors' recommendations in relation to the Offer, you will be notified through an ASX announcement and/or a supplementary target's statement. Page 2

15 2. Why you should accept the Offer 2.1 Reasons to accept the Offer The Offer provides a significant premium for your Shares Shareholders who accept the Offer will receive $ in cash per Share, which represents a: (i) 47.4% premium to the ASX closing share price of $ on 16 February 2018, being the last trading day prior to announcement of the Offer; (ii) 48.2% premium to the 10-day VWAP to 16 February 2018 of $0.0388; (iii) 35.4% premium to the 30-day VWAP to 16 February 2018 of $0.0425; and (iv) 21.7% premium to the 90-day VWAP to 16 February 2018 of $ The Independent Expert has concluded that the Offer is NOT FAIR BUT REASONABLE The Independent Directors appointed BDO Corporate Finance (WA) Pty Ltd to prepare the Independent Expert's Report in connection with the Offer. As part of the Independent Expert's Report, CSA Global Pty Ltd was commissioned to prepare an Independent Technical Assessment and Valuation (Appendix 4 of the Independent Expert's Report). In section 2.3 of the Independent Expert's Report (set out in Annexure A of this Target's Statement), the Independent Expert states the following opinion: "We have considered the terms of the Offer as outlined in the body of this report and have concluded that the Offer is not fair but reasonable to Shareholders. Despite being not fair, we consider the Offer to be reasonable because, in particular, if the Offer is not accepted, Shareholders will continue to hold shares in a Company that has a material uncertainty surrounding its ability to continue as a going concern. This means that the Company will require additional funding in the short to medium term, which will dilute Shareholders interests. Further, given this uncertainty, if the Offer is not accepted, the assessed values presented in our report and in CSA s report may not be realisable in the future." As stated in the Independent Expert's Report, the Independent Expert came to the following conclusions in respect of the Offer: (i) The value of a PGO Share on a control basis is in the range of $0.068 and $0.107 with a preferred value of $0.088 as compared to the Offer Price of $ and therefore the Offer is not fair (section 12 of the Independent Expert's Report). Page 3

16 (ii) If the Offer is not accepted, Shareholders will continue to hold shares in a company that has a material uncertainty surrounding its ability to continue as a going concern. This means that PGO will require additional funding in the short to medium term, which will dilute Shareholders interests. Further, given this uncertainty, if the Offer is not accepted, the assessed values presented in the Independent Expert's Report (including CSA's report) may not be realisable in the future. On this basis, the Offer is reasonable (section 14 of the Independent Expert's Report). A copy of the Independent Expert's Report is set out in Annexure A. The Independent Directors recommend that you read the Independent Expert's Report carefully before making a decision with respect to the Offer. The Independent Directors are not aware of any Superior Proposal As at the date of this Target's Statement, there is no other offer for your Shares. Further, the Independent Directors have received no notice of any Competing Proposal and are not otherwise aware of any circumstances that could result in a Superior Proposal emerging. The Independent Directors consider the prospect of a Superior Proposal emerging is remote, given that more than 1 month has elapsed since the Offer was publicly announced and that as at 7:30pm (AEST) on 19 March 2018 (being the latest practicable date prior to the lodgement of this Target s Statement with ASIC), HGM and its associates have Voting Power in PGO of 13.20%, and HGM has received acceptance instructions under the Institutional Acceptance Facility in respect of an additional 10.82% of Shares. Although many factors affect the price of a PGO Share, the Independent Directors believe that if HGM does not acquire all of the PGO Shares and no Superior Proposal is announced and successfully implemented, the PGO Share price may fall to levels at, or below, which the PGO Share price traded up to and including 16 February 2018, being the last trading day prior to the announcement of the Offer. Together, the Independent Directors hold or otherwise control 4.13% of Shares and they are obligated to accept the Offer within 5 Business Days of release of this Target's Statement, in the absence of a Superior Proposal. The Independent Directors will keep Shareholders informed of any material developments. The Offer provides an opportunity for an immediate cash return to Shareholders and avoids the risks and uncertainties associated with remaining a PGO Shareholder The Offer Price of $ cash per Share provides certainty of value. In addition to offering a significant premium, the Offer provides Shareholders with a liquidity event whereby all Shareholders are given the opportunity to realise immediate value for their investment in PGO. In making their recommendation to Shareholders, your Independent Directors are also conscious that the development of the Mt Bundy and/or Coolgardie Gold Project by PGO for production without a joint venture partner may require an injection of capital, and there are no guarantees that such capital Page 4

17 could be secured on terms that would not result in the significant dilution of existing Shareholders, or at all. If the Offer is unsuccessful, Shareholders will continue to be exposed to the risks associated with PGO's operational and project funding commitments, including the risks that: (i) (ii) PGO will be unable to fund one or more of its existing Projects; and PGO will, in the short to medium term, be unable to raise equity or debt capital required to fund its ongoing operations. As contemplated by the Bid Implementation Agreement, HGM has extended to PGO a short-term loan facility of $1.5 million which is repayable within 3 months after the end of the Offer Period. As at the date of this Target's Statement, no amounts have been advanced under the loan facility. If the Offer is not successful, for example due to insufficient acceptances of the Offer, any amounts drawn down will become repayable and alternative sources of that funding will be required within a short period. In the event that such funding is obtained via an equity raising, existing Shareholders will be diluted (other than in the case of an entitlements issue). If you accept the Offer, you will cease to be exposed to the risks associated with potential share price volatility due to general share market conditions and underlying business performance. For further discussion of the risks associated with PGO's business, see Section 6. Under the Offer you will not incur brokerage fees By accepting the Offer you will receive (subject to the Conditions being satisfied or waived) the Offer Price of $ cash per Share. You will not incur any brokerage fees, which may be incurred if you choose to sell your Shares on the ASX. However, if you hold your Shares through CHESS or through a bank, custodian or other nominee, you should ask your Controlling Participant (normally your stockbroker) or nominee whether it will charge any transaction fees or service charges in connection with acceptance of the Offer. There are risks in not accepting the Offer At the end of the Offer Period, any Shareholders who do not accept the Offer and retain their Shares will be subject to the following risks: (i) if the Offer is successful but HGM does not become entitled to compulsorily acquire all outstanding Shares (see Section 5.11), then HGM could ultimately have a shareholding of more than 50% but less than the 90% shareholding required for compulsory acquisition HGM would nevertheless still be able to (among other things) control the composition of the board of PGO and significantly influence the direction of PGO generally. As at 7:30pm (AEST) on 19 March 2018 (being the latest practicable date prior to the lodgement of this Target s Statement with ASIC), HGM and its associates have Voting Power in PGO of 13.20%, and HGM has received acceptance Page 5

18 instructions under the Institutional Acceptance Facility in respect of an additional 10.82% of Shares; (ii) (iii) (iv) (v) if HGM acquires 75% (or more) of Shares, it will, subject to applicable voting exclusions in the Corporations Act and, if PGO remains listed, the Listing Rules, be able to pass a special resolution at a general meeting of Shareholders. This would enable HGM to, among other things, change the constitution of PGO; regardless of whether the Offer is successful or not, the price of Shares may fall following the end of the Offer Period if no Superior Proposal emerges, and it is unlikely that the price of Shares will reflect any takeover premium; regardless of whether the Offer is successful or not, the liquidity of your Shares may be lower than at present, potentially affecting your ability to dispose of your Shares; and if the number of Shareholders is fewer than required by the Listing Rules to maintain an ASX listing, then HGM may seek to have PGO removed from the official list of ASX and Shares will not be able to be bought or sold on the ASX post-delisting. 2.2 Other considerations and risks in deciding whether to accept the Offer Although the Independent Directors unanimously recommend that you ACCEPT the Offer, there may be a number of disadvantages in doing so. A summary of some of those disadvantages is set out below. This summary is not exhaustive and you should have regard to your own personal investment objectives and financial circumstances, and should consult your professional advisers, before deciding whether or not to accept the Offer. You may believe the Offer Price is inadequate and/or disagree with the conclusion of the Independent Expert and the recommendation of the Independent Directors You may hold a different view to the Independent Expert and the Independent Directors that the Offer is reasonable, and believe that the Offer Price of $ in cash per Share is inadequate. You may wish to accept a Superior Proposal if one was to emerge You may believe that a Superior Proposal will emerge for PGO. Accepting the Offer will deny you the benefit of any subsequent Superior Proposal by another bidder should one emerge during the Offer Period, unless you become entitled to withdraw your acceptance or the Offer lapses. You will also give up your right to deal with your Shares whilst the Offer remains open. However, as at the date of this Target's Statement, no alternative proposal which is capable of acceptance by Shareholders has been received and the Independent Directors have received no notice of any Competing Proposal and are not otherwise aware of any circumstances that could result in a Superior Proposal emerging. Page 6

19 You may wish to remain a Shareholder If you accept the Offer, you will no longer be entitled to participate in the future financial performance of PGO or exercise the rights of a Shareholder. You may believe that the Offer will not be successful You may believe that the Offer will not be successful, including due to the Minimum Acceptance Condition not being satisfied or waived. However, you should be aware that as at 7:30pm (AEST) on 19 March 2018 (being the latest practicable date prior to the lodgement of this Target s Statement with ASIC), HGM and its associates have Voting Power in PGO of 13.20%, and HGM has received acceptance instructions under the Institutional Acceptance Facility in respect of an additional 10.82% of Shares. You may wish to sell your Shares on-market You may wish to cash out your investment in PGO on market. By doing so you would receive the proceeds of that sale of your investment sooner than the consideration under the Offer. However, you should note that as at the close of trading on 19 March 2018 (being the latest practicable date prior to the lodgement of this Target's Statement with ASIC), the price of Shares was $0.050, which is less than the $ cash that you will receive for each Share under the Offer (subject to it becoming unconditional). You should also be aware that you will incur brokerage in any on-market sale. The tax consequences or implications of accepting the Offer may not suit your financial position or circumstances No capital gains scrip-for-scrip rollover relief is available under HGM's cash Offer. If you are an Australian resident for tax purposes, you may stand to make a capital gain by accepting the Offer and depending on your personal circumstances, you may be required to pay tax (in cash) on any gains. See Section 10.5 below and section 7 of the Bidder's Statement for an overview of the tax consequences for accepting the Offer. Shareholders should not rely upon the taxation considerations in these overviews as being advice on their own affairs. The Independent Directors encourage Shareholders to consult with their own independent taxation advisers regarding the taxation implications of accepting the Offer given their own particular circumstances. Page 7

20 3. Important information for the Shareholders to consider 3.1 HGM's Offer On 21 February 2018, PGO announced that it had entered into the Bid Implementation Agreement with Hanking Australia pursuant to which HGM has made the Offer. A summary of the Offer, which is conditional on the satisfaction of a number of Conditions, including the Minimum Acceptance Condition, is contained in Section 5. The Offer opened on 6 March 2018 and is open for acceptance until 7pm (AEST) on 17 April 2018, unless it is extended or withdrawn (Sections 5.5 and 5.6 describe the circumstances in which HGM can extend or withdraw its Offer). 3.2 Information about PGO Section 7 contains detailed information about PGO. A summary of the risks and uncertainties associated with an investment in PGO is set out in Section 6. Those risks (and other risks) will continue to be relevant to Shareholders who do not accept the Offer and retain their current investment in PGO. These risks will also continue to be relevant to all Shareholders if the Offer is not successful. 3.3 Information about HGM, Hanking Australia and China Hanking Section 8 contains an overview of HGM, Hanking Australia and China Hanking. Section 2 of the Bidder's Statement contains detailed information about HGM, Hanking Australia and China Hanking. 3.4 Independent Expert's Report PGO engaged BDO to provide an independent expert's report stating whether, in its opinion, the Offer is fair and reasonable and giving reasons for forming that opinion. A copy of the Independent Expert's Report accompanies this Target's Statement in Annexure A. The Independent Directors recommend that you read the report in full. The Independent Expert has concluded that the Offer is not fair but reasonable to the Shareholders of PGO. 3.5 Minority ownership consequences The Offer is presently subject to the Minimum Acceptance Condition of HGM acquiring a Relevant Interest in at least 50% of all Shares on issue, on a Fully Diluted Basis during or before the end of the Offer Period. If the Offer becomes or is declared unconditional and HGM: does not acquire all of the Shares, but acquires the majority of the Shares (i.e. more than 50% of Shares); and is not entitled to, or elects not to, compulsorily acquire the rest of the Shares under the Corporations Act, there may be a number of possible implications for Shareholders, including: Page 8

21 HGM will be in a position to cast the majority of votes at a general meeting of PGO. This will enable HGM to control the composition of PGO's board of directors and senior management, determine PGO's fundraising plans and dividend policy as well as control the strategic direction of PGO; if HGM acquires 75% or more of the Shares it will be able to pass special resolutions at meetings of Shareholders. This will enable HGM to, among other things, change PGO's constitution; HGM has indicated that if it acquires 50% or more but less than 90% of the Shares: (i) (ii) (iii) it proposes to seek the appointment of a majority of HGM nominees to the Board although it has not made a decision as to who would be nominated for appointment; it will consider whether it is appropriate to maintain PGO's listing on ASX, having regard to considerations such as the costs associated with maintaining that listing, HGM's final level of ownership, the number of remaining shareholders in PGO and the level of trading in Shares; and it may, at some later time, acquire further Shares and Options in a manner permitted by the Corporations Act, including pursuant to compulsory acquisition under Part 6A.2 of the Corporations Act if it becomes so entitled; and the liquidity of Shares may be affected, particularly if PGO is removed from the official list of ASX; and Shares may trade at prices lower than they did prior to the announcement of the Offer. Section 4 of the Bidder's Statement sets out the details of HGM's intentions in relation to PGO. 3.6 Compulsory acquisition HGM has indicated in section 4.2 of its Bidder's Statement that it has not yet made a decision as to whether it will proceed to compulsorily acquire all remaining Shares if it is entitled to do so, however it reserves the right to do so. See Section 5.11 for further information. 3.7 Dividend issues for Shareholders PGO has not paid a dividend to Shareholders since listing on the ASX. The Independent Directors consider it unlikely that PGO will pay dividends in the 2018 financial year. 3.8 Considerations in favour of accepting the Offer HGM has set out its views on the considerations in favour of accepting the Offer in the Bidder's Statement. The Independent Directors have also set out their views on the considerations in favour of accepting the Offer in Section 2.1. Page 9

22 The Independent Directors encourage you to review the Bidder's Statement and this Target's Statement in their entirety. 3.9 Other alternatives to the Offer As at the date of this Target's Statement, no alternative proposal which is capable of acceptance by Shareholders has been received and the Independent Directors have received no notice of any Competing Proposal and are not otherwise aware of any circumstances that could result in a Superior Proposal emerging. The Independent Directors will keep Shareholders informed of any material developments Taxation consequences of a change in control in PGO The taxation consequences of accepting the Offer depend on a number of factors and will vary depending on your particular circumstances. A general outline of the Australian taxation considerations of accepting the Offer is set out in Section 10.5 of this Target's Statement and section 7 of the Bidder's Statement. You should carefully read and consider the taxation consequences of accepting the Offer. The outlines provided in the Bidder's Statement and the Target's Statement are of a general nature only and you should seek your own specific professional advice as to the taxation implications applicable to your circumstances Company announcements PGO is a disclosing entity under the Corporations Act. It is subject to regular reporting and disclosure obligations under both the Corporations Act and the Listing Rules. Copies of announcements lodged with ASX can be obtained from ASX's website at under the code "PGO" or from PGO's website at A list of announcements made by PGO to ASX between 31 October 2017 (the date of release of PGO's annual report for the financial year end 30 June 2017) and the date of this Target's Statement is set out in Annexure B. This information may be relevant to your assessment of the Offer. Page 10

23 4. Your choices as a Shareholder In considering whether to accept the Offer, the Independent Directors encourage you to read this Target's Statement and seek professional advice if you are unsure as to whether or not accepting the Offer is in your best interests, taking into account your individual circumstances. The Bidder's Statement contains important information which you are urged to read carefully. PGO has not undertaken investigations to verify the accuracy or completeness of the information contained in the Bidder's Statement and neither PGO nor its Independent Directors or advisers makes any representation as to the accuracy or completeness of information contained in the Bidder's Statement. To the fullest extent permitted by law, each of those parties disclaims liability to any person who acts in reliance of that information. You can find information about PGO and its activities on the PGO website at During the Offer Period you have the following choices: ACCEPT the Offer The Independent Directors recommend that you ACCEPT the Offer, in the absence of a Superior Proposal. If you wish to accept the Offer for all of your Shares, you should follow the instructions in paragraph 3 of schedule 1 to the Bidder's Statement and the Acceptance Form. If you accept the Offer, you will be entitled to receive $ in cash for every 1 Share that you hold and transfer to HGM. You will only receive the Offer consideration if each of the Conditions to the Offer are either satisfied or waived within the prescribed periods. While the Offer remains subject to Conditions, Eligible Participants can accept into the Institutional Acceptance Facility. The consequences of accepting the Offer and the limited circumstances in which acceptances of the Offer may be withdrawn are discussed in Section 5. Shareholders who accept the Offer may be liable for income tax, including by reference to a capital gain made on the sale, but will not incur a brokerage charge. 1 If you accept the Offer, you are unable to accept any Superior Proposal if one emerges or otherwise sell your Shares as set out in Section (b) below. Sell your Shares During the Offer Period, you may sell all or some of your Shares on-market or off-market, provided you have not already accepted the Offer for those Shares. If you sell any of your Shares, you may receive the agreed 1 However, if you hold your Shares through CHESS or through a bank, custodian or other nominee, you should ask your Controlling Participant (normally your stockbroker) or nominee whether it will charge any transaction fees or service charges in connection with acceptance of the Offer. Page 11

24 consideration for your Shares sooner than if you accept the Offer. However, you should note that as at the close of trading on 19 March 2018 (being the latest practicable date prior to the lodgement of this Target's Statement with ASIC), the price of Shares was $0.050, which is less than the $ cash that you will receive for each Share under the Offer (subject to it becoming unconditional). If you sell any or all of your Shares, you: (i) (ii) (iii) (iv) will lose the ability to accept the Offer in respect of those Shares; may be liable for CGT or income tax on the sale of those Shares; may incur a brokerage fee; and will lose the opportunity to receive any future returns from PGO in respect of those Shares, if the Offer is not successfully completed. If you are considering selling your Shares on- or off-market, you should contact your broker for information on how to do so and your tax adviser to determine your tax implications from such a sale. Please note that you cannot sell your Shares on- or off-market if you have accepted the Offer and have not validly withdrawn your acceptance. Reject the Offer and retain your Shares If you wish to retain your Shares, you need take no action in relation to the Offer. You should note that if HGM acquires 90% of Shares and the compulsory acquisition provisions of the Corporations Act are satisfied, HGM will be entitled to compulsorily acquire the Shares that it does not already own. You should also note that if: (i) (ii) the Minimum Acceptance Condition is satisfied or waived by HGM and the Offer is declared unconditional; and HGM acquires Voting Power in more than 50% but less than 90% of all Shares on issue, you will be exposed to the risks associated with being a minority Shareholder. See Section 3.5 for further details. Page 12

25 5. Key features of the Offer 5.1 Off-market takeover bid On 21 February 2018, PGO announced that it had entered into a Bid Implementation Agreement with Hanking Australia pursuant to which the parties agreed to implement an off-market takeover bid by Hanking Australia or its wholly owned subsidiary, HGM, to acquire all Shares that exist or will exist any time during the Offer Period (Offer). The Offer also extends to all new Shares that are issued during the Offer Period as a result of the exercise of the Options on issue as at 2 March However, HGM is not offering to acquire any Options themselves. The consideration being offered by HGM is $ for each Share. The Offer is conditional upon the satisfaction or waiver of each of the Conditions, including the Minimum Acceptance Condition (as described in further detail in Section 5.3 below). A summary of the Bid Implementation Agreement is contained in Section 10.1 of this Target's Statement and in section 8.2 of the Bidder's Statement. The conduct of the Offer is otherwise governed by the terms and conditions set out in the Bidder's Statement. 5.2 Offer Period Unless the Offer is extended or withdrawn, it is open for acceptance from 6 March 2018 until 7pm (AEST) on 17 April The circumstances in which HGM may vary or withdraw its Offer are set out in Sections 5.5 and 5.6 respectively. 5.3 Conditions of the Offer The Offer is subject to a number of conditions, which are set out in full in schedule 2 of the Bidder's Statement. By way of broad overview, the conditions to the Offer are: (Minimum Acceptance Condition): HGM having a Relevant Interest in at least 50% of all Shares on a Fully Diluted Basis at the end of the Offer Period; (FIRB approval) FIRB having approved the proposed acquisition by HGM of all the Shares before the end of the Offer Period; (no breach): HGM does not become entitled to terminate the Bid Implementation Agreement before the end of the Offer Period; (no change of control or pre-emptive rights): no person has any pre-emptive or other right as a result of HGM acquiring Shares to acquire a material asset of PGO, a subsidiary of PGO or any interest in a Project, or to terminate or vary any agreement with PGO or a subsidiary of PGO; (index): the S&P/ASX All Ordinaries Gold (Sub-Industry) index (ASX:XGD) does not fall by 10% from its level immediately before 21 February 2018 and remains at that level (as at close of trade) for at least 5 consecutive Business Days during the Offer Period; Page 13

26 (gold price): the spot price of gold does not fall to below $1,500 per ounce on 5 consecutive Business Days during the Offer Period; (no material adverse event): no Material Adverse Event in relation to PGO occurs, is announced or becomes known to HGM before the end of the Offer Period; and (no regulatory action): no regulatory actions, of various kinds, occurring during the Offer Period; and (no Prescribed Occurrences) no Prescribed Occurrence occurs in relation to PGO during the Offer Period. As at the date of this Target's Statement, the Independent Directors are not aware of any act, omission, event or fact that would result in any of the Conditions in Sections 5.3(c) to (i) being triggered. HGM may, but is not obliged to, waive any Condition. See Section 5.6 for an explanation of the circumstances in which HGM may withdraw an unaccepted Offer. 5.4 Consequences if the Conditions are not satisfied If any of the Conditions are not satisfied or waived before the Offer closes, the Offer will lapse. This means that: 5.5 Variation of the Offer if you have accepted the Offer, your acceptance is void and you will continue to be a Shareholder, free to deal with your Shares; or if you have not accepted the Offer, you will continue to be a Shareholder, free to deal with your Shares. HGM may vary its Offer in accordance with the Corporations Act by: increasing the Offer consideration; waiving a Condition of the Offer; or extending the Offer Period. Any variation to the Offer must be announced on ASX. HGM has advised the Independent Directors that it has no present intention to vary its Offer, but reserves its right to do so. 5.6 Withdrawal of Offer HGM may be able to withdraw the Offer if it obtains the written consent of ASIC, subject to the conditions (if any) specified in such consent. 5.7 Limited rights to withdraw your acceptance You have only limited rights to withdraw your acceptance of the Offer. You may withdraw your acceptance of the Offer only if the Offer is still subject to a Condition Page 14

27 and HGM varies the Offer in a way that postpones, for more than 1 month, the time when you would receive your payment of the Offer consideration. If you have accepted the Offer and any of the Conditions have not been satisfied or waived by the end of the Offer Period (which may be extended), the Offer will lapse and you will be free to deal with your Shares. 5.8 Institutional Acceptance Facility In the First Supplementary Bidder's Statement, HGM announced that it has established an Institutional Acceptance Facility open to Eligible Participants. The Institutional Acceptance Facility enables Eligible Participants to indicate their intention to accept the Offer without actually accepting the Offer unless and until the Offer becomes unconditional. Further details in relation to the Institutional Acceptance Facility are set out in First Supplementary Bidder's Statement. Shareholders who are not Eligible Participants cannot participate in the Institutional Acceptance Facility, however they can accept the Offer by following the instructions in the Bidder's Statement and the Acceptance Form. 5.9 When you will receive payment if you accept the Offer Payment for acceptances will be received by 21 days after the later of: the date you accept the Offer; and the date the Offer becomes or is declared unconditional Effect of an improvement in consideration on Shareholders who have already accepted the Offer If HGM improves the consideration under its Offer, all Shareholders, whether or not they have accepted the Offer before that improvement in consideration, will be entitled to the benefit of that improved consideration (assuming the Offer becomes or is declared unconditional). If you have already received payment in respect of the Offer, you will be paid the difference between the amount you have already received and the higher price. HGM has advised the Independent Directors that it has no present intention to improve the consideration under its Offer, but reserves its right to do so Compulsory acquisition As at the date of the Offer, HGM had a Relevant Interest in 8.43% of the Shares on issue. As at 7:30pm (AEST) on 19 March 2018 (being the latest practicable date prior to the lodgement of this Target s Statement with ASIC), HGM and its associates have Voting Power in PGO of 13.20%, and HGM has received acceptance instructions under the Institutional Acceptance Facility in respect of an additional 10.82% of Shares. HGM has indicated in section 4.2 of its Bidder's Statement that it has not yet made a decision as to whether it will proceed to compulsorily acquire all remaining Shares if it is entitled to do so, however it reserves the right to do so. HGM will be entitled to compulsorily acquire any Shares in respect of which it has not received an acceptance of its Offer on the same terms as the Offer if, during or at the end of the Offer Period, HGM and its associates have a Relevant Interest in at least 90% (by number) of the Shares. Page 15

28 The consideration per Share payable to Shareholders whose Shares are compulsorily acquired is the same as that payable under the Offer. If the 90% threshold is met, HGM will have one month after the end of the Offer Period within which to: give compulsory acquisition notices to Shareholders who have not accepted the Offer; and make offers to buy out any unexercised Options. Any offers to buy out Options must be accompanied by a report prepared by an independent expert approved by ASIC in relation to the value of the Options. Shareholders have statutory rights to challenge the compulsory acquisition, but a successful challenge will require the relevant Shareholder to establish to the satisfaction of a Court that the terms of the relevant Offer do not represent "fair value" for their Shares. It is also possible that HGM will, at some time after the end of the Offer Period, become the beneficial holder of 90% or more of all of the securities of PGO on issue (by value). HGM would then have rights to compulsorily acquire securities not owned by it within six months of becoming the holder of 90% or more of the securities of PGO by value. HGM's price for compulsory acquisition under this procedure would have to be considered in a report of an independent expert. Page 16

29 6. Risks In considering this Target's Statement and the Offer, Shareholders should be aware that there are a number of risks which apply to a continuing investment in PGO. There are also risks associated with the alternative of accepting the Offer. The following list is not intended to be an exhaustive exploration of such risk factors. 6.1 Risks associated with accepting the Offer Possibility of a Superior Proposal emerging A third party may emerge with a Superior Proposal. If you accept the Offer, other than in limited circumstances provided in the Corporations Act (as summarised in Section 5.7), you will not be able to accept any Superior Proposal for your Shares and you will not be able to obtain any potential benefit associated with that Superior Proposal (if any). However, the Independent Directors have received no notice of any Competing Proposal and are not otherwise aware of any circumstances that could result in a Superior Proposal emerging. Accepting the Offer will also preclude a Shareholder from selling their Shares on-market on the ASX, where they may trade at a higher price than the Offer Price. However, the Shares have not traded above the Offer Price since 6 November Possibility of future Share price appreciation It may be possible in the future to sell your Shares for more valuable consideration than that offered under the Offer. The Independent Directors make no forecast of whether this will occur or whether it will occur in the foreseeable future. As at the close of trading on 19 March 2018 (being the latest practicable date prior to the lodgement of this Target's Statement with ASIC) the Shares were trading below the Offer Price. Taxation consequences of a change in control in PGO The taxation consequences of disposing of your Shares pursuant to the Offer depend on a number of factors and will vary depending on your particular circumstances. A general outline of certain Australian tax considerations of such a disposal is set out in Section 10.5 below and section 7 of the Bidder's Statement. You should carefully read and consider the taxation consequences of disposing of your Shares pursuant to the Offer. The outline provided in this Target's Statement is of a general nature only and you should seek your own specific professional tax advice as to the taxation implications applicable to your circumstances. 6.2 Risks associated with rejecting the Offer and continuing an investment in PGO In considering the Offer, Shareholders should be aware of the risks related to PGO, its business and assets. PGO is subject to a number of investment risk factors, both specific to its business activities and of a general nature which may affect the future operating and financial performance of PGO and the value of Shares. Many of the risks Page 17

30 are outside the control of PGO and the Directors, and there can be no certainty that PGO's objectives or anticipated outcomes will be achieved. The below list of risk factors ought not to be taken as exhaustive of the risks faced by PGO or by investors in PGO. The below factors, and others not specifically referred to below, may in the future materially affect the financial performance of PGO and the value of the Shares. You should be cognisant of all the below risks when making your decision whether to accept or reject the Offer. Accepting the Offer will mean that you will avoid exposure to the below risks by receiving the Offer Price, whereas rejecting the Offer may see you remain exposed to all the below risks on an ongoing basis. Specific Risks (i) Minority ownership risks HGM may acquire more than 50% but less than 90% of Shares pursuant to the Offer. This has a number of possible implications, including those set out in Section 3.5. (ii) Possibility of future Share price depreciation While there are many factors that influence the market price of Shares, following the close of the Offer, the market price of Shares may fall if the Offer fails (and there is no alternative takeover bid to the Offer). Depending on the size of HGM's interest in PGO at the conclusion of the Offer, there may also be a reduced likelihood that another party will make an offer to acquire all of the Shares in the future. Depending on the number of acceptances of the Offer, the number of Shares held by investors for trading purposes may be reduced, thereby potentially diminishing the future liquidity of ASX market trading of Shares. There is also a general risk of future depreciation of the price of Shares due to other factors, such as the other risks described in this Target's Statement. (iii) No other alternatives to the Offer emerge If you reject the Offer there can be no guarantee that a Superior Proposal will emerge. As at the date of this Target's Statement, no alternative proposal which is capable of acceptance by Shareholders has been received and the Independent Directors have received no notice of any Competing Proposal and are not otherwise aware of any circumstances that could result in a Superior Proposal emerging. (iv) Future funding PGO has no operating revenue and is unlikely to generate any operating revenue unless and until the Projects are successfully developed and production commences. PGO will need to raise additional capital to fund, or secure a joint venture partner to assist funding, the development of its Projects. There are no guarantees Page 18

31 that PGO will be able to raise additional capital or secure a joint venture partner on acceptable terms or at all. In the event that such funds or joint ventures are not forthcoming, PGO may seek to divest all or part of its interests in its Projects or reduce its commitments. Additional funding may be required in the event that the costs of recommissioning the Toms Gully project exceed PGO's estimates and to effectively implement its business and operations plans in the future, to take advantage of opportunities for acquisitions, joint ventures or other business opportunities, and to meet any unanticipated liabilities or expenses which PGO may incur. There is a risk that PGO may not be able to procure the necessary project finance on terms that are acceptable to the Board, or at all. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on PGO's financing and operating activities. If PGO is unable to obtain additional financing, it will be required to reduce the scope of, defer, or cancel its proposed start-up of operations and scale back its exploration programmes as the case may be. There is, however, no guarantee that PGO will be able to secure any additional funding or be able to secure funding on terms favourable to PGO. (v) Exploration, development, commissioning, mining and processing risks PGO's Coolgardie Gold Project is at the development stage following positive results from its recently completed pre-feasibility study. However these results were predicated on the existence of toll treatment arrangements for 40,000 tonnes of ore per month on attractive terms. Given the toll treatment risks described below, there is greater uncertainty that development of Coolgardie can occur as contemplated by the pre-feasibility study. A pre-feasibility study is currently underway for the Mt Bundy Gold Project. As at the date of this Target's Statement, this study is incomplete. Exploration is also ongoing at both Projects. The prospects of PGO should be considered in light of the risks, expenses and difficulties frequently encountered by companies at this stage of development. The business of mineral exploration, project development, project commissioning and production, by its nature, contains elements of significant risk with no guarantee of success. Ultimate and continuous success of these activities is dependent on many factors and there can be no assurance that any project will be brought into commercial production. There can be no assurance that any additional exploration of the current or future tenements held by PGO will result in the discovery of an economic mineral deposit. Even if a mineral deposit is identified, there is no certainty that it can be economically exploited. If exploration is successful, there will be additional costs and processes involved in transitioning to the development phase. In the event that exploration development and exploration programs prove to be unsuccessful, this could lead to a diminution in the value Page 19

32 of the licences, a reduction in the base reserves of the Company and possible relinquishment of the licences. If PGO proceeds to mine at one or more of its projects, mining risks include fire, explosions, environmental hazards, and injury to persons and property. The occurrence of any of these risks could adversely affect PGO's operations, reputation or licence to operate. For PGO to ultimately become a profitable operating entity, it must be successful in developing and commercialising the Mt Bundy Gold Project and/or the Coolgardie Gold Project. If PGO is not successful in developing any of its Projects, this is likely to have a material adverse effect on PGO and the value of its Shares. (vi) Toll treatment risk Prior to the announcement of the Bid Implementation Agreement, PGO was at an advanced stage in its negotiations with a third party mill regarding a toll treatment agreement to process ore that it proposes to mine from the Coolgardie Gold Project. Negotiations were suspended as a result of the Offer and PGO has since become aware that the third party mill is the subject of a potential acquisition. If a toll treatment agreement is unable to be negotiated with the owner of any processing facility, or has restrictive terms as to pricing and availability, or ore mined is unable to be treated by the plant as anticipated, this may prevent or delay mining operations and adversely affect PGO's prospects and financial position. PGO is in the process of identifying potential alternative third parties to provide toll treatment. This risk will also apply to any future projects that involve toll treatment of ore proposed to be mined, including any ore from the Mt Bundy Gold Project in the event that the Toms Gully Processing Plant is not recommissioned. (vii) Third party interest risk PGO may enter into agreements and undertakings with third parties from time to time. If PGO is unable to satisfy the conditions of these agreements and undertakings, or if it defaults on its obligations under these agreements and undertakings, PGO's interest in their subject matter may be jeopardised. Further, if the third parties default on their obligations under the agreements and undertakings, PGO may be adversely affected. There are also historical agreements registered against certain of PGO's tenements, under which historical royalties have been granted. As a result, there is a possibility that PGO may need to pay royalties on some or all minerals derived from some of its tenements upon the commencement of production from those tenements. However, as at the date of this Target's Statement, PGO does not currently have any mining operations and therefore there is no production on which any royalty may be payable. Page 20

33 (viii) Licences and permits PGO's mining exploration activities are dependent upon the grant, or as the case may be, the maintenance of appropriate licences, concessions, leases, permits and regulatory consents which may be withdrawn or made subject to limitations. PGO cannot guarantee that those mining tenements that are applications will ultimately be granted (in whole or in part). The maintaining of tenements, obtaining renewals, or getting tenements granted, often depends on the Company being successful in obtaining the required statutory approvals for its proposed activities and that the licences, concessions, leases, permits or consents it holds will be renewed as and when required. Each tenement licence is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, PGO could lose title to, or its interest in, these tenements if licence conditions are not met or insufficient funds are available to meet expenditure commitments. The High Court of Australia recently handed down a decision, Forrest & Forrest Pty Ltd v Wilson [2017] HCA 30, that called into question the validity of a number of mining leases in Western Australia. In September 2017, the Minister announced that he was examining legislative solutions to address this decision and ensure retrospective application to give certainty for existing tenement holders. However a time frame for this remedial action has not yet been announced. PGO is aware that one of its Mining Leases (M15/1808) at the Coolgardie Gold Project may be affected by this decision. (ix) Estimation of Mineral Resources and Ore Reserves There is a degree of uncertainty as to the estimation of Mineral Resources and Ore Reserves and corresponding grades being mined or dedicated to future production. Until Mineral Resources or Ore Reserves are actually mined and processed, the quantity of Mineral Resources and Ore Reserves must be considered as estimates only. In addition, the grade of Mineral Resources and Ore Reserves may vary depending on, among other things, gold prices. Any material change in quantity and grades of Mineral Resources, Ore Reserves, or stripping ratio may affect the economic viability of the properties. In addition, there can be no assurance that metal recoveries in smallscale laboratory tests will be duplicated in larger scale tests under on-site conditions or during production. Fluctuation in the price of commodities including gold, results of drilling, metallurgical testing and the evaluation of mine plans subsequent to the date of any mineral resource estimate may require revision of such estimate. Any material reductions in estimates of Mineral Resources and/or Ore Reserves, could have a material adverse effect on the Company's financial condition. (x) Native Title and Aboriginal Heritage In relation to tenements which PGO has an interest in or will in the future acquire such an interest there may be areas over which legitimate common law native title rights of Aboriginal Australians Page 21

34 exist. If native title rights do exist, the ability of PGO to gain access to tenements (through obtaining consent of any relevant landowner), or to progress from the exploration phase to the development and mining phases of operations may be adversely affected. Further to this, it is possible that an Indigenous Land Use Agreement (ILUA) may be registered against one or more of the tenements in which PGO has an interest. The terms and conditions of any such ILUA may be unfavourable for, or restrictive against, PGO. PGO is aware that there are registered native title claims which overlap the Projects. The Directors will closely monitor the potential effect of native title claims involving tenements in which PGO has or may have an interest. (xi) Metals and currency price volatility PGO's ability to proceed with the development of its mineral projects and benefit from any future mining operations will depend on market factors, some of which may be beyond its control. It is anticipated that any revenues derived from mining will primarily be derived from the sale of gold. Consequently, any future earnings are likely to be closely related to the price of this commodity and the terms of any off-take agreements that PGO enters into. (xii) Environmental Risks The operations and proposed activities of PGO are subject to State and Federal laws and regulations concerning the environment. As with most exploration projects and mining operations, PGO's activities are expected to have an impact on the environment, particularly if advanced exploration or field development proceeds. In this regard, government authorities may, from time to time, review the environmental bonds that are placed on permits. The value of the security bonds lodged by PGO in respect of the Mt Bundy Gold Project is based on the project currently being on care and maintenance. Therefore, prior to recommencing mining operations at Toms Gully a new mine management plan will need to be submitted (in progress). Upon lodging an updated mine management plan, the Department will review, and potentially increase, the bond requirements in respect of the Project. This risk factor is customary for a company transitioning from mineral exploration to mineral production in the Northern Territory. (xiii) Weather-window and dewatering The Mt Bundy Gold Project, which includes the Toms Gully mine, is located in the Northern Territory of Australia. The Northern Territory has a warm and humid monsoon climate with distinct wet and dry seasons. Most rain falls during the period from December to April. Throughout this period, PGO's activities may be restricted. PGO plans to dewater the Toms Gully open-pit and underground mine workings prior to recommencing mining activities. Further parts of the Mt Bundy Gold Project, including Toms Gully, will also require dewatering in the future. Page 22

35 Likely dewatering options include discharging treated water directly into the environment, assisted evaporation or by pumping the water to alternate water storages located nearby. The method and timing (e.g. wet season) of these activities will be set out in the Northern Territory Government and Environmental Protection Authority authorisations, currently being prepared for submission by PGO. PGO proposed to manage this risk by seeking government approval in order to commence dewatering activities at the earliest opportunity. (xiv) Competition Risk The industry in which PGO is involved is subject to domestic and global competition. Although PGO undertakes all reasonable due diligence in its business decisions and operations, PGO has no influence or control over the activities or actions of its competitors, which activities or actions may, positively or negatively, affect the operating and financial performance of PGO's Projects and business. General Securities Risks (i) Economic risks Adverse changes in economic conditions such as interest rates, exchange rates, inflation, government policy, international economic conditions and employment rates, amongst others, are outside PGO's control and have the potential to have an adverse impact on PGO and its operations. (ii) Share market conditions Share market conditions may affect the value of PGO's quoted securities regardless of PGO's operating performance. Share market conditions are affected by many factors such as: general economic outlook; interest rates and inflation rates; currency fluctuations; changes in investor sentiment toward particular market sectors; the demand for, and supply of, capital; and terrorism or other hostilities. The market price of the Shares can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general. Neither PGO nor the Independent Directors warrant the future performance of PGO or any return on an investment in PGO. (iii) Regulatory Risks PGO incurs ongoing costs and obligations associated with compliance with necessary regulations. Any failure to comply with regulations may result in additional costs for corrective measures, penalties or in restrictions on PGO's business operations. In addition, changes in regulations could require extensive changes to PGO's operations, increased compliance costs or give rise to material liabilities, which could have a material adverse effect on the business, results of operations and financial condition of PGO. Page 23

36 (iv) Government and legal risk Changes in government, monetary policies, taxation and other laws can have a significant impact on PGO's assets, operations and ultimately the financial performance of PGO and its Shares. Such changes are likely to be beyond the control of PGO and may affect industry profitability as well as PGO's capacity to explore and mine. (v) Force majeure PGO's projects now or in the future may be adversely affected by risks outside the control of PGO, including labour unrest, civil disorder, war, subversive activities or sabotage, fires, floods, explosions or other catastrophes, epidemics or quarantine restrictions. (vi) Insurance risks PGO insures its operations in accordance with industry practice. However, in certain circumstances, such insurance may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of PGO. (vii) Litigation risks All industries, including the mining industry, are subject to legal claims, with and without merit. Defence and settlement costs of legal claims can be substantial, even with respect to claims that have no merit. Due to the inherent uncertainty of the litigation process, the resolution of any particular legal proceeding to which PGO is or may become subject could have a material effect on its financial position, results of operations or PGO's activities. So far as the Independent Directors are aware, there is no current or threatened civil litigation, arbitration proceedings or administrative appeals, or criminal or governmental prosecutions of a material nature in which PGO is directly or indirectly concerned which is likely to have a material adverse effect on the business or financial position of PGO. Page 24

37 7. Information relating to PGO 7.1 Overview of PGO PGO is an ASX listed emerging gold producer with a resource of approximately 2M oz gold across its Australian portfolio. It has a 100% interest in both the Coolgardie Gold Project in the goldfields region of Western Australia and the Mt Bundy Gold Project in the Northern Territory (80% for Rustlers Roost). PGO is targeting a 150K oz per annum production profile by PGO was incorporated on 17 November 2006 as 'Hydrotech International Limited' and was admitted to the official list of ASX on 12 July The Company was established for the purposes of acquiring, developing and marketing masonry waterproofing technology. In November 2012, PGO announced that it had entered into a binding heads of agreement to acquire Primary Minerals NL, which, in turn, had entered into an asset sale agreement with Crocodile Gold Australia Pty Limited to acquire the Mt Bundy Gold Project. In March 2013, PGO changed its name to 'Primary Gold Limited' to reflect the Company's transition to focus on the exploration and development of mineral assets and more specifically, gold. PGO subsequently focused on updating the Mineral Resources at the Mt Bundy Gold Project and in December 2016 acquired 100% of the issued shares in MacPhersons Reward Pty Ltd, a wholly-owned subsidiary of MacPhersons Resources Limited (ASX:MRP) and the holder of the Coolgardie Gold Project. In consideration for the acquisition, PGO paid a total of $10 million, comprised of $5 million in cash instalments over 12 months and $5 million worth of Shares. To progress the Mt Bundy and Coolgardie Gold Projects, PGO raised $8.5 million (before costs) via a placement of Shares at $0.07 each to institutional and sophisticated investors in February The Mt Bundy Gold Project is the flagship asset of PGO with a combined +130,000oz/year potential. A 2017 scoping study indicated a 9-year life of mine, however the project area has hardly been explored over the past 20 years. As at the date of this Target's Statement, a pre-feasibility study commenced on the Mt Bundy Gold Project is incomplete. In October 2017, PGO announced a maiden Ore Reserve estimate for the Coolgardie Gold Project following positive results from a pre-feasibility study conducted by PGO's team working in conjunction with specialised consults, Entech Pty Ltd. PGO acquired a further prospecting licence at the Coolgardie Gold Project in January 2018 and announced that it had received the final outstanding regulatory approval required to commence mining at that project. 7.2 Strategy of PGO In recent times, PGO's strategy has focussed on: commencing mining operations at the Coolgardie Gold Project to generate cash flow to fund PGO's operations; and Page 25

38 contemplating a two stage Northern Territory development to minimise risk and maximise leverage by: (i) (ii) bringing Toms Gully into production utilising refurbishment of an existing plant; and drilling out Rustlers Roost and advancing environmental permitting for large scale low grade open pit mining. 7.3 Directors The names and details of the Directors are as follows: Mr Garry Mills Executive Chairman and Managing Director; Mr Tony Patrizi Non-Executive Director; and Dr Mark Qiu Non-Executive Director. Biographical details of each of the Directors are set out below. Garry Mills B. App Sc (Mining) Mr Mills is a Mining Engineer with over 30 years of operating experience in middle and senior management levels in a range of progressive technical and hands on positions within the mining industry. Mr Mills has operating and management experience in both open cut and underground mines in gold and base metals. He has operated throughout Australia and Africa at Mine Manager, VP Operations and Chief Operating Officer levels. Mr Mills' previous roles include General Manager at Northern Star Resources and Operations Manager at Dominion Mining Limited where he was instrumental in turning around the performance of its Challenger Gold Mine in South Australia. He has extensive experience in narrow vein gold mining starting at Coolgardie Gold's mines which has long been regarded as the pioneer of mechanised narrow vein gold mining. He was the Chief Operating Officer of Norseman Gold where he developed mechanised mining of horizontal narrow gold veins. Mr Mills has been involved in resurrecting some of Australia and South Africa's more successful gold mines including Jundee, Paulsens, Agnew and South Deeps where under his guidance the mines substantially reduced their operating costs. Mr Mills has significant experience in feasibility studies, project construction and strategic, middle and short term planning for effective mine operation from exploration to metal production. Mr Mills was appointed Managing Director of PGO on 1 March 2017, having previously been appointed as Non-Executive Director on 7 March Tony Patrizi BEng (Mech) Mr Patrizi is an executive director of GR Engineering Services Limited, which he cofounded, and is a mechanical engineer with over 30 years' experience in the mining and mineral processing industry. GR Engineering is recognised as one of the industry's leaders in minerals processing and the company prides itself on the services it provides starting from initial metallurgical programs, through to the various study phases and culminating in the construction and Page 26

39 operation of the process plant. Mr Patrizi was previously the operations manager of JR Engineering which had over 300 personnel and provided workshop, maintenance, engineering and construction services to mining and mineral processing project in Western Australian and interstate. During his career Mr Patrizi has been involved in the construction of numerous gold processing plants and his experience will greatly assist the Mt Bundy Gold Project recommence operations. Mr Patrizi was appointed as a Non-Executive Director of PGO on 7 March Dr Mark Qiu PhD 7.4 Corporate Structure Dr Qiu has more than 25 years' experience in gold and iron ore mining, in addition to holding a number of senior management roles in Australia and abroad. This includes serving as group executive for Sino Gold Mining Limited until its acquisition by Eldorado Gold Corporation. Dr Qiu is currently an Executive Director and Vice President of China Hanking and the Managing Director and Chief Executive Officer of Hanking Australia and HGM. He is also a non-executive director of Corazon Mining Limited (ASX: CZN) and was appointed as a Non-Executive Director of PGO on 31 March Please refer to section 2.5 of the Bidder's Statement for further details on Dr Qiu. An overview of the corporate structure of PGO is set out below: Primary Gold Limited (ACN ) 100% 100% 100% Primary Minerals NL (ACN ) MacPhersons Reward Pty Ltd (ACN ) Primary Resources Pty Ltd (ACN ) 100% 100% Mt Bundy Gold Project* Coolgardie Gold Project * Primary Minerals NL only has an 80% interest in Rustler's Roost (MLN1083). 7.5 Issued Capital As at the date of this Target's Statement, PGO's issued capital comprises 614,168,885 Shares and 90,333,336 unquoted Options. The key terms of the Options are set out in the table below. Exercise Price Expiry Number Number vested Number vested & 'in the money' $ November ,333,336 2,333,332 2,333,332 Page 27

40 Exercise Price Expiry Number Number vested Number vested & 'in the money' $ March ,000,000 30,000,000 30,000,000 $ May ,000,000 2,000,000 0 $ July ,000,000 10,000,000 0 $ June ,000,000 15,000,000 0 $ April ,000,000 10,000,000 0 $ June ,000,000 15,000,000 0 TOTAL 90,333,336 84,333,332 32,333,332 The Offer does not extend to the Options. However, the Offer extends to all Shares that are issued prior to the end of the Offer Period due to the exercise of Options. As detailed above, all of the Options have vested, with the exception of 6,000,004 Options exercisable at $0.031 each and expiring on 28 November 2018 which have not yet vested and become exercisable (Unvested Options). The Unvested Options were issued to directors of PGO (or their nominees) pursuant to Shareholder approval obtained at the annual general meeting held on 28 November No offer has been made by HGM to acquire the Unvested Options. If HGM and its associates have a Relevant Interest in at least 90% of the Shares at the end of the Offer Period, it will be required to offer to buy out all of the remaining Options by providing a notice of compulsory acquisition to holders of all outstanding Options in accordance with the requirements of section 663A of the Corporations Act. 7.6 Substantial holders Based on substantial shareholder notices lodged with the ASX and registry data, the following persons (and their associates) have Voting Power of more than 5% as at the date of this Target's Statement: Shareholder Shares % HGM Resources Pty Ltd 1 63,785, Note: 1. Based on the most recent change of substantial holder notice filed by HGM and its associates on 15 March Mt Bundy Gold Project The Mt Bundy Gold Project is located approximately 100km from Darwin (see Figure 1) and consists of a 1,500km 2 tenement package within the Pine Creek gold region where over 14m oz of gold have been discovered to date. The Project currently consists of three deposits: the Rustler Roost and Quest 29 open pittable deposits as well as the high grade Toms Gully underground mine. Combined these deposits have a resource of 1.79 million ounces of gold (see table at Section 7.9). PGO released a positive Scoping Study for the Mt Bundy Project in 2017 which examined a 3Mtpa operation, with All in Page 28

41 Sustaining Operating Costs of $1,054/oz. A processing plant on care and maintenance is located at Toms Gully. Figure 1 - Mt Bundy Gold Mine Location Map showing regional prospectivity 7.8 Coolgardie Gold Project In August 2016, PGO announced the acquisition of the Coolgardie Gold Project, located 5km from the town of Coolgardie in the Western Australian Goldfields (see Figure 2). PGO completed its maiden drilling program for 7,000m drilled at the Coolgardie Gold Project in Western Australia in H and announced a maiden Ore Reserve estimate. The pre-feasibility study completed on the Project in October 2017 confirmed the viability of a low capital cost start-up gold mining operation based on the extraction of shallow reserves across three initial starter pits at the Project, with the ore to be treated via a toll-treatment arrangement at a nearby processing facility. Prior to the announcement of the Bid Implementation Agreement, PGO was at an advanced stage in its negotiations with a third party mill regarding a toll treatment agreement to process ore that it proposes to mine from the Coolgardie Gold Project. Negotiations were suspended as a result of the Offer and PGO has since become aware that the processing facility is the subject of a potential acquisition. In January 2018, PGO acquired a further prospecting licence at the Coolgardie Gold Project and received the final outstanding regulatory approval from the Department Page 29

42 of Mines, Industry Regulation and Safety required to begin mining at the Coolgardie Gold Project. Mining operations are expected to commence at the Tycho, MacPhersons and A-Cap pits during the first quarter of MacPhersons, A-Cap and Tycho contain approximately 69,000 ounces Au (approximately 13,000oz 1.5 g/t Au, 45,000oz 1.7 g/t Au and 11,000 oz 1.7 g/t Au). The bulk of the Mineral Resources (approximately 145,000 oz) is contained within the MacPhersons deposit, which is PGO's key deposit at the Coolgardie Project (see table at Section 7.9). Figure 2 - Coolgardie Project Location Map Page 30

43 7.9 Statement of JORC 2012 Complaint Resources and Reserves Mineral Resources: Resources 1 Measured Indicated Inferred Total '000t g/t Koz Au '000t g/t Koz Au '000t g/t Koz Au '000t g/t Koz Au MT BUNDY GOLD PROJECT Rustlers Roost , ,028 12, , ,332 Toms Gully , Quest , , , SUB-TOTAL , ,368 14, , ,795 COOLGARDIE GOLD PROJECT Macphersons , , Tycho , Franks Find SUB-TOTAL , , , TOTAL , ,463 15, , ,996 Notes: 1. Mineral Resources are reported as inclusive of Ore Reserves. Figures have been rounded and hence may not add up exactly to the given totals. MacPhersons Resources include A-Cap. 2. Cut off of 0.50g/t Au. Page 31

44 3. Cut off of 6.00g/t Au. 4. Cut off of 0.80g/t Au. Ore Reserves: Reserves Indicated Inferred Total '000t g/t Koz Au '000t g/t Koz Au '000t g/t Koz Au Mt Bundy Gold Project Coolgardie Gold Project , TOTAL , , Competent Persons Statement The information in this Target's Statement that relates to Mineral Resources and Reserves (as those terms are defined in the JORC Code) in respect to the Coolgardie and Mt Bundy Gold Projects was reported by PGO in its announcements released to ASX on 27 August 2013, 27 June 2016, 17 October 2017 and 31 October The information that relates to exploration results at the Tycho Deposit was reported in an announcement released to ASX on 28 November PGO confirms that it is not aware of any new information or data that materially affects the resource and reserve estimates or exploration results, and that all material assumptions and technical parameters underpinning those estimates continue to apply and have not materially changed Key Statistics Set out below are some key ratios and statistics extracted from PGO's audited financial statements for the years ended 30 June 2017 and 30 June Year Ended 30 June Basic earnings/(loss) per Share (0.26) (0.98) Share Price at year end Page 32

45 7.12 Summary of historical financial information The summary historical financial information below has been extracted from PGO's audited financial statements for the years ended 30 June 2017 and 30 June 2016 and does not take into account the effect of the Offer. Copies of PGO's annual reports from which the financial information was extracted can be found on the Company's website at These reports also contain details of PGO's accounting policies. Shareholders without internet access can obtain copies of these reports by contacting the Company Secretary of PGO on Statement of Financial Position 2017 ($) 2016 ($) Total Assets 33,124,786 21,160,002 Total Liabilities 5,376,082 3,082,374 Total Equity 27,748,704 18,077,628 Income Statement 2017 ($) 2016 ($) Revenue from continuing operations 92,177 51,555 Income tax benefit - 137,430 Expenses (1,450,921) (3,346,496) Profit/(Loss) for the year from continuing operations (1,358,744) (3,157,511) Statement of Cash Flows 2017 ($) 2016 ($) Net Cash Flows from Operating Activities (4,109,331) (1,862,132) Net Cash Flows from Investing Activities (3,607,664) - Net Cash Flows from Financing Activities 8,025,219 4,684,340 Statement of Cash Flows 2017 ($) 2016 ($) Net Increase / (Decrease) in Cash and Cash Equivalents 308,224 2,822,208 Beginning Cash and Cash Equivalents 4,490,676 1,668,468 Ending Cash and Cash Equivalents 4,798,900 4,490, No material change in financial position PGO's last published financial statements are for the half year ended 31 December 2017, as set out in its Interim Financial Report lodged with ASX on 14 March PGO Page 33

46 lodged its latest audited annual financial statements for the full year ended 30 June 2017 with ASX on 31 October Except as disclosed in this Target's Statement and in any announcement made by PGO to ASX since 14 March 2018, the Independent Directors are not aware of any material change to the financial position of PGO since 31 December Publicly available information PGO is a disclosing entity under the Corporations Act. It is subject to regular reporting and disclosure obligations under both the Corporations Act and the Listing Rules of ASX. Copies of announcements lodged with ASX can be obtained from the ASX's website at under the code "PGO" or from PGO's website at Copies of documents lodged with ASIC in relation to PGO may be obtained from, or inspected at, an ASIC office. Shareholders may obtain a copy of PGO's annual report, constitution and any document lodged by PGO with ASX free of charge by contacting the Company Secretary or from the ASX website at A list of announcements made by PGO to ASX between 31 October 2017 (the date of release of PGO's annual report for the financial year end 30 June 2017) and the date of this Target's Statement is set out in Annexure B. This information may be relevant to your assessment of the Offer. Further announcements about developments on the Offer will continue to be made publically available on PGO's website at after the date of this Target's Statement. Page 34

47 8. Information relating to HGM, Hanking Australia and China Hanking 8.1 Disclaimer The following information about HGM, Hanking Australia and China Hanking has been prepared by PGO using publicly available information, including information in the Bidder's Statement, and has not been independently verified. Accordingly, PGO does not, subject to the Corporations Act, make any representation or warranty, express or implied as to the accuracy or completeness of this information. The information on HGM, Hanking Australia and China Hanking in this Target's Statement should not be considered comprehensive. 8.2 Overview of the China Hanking group and its principal activities China Hanking was incorporated in the Cayman Islands on 2 August 2010 and listed on the Hong Kong Stock Exchange on 30 September 2011 (HKSE:03788). The China Hanking group is a diversified international mining group of companies with three major business segments (gold, iron ore and nickel), engaging in exploration, mining, processing, smelting and marketing of mineral resources with mining assets and investments in the People's Republic of China, Indonesia and Australia. In the half year ended 30 June 2017, China Hanking reported profit of approximately 830,639,000 RMB (approximately $160 million). In Australia, China Hanking currently operates through its local subsidiaries, including Hanking Australia and HGM. Hanking Australia was incorporated in July HGM, a wholly owned subsidiary of Hanking Australia, was incorporated in February 2018 for the purpose of making the Offer. As at the date of this Target's Statement, Hanking Australia is owned as to 97% by China Hanking and 3% by an entity associated with Dr Mark Qiu. China Hanking is ultimately controlled as to 72.13% by entities associated with Mr Jiye Yang and Ms Min Yang, who are both citizens of the People's Republic of China. Dr Mark Qiu is a director of HGM, Hanking Australia and China Hanking, and a nonexecutive director of PGO. 8.3 Further information Further information about China Hanking and filings made by it with the Hong Kong Stock Exchange are available in electronic form on its website at Page 35

48 9. Information relating to the Directors 9.1 Interests in PGO securities As at the date of this Target's Statement, the Directors (and their associates) have the following Relevant Interests in Shares and Options: Director Shares % Shareholding 1 Options Garry Mills 2 8,700, ,000,000 Tony Patrizi 3 16,666, ,000,000 Dr Mark Qiu 4 3,491, ,001 Notes: 1. Assuming that there are 614,168,885 Shares on issue and no further Shares are issued or Options exercised. 2. Shares held indirectly by Mining and Management Services Pty Ltd as trustee for Mills Superannuation Fund, of which Mr Mills is a director and beneficiary respectively. Options comprised of 10,000,000 Options exercisable at $0.04 on or before 7 March 2019 and 10,000,000 Options exercisable at $0.088 each on or before 19 April 2020, all held indirectly by Renwick Holdings Pty Ltd as trustee for Mills Unit Trust, of which Mr Mills is a director and beneficiary respectively. 3. Shares and Options exercisable at $0.04 each on or before 7 March 2019 are held indirectly by Kingarth Pty Ltd, of which Mr Patrizi is a director. 4. Shares held indirectly by Golden Resource Investment Pty Ltd as trustee for Golden Discovery Holdings Trust (333,332 Shares), of which Dr Qiu is a director and a beneficiary respectively, and The Qiu Family Super Pty Ltd as trustee for The Qiu Family Super Fund (3,158,086 Shares), of which Dr Qiu is a director and a beneficiary respectively. Options exercisable at $0.031 each on or before 28 November 2018 are held directly by Dr Qiu and are subject to various vesting conditions. None of the Options held by Dr Qiu have vested and become exercisable. All Independent Directors have decided to ACCEPT the Offer in relation to their Shares, in the absence of a Superior Proposal. See Section 1.4 for further information on the Independent Directors' intentions in relation to the Offer. 9.2 Dealings in PGO securities No Director has acquired or disposed of a Relevant Interest in any Shares or Options in the 4 month period immediately prior to the date of this Target's Statement, other than as follows: on 23 February 2018, Dr Qiu acquired a Relevant Interest in 174,839 Shares as a result of on-market trades for total cash consideration of $8, ; between 11 and 18 January 2018, Dr Qiu acquired a Relevant Interest in 2,983,247 Shares as a result of on-market trades for total cash consideration of $126,205; on 11 January 2018, Dr Qiu acquired a Relevant Interest in 333,332 Shares upon conversion of 333,332 Options exercisable at $0.031 each; and Page 36

49 on 5 December 2017, Mr Mills acquired a Relevant Interest in 1,200,000 Shares as a result of on-market trades for total cash consideration of $47, Interests and dealings in HGM or its Related Bodies Corporate Golden Resource Investment Pty Ltd as trustee for Golden Discovery Holdings Trust, of which Dr Mark Qiu is a director and beneficiary respectively, holds 3% of the issued capital of Hanking Australia. No Independent Director has a Relevant Interest in any securities of HGM, Hanking Australia or China Hanking. No Independent Director has acquired or disposed of any securities in HGM, Hanking Australia or China Hanking within the four month period immediately prior to the date of this Target's Statement. 9.4 Benefits and agreements Agreements connected with or conditional on the Offer There are no agreements or arrangements made between an Independent Director and any other person in connection with or conditional upon the outcome of the Offer, other than in their capacity as a holder of Shares. Benefits in connection with retirement from office As a result of the Offer, no benefit (other than a benefit permitted under section 200E, 200F or 200G of the Corporations Act) has been or will be given to a person: (i) (ii) in connection with the retirement of a person from a board or managerial office in PGO or a Related Body Corporate of PGO; or who holds, or has held a board or managerial office in PGO or a Related Body Corporate of PGO or a spouse, relative or associate of such a person, in connection with the transfer or the whole or any part of the undertaking or property of PGO. As set out in clause 5.9(b) of the Bid Implementation Agreement, if the Offer is successful and HGM acquires 90% or more of the Shares, the Independent Directors, Mr Garry Mills and Mr Tony Patrizi, will resign as Directors. As set out in section 4.3 of the Bidder's Statement, if the Offer is successful and HGM acquires more than 50% of the Shares, HGM intends to seek to reconstitute the Board with nominees of HGM to reflect HGM's ownership of PGO. In the event Mr Mills' role is made redundant within 6 months of HGM acquiring 50% or more of the Shares (and subject to compliance with Division 2 of Part 2D.2 of the Corporations Act), Mr Mills is entitled to an amount (less any taxation required by law) equal to the lesser of: (iii) 3 months of his consultancy fee for services provided as managing director ($350,000 per annum plus GST); or Page 37

50 (iv) if section 200B(1) of the Corporations Act applies, the maximum amount that could be paid under sections 200F(3) or (4) of the Corporations Act. In the event Mr Mills' consultancy agreement is terminated by PGO (other than for summary termination) for any other reason, PGO must pay Mr Mills an amount equal to 3 months' consultancy fee. Benefits from and agreements with HGM or its Related Bodies Corporate As outlined elsewhere in this Target's Statement, Dr Mark Qiu is a director of HGM, Hanking Australia and China Hanking, and a non-executive director of PGO. Neither of the Independent Directors have agreed to receive, or are entitled to receive, any benefit from HGM or its Related Bodies Corporate which is conditional on, or is related to, the Offer, other than in their capacity as a holder of Shares or Options. Neither Independent Director has any interest in any contract entered into by HGM or any of its Related Bodies Corporate as at the date of this Target's Statement. Page 38

51 10. Other material information 10.1 Bid Implementation Agreement On 20 February 2018, PGO and Hanking Australia entered into the Bid Implementation Agreement which sets out the terms and conditions upon which the parties proposed to implement the Offer. Section 8.2 of the Bidder's Statement contains a summary of the Bid Implementation Agreement. A copy of the Bid Implementation Agreement was released by PGO to ASX on 21 February 2018 and can be viewed on the ASX website at (ASX code: PGO). The Bid Implementation Agreement includes a number of other key provisions including exclusivity provisions (including notification and matching right provisions and no shop, no talk and no due diligence restrictions on PGO (although the no talk and no due diligence restrictions are subject to a standard "fiduciary limitation" exception)) and various other requirements that relate to the conduct of PGO's business, operations and assets. PGO has also granted customary matching rights to HGM in respect of any Superior Proposal that may emerge and the payment of a break fee of $400,000 in agreed circumstances Loan Facility Agreement As announced on 21 February 2018, PGO and Hanking Australia entered into a loan facility agreement on 20 February 2018 (Loan Facility Agreement) pursuant to which Hanking Australia agreed to provide PGO with a $1.5 million unsecured loan facility to assist PGO to fund its short term working capital needs and other approved project activities during the Offer Period. As at the date of this Target's Statement, no amounts have been advanced under the loan facility. Interest is payable on amounts drawn down under the loan facility at 8% per annum. Any amounts advanced under the loan facility are repayable on the date that is 3 months after the end of the Offer Period, although PGO is obliged to repay those amounts in full: immediately, if any event of default occurs under the Loan Facility Agreement, which includes failure to pay amounts when due, giving an untrue warranty, an insolvency event occurring, unremedied breach, judgement or settlement, enforcement proceedings, business stopping or changing, negative pledge or any other materially adverse event; or within: (i) (ii) 10 Business Days of any Independent Director recommending a Competing Proposal; 5 Business Days if: (A) (B) any person (other than HGM) obtains control of PGO or acquires Voting Power of more than 20% of the Shares; Hanking Australia terminates the Bid Implementation Agreement due to a material breach of that agreement by PGO; or Page 39

52 (C) PGO raises an amount in cash exceeding $3,750,000 as a result of one or more issues of new equity, debt or hybrid securities; or (iii) 3 months of the date of termination of the Bid Implementation Agreement, if that agreement is terminated for reasons other than as set out above Effect of the Offer on PGO's material contracts In the ordinary course of business, PGO has entered into agreements with certain key executives and employees which contain provisions allowing the parties to terminate for any reason by providing a period of notice or a payment in lieu of notice. In the context of the Offer, there is a risk that HGM or the counterparties may seek to terminate the agreements, which could result in PGO being liable for redundancy payments and other benefits in accordance with their legal and contractual entitlements. HGM has indicated that it intends to retain the majority of PGO's management and personnel at section 4.2(c) of the Bidder's Statement. Please refer to Section 9.4(b) above and sections 4.2(a)(iii) and 4.3(a)(i) of the Bidder's Statement for further information on the effect of the Offer on the Board. As previously announced to the ASX, PGO has entered into an agreement with Ausdrill Limited (ASX: ASL) pursuant to which Ausdrill provides drilling services to PGO in consideration for the issue of up to $3 million worth of Shares. Under the terms of the Bid Implementation Agreement and for the duration of the Offer Period, PGO has agreed not to take any action or permit anything to occur which could give rise to an obligation to issue any Shares (except for the issue of Shares upon exercise of Options). Accordingly, during the Offer Period, PGO will not require Ausdrill Limited to undertake any drilling on its Project which would require it to issue Shares. To the best of the Independent Directors' knowledge and other than as set out elsewhere in this Target's Statement, none of the other material contracts to which PGO is a party contain change in control provisions which may be triggered as a result of, or as a result of acceptances of, the Offer and which may have a material adverse effect on the assets and liabilities, financial position and performance, profits and losses and prospects of PGO Effect of the Offer on PGO's Employee Securities Plan PGO has adopted and operates an Employee Securities Plan (Plan), pursuant to which the Board has granted Options to employees. As at the date of this Target's Statement, PGO has granted 2,000,000 Options exercisable at $0.065 each on or before 12 May 2020 pursuant to the Plan. The Offer does not extend to the Options. However, the Offer extends to all Shares that are issued prior to the end of the Offer Period due to the exercise of Options Taxation Implications General The following is intended only as a general guide to the income tax position under current Australian income tax law and administrative practice as at the date of this Target's Statement. Income tax is a complex area of law and the income tax implications for you may differ from those detailed below, Page 40

53 depending on your particular circumstances. As these statements are of a general nature only it is recommended that you obtain your own independent professional advice in respect of the Australian income tax implications of the Offer. The following is an overview of the likely Australian income tax implications as a consequence of the takeover bid for an Australian tax resident or non- Australian tax resident Shareholder who holds their Shares on capital account. The following may not apply to certain Shareholders, such as if you are a dealer in shares, you hold Shares on revenue account or as trading stock, if you are an insurance company or a collective investment scheme, or if Division 230 of the Income Tax Assessment Act 1997 (Cth) (ITAA 1997) applies to you and you have made an election to apply certain methods to calculating gains and losses. In addition, the following may not apply to you if you acquired your shares as a result of an employment or services arrangement. Such persons may be subject to special rules or any gain on the disposal of their Shares may be assessed as ordinary income. As outlined above, it is recommended that you obtain specific taxation advice concerning your specific circumstances. The following may also not apply to non-australian tax resident Shareholders. The Australian income tax implications for non-australian resident Shareholders are complex and will depend upon their own specific circumstances. Non-Australian tax resident Shareholders may also have tax implications in their country of Tax residence. Australian tax resident Shareholders The transfer of Shares to HGM pursuant to the Offer will trigger a capital gains tax (CGT) event for you. Australian tax resident Shareholders may make a capital gain or a capital loss in respect of this event. You may make a capital gain equal to the capital proceeds received (the cash consideration received from HGM) less the cost base of your Shares. The cost base of your Shares is generally the cost of their acquisition plus certain other amounts associated with their acquisition and disposal such as brokerage or stamp duty. We recommend you obtain specific taxation advice concerning this. If you are an individual, trustee of a trust or a complying superannuation entity, and you acquired your Shares at least 12 months prior to accepting the Offer, you may be entitled to concessional discount CGT treatment under Division 115-A of the ITAA 1997 in respect of a capital gain (based on meeting a number of conditions). This will depend upon your individual circumstances. We recommend you obtain specific taxation advice concerning this. If the reduced cost base of your Shares is greater than the capital proceeds you received, you may realise a capital loss equal to the difference. A capital loss may be applied to reduce a capital gain in the same or a future tax year. Non-Australian tax resident Shareholders Non-Australian tax resident Shareholders that hold Shares on capital account may only be subject to Australian CGT upon disposal of their Shares where the following conditions are met: Page 41

54 (i) (ii) the non-australian tax resident Shareholder, together with its associates, holds 10 per cent or more of PGO's issued shares at the time of the disposal or for any 12 month period in the 24 months prior to disposal; and more than 50 per cent of the market value of the assets of PGO is represented (directly or indirectly) by real property interests or mining rights in respect of certain resources in Australia Material Litigation If CGT applies, concessional CGT treatment under Division 115 of the ITAA 1997 (general discount) is not available to non-australian tax residents in relation to the disposal of Shares acquired after 8 May We recommend you obtain specific taxation advice concerning this. As at the date of this Target's Statement, PGO is not involved in any material litigation Consents The following persons have given, and have not before the date of issue of this Target's Statement withdrawn, their consent to: be named in this Target's Statement in the form and context in which they are named; and the inclusion of other statements in this Target's Statement which are based on or referable to statements made in the reports or statements noted next to their names, or which are based on or referable to other statements made by those persons, in the form and context in which they appear: Name of Person Capacity Reports or Statements Mr Garry Mills Mr Tony Patrizi Independent Directors Statements made by, or statements based on the statements made by, the Independent Directors Dr Mark Qiu Director Statements made by, or statements based on the statements made by, Dr Mark Qiu, with such statements expressly excluding those attributed to the Independent Directors in this Target's Statement. Longreach Capital Financial advisor to PGO N/A Bellanhouse Legal Legal advisor to PGO N/A BDO Corporate Finance (WA) Pty Ltd Independent Expert Independent Expert's Report Page 42

55 Name of Person Capacity Reports or Statements CSA Global Pty Ltd Security Transfer Australia Pty Ltd Independent technical assessor PGO's share registry Independent Technical Assessment and Valuation included with the Independent Expert's Report N/A Each of the persons named above: does not make, or purport to make, any statement in this Target's Statement other than those statements referred to above and as consented to by that person; and to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Target's Statement other than as described in this Section with the person's consent. As permitted by ASIC Class Order 13/521, this Target's Statement contains statements that are made, or based on statements made, in documents lodged with ASIC or ASX (in compliance with the Listing Rules), including the Bidder's Statement. Pursuant to this Class Order, the consent of persons to whom such statements are attributed to is not required for the inclusion of those statements in the Target's Statement. Any Shareholder who would like to receive a copy of any of the documents (or parts of the documents) that contain the statements which have been included pursuant to ASIC Class Order 13/521 may obtain a copy free by writing to PGO's Company Secretary. Copies of all announcements by PGO may also be obtained from its website at or from ASX's website under the code "PGO". Additionally, as permitted by ASIC Corporations (Consents to Statements) Instrument 2016/72, this Target's Statement may include or be accompanied by statements: fairly representing what purports to be a statement by an official person; or that are a correct and fair copy of, or extract from, a public official document or a published book, journal or comparable publication. Pursuant to that Class Order, the consent of persons to whom such statements are attributed is not required for inclusion of those statements in this Target's Statement No Other Material Information There is no other information that Shareholders or their professional advisers would reasonably require to make an informed assessment on whether to accept the Offer, being information which: is reasonable for Shareholders and their professional advisers to expect to find in this Target's Statement; and is known to any of the Independent Directors. Page 43

56 In deciding what information should be included in this Target's Statement, the Independent Directors have had regard to, amongst other things, the matters which Shareholders (or their professional advisers) may reasonably be expected to know, including information contained in documents previously sent to Shareholders and information available from public sources such as the ASX, ASIC or PGO's website at Page 44

57 11. Authorisation Mr Garry Mills, the Executive Chairman and Managing Director of PGO, is authorised to sign this Target's Statement pursuant to a resolution passed by the Independent Directors on 20 March Mr Garry Mills Executive Chairman and Managing Director Dated: 21 March 2018 Page 45

58 12. Glossary of terms 12.1 Glossary In this Target's Statement, unless a contrary intention appears, the following expressions have the following meanings: AEST means Australian Eastern Standard Time. ASIC means the Australian Securities and Investments Commission. associate has the meaning given in section 12 of the Corporations Act. ASX means ASX Limited (ACN ) or the financial market operated by it, as the context requires. ASX Settlement means ASX Settlement Pty Limited (ACN ). ASX Settlement Operating Rules means the settlement rules of ASX Settlement. Bid Implementation Agreement means the bid implementation agreement entered into by PGO and Hanking Australia dated 20 February Bidder's Statement means the bidder's statement of HGM dated 2 March 2018 which was served on PGO on 2 March 2018, as supplemented by the First Supplementary Bidder's Statement. Board means the board of directors of PGO. Business Day means a day on which banks are open for general banking business in Perth (not being a Saturday, Sunday or public holiday in that place). CGT means capital gains tax. CHESS means the Clearing House Electronic Sub-register System operated by ASX Settlement, which provides for electronic share transfer in Australia. CHESS Holding means a holding of Shares on the CHESS sub-register of PGO. China Hanking means China Hanking Holdings Limited (Hong Kong Stock Exchange Code 03788). Conditions means the conditions to the Offer as described in schedule 2 to the Bidder's Statement. Control has the meaning given under section 50AA of the Corporations Act. Controlled has the same meaning. Controlling Participant means the broker who is designated as the controlling participant for Shares in a CHESS Holding in accordance with the ASX Settlement Operating Rules. Competing Proposal means any proposal, offer or transaction by a Third Party, which, if entered into or completed substantially in accordance with its terms, would mean a Third Party would directly or indirectly: Page 46

59 acquire a Relevant Interest or Voting Power in 10% or more of Shares or of the securities of any member of the PGO Group; enter into, buy, dispose of, terminate or otherwise deal with any cash settled equity swap or other synthetic, economic or derivative transaction connected with or relating to 10% or more of Shares or of the securities of any member of the PGO Group; acquire or obtain an interest (including an economic interest) in all or a substantial part or material part of the business conducted by, or assets or property of, PGO or any member of the PGO Group, or any projects in which any of them have an interest; acquire Control of PGO or any member of the PGO Group; or otherwise acquire, or merge with, PGO or any member of the PGO Group (including by way of takeover bid, scheme of arrangement, capital reduction, sale of assets, sale of securities, strategic alliance, dual listed company structure, joint venture or partnership). Each successive material modification or variation of any proposal, offer or transaction in relation to a Competing Proposal will constitute a new Competing Proposal. Coolgardie Gold Project means PGO's project located in the Western Australian Goldfields. Corporations Act means the Corporations Act 2001 (Cth). Director means a director of PGO and Directors means all of the directors of PGO. Eligible Participants means: "sophisticated investors" (as contemplated by section 708(8) of the Corporations Act); "professional investors" (as defined in section 9 of the Corporations Act); "wholesale clients" (as defined in section 761G of the Corporations Act); and persons associated with PGO (as contemplated by section 708(12) of the Corporations Act), that hold or beneficially own at least 2,500,000 Shares. FIRB means Foreign Investment Review Board. First Supplementary Bidder's Statement means the first supplementary bidder's statement of HGM dated 15 March 2018 which was served on PGO on 15 March Fully Diluted Basis means all Shares to which the Offer relates included any new Shares that are able to be issued during the Offer Period on the exercise of Options that are on issue at the Register Date (being 7pm (AEST) on 2 March 2018, the date set by HGM under subsections 633(2) to (4) inclusive of the Corporations Act). Hanking Australia means Hanking Australia Investment Pty Ltd (ACN ). HGM means HGM Resources Pty Ltd (ACN ). Page 47

60 Independent Directors means Mr Garry Mills and Mr Tony Patrizi. Independent Expert means BDO Corporate Finance (WA) Pty Ltd (ACN ). Independent Expert's Report means the report of the Independent Expert set out in Annexure A. Institutional Acceptance Facility means the institutional acceptance facility established by HGM and open to Eligible Participants on the terms set out in the First Supplementary Bidder's Statement. ITAA 1997 means Income Tax Assessment Act 1997 (Cth). Listing Rules means the listing rules of the ASX. Material Adverse Event means the events referred to in section 9.1 (definition of "Material Adverse Event") of the Bidder's Statement. Minimum Acceptance Condition means the Condition referred to in paragraph 1 of schedule 2 of the Bidder's Statement, namely, that HGM has a Relevant Interest in at least 50% of all Shares on a Fully Diluted Basis during or before the end of the Offer Period. Mt Bundy Gold Project means PGO's project located in the Northern Territory, Australia, which encompasses the Toms Gully, Rustlers Roost and Quest 29 projects. Offer means the offer dated 6 March 2018 made by HGM to acquire all of the Shares on the terms set out in schedules 1 and 2 of the Bidder's Statement. Offer Period means the period commencing on 6 March 2018 and ending on 17 April 2018 (unless extended or withdrawn) during which the Offer will remain open for acceptance. Offer Price means the offer of $ in cash for each Share. Option means an option to subscribe for, and be issued, a Share. PGO Group means PGO and its Related Entities. PGO or Company means Primary Gold Limited (ACN ). Prescribed Occurrences means the events referred to in paragraph 9 of schedule 2 of the Bidder's Statement. Projects means the Mt Bundy Gold Project and the Coolgardie Gold Project. Related Body Corporate has the meaning given in section 50 of the Corporations Act. Related Entity means in relation to a party, any entity that is related to that party within the meaning of section 50 of the Corporations Act or which is an economic entity (as defined in any approved Australian accounting standard) that is Controlled by that party. Relevant Interest has the meaning given in sections 608 and 609 of the Corporations Act. Section means a section of this Target's Statement. Page 48

61 Share means a fully paid ordinary share in PGO. Share Register means the register of shareholders of PGO maintained by or on behalf of PGO in accordance with the Corporations Act. Shareholder means a person registered as a member of PGO. Superior Proposal means a written bona fide Competing Proposal which the Independent Directors of PGO acting in good faith and, after having first obtained written advice from its legal and financial advisers, determines is: reasonably capable of being completed, taking into account all aspects of the Competing Proposal; and more favourable to Shareholders than the Offer, taking into account all terms and conditions of the Competing Proposal. Target's Statement means this Target's Statement, being the statement of PGO under Part 6.5 Division 3 of the Corporations Act. Third Party means a person other than HGM and its associates. Voting Power has the meaning given in section 610 of the Corporations Act. VWAP means volume weighted average price of Shares Interpretation Various defined terms are used in this Target's Statement. Unless the contrary intention appears, the context requires otherwise, or words are defined in Section 12.1, words and phrases in this Target's Statement have the same meaning and interpretation as in the Corporations Act. In this Target's Statement, headings are for convenience only and do not affect interpretation and unless the context indicates a contrary intention: the expression "person" includes an individual, the estate of an individual, a corporation, an authority, an association or a joint venture (whether incorporated or unincorporated), a partnership and a trust; a reference to any party includes that party's executors, administrators, successors and permitted assigns, including any person taking by way of novation and, in the case of a trustee, includes any substituted or additional trustee; a reference to any document (including this Target's Statement) is to that document as varied, novated, ratified or replaced from time to time; a reference to any statute or to any statutory provision includes any statutory modification or re- enactment of it or any statutory provision substituted for it, and all ordinances, by-laws, regulations, rules and statutory instruments (however described) issued under it; words importing the singular include the plural (and vice versa), and words indicating a gender include every other gender; Page 49

62 references to sections, schedules, exhibits or annexures are references to sections, schedules, exhibits and annexures to or of this Target's Statement, and a reference to this Target's Statement includes any schedule, exhibit or annexure to this Target's Statement; where a word or phrase is given a defined meaning, any other part of speech or grammatical form of that word or phrase has a corresponding meaning; the word "includes" in any form is not a word of limitation; a reference to "$" or "dollar" is to Australian currency; and if any day appointed or specified by this Target's Statement for the payment of any money or doing of any thing falls on a day which is not a Business Day, the day so appointed or specified shall be deemed to be the next Business Day. Page 50

63 ANNEXURE A INDEPENDENT EXPERT'S REPORT Page 51

64 PRIMARY GOLD LIMITED Independent Expert s Report 20 March 2018

65 Financial Services Guide 20 March 2018 BDO Corporate Finance (WA) Pty Ltd ABN ( we or us or ours as appropriate) has been engaged by Primary Gold Limited ( Primary Gold ) to provide an independent expert s report on the takeover offer from HGM Resources, a wholly-owned subsidiary of Hanking Australia Investment Pty Ltd ( Hanking ) for all the issued shares of Primary Gold at $ per Primary Gold Share ( the Offer ). You will be provided with a copy of our report as a retail client because you are a shareholder of Primary Gold. Financial Services Guide In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide ( FSG ). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees. This FSG includes information about: Who we are and how we can be contacted; The services we are authorised to provide under our Australian Financial Services Licence, Licence No ; Remuneration that we and/or our staff and any associates receive in connection with the general financial product advice; Any relevant associations or relationships we have; and Our internal and external complaints handling procedures and how you may access them. Information about us BDO Corporate Finance (WA) Pty Ltd is a member firm of the BDO network in Australia, a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN to represent it in BDO International). The financial product advice in our report is provided by BDO Corporate Finance (WA) Pty Ltd and not by BDO or its related entities. BDO and its related entities provide services primarily in the areas of audit, tax, consulting and financial advisory services. We do not have any formal associations or relationships with any entities that are issuers of financial products. However, you should note that we and BDO (and its related entities) might from time to time provide professional services to financial product issuers in the ordinary course of business. Financial services we are licensed to provide We hold an Australian Financial Services Licence that authorises us to provide general financial product advice for securities to retail and wholesale clients. When we provide the authorised financial services we are engaged to provide expert reports in connection with the financial product of another person. Our reports indicate who has engaged us and the nature of the report we have been engaged to provide. When we provide the authorised services we are not acting for you. General Financial Product Advice We only provide general financial product advice, not personal financial product advice. Our report does not take into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. BDO CORPORATE FINANCE (WA) PTY LTD

66 Financial Services Guide Page 2 Fees, commissions and other benefits that we may receive We charge fees for providing reports, including this report. These fees are negotiated and agreed with the person who engages us to provide the report. Fees are agreed on an hourly basis or as a fixed amount depending on the terms of the agreement. The fee payable to BDO Corporate Finance (WA) Pty Ltd for this engagement is approximately $55,000. Except for the fees referred to above, neither BDO, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report. Remuneration or other benefits received by our employees All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report. We have received a fee from Primary Gold for our professional services in providing this report. That fee is not linked in any way with our opinion as expressed in this report. Referrals We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide. Complaints resolution Internal complaints resolution process As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing addressed to The Complaints Officer, BDO Corporate Finance (WA) Pty Ltd, PO Box 700 West Perth WA When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination. Referral to External Dispute Resolution Scheme A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service ( FOS ). FOS is an independent organisation that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial service industry. FOS will be able to advise you as to whether or not they can be of assistance in this matter. Our FOS Membership Number is Further details about FOS are available at the FOS website or by contacting them directly via the details set out below. Financial Ombudsman Service GPO Box 3 Melbourne VIC 3001 Free call: Facsimile: (03) info@fos.org.au Contact details You may contact us using the details set out on page 1 of the accompanying report.

67 TABLE OF CONTENTS 1. Introduction 1 2. Summary and Opinion 1 3. Scope of the Report 4 4. Outline of the Offer 5 5. Profile of Primary Gold 7 6. Profile of China Hanking Holdings Limited Economic analysis Industry analysis Valuation approach adopted Valuation of Primary Gold prior to the announcement of the Offer Valuation of the Offer consideration Is the Offer fair? Is the Offer reasonable? Conclusion Sources of information Independence Qualifications Disclaimers and consents 48 Appendix 1 Glossary and copyright notice Appendix 2 Valuation Methodologies Appendix 3 - Discount rate assessment Appendix 4 Independent Valuation Report prepared by CSA Global Pty Ltd 2018 BDO Corporate Finance (WA) Pty Ltd

68 20 March 2018 The Independent Directors Primary Gold Limited 907 Canning Hwy MOUNT PLEASANT WA 6153 Dear Directors INDEPENDENT EXPERT S REPORT 1. Introduction On 21 February 2018, Primary Gold Limited ( Primary Gold or the Company ) announced that it had entered into a Bid Implementation Agreement ( BIA ) with Hanking Australia Investment Pty Ltd ( Hanking ), a 97%-owned subsidiary of China Hanking Holdings Limited ( CHH ) and also Primary Gold s largest shareholder, pursuant to which Hanking made an off-market conditional cash takeover bid for all of the shares in Primary Gold at $ per Primary Gold share. On 2 March 2018, the Company announced that the takeover bid was formalised with Primary Gold receiving the Bidder s Statement which confirmed the cash takeover offer for all the issued shares in Primary Gold at $ per Primary Gold share ( the Offer ). The Offer restated the bidder as Hanking Australia s wholly-owned subsidiary, HGM Resources Pty Ltd ( HGM ), which was incorporated for the purposes of the Offer. On 15 March 2018, HGM provided a Supplementary Bidder s Statement in relation to an institutional acceptance facility that had been established by HGM for the purposes of the Offer. All dollar amounts are in Australian dollars ( A$ or AUD ) unless otherwise indicated. 2. Summary and Opinion 2.1 Purpose of the report The independent directors of Primary Gold have requested that BDO Corporate Finance (WA) Pty Ltd ( BDO ) prepare an independent expert s report ( our Report ) to express an opinion as to whether or not the Offer is fair and reasonable to the shareholders of Primary Gold not associated with HGM ( Shareholders ). Our Report is prepared pursuant to section 640 of the Corporations Act 2001 Cth ( Corporations Act or the Act ) and is to be included in Target s Statement for Primary Gold in order to assist the Shareholders in their decision whether to accept the Offer. An independent expert s report is required because Dr Mark Qiu, Non-Executive Director of Primary Gold, is also the Managing Director of Hanking and HGM. We note that Dr Mark Qui is also a director and beneficiary of Golden Resource Investment Pty Ltd ATF Golden Discovery Holdings Trust. BDO Corporate Finance (WA) Pty Ltd ABN AFS Licence No is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN , an Australian company limited by guarantee. BDO Corporate Finance (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

69 2.2 Approach Our Report has been prepared having regard to Australian Securities and Investments Commission ( ASIC ) Regulatory Guide 111 Content of Expert s Reports ( RG 111 ) and Regulatory Guide 112 Independence of Experts ( RG 112 ). In arriving at our opinion, we have assessed the terms of the Offer as outlined in the body of this report. We have considered: how the value of a Primary Gold share prior to the announcement of the Offer on a control basis compares to the value of the Offer consideration; the likelihood of a superior alternative being available to Primary Gold; other factors which we consider to be relevant to Shareholders in their assessment of the Offer; and the position of Shareholders should the Offer not be accepted. 2.3 Opinion We have considered the terms of the Offer as outlined in the body of this report and have concluded that the Offer is not fair but reasonable to Shareholders. Despite being not fair, we consider the Offer to be reasonable because, in particular, if the Offer is not accepted, Shareholders will continue to hold shares in a Company that has a material uncertainty surrounding its ability to continue as a going concern. This means that the Company will require additional funding in the short to medium term, which will dilute Shareholders interests. Further, given this uncertainty, if the Offer is not accepted, the assessed values presented in our report and in CSA s report may not be realisable in the future. 2.4 Fairness In section 12, we determined that the Offer consideration compares to the value of a Primary Gold share on a control basis, as detailed below. Ref Low $ Preferred $ High $ Value of a share in Primary Gold (control basis) Value of the Offer consideration Source: BDO analysis 2

70 The above valuation ranges are graphically presented below: Value of a Primary Gold share prior to the announcement of the Offer (control basis) Value of the Offer consideration Valuation Summary Value ($) Source: BDO analysis The above pricing indicates that, in the absence of any other relevant information, the Offer is not fair for Shareholders. 2.5 Reasonableness We have considered the analysis in section 13 of this report, in terms of both advantages and disadvantages of accepting and rejecting the Offer; and other considerations, including the position of Shareholders if the Offer is not successful and the consequences of not accepting the Offer. In our opinion, in the absence of an alternate proposal, we believe that the Offer is reasonable for Shareholders. The respective advantages and disadvantages of accepting the Offer are summarised below: ADVANTAGES AND DISADVANTAGES Section Advantages Section Disadvantages The Offer provides Shareholders with an opportunity to realise their investment with certainty Shareholders will be unable to participate in the potential upside of prospective operations The Offer is at a premium to the Company s most recent quoted price and VWAP 3

71 The respective advantages and disadvantages of rejecting the Offer are summarised below: ADVANTAGES AND DISADVANTAGES Section Advantages Section Disadvantages Superior options available to the Company may emerge Shareholders will continue to hold shares in a company that has uncertain future funding options A superior takeover offer may emerge Shareholders who reject the Offer could become minority holders in a company in which HGM will have a controlling interest Other key matters we have considered include: Section Description 13.5 Alternative proposals 13.6 Consequences of not accepting the Offer 3. Scope of the Report 3.1 Purpose of the Report HGM has prepared a Bidder s Statement in accordance with section 636 of the Act. Under section 633 Item 10 of the Act, Primary Gold is required to prepare a Target Statement in response to the Bidder s Statement. Section 640 of the Act requires the Target Statement to include an independent expert s report to shareholders if: the bidder s voting power in the target is 30% or more; or the bidder and the target have a common director or directors. Dr Mark Qiu, Non-Executive Director of Primary Gold, is also the Managing Director of HGM and Hanking. Therefore, an independent expert s report is required for inclusion in the Target Statement. The independent directors of Primary Gold have engaged BDO to satisfy this requirement. 3.2 Regulatory guidance Neither the Listing Rules nor the Corporations Act defines the meaning of fair and reasonable. In determining whether the Offer is fair and reasonable, we have had regard to the views expressed by ASIC in RG 111. This regulatory guide provides guidance as to what matters an independent expert should consider to assist security holders to make informed decisions about transactions. 4

72 This regulatory guide suggests that where the transaction is a control transaction, the expert should focus on the substance of the control transaction rather than the legal mechanism used to effect it. RG 111 suggests that where a transaction is a control transaction, it should be analysed on a basis consistent with a takeover bid. In our opinion, the Offer is a control transaction as defined by RG 111 and we have therefore assessed the Offer as a control transaction to consider whether, in our opinion, it is fair and reasonable to Shareholders. 3.3 Adopted basis of evaluation RG 111 states that a transaction is fair if the value of the offer price or consideration is equal to or greater than the value of the securities subject of the offer. This comparison should be made assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm s length. When considering the value of the securities subject of the offer in a control transaction the expert should consider this value inclusive of a control premium. Further to this, RG 111 states that a transaction is reasonable if it is fair. It might also be reasonable if despite being not fair the expert believes that there are sufficient reasons for security holders to accept the offer in the absence of any higher bid. Having regard to the above, BDO has completed this comparison in two parts: a comparison between the value of a Primary Gold share prior to the announcement of the Offer on a control basis and the value of the Offer consideration (fairness see section 12 Is the Offer Fair? ); and an investigation into other significant factors to which Shareholders might give consideration, prior to accepting the Offer, after reference to the value derived above (reasonableness see section 13 Is The Offer Reasonable? ). This assignment is a Valuation Engagement as defined by Accounting Professional & Ethical Standards Board professional standard APES 225 Valuation Services ( APES 225 ). A Valuation Engagement is defined by APES 225 as follows: an Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Valuer is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Valuer at that time. This Valuation Engagement has been undertaken in accordance with the requirements set out in APES Outline of the Offer On 21 February 2018, the Company announced that it had entered into a BIA with Hanking, a 97% owned subsidiary of China Hanking Holdings Limited and also Primary Gold s largest shareholder, pursuant to which Hanking made an off-market conditional cash takeover bid for all of the shares in Primary Gold at $ per Primary Gold share that it does not already hold. On 2 March 2018, the Company announced that the takeover bid was formalised with Primary Gold receiving the Bidder s Statement which confirmed the cash takeover offer for all the issued shares in Primary Gold at $ per Primary Gold share. The offer detailed the bidder as HGM Resources Pty Ltd, a wholly owned subsidiary of Hanking that was incorporated for the purposes of the Offer. 5

73 Hanking held approximately 8.43% of the issued ordinary share capital of Primary Gold as at the date of the Bidder s Statement. On 15 March 2018, Hanking provided a Supplementary Bidder s Statement in relation to an institutional acceptance facility that had been established by HGM for the purposes of the Offer. The facility was established in order to enable eligible participants to indicate their intention to accept the Offer. As at 15 March 2018, Hanking and its associates held 10.39% (previously 8.43%) of the issued ordinary share capital of the Company. This increase was due to the acceptances of the Offer amounting to 8,493,854 shares. As at 20 March 2018, Hanking and its associates held 24.03% (previously 10.39%) of the issued ordinary share capital of the Company. This increase was due to the acceptances under the Institutional Acceptance Facility. The Offer also extends to any Primary Gold shares that are issued as a result of the exercise of Primary Gold unlisted options during the Offer period. The Offer and any contracts resulting from acceptance of the Offer are subject to the following conditions: a minimum acceptance condition of greater than 50% on a fully diluted basis; receipt of Foreign Investment Review Board ( FIRB ) approval; no change of control or pre-emptive rights are triggered as a result of HGM acquiring Primary Gold shares; prior to the end of the Offer period, Hanking does not become entitled to terminate the BIA as a result of a material breach by Primary Gold or a change in recommendation of the Offer by the independent board committee of Primary Gold; the Standard & Poors ( S&P )/Australian Securities Exchange ( ASX ) All Ordinaries Gold (Sub- Industry index) falls by 10% from its level immediately before the announcement date of the Offer and remains at or below that level, as at the close of trade, for at least five consecutive business days before the end of the Offer period; the spot price of gold in AUD as specified on the Australian Gold and Silver Exchange website (XAU (GOLD)) falls to a level that is below A$1,500 per ounce and remains at or below that level for at least five consecutive business days before the end of the Offer period; before the end of the Offer period, no material adverse event occurs, is announced or becomes known to HGM; no regulatory action between the announcement date and the end of the Offer period; during the period between the date that the Bidder s Statement is provided to Primary Gold and the end of the Offer period (each inclusive), there are no prescribed occurrences as set out in Schedule 1 of the Bidder s Statement dated 2 March 2018; and none of the events referred to in regards to the prescribed occurrences occur during the period commencing on the announcement date and ending at the end of the day immediately preceding the date the Bidder s Statement is provided to Primary Gold. 6

74 Further information regarding the conditions can be found in Schedule 1 of the Bidder s Statement dated 2 March The Offer is not subject to any Chinese regulatory approval or any financing conditions. In addition to the above, Hanking has agreed to provide Primary Gold with a $1.5 million unsecured loan facility to assist Primary Gold fund its short term working capital needs and other approved project activities during the Offer period ( Hanking Facility ). Interest is payable on amounts drawn down under the loan facility at 8% per annum, and any amounts advanced under the loan facility, plus interest, are repayable on the date that is three months after the close of the Offer. Amounts advanced under the loan facility, plus interest, are repayable within five business days if the BIA is terminated due to a material breach by Primary Gold, or in certain other circumstances. Primary Gold is liable to pay a break fee of $400,000 on the occurrence of certain events that include but are not limited to, if the independent Directors change their recommendation (subject to customary exceptions) or if a competing proposal is successfully completed prior to 20 February The break fee is also payable if certain conditions within the control of Primary Gold are breached or become incapable of being fulfilled or in certain circumstances where Hanking terminates the BIA. Further details of the Offer can be found in the Target s Statement, to which our report is attached. 5. Profile of Primary Gold 5.1 History and overview Primary Gold, through its subsidiaries, is an Australian listed gold producer and explorer that was listed on the ASX in July The Company has two major assets, being the Mount Bundy Gold Project ( Mount Bundy ) located in the Northern Territory and the Coolgardie Gold Project ( Coolgardie ) which is located in the goldfields region of Western Australia ( WA ). The current directors of Primary Gold are: Mr Garry Mills, Executive Chairman and Managing Director; Mr Tony Patrizi, Non-Executive Director; and Dr Mark Qiu, Non-Executive Director. Primary Minerals NL ( Primary Minerals ) is a wholly-owned subsidiary of Primary Gold, and was acquired by the Company in November Primary Minerals is the registered holder of Mount Bundy. In December 2016, the Company announced that it had finalised the acquisition of Coolgardie and an additional tenement adjoining the western boundary of the Coolgardie tenements through the purchase of MacPhersons Resources Limited s ( MacPhersons ) wholly-owned subsidiary MacPhersons Reward Pty Ltd ( MacPhersons Reward ). The consideration for the acquisition comprised both cash and shares. The Company s latest capital raising was undertaken in February 2017, under which it received firm commitments to raise $8.5 million before costs through a placement of million ordinary shares at an issue price of $0.07 each. The placement was made to both new and existing domestic and international institutional and sophisticated investors. Funds raised from the placement were used in progressing both Coolgardie and Mount Bundy, in addition for general working capital purposes. 7

75 5.2 Projects A summary of the Company s projects is set out below. Mount Bundy Mount Bundy is located approximately 100 kilometres ( km ) from Darwin, Northern Territory. Mount Bundy comprises the Rustlers Roost open pit and Toms Gully underground deposits, the Quest 29 open pit deposit, and an exploration portfolio that covers an area of approximately 1,500km 2. A scoping study commenced at Mount Bundy in November 2016, with results subsequently released in April Following this, in May 2017 the Company announced that the drill program at Mount Bundy was underway. In its quarterly activities report for the 2017 December quarter, Primary Gold stated the Preliminary feasibility study ( PFS ) for Mount Bundy would be due for release during the first half of On 2 November 2017, the Company announced that a number of gold nuggets had been discovered within Mount Bundy, with the discovered nuggets weighing in excess of 40 ounces. Coolgardie Coolgardie is a 3,047 hectare tenement package located 5km from the town of Coolgardie in the WA goldfields, and comprises the MacPhersons, Tycho, Franks Find and Bakers Find deposits. The project also has additional exploration area across the various tenements. Previous owners of Coolgardie, MacPhersons Resources Limited, had undertaken optimisation studies at both the MacPhersons and Tycho deposits in 2012 and 2013, respectively. In October 2016, the Company announced that it had commenced an exploration campaign at Coolgardie to target prospective geology zones away from the known MacPhersons, A-Cap and Tycho deposits. During the month, the Company also announced a maiden ore reserve estimate and positive results from its recently completed PFS on Coolgardie. In November 2017, the Company announced that commencement of mining operations at Coolgardie was subject to Primary Gold entering into a two-year toll treatment agreement with Westgold Resources Limited ( Westgold ) and obtaining Mining Proposal approval. Under the signed Memorandum of Understanding ( MoU ) between the Company and Westgold, Primary Gold provided Westgold with an exclusivity period to negotiate and agree a two-year toll treatment agreement for the processing of Coolgardie ore at the Westgold-owned Jubilee Mill. The exclusivity period ended on 31 December As at the date of Our Report, no toll treatment arrangements have been finalised. On 8 March 2018, Westgold announced that it had agreed to sell its South Kalgoorlie Operations to Northern Star Resources Limited. The sale of the South Kalgoorlie Operations included Westgold s Jubilee Mill, and as such, the MoU between Westgold and the Company was terminated. In January 2018, the Company received statutory approval from the Department of Mines, Industry Regulation and Safety to commence mining at Coolgardie. This represented the final step for all required statutory approvals, which included those related to environment, water, waste management and safety, to begin mining at Coolgardie. 8

76 In addition to the above, the Company also announced the acquisition of a 100% interest in an additional prospecting licence at Coolgardie. This increased Primary Gold s landholding at Coolgardie to 3,047 hectares of granted tenements. 5.3 Historical Statement of Financial Position Historical Statement of Financial Position CURRENT ASSETS Reviewed as at Audited as at Audited as at 31-Dec Jun Jun-16 $ $ $ Cash and cash equivalents 1,377,566 4,798,900 4,490,676 Trade and other receivables 81, ,503 41,763 Other assets 10,346 62,682 12,284 TOTAL CURRENT ASSETS 1,469,590 5,024,085 4,544,723 NON-CURRENT ASSETS Exploration and evaluation costs 26,217,149 25,115,323 13,846,259 Other financial assets 50, Other assets 2,824,795 2,824,795 2,769,020 Property, plant and equipment 152, ,583 - TOTAL NON-CURRENT ASSETS 29,244,232 28,100,701 16,615,279 TOTAL ASSETS 30,713,822 33,124,786 21,160,002 CURRENT LIABILITIES Trade and other payables 633,534 2,551, ,354 TOTAL CURRENT LIABILITIES 633,534 2,551, ,354 NON-CURRENT LIABILITIES Provisions 2,824,795 2,824,795 2,769,020 TOTAL NON-CURRENT LIABILITIES 2,824,795 2,824,795 2,769,020 TOTAL LIABILITES 3,458,329 5,376,082 3,082,374 NET ASSETS 27,255,493 27,748,704 18,077,628 EQUITY Contributed equity 44,409,960 44,409,960 33,707,140 Reserves 5,704,979 5,487,979 5,160,979 Accumulated losses (22,859,446) (22,149,235) (20,790,491) TOTAL EQUITY 27,255,493 27,748,704 18,077,628 Source: Primary Gold s audited financial statements for the years ended 30 June 2016 and 30 June 2017, and reviewed financial statements for the half-year ended 31 December 2017 We note that for the half year ended 31 December 2017, Primary Gold s auditor issued an emphasis of matter paragraph in the review report. The auditor outlined the existence of a material uncertainty that may cast significant doubt over Primary Gold s ability to continue as a going concern due to the Company s net loss of $710,211 during the half year ended 31 December We note the following in relation to Primary Gold s historical statement of financial position: Cash and cash equivalents increased from $4.5 million as at 30 June 2016 to $4.8 million as at 30 June This increase was largely a result of $8.0 million in cash received (net) from a share placement in February 2017, partially offset by the payment of $3.5 million for the acquisition of 9

77 Coolgardie, $1.3 million payments to suppliers and employees and $2.9 million exploration expenditure. Cash and cash equivalents then decreased to $1.4 million at 31 December 2017, mainly as a result of payments for the acquisition of mining tenements of $1.5 million and exploration expenditure of $1.5 million. Exploration and evaluation costs increased from $13.8 million as at 30 June 2016 to $25.1 million as at 30 June This was mainly a result of the acquisition of MacPhersons in addition to $2.6 million of capitalised expenditure on acquisition. For the year ended 30 June 2017, capitalised exploration and evaluation costs amounted to $3.3 million and represented amounts spent at both Mount Bundy and Coolgardie. The increase to $26.2 million at 31 December 2017 related to capitalised expenditure at Coolgardie and Mount Bundy. Other non-current assets related to security deposits and guarantees. As a part of its acquisition of Primary Minerals in March 2013, the Company was required to provide the Northern Territory Minister for Mines and Energy bank guarantees to fulfil its environmental obligations relating to Mount Bundy. During the financial year ended 30 June 2017, the Company forwarded $0.05 million by way of deposits to the minister, increasing total guarantees from $2.77 million as at 30 June 2016 to $2.82 million as at 30 June 2017, which remained unchanged at 31 December Trade and other payables increased from $0.3 million as at 30 June 2016 to $2.6 million as at 30 June This increase was mainly a result of $1.5 million deferred consideration and $0.5 million in accrued stamp duty in relation to the acquisition of MacPhersons during the year. The deferred consideration was paid during the half year ended 31 December Provisions relate to restoration provisions in the form of environmental bonds in relation to Mount Bundy. 5.4 Historical Statement of Profit or Loss and Other Comprehensive Income Historical Statement of Profit or Loss and Other Comprehensive Income Reviewed for the Audited for the Audited for the half year ended year ended year ended 31-Dec Jun Jun-16 $ $ $ Revenue from continuing operations 44,877 92,177 51,555 Expenses Administration expenses (228,551) (540,289) (653,937) Consultants & administration expenses (241,216) (386,831) (147,754) Depreciation and amortisation (8,295) (12,575) - Financial costs - - (1,276) Legal expenses (49,939) (64,382) (55,607) Share based payments expense (217,000) (327,000) (2,359,849) Exploration expenses (10,087) (119,844) (128,073) Total expenses (755,088) (1,450,921) (3,346,496) (Loss)/profit before income tax (710,211) (1,358,744) (3,294,941) Income tax benefit ,430 Loss after tax for the period (710,211) (1,358,744) (3,157,511) Source: Primary Gold s audited financial statements for the years ended 30 June 2016 and 30 June 2017, and reviewed financial statements for the half-year ended 31 December

78 We note the following in relation to Primary Gold s historical statement of profit or loss and other comprehensive income: Revenue from continuing operations relates to interest received from financial assets. Share based expense payments for the year ended 30 June 2016 amounted to $2.4 million, due to 60 million options being issued to directors throughout the financial year. This amount decreased to $0.3 million for the year ended 30 June 2017 and $0.2 million for the half year ended 31 December 2017, due to only 10 million options being issued to directors in each financial period. The income tax benefit of $0.1 million for the year ended 30 June 2016 was in relation to a research and development grant that was received during the year. 5.5 Capital Structure The share structure of Primary Gold as at 15 March 2018 is outlined below: Number Total ordinary shares on issue 614,168,885 Top 20 shareholders 257,553,156 Top 20 shareholders - % of shares on issue 41.94% Source: Share registry information The range of shares held in Primary Gold as at 15 March 2018 is as follows: Range of Shares Held Number of Ordinary Shareholders Number of Ordinary Shares Percentage of Issued Shares (%) 1-1, , % 1,001-5, , % 5,001-10, , % 10, , ,172, % 100,001 - and over ,928, % Total 1, ,168, % Source: Share registry information The ordinary shares held by the most significant shareholders as at 14 March 2018 are detailed below: Name Number of Ordinary Shares Percentage of Issued Shares (%) Hanking Australia Investment* 51,800, % Jasper Hill Resources Pty Ltd 23,731, % MacPhersons Resources Limited 20,400, % National Nominees Limited 20,063, % Subtotal 115,994, % Others 498,174, % Total ordinary shares on Issue 614,168, % Source: Share registry information *We note on 20 March 2018, a change of interest of substantial holder notice was released in relation to Hanking s holding in Primary Gold. The notice detailed Hanking and its associates voting power had increased to 24.03%, as a result of acceptances of the Offer. 11

79 The options on issue as at 15 March 2018 are detailed below: Current options on issue Number Options exercisable at $0.031 on or before 28 November ,333,336 Options exercisable at $0.040 on or before 7 March ,000,000 Options exercisable at $0.075 on or before 23 June ,000,000 Options exercisable at $0.100 on or before 23 June ,000,000 Options exercisable at $0.088 on or before 19 April ,000,000 Options exercisable at $0.065 on or before 12 May ,000,000 Options exercisable at $0.070 on or before 1 July ,000,000 Total 90,333,336 Source: Option registry information We note that 6,000,004 of the above mentioned options remain subject to vesting conditions. 6. Profile of China Hanking Holdings Limited HGM is a wholly owned subsidiary of Hanking, and was incorporated in February 2018 for the purposes of the Offer. CHH, the ultimate parent company of both entities, is a diversified mining conglomerate principally engaged in the exploration, mining, processing and sale of mineral resources. CHH operates through three segments, being iron ore, nickel and gold. CHH was incorporated on 2 August 2010, and listed on the Hong Kong Stock Exchange in September In the half year ended 30 June 2017, CHH reported a profit of approximately million Renminbi ( RMB ). As at 30 June 2017, CHH had bank balances and cash amounting to RMB379.7 million. The current directors and senior management of CHH are: Mr. Yang Jiye, Chairman; Dr. Pan Guocheng, Chief Executive Officer and President; Mr. Zheng Xuezhi, Chief Financial Officer; Dr. Mark Qui, Executive Director; Mr. Xia Zhuo, Executive Director; Mr. Kenneth Jue Lee, Non-Executive Director; Mr. Wang Ping, Non-Executive Director; Dr. Wang Anjian, Non-Executive Director; and Mr. Ma Qingshan, Non-Executive Director. In Australia, CHH operates through its subsidiaries Hanking, Marvel Loch Hotel Pty Ltd and HGM. A corporate structure is set out below. 12

80 Source: Bidder s Statement dated 2 March 2018 As per the diagram above, China Hanking Holdings Limited is a company incorporated in Cayman Islands. The remaining companies being Golden Resource Investment Pty Ltd, Hanking Australia Investment Pty Ltd, Marvel Loch Hotel Pty Ltd and HGM Resources Pty Ltd are all companies incorporated in Australia. We note Golden Resource Investment Pty Ltd holds 3% of the shares in Hanking in its capacity as trustee for the Golden Discovery Goldings Trust, a family trust associated with Dr Mark Qiu. 7. Economic analysis 7.1 Global Overall, the global economy has strengthened over the past year. A number of advanced economies are growing at an above-trend rate and unemployment rates are low. Growth picked up in the Asian economies in 2017, partly supported by increased international trade. The Chinese economy continues to grow solidly, with the authorities paying increased attention to the risks in the financial sector and the sustainability of growth. The pick-up in the global economy has contributed to a rise in oil and other commodity prices over the past year. Even so, Australia's terms of trade are expected to decline over the next few years, but remain at a relatively high level. Globally, inflation remains low, although higher commodity prices and tight labour markets are likely to see inflation increase over the next couple of years. Long-term bond yields have risen but are still low. Market volatility has increased from the very low levels of last year. As conditions have improved in the global economy, a number of central banks have withdrawn monetary stimulus. Financial conditions remain expansionary, with credit spreads narrow. 13

81 7.2 Australia Domestic growth The Reserve Bank of Australia s central forecast is for the Australian economy to grow faster in 2018 than it did in Business conditions are positive and non-mining business investment is increasing. Higher levels of public infrastructure investment are also supporting the economy. Further growth in exports is expected after temporary weakness at the end of One continuing source of uncertainty is the outlook for household consumption. Household incomes are growing slowly and debt levels are high. Unemployment Employment grew strongly over the past year and the unemployment rate declined. Employment has been rising in all states and has been accompanied by a significant rise in labour force participation. The various forward-looking indicators continue to point to solid growth in employment over the period ahead, with a further gradual reduction in the unemployment rate expected. Notwithstanding the improving labour market, wage growth remains low. This is likely to continue, although the stronger economy should see some lift in wage growth over time. Consistent with this, the rate of wage growth appears to have troughed and there are reports that some employers are finding it more difficult to hire workers with the necessary skills. Inflation Inflation remains low, with both CPI and underlying inflation running a little below 2 per cent. Inflation is likely to remain low for some time, reflecting low growth in labour costs and strong competition in retailing. A gradual pick-up in inflation is, however, expected as the economy strengthens. The central forecast is for CPI inflation to be a bit above 2 per cent in Housing market The housing markets in Sydney and Melbourne have slowed. Nationwide measures of housing prices are little changed over the past six months, with prices having recorded falls in some areas. In the eastern capital cities, a considerable additional supply of apartments is scheduled to come on stream over the next couple of years. APRA's supervisory measures and tighter credit standards have been helpful in containing the build-up of risk in household balance sheets, although the level of household debt remains high. Interest rates The low level of interest rates is continuing to support the Australian economy. Further progress in reducing unemployment and having inflation return to target is expected, although this progress is likely to be gradual. Taking account of the available information, the Board judged that holding the stance of monetary policy unchanged at this meeting would be consistent with sustainable growth in the economy and achieving the inflation target over time. Currency movements On a trade-weighted basis, the Australian dollar remains within the range that it has been in over the past two years. An appreciating exchange rate would be expected to result in a slower pick-up in economic activity and inflation than currently forecast. Source: Statement by Phillip Lowe, Governor: Monetary Policy Decision 6 March

82 8. Industry analysis Gold is a soft malleable metal which is highly desirable due to its rarity and unique mineral properties. Gold has been used in jewellery and as a form of currency for thousands of years, however in more recent history there has been increasing demand for its use in the manufacture of electronics, dentistry, medicine and aerospace technology. In addition to its practical applications, gold also serves as an international store of monetary value. Gold is widely regarded as a monetary asset as it is considered less volatile than world currencies and therefore provides a safe haven investment during periods of economic uncertainty. Once mined, gold continues to exist indefinitely and is often melted down and recycled to produce alternative or replacement products. Consequently, demand for gold is supported by both gold ore mining and gold recycling. A summary of the supply of gold for the eight years to 2017 is provided in the table below: Gold supply (tonnes) Mine production 2,744 2,846 2,911 3,073 3,150 3,223 3,263 3,269 Net producer hedging (109) 23 (45) (28) (30) Recycled gold 1,683 1,668 1,691 1,263 1,189 1,120 1,295 1,160 Total supply 4,318 4,537 4,557 4,308 4,444 4,356 4,591 4,399 Source: World Gold Council The gold ore mining industry has performed steadily in recent years, with growth driven by price increases and gold s status as a counter cyclical commodity. In Australia, gold ore mining is a well-established industry and has undergone robust growth over the past decade. Key external drivers Global gold prices have a significant impact on the revenue generated by industry operators. When gold prices are low, gold miners are less likely to commit to projects with lower gold grades and higher production costs. Ultimately, a decline in gold prices reduces the viability of new and existing projects, which hinders industry growth and conversely, higher gold prices encourage operators to re-examine techniques used to access lower grade ore. The global gold price is denominated in US dollars. Therefore, the exchange rate directly affects the returns received by local industry operators. A weaker domestic currency benefits the local industry by reducing prices in export markets and providing opportunities for expansion. Global demand for gold is also influenced by global economic performance, which is inversely related due to the counter cyclical nature of gold. Stronger global GDP growth can therefore negatively impact gold demand and the gold industry. According to IBIS World, global economic performance is expected to strongly improve, which may place downward pressure on demand for gold. Gold ore mining trends Gold ore mining is a capital intensive and high cost process, which is becoming increasingly difficult and more expensive as the quality of ore diminishes. The industry also incurs many indirect costs related to exploration, royalties, overheads, marketing and native title law. Typically, many of these costs are fixed in the short term as a result of industry operators inability to significantly alter cost structures once a mine commences operation. 15

83 Until the late 1980s, South Africa produced approximately half of the total gold ore mined globally. More recently however, the industry has diversified geographically, with China and Australia dominating global gold production. According to the United States Geological Survey ( USGS ), total estimated global gold ore mined for 2017 was approximately 3,150 metric tonnes. The chart below illustrates the estimated global gold production by country for the USGS 2017 estimate. 1.9% Global Gold Production 2.5% 2.2% (2017 estimate) 2.7% 2.5% 3.5% 3.2% 4.6% 4.9% 5.7% 7.8% 8.1% 9.5% 26.8% 14.0% Other China Australia Russia United States Canada Peru South Africa Mexico Uzbekistan Brazil Ghana Indonesia Kazakhstan Papua New Guinea Source: USGS Despite China and Australia accounting for approximately 24% of global gold production, Australia and South Africa are endowed with the largest known gold mine reserves globally. As depicted below, Australia and South Africa collectively account for approximately 29% of global gold reserves. 4.1% 3.7% 3.3% 4.2% 4.4% 4.6% 5.5% 1.8% 2.6% 2.4% 10.1% Global Gold Reserves (2017 estimate) Other 1.8% Australia 22.1% South Africa Russia United States Indonesia Brazil Peru Canada 18.1% China Uzbekistan Mexico 11.1% Papua New Guinea Ghana Kazakhstan Source: USGS 16

84 Gold prices The price of gold peaked at US$1,900 per ounce on 5 September 2011, due largely to the debt market crisis in Europe and the Standard and Poor s downgrade of the US credit rating. Global stock markets subsequently went into turmoil, which saw a flood of investors flock towards safer havens such as gold. The price of gold fluctuated around US$1,700 per ounce during 2012 before entering a steep decline in The downturn represented the beginning of a correction in the price of gold, which had almost tripled in the two-year period prior to the European crisis in Improved market sentiment and increased risk appetite from investors saw gold prices continue to decline throughout 2014 and 2015 to US$1,051 per ounce in December During 2016, gold prices strengthened, likely as a result of heightened uncertainty surrounding the US Presidential election and the United Kingdom s exit from the European Union. The price of gold reached US$1,363 per ounce in late 2016 before stabilising around US$1,200 per ounce for the first half of More recently, factors such as a build-up in inflation expectations and risk aversion caused by volatility in cryptocurrencies have worked to support gold prices. A summary of the gold spot price from 1 January 2008 to 13 March 2018 and Consensus Economics longterm forecast to December 2027 is set out below. As at 13 March 2018, the gold price was approximately US$1,326 per ounce. 2,000 Gold Spot and Forecast Price US$/ounce 1,800 1,600 1,400 1,200 1, Spot price Forecast Source: Bloomberg, Consensus Economics and BDO analysis According to Consensus Economics, gold prices are forecast to remain relatively stable with a long term nominal price forecast of approximately US$1,325 per ounce. 17

85 9. Valuation approach adopted In assessing whether the Offer is fair for Shareholders, we have considered a comparison between the value of a Primary Gold share on a control basis prior to the announcement of the Offer and the value of the consideration being offered by HGM, being $ cash per Primary Gold share. There are a number of methodologies which can be used to value a business or the shares in a company. The principal methodologies which can be used are as follows: Capitalisation of future maintainable earnings ( FME ) Discounted cash flow ( DCF ) Quoted market price basis ( QMP ) Net asset value ( NAV ) A summary of each of these methodologies is outlined in Appendix 2. Different methodologies are appropriate in valuing particular companies, based on the individual circumstances of that company and available information. It is possible for a combination of different methodologies to be used together to determine an overall value where separate assets and liabilities are valued using different methodologies. When such a combination of methodologies is used, it is referred to as a sum-of-parts valuation ( Sum-of-Parts ). The approach using the Sum-of-Parts involves using separately valuing each asset and liability of a company. The value of each asset may then be determined using different methods as described above. The component parts are then valued using the NAV methodology, which involves aggregating the estimated fair market value of each individual asset and liability. 9.1 Valuation of a Primary Gold share prior to the announcement of the Offer In our assessment of the value of a Primary Gold share we have chosen to employ the following methodologies: Sum-of-Parts as our primary method, which estimates the market value of a company by separately valuing each asset and liability of the company. The value of each asset may be determined using different methods and the component parts are then aggregated using the NAV methodology; and QMP as our secondary approach as this represents the value that a Shareholder could receive for a share if sold on the market prior to the announcement of the Offer Sum-of-Parts We have employed the Sum-of-Parts methodology in assessing the fair market value of Primary Gold by aggregating the estimated fair market value of its underlying assets and liabilities, having consideration for the following, the: value of Primary Gold s 100% interest in Coolgardie (by applying the DCF methodology); value of Primary Gold s interest in the residual resources of Coolgardie not included in the DCF (having reliance on the valuation carried out by an independent technical expert); value of Primary Gold s interest in Mount Bundy (having reliance on the valuation carried out by an independent technical expert); and 18

86 value of other assets and liabilities of Primary Gold (applying the cost approach under the NAV methodology) QMP We have chosen the QMP methodology as a cross check. The QMP basis is a relevant methodology to consider because Primary Gold s shares are listed on the ASX. This means that there is a regulated and observable market where Primary Gold s shares can be traded. However, in order for the QMP methodology to be considered appropriate, the Company s shares should be liquid and the market should be fully informed on the Company s activities Rationale for methodologies adopted We have chosen the Sum-of-Parts and QMP methodologies for the following reasons: we have adopted the Sum-of-Parts combined with the NAV and DCF approach as our primary valuation method. The Company s main assets are the projects it holds, being Coolgardie and Mount Bundy; - We note in October 2017, the Company announced that it had completed a pre-feasibility study ( PFS ) for Coolgardie and that proved and probable reserves have been declared. Therefore we consider that we have a reasonable basis under Regulatory Guide 170 Prospective Financial Information ( RG 170 ) and Information Sheet 214 Mining and resources Forward-looking statements ( IS 214 ) to apply the DCF methodology to value Coolgardie and have instructed CSA Global Pty Ltd ( CSA ) to act as independent technical specialist to perform a review of the technical project assumptions contained in the Coolgardie cash flow model prepared by the Company. The additional resources and exploration assets at Coolgardie not included in the DCF are valued separately by CSA as we do not have reasonable grounds to include them in the DCF valuation. - Mount Bundy recently completed a scoping study, and has not reached PFS stage. Therefore, we do not have a reasonable basis under RG 170 and IS 214 to apply the DCF methodology to value Mount Bundy. Further, we note that we have considered the work performed by CSA in conducting the valuation of the mineral resource and exploration licences and are satisfied that the assumptions and methodology used are reasonable. other component parts of Primary Gold are valued using the cost approach as they reflect other assets and liabilities not included in the DCF methodology, which are not income generating themselves; the QMP methodology is a relevant valuation method because Primary Gold shares are listed on the ASX and this reflects the value that a Shareholder will receive for a share sold on market. This means that there is a regulated and observable market where Primary Gold shares can be traded. However, in order for the QMP to be considered appropriate, the Company s shares should be liquid and active, and the market should be fully informed of the Company s activities; and the FME methodology is not an appropriate valuation method as it is most commonly applicable to profitable businesses with relatively stable growth histories and forecasts. We are unable to use this approach for Primary Gold given that it has been operating at a loss historically and it does not have a stable profitability outlook. 19

87 Technical expert In performing our valuation of Coolgardie using the DCF method, we have relied on the Independent Technical Assessment and Valuation Report prepared by CSA ( Independent Technical Assessment and Valuation Report ) based on CSA s review of the technical project assumptions contained in the cash flow model of Coolgardie. Additionally, we have relied on CSA s valuation of the additional resources and exploration assets not included in the DCF valuation of Coolgardie and CSA s valuation of Mount Bundy. In forming our low valuation of Coolgardie, we have also considered the assessed transaction multiple used to value the residual resource at Coolgardie, which we consider to be a conservative and appropriate approach given the economics of the project. CSA s Independent Technical Assessment and Valuation Report has been prepared in accordance with the Australasian Code for Public Reporting of Technical Assessments and Valuation of Mineral Assets (2015 Edition) ( Valmin Code ) and the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 Edition) ( JORC Code ). We are satisfied with the valuation methodologies adopted by CSA, which we believe are in accordance with industry practices and compliant with the requirements of the Valmin Code. A copy of CSA s Independent Technical Assessment and Valuation Report is attached in Appendix Four. 20

88 10. Valuation of Primary Gold prior to the announcement of the Offer 10.1 Sum-of-Parts We have employed the Sum-of-Parts methodology in estimating the fair market value of a Primary Gold share by aggregating the fair market values of its underlying assets and liabilities, having consideration to the following, the: value of Primary Gold s 100% interest in Coolgardie (by applying the DCF methodology); value of Primary Gold s interest in the residual resources and prospecting licences at Coolgardie not included in the DCF (having reliance on the valuation carried out by an independent technical expert); value of Primary Gold s interest in Mount Bundy (having reliance on the valuation carried out by an independent technical expert); value of the cash raised on notional exercise of in-the-money options that have vested; and value of other assets and liabilities of Primary Gold (applying the cost approach under the NAV methodology). The value of Primary Gold s assets on a going concern basis are summarised in the table below: Sum-of-Parts Low Preferred High Ref $ $ $ DCF value of Coolgardie ,800,000 5,700,000 7,500,000 Value of residual resource at Coolgardie ,300,000 1,600,000 1,900,000 Value of prospecting licences at Coolgardie ,000 1,200,000 1,700,000 Value of Mount Bundy ,400,000 46,700,000 56,800,000 Cash raised on notional exercise of options ,272,333 1,272,333 1,272,333 Value of other assets and liabilities , , ,438 Value of Primary Gold on a controlling interest basis 43,688,771 56,688,771 69,388,771 Number of shares on issue ,502, ,502, ,502,217 Value per Primary Gold share (control) ($) Source: BDO analysis The table above indicates that the value of a Primary Gold share prior to the announcement of the Offer, using the Sum-of-Parts methodology, is between $0.068 and $0.107, with a preferred value of $ The value of a Primary Gold share derived under the Sum-of-Parts methodology is reflective of a controlling interest DCF valuation of Coolgardie Future Cash Flows A detailed cash flow model for Coolgardie was prepared by management of Primary Gold ( the Coolgardie Model ). The Coolgardie Model estimates the future cash flows expected to be generated from gold production at Coolgardie based on JORC compliant resources including approximately 13,000oz of Measured, 45,000oz of Indicated and 11,000oz of Inferred. The Coolgardie Model depicts forecasts of real, pre-tax cash flows over the life of mine on a monthly and annual basis. We have reviewed the Coolgardie Model and the material assumptions that underpin it. 21

89 BDO has made certain adjustments to the Model where it was considered appropriate to arrive at an adjusted model ( Adjusted Coolgardie Model ). We have used the Adjusted Coolgardie Model in our DCF valuation. In particular, we have adjusted the Coolgardie Model to reflect any changes to technical assumptions together with operating and capital costs as a result of CSA s review and any changes to the economic and other input assumptions from our research. As forecast commodity prices are quoted on a nominal basis, we have adjusted the Coolgardie Model to reflect cash flows in nominal terms. The Coolgardie Model was prepared based on estimates of production profile, operating costs and capital expenditure. The main assumptions underlying the Coolgardie Model include: mining and production volumes; stockpile movements; gold prices; foreign exchange rates; pre-production infrastructure capital expenditure; operating costs; royalties; and discount rate. We undertook the following analysis on the Coolgardie Model: appointed CSA as technical expert to review, and where required, provide changes to the technical assumptions underlying the Coolgardie Model; conducted independent research on certain economic and other inputs such as gold prices, exchange rates, inflation and the discount rate applicable to the future cash flows of Coolgardie; and performed a sensitivity analysis on the value of the Coolgardie Model as a result of flexing selected key assumptions and inputs. We have not undertaken a review of the cash flow forecasts in accordance with Australian Auditing Standard on Assurance Engagements ASAE 3450 Assurance Engagements involving Corporate Fundraisings and/or Prospective Financial Information and do not express an opinion on the achievability of the forecast. However, nothing has come to our attention as a result of our procedures to suggest that the assumptions on which the Adjusted Coolgardie Model has been based have not been prepared on a reasonable basis. Appointment of a technical expert CSA was engaged to prepare a report providing a technical assessment of the assumptions underlying the Coolgardie Model. CSA s assessment involved the review and provision of opinion on the reasonableness of the assumptions adopted in the Coolgardie Model, including but not limited to: mining physicals (including volume mined, recovery and grade); processing assumptions (including products, recovery and dilution); 22

90 operating costs (including mining, processing, surface haulage, refining, royalty and onsite overhead costs); capital expenditure (pre-production and infrastructure capital required); mine closure and contractor demobilisation costs; and other relevant assumptions. Coolgardie is expected to have an initial mine life of 22 months. A copy of CSA s Independent Technical Assessment and Valuation Report is included in Appendix Four. Limitations Since forecasts relate to the future, they may be affected by unforeseen events and they depend, in part, on the effectiveness of management s actions in implementing the plans on which the forecasts are based. Accordingly, actual results may vary materially from the forecasts included in the Adjusted Coolgardie Model, as it is often the case that some events and circumstances frequently do not occur as expected, or are not anticipated, and those differences may be material. Economic assumptions Inflation We note that all cash flows contained in the Coolgardie Model were calculated on a real basis, with CSA s recommendations on the reasonableness of these forecast costs also being on a real basis. However, as commodity prices are quoted on a nominal basis, we have adjusted the Coolgardie Model to reflect cash flows in nominal terms. We have also calculated a nominal discount rate. Therefore, we have considered the appropriateness of inflation adjustments in deriving the forecast nominal cash flows of the Coolgardie project. We note the Coolgardie Model is denominated in AUD, and all costs related to the Coolgardie project are incurred in AUD. Therefore, in our assessment of the inflation rate in Australia, we have considered forecasts prepared by economic analysts and other publicly available information including broker consensus to arrive at our inflation rate assumptions. From our analysis, the consumer price index ( CPI ) over the year to 31 December 2017 was approximately 1.9%. Based on broker consensus, the average annual year-on-year inflation over 2018 and 2019 is forecast at approximately 2.2% and 2.3%, respectively. Having regard to the above, and the RBA s long-term target inflation rate of 2.0% to 3.0%, we have assumed an Australian inflation rate of 2.2% for 2018, and a long-term inflation rate of 2.3% over the remaining life of the mine. Foreign exchange rate The cash flows presented in the Coolgardie Model are denominated in AUD, however gold prices are quoted in USD. Therefore, we have converted the quoted gold prices from USD to AUD at the following forecast exchange rates. Exchange Rates Q Q Q AUD/USD Source: Bloomberg 23

91 Revenue assumptions Coolgardie receives revenue from the sale of gold only. Gold Gold revenue has been estimated as the product of recovered metal and gold prices, converted at the AUD/USD exchange rate. Primary Gold adopted a flat gold price of US$1,200 per ounce or A$1,600 per ounce over the life of mine in the Coolgardie Model. In obtaining forecast gold prices, we considered the most recent Consensus Economics price forecasts. Based on our analysis, we have adopted the following future gold prices (in nominal terms): Gold Prices Q Q Q Q Q Q Q Q Forecast price (US$/oz) Source: Consensus Economics Mining physicals 1,284 1,283 1,289 1,288 1,288 1,291 1,296 1,306 1,306 The Coolgardie Model depicts mining commencing on 1 October 2017, however as at the date of our Report, production has not yet commenced at Coolgardie. CSA have therefore recommended a mining commencement date of 1 July 2018 which reasonably accounts for the delays associated with factors such as contract negotiation and finalisation, equipment mobilisation and obtaining services, supplies and infrastructure which are required to commence production. We have accounted for this delay in the Adjusted Coolgardie Model, with mining commencing on 1 July The Coolgardie Model also accounts for a delay between mining and processing of one month. Therefore, based on CSA s recommended delay, processing in the Adjusted Coolgardie Model is assumed to commence from 1 August The graphs below show the forecast ore to be mined and processed over the life of mine of Coolgardie, with mining commencing in July 2018 and production commencing in August Ore Mined Ore Mined (tonnes) 200, , , , , ,000 80,000 60,000 40,000 20,000 - Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Source: Adjusted Coolgardie Model 24

92 Ore Processed 60,000 50,000 Ore Processed (tonnes) 40,000 30,000 20,000 10,000 - Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Source: Adjusted Coolgardie Model Product assumptions The graph below shows the production forecast over the life of mine of Coolgardie. Gold Produced 4,000 3,500 Gold Produced (ounces) 3,000 2,500 2,000 1,500 1, Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Oct-20 Source: Adjusted Coolgardie Model Operating costs Operating costs included in the Adjusted Coolgardie Model consist of mining costs, processing costs, surface haulage costs, refining costs, royalties and onsite overheads. The Adjusted Coolgardie Model also accounts for a waste dump relocation allowance of $1.2 million, in nominal terms. 25

93 The key operating cost elements in the Coolgardie Model were based on firm prices as tendered by the relevant contractors, as well as independent mining consultant Entech s cost database through the PFS process. We have engaged CSA to review and opine on the reasonableness of the operating costs underpinning the Coolgardie Model. CSA have concluded that all operating costs assumed in the Coolgardie Model are reasonable other than the adjustments set out below. We note that where changes have been made to the Coolgardie Model based on CSA s advice in preparing the Adjusted Coolgardie Model, we consider them to be reasonable and the source data to be appropriate. Toll treating agreement We note that on 28 November 2017, the Company announced that a MoU had been signed with Westgold, providing Westgold with an exclusivity period ended 31 December 2017 to negotiate and agree a two-year toll treatment agreement for the processing of ore at the Westgold-owned Jubilee Mill. However, the Jubilee Mill was subsequently sold to Northern Star Resources Limited in March As a result of the above, CSA have considered whether there are likely to be any expected costs associated with sourcing an alternative tolling arrangement. Based on this, CSA consider the processing costs used in the Coolgardie Model to be a reasonable estimate despite the terminated MoU. A summary of CSA s consideration in regards to toll treating costs can be found in CSA s Independent Technical Assessment and Valuation Report in Appendix Four. We note that where changes have been made to the Coolgardie Model based on CSA s advice in preparing the Adjusted Coolgardie Model, we consider them to be reasonable and the source data to be appropriate. Capital expenditure Coolgardie is forecast to require a project investment of approximately $0.1 million in nominal terms over the entire life of mine, which relates to ongoing environmental commitments and liabilities incurred at the end of production. The Coolgardie Model does not account for sustaining capital or capital contingencies, which CSA consider to be reasonable. We have engaged CSA to review and provide an opinion on the reasonableness of the capital expenditure underpinning the Coolgardie Model. The Coolgardie Model does not account for any other capital expenditure items other than those discussed below, which CSA consider to be reasonable. Further details of the capital expenditure assumptions contained in the Adjusted Coolgardie Model may be found in the CSA Independent Technical Assessment and Valuation Report at Appendix 4. Specifically, we have made the following adjustments to forecast capital expenditure: provided for $100,000 in costs associated with ongoing environmental commitments and liabilities to be incurred at the end of production in September 2018, in line with CSA s recommendations; and removed $125,000 of pre-production capital assumed in the Coolgardie Model due to these amounts already being incurred by Primary Gold, in line with CSA s recommendations. We note that where changes have been made to the Coolgardie Model based on CSA s advice in preparing the Adjusted Coolgardie Model, we consider them to be reasonable and the source data to be appropriate. 26

94 Royalties Primary Gold has the following obligations to third parties: a third party royalty of $2.00 per tonne of ore mined and processed; a 1.5% net smelter return royalty payable to Kurana Pty Ltd ( Kurana Royalty ); and a WA state royalty of 2.5%, which is the standard precious metal royalty payable on all gold produced in WA. We note the Kurana Royalty has not been accounted for in the Coolgardie Model, however CSA have confirmed the abovementioned royalties represent a cost to the operation and should therefore be included as part of Coolgardie s cash flows. As such, we have accounted for the Kurana Royalty in the Adjusted Coolgardie Model. Taxation We note the Coolgardie Model was prepared on a pre-tax basis. However, in order to derive a value that is reflective of the value received by shareholders, we have converted the pre-tax cash flows to post-tax cash flows. In our calculation, tax has been applied at a rate of 27.5% which represents the current corporate tax rate for Primary Gold in Australia. The tax calculation also takes into account Primary Gold s brought forward Australian tax losses which were approximately $19.0 million at 30 June It is expected that these tax losses are likely to be able to be utilised by the Company. We note that based on the above, no tax is assumed to be paid in the Adjusted Coolgardie Model over the life of mine Discount Rate We have selected a nominal post-tax discount rate in the range of 7.2% to 10.9% to discount the cash flows from Coolgardie to their present value. We have used a rounded discount rate of 9.0% in our base case. In selecting this range of discount rates, we have considered the following: the rate of return for comparable ASX-listed gold exploration and producing companies; and the risk profile of Primary Gold as compared to other gold exploration and producing companies. A detailed consideration of how we arrived at our adopted discount rate range is shown in Appendix Three Sensitivity Analysis We have analysed the key assumptions to the Adjusted Coolgardie Model and have prepared sensitivities on the NPV. These sensitivities have been prepared to assist Shareholders in considering the potential affects to the value of Coolgardie if our base case assumptions change. 27

95 Percentage change Sensitivity Analysis NPV NPV NPV NPV (A$m) (A$m) (A$m) (A$m) Gold price (USD/oz) Exchange rate (AUD/USD) Capital expenditure Operating expenditure -8% (1.6) % % % % % % % % 12.9 (1.1) 5.7 (1.0) Source: BDO analysis Discount rate sensitivity analysis Discount rate (%) 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% NPV (A$m) Source: BDO analysis As depicted above, our analysis of the sensitivity of the value of Coolgardie to changes in key inputs indicates that the project becomes not economically viable based on an 8% increase in operating expenditure, an 8% increase in the AUD/USD exchange rate, or an 8% decrease in the gold price. In considering the above sensitivities, Shareholders should note the following: the variables described above may have compounding or offsetting effects and are unlikely to move in isolation; and the variables for which we have performed sensitivities are not the only variables which are subject to deviation from the forecast assumptions Secondary methodology resource valuation Given the sensitivities of the key inputs to the Adjusted Coolgardie Model as set out in section , we consider it appropriate to consider a secondary resource valuation methodology to value the resource at Coolgardie. This is derived using CSA s adopted preferred transaction multiple used in the valuation of the residual resources at Coolgardie, and applied to the resource that form the basis of the DCF of Coolgardie. As set out in CSA s Independent Technical Assessment and Valuation Report in Appendix 4, CSA adopted a range of $9.60 per ounce to $14.40 per ounce with a preferred value of $12 per ounce based on comparative market transactions to apply to the residual mineral resource at Coolgardie. Further detail on this derivation is contained in Appendix Four. Based on CSA s preferred value of $12 per ounce and the total 69,000 ounces of gold contained in the DCF, the value of the resource at Coolgardie is approximately $0.83 million as set out below. 28

96 Valuation of resources at Coolgardie $ Preferred value per ounce as adopted by CSA 12.0 Ounces contained in Coolgardie Model (oz) 69,000 Value of resources at Coolgardie 828,000 Source: CSA s Independent Technical Assessment and Valuation Report, Coolgardie Model The above value of the resource at Coolgardie is used as a cross check to our DCF value as contemplated below Conclusion on the value of resources at Coolgardie In determining the low and high end of our range, we consider it appropriate to incorporate the potential upside and downside associated with the gold price and the AUD/USD exchange rate, given the sensitivity of the NPV to changes in these key assumptions. This is because Coolgardie derives revenue purely from the sale of gold produced, and the gold price is quoted in USD. Based on the sensitivities as set out in section , a 2% decrease in the gold price and an unfavourable 2% increase in the AUD/USD foreign exchange rate results in a rounded NPV of $3.8 million and $3.9 million, respectively. We therefore consider it appropriate to adopt $3.8 million as the low end of an appropriate range. We have also considered the value of the resources contained in the DCF as derived under section as a cross check to our assessed low end of an appropriate valuation range. Specifically, we note the residual mineral resources valued by CSA are considered pre-development mineral assets and therefore require improved economics in order for them to become economically viable. This is in comparison to those resources considered in the DCF of Coolgardie, for which a PFS has been completed and viability of the project has been confirmed. As such, the resources that form the basis for the DCF are considered well-advanced compared to the residual resources at Coolgardie. In addition to the above, we note the resources valuation in section only incorporates the inground resources at Coolgardie. This does not include existing plant and infrastructure at Coolgardie, with those costs having already been incurred by the Company. We understand, based on discussions with CSA, that the replacement cost of the infrastructure at Coolgardie would be approximately $2 million. Therefore, the difference between our assessed low end of $3.8 million and the $0.83 million resource valuation derived under section is explained by the fact that the resource as contemplated by the DCF is more advanced than the residual resource at Coolgardie (on which the resource multiple is derived) and the DCF value includes infrastructure that would have a replacement cost of approximately $2 million. Our preferred value of $5.7 million represents the rounded NPV of Coolgardie in our base case scenario, being the shaded values in the sensitivity tables in section Based on the sensitivities contained in section , a corresponding 2% increase in the gold price and a favourable 2% decrease in the AUD/USD foreign exchange rate results in a rounded NPV value of $7.5 million. We have therefore adopted this as our high end of an appropriate range. Therefore, our range of values for the resource at Coolgardie, as contemplated by the DCF, is $3.8 million to $7.5 million, with a preferred value of $5.7 million. 29

97 Value of residual resource at Coolgardie CSA has used the comparable transactions and yardstick methodologies to value the residual resource at Coolgardie. The residual resource represents the in-ground value of the resource that has a reduced level of certainty of production and therefore in accordance with RG 170 should not be valued using a DCF. The value ascribed to the residual resource is set out in the table below. Low Preferred High $ $ $ Value of residual resource 1,300,000 1,600,000 1,900,000 Source: Independent Valuation Report prepared by CSA (Appendix Four) As outlined in the Valmin Code, a range of values must be determined and stated in a public report to reflect any uncertainties in the data and the interaction of the various assumptions made. As such, the preferred value determined by CSA as set out above is selected as the most likely figure within a range after taking into account factors which may impact value. Further details can be found in CSA s Independent Technical Assessment and Valuation Report at Appendix Value of prospecting licences at Coolgardie CSA has relied on the comparable market transactions methodology to value the prospecting licences at Coolgardie. Given the early stage of these licences and the fact that CSA s analysis of market transactions includes a transaction dated 5 January 2018, we consider it appropriate for CSA to rely solely on this methodology. The value of the prospecting licences is set out in the table below. Low Preferred High $ $ $ Value of prospecting licences 700,000 1,200,000 1,700,000 Source: Independent Valuation Report prepared by CSA (Appendix Four) Further information on CSA s valuation can be found in Appendix Four Valuation of Mount Bundy We instructed CSA to provide an independent market valuation of Mount Bundy. CSA considered a number of different valuation methods when valuing Mount Bundy. CSA applied the Geoscientific (Kilburn) approach and the comparable transaction method. The comparable transaction method involves calculating a value per common attribute in a comparable transaction and applying that value to the subject asset. A common attribute could be the amount of resource or the size of a tenement. We consider these methods to be appropriate and in accordance with the Valmin Code. The range of values for Mount Bundy, as assessed by CSA is set out below: Low Preferred High $ $ $ Value of the Mount Bundy mineral resources 35,100,000 43,900,000 52,600,000 Value of the Mount Bundy exploration licences 1,300,000 2,800,000 4,200,000 Total value of Mount Bundy 36,400,000 46,700,000 56,800,000 Source: Independent Valuation Report prepared by CSA (Appendix Four) 30

98 Cash raised on notional exercise of options We have adjusted our Sum-of-Parts valuation to include the cash raised on exercise of those options that are in-the-money based on the Offer consideration and have vested at the date of our Report. Based on the option register provided, the Company has the following in-the-money options that have vested. Number of options Exercise price $ Cash raised on exercise $ 2,333, ,333 30,000, ,200,000 32,333,332 1,272,333 Source: Option register, as provided by management As detailed in section , we have also increased the number of shares on issue to reflect the issue of the shares on exercise of the above options Valuation of Other Assets and Liabilities Other assets and liabilities of Primary Gold represent the assets and liabilities that have not been specifically addressed in our Sum-of-Parts valuation. From our discussions with Primary Gold and analysis of these other assets and liabilities, outlined in the table below, we do not believe that there is a material difference between their book value and their fair value unless an adjustment has been noted below. The table represents a summary of the assets and liabilities identified: Reviewed as at Adjusted Other assets and liabilities 31-Dec-17 Note $ $ CURRENT ASSETS Cash and cash equivalents a 1,377, ,789 Trade and other receivables 81,678 81,678 Other assets 10,346 10,346 TOTAL CURRENT ASSETS 1,469, ,813 NON-CURRENT ASSETS Exploration and evaluation costs b 26,217,149 - Other financial assets 50,000 50,000 Other assets c 2,824,795 2,824,795 Property, plant and equipment d 152, ,288 TOTAL NON-CURRENT ASSETS 29,244,232 3,027,083 TOTAL ASSETS 30,713,822 3,925,896 CURRENT LIABILITIES Trade and other payables e 633, ,663 TOTAL CURRENT LIABILITIES 633, ,663 NON-CURRENT LIABILITIES Provisions f 2,824,795 2,824,795 TOTAL NON-CURRENT LIABILITIES 2,824,795 2,824,795 TOTAL LIABILITES 3,458,329 3,709,458 Value of Primary Gold's other assets and liabilities 216,438 Source: BDO analysis, reviewed financial statements for the half year ended 31 December 2017 and management accounts as at 28 February 2018 We have not undertaken a review of Primary Gold s management accounts in accordance with Australian Auditing and Assurance Standard 2405 Review of Historical Financial Information and do not express an opinion on this financial information. However, nothing has come to our attention as a result of our 31

99 procedures that would suggest the financial information within the management accounts has not been prepared on a reasonable basis. We have been advised that there has not been any significant change in the net assets of Primary Gold since 31 December 2017 and that the above assets and liabilities represent their fair market values apart from the adjustments detailed below. Where the above balances differ materially from the reviewed position at 31 December 2017 we have obtained supporting documentation to validate the adjusted values used, which provides reasonable grounds for reliance on the management accounts. Note a) Cash and cash equivalents Management have provided us with Primary Gold s bank balance at 28 February 2018 which we have verified by obtaining bank statements to support this bank balance. As at 28 February 2018, the Company s cash balance was $806,789, with the decrease largely relating to transaction costs incurred as a result of the Offer, in addition to a large expenditure item during February 2018 for pumping at Mount Bundy. Our adjustment to cash and cash equivalents is as follows: $ Cash balance at 31 December ,377,566 Less: movements to 28 February 2018 (570,777) Adjusted value of cash and cash equivalents 806,789 Source: Primary Gold s management accounts at 28 February 2018 Note b) Exploration and evaluation costs The entire exploration and evaluation assets balance of $26,217,149 as at 31 December 2017 has been removed as this has been separately reflected in our Sum-of-Parts valuation as follows: DCF value of Coolgardie (10.1.1); Value of residual resource at Coolgardie (10.1.2); Value of prospecting licences at Coolgardie (10.1.3); and Value of Mount Bundy (10.1.4). Note c) Non-current other assets The non-current other assets relate to security deposits and guarantees which the Company was required to give the Northern Territory Minister for Mines and Energy in relation to Mount Bundy. The book value of this guarantee remained unchanged between the audited position at 30 June 2017 and the reviewed position at 31 December Given the nature of this asset, we do not consider the market value of this asset to materially differ from its book value. Management also confirm that the book value of this asset has not changed materially since the 31 December 2017 reviewed position. This is also supported by the management accounts at 28 February Note d) Property, plant and equipment The property, plant and equipment relates primarily to non-mining assets, therefore we do not consider the value of the property, plant and equipment to be reflected in our valuations of Coolgardie and Mount Bundy. Also, we do not consider the market value of the property, plant and equipment to materially 32

100 differ from its book value. Nor has the book value of property, plant and equipment changed materially since the 31 December 2017 reviewed position. As such, we have not adjusted the book value of property, plant and equipment from the reviewed position at 31 December Note e) Trade and other payables We have adjusted trade and other payables to reflect the position as at 28 February 2018, which was $885,663. This increase is largely due to an expenditure item during February 2018 for pumping at Mount Bundy which impacted trade creditors. We have been provided with a payables listing supporting the trade and other payables balance at 28 February Our adjustment to trade and other payables is set out below: $ Trade and other payables balance at 31 December ,534 Add: movements to 28 February ,129 Adjusted value of trade and other payables 884,663 Source: Primary Gold s management accounts at 28 February 2018 Note f) Provisions The non-current provisions relate to rehabilitation of Mount Bundy. CSA has valued the resource at Mount Bundy and this rehabilitation provision has not been captured by their valuation. As such, we do not consider it appropriate to remove this from our Sum-of-Parts. Given the nature of the provision and based on the management accounts at 28 February 2018, we do not consider it appropriate to adjust the value of the provisions from the reviewed position at 31 December Number of shares on issue We have increased the number of shares on issue to reflect the notional exercise of options as detailed in section Prior to the announcement of the Offer, Primary Gold had 614,168,885 shares on issue. We have increased the number of shares on issue to reflect the exercise of 32,333,332 options, giving a total number of shares on issue of 646,502, Quoted Market Prices for Primary Gold Securities To provide a comparison to the valuation of Primary Gold in Section 10.1, we have also assessed the quoted market price for a Primary Gold share. The quoted market value of a company s shares is reflective of a minority interest. A minority interest is an interest in a company that is not significant enough for the holder to have an individual influence in the operations and value of that company. RG suggests that when considering the value of a company s shares for the purposes of a control transaction, the expert should consider a premium for control. An acquirer could be expected to pay a premium for control due to the advantages they will receive should they obtain 100% control of another company. These advantages include the following: control over decision making and strategic direction; access to underlying cash flows; control over dividend policies; and 33

101 access to potential tax losses. Therefore, our calculation of the quoted market price of a Primary Gold share including a premium for control has been prepared in two parts. The first part is to calculate the quoted market price on a minority interest basis. The second part is to add a premium for control to the minority interest value to arrive at a quoted market price value that includes a premium for control. Minority interest value Our analysis of the quoted market price of a Primary Gold share is based on the pricing prior to announcement of the Offer. This is because the value of a Primary Gold share after the announcement may include the effects of any change in value as a result of the Offer. However, we have considered the value of a Primary Gold share following the announcement when we have considered reasonableness in Section 13. The Company s securities were placed in a trading halt on 16 February 2018, prior to which there was 100,000 shares traded that day. The Company s shares were subsequently suspended from official quotation on 20 February Information on the Offer was subsequently announced to the market on 21 February Therefore, the following chart provides a summary of the share price movement over the 12 months to 16 February 2018 which incorporates trading that took place prior to the trading halt, and was the last trading day prior to the suspensions and trading halts leading up to the announcement of the Offer. PGO share price and trading volume history Share Price ($) Volume (millions) Volume Closing share price Source: Bloomberg The daily closing price of shares from 16 February 2017 to 16 February 2018 has ranged from a low of $0.036 on 14 December 2017 to a high of $0.092 on 20 February As depicted by the graph above, the Primary Gold share price has exhibited an overall decreasing trend over the period. The greatest level of trading activity occurred over October 2017 to February 2018, with the highest single date of trading occurring on 2 November 2017 where 24,061,384 shares were traded. During this period a number of announcements were made to the market. The key announcements are set out below: 34

102 Date Announcement Closing Share Price Following Announcement Closing Share Price Three Days After Announcement $ (movement) $ (movement) 16/02/2018 Request for Trading Halt % % 31/01/2018 Quarterly Activities Report % % 05/01/ /01/ /12/ /12/2017 Strategic Acquisition Consolidates Footprint At Coolgardie Final Approval Paves Way For Start Of Mining At Coolgardie Assays For Tailings Return Grades Up To 3.85 G/T Au At Toms New Strong Geochemical Anomalies Identified At Coolgardie % % % % % % % % 28/11/2017 Toll Treatment Update % % 06/11/2017 Further Information To Gold Nugget Discovery Announcement % % 02/11/2017 Trading Halt % % 02/11/2017 Gold Nuggets Discovered At Mt Bundy Identify New Target % % 31/10/2017 Quarterly Activities Report % % 31/10/ /10/ /10/ /10/ /09/ /08/2017 Major Resource Upgrade For Mt Bundy Gold Project To 1.8Moz Hampton Mining And Civil Preferred Contractor For Coolgardie Ore Reserve Estimate And Positive PFS For Coolgardie Project PGO Commences New Exploration Campaign At Coolgardie Project PGO Results Confirm Additional Broad Continuous Gold Zones PGO Intersects Broad Zones Of Gold Mineralisation % % % % % % % % % % % % 02/08/2017 Trading Halt % % 31/07/2017 Quarterly Activities Report % % 29/06/2017 Coolgardie Project Update % % 31/05/ /05/2017 Drilling Commenced At Mount Bundy Gold Project Primary To Commence Mt Bundy Drilling % % % % 28/04/2017 Quarterly Activities Report % % 19/04/ /03/2017 Source: Bloomberg, BDO analysis PGO Announces Positive Scoping Study For Mount Bundy PGO Receives Approvals For Drilling At Mount Bundy Project % % % % 35

103 At midday on 16 February 2018, the Company s securities were placed in a trading halt pending the release of an announcement by the Company. Prior to commencement of the trading period, the share price increased by 2.6% to close at $ Over the subsequent three trading days, the share price increased by a further 28.2% to close at $ We note information on the Offer was released by the Company on 21 February 2018, and as such, this price increase is likely to reflect effects of the announcement. On 31 January 2018, the Company released its quarterly activities report for the quarter ended 31 December On the date of the announcement, Primary Gold s share price remained unchanged. However, over the subsequent three trading days the share price decreased by 7.1% to $ On 3 January 2018, the Company announced that it had received the final outstanding regulatory approval required to commence mining at Coolgardie. On the date of the announcement, Primary Gold s share price increased by 25.6% to close at $ However, over the subsequent three trading days the share price decreased by 10.2% to close at $ On 28 November 2017, the Company announced that it had signed a MOU with Westgold, providing exclusivity until 31 December 2017 to negotiate a two-year toll treatment agreement to process ore from Coolgardie at the nearby Jubilee Mill from 1 July On the date of the announcement, Primary Gold s share price decreased by 2.2% to $ Over the subsequent three trading days, the share price decreased by a further 9.1% to close at $ On 6 November 2017, the Company released further details in relation to the method of discovery of gold nuggets at Mount Bundy. On the date of the announcement, Primary Gold s share price decreased by 16.1% to close at $ Over the subsequent three trading days, the share price decreased by a further 3.8% to $ On 2 November 2017, the Company announced that it had discovered gold nuggets weighing more than 40 ounces at Mount Bundy. On the date of the announcement, Primary gold s share price increased by 21.6% to close at $ However, over the subsequent three trading days the share price decreased by 17.7% to close at $ On 31 October 2017, the Company announced that gold resources at the Rustlers Roost deposit had increased by 72%. On the date of the announcement, Primary Gold s share price increased by 2.0% to close at $ However, over the three subsequent trading days the share price increased by a further 24.0% to close at $ On 4 August 2017, the Company announced that the drilling program at Mount Bundy had completed with positive results being received for the Rustlers Roost deposit. On the date of the announcement, Primary Gold s share price increased by 7.3% to close at $ However, over the three subsequent trading days the share price decreased by 11.9% to close at $ On 31 July 2017, the Company released its quarterly activities report for the quarter ended 30 June On the date of the announcement, Primary Gold s share price decreased by 10.7% to close at $ However, over the subsequent three trading days the share price increased by 10% to close at $ On 29 June 2017, the Company announced that it remained on track for the commencement of mining at Coolgardie, with the PFS close to completion. On the date of the announcement, Primary Gold s share price increased by 3.7% to close at $ However, over the subsequent three trading days the share price decreased by 7.1% to close at $

104 On 31 May 2017, the Company announced that the drilling program at Mount Bundy had commenced. On the date of the announcement, Primary Gold s share price decreased by 1.9% to close at $ Over the subsequent three trading days the share price decreased by a further 11.5% to close at $ On 12 May 2017, the Company announced that the drill pad preparation had been completed in preparation for drilling at Mount Bundy. On the date of the announcement, Primary Gold s share price increased by 16.3% to $ However, over the subsequent three trading days the share price decreased by 7.0% to $ On 28 April 2017, the Company released its quarterly activities report for the quarter ended 31 March On the date of the announcement, Primary Gold s share price remained unchanged. However, over the subsequent three trading days the share price decreased by 5% to close at $ On 9 March 2017, the Company announced that it had received all permitting and heritage approvals required to initiate drilling at Mount Bundy. On the date of the announcement, Primary Gold s share price decreased by 9.0% to close at $ Over the subsequent three trading days the share price decreased by a further 1.4% to close at $ To provide further analysis of the market prices for a share in Primary Gold, we have also considered the weighted average market price for 10, 30, 60 and 90-day periods to 16 February Share Price per unit 16-Feb Days 30 Days 60 Days 90 Days Closing price $0.039 Volume weighted average price (VWAP) $0.039 $0.042 $0.042 $0.047 Source: Bloomberg, BDO analysis The above weighted average prices are prior to the date of the announcement of the Offer to avoid the influence of any increase in price of Primary Gold shares that has occurred since the Offer was announced. An analysis of the volume of trading in Primary Gold shares for the 180 trading days to 16 February 2018 is set out below: Trading days Share price Share price Cumulative volume As a % of low high traded Issued capital 1 Day $0.039 $ , % 10 Days $0.037 $ ,775, % 30 Days $0.037 $ ,954, % 60 Days $0.036 $ ,702, % 90 Days $0.036 $ ,975, % 180 Days $0.036 $ ,606, % Source: Bloomberg, BDO analysis This table indicates that Primary Gold s shares display a moderate level of liquidity, with 43.41% of the Company s current issued capital being traded over a 180 trading day period. RG states that for the quoted market price methodology to be an appropriate methodology there needs to be a liquid and active market in the shares and allowing for the fact that the quoted price may not reflect their value should 100% of the securities not be available for sale. We consider the following characteristics to be representative of a liquid and active market: regular trading in a company s securities; approximately 1% of a company s securities are traded on a weekly basis; 37

105 the spread of a company s shares must not be so great that a single minority trade can significantly affect the market capitalisation of a company; and there are no significant but unexplained movements in share price. A company s shares should meet all of the above criteria to be considered liquid and active, however, failure of a company s securities to exhibit all of the above characteristics does not necessarily mean that the value of its shares cannot be considered relevant. In the case of Primary Gold, we consider there to be a liquid and active market for the Company s shares as a result of 43.41% of the Company s current issued capital being traded over a 180 trading day period prior to the announcement of the Offer. Furthermore, we do not consider there to have been any significant unexplained price movements in trade volume during the period. Our assessment is that a range of values for Primary Gold shares based on market pricing, after disregarding post announcement pricing is between $0.039 and $ Control Premium We have reviewed the control premiums paid by acquirers of gold mining companies listed on the ASX. We have summarised our findings below: Average Control Premium Year Number of Transactions Average Deal Value (A$m) (%) Mean Source: Bloomberg Median In arriving at an appropriate control premium to apply, we note that observed control premiums can vary due to the: nature and magnitude of non-operating assets; nature and magnitude of discretionary expenses; perceived quality of existing management; nature and magnitude of business opportunities not currently being exploited; ability to integrate the acquiree into the acquirer s business; level of pre-announcement speculation of the transaction; and level of liquidity in the trade of the acquiree s securities. 38

106 When performing our control premium analysis, we considered completed transactions where the acquirer held a controlling interest, defined at 20% or above, pre transaction or proceeded to hold a controlling interest post transaction in the target company. The table above indicates that the long term average of completed control premiums paid by acquirers of gold mining companies on the ASX is approximately 50%. However, in assessing the sample of transactions included in the table, we noted transactions that appear to be extreme outliers. These outliers included 11 transactions in which the announced premium was in excess of 80%. In a sample where there are extreme outliers, the median often represents a superior measure of central tendency compared to the mean. We note that the median completed control premium over the review period was approximately 43%. In determining the control premium most appropriate for Primary Gold, we considered a number of company specific factors. Given that Primary Gold s projects are yet to derive revenue and the Company is loss making we consider it unlikely that an acquirer would pay a control premium in line with historical averages. Further, the inclusion of an emphasis of matter in the Company s audit report relating to the Company s ability to continue as a going concern provides further support for our assessment of control premium at the lower end of historical averages. Based on the above analysis, we consider an appropriate premium for control is between 30% and 40%, with a midpoint of 35%. Quoted market price including control premium Applying a control premium to Primary Gold s quoted market share price results in the following quoted market price value including a premium for control: Low $ Midpoint $ High $ Quoted market price value Control premium 30% 35% 40% Quoted market price valuation including a premium for control Source: BDO analysis Therefore, our valuation of a Primary Gold share based on the quoted market price method and including a premium for control is between $0.051 and $0.066, with a midpoint value of $

107 10.3 Assessment of Primary Gold value prior to announcement of the Offer The results of the valuations performed are summarised in the table below: Low $ Preferred $ High $ Sum-of-Parts (Section 10.1) ASX market prices (Section 10.2) Source: BDO analysis We note while the value ranges overlap, the values obtained under the Sum-of-Parts method are higher than the values obtained from the QMP method. The difference in values under the QMP method and the Sum-of-Parts method may be explained by the following: the QMP value reflects investors perception of the future prospects of Coolgardie and Mount Bundy and may take into account a more conservative or negative sentiment around future commodity prices and the prospects of these projects. Similarly, it may also reflect the uncertainty surrounding the tolling arrangements in place for Coolgardie; detailed operating and capital cost assumptions have not been disclosed to the market, therefore it is likely that the market price is based on more pessimistic cost assumptions than those assumptions which form the basis of our DCF valuation; our Sum-of-Parts valuation includes the DCF valuation of Coolgardie, which incorporates technical assumptions provided by an independent specialist. Investors may have made different technical assumptions in forming their valuation; and given that Coolgardie is the Company s most advanced project, investors may be basing their assessment of the value of Primary Gold on the outlook of cash flows for Coolgardie. In particular uncertainty surrounding the completion of an agreement for tolling the output from Coolgardie is likely to have suppressed pricing; and based on our Sum-of-Parts valuation, Mount Bundy contributes approximately 82% of the total value of Primary Gold compared to Coolgardie only representing 15% (under our preferred valuations). Whilst there may be some reflection of the value of Mount Bundy in the Company s share price it appears that, the market may be undervaluing Mount Bundy. This is evidenced, for example, in the increase in the Company s share price by 21.6% immediately after the announcement of the discovery of gold nuggets leading to the identification of a new project at Mount Bundy on 2 November 2017 which was not sustained with the share price falling by 17.7% three days after this announcement. The market s undervaluation of Mount Bundy may be a result of limited information being released to the market relative to the information provided on the Company s more advanced Coolgardie project and the Company s public focus being on Coolgardie. For the reasons stated above, we consider the Sum-of-Parts method to be the most appropriate method to value a Primary Gold share. In particular, our Sum-of-Parts valuation includes valuations and technical inputs provided by CSA, an independent technical specialist. We consider the methodologies used by CSA to more accurately reflect the fair market value of Primary Gold s assets. 40

108 Based on the results above we consider the value of a Primary Gold share to be between $0.068 and $0.107, with a preferred value of $ Valuation of the Offer consideration Under the Offer, Shareholders will receive $ in cash for every Primary Gold share held if the Offer is accepted and it becomes unconditional. 12. Is the Offer fair? The value of a Primary Gold share and the Offer consideration is compared below: Ref Low $ Preferred $ High $ Value of a share in Primary Gold (control basis) Value of the Offer consideration We note from the table above that the value of a share in Primary Gold on a control basis is greater than the Offer consideration. Therefore, we consider that the Offer is not fair. 41

109 13. Is the Offer reasonable? We consider the Offer to be reasonable for Shareholders, based on the considerations detailed below Advantages of Accepting the Offer We have considered the following advantages when assessing whether the Offer is reasonable The Offer provides Shareholders with an opportunity to realise their investment with certainty The Offer consideration is in the form of cash, therefore it provides Shareholders with a certain return on their investment. This certainty of a return of cash eliminates Shareholders exposure to the perceived environmental and other risks associated with the Company s projects such as the uncertainty surrounding the tolling arrangements at Coolgardie. Also, the development of Mount Bundy will require significant capital expenditure, therefore the Offer eliminates the funding risk associated with Mount Bundy as there is no guarantee that the funding will be secured on terms that would not significantly dilute existing shareholders interests. Further information on these risks can be found in CSA s report in Appendix Four The Offer is at a premium to the Company s most recent quoted price and recent VWAP As detailed in section 10.2, the closing price of a Primary Gold share on the last trading day prior to the announcement of the Offer was $0.039 and the VWAP for the 90 days prior to the announcement of the Offer was $ Therefore, the Offer consideration represents a premium of approximately 47% to the most recent trading price prior to the Offer and 22% to the 90 day VWAP Disadvantages of Accepting the Offer If the Offer is accepted, in our opinion, the potential disadvantages to Shareholders include those set out below: Shareholders will be unable to participate in the potential upside of prospective operations If Shareholders accept the Offer, they will be unable to participate in the potential upside of Mount Bundy, as well as the upside and potential to dividends if either Coolgardie or Mount Bundy reach production. We note that there is no guarantee that the Company will pay a dividend in the foreseeable future Advantages of Rejecting the Offer We consider the advantages of rejecting the Offer to be as follows: Superior options available to the Company may emerge There may be other alternatives available to the Company and if Shareholders reject the Offer they will not be able to participate in the upside of these alternatives, should they emerge. Given the market value ascribed to Mount Bundy by CSA, a potential option for Primary Gold may be to dispose of all or part of its in interest in Mount Bundy and use the proceeds to give a return of capital to shareholders. If the value of Mount Bundy as determined by CSA is realised on sale, and the Company opts for a return of capital, this 42

110 would result in shareholders receiving a cash amount in the magnitude of the Offer consideration. This would mean that Shareholders could receive an amount similar to the Offer consideration and still retain its exposure to the potential upside of Coolgardie. However, given the requirement for additional funding and the uncertainty around the Company s ability to continue as a going concern, there is a risk that in the future, these values may not be realisable. This is detailed further in section We note that the above scenarios are hypothetical and are used to demonstrate the possibility of alternatives being available to Primary Gold. We make no assertions as to whether these potential alternatives may eventuate A superior takeover offer may emerge Given that our assessed value ranges are higher than the Offer consideration, HGM may increase its takeover bid to a value closer to, or within, our assessed value range. Alternatively, a third party may view it as an opportunity to make a superior bid at a price that is greater than the Offer price and that is within our assessed value range for a Primary Gold share. However, based on our enquiries of the Directors of Primary Gold, we are not aware of any alternative offers that may emerge. Even if an alternative offer was made, the price, structure and terms of such an offer are not known and cannot be predicted Disadvantages of Rejecting the Offer If the Offer is rejected, in our opinion, the potential disadvantages to Shareholders include the following: Shareholders will continue to hold shares in a company that has uncertain future funding options The review report for the half year ended 31 December 2017 includes an emphasis of matter surrounding the ability of the Company to continue as a going concern. Based on the reviewed cash position at 31 December 2017 of approximately $1.4 million as well as the forecast cash burn for the March 2018 quarter of $0.7 million, we consider it likely that in the next three to six months the Company will seek to raise funding. As detailed in section 4, Primary Gold is able to draw on a loan of up to $1.5 million from Hanking. However, this loan must be repaid within three months of the close of the Offer or within five business days of the BIA being terminated. We do not consider this loan to be a sustainable funding solution for the Company. Therefore, we consider it likely that the Company would need to raise additional funds in the near term. This reflects the views of the Company s Directors who state in Note 1 to the 31 December 2017 half-year report that If the Takeover is unsuccessful, there are appropriate plans in place to raise additional funds as and when it is required. In light of the consolidated entities current projects, the directors believe that additional capital or debt can be raised. We consider it most likely that any future capital raisings are likely to be at a discount to the quoted market price, thereby diluting existing Shareholders interests. If Shareholders reject the Offer, they will continue to hold shares in a Company that has a material uncertainty around its ability to continue as a going concern. Due to the potential vulnerability of Primary 43

111 Gold s financial position, this may impact the price that a potential acquirer is willing to pay for its assets, which may prevent the Company from realising the market values as determined by CSA Shareholders who reject the Offer could become minority holders in a company that HGM will have a controlling interest Shareholders who reject the Offer may potentially be left holding a minority interest shareholding in a Company that HGM has a controlling interest in. The implications of the various levels of control that HGM may obtain as a result of the Offer are outlined below: Controlling Interest Company Influence >50% ability to block and pass general resolutions >75% ability to pass special resolutions >90% ability to initiate a compulsory takeover We note that the Offer has a minimum acceptance condition of 50% on a fully diluted basis. This means that if the Offer is effected, at a minimum HGM will hold 50% of the Company s issued shares assuming that no options are exercised. Therefore, if Shareholders reject the Offer and other Shareholders holding 41.57% of Primary Gold s issued capital accept, then those Shareholders that reject will be left holding a share with a significant controlling shareholder. This is likely to reduce the value of the share, as well as reducing its liquidity, which may make it difficult to realise the investment in the future. Further, the presence of a shareholder with a controlling interest is likely to deter a takeover offer from another party in the future. This therefore would reduce the likelihood of Shareholder s receiving a takeover premium for their shares in the future. If the minimum acceptance condition of 50% is not achieved, the Offer will not proceed unless that condition is lifted by HGM Alternative Proposal We are unaware of any alternative proposal that might offer the Shareholders of Primary Gold a premium over the value of the Offer Consideration Consequences of not Accepting the Offer Potential decline in share price We have analysed movements in Primary Gold s share price since the Offer was announced. A graph of Primary Gold s share price since the announcement is set out below. 44

112 Primary Gold post-announcement pricing Share Price ($) Announcement date Volume (millions) Volume Closing share price Source: Bloomberg The price of Primary Gold s shares from 2 January 2018 to 9 March 2018 has ranged from a low of $0.037 on 9 February 2018 to a high of $0.052 on 23 February Subsequent to the announcement of the Offer, 27,120,144 shares were traded on 21 February 2018, representing 2.49% of the Company s current issued share capital. The share price of Primary Gold increased by approximately 28% on the date of the announcement, from a close of $0.039 on 20 February 2018 to a close of $0.050 on 21 February Following the announcement, the share price has been trading within the range of $0.049 and $ Given the above analysis, it is possible that if the Offer is not successful, then Primary Gold s share price may decline to levels exhibited prior to the announcement of the Offer. 14. Conclusion We have considered the terms of the Offer as outlined in the body of this report and have concluded that Offer is not fair but reasonable to the Shareholders of Primary Gold. Despite being not fair, we consider the Offer to be reasonable because, in particular, if the Offer is not accepted, Shareholders will continue to hold shares in a Company that has a material uncertainty surrounding its ability to continue as a going concern. This means that the Company will require additional funding in the short to medium term, which will dilute Shareholders interests. Further, given this uncertainty, if the Offer is not accepted, the assessed values presented in our report and in CSA s report may not be realisable in the future. 45

113 15. Sources of information This report has been based on the following information: audited financial statements of Primary Gold for the years ended 30 June 2015, 30 June 2016 and 30 June 2017; reviewed financial statements of Primary Gold for the half year ended 31 December 2017; unaudited management accounts of Primary Gold for the period ended 28 February 2018; supporting documentation for the management accounts of Primary Gold including but not limited to bank statements and payables listings; Independent Technical Assessment and Valuation Report of Primary Gold s mineral assets dated 16 March 2018 prepared by CSA; executed Loan Facility Agreement between Hanking and Primary Gold dated 20 February 2018; draft Target s Statement; Bidder s Statement; share registry information; option registry information; Bloomberg; S&P Capital IQ; and information in the public domain such as; - Reserve Bank of Australia s Monetary Policy Decision dated 6 March 2018; - World Gold Council Production Statistics; - US Geological Survey; - Energy and Metals Consensus Forecast. 16. Independence BDO Corporate Finance (WA) Pty Ltd is entitled to receive a fee of $55,000 (excluding GST and reimbursement of out of pocket expenses). The fee is not contingent on the conclusion, content or future use of this Report. Except for this fee, BDO Corporate Finance (WA) Pty Ltd has not received and will not receive any pecuniary or other benefit whether direct or indirect in connection with the preparation of this report. BDO Corporate Finance (WA) Pty Ltd has been indemnified by Primary Gold in respect of any claim arising from BDO Corporate Finance (WA) Pty Ltd's reliance on information provided by Primary Gold, including the non provision of material information, in relation to the preparation of this report. Prior to accepting this engagement BDO Corporate Finance (WA) Pty Ltd has considered its independence with respect to Primary Gold and Hanking and any of their respective associates with reference to ASIC Regulatory Guide 112 Independence of Experts. In BDO Corporate Finance (WA) Pty Ltd s opinion it is independent of Primary Gold and Hanking and their respective associates. Neither the two signatories to this report nor BDO Corporate Finance (WA) Pty Ltd, have had within the past two years any professional relationship with Primary Gold, or their associates, other than in connection with the preparation of this report. 46

114 A draft of this report was provided to Primary Gold and its advisors for confirmation of the factual accuracy of its contents. No significant changes were made to this report as a result of this review. BDO is the brand name for the BDO International network and for each of the BDO Member firms. BDO (Australia) Ltd, an Australian company limited by guarantee, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of Independent Member Firms. BDO in Australia, is a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN to represent it in BDO International). 17. Qualifications BDO Corporate Finance (WA) Pty Ltd has extensive experience in the provision of corporate finance advice, particularly in respect of takeovers, mergers and acquisitions. BDO Corporate Finance (WA) Pty Ltd holds an Australian Financial Services Licence issued by the Australian Securities and Investment Commission for giving expert reports pursuant to the Listing rules of the ASX and the Corporations Act. The persons specifically involved in preparing and reviewing this report were Sherif Andrawes and Adam Myers of BDO Corporate Finance (WA) Pty Ltd. They have significant experience in the preparation of independent expert reports, valuations and mergers and acquisitions advice across a wide range of industries in Australia and were supported by other BDO staff. Sherif Andrawes is a Fellow of the Institute of Chartered Accountants in England & Wales and a Fellow of Chartered Accountants Australia & New Zealand. He has over 30 years experience working in the audit and corporate finance fields with BDO and its predecessor firms in London and Perth. He has been responsible for over 300 public company independent expert s reports under the Corporations Act or ASX Listing Rules and is a CA BV Specialist. These experts reports cover a wide range of industries in Australia with a focus on companies in the natural resources sector. Sherif Andrawes is the Chairman of BDO in Western Australia, Corporate Finance Practice Group Leader of BDO in Western Australia and the Natural Resources Leader for BDO in Australia. Adam Myers is a member of the Australian Institute of Chartered Accountants. Adam s career spans 20 years in the Audit and Assurance and Corporate Finance areas. Adam is a CA BV Specialist and has considerable experience in the preparation of independent expert reports and valuations in general for companies in a wide number of industry sectors. 47

115 18. Disclaimers and consents This report has been prepared at the request of Primary Gold for inclusion in the Target s Statement which will be sent to all Primary Gold Shareholders. Primary Gold engaged BDO Corporate Finance (WA) Pty Ltd to prepare an independent expert's report to consider the proposed cash takeover offer of Primary Gold shares at a price of $ per share. BDO Corporate Finance (WA) Pty Ltd hereby consents to this report accompanying the above Target s Statement. Apart from such use, neither the whole nor any part of this report, nor any reference thereto may be included in or with, or attached to any document, circular resolution, statement or letter without the prior written consent of BDO Corporate Finance (WA) Pty Ltd. BDO Corporate Finance (WA) Pty Ltd takes no responsibility for the contents of the Target s Statement other than this report. We have no reason to believe that any of the information or explanations supplied to us are false or that material information has been withheld. It is not the role of BDO Corporate Finance (WA) Pty Ltd acting as an independent expert to perform any due diligence procedures on behalf of the Company. The Directors of the Company are responsible for conducting appropriate due diligence in relation to the Offer. BDO Corporate Finance (WA) Pty Ltd provides no warranty as to the adequacy, effectiveness or completeness of the due diligence process. The opinion of BDO Corporate Finance (WA) Pty Ltd is based on the market, economic and other conditions prevailing at the date of this report. Such conditions can change significantly over short periods of time. The forecasts provided to BDO Corporate Finance (WA) Pty Ltd by Primary Gold and its advisers are based upon assumptions about events and circumstances that have not yet occurred. Accordingly, BDO Corporate Finance (WA) Pty Ltd cannot provide any assurance that the forecasts will be representative of results that will actually be achieved. With respect to taxation implications it is recommended that individual Shareholders obtain their own taxation advice, in respect of the Offer, tailored to their own particular circumstances. Furthermore, the advice provided in this report does not constitute legal or taxation advice to the Shareholders of Primary Gold, or any other party. BDO Corporate Finance (WA) Pty Ltd has also considered and relied upon independent valuations for mineral assets held by Primary Gold. The valuer engaged for the mineral asset valuation, CSA Global Pty Ltd, possess the appropriate qualifications and experience in the industry to make such assessments. The approaches adopted and assumptions made in arriving at their valuation is appropriate for this report. We have received consent from the valuer for the use of their valuation report in the preparation of this report and to append a copy of their report to this report. The statements and opinions included in this report are given in good faith and in the belief that they are not false, misleading or incomplete. 48

116 The terms of this engagement are such that BDO Corporate Finance (WA) Pty Ltd is required to provide a supplementary report if we become aware of a significant change affecting the information in this report arising between the date of this report and the end of the offer period. Yours faithfully BDO CORPORATE FINANCE (WA) PTY LTD Sherif Andrawes Director Adam Myers Director 49

117 Appendix 1 Glossary of Terms Reference Definition A$ or AUD Australian dollars the Act Adjusted Coolgardie Model The Corporations Act 2001 Cth The Coolgardie Model, adjusted to incorporate CSA s technical inputs and BDO s economic assumptions APES 225 Accounting Professional & Ethical Standards Board professional standard APES 225 Valuation Services ASIC ASX BDO CHH the Company Coolgardie The Coolgardie Model Corporations Act CPI CSA DCF EBIT EBITDA FIRB FME FOS Hanking Australian Securities and Investments Commission Australian Securities Exchange BDO Corporate Finance (WA) Pty Ltd China Hanking Holdings Limited Primary Gold Limited Primary Gold s Coolgardie Gold Project Detailed cash flow for Coolgardie prepared by management of Primary Gold The Corporations Act 2001 Cth Consumer price index CSA Global Pty Ltd Discounted Future Cash Flows Earnings before interest and tax Earnings before interest, tax, depreciation and amortisation Foreign Investment Review Board Future Maintainable Earnings Financial Ombudsman Service Hanking Australia Investment Pty Ltd 50

118 Reference Hanking Facility HGM Independent Technical Assessment and Valuation Report IS 214 JORC Code km Kurana Royalty MacPhersons MacPhersons Reward MoU Mount Bundy NAV the Offer PFS Primary Gold Primary Minerals QMP RBA Regulations Definition As per the BIA, Hanking has agreed to provide Primary Gold with a $1.5 million unsecured loan facility to assist Primary Gold fund its short term working capital needs and other approved project facilities during the Offer period. Interest is payable on amounts drawn down under the loan facility at 8% per annum, and any amounts advanced under the loan facility, plus interest, are repayable on the date that is three months after the close of the Offer HGM Resources Pty Ltd CSA s Independent Technical Assessment and Valuation Report dated 16 March 2018 Information Sheet 214 Mining and resources Forward-looking statements The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2012 Edition) Kilometres a 1.5% net smelter return royalty payable to Kurana Pty Ltd MacPhersons Resources Limited MacPhersons Reward Pty Ltd Memorandum of Understanding Primary Gold s Mount Bundy Gold Project Net Asset Value Cash takeover offer by HGM for all the issued shares in Primary Gold at $ per Primary Gold share Preliminary feasibility study Primary Gold Limited Primary Minerals NL Quoted market price Reserve Bank of Australia Corporations Act Regulations 2001 (Cth) 51

119 Reference RMB Our Report Definition Renminbi This Independent Expert s Report prepared by BDO RG 111 Content of expert reports (March 2011) RG 112 Independence of experts (March 2011) RG 170 S&P Section 411 Section 611 Shareholders Sum-of-Parts Valmin Code Valuation Engagement VWAP WA WACC Westgold Prospective Financial Information Standard & Poors Section 411 of the Corporations Act Section 611 of the Corporations Act Shareholders of Primary Gold not associated with Hanking A combination of different methodologies used together to determine an overall value where separate assets and liabilities are valued using different methodologies Australasian Code for Public Reporting of Technical Assessments and Valuations of Mineral Assets (2015 Edition) An Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Valuer is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Valuer at that time. Volume Weighted Average Price Western Australia Weighted Average Cost of Capital Westgold Resources Limited 52

120 Appendix 2 Valuation Methodologies Methodologies commonly used for valuing assets and businesses are as follows: 1 Net asset value ( NAV ) Asset based methods estimate the market value of an entity s securities based on the realisable value of its identifiable net assets. Asset based methods include: Orderly realisation of assets method Liquidation of assets method Net assets on a going concern method The orderly realisation of assets method estimates fair market value by determining the amount that would be distributed to entity holders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the entity is wound up in an orderly manner. The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Since wind up or liquidation of the entity may not be contemplated, these methods in their strictest form may not be appropriate. The net assets on a going concern method estimates the market values of the net assets of an entity but does not take into account any realisation costs. Net assets on a going concern basis are usually appropriate where the majority of assets consist of cash, passive investments or projects with a limited life. All assets and liabilities of the entity are valued at market value under this alternative and this combined market value forms the basis for the entity s valuation. Often the FME and DCF methodologies are used in valuing assets forming part of the overall Net assets on a going concern basis. This is particularly so for exploration and mining companies where investments are in finite life producing assets or prospective exploration areas. These asset based methods ignore the possibility that the entity s value could exceed the realisable value of its assets as they do not recognise the value of intangible assets such as management, intellectual property and goodwill. Asset based methods are appropriate when an entity is not making an adequate return on its assets, a significant proportion of the entity s assets are liquid or for asset holding companies. 2 Quoted Market Price Basis ( QMP ) A valuation approach that can be used in conjunction with (or as a replacement for) other valuation methods is the quoted market price of listed securities. Where there is a ready market for securities such as the ASX, through which shares are traded, recent prices at which shares are bought and sold can be taken as the market value per share. Such market value includes all factors and influences that impact upon the ASX. The use of ASX pricing is more relevant where a security displays regular high volume trading, creating a liquid and active market in that security. 3 Capitalisation of future maintainable earnings ( FME ) This method places a value on the business by estimating the likely FME, capitalised at an appropriate rate which reflects business outlook, business risk, investor expectations, future growth prospects and other entity specific factors. This approach relies on the availability and analysis of comparable market data. 53

121 The FME approach is the most commonly applied valuation technique and is particularly applicable to profitable businesses with relatively steady growth histories and forecasts, regular capital expenditure requirements and non-finite lives. The FME used in the valuation can be based on net profit after tax or alternatives to this such as earnings before interest and tax ( EBIT ) or earnings before interest, tax, depreciation and amortisation ( EBITDA ). The capitalisation rate or earnings multiple is adjusted to reflect which base is being used for FME. 4 Discounted future cash flows ( DCF ) The DCF methodology is based on the generally accepted theory that the value of an asset or business depends on its future net cash flows, discounted to their present value at an appropriate discount rate (often called the weighted average cost of capital). This discount rate represents an opportunity cost of capital reflecting the expected rate of return which investors can obtain from investments having equivalent risks. Considerable judgement is required to estimate the future cash flows which must be able to be reliably estimated for a sufficiently long period to make this valuation methodology appropriate. A terminal value for the asset or business is calculated at the end of the future cash flow period and this is also discounted to its present value using the appropriate discount rate. DCF valuations are particularly applicable to businesses with limited lives, experiencing growth, that are in a start up phase, or experience irregular cash flows. 5 Market Based Assessment The market based approach seeks to arrive at a value for a business by reference to comparable transactions involving the sale of similar businesses. This is based on the premise that companies with similar characteristics, such as operating in similar industries, command similar values. In performing this analysis it is important to acknowledge the differences between the comparable companies being analysed and the company that is being valued and then to reflect these differences in the valuation. Copyright 2018 BDO Corporate Finance (WA) Pty Ltd All rights reserved. No part of this publication may be reproduced, published, distributed, displayed, copied or stored for public or private use in any information retrieval system, or transmitted in any form by any mechanical, photographic or electronic process, including electronically or digitally on the Internet or World Wide Web, or over any network, or local area network, without written permission of the author. No part of this publication may be modified, changed or exploited in any way used for derivative work or offered for sale without the express written permission of the author. 54

122 Appendix 3 Discount rate assessment Determining the correct discount rate, or cost of capital, for a business requires the identification and consideration of a number of factors that affect the returns and risks of a business, as well as the application of widely accepted methodologies for determining the returns of a business. The discount rate applied to the forecast cash flows from a business represents the financial return that will be required before an investor would be prepared to acquire (or invest in) the business. The capital asset pricing model ( CAPM ) is commonly used in determining the market rates of return for equity type investments and project evaluations. In determining a business weighted average cost of capital ( WACC ) the CAPM results are combined with the cost of debt funding. WACC represents the return required on the business, whilst CAPM provides the required return on an equity investment. We note the Adjusted Coolgardie Model is assumed to be 100% equity funded, due to nil pre-production capital expenditure required. Therefore, the WACC is reduced to a cost of equity. We have used a valuation date of 1 March 2018 in determining an appropriate discount rate for the DCF of Coolgardie. Cost of Equity and Capital Asset Pricing Model CAPM is based on the theory that a rational investor would price an investment so that the expected return is equal to the risk free rate of return plus an appropriate premium for risk. CAPM assumes that there is a positive relationship between risk and return, that is, investors are risk averse and demand a higher return for accepting a higher level of risk. CAPM calculates the cost of equity and is calculated as follows: CAPM K e = R f + β x (R m R f) Where: K e R f R m R m R f β = expected equity investment return or cost of equity in nominal terms = risk free rate of return = expected market return = market risk premium = equity beta The individual components of CAPM are discussed below. Risk Free Rate (Rf) The risk free rate is normally approximated by reference to a long term government bond with a maturity equivalent to the timeframe over which the returns from the assets are expected to be received. We have considered the current yield to maturity on the three-year Australian Government Bond rate, which was 2.09% as at 1 March Market Risk Premium (Rm Rf) The market risk premium represents the additional return that investors expect from an investment in a well-diversified portfolio of assets. It is common to use a historical risk premium, as expectations are not observable in practice. In order to determine an appropriate market risk premium in Australia, we 55

123 analysed historical data. Our sample of data included the daily historical market risk premiums in Australia over the past ten years, from 16 March 2009 to 15 March Our research indicated the market risk premium in Australia has ranged from a low of 4.01% to a high of 13.07%. The market risk premium is derived on the basis of capital weighted average return of all members of the S&P 200 Index minus the risk free rate, which is dependent on the 10-year Australian Government Bond rate. No. of observed market risk premiums 1,600 1,400 1,200 1, Australian Market Risk Premiums (observed over last ten years) <6% 6%-8% 8%-10% 10%-12% 12%-14% Market risk premium range Source: Bloomberg The graph above illustrates the frequency of observations of the Australian market risk premium over the past ten years, from 16 March 2009 to 15 March The graph indicates that a high proportion of the sample data for Australian market risk premiums lie in the range of 6% to 8%. This is supported by the long term historical average market risk premium of between 6% and 8%, which is commonly used in practice. For the purpose of our Report, we have adopted a market risk premium of 6% to 8%. Equity Beta Beta is a measure of the expected correlation of an investment s return over and above the risk free rate, relative to the return over and above the risk free rate of the market as a whole; a beta greater than one implies that an investment s return will outperform the market s average return in a bullish market and underperform the market s average return in a bearish market. On the other hand, a beta less than one implies that the company will underperform the market s average return in a bullish market and outperform the market s average return in a bearish market. Equity betas are normally estimated using either a historical beta or an adjusted beta. The historical beta is obtained from the linear regression of a stock s historical data and is based on the observed relationship between the security s return and the returns on an index. An adjusted beta is calculated based on the assumption that the relative risk of the past will continue into the future, and is hence derived from historical data. It is then modified by the assumption that a stock will revert towards the market (i.e. a beta of one) over time, taking into consideration the industry risk factors, which make the operating risk of the company greater or less risky than comparable listed companies. 56

124 It is important to note that it is not possible to compare the equity betas of different companies without having regard to their gearing levels. Thus, a more valid analysis of betas can be achieved by ungearing the equity beta (β a ) by applying the following formula: β a = β / (1+(D/E x (1-t)) In order to assess the appropriate equity beta for Coolgardie, we have had regard to the equity beta of Primary Gold as well ASX-listed companies involved in similar activities in similar industry sectors. We consider it appropriate to include Primary Gold in our data set, as our analysis in section 10.2 indicates the existence of a liquid and active market for Primary Gold shares due to 43.41% of the Company s current issued capital being traded over a 180 trading day period. However, we note Primary Gold s beta is reflective of systematic risk, and does not take into account project-specific factors relating to Coolgardie. As we are applying a discount rate specifically to Coolgardie, we have assessed a number of comparable companies betas in addition to Primary Gold s beta, and adjusted for any specific risks we consider are associated with Coolgardie. The geared betas below have been calculated against the S&P All Ordinaries Index using weekly data over a two and three year period. The data below sets out our wider data set, which does not account for our appropriate considerations and adjustments. Company Market Capitalisation 01-Mar-18 Geared Gross Ungeared Beta Debt/Equity Beta Revenue ($m) (β) (%) (βa) ($m) R² Data Primary Gold Limited % year, weekly Focus Minerals Limited % year, weekly Intermin Resources Limited % year, weekly St Barbara Limited 2, % year, weekly Westgold Resources Limited % year, weekly Evolution Mining Limited 4, % year, weekly Northern Star Resources Limited 3, % year, weekly Newcrest Mining Limited 16, % year, weekly Saracen Mining Holdings 1, % year, weekly Mean 3, % Median 1, % Source: Bloomberg, BDO analysis Descriptions of the comparable listed companies set out in the table above are summarised as follows. Company Name Exchange Ticker Company description Focus Minerals Limited ASX FML Focus Minerals Limited is a gold mining and production company with its primary operations located in the Coolgardie gold belt in Western Australia. A PFS was completed for the company's Coolgardie deposits in October

125 Company Name Exchange Ticker Company description Intermin Resources Limited ASX IRC Intermin Resources Limited explores for and produces gold. The company's exploration projects and tenements are located in Western Australia and the Northern Territory. The company's most advanced asset is the 100%-owned Teal Gold Deposit, located in Kalgoorlie in Western Australia. First gold production from the Teal Gold mine was announced by the company in March St Barbara Limited ASX SBM St. Barbara Limited is a gold exploration and production company. The company's cornerstone asset is the Gwalia Underground mine at its Leonora Operations, however is also involved in development of the Simberi gold mine in the New Ireland province of Papua New Guinea. As announced in its production update for the first half of FY18, St. Barbara Limited produced 127,118 ounces of gold over the half-year from both its Gwalia Underground mine and the Simberi gold mine. Westgold Resources Limited ASX WGX Westgold Resources Limited is a WA-based gold producer, and currently owns three operating gold projects with a fourth under refurbishment. The company's three operations currently in production are the Higginsville Gold Operation in the Norseman region of WA, the South Kalgoorlie Operations in the Kalgoorlie region of WA and the Central Murchison Gold Project in the Murchison region of WA. As announced on 8 March 2018, the company agreed to sell its South Kalgoorlie Operations to Northern Star Resources. The sale includes the Jubilee Processing Plant. Evolution Mining Limited ASX EVN Evolution Mining Limited is an Australian gold producer, operating five wholly-owned mines being Cowal in New South Wales, Mt Carlton, Mt Rawdon and Cracow in Queensland, and Mungari in WA. In addition, the company holds an economic interest in Ernest Henry, Queensland. Northern Star Resources Limited ASX NST Northern Star Resources Limited is an Australian gold producer with projects located in WA and the Northern Territory. The company operates three concentrated centres, being Jundee, Kalgoorlie (including Kundana (the East Kundana Joint Venture - with Northern Star Resources' interest being 51%) and Kanawna Belle Gold Mines) and Paulsens. In 2015, Northern Star Limited also acquired a 25% interest in the Central Tanami Project in the Northern Territory. As announced on 8 March 2018, Westgold Resources Limited agreed to sell its South Kalgoorlie Operations which included the Jubilee Processing Plant, to Northern Star Resources Limited. Newcrest Mining Limited ASX NCM Newcrest Mining Limited is a gold mining, exploration and production company. The Company has operations in Cadia Valley in New South Wales, Telfer in WA, Lihir in Papua New Guinea, Bonikro in Côte d'ivoire and Gosowong, Indonesia. The company also has advanced projects in Wafia-Golpu, Papua New Guinea, and Namosi in Fiji. 58

126 Company Name Exchange Ticker Company description Saracen Mining Holdings ASX SAR Saracen Mineral Holdings Limited explores for and produces gold. The Company produces gold from its Carosue Dam mine located northeast of Kalgoorlie, WA, and its Thunderbox mine also located in WA. Source: Bloomberg, ASX announcements and respective company websites Selected Beta (β) In selecting an appropriate beta for Primary Gold, we have considered the similarities and differences between the comparable companies set out above. The comparable similarities and differences noted are: the mining and exploration assets held by the companies listed above have varying risk profiles depending on the maturity of the assets and stages and location of production; there are varying stages of development of the companies projects compared to Coolgardie. Namely, most of the comparable companies listed above are already producing, and therefore generating revenue. This is in comparison to Coolgardie, which has not yet commenced production. We note Focus Minerals Limited ( Focus Minerals ) has a risk profile similar to that of Primary Gold at its current stage, as Focus Minerals completed a PFS in October 2017 for its Coolgardie project; and Coolgardie is located in WA, whereas Newcrest Mining Limited ( Newcrest ) has operations in Australia, Papua New Guinea, Côte d'ivoire and Indonesia. This is in addition to advanced projects located in Papua New Guinea and Fiji. Therefore, Newcrest s beta may reflect additional factors not relevant to Primary Gold such as sovereign and political risk. We also note St Barbara Limited ( St Barbara ) has operations in Papua New Guinea, and as such, factors described above may also be reflected in its observed beta. In selecting our ungeared beta, we have considered the comparable companies ungeared betas, Primary Gold s ungeared beta, and the factors listed above. A summary of our conclusions regarding data selection is set out below: as we have performed a DCF for Coolgardie, we are assuming it will be brought into production. As such, we do not consider including Focus Minerals in our chosen data set to be appropriate; and as mentioned in our comparison of the similarities and differences between Primary Gold and the companies above, we note both Newcrest and St Barbara have geographically diverse operations. As we are assessing a beta and therefore a discount rate for Coolgardie, we do not consider it appropriate to include these companies in our assessment of an appropriate discount rate. 59

127 A summary of our final data set is summarised below. Company Geared Beta Gross Debt/Equity Ungeared Beta (β) (%) (βa) Primary Gold Limited % 1.32 Intermin Resources Limited % 0.96 Westgold Resources Limited % 1.02 Evolution Mining Limited % 0.66 Northern Star Resources Limited % 0.65 Saracen Mining Holdings % 0.47 Source: Bloomberg, BDO analysis Mean % 0.85 Median % 0.81 As set out above, the average ungeared beta based on our data set is 0.85, which we have adopted as the low end of our beta range. In assessing the high end of an appropriate ungeared beta range, we have considered risks associated with Coolgardie, specifically the uncertainty surrounding the tolling arrangements due to the terminated MoU with Westgold. We note the observed beta of Primary Gold of 1.32 is reflective of the perceived risk of Primary Gold s entire operations (including Mount Bundy). As such, we have considered Primary Gold s beta in light of the ungeared betas of comparable companies to derive our high beta. Based on the above analysis, we consider the upper end of an appropriate ungeared beta range for Coolgardie to be Having regard to the above, we consider that an appropriate ungeared beta to apply to Coolgardie is between 0.85 and Cost of Equity We have assessed the cost of equity to be in the range of 7.2% to 10.9% with our preferred value being a rounded midpoint of 9.0%. Input Value Adopted Risk free rate of return 2.09% 2.09% Equity market risk premium 6.00% 8.00% Beta (ungeared) Cost of Equity 7.2% 10.9% Source: Bloomberg, BDO analysis Low High 60

128 Appendix 4 Independent valuation report prepared by CSA Global Pty Ltd 61

129 Independent Technical Assessment and Valuation Report Primary Gold Limited s Western Australian and Northern Territory Mineral Assets CSA Global Report Nº R March

130 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Report prepared for Client Name Project Name/Job Code Contact Name Contact Title Office Address Primary Gold Limited PGOITV01 Garry Mills Managing Director Suite 23, 513 Hay Street, West Perth, WA 6005, Australia Report issued by CSA Global Pty Ltd Level 2, 3 Ord Street West Perth, WA 6005 AUSTRALIA CSA Global Office PO Box 141, West Perth WA 6872 AUSTRALIA Division csaaus@csaglobal.com Corporate Report information File name Last edited Report Status R ITAVR on Primary Gold Mineral Assets (PGOITV01) 3/19/2018 6:06:00 PM Draft Author and Reviewer Signatures Coordinating Author Contributing Author Contributing Author Sam Ulrich BSc (Hons.), GDipAppFin, MAusIMM, MAIG, FFin Wayne Ghavalas BSc (Eng.) (Mining) MAusIMM Aaron Meakin BSc (Hons), MAppFin, MAusIMM CP (Geo), FFin Contributing Author Peer Reviewer CSA Global Authorisation Ivy Chen BAppSc (MultiDisc.) MAusIMM GAICD Jeff Elliott BSc (Geology) FAusIMM, MAIG, MAICD, AFAIM Copyright 2018 CSA Global Report Nº R i

131 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Executive Summary CSA Global Pty Ltd (CSA Global) was commissioned by BDO Corporate Finance (WA) Pty Ltd (BDO) to prepare an independent Technical Assessment Report and Valuaon of Primary Gold Limited s (Primary Gold s) Coolgardie and Mount Bundy projects located in Western Australia (WA) and Northern Territory (NT) respecvely. This independent technical assessment and valuaon report ( the Report ) was prepared for BDO. The Report provides an opinion to support an Independent Expert s Report to be prepared by BDO, and has been prepared as a public document, in the format of an independent technical specialist s report and has been prepared in accordance with the VALMIN Code. The Report provides a review of the Coolgardie and Mount Bundy Mineral Assets of Primary Gold in WA and NT respecvely and provides a technical valuaon of these Mineral Assets. CSA Global has used a range of valuaon methodologies to reach a conclusion on the value of the Coolgardie and Mount Bundy projects. Note that the valuaon is of the Coolgardie and Mount Bundy Mineral Assets and not the value of Primary Gold as a company. The statements and opinions contained in this Report are given in good faith and in the belief that they are not false or misleading. The conclusions are based on the reference date of 1 March 2018 and could alter over me depending on exploraon results, mineral prices and other relevant market factors. CSA Global s valuaons are based on informaon provided by Primary Gold and public domain informaon. CSA Global has endeavoured, by making all reasonable enquiries, to confirm the authencity and completeness of the technical data upon which this Report is based. No audit of any financial data has been conducted. The valuaons discussed in this Report have been prepared at a valuaon date of 1 March It is stressed that the values are opinions as to likely values, not absolute values, which can only be tested by going to the market. Coolgardie Project The Coolgardie Project area is located 560 km east of Perth, 40 km southwest of Kalgoorlie, near (<10 km) the town of Coolgardie. The project comprises of 26 granted tenements, consisng of a miscellaneous licence, six mining licences and 18 prospecng licences. Addionally, there are three applicaons (two miscellaneous licence and one mining licence). All tenements are owned 100% by Primary Gold, either through a wholly-owned subsidiary or an executed tenement sale agreement. The project contains three Mineral Resources; Macphersons, Tycho and Franks Find, containing a total of 200,600 oz of gold. CSA Global has assessed the reasonableness of the Mineral Resources for valuaon. In October 2017, Primary Gold reported a maiden Ore Reserve of 58,000 oz of gold and a posive prefeasibility study (PFS) for the Coolgardie Project. The PFS mine schedule produced a total of 1.3 Mt of ore with an average grade of 1.70 g/t Au for a total of 69,000 oz gold (65,000 oz of gold recovered). A total of 14.3 Mt of waste is mined, resulng in an average stripping rao of 11.3 (waste t / ore t). CSA Global has assessed the reasonableness of the technical assumpons used within the PFS at the request of BDO, so that they can undertake an income-based valuaon of the Mineral Resources within the mine schedule. Mount Bundy Project The Mount Bundy Project is located approximately 100 km southeast of Darwin in the NT of Australia. The project comprises of 19 granted tenements, consisng of seven mineral leases, two mineral lease norths and 10 mineral exploraon licences. Addionally, there are two applicaons (one mineral lease and one mineral lease north). CSA Global Report Nº R ii

132 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Primary Gold holds 100% beneficial interest (via its wholly-owned subsidiary; Primary Minerals NL) in all tenements except one, the tenement containing the Rustlers Roost Mineral Resource. Primary Minerals NL has an 80% interest in the Rustlers Roost tenement. The project contains three Mineral Resources; Rustlers Roost, Toms Gully and Quest 29 in close proximity of each other, containing a total of 1,795,000 oz of gold. CSA Global has assessed the reasonableness of the Mineral Resources for valuaon. The project has an extensive area (1,444.7 km 2 ) of exploraon licences, mostly consisng of early stage exploraon ground containing targets worthy of follow-up. Valuation At BDO s request, CSA Global undertook an assessment of the technical inputs into the Coolgardie mine schedule so that BDO could undertake a Discounted Cash Flow model (DCF) valuaon. CSA Global has valued the Coolgardie Project on the residual Mineral Resources, i.e. those not included in BDO s DCF valuaon and the exploraon potenal of the surrounding prospecng licences. At the Mount Bundy Project, CSA Global has valued the project on its Mineral Resources and exploraon potenal of the surrounding exploraon licences, which contain early stage targets prospecve for gold that warrant further exploraon. CSA Global s opinion on the Market Value of Primary Gold s Australian Mineral Assets, as at 1 March 2018, is summarised in Table 1. Project Coolgardie Mount Bundy Table 1: Mineral Assets Summary valuation of Primary Gold s Mineral Assets Primary Gold interest Valuation (A$M) Low Preferred High Residual Mineral Resources 100% Prospecting Licences 100% Mineral Resources 80/100% Exploration Licences 100% Total Various 80/100% Note: The valuation has been compiled to an appropriate level of precision; values may not add up due to rounding. CSA Global Report Nº R iii

133 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Contents Report prepared for... i Report issued by... i Report information... i Author and Reviewer Signatures... i EXECUTIVE SUMMARY... II Coolgardie Project... ii Mount Bundy Project... ii Valuation... iii 1 INTRODUCTION Context, Scope and Terms of Reference Compliance with the VALMIN and JORC Codes Principal Sources of Information Authors of the Report Qualification, Experience and Competence Prior Association and Independence Declarations Results are Estimates and Subject to Change COOLGARDIE PROJECT Location and Access Ownership and Tenure Agreements and Royalties Geology Regional Geology Local Geology Mineralisation Exploration and Mining History Exploration History Mining History Exploration Potential Mineral Resources MacPhersons and A-Cap Mineral Resource estimates Tycho Mineral Resource Eestimate Mining Study Assessment Technical Assessment Assessment of Cash Flow Model Inputs MOUNT BUNDY PROJECT Location and Access Ownership and Tenure Agreements and Royalties Geology Exploration and Mining History Rustlers Roost Mining History Toms Gully Mining History Exploration Potential CSA Global Report Nº R iv

134 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 3.6 Mineral Resources Deposit Geology Rustlers Roost Quest Toms Gully Mining Studies Feasibility Study Toms Gully Underground Mount Bundy Scoping Study VALUATION Commodities Market Previous Valuations Comparable Transactions Valuation Mineral Resources Prospecting Licences Mount Bundy Project Exploration Licences Yardstick Order of Magnitude Check Coolgardie Project Yardstick Mount Bundy Project Yardstick Geoscientific Factor Valuation Valuation Summary Coolgardie Project Valuation Summary Mount Bundy Project Valuation Summary Primary Gold s Projects Valuation Summary REFERENCES GLOSSARY ABBREVIATIONS AND UNITS OF MEASUREMENT APPENDIX 1: VALUATION APPROACHES APPENDIX 2: COMPARABLE TRANSACTIONS APPENDIX 3: DETAILED YARDSTICK VALUATION APPENDIX 4: DETAILED GEOSCIENTIFIC FACTOR RATING VALUATION APPENDIX 5: TENEMENT SCHEDULES Western Australia Northern Territory: PRIMARY MINERALS NL -SCHEDULE OF TITLES, AS AT 07 MARCH Figures Figure 1: Coolgardie Project location... 5 Figure 2: Coolgardie Project geology... 8 Figure 3: Macphersons modelled mineralisation envelopes Figure 4: Tycho modelled mineralisation envelopes with MINZON values shown Figure 5: Mount Bundy Project location Figure 6: Mount Bundy Project local geology Figure 7: Cross-section view of Rustlers Roost at 60350N (showing drilling, lithological units, projected with fold hinge model) Figure 8: Rustlers Roost mineralisation domains (looking northwest) Figure 9: Rustlers Roost block model, estimation zones Figure 10: Rustlers Roost validation plots CSA Global Report Nº R v

135 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Figure 11: Rustlers Roost classified block model Figure 12: Quest 29 oblique cross section showing typical relationship between oxidation surfaces and mineralisation domains Figure 13: Quest 29 oblique view, showing interpreted mineralisation wireframe Figure 14: Toms Gully drillhole traces, coloured by type Figure 15: Toms Gully block model validation plot (northing) Figure 16: Five-year spot gold price in US$ and A$ Figure 17: Comparison of selected gold Mineral Resource transactions Figure 18: Coolgardie Mineral Resources comparison of valuation techniques Figure 19: Mount Bundy Mineral Resources comparison of valuation techniques and CSA Global s valuation Figure 20: Mount Bundy exploration licences comparison of valuation techniques Tables Table 1: Summary valuation of Primary Gold s Mineral Assets... iii Table 2: Coolgardie Project tenements... 6 Table 3: MacPhersons Reward Gold Mine Mineral Resource estimate Table 4: MacPhersons and A-Cap resource model search parameters Table 5: Tycho Mineral Resource estimate Table 6: Tycho estimation domains Table 7: Tycho search parameters Table 8: Mining and processing schedule Table 9: Mining operating costs Table 10: Mining schedule for royalty estimation Table 11: Opex Summary Table 12: Mount Bundy Project tenements Table 13: Toms Gully mine production history Table 14: Assigned density, by oxidation state Table 15: Rustlers Roost block model parameters Table 16: Rustlers Roost search parameters Table 17: Rustlers Roost classified Mineral Resources Table 18: Quest 29 summary drilling statistics by drill type Table 19: Quest 29 assigned bulk density values Table 20: Quest 29 top-cuts applied for estimation domains Table 21: Quest 29 variogram parameters Table 22: Quest 29 block model definition Table 23: Quest 29 estimation parameters, by domain Table 24: Quest 29 classified Mineral Resource estimate (JORC 2012) Table 25: Toms Gully historical drilling Table 26: Toms Gully drill database statistics Table 27: Toms Gully variogram model for the quartz vein (domain 1001) Table 28: Toms Gully classified Mineral Resource >6.0 g/t Au (June 2013) Table 29: Scoping study key findings Table 30: Summary statistics of selected transactions of gold Mineral Resources in Australia Table 31: Coolgardie Project residual Mineral Resource valuation by comparable transactions Table 32: Mount Bundy valuation factors by Mineral Resource classification Table 33: Mount Bundy Project Mineral Resource valuation by comparable transactions Table 34: Summary statistics of selected prospecting licence transactions prospective for gold Table 35: Coolgardie Project prospecting licences valuation Table 36: Summary statistics of selected exploration licence transactions prospective for gold Table 37: Mount Bundy Project exploration licences valuation Table 38: Summary of Yardstick order of magnitude check of the Coolgardie Project Mineral Resources Table 39: Summary of Yardstick order of magnitude check of the Mount Bundy Project Table 40: Estimation of the BAC for NT mineral exploration licences Table 41: Summary of Geoscience Factor valuation of Mount Bundy Project exploration licences Table 42: Summary valuation of Primary Gold s Mineral Assets Table 43: Prospectivity Enhancement Multiplier (PEM) factors CSA Global Report Nº R vi

136 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 44: Geoscience Factor Ranking Table 45: Valuation approaches for different types of mineral properties (VALMIN, 2015) Table 46: Selected comparative transactions of gold Mineral Resources in Australia Table 47: Comparative transactions of prospecting licences prospective for gold in Western Australia Table 48: Comparative transactions of exploration licences prospective for gold in Australia Table 49: Coolgardie Project Detailed Yardstick Valuation Table 50: Mount Bundy Project Detailed Yardstick Valuation Table 51: Mount Bundy Project exploration licence Geoscientific Factor Rating valuation CSA Global Report Nº R vii

137 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 1 Introduction 1.1 Context, Scope and Terms of Reference Primary Gold Limited (Primary Gold or the Company ) is a Perth-based exploraon company that is listed on the Australian Securies Exchange (ASX). Primary Gold s key assets are the Coolgardie and Mount Bundy projects in Western Australia (WA) and Northern Territory (NT) respecvely. On 21 February 2018, Primary Gold announced that it has entered into a Bid Implementaon Agreement with Hanking Australia Investment Pty Ltd (Hanking Australia), pursuant to which Hanking Australia (or a wholly-owned subsidiary of Hanking Australia) will make an off-market condional takeover bid for all the shares in Primary Gold. Primary Gold engaged BDO Corporate Finance (WA) Pty Ltd (BDO) to prepare an Independent Expert s Report ( BDO Report ) for inclusion within a Target Statement to non-associated shareholders to assist in their decision of whether to approve the takeover of Primary Gold by Hanking Australia. CSA Global Pty Ltd (CSA Global) was in turn commissioned by BDO to prepare an independent opinion on the Market Valuaon of Primary Gold s Coolgardie and Mount Bundy projects in WA and NT respecvely ( CSA Global Report or the Report ) in accordance with the requirements of the VALMIN Code BDO will rely on, and the BDO Report will refer to, the CSA Global valuaon opinion, and a copy of the CSA Global Report will be appended to the BDO Report. The BDO Report will provide an opinion to Primary Gold s shareholders, and as such it will be a public document. CSA Global will provide its consent to the use of the Report in the form and context in which it will be published. The Report will be a Technical Assessment and Valuaon subject to the VALMIN Code. The Report will contain a high level technical appraisal of the Coolgardie and Mount Bundy projects in WA and NT respecvely, including geological and mining aspects. A valuaon of the assets will also be completed. CSA Global will use a range of valuaon methodologies to reach a conclusion on the value of the assets. 1.2 Compliance with the VALMIN and JORC Codes The Report has been prepared in accordance with the VALMIN Code, which is binding upon Members of the Australian Instute of Geosciensts (AIG) and the Australasian Instute of Mining and Metallurgy (AusIMM), the JORC Code 2 and the rules and guidelines issued by such bodies as the Australian Securies and Investments Commission (ASIC) and ASX that pertain to Independent Experts Reports. The authors have taken due note of the rules and guidelines issued by such bodies as ASIC and ASX, including ASIC Regulatory Guide 111 Content of Expert Reports, and ASIC Regulatory Guide 112 Independence of Experts. 1.3 Principal Sources of Information The Report has been based on informaon available up to and including 1 March The informaon was provided to CSA Global by Primary Gold, or has been sourced from the public domain, and includes both published and unpublished technical reports prepared by consultants, and other data relevant to Primary Gold s projects. 1 Australasian Code for Public Reporting of Technical Assessments and Valuations of Mineral Assets (The VALMIN Code) 2015 Edition. Prepared by the VALMIN Committee, a joint committee of the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. 2 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code) 2012 Edition. Prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC). CSA Global Report Nº R

138 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets The authors have endeavoured, by making all reasonable enquiries within the meframe available, to confirm the authencity and completeness of the technical data upon which the Report is based. No site visit was made to the Coolgardie or Mount Bundy Projects in preparaon of this report. CSA Global has recently visited the Coolgardie Project and the authors felt that no material informaon would be gained by undertaking a further site visit. The authors have had access to CSA Global personnel, who have familiarity with the Mount Bundy Project area and based on discussions with them, felt that they have sufficient knowledge of the project area and that no material informaon would be gained by undertaking a site visit. CSA Global has had access to and discussions with Mr Brian Fitzpatrick, Principal Geologist, Cube Consulng who is the Competent Person for the Mount Bundy Mineral Resource esmates for Rustlers Roost, Toms Gully and Quest 29. Mr Fitzpatrick has provided his consent for his work to be referenced. CSA Global is sasfied that there is sufficient current informaon available to allow an informed evaluaon. Tenement informaon on the Coolgardie Project was provided by independent tenement specialist Strategic Tenement Services Pty Ltd (STS), details are provided in Secon 2.2. CSA Global relies on the independent opinion of STS dated 9 March 2018, with regards to the validity, ownership and good standing of Primary Gold s Coolgardie Project tenements. CSA Global makes no other assessment or asseron as to the legal tle of the tenements and is not qualified to do so. Tenement informaon on the Mount Bundy Project was provided by independent tenement specialist Australian Mining and Exploraon Title Services (AMETS), details are provided in Secon 3.2. CSA Global relies on the independent opinion of AMETS dated 7 March 2018, with regards to the validity, ownership and good standing of Primary Gold s Mount Bundy Project tenements. CSA Global makes no other assessment or asseron as to the legal tle of the tenements and is not qualified to do so. 1.4 Authors of the Report Qualification, Experience and Competence The Report has been prepared by CSA Global, a privately-owned consulng company that has been operang for over 30 years; with its headquarters in Perth, Western Australia. CSA Global provides muldisciplinary services to a broad spectrum of clients across the global mining industry. Services are provided across all stages of the mining cycle from project generaon, to exploraon, resource esmaon, project evaluaon, development studies, operaons assistance, and corporate advice, such as valuaons and independent technical documentaon. The informaon in this Report that relates to the Technical Assessment and Valuaon of Mineral Assets reflects informaon compiled and conclusions derived by Mr Sam Ulrich who is a Member of the Australasian Instute of Mining and Metallurgy and Australian Instute of Geosciensts. He is not a related party or employee of Primary Gold. Mr Ulrich has sufficient experience relevant to the Technical Assessment and Valuaon of the Mineral Assets under consideraon and to the acvity which he is undertaking to qualify as a Praconer as defined in the 2015 edion of the Australasian Code for the Public Reporng of Technical Assessments and Valuaons of Mineral Assets. Mr Ulrich consents to the inclusion in the Report of the maters based on his informaon in the form and context in which it appears. The informaon in this Report that relates to the Technical Assessment of Mineral Resources at the Coolgardie Asset was completed by CSA Global s Manager Resources, Aaron Meakin, BSc(Hons), MAppFin, MAusIMM CP (Geo) and FFin. Mr Aaron Meakin is a geologist with over 24 years experience in mining, resource esmaon and exploraon; including 14 years in operaonal roles and 10 years as a consultant. Aaron has significant mine producon experience, having worked at both underground and open pit operaons. His resource esmaon experience spans a range or commodies and styles of mineralisaon. The informaon in this Report that relates to the Technical Assessment of the technical project assumpons and the reasonableness of the assumpons used in the cash flow model of the Coolgardie CSA Global Report Nº R

139 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Project was completed by CSA Global Principal Consultant, Wayne Ghavalas, BSc Eng (Mining), GDipAppFin and MAusIMM. Mr Wayne Ghavalas is a mining engineer with over 20 years experience. This mining experience has been gained in operaonal, technical and consulng roles. Site based experience has been gained in South Africa, Namibia and Australia. Non-mining experience is in mergers and acquisions, venture capital and capital raisings. The informaon in this Report that relates to the Technical Assessment of Mineral Resources at the Mount Bundy Asset was completed by CSA Global Principal Consultant, Ms Ivy Chen, BApp.Sc. (Mul- Disciplinary), Post Grad. Natural Resources MAusIMM, GAICD. Ms Chen is a corporate governance specialist, with 28 years experience in mining and resource esmaon. She served as the naonal geology and mining adviser for the ASIC from 2009 to Ms Chen s experience in the mining industry in Australia and China, as an operaons and consulng geologist includes open pit and underground mines for gold, manganese and chromite, and as a consulng geologist she has conducted mineral project evaluaon, strategy development and implementaon, through to senior corporate management roles. Ms Chen joined the VALMIN Commitee in The valuaon of Mineral Resources and Exploraon Tenure was completed by CSA Global Principal Consultant, Mr Sam Ulrich, BSc(Hons), GDipAppFin, MAusIMM, MAIG, and FFin. He is a consulng geologist with over 20 years experience in the minerals industry, including six years as a consultant. Mr Ulrich has an extensive background in mineral exploraon, and specialises in due diligence reviews, project evaluaons and valuaons, as well as code-compliant reporng. His knowledge is broad based and he has wide-ranging experience in the field of mineral exploraon and resource development, having managed or consulted on various projects ranging from first-pass grassroots exploraon to brownfields exploraon and evaluaon. Mr Ulrich has the relevant qualificaons, experience, competence and independence to be considered a Specialist under the definions provided in the VALMIN Code and a Competent Person as defined in the JORC Code. The reviewer of the Report is Mr Jeff Elliot, Managing Director, CSA Global, BSc. (Geology), MAIG, FAusIMM, MAICD, AFAIM. Mr Elliot has over 25 years experience in the mining industry during which me he has developed broad capabilies in project evaluaon, exploraon, resource development and mining for a wide variety of commodies in diverse geological sengs and locaons. He has significant technical experience in exploraon, project assessment, technical valuaons, independent reporng and corporate advice. Mr Elliot also has strong financial, business management, communicaon, and strategy development and implementaon skills. 1.5 Prior Association and Independence The authors of this Report have no prior associaon with Primary Gold in regard to the Mineral Assets. Neither CSA Global, nor the authors of this Report, have or have had previously, any material interest in Primary Gold or the mineral properes in which Primary Gold has an interest. CSA Global s relaonship with Primary Gold is solely one of professional associaon between client and independent consultant. CSA Global is an independent geological consultancy. This Report is prepared in return for professional fees based upon agreed commercial rates and the payment of these fees is in no way conngent on the results of this Report. The fee for the preparaon of this Report is approximately A$50,000. No member or employee of CSA Global is, or is intended to be, a director, officer or other direct employee of Primary Gold. No member or employee of CSA Global has, or has had, any material shareholding in Primary Gold. There is no formal agreement between CSA Global and Primary Gold to CSA Global conducng further work for Primary Gold. CSA Global Report Nº R

140 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 1.6 Declarations The statements and opinions contained in this Report are given in good faith and in the belief that they are not false or misleading. The Report has been compiled based on informaon available up to and including the date of the Report. The statements and opinions are based on the reference date of 1 March 2018 and could alter over me depending on exploraon results, mineral prices and other relevant market factors. The opinions expressed in the Report have been based on the informaon supplied to CSA Global by Primary Gold. The opinions in the Report are provided in response to a specific request from Primary Gold to do so. CSA Global has exercised all due care in reviewing the supplied informaon. Whilst CSA Global has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are enrely reliant on the accuracy and completeness of the supplied data. CSA Global does not accept responsibility for any errors or omissions in the supplied informaon and does not accept any consequenal liability arising from commercial decisions or acons resulng from them. Opinions presented in the Report apply to the site condions and features, as they existed at the me of CSA Global s invesgaons, and those reasonably foreseeable. These opinions do not necessarily apply to condions and features that may arise aer the date of the Report, about which CSA Global had no prior knowledge nor had the opportunity to evaluate. CSA Global s valuaons are based on informaon provided by Primary Gold and public domain informaon. This informaon has been supplemented by making all reasonable enquiries within the meframe available, to confirm the authencity and completeness of the technical data. No audit of any financial data has been conducted. The valuaons discussed in the Report have been prepared at a valuaon date of 1 March It is stressed that the values are opinions as to likely values, not absolute values, which can only be tested by going to the market Results are Estimates and Subject to Change The interpretaons and conclusions reached in this Report are based on current scienfic understanding and the best evidence available to the authors at the me of wring. It is the nature of all scienfic conclusions that they are founded on an assessment of probabilies and, however high these probabilies might be, they make no claim for absolute certainty. The ability of any person to achieve forward-looking producon and economic targets is dependent on numerous factors that are beyond CSA Global s control and that CSA Global cannot ancipate. These factors include, but are not limited to, site-specific mining and geological condions, management and personnel capabilies, availability of funding to properly operate and capitalise the operaon, variaons in cost elements and market condions, developing and operang the mine in an efficient manner, unforeseen changes in legislaon and new industry developments. Any of these factors may substanally alter the performance of any mining operaon. CSA Global Report Nº R

141 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 2 Coolgardie Project 2.1 Location and Access The Coolgardie Project area is located 560 km east of Perth, 40 km southwest of Kalgoorlie, and near (<10 km) the town of Coolgardie (Figure 1). The leases fall within the Coolgardie Minerals Field. The project area is accessible via numerous roads. Figure 1: Coolgardie Project location 2.2 Ownership and Tenure The Coolgardie Project comprises of 26 granted tenements, consisng of one miscellaneous licence, six mining licences and 18 prospecng licences (Table 2). Addionally, there are three applicaons (two miscellaneous licences and one mining licence). All tenements are owned 100% by Primary Gold either through a wholly-owned subsidiary, Macphersons Reward Pty Ltd, or subject to a fully executed tenement sale agreement between Vaclav Dvorak and Primary Gold dated 30 November CSA Global Report Nº R

142 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Primary Gold has all statutory approvals covering environment, water, waste management and safety. On the 3 rd January 2018, Primary Gold announced it had received final statutory approval from the Department of Mines, Industry Regulaon and Safety allowing mining to commence, (Primary Gold ASX Announcement 3 January 2018). Table 2: Coolgardie Project tenements Tenement Status Area (km 2 ) Grant date Expiry date Registered holders L15/312 Granted /09/2012 9/09/2033 Macphersons Reward Pty Ltd (100%) L15/375 Granted /01/2018 1/01/2039 Macphersons Reward Pty Ltd (100%) M15/40 Granted /05/ /05/2026 Macphersons Reward Pty Ltd (100%) M15/128 Granted /02/ /02/2027 Macphersons Reward Pty Ltd (100%) M15/133 Granted /07/1985 7/07/2027 Macphersons Reward Pty Ltd (100%) M15/147 Granted /12/ /12/2026 Macphersons Reward Pty Ltd (100%) M15/148 Granted /02/1985 3/02/2027 Macphersons Reward Pty Ltd (100%) M15/1808 Granted /06/ /06/2034 Macphersons Reward Pty Ltd (100%) P15/5261 Granted /08/ /08/2018 Macphersons Reward Pty Ltd (100%) P15/5719 Granted /01/ /01/2021 Macphersons Reward Pty Ltd (100%) P15/5720 Granted /01/ /01/2021 Macphersons Reward Pty Ltd (100%) P15/5721 Granted /01/ /01/2021 Macphersons Reward Pty Ltd (100%) P15/5722 Granted /01/ /01/2021 Macphersons Reward Pty Ltd (100%) P15/5723 Granted /01/ /01/2021 Macphersons Reward Pty Ltd (100%) P15/5724 Granted /01/ /01/2021 Macphersons Reward Pty Ltd (100%) P15/5725 Granted /01/ /01/2021 Macphersons Reward Pty Ltd (100%) P15/5892 Granted /10/ /10/2018 Macphersons Reward Pty Ltd (100%) P15/5901 Granted /10/ /10/2018 Macphersons Reward Pty Ltd (100%) P15/5902 Granted /10/ /10/2018 Macphersons Reward Pty Ltd (100%) P15/6071 Granted /02/ /02/2021 Macphersons Reward Pty Ltd (100%) P15/6085* Granted /03/ /03/2021 Dvorak, Vaclav (100%) P15/6086* Granted /03/ /03/2021 Dvorak, Vaclav (100%) P15/6087* Granted /03/ /03/2021 Dvorak, Vaclav (100%) P15/6088* Granted /03/ /03/2021 Dvorak, Vaclav (100%) P15/6089* Granted /03/ /03/2021 Dvorak, Vaclav (100%) P15/6090* Granted /03/ /03/2021 Dvorak, Vaclav (100%) L15/352 Application 0.11 Macphersons Reward Pty Ltd (100%) M15/1838 Application 0.10 Macphersons Reward Pty Ltd (100%) *Subject to fully executed tenement sale agreement Vaclav Dvorak and Primary Gold dated 30 November Agreements and Royalties Primary Gold has the following obligaons to third pares in respect of the following tenements: A Royalty of $2.00 per tonne of ore mined and processed from the tenement payable to William Dudley James Powell on M15/133 (MacPhersons Reward) A 1.5% net smelter return royalty is payable to Kurana Pty Ltd on tenements M15/128 (A-Cap), M15/1808, P15/6085 and P15/ Geology The geological descripons have been adapted from Weeber (2016). CSA Global Report Nº R

143 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Regional Geology The Coolgardie Project is located in the Coolgardie Goldfield District around the town of Coolgardie 560 km east of Perth and 40 km southwest of Kalgoorlie. The Coolgardie Goldfield District is located in the Eastern Goldfields Province on the western side of the Archaean Menzies-Norseman Greenstone Belt. The Archaean Menzies-Norseman Greenstone Belt can be subdivided into the Kalgoorlie Terrane, the Menzies Terrane and the Norseman Terrane (Swager et al., 1990). The Coolgardie Goldfield District is located in the Kalgoorlie Terrane, which can be further subdivided in to the following tectonostragraphic domains: Bullabulling, Coolgardie, Ora Banda, Kambalda, Boorara and the Parker domains. The domains are separated by north-northwest trending shear zones, which include dismembered elements of the stragraphy (Wyche, 1996). The Kalgoorlie Terrane is a greenstone belt of reportedly between 2,690 Ma and 2,700 Ma in age with peak metamorphism in the Coolgardie area at about 2,650 Ma (Standing, 2001). The Coolgardie Domain is arcuate in shape and bound on its eastern and western margins by large-scale faults. The Bullabulling and Ida shear zones form the western margin of the Coolgardie Domain, which is also the western margin of the Kalgoorlie Terrane, and the Zuleika and Kunanalling shear zones form the eastern margin of the domain (Phillips, 2011). The stragraphy consists of complexly folded and faulted mafic to ultramafic volcanic rocks with minor interbedded black shales and volcaniclasc rocks. These are overlain by a thick succession of felsic volcanic and volcaniclasc rocks, which are interbedded with clasc sedimentary rocks. A suite of intermediate porphyries and differenated to undifferenated dolerite and gabbros intrude the stragraphy. Where younging direcons are observed, they indicate the rocks become younger towards the east and northeast. The Coolgardie Goldfields District is bound to the west by the Calooli and Bali monzogranites. Locally the Calooli and Bali granodiorites have caused doming of the greenstone belt and strike direcons wrap around the granitoid margins (Figure 2). The age of the Bali granodiorite has been esmated at 2,676 ± 8 Ma (Nelson, 1998). In the Coolgardie Goldfield District, the greenstone belt has been metamorphosed to lower to middle amphibolite facies. Dominant mineral assemblages are hornblende acnolite plagioclase ilmenite in the mafic rocks and tremolite chlorite talc carbonate-olivine-anthophyllite in the ultramafic rocks (Jeffery, 1998). At least three thrust successions of the greenstone belt have been documented (Jeffery, 1998) of which the Coolgardie Group is one. Hunter (1993), Knight (1994), and Standing (2001) outline the stragraphy of the Coolgardie Group as follows: a basal succession of high and low grade magnesium basalts (Burbanks Formaon), which are intruded by a 500 m thick differenated gabbro sill (Three Mile Hill Sill), which is overlain by a thin porphyric basalt and a thick sequence of spinifex komaites (Hampton Formaon). The Black Flag Group felsic volcaniclascs and siliciclascs structurally and stragraphically overlie the Hampton Formaon (Besserer et al., 2005). Four phases of deformaon have been proposed by Swager et al., (1990), which is the most widely accepted model for the evoluon of the Eastern Goldfields Province. Swager et al., (1990) proposed the first deformaon event (D1) of south to north directed thrusng and isoclinal folding followed by regional scale upright folding and the iniaon of north-northwest to northwest oriented reverse faults during the second deformaon event (D2). The second deformaon event was synchronous with granitoid emplacement, peak metamorphism and foliaon development. The third deformaon phase (D3) consisted of sinistral strike-slip reacvaon of D2 reverse faults. The final fourth phase (D4) of deformaon consisted of dextral and britle reacvaon of D3 faults (Standing, 2001). CSA Global Report Nº R

144 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Figure 2: Coolgardie Project geology Local Geology The local deposit geology is summarised in Secons and for the Macpherson/A-Cap and Tycho Mineral Resources respecvely Mineralisation Within the Coolgardie Goldfield, gold is found in two disnct sengs: near surface supergene or oxide gold deposits and Archaean lode gold deposits. Significant gold has been produced from both sources. The majority of the supergene gold that has been mined in the Coolgardie region can be correlated with an underlying lode gold source. The Archaean lode gold deposits of the Coolgardie Goldfield are dominated by veins, breccia zones, stockworks and/or shear zones; not hosted by specific greenstone lithology but by a number of different lithologies, generally always within the greenstone succession. Mineralisaon occurs typically adjacent to or within major tectonic zones, which includes shear zones, deformaon zones and fold hinges, CSA Global Report Nº R

145 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets predominantly on or close to the lithological contacts and is generally thought to have been broadly synchronous with peak metamorphism. 2.4 Exploration and Mining History The following exploraon history has been summarised from Weeber (2016) Exploration History Gold was first discovered in the Coolgardie Goldfields District in 1892 by prospectors Bayley and Ford, with the discovery of the Bayleys Reward deposit (Dufresne, 2006). The Bayleys Mine went on to produce more than 280,000 oz of gold from in excess of half a million tonnes of ore between 1892 and 1964 (Dufresne, 2006). Other early gold mines include King Solomon (16,300 oz Au from 23,400 t), Lindsays (14,500 oz Au from 50,640 t) and Redempon (5,000 oz Au from 4,564 t) (Dufresne, 2006). Gold mines in the Coolgardie Goldfields District have produced more than 2.5 Moz of Au since 1892 with in excess of 1 Moz since 1980 (Coolgardie Mining Company, 2003; MPI Mines Ltd and Herald Resources Ltd, 2004). A number of companies have carried out historic exploraon over the MacPhersons Coolgardie project area. A brief chronological history is summarised below. From 1966 to 1969: Anaconda Australia Inc carried out an aeromagnec survey, soil sampling and percussion drilling. Between 1984 and 1987: A-Cap Development Ltd completed, 166 reverse circulaon (RC) holes for 4,514 m and 84 diamond holes for 11,120.8 m over the MacPhersons Reward prospect and four drillholes over the A-Cap and Queensland prospects. They also undertook costeaning and channel sampling. In 1985: Whiield and Associates completed an inial examinaon of MacPhersons Reward. They completed 208 RC drillholes at the MacPhersons Reward prospect, although the details of these drillholes are unclear. Anmony Nickel NL commissioned a report on the summary of geological potenal for the A-Cap prospect, which idenfied the area, retains good potenal to host gold deposits similar to MacPhersons Reward. In 1986: Roebuck Resources NL (Roebuck) compiled open file aerial photography and airborne magnecs, field mapping and resampling and logging of A-Cap Development Ltd s drilling. Roebuck drilled 19 RC drillholes at the A-Cap prospect and determined there was considerable potenal south of A- Cap s pit. In 1987, Roebuck completed 69 rotary air blast (RAB) drillholes for 1,575 m and two RC drillholes at A-Cap. Fourteen RC drillholes were completed at MacPhersons Reward for WDJ Powell to test the lower limit of the planned open pit. The drillholes define an anomalous zone at depth. In 1988: Samantha Exploraon carried out soil geochemical sampling over the A-Cap prospect, which idenfied anomalous gold areas. The anomalous gold was later followed up with 15 RC drillholes for a total of 1,133 m. CSA Global Report Nº R

146 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Electrum NL carried out geophysical interpretaon and field mapping of the Bakers Find prospect. Geological reconnaissance showed the old workings were centred on a quartz reef, which intruded an ultramafic unit. Coolgardie Gold NL (Coolgardie Gold) carried out a geochemical soil sampling program on the Bromley Jean prospect. Lubbock and Associated drilled 35 RC holes for 752 m over the Burbanks-Lady Robinson prospect. No further details on this drilling are available. Belgravia Resources NL drilled 23 RAB holes for 530 m at the Queensland prospect. The holes were vercal and designed to test the lithologies. Samples were assayed for gold with only background values detected. In 1989: Callion Mining Pty Ltd drilled 16 RC drillholes for 570 m at the Bakers Find prospect. Narrow (2 m) intervals of high-grade gold were intersected within an ultramafic unit. Results indicate a narrow, and locally high-grade, gold lode is present, but connuity along strike was not verified. Coolgardie Gold drilled two RC holes for 94 m at the Bromley Jean prospect. Drillhole BJC001 intersected 1 m at 1.7 g/t Au and 1 m at 2.5 g/t Au. In 1990: Croesus Mining NL (Croesus) carried out an interpretaon of high resoluon magnec data over the Bakers Find prospect and drilled 57 RAB drillholes for 1,350 m on the Queensland prospect. In 1991: Croesus and Invincible Gold NL drilled 57 RAB holes on the A-Cap prospect and carried out mapping and soil geochemical sampling to test targets idenfied through aeromagnec interpretaons. In 1995: Mt Kersey Mining NL (Mt Kersey) drilled 28 RC drillholes for 1,066 m on the Queensland prospect. Laterite sampling was carried out along with aeromagnec data interpretaons. The RC drilling program returned a number of anomalous results related to a northeast-southwest trending magnec high, which was intersected by the Queensland workings. Eln Minerals Pty Ltd carried out a series of RC drillholes over the Tindals prospect. In 1996: Spinifex Gold NL (Spinifex) performed geological reconnaissance and a study of previous exploraon and evaluaon over the A-Cap prospect. Coolgardie Gold NL completed a program of auger drilling and soil sampling over the Bromley Jean and Burbanks prospects. Mt Kersey drilled 30 aircore holes for 1,244 m over the Queensland prospect. In 1997: Spinifex drilled 136 RC holes for 8,147 m over the A-Cap prospect. Mt Kersey completed a series of aircore drilling programs over the Queensland prospect. Only limited assays are available. Another aircore drilling program of 174 holes for 7,654 m was also completed over the Londonderry prospect. In 1999: Gutnick Resources NL completed a RAB drilling program over the Queensland prospect. In 2000: CSA Global Report Nº R

147 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Mining Project Investors PLC flew an aeromagnec survey over the Tycho prospect. In 2006: Focus Minerals Ltd completed five RC drillholes over the Burbanks prospect. In 2009: In 2010: Cazaly Resources NL completed geochemical and soil sampling over the Burbanks prospect. MacPhersons Reward Gold Ltd completed 88 diamond holes for 16, m over the MacPhersons Reward, Bakers Find and Franks Find prospects. Eight RC holes for 1,151 m were completed over the MacPhersons Reward prospect. Airborne and magnec and radiometric surveys were completed over the enre project area Mining History The MacPhersons Reward mine consists of four interconnected open pits (Powell, MacPhersons, Salvo and Kerry) within a 1 km pre-strip area. Historical drilling was centred on the Powell and MacPherson reefs with only limited work evaluang the Kerry and Salvo reef posions. A-Cap is a historic open pit measuring 115 m x 115 m and is located southwest of the MacPhersons Pit along strike of the tonalite dyke. The geological contact between the tonalite dyke and the mafic basalt host is on the western and eastern edges of the A-Cap pit. The exisng 14 m deep A-Cap pit has undergone a significant amount of very shallow (less than 50 m depth) RAB and RC drilling. Some significant gold intersecons and exploraon targets have been idenfied on the geological contact. Bakers Find represents a shear zone hosted gold zone that was mined as an open pit in The pit was re-opened and the backfill was removed in 2010, exposing the original mineralised shear zone with visible gold exposed on the pit floor and the northeast face. 2.5 Exploration Potential There are a number of historical workings such as Bakers Find, Queensland and Queenslander (see Figure 1 above) that would benefit from addional drilling, targeng addional Mineral Resources. A number of the prospecng licences in the southwest of the Coolgardie Project area have been poorly explored due to being under alluvium and colluvium, whereas the tenements not covered by alluvial or colluvial cover contain numerous historical workings and the present Mineral Resources. Recent geochemical sampling by Primary Gold in the covered areas has returned gold targets warranng drill follow-up (Primary Gold, 2017 ASX Announcement dated 1 December 2017). The main geochemical anomaly is in the area of some shallow historical scout drilling, which returned anomalous gold intersecons (>1 g/t Au) from between 40 m and 60 m. 2.6 Mineral Resources MacPhersons and A-Cap Mineral Resource estimates The Mineral Resource esmate for the MacPhersons Reward Gold Mine was completed by CSA Global in Detail surrounding the work is contained in CSA Global report The Mineral Resource esmate includes the MacPhersons Reward deposit, and the A-Cap deposit located 200 m to the southwest of MacPhersons Reward. The Mineral Resource esmates were classified and reported in accordance with the JORC Code (2004 Edion). Primary Gold updated the 2012 Mineral Resource esmate and reported it in accordance with the JORC Code (2012 Edion) in October 2017 (refer ASX: Primary Gold Announcement dated 17 October 2017). The Competent Person for the most recent Mineral Resource esmate is Dr Marat Abzalov. CSA Global Report Nº R

148 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets The 2017 MacPhersons Reward Gold Mine Mineral Resource esmate is shown in Table 3, reported using a cut-off grade of 0.5 g/t Au. Table 3: MacPhersons Reward Gold Mine Mineral Resource estimate Deposit Geology JORC Classification Tonnage (kt) Au (g/t) Au (koz) Measured Indicated 1, Inferred Total 2, The MacPhersons Reward and A-Cap deposits are located within the Coolgardie Goldfield. Greenstone belts which comprise mafic and ultramafic rocks are overlain by felsic volcanic, volcaniclasc and sedimentary rocks in the area. Granic plutons intrude the area and all rocks are metamorphosed to amphibolite facies. Early thrusng has resulted in the repeon of units, and later deformaon includes folding and faulng. According to documentaon supporng the Mineral Resource esmate, gold mineralisaon is closely associated with quartz and sulphide veining in the area. Based on mapping in the open pits, quartz veins have two main orientaons. One set dips approximately 40 to the northeast and the approximately 40 to the southwest. Gold occurs within quartz veins and pyrite-pyrrhote veins, and in altered wall rocks and fractures where there are sulphide minerals. Data Collection Techniques Data used to prepare the MacPhersons and A-Cap deposit Mineral Resource esmates is sourced primarily from diamond (DD), reverse circulaon (RC) and air-core (AC) drillholes. 4, m of DD and 2, m of RC samples lie within the mineralisaon envelopes. A detailed summary of the various phases of drilling is not provided in documentaon supporng the Mineral Resource esmate. The collar table of the drillhole database provided was reviewed however to gain an understanding of the drilling history. RC drilling has been completed at the MacPhersons deposit by Roebuck Resources, Samantha NL, Spinifex, Cullen, and MacPhersons Resources (since 2010). The earliest recorded drilling data in the database is All DD drilling appears to have been completed by MacPhersons Resources since Data collecon techniques are documented for the MacPhersons drilling; however, detail is lacking regarding procedures that were in place during the previous drilling programs. A summary of the data collecon techniques adopted by MacPhersons Resources is provided below. Drillhole collars were surveyed by total staon or differenal global posioning system (DGPS) methods. RC holes were sampled at 1 m intervals to obtain a 3 kg cone split sample which was then pulverised to produce a 40 g charge for fire assay, with determinaon by atomic absorpon spectroscopy (AAS) using the FA40AAS process. DD holes were HQ and HQ3 size. Intervals were sampled at the discreon of the geologist, and core was cut in half, crushed and pulverised to give a 40 g sample for fire assay analysis using the FA40AAS process. All samples were sent to Kalgoorlie Assay Laboratory of Inspectorate Kalassay Ltd (Kalassay). DD and RC sample recovery were measured and documentaon supporng the Mineral Resource esmate suggests that recoveries were excellent. DD core was photographed for future reference. All RC samples and DD core were geologically logged for lithology, alteraon, mineralisaon and oxidaon state. CSA Global Report Nº R

149 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets A total of 113 density measurements were taken in July 2012 using water immersion methods. Weathered samples were wrapped prior to water immersion. Density sample locaons were flagged by lithology and oxidaon state and mean values determined to support Mineral Resource esmaon. No quality control (QC) samples were submited through the historical (the drilling not completed by MacPhersons Resources) drilling programs. A twinning program was completed to validate historic RC and DD results. Results of the twinning program were not presented in the Mineral Resource report however it was noted that: 27 RC samples compared poorly against the MRP diamond drilling. The historic diamond drilling assays correlated well against the newer diamond drilling. (Hodgson, 2010). Cerfied reference materials (CRMs) were submited by MacPhersons Resources to check for analycal accuracy. Blanks were submited with RC and DD samples to monitor carry-over contaminaon, and RC and DD field duplicates were submited to monitor sampling precision. The Competent Person for the Mineral Resource esmate (ASX: Primary Gold ASX Announcement dated 17 October 2017) states: Sufficient QAQC and data validation has been undertaken to verify the integrity of the assay data. QAQC measures include insertion of commercial standards and blanks to the sample stream, laboratory repeats, and umpire laboratory checks. A program of commercial standard reference material and onsite blank material insertion to the sample stream was instituted during the resource definition drilling for diamond drilling and RC samples. Standard samples are inserted with every submitted batch of the samples. CSA Global Assessment CSA Global considers that data collecon techniques adopted by MacPhersons Resources, inclusive of drilling methods, data locaon methods, density, logging, sampling, analycal methods and topographic control, according to the documentaon supplied, are largely consistent with industry standards. There is insufficient informaon in the supporng documentaon, however, to gain an understanding of the quality of the historical data. JORC Table 1 infers that Measured Mineral Resources were esmated using only MacPhersons data, however Indicated and Inferred Mineral Resources were esmated using all data. This is confirmed in the original CSA Global Mineral Resource report. A lower confidence exists with the historical data, and CSA Global considers the veracity of the data has not been demonstrated. Data has been collected by DD and RC drilling methods which generally provide a high-quality sample. Sampling and analycal techniques are considered appropriate, and adequate QC data appears to have been collected by MacPhersons Resources to allow the quality of this data to be assessed. The Competent Persons formed the view that acceptable levels of precision and accuracy have been demonstrated with the data. The use of historical data is restricted to Indicated and Inferred areas and its quality has not been demonstrated. Gold analysis was completed using 40 g fire assay with determinaon by AAS. Screened fire methods are oen adopted, at least on selected samples, when coarse gold is present, however this method is not discussed in the report, nor is a summary of the size of the gold parcles. This makes it difficult to comment on whether screen fire methods (which should provide a more accurate assay where coarse gold is present) would have been more appropriate. Based on the informaon supplied, CSA Global is unable to form an informed judgement about the quality of the sampling and assaying that was carried out prior to CSA Global considers the sampling and analycal data that was collected since 2010 has been collected according to industry standards. Further comments about the use of historical data, and its potenal impact on Mineral Resource risk, are made in the Mineral Resource Classificaon and Statement secon. CSA Global Report Nº R

150 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Geological Interpretation and Modelling Lithological models were created of the hosng basalt, ultramafic and tonalite units. Mineralisaon wireframes were created based on a 0.5 g/t Au cut-off grade, using a minimum mining width of 2 m. Strings were created on secons and then linked to form the final wireframes. Strings were snapped to drillholes on each secon and projected 50 m from the last hole. Where the mineralisaon terminated, strings were projected 5 m along strike, or half way to the adjacent secon. A total of 97 wireframes were modelled, and each assigned a unique MINZON value. Figure 3 shows the modelled mineralisaon interpretaons. Oxidaon wireframes which represented the base of complete oxidaon (BOCO) and top of fresh rock (TOFR) were also modelled. Figure 3: Macphersons modelled mineralisation envelopes Source: CSA Global Report R CSA Global Assessment A total of 97 mineralisaon wireframes were modelled for the MacPhersons deposit and 11 wireframes were modelled for the A-cap deposit. According to documentaon supporng the Mineral Resource esmate, the quartz veins which host the bulk of the mineralisaon have two main orientaons, one set dips approximately 40 to the northeast and the other 40 to the southwest. Almost all wireframes have been modelled however to dip 40 to the northeast. Open pit mapping and significant drilling has been completed to support the mineralisaon interpretaon. In addion, some of the lodes have been named historically ( Kerry MINZON 7 and 20), ( Salvo MINZON 34), ( MacPhersons MINZON 12), and ( Powell MINZON 33). Although CSA Global was unable to gain a detailed understanding of the litho-structural controls to the mineralisaon from the informaon provided, there appears to be sufficient support to support the dominant moderate-dipping northeast orientaon. All mineralisaon wireframes and drillholes were loaded into Datamine for review. There appears to be several zones where the mineralisaon is coherent and high grade, and where alternave interpretaons CSA Global Report Nº R

151 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets are unlikely. There are other less coherent zones however where a lower amount of confidence probably exists with the interpretaon. CSA Global considers that there is reasonable potenal for interpretaon (of the less coherent lodes in parcular) to change during mining. This is unlikely however to have a material impact on the total metal and could be appropriately managed through adopon of robust grade control procedures, including detailed mapping. On that basis, CSA Global considers that the risk associated with the interpretaon can be appropriately managed during producon. Statistical and Geostatistical Analysis No discussion is made in the Mineral Resource documentaon regarding stascal analysis that was completed to support the selected modelling cut-off grade (0.5 g/t Au). Gold stascs were reviewed by lithology, and it was found that 94% of the mineralisaon is hosted in tonalite, 6% is hosted within ultramafics and a minor amount is hosted within basalt. The stascs did not vary substanally between lithologies. Domains were therefore not created based on lithology type. A sample histogram was created to assist with determining a composite length. A 1 m composite length was chosen to maintain the variability of the sample data given that this was the dominant sample interval. Log-probability plots and log-histogram plots were used to assist with determining a top-cut. A 45 g/t Au top-cut was chosen which represents the 99.7 th percenle. Variography was completed using the 1 m composite data using Supervisor soware. Log variograms were modelled, which were back-transformed prior to esmaon. The mineralisaon was shown to display a high nugget component (63%) and significant short-range variability. CSA Global Assessment Although the stascal jusficaon for the adopted modelling cut-off grade is not discussed in the Mineral Resource report, the adopted value appears reasonable based on review of the gold histogram. The selecon of a 1 m composite size also appears appropriate, given that it is generally advisable to composite to as close as possible to the original sample length, which is in the order of 1 m, to retain the natural variability of the data. The top-cut applied also appears reasonable and follows due assessment of the data. The variography that was completed suggests the deposit is high-nugget with significant short-range grade variability. This is typical for gold deposits in the region and has Mineral Resource classificaon implicaons which are discussed later. CSA Global considers that the manner in which the stascal and geostascal analysis was completed does not represent a material risk to the ongoing development, mining or value of the project. However, we recommend that this is documented in any future resource updates. Estimation of Mineral Resources A block model was constructed in Datamine soware using a block size of 20 m N by 20 m E by 5 m RL. Sub-celling was completed to 2 m N by 2 m E by 1 m RL to honour the wireframe boundaries. Grades were esmated by ordinary kriging (OK), with inverse distance squared used as a check esmate. Block discresaon was set to 3 X by 3 Y by 3 Z. A hard boundary was used between each mineralisaon lens. The search ellipses were oriented along strike and down dip of the wireframes. A three-pass search strategy was adopted as shown in Table 4. CSA Global Report Nº R

152 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 4: MacPhersons and A-Cap resource model search parameters Deposit Along strike radius Across strike radius Across strike radius Minimum/ Maximum samples Datamine rotation (Z, X, Y) Second-pass multiplication factor/minimum and maximum samples Third-pass multiplication factor/minimum and maximum samples A-Cap /32 50/40/-90 2 / 2,6 3 / 2,32 MacPhersons /32 50/20/-90 2 / 2,6 3 / 2,32 Density values were assigned to the block model based on lithology type and oxidaon status as follows: Oxide all lithologies 2.38 g/cm 3 Transional all lithologies 2.62 g/cm 3 Fresh Basalt 2.83 g/cm 3 Fresh Tonalite 2.70 g/cm 3 Fresh Ultramafic 3.04 g/cm 3. Block model validaon was completed by visual comparison of sample and block grades, stascal comparison of sample and block grades, swath plots and comparison of OK and inverse distance squared results. CSA Global Assessment The use of OK with applicaon of top-cuts is considered reasonable given the style of mineralisaon. The block size of 20 m E by 20 m N by 5 m RL is also considered jusfiable given the resource drill patern, which averages approximately 20 m by 20 m, and is 10 m by 10 m in the central part of the deposit. Density values that have been assigned to the block model appear reasonable, however addional density data should be collected to validate the assumpons given they are supported by a total of only 113 density measurements. To check the Mineral Resource esmate, CSA Global imported the Mineral Resource block model, mineralisaon wireframes and drillhole database files that were provided into Datamine. Validaon checks were completed on the database files (such as checking for overlapping samples and samples that extend beyond the hole depth). Mineralisaon wireframes were assessed for correct interpretaon (that they appropriately encapsulate the mineralisaon) and the block model was checked to confirm if the block grades correlate well with the composited sample data. Block model stascs were also reviewed to determine if any negave or very high grades or density values exist. Validaon checks of the drillhole database files revealed no material errors. The wireframes were found to encapsulate >0.5 g/t Au mineralisaon, and the block model grades compared well with the drillhole grades. No negave or significantly high grade or density values exist in the block model. CSA Global also re-reported the Mineral Resource esmate from the block model and was able to reproduce the tonnage and metal esmate tabulated in the original CSA Global Report. This gives confidence in the original 2012 reporng macros. CSA Global considers that the manner in which the Mineral Resource model was prepared does not represent a material risk to the ongoing development, mining or global value of the project. Mineral Resource Classification and Statement The Mineral Resource esmate has been classified and reported in accordance with the JORC Code (2012 Edion). CSA Global Report Nº R

153 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets The Mineral Resource was classified based on the search volume and number of samples as follows: To be classified as Measured, blocks had to fall within the first search volume, and generally have more than 18 samples to inform the block esmate. Note that the Measured esmate only used MacPhersons RC and DD holes, to remove uncertaines surrounding the historic data. A wireframe was constructed to encapsulate the Measured area. To be classified as Indicated, blocks had to fall within the first or second search volume, and generally have more than eight samples to inform the block esmate. All RC and DD holes were used in the esmate. A wireframe was constructed to encapsulate the Indicated area. All other blocks within the mineralisaon envelopes were classified as Inferred. All RC and DD holes were used in the esmate. CSA Global Assessment Measured Mineral Resources have been reported where blocks have been informed by more than 18 samples within a 40 m by 40 m by 10 m search ellipse, and where they fell within an overall constraining solid. The area has been classified as Measured is drilled out on a patern of between 10 m by 10 m and 20 m by 20 m. Given the high nugget nature of the gold mineralisaon, significant short-range grade variability, an Indicated classificaon may have been more appropriate for this area. For high-nugget gold deposits, it is generally inadvisable to classify Mineral Resources based on drillhole data alone. Indicated Mineral Resources have essenally been reported where blocks have been informed by more than eight samples within an 80 m by 80 m by 20 m search ellipse but lie outside the Measured area. The area has been drilled out on a patern of between 20 m by 20 m and 40 m by 40 m, which appears reasonable. There is some uncertainty about the quality of historical data however that has been used to inform this area. Unl the quality of this data has been demonstrated, CSA Global considers that this area should be classified as Inferred unl the quality of the historical data has been demonstrated. All other blocks within the mineralisaon wireframes are classified as Inferred, and this is deemed appropriate. The adopted Measured and Indicated Mineral Resource classificaon approaches are considered somewhat aggressive, however potenally jusfiable if supporng data is collated, or appropriate work programs are completed. The exisng Mineral Resource block model should be reconciled against producon on a periodic basis from commencement of mining to gauge block model performance. This will provide a check on the reliability of the block model, and a quantave assessment of whether the Measured Mineral Resource classificaon is jusfied. Furthermore, to migate these risks associated with the historical data (which affects the Indicated Mineral Resources only), a work program should be implemented immediately to validate the integrity of the historical data. This may involve collaon of data that already exists, or compleon of addional QC programs (such as twinning historical holes or re-assaying exisng pulps) Tycho Mineral Resource Eestimate The Mineral Resource esmate for Tycho was completed by CSA Global in Detail surrounding the work is provided in CSA Global report The Tycho Mineral Resource esmate was classified and reported in accordance with the JORC Code (2004 Edion). Primary Gold updated the 2012 Mineral Resource esmate by reporng it in accordance with the JORC Code (2012 Edion) in October 2017 (refer ASX: Primary Gold Announcement dated 17 October 2017). The Competent Person for the most recent Mineral Resource esmate is Dr Marat Abzalov. The 2017 Tycho Mineral Resource estimate is shown in Table 5, reported above a cut-off grade of 0.5 g/t Au. CSA Global Report Nº R

154 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 5: Tycho Mineral Resource estimate Deposit Geology JORC classification Tonnage (kt) Au (g/t) Au (KOz) Measured Indicated Inferred Total 1, The Tycho deposit is hosted within a northwest-southeast striking, northeast dipping, sequence of mafic and ultramafic rocks. According to the documentaon supporng the Mineral Resource esmate, gold mineralisaon is associated with shallow dipping biote+chlorite+talc shears within a sequence of high-magnesium basalt and komaite rocks (Hampton Formaon) that have been metamorphosed to upper greenschist facies. This sequence strikes at 045 and has a near vercal dip. The deposit is situated adjacent to a synclinal axis. The high-magnesium basalt is dominated by tremolite, acnolite, biote and chlorite. Higher gold grades (>1.5 g/t Au) area associated with a weak foliaon within a former komaite and are not restricted to one form of alteraon. Gold mineralisaon is hosted within a shear zone which strikes at 290 and dips 20 to the north. A series of stacked en-echelon shoots occur within the shear zone and higher gold grades appear to be associated with northeast striking features. A more detailed understanding of the controls to the mineralisaon is lacking at this stage. CSA Global Assessment The broad-scale controls to the mineralisaon appear to be reasonably understood, this sets a solid foundaon for Mineral Resource esmaon. Data Collection Techniques Data used to prepare the Tycho Mineral Resource esmate is sourced primarily from DD and RC drillholes. Mineral Resource esmaon is based on 49 DD holes for 4,716.4 m and 24 RC holes for 1,753 m completed by MacPhersons Resources. The drillhole spacing varies significantly from approximately 10 m by 10 m in the south to m by m in the north. DD holes were distributed approximately at 20 m to 50 m apart on secon lines which are in average 50 m apart. RC holes infill this drilling grid. Prior to MacPhersons Resources ownership, drilling was primarily RAB and RC, and no QC data is available. RAB drilling was not used at all in the Mineral Resource esmate. The remaining historical drilling, consisng of three DD and 92 RC holes, was used to assist with interpretaon but not for grade esmaon. MacPhersons Resources drillhole collars were surveyed by DGPS. Historical drill collars were draped onto the latest topographic digital terrain model (DTM). For MacPhersons Resources DD drilling, a reflex tool was used to survey holes at 15 m from the collar and then every 30 m downhole. For MacPhersons RC drilling, an Eastman camera was used at intervals ranging from 10 m to 30 m downhole. Historical holes were not surveyed downhole, with the dip and azimuth assigned based on the design values. RC holes were sampled at 1 m intervals to obtain a cone split sample which was then pulverised to produce a 40 g charge for fire assay, with determinaon by AAS, using the FA40AAS process. DD intervals were sampled at the discreon of the geologist, and core was cut in half, crushed and pulverised to give a 40 g sample for fire assay analysis using the FA40AAS process. All samples were sent to Kalassay. CSA Global Report Nº R

155 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets All holes were geologically logged, with lithology, mineralisaon, alteraon and oxidaon status recorded. Density measurements were taken on 91 core samples. A total of 42 samples were taken in the oxide zone and 49 samples were taken in fresh material. The density data is concentrated in two parts of the deposit where fans of DD holes were drilled. A topographic DTM exists over the area, however the method used to create the surface is not clearly stated in the documentaon provided. CRMs and blanks were inserted into the sample stream by MacPhersons Resources for their drilling programs. Fiy-three pulps, two blanks and one CRM were also submited to an umpire laboratory as a further check on the accuracy of the primary laboratory. QC results are presented in the Mineral Resource report. The umpire laboratory results reveal no significant laboratory bias, CRM results performed well (less than 5% were outside the ± 2 SD range), and blank results were reasonable (there were some minor anomalism; however, the blanks were sourced from site material which returned below detecon limit results rather than from a commercial laboratory). CSA Global Assessment CSA Global considers that data collecon techniques, inclusive of drilling methods, data locaon methods, sampling methods, analycal methods and topographic control are largely consistent with industry standards and a high confidence can therefore be placed in the data. Density data measurement techniques are not documented. CSA Global assumes but has not verified that the water immersion method was used. Mean density values of 2.65 g/cm 3 and 2.78 g/cm 3 were determined for the oxide/transion zone and fresh zone respecvely based on the results. These values appear reasonable, however should be validated as soon as possible. Although the method used to create the topographic DTM is not clear from the Mineral Resource documentaon, drillhole collar posions align with the topographic model. On this basis, it is reasonable to assume the topographic model is accurate. Data was collected by DD and RC drilling methods which both generally provide a high-quality sample. Sampling and analycal techniques are considered appropriate, and adequate QC data appears to have been collected to allow the quality of the data to be assessed. Based on the informaon supplied, CSA Global considers that the quality of the sampling and assaying does not pose a material risk to the ongoing development, mining or value of the project. Geological Interpretation and Modelling Mineralisaon wireframes were based on a 0.5 g/t Au cut-off grade. Strings were created on secons by snapping to drillhole intercepts. Strings were then linked to form the final wireframe. A total of 31 wireframes were modelled, and each assigned a unique MINZON value. The largest wireframe contained 75% of the volume of the Mineral Resource. Figure 4 shows the modelled mineralisaon interpretaons. A TOFR surface was also modelled. Material above the TOFR surface is considered oxidised and material below the surface is considered fresh. CSA Global Assessment The controls to the mineralisaon were only discussed at a high-level in the documentaon supporng the Mineral Resource esmate. The use of a 0.5% Au cut-off grade to define the limits to the mineralisaon appears broadly appropriate to encapsulate the mineralisaon. Following a brief review of the deposit stascs, however, there may CSA Global Report Nº R

156 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets be potenal to model the wireframes based on a slightly lower cut-off grade. This is unlikely to materially impact the metal contained in the Mineral Resource esmate. All mineralisaon wireframes and drillholes were loaded into Datamine for review. The main lode contains 75% of the volume of the resource and appears to form a coherent zone of mineralisaon. It is unlikely that an alternave interpretaon of this lode is plausible. CSA Global considers that there is reasonable potenal for refinement of the interpretaon of the smaller lodes during mining. This is unlikely however to have a material impact on the total metal and could be appropriately managed through adopon of robust grade control procedures, including detailed mapping. On that basis, CSA Global considers that the risk associated with the interpretaon can be appropriately managed during producon. CSA Global considers that interpretaon and modelling procedures do not represent a material risk to the ongoing development, mining or value of the project. Figure 4: Tycho modelled mineralisation envelopes with MINZON values shown Source: CSA Global Report R Statistical and Geostatistical Analysis Drillhole samples from within each mineralised envelope were flagged with a MINZON code prior to stascal analysis. The samples were also flagged according to oxidaon state based on the modelled TOFR surface. A histogram of sample lengths was prepared, and a 1 m composite length was chosen, given most samples were collected over this length. Stascs were generated for Au for historic drilling, excluding the RAB results, and MacPhersons Resources drilling separately, for the combined oxide and fresh zones. Stascs were also generated for the oxide and fresh zones separately. CSA Global Report Nº R

157 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets The average grade of the MacPhersons drilling composites was slightly higher (0.18 g/t Au) than the historic composites, with the data in the oxide zone showing the biggest difference. Within the fresh zone, the mean grades are similar. Despite the similar grades, historic data was not carried forward for grade esmaon. Histograms and probability plots showed a similar distribuon for the oxide and fresh material; hence the data was not separated by weathering state for grade esmaon. Log-probability plots were created and reviewed, and a top-cut of 15 g/t Au was applied following this assessment. Given almost 80% of the sample data is located in the primary mineralisaon lens, this data was selected for the spaal variability analysis. A gaussian anamorphosis (transformaon) was applied and the gaussian data was back transformed to obtain parameters for grade esmaon. Downhole and the direconal variograms were created using Isas soware. CSA Global Assessment The selecon of 1 m as a composite length appears appropriate, given most of the data has been collected over this interval. The top-cut applied to the data is also considered reasonable and followed appropriate stascal analysis. The variography that was completed also appears well considered. The exclusion of historical drilling based on the absence of QC data is reasonable, however where this is considered valuable informaon the data should be validated by twinning as a mater of priority, with the view to include the data in future Mineral Resource updates. CSA Global considers that manner in which stascal and geostascal assessment was carried out does not represent a material risk to the ongoing development, mining or value of the project. Estimation of Mineral Resources A block model was constructed in Datamine soware using a block size of 10 m N by 10 m E by 5 m RL. Sub-celling was completed to 2 m N by 2 m E by 1 m RL to honour the wireframe boundaries. Kriging neighbourhood analysis (KNA) was completed to jusfy the selected block size. Grades were esmated by OK, with inverse distance squared used as a check esmate. A hard boundary was used between each ESTZONE. The field ESTZONE was created to combine mineralisaon lenses that formed part of the same mineralisaon zones as shown in Table 6. Table 6: Tycho estimation domains MINZON numbers ESTZONE Number of samples contained 1 and to 15, 17 to Search ellipses were oriented along strike and down dip of the wireframes. The adopted search parameters are shown in Table 7. Table 7: Tycho search parameters SREFNUM SDIST1 SDIST2 SDIST3 SANGLE1 SANGLE2 SANGLE3 SAXIS1 SAXIS2 SAXIS CSA Global Report Nº R

158 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets For ESTZONE=1 (the primary domain), a minimum of 15 and a maximum of 24 samples were used for the first search pass. For all remaining lenses a minimum of 15 and a maximum of 24 samples were used for the first search pass. The maximum number of samples from any one drillhole used per block esmate was six. The second search dimensions were twice those of the first search with all other parameters idencal. A third search pass with dimensions 20 mes the first was ulised to ensure all blocks were esmated. The minimum number of samples required was reduced to a minimum of 12 for the third search volume. Cell discresaon of 6 by 6 by 6 was used, with no octant-based searching. Density values were assigned to the block model based on oxidaon status. A value of 2.65 g/cm 3 was applied to oxide and 2.78 g/cm 3 was applied to fresh material. Block model validaon was completed by visual comparison of sample and block grades, stascal comparison of sample and block grades, swath plots and comparison of OK and inverse distance results. CSA Global Assessment The use of OK with applicaon of top-cuts is considered reasonable given the style of mineralisaon. The block size of 10 m E by 10 m N by 5 m RL is also considered jusfiable given the resource drill patern, which is averages approximately 20 m by 20 m in the central part of the deposit. Density values that have been assigned to the block model appear reasonable, however addional density data should be collected to validate the assumpons given they are supported by a total of only 91 density measurements. To check the Mineral Resource esmate, CSA Global imported the Mineral Resource block model, mineralisaon wireframes and drillhole database files that were provided into Datamine. Mineralisaon wireframes were assessed for correct interpretaon (that they appropriately encapsulate the mineralisaon) and the block model was checked to confirm if the block grades correlate well with the composited sample data. Block model stascs were also reviewed to determine if any negave or very high grades or density values exist. Validaon checks of the drillhole database files, such as checking for overlapping samples, revealed no material errors. The wireframes were found to encapsulate >0.5 g/t Au mineralisaon, and the block model grades compared well with the drillhole grades. CSA Global re-reported the Mineral Resource esmate from the block model and was able to reproduce the tonnage and metal esmate tabulated in the original CSA Global Report. This gives confidence in the original 2012 reporng macros. No negave or significantly high grades or density values exist in the block model. CSA Global considers that the manner in which the Mineral Resource model was prepared does not represent a material risk to the ongoing development, mining or global value of the project. Mineral Resource Classification and Statement The reported Mineral Resource has been classified as Indicated and Inferred. The drilling density through the core of the deposit has an average nominal drill density of 20 m by 20 m, for the MacPhersons drilling, and contains holes from which density measurements were taken. In this higher data density area, blocks were classified as Indicated where the slope of regression values were above a nominal value of 0.5. Only blocks within MINZON 1 and 2 were classified as Indicated. The remaining material within the modelled lenses was classified as Inferred, provided the dip and strike connuity of the lenses were support by drilling. Only blocks within MINZON numbers of 1 11, 16 and 19 were classified as Inferred. CSA Global Report Nº R

159 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets CSA Global Assessment CSA Global considers that industry good pracse has been adopted when forming a judgement on Mineral Resource confidence. The quality of the input data, confidence in the interpretaon, sampling density and local uniform condioning results have been considered. CSA Global therefore considers however that the manner in which Mineral Resource classificaon was completed does not represent a material risk to the ongoing development, mining or global value of the project. 2.7 Mining Study Assessment The mining study assessment is based on a review of the following three documents. ENT_0376_Primary Gold_Dra_Reserves_Report This report, dated October 2017, contains the Macphersons and Tycho Reserve esmate, the accompanying JORC Table 1 Secon 4 and details that have been used for open pit opmisaon, design and scheduling. ASX Announcement Ore Reserve Esmate and Posive Pre-Feasibility Study Results for the Coolgardie Project. This announcement was released on 17 October Primary Gold_PFS_MacPhersons_Cost_Model_DRAFT_Base_Mining_Inventory This Microso Excel file is the cash flow model that was used in esmang the Ore Reserves. It contains mulple sheets including: Project assumpon and model inputs, raw mining physicals of each pit, mining cost calculaon for each pit, mining and processing schedules, capital, and total project cash flows. The Coolgardie project consists of three open pits; the MacPhersons open pit, the A-Cap open pit and the Tycho pit. Mining of all three open pits will be undertaken by a mining contractor using convenonal open pit truck and shovel surface mining methods. Both the MacPhersons and A-Cap open pits are cutbacks of exisng excavated open pits. The Coolgardie Project does not include a processing plant. Therefore, it is assumed that ore sourced from the open pits will be transported off-site to a third-party processing facility, under a toll treatment arrangement. Numerous gold processing plants are within trucking distance of the project however Primary Gold is yet to enter in to any toll treatment agreements and this is a key risk that must be addressed in updates to feasibility studies Technical Assessment Open pit opmisaons were completed using industry standard opmisaon soware. The inputs into the opmisaons, while specifically tailored for the project, fall within a range considered acceptable for the project. The pit designs were completed using prefeasibility study (PFS)-level geotechnical inputs and other design criteria based on the both mining equipment requirements and praccal operang consideraons. The mine design inputs are considered reasonable based on the pit geometries, mining equipment selecon and producon capacity. The mine schedule produced a total of 1.3 Mt of ore with an average grade of 1.70 g/t Au for a total of 69 koz gold. A total of 14.3 Mt of waste is mined, resulng in an average stripping rao of 11.3 (waste t / ore t) Assessment of Cash Flow Model Inputs The inputs into the cost model are considered reasonable and are expected to fall within the level of accuracy of a PFS. CSA Global Report Nº R

160 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Mining and Processing Physicals The mining physicals used in the cashflow model align with the Ore Reserves. The combined monthly mining producon for the three pits is shown in Table 8. Mining modificaon factors of 10% diluon and 90% mining recovery have been applied to the mining physicals. The cash flow model allows for a delay between mining and processing, accommodang any blending requirements and to help reduce the risk of ore shortage for batch transport and treatment of ore at an off-site treatment facility should any delay in mining occur once the project is operaonal. The processing schedule is shown in Table 8. The mining physicals, modificaon factors and mining and processing schedules are reasonable for the proposed mining operaon and toll treatment processing strategy. Table 8: Mining and processing schedule Months Mined waste (t) Mined ore (t) Mined grade (g/t) Milled ore (t) Milled grade (g/t) 1 1,510,323 48, ,297,098 53, , ,413,861 58, , ,358,933 58, , ,231,822 40, , ,186,813 49, , ,130 37, , ,026 49, , ,243 38, , ,929 68, , ,055 59, , ,304 82, , ,130 99, , , , , ,096 67, , ,263 29, , ,219 45, , ,694 55, , ,739 72, , ,299 53, , ,538 23, , ,831 8, , , , , , , Total 14,343,198 1,273, ,273, Mining Operating Costs The cost of mining each pit has been esmated separately. The average unit mining operang cost (Table 9) over the life of the project is based on combined monthly cost of mining each pit. This modelling approach is appropriate giving the most accurate outcome for mining mulple ore sources. The resulng unit costs fall within a range considered reasonable, at a prefeasibility level of accuracy, based on benchmarking against comparave Australian open pit mining studies. CSA Global Report Nº R

161 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 9: Mining operating costs Activity Unit cost ($/t ore) Total cost (%) Drill and blast ,692,786 Load and haul ,436,980 Mine services ,298 Grade control ,304 Overheads ,213,373 Dewatering ,168,479 Waste dump relocation allowance ,187,500 Total ,741,719 The drill and blast costs for each pit are based on the same mine design parameters and unit costs. Variaon in total pricing is due to different parameters used for different material types and the different proporons of the various materials (oxide, transional and fresh) in each pit. Load and haul costs have been esmated allowing for an increase in cost as the pit depth, and haulage distance, increase. Grade control, mining overheads and services, and pit dewatering form the remainder of the operang costs commonly associated with all open pit mining operaons. The waste dump relocaon allowance charge could be considered a capital charge as it is a once off cost occurring in mid project life. This change was not made, due to this charge only forming a small (3%) proporon of the total operang cost and the short life of the project, the impact of including it in the unit operang cost is negligible. Surface Haulage Cost The haulage of ore from the project to an off-site processing facility has been costed at $6.00 per ore tonne. This cost is considered reasonable for a haulage distance of up to 75 km, based on a benchmark value generally used in prefeasibility studies for Australian mines. Site Overheads Site overheads have been esmated at $2.50 per ore tonne mined. This is considered reasonable for a Western Australian open pit mining operaon of this size. Processing Cost and Recovery The cash flow model uses a processing cost of $35.00/t. A more accurate cost may be obtainable from the Memorandum of Understanding signed with Westgold Resources (ASX Announcement dated 28 November 2017). It is unclear from the documentaon reviewed if the $35.00/t is based on a benchmark figure or on the toll treang negoaons. The processing cost used in the model is a reasonable esmate for carbon-in-pulp/carbon-in-leach, common gold extracon processes employed by the numerous processing plants in the surrounding area. Although Westgold Resources no longer own the Jubilee processing plant, the new owners Northern Star Resources may be interested in a toll treatment agreement providing addional material for milling. Numerous other gold processing plants are in close vicinity to the project and have been used to toll treatment ore from other operaons in the past. These include: The Greenfields Mill, located 3 km east of Coolgardie and owned by Fmr Investments Burbank Processing Plant, located 8 km south of Coolgardie and owned Barra Resources Lakewood Mill is south of Kalgoorlie and operated by Golden Mile Milling, which has been toll treang ore for Excelsior Gold, Empire Resources and Intermin Resources CSA Global Report Nº R

162 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Mungari Processing Plant, located 20 km west of Kalgoorlie and owned and operated by Evoluon Mining Kanowna Belle Processing Plant, located 18 km northeast of Kalgoorlie and owned and operated by Northern Star Resources Paddington Mill, located 35 km north of Kalgoorlie and owned by Norton Goldfields, which has previously toll treated ore from Excelsior Gold and Keras Resources. Metallurgical testwork has shown that gold recoveries range between 93% and 97%. An average gold recovery of 94% has been used in the cash flow model. The recovery selected at the low end of the test work range is considered reasonable based on the different material properes being treated by a processing plant that has not been opmised for a parcular ore type. Royalties The WA state royalty of 2.5% has been included in the cash flow model. This is the standard precious metal royalty payable on all gold produced in WA. An addional royalty (Bill Powel Royalty) of $2.00/t milled is included in the cash flow model. A 1.5% net smelter return (NSR) royalty is payable to Kurana Pty Ltd on the A-Cap tenements and has not been included in the cash flow model. Although unclear what these royales are for (payment relang to previous ownership, farm-in/farm-out arrangement, funding type arrangement), it is not unusual to have royales of this nature atached to mining projects. These royales represent a real cost to the operaon and should be included in the financial model. Table 10 shows the mining schedule showing the A-Cap open pit contained gold and the Macphersons open pit ore tonnes which will form the basis of calculang the two non-state royales. The 1.5% NSR payable to Kurana Pty Ltd represents approximately $185,000 at the study gold price of A$1,600/oz. Table 10: Mining schedule for royalty estimation Months A-Cap (contained oz) MacPhersons (ore tonnes) , , , , , , , , , , , , , , , , , , , , ,961 Total 7, ,369 CSA Global Report Nº R

163 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Opex Summary A summary of the unit operang costs (nominal) is given in Table 11. Table 11: Opex Summary Activity Unit cost ($/t ore) Mining Surface haulage 6.00 Processing Onsite overheads 2.50 Bill Powel royalty 2.00 Total Operating Costs before State Royalties State Royalty 2.5% Capital The majority of site infrastructure and facilies are in place from previous mining acvies and only minimal dy up and maintenance is expected to be required. The cash flow model esmates an inial capital investment of $125,000 for the purchase of computer soware, VHF radios and geology items. Based on a recent site visit, these costs have already been incurred, with the infrastructure already in place. The ASX announcement contains a capital esmate of $850,000 inclusive of pre-producon and infrastructure costs, of which $750,000 of this will be deferred by up to three months under the mining services contract and will be paid out of revenue from the sale of gold (Primary Gold, ASX Announcement 17 October 2017) It is not evident if an allowance has been made for costs associated with ongoing environmental commitments and monitoring. CSA Global has esmated ongoing environmental commitments and liabilies in the order of $100,000, which should be included at the end of the cash flow model. CSA Global Report Nº R

164 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 3 Mount Bundy Project 3.1 Location and Access The Mount Bundy Project is located approximately 100 km southeast of Darwin in the Northern Territory (NT) of Australia (Figure 5). The main tenement block containing the Toms Gully, Rustlers Roost and Quest 29 Mineral Resources is accessed by the sealed Arnhem Highway and 15 km of unsealed roads. The project has access to electricity and water. The southern tenements are accessed via the Stuart Highway. The project area lies in the tropical monsoon rain belt of northern Australia. Figure 5: Mount Bundy Project location 3.2 Ownership and Tenure The Mount Bundy Project comprises of 19 granted tenements, consisng of seven mineral leases, two mineral lease norths and ten mineral exploraon licences (Table 12). Addionally, there are two applicaons (one mineral lease and one mineral lease north). All tenements are owned 100% by Primary Gold except one (MLN1083), which Primary Gold has an 80% equity interest. All tenements are held through a wholly owned-subsidiary, Primary Minerals NL. CSA Global Report Nº R

165 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 12: Mount Bundy Project tenements Tenement Status Area (km 2 ) Grant date Expiry date Registered holders MLN1058 Granted 6.8 3/08/1989 2/08/2039 Primary Minerals NL (100%) MLN1083 Granted 7.6 4/03/ /12/2020 Primary Minerals NL (80%), Stanley Fletcher (10%), Karen On (10%) ML29781 Granted 0.1 6/02/2013 5/02/2023 Primary Minerals NL (100%) ML29782 Granted 0.8 6/02/2013 5/02/2023 Primary Minerals NL (100%) ML29783 Granted 2.9 6/02/2013 5/02/2023 Primary Minerals NL (100%) ML29785 Granted 0.4 6/02/2013 5/02/2023 Primary Minerals NL (100%) ML29786 Granted 1.1 6/02/2013 5/02/2023 Primary Minerals NL (100%) ML29812 Granted 1.7 6/02/2013 5/02/2023 Primary Minerals NL (100%) ML29814 Granted 0.8 6/02/2013 5/02/2023 Primary Minerals NL (100%) EL29330 Granted /10/ /10/2018 Primary Minerals NL (100%) EL29717 Granted /01/2014 7/01/2020 Primary Minerals NL (100%) EL30128 Granted /05/ /05/2020 Primary Minerals NL (100%) EL30234 Granted /08/ /08/2021 Primary Minerals NL (100%) EL30809 Granted /06/ /06/2021 Primary Minerals NL (100%) EL30824 Granted /07/2015 2/07/2021 Primary Minerals NL (100%) EL29362 Granted /10/ /10/2018 Primary Minerals NL (100%) EL29520 Granted /01/ /01/2019 Primary Minerals NL (100%) EL29521 Granted /01/ /01/2019 Primary Minerals NL (100%) EL30255 Granted /03/ /02/2022 Primary Minerals NL (100%) MLA24828 Application Primary Minerals NL (100%) MLNA1155 Application Primary Minerals NL (100%) For the purposes of this Report the Mt Bundy Project is considered to comprise both Pre-Development and Advanced Exploraon Mineral Assets. In the conduct of their acvies in the NT Primary Gold has in the past obtained permits for exploraon of their tenements and will need to obtain further permits to connue with the exploraon and the development of the Project. In September 2015, an Environmental Impact Statement (EIS) was lodged with the Northern Territory Environment Protecon Authority to recommence operaons at Toms Gully. Based on their ASX release dated 19 th April 2017; Primary Gold is preparing an EIS for the larger Mount Bundy Project incorporang the Rustlers Roost and Quest 29 mining areas. The perming and approvals process for mining the NT is well documented. The level of perming completed for the project appears consistent with the stage of the project Agreements and Royalties Primary Gold has the following obligaons to third pares in respect of the following tenements: Primary Gold is required to pay Crocodile Gold Corporaon, now Kirkland Lake Gold Ltd, (Crocodile) a royalty of $10/oz of gold extracted and recovered from tenements; MLN1083, MLN1058 and applicaons MLA24828 and MLNA1155 capped at a total amount of $2,500,000 and ceasing at the me that the cap is reached. There is deferred consideraon of $1,550,000 in four quarterly instalments when the operaon is cash flow posive. There is also an agreement for gold producon from Rustlers Roost in mining lease MLN1083, whereby Fletcher and On are to share in expenses and are entled to their pro rata of product (gold) produced i.e. each is required to pay 10% of project costs out of project cash flow once project commenced and are entled to 10% of product once costs recovered. CSA Global Report Nº R

166 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 3.3 Geology The Mount Bundy Project is located within the Pine Creek Orogen which is a major syncline, exposed over an area of approximately 66,000 km 2, where its formed by a Palaeoproterozoic volcano-sedimentary succession overlaying the late Archaean granite-gneiss basement. The Palaeoproterozoic succession is formed by fluvial and marine sedimentary rocks including mudstones and siltstones, shales and their carbonaceous variees colloquially referred to as black-shales, greywackes and sandy sediments that are intercalated with the volcaniclasc rocks. These units have been intruded by sills and dykes of dolerite (Zamu Dolerite and equivalents) and later by granites of the Cullen Supersuite (the Cullen batholith). These high temperature I-type granites have induced strong contact metamorphic aureoles ranging up to (garnet) amphibolite facies, and created regionally extensive biote and andalusite hornfels facies. Figure 6 summarises the geology of the Mount Bundy area. The Palaeoproterozoic rock units discussed above are subdivided onto several formaons, including the Wildman Siltstone formaon of the Mount Patridge Group, Koolpin formaon, Gerowie tuffs, Mount Bonnie formaon of the South Alligator River Group and the Burrell Creek formaon of the Finniss Group. Outside the contact metamorphic aureoles, the rocks are weakly metamorphosed, with metamorphic grade in most of the project area corresponding to a lower greenschist facies with some upward gradaon towards lower amphibolite facies to the south. Flat-lying Palaeozoic and Mesozoic strata, along with Cainozoic sediments and proto-laterite cementaon, overlie parts of the Pine Creek Orogen lithologies. The Pine Creek Orogen is subdivided into three domains, from west to east these are; the Litchfield Province, Central Domain and the Nimbuwah Domain. The Central Domain contains the vast majority of the gold, base metal, n and polymetallic deposits and is the main focus for exploraon in the region. All Primary Gold s Pine Creek tenements are located within the Central Domain. Quartz veining, both concordant and discordant is common in the area, associated with areas of folding stress and faulng. Most veins are relavely massive indicang development at deeper levels while to a lesser extent some are more fibrous and brecciated and may indicate development at higher crustal levels. A more detailed descripon of the geology associated with the Mount Bundy Mineral Resources is provided in Secon Exploration and Mining History The Mount Bundy Project area has been subject to around 50 years of exploraon, focused around two main periods of acvity during the early 1970 s and then again during the mid to late 1980s and early 1990s. Previous explorers idenfied numerous prospects which have been subject to varying degrees of invesgaon. The earliest record of exploraon in the Mount Bundy region was Australian Geophysical Pty Ltd from 1967 to 1971 ulising geochemical and geophysical surveys and some limited follow up RAB drilling, primarily looking for uranium and base metals with no recorded success. The next significant phase of exploraon was undertaken by Geopeko during the early 1970s following their acquision of the then relavely new BMR aeromagnec and radiometric survey data, which was flown during Interpretaon of this geophysical data outlined a large number of potenal target areas throughout the region, which were subsequently invesgated by ground-based geophysics, geochemical sampling, stream sediment sampling; soil geochemistry; rock chipping, geological mapping, costeaning, and limited drilling. These sampling programs defined anomalies, which were thencedesignated Quest numbers for idenficaon. These anomalies became the focus of Geopeko s exploraon acvies for some six years. CSA Global Report Nº R

167 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Geopeko formed the AJP Joint Venture (AJP JV) with Aquitaine, Jimberlana Minerals and Pan d Or Mining ( ) looking for uranium and base metals with a minor focus on gold. The AJP JV also ulised geophysical and geochemical surveys, which included rock chipping, and stream sediments with followup trenching and drilling. Their targets were given names of Anomaly All the early exploraon was focused on uranium and base metals with gold being of minor consideraon. Geopeko having located some base metal and gold mineralisaon at Quest 29, brought in Carpentaria Exploraon Company Pty Ltd (Carpentaria Exploraon). In 1986, Carpentaria Exploraon discovered Toms Gully from a stream sediment survey in the Wildman Siltstone. Following the successful discovery of the Toms Gully gold deposit during , Carpentaria Exploraon launched a regional gold exploraon program, largely completed under joint venture agreements with smaller companies or syndicates, which held exploraon tenure within the area. This regional program was comprised mainly of stream sediment sampling. The work on the rest of the Mount Bundy Region however produced limited success with follow up rock chipping and drilling only finding very small-scale prospects, such as Bandicoot, Henry s Prospect, Fence line, Block X and further delineated the Quest 29 Dolerite deposit. With the discovery of gold at Toms Gully, regional exploraon became focused more on gold, with work completed by Newmont ( ), Pinnacle Mining Gold and Base Metals ( ). Regionally, Normandy Poseidon in 1993 to 1995 searched for diamonds, base metals and gold. In 1995 to 1996, Dominion Mining completed LAG sampling on western porons of the project area. Crocodile who purchased the project from GBS Gold in 2009, focused its exploraon on Toms Gully and did not undertake any regional exploraon. Primary Gold has undertaken very limited regional exploraon. Numerous prospects (55) have been idenfied by previous explorers, with 49 located within Primary Gold s tenure Rustlers Roost Mining History Alluvial gold was discovered at Rustlers Roost by prospectors in 1948, idenfying a number of prospects. It is esmated that t of ore were mined for the producon of about 3.7 kg of gold. Rustlers Roost Mining Pty Ltd a subsidiary of Valdora Minerals NL, mined and heap-leach treated 4.71 Mt at 1.5 g/t Au of oxide resources, between June 1994 and March 1998 for ~113,000 oz of gold (esmated 70% recovery). The shallow pit was excavated to a depth of approximately 50 m Toms Gully Mining History The Toms Gully deposit was discovered in 1986 during a regional stream sediment sampling program conducted by Mount Isa Mines Ltd subsidiary, Carpentaria Exploraon. The anomalism was related to an outcropping quartz vein, drilled in 1987, resulng in the delineaon of an inial Mineral Resource. An open pit was developed by Carpentaria Gold Pty Ltd between 1988 and May 1991, extending to a depth of 90 m. A decline was commenced to access underground Ore Reserves but was abandoned in difficult ground condions. Kakadu Resource NL built a plant to re-treat tailings in Renison Consolidated Mines NL (Renison) completed extensive drilling in 2003 and 2004 delineang and Mineral Resource down plunge/dip from the open pit. Renison commited to development of the underground in 2005, with mining undertaken in 2007 before being placed on care and maintenance. The project was acquired by GBS Gold in July 2007 and undertook minimal mining acvies in 2008 before going into administraon. Crocodile acquired the mine from administrators in 2009 and recommenced mining in 2010, they put the mine into care and maintenance aer minimal mining. Historical producon by the various companies is summarised in Table 13. CSA Global Report Nº R

168 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 13: Toms Gully mine production history Carpentaria Gold Pty Ltd Kakadu Resources NL Company Renison Consolidated Mines NL GBS Gold Crocodile Gold Corporation Mining period Mine type Open pit and underground Tailings Underground Underground Underground Ore tonnes (t) 356,651 65,000 63,300 26,835 NA Grade (g/t) 9.2 NA NA Recovery NA 30 40% NA 70% NA Au produced (oz) 106,000 NA 5,200 3,700 NA 3.5 Exploration Potential Source: Fitzpatrick 2013 The Mount Bundy Project has numerous exploraon opportunies that have had limited work done on them both during Primary Gold s tenure and historically, which warrant further work. An analysis of the Rustlers Roost, Quest 29 and Toms Gully geology and the lode geometry has resulted in numerous down dip and resource extension targets being generated by Primary Gold. There are also numerous targets at Quest 30 and along the anclines located to the west of Rustlers Roost. All these targets have had minimal exploraon in the past and almost enrely lack any drilling. Reviews of the southern exploraon licences by Primary Gold over the last three years and reconnaissance traverses have shown that the EL29520, EL29521 and EL29362 tenements are characterised by low level gold soil anomalies which have not been drilled. These southern tenements are not as prospecve as those surrounding the Mount Bundy Mineral Resources and are considered peripheral to Primary Gold s main areas of focus. 3.6 Mineral Resources Mount Bundy comprises of two main open pit operaons at Rustlers Roost and Quest 29, and an underground room and pillar operaon at Toms Gully. The Mineral Resource esmate for the Rustlers Roost Project was completed by Cube Consulng Pty Ltd (Cube) in October 2017; the Quest 29 esmate was completed by Cube in August 2014; and the Toms Gully esmate in June Mr Brian Fitzpatrick, Principal Consultant Geologist from Cube, was the Competent Person for all three esmates. The Mount Bundy Project Mineral Resource esmates have been classified and reported in accordance with the JORC Code (2012 Edion) Deposit Geology The Rustlers Roost Prospects are located 10 km southwest of the Toms Gully gold mine. A turbidite sequence in the Mount Bonnie Formaon of the South Alligator Group hosts the Rustlers Roost deposit. The sequence is at least 1,500 m thick and comprises shale, siltstone, minor tuff, greywacke and banded iron formaon. In the Rustlers Roost deposit area, the sequence outcrops as banded carbonaceous siltstone and mudstone. The sediments have undergone regional greenschist grade metamorphism and later contact metamorphic events. The sediments, volcanics and dolerite sills were then subjected to a major folding episode along the northnortheast trending regional fold axes. The folds are open to ght in style and plunge consistently to the south at approximately 35. Gold mineralisaon is hosted in a planar, south dipping quartz-sulphide vein CSA Global Report Nº R

169 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets set that postdates the folding event. Following the folding, an extensive array of northeast and northwest trending dolerite dykes was intruded during extensional deformaon. The Quest 29 area is mostly underlain by the metasediments of the Koolpin Formaon. Minor, though economically important sills of Zamu Dolerite occur within the area. The Mount Bundy Granite underlies the north-eastern most poron of the property. The Koolpin Formaon is comprised mainly of pyric and pyrrhoc, carbonaceous siltstone with andalusite porphyroblasts. Bands of re-crystallised laminated and nodular chert are common along the main ridge running up the western side of the property. The enveloping carbonaceous siltstones are more strongly silicified along this ridge. Thin green-grey layers within the siltstones are possibly iron formaons. The sediments, tuffs and dolerites occupy the core of a regional ancline (the Quest 29 Ancline). The axis of this ancline plunges to the south-southeast at a shallow angle. Gold mineralisaon occurs in both the dolerite and the carbonaceous siltstones. The host dolerite dips to the east at 50 to 70. The Toms Gully mineralisaon consists of a shallow dipping quartz reef hosted in graphic shale and siltstone of the Wildman Siltstone unit. The deposit lies enrely within an 800 m wide, planar quartz sulphide vein which strikes east-west and dips south at approximately 30 in outcropping exposures, to near horizontal at approximately 1,500 m down dip (280 m vercal depth). Carbonaceous shales and siltstones of the Wildman Group dominate the lithology near the Toms Gully Gold Mine. Locally the sediment package dips to the south and the quartz reef appears to be conformable with the sediments. The sediments are generally well banded with litle structural fabric, however, within 1 m to 2 m of the reef, a deformaon fabric consisng of varying degrees of shearing and brecciaon is typically present. Figure 6: Mount Bundy Project local geology CSA Global Report Nº R

170 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Rustlers Roost The Rustlers Roost mine is a substanal open pit of over 1 km in length and 480 m at its widest. The pit was mined to a maximum depth of 50 m below surface, correlang with the approximate posion of the base of oxidaon. Oxide resources of 4.71 Mt at 1.05 g/t Au (GBM, 2006) were mined and heap-leach treated by Rustlers Roost Mining Pty Ltd between 1994 and 1998 for a return of 113,000 oz Au. Gold recovered was esmated at approximately 70% recovery (Payne, 2004). Previous resource work had idenfied substanal Indicated and Inferred Resources remaining below the base of the pit, with potenal upside as the resource was open at depth, both down pit and down plunge from the known mineralisaon trends. The Rustlers Roost Mineral Resource esmate was updated in October Data Collection Techniques RC, DD (PQ, HQ, and NQ) with standard and triple inner tubes, open hole percussion drilling and RAB drilling have all been used at Rustlers Roost. All data are recorded in a MGA51 (GDA94) grid. Pre-2017 drilling: o RC drilling was the primary method of resource drilling, and most of the drilling was completed prior to 1998 with few records available regarding the various drilling programs. Of the 884 drillhole records, there were 574 RC, two DD, and 268 of unknown drilling method. o DD core drilling was completed pre-2003, using HQ or HQ triple tube (61.1 mm diameter). Nine holes were drilled in 2003 using HQ coring (63.5 mm diameter). A high quality of core was recorded with recovery rates in excess of 95%. Core was oriented using a spear and reassembled for logging and sampling. o Grade control data was collected from 5 m open hole percussion blast hole rigs, and the data separated by mining level and mineralised zones. The data was not however used for the mineral resource esmaon work by Cube in o None of the pre-2017 data had any associated informaon for drill rig specificaons. o Pre-2003 drill collars were surveyed by contract and mine surveyors; 2003 holes collars were surveyed using GPS. o Downhole surveys completed at the end of hole pre-2003, and every m in 2003 o Dry and wet percussion chip samples, and core, were sampled at 1 m intervals. Oriented core was cut and the southern side sent for assay. o Logging prior to 2003 was basic, with more detailed geological core logging from 2003 onwards. o Oxide in-situ bulk density values were obtained from gamma-logging of four shallow percussion holes. Bulk density measurements from a further 285 DD samples from nine holes were made, but no record of the method was retained drilling: o Sixteen holes were drilled with a greater level of drillhole metadata available; 14 were RC and two were HQ diamond core holes. o Hole collars surveyed using GPS +/-3 m accuracy. o Downhole surveys every m. o Oriented at -55 to -90 toward grid west or east to intersect the mineralisaon orthogonally; new holes were drilled between 50 m and 100 m from previous holes to infill gaps and target extensions at depth. o Dry and wet percussion chip samples were sampled at 1 m intervals. Oriented core was cut and then one half sent for assay. DD core was logged, photographed. Sampling was to geological contacts maintaining the sample length between 0.6 m and 1.2 m and averaging approximately 1 m. CSA Global Report Nº R

171 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets o Logging was detailed, including lithology, mineral percentages, degree of weathering and water table occurrences. Bulk Density Cube reported that no bulk density values were available from the 2017 drilling program; values were provided to Cube for use in the 2017 esmate. The values were derived from a dataset supplied by Primary Gold. The data supplied contained 63 records, with fields recording the hole ID, sample ID, depth and interval, gold assay value, oxidaon type and mineralised zone locaon. Following reviews of previous studies, Cube concluded that these data were of sufficient reliability to provide averaged esmates of density to be assigned to the different states of oxidised mineralisaon, in lieu of esmang density. CSA Global concurs with this approach and endorses the Cube recommendaon that future esmates be based on a greater number of density measurements to be collected from drilling programs. Table 14 summarises the assigned density values. Table 14: Assigned density, by oxidation state Description Oxide Transition Primary Host Min. Zone Host Min. Zone Host Min. Zone Number of samples Density Quality Assurance and Controls Source: Cube, 2017 Cube reviewed the limited reporng of historical sample preparaon and quality assurance/quality control (QAQC) informaon available for the drilling programs at Rustlers Roost prior to 2004 but was unable to locate any original documentaon of laboratory procedures or QAQC data from the data room records provided to Cube. Nor were details available on security of sample handling. Cube s assessment of the historical data quality was drawn from preceding esmaon work in 2004, and before that analyses competed in 1996 and Based on the documentaon the drilling, sampling, sample preparaon and assaying was consistent with industry standards for the me. Cube was able to assess the quality of the 2017 data, based on Primary Gold s data and procedures. Hole logging using portable x-ray fluorescence (pxrf) for preliminary mul-element analysis in the field was backed up by 50 g fire-assays for gold in the laboratory. Cerfied standards, blanks and duplicates (field and pulp) were employed. Sample security was assured by daily removal from the drill sites at the end of day and storage within a secure locaon in the exploraon camp. Cube s review of quanle-quanle (QQ) plots and the performance of assays against standard, indicated that the 2017 data was of an acceptable standard for inclusion in the 2017 esmate. CSA Global Assessment CSA Global considers that data collecon techniques described, inclusive of drilling methods, data locaon methods, logging, sampling, analycal methods and topographic control, according to the documentaon supplied, are largely consistent with industry standards. There was however insufficient informaon to provide an understanding of the quality of the historical data. The June 2017 drilling program consisted of 16 drillholes for a total of 2,670 m; and included 12 RC drillholes and four bulk metallurgical test including two HQ diamond drillholes. Most of the drilling intersected gold mineralisaon within sedimentary units consistent with previous interpreted models of structural control and mineralisaon. The esmaon dataset is primarily derived from diamond core and RC drilling methods which generally provide a high-quality sample. Sampling and analycal techniques are considered appropriate, and CSA Global Report Nº R

172 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets sufficient QC work appears to have been completed to provide a high-level view of the quality of the resource dataset. Cube concluded that acceptable levels of precision and accuracy have been demonstrated with is data and is appropriately reflected in the classificaon categorisaon. CSA Global concurs with this view. Geological Interpretation and Modelling Cube was provided with a topographic surface and open pit surface wireframe reflecng depleon to May 1997, when open pit mining ceased. This topographic surface was used to trim the three-dimensional (3D) wireframes of the remaining ore interpreted. Surfaces represenng the base of complete oxidaon and top of primary oxidaon were updated using data from the 2017 drilling and from a review of logging oxidaon data from the drilling database. Primary Gold s geologists provided Cube with an interpreted structural model which was interpreted using exploraon data as well as open pit mapping and grade control informaon. This model included projecons of down dip and down plunge projecons of stragraphic units, major structural features (fold hinge zones, major faults), lithological contacts and mineralisaon trends. Figure 7 presents a typical cross secon through mn. The mineralisaon envelope was defined using an inial 0.2 g/t Au cut-off grade, to isolate the mineralisaon, and then a 0.4 g/t Au cut-off within this larger domain was used to define the resource envelope. Four mineralised domains (1011, 1012, 1013, 1004) were interpreted, represenng changes in strike and dip across the hinge zone and fold limbs of the regional fold structure. Figure 8 illustrates the mineralisaon domains. CSA Global Assessment CSA Global loaded the mineralisaon wireframes and drillholes into Surpac for review; and considers that the closer-spaced grade control drilling, plus detailed pit mapping, during mining may provide beter definion of the slightly irregular higher-grade mineral occurrences, allowing improved control of mining diluon. The mineralisaon envelope interpreted at a 0.4 g/t Au cut-off is however valid for esmang global grades and tonnages. CSA Global considers that any risk associated with the interpretaon is adequately reflected in the classificaon of the esmate. CSA Global Report Nº R

173 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Figure 7: Cross-section view of Rustlers Roost at 60350N (showing drilling, lithological units, projected with fold hinge model) Source: Cube, 2017 Figure 8: Rustlers Roost mineralisation domains (looking northwest) CSA Global Report Nº R

174 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Source: Cube, 2017 Statistical Analysis and Estimation of Mineral Resources The majority of the data was sampled on 1 m intervals; Cube elected to use 2 m esmaon composites, to reduce the variability inherent in raw samples or a smaller composite length relave to esmaon resource model block dimensions. A top-cut was selected for all four domains following review of the log-normal probability plots. The impact of applying a top-cut was considered minimal, as approximately 1% of the data was above 5 g/t Au. Cube noted that grades were esmated using inverse distance squared esmaon, at Primary Gold s request. Variography was reportedly atempted in 2004 and resulted in poorly defined variograms in the east-west direcon; this was considered to be a result of the closer drill spacing in that direcon. Esmaon ellipsoids were oriented to match mineralisaon direcons evident in the closer spaced grade control data. Two models, a sub-blocked model and a regularised model, were generated by Cube. Table 15 summarises parameters for both block models. The sub-celled model provided beter resoluon of volumes, and was used to report global Mineral Resource tonnages, and the regularised block model was used to facilitate Whitle opmisaon and open pit design work. Cube derived interpolaon parameters from the 2004 Mineral Resource esmate, as specified in the scope of work by Primary Gold. For all domains, a first pass a search radius of 50 m was used along strike by 10 m down dip and 25 m across strike. Minimum and maximum number of samples used was 10 and 40 respecvely. A second esmaon pass was run to fill blocks in outlying or sparsely drilled areas; this second pas of esmaon was based on a search radius of 200 m, with a minimum of two and maximum of 40 samples respecvely. Table 16 and Figure 9 summarise the esmaon parameters and domains. Table 15: Rustlers Roost block model parameters Type Easting (x) Northing (y) RL (z) Origin coordinates 10,500 59, Extent 11,700 61, Parent block size Sub-cell minimum Rotation Total blocks 12,279 Note: Regularised block model cell are parent cells only. Table 16: Rustlers Roost search parameters Estimation zone Minimum no. of samples Maximum no. of samples Search direction Az. Pl. Dip Search radius Run 1 (m) Maximum vertical search (m) Search radius Run 2 (m) Major/ Semimajor ratio Major/ Minor ratio Descret. (x,y,z) Backhoe ,4,2 Dolly Pot ,4,2 Sweat Ridge ,4,2 Beef Bucket ,4,2 CSA Global Report Nº R

175 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Figure 9: Rustlers Roost block model, estimation zones CSA Global Assessment CSA Global believes that given that the bulk of the data was sampled in 1 m intervals, the use of 2 m esmaon composites may mask any inherent variability in the data, however given the relavely large amounts of data used in esmaon, as well as the esmaon method selected, this difference is unlikely to be material. CSA Global loaded the Mineral Resource block model, re-reported the esmate from the block model and was able to reproduce the tonnage and grade esmate. Mineralisaon wireframes were assessed for correct interpretaon (that they appropriately encapsulate the mineralisaon) and the block model was checked to confirm if the block grades correlate well with the composited sample data. The wireframes encapsulated esmaon composites nominally greater than 0.4 g/t Au, and the block model grades correlated with the drillhole grades. No negave or anomalously high-grade values were reported in the block model. CSA Global concurs with Cube s view that while not ideal, inverse distance squared esmaon was acceptable for grade esmaon, largely due to the relavely high volume of data available. Geostascal interpolaon methods are more robust, and with the definion of geologically constrained domains will provide a beter esmate of grade variability. However, in the current Rustlers Roost esmate, a greater understanding of the complex structural controls on mineralisaon are needed before this is possible if robust variograms cannot be interpreted, geostascal esmaon methods can only provide minimal addional benefit. CSA Global Report Nº R

176 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Block Model Validation and Mineral Resource Classification The validaon of the block model included three dimensional visual checks, stascal and graphical spaal comparison checks using swather plots, and volumetric and grade comparisons between composite data and block model esmates. Validaon results demonstrated acceptable correlaons of the input data to the esmated gold grades. Figure 10 illustrates the comparave swathe plots. Block were classified as Indicated, where drill spacing was 50 m or less, and connuity of mineralisaon and structural control was well defined. This corresponds to the upper porons of the deposit, to a depth of approximately 200 m. The more sparsely drilled areas were classified as Inferred, corresponding to the areas below 200 m depth or extending to the east beyond the current extension drilling. Blocks which were esmated, but not classified fell into areas where drilling was very sparse, where there was insufficient connuity in mineralisaon trends and where the drilling was poor or undefined. The Rustlers Roost classified Mineral Resources are presented in Table 17 and Figure 11 illustrates the classificaons. Table 17: Rustlers Roost classified Mineral Resources Material Tonnes (Mt) Indicated Inferred Total Grade (g/t Au) Contained metal (Au koz) Tonnes (Mt) Grade (g/t Au) Contained metal (Au koz) Tonnes (Mt) Grade (g/t Au) Contained metal (Au koz) Oxide Transition Fresh ,008 Total , ,332 CSA Global Report Nº R

177 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Figure 10: Rustlers Roost validation plots Note: Combined domains, by northing, easting and elevation. CSA Global Report Nº R

178 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets CSA Global Assessment Figure 11: Rustlers Roost classified block model Note: Perspective view looking northwest. CSA Global considers that the classificaon appropriately represents the level of certainty in the esmate. The classificaon criteria reflect the quality of the input data, data density, the choice of esmaon method and confidence in the overall interpretaon and does not represent a material risk to the ongoing development, mining or global value of the project Quest 29 Cube completed the Quest 29 esmate in August The Quest 29 prospects have several mineralised targets along a 3.5 km strike length with two parallel north-south mineralised trends. Drill tesng of the zones to date was limited to the oxide and transion weathering profiles and in most cases has not penetrated beyond depths of 40 m into the primary rock units. Mining acvity occurred in 1999 on several of the prospects, most notably the West Koolpin Pit, with addional ore material mined from the Zamu Dolerite Zone, Taipan, North Koolpin and BHS Reef pits. A total of approximately 670,000 t was mined at a grade of 0.7 g/t Au, mainly for a heap leach operaon. Several zones, including Taipan Hill, Zamu Dolerite and West Koolpin Hill have not been closed off by drilling in any direcon. The prospects have several mineralised targets along two parallel north-south mineralised trends. Drill tesng of the zones to date has been limited to the oxide and transion weathering profiles and only a small number of drillholes have been drilled beyond 40 m deep, into the primary rock units. Cube completed a site visit to the Primary Gold s NT in July 2014 and reviewed the geology in the old pits to support the interpreted geological controls of mineralisaon envelopes used in the Quest 29 Mineral; Resource esmate. Cube s Competent Person, Brian Fitzpatrick, inspected the resource areas, historic open pit and other old workings, and reviewed the sampling from the RC rigs working at the me. Cube s site visit also included reviews of the geological and structural core logging and inspecon of the metallurgical PQ and HQ core at the core processing facility. CSA Global Report Nº R

179 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Previous mining occurred from 1998 to 2001 on several of the prospects, approximately 670,000 t to 720,000 t was mined at a grade of around 0.7 g/t Au, mainly for a heap leach operaon. Deposit Geology The Quest 29 area is mostly underlain by the metasediments of the Koolpin Formaon. Minor, though economically important sills of Zamu Dolerite occur within the area. The Mount Bundy Granite underlies the north eastern most poron of the property The Quest 29 sedimentary trend is comprised of folded and faulted Koolpin sediments of low grade metamorphism. These sediments comprise material of variable grain size from mudstone to greywacke, and also highly variable degrees of carbonaceous material. These sediments have been intruded by narrow dolerite sills. The gold mineralisaon occurs semi-connuously over a strike length of more than 3.5 km along the crest of the Quest 29 ancline. The style of mineralisaon throughout the Quest 29 zones is associated with sheeted or stockworked quartz-sulphide veins hosted by dolerite sills or along the sheared contact margins with siltstones and carbonaceous shales. CSA Global Assessment CSA Global finds that the controls to the mineralisaon are adequately understood and the geological interpretaon sets a solid foundaon for Mineral Resource esmaon. Data Collection Techniques Cube relied on historical drilling and sampling procedures for the Quest 29 Gold Project, as there was no recent drilling and sampling at Quest 29, when the esmate was run. Cube noted that the main sample types within the drillhole database were percussion, RAB, RC and diamond exploraon drilling, and open pit blast hole sampling. Table 18 summarises the different types of drilling. Table 18: Quest 29 summary drilling statistics by drill type Hole type Number of holes Metres Average depth DDH 18 1, RC , RAB , GC 8,018 41, DW Total 9,208 88, Source: Cube, 2014 Percussion drilling was largely confined to the mined-out pit area or very shallow levels of the remaining resource. There was minimal informaon relang to sampling of the percussion holes, and none of the assay results from the percussion drilling were used to define the current resource, as there was no confidence in the quality of the data. Cube reported that there was litle informaon available relang to the sampling procedures for RC drilling, and noted that these holes were mostly confined to the mined-out pit area and had litle influence on the esmate of the remaining resource. Cube found that many of the RC holes were reported to have been drilled using a crossover sub, which can result in smearing or contaminaon of samples. Cube s lode interpretaons were modified where it was apparent from logging or unusual geometry that contaminaon could be present. No sample recovery informaon was noted. The majority of RC drillholes were angled at -60 toward 090 (Mine Grid bearing) in the main resource area, designed to opmally intersect the gold mineralisaon. CSA Global Report Nº R

180 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Diamond core was reported as being logged in detail, including records of weathering, lithological contacts, structural contacts, alteraon, mineralisaon and geotechnical informaon. No orientaon data was noted, with most holes drilled to shallow depths of less than 60 m. No record of procedures for core sampling, logging or recovery was available. Diamond drillhole collars were surveyed, but no details of the survey methods are available. All deeper RC and DD drillholes were surveyed at the collar and at various downhole intervals, ranging from 50 m to a single downhole survey at the botom of the hole using either an Eastman single shot or mul-shot camera. No original survey discs were available to Cube to verify surveys in the database. Blast hole samples were collected u the open pits, drilled on a blasng grid of approximately 3.5 m by 4 m. Two samples per 5.5 m hole were collected for each 2.5 m flitch. All collars were surveyed and assay results (merged in a spreadsheet and imported into the database. An RC grade control program using a 6.25 m by 6.25 m grid was completed in May 2000, over the main area of the resource to improve the definion of remaining ore in the pit. Assaying for gold was completed by ALS laboratories in Alice Springs and Pine Creek, using 50 g Fire Assay with AAS finish. Cube found QAQC data to be minimal, largely due to the age of the datasets, and industry standard was assumed as appropriate to the me of the data acquision between 1998 and RC and diamond drillholes were logged in 1 m intervals and recorded on handwriten logs. Cube atempted to remedy inconsistencies atributed to different companies, by imposing a structured database, with standardised lithological tables for lithology, alteraon, mineralisaon codes, structure, vein coding, core recovery and geotechnical logging. Cube noted that logging was both qualitave and quantave with basic descripons of lithologies, alteraon, and oxidaon noted in the electronic data files as well as percentage esmates of alteraon minerals, veining, and sulphide minerals present, and concluded that the informaon was adequate to support an esmate, with the confidence in the data reflected by the classificaon category. No sample assay data from RAB drilling and grade control holes was included in the exploratory data analysis and in the esmaon of the resource block model. Select samples from two HQ3 diamond drillholes were measured and weighed for density determinaons in the oxidised mineralisaon from the Koolpin Pit. These ranged between 1.73 and 2.55 and averaged 2.12 g/cc. The data were compared to density values ranged from 2.2 to 2.4 for oxide material in previous esmates. Cube concluded that a value of 2.1 was appropriate for all oxide material in the Quest 29 esmate, taking into consideraon the lower values noted in this latest small dataset from the two recent diamond drillholes. Density values were then allocated for sediments and dolerite based on equivalent material noted in nearby gold deposits in the Mount Bundy Project area (see Table 19). Table 19: Quest 29 assigned bulk density values Rock type Oxide Transition Fresh Sediments Dolerite Mineralised zone CSA Global Assessment Source: Cube, 2014 CSA Global considers that data collecon techniques, inclusive of drilling methods, data locaon methods, sampling and analycal methods, density measurements and topographic control are largely consistent with industry standard for the period between 1998 and Sufficient confidence can be atributed to the data, to complete a Mineral Resource esmate. However, given the lack of available details relang CSA Global Report Nº R

181 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets to procedures and QC, it would seem difficult to progress beyond Indicated categorisaon at best, unl more verificaon checks can be completed. Geological Interpretation and Modelling The Quest 29 Mineral Resource area has a strike length of approximately 3.5 km by 650 m wide and down to approximately 150 m. Primary Gold provided Cube with a topographic surface wireframe file and surfaces for Base of Complete Oxidaon ( BOX ), and Top of Fresh Rock ( TOF ). The surfaces were imported into Surpac and used for designaon of material type, and as a guide for separaon of supergene mineralisaon from primary mineralisaon. The surfaces were also used to assign bulk density values for material within each oxidaon zone for the different lithological units hosng gold mineralisaon, as described in Table 19. Figure 12 illustrates the typical relaonship between the oxidaon surfaces. Figure 12: Quest 29 oblique cross section showing typical relationship between oxidation surfaces and mineralisation domains CSA Global reviewed the topography surface and considered it to be adequate for the purposes of global resource esmaon, evaluaon and reporng. Cube noted that addional ground surveys in localised areas may be required parcularly around old workings, prior to any mining infrastructure design work. RAB and open pit blast hole assay data was used to provide secondary guidance for the interpretaon of the mineralisaon envelope but not used for grade esmaon. Interpreted secons were wireframed using Surpac to create 3D solids for each ore zone within the resource area. A 0.4 g/t Au lower cut-off grade was used for the mineralisaon boundaries on nominal 20 m spaced north-south secons. Geological logging was used to confirm the mineralised intersecons where possible. Within the oxidaon horizons, the interpreted BOX and TOF boundaries guided the interpretaon of boundaries between flat, laterite or transported cover, and steeper primary mineralisaon. Narrow barren zones were included to preserve wireframe connuity; interpreted strings were snapped to drillholes. End secons were projected to half of the average drillhole spacing or a maximum of 10 m; down-dip projecons were confined to 20 m below the deepest drillholes on adjacent secons. The interpreted mineralisaon envelope was checked in long secon and plan view flitches. Thirty wireframes were interpreted in the five historical mining zones, as illustrated in Figure 13. CSA Global Report Nº R

182 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Figure 13: Quest 29 oblique view, showing interpreted mineralisation wireframe Source: Cube, 2014 Cube interpreted broad zones of low grade mineralisaon in the oxide zones narrowing into mineralised veins and sheared contacts at depth, in the transion and fresh zones. The transional and fresh material were interpreted broadly orientated parallel to the dolerite sill contacts, striking approximately northsouth and dipping moderately to steeply towards the west. CSA Global Assessment CSA Global loaded the data and interpreted wireframes for review and concluded that the interpretaon process adhered to the described process. The interpretaon appears to be an appropriate representaon of the mineralisaon controls. CSA Global considers that the interpreted mineralisaon envelopes do not represent a material risk to the ongoing development, mining or global value of the project despite the stated difficulty in verifying the data quality and reliability. Statistical Analysis and Estimation of Mineral Resources Cube completed data validaon prior to resource esmaon; the validaon process included checks for duplicate surveys, downhole surveys errors, assays and geological intervals beyond drillhole total depths, overlapping intervals, and gaps between intervals. Several minor downhole survey deviaon errors, overlapping assay and geology data, and end of drillhole depths mismatched between records were found and corrected. Stascal analyses of the interpreted mineralised domains were competed to review the need for topcuts, and any further need to sub-domain for weathering state. 2 m esmaon composites were used. Six major esmaon domains were selected, and top-cuts applied as summarised in Table 20. No further subdomaining for weathering state was considered necessary. CSA Global Report Nº R

183 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 20: Quest 29 top-cuts applied for estimation domains Zone Domain from Domain to Top-cut Taipan No top-cuts applied West Koolpin g/t Au Zamu g/t Au North Koolpin No top-cuts applied Mobile Hill No top-cuts applied Source: Cube, 2014 Variography was completed in the longitudinal plane for the major mineralised domains (domains 1001, 2001, 3001, 3008, 4001 and 5003) as summarised in Table 21. Domain Structure no. Table 21: Nugget Sill 1 Range 1 (m) Quest 29 variogram parameters Sill 2 Range 2 (m) Structures 1 and 2 (azimuth, plunge, dip) Semi ratio 1 and 2 Minimum ratio 1 and ,0, , 0, , 0, , 0, , 0, , 0, Source: Cube, 2014 OK was used to esmate grade, in a single pass of esmaon, with a minimum of three and a maximum of 15 samples. Grade were esmated into parent cells only, with sub-blocking to improve volume definion. Table 22 summarise the block model parameters, and Table 23 summarises the esmaon parameters. Table 22: Quest 29 block model definition Type Easting (x) Northing (y) RL (z) Minimum coordinates 4,200 8, Maximum coordinates 5,600 12, Parent block size Sub-cell minimum Rotation CSA Global Report Nº R

184 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 23: Quest 29 estimation parameters, by domain Domain Estimation method X,Y,Z desc. pts Minimum no. of samples Maximum no. of samples Search dist: major/ semi (m) Search dist: minor (m) Major axis (bearing, plunge, dip) Major/ Semimajor ratio 1001 OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, OK 3,3, , 0, Source: Cube, 2014 Major/ Minor ratio The Quest 29 block model does not contain any unesmated blocks flagged within the mineralisaon wireframes. All blocks within the domain wireframes met the minimum requirement for a block to be esmated. The validaon of the block model included 3D visual checks, stascal and graphical spaal comparison checks using swather plots, and volumetric and grade comparisons between composite data and block model esmates. Validaon results demonstrated acceptable correlaons of the input data to the esmated gold grades. CSA Global Assessment CSA Global re-reported the Mineral Resource esmate from the block model and was able to reproduce the tonnage and grade tabulated. CSA Global considers that the manner in which the Mineral Resource model was prepared is appropriate and does not represent a material risk to the ongoing development, mining or global value of the project. CSA Global Report Nº R

185 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Mineral Resource Classification and Statement Blocks were classified as Indicated or Inferred based on data spacing and using a combinaon of search volume and number of data used for the esmaon. There are no Measured Mineral Resources. Indicated Mineral Resources were defined nominally on 40 m by 20 m to 20 m by 10 m spaced drilling; while Inferred Mineral Resources were defined by data density greater than 40 m by 20 m spaced drilling and confidence that the connuity of geology and mineralisaon could be extended along strike and at depth. Table 24 summarises the classified Mineral Resources. Table 24: Quest 29 classified Mineral Resource estimate (JORC 2012) Indicated Mineral Resources Inferred Mineral Resources Total Mineral Resources Tonnes Grade (g/t Au) Au (oz) Tonnes Grade (g/t Au) Au (oz) Tonnes Grade (g/t Au) Au (oz) 2,188, ,000 1,206, ,000 3,394, ,000 CSA Global Assessment Source: Cube 2014 The use of OK with applicaon of top-cuts is considered reasonable given the style of mineralisaon. The orientaon of the primary esmaon searches appropriately reflects the mineralisaon controls and the block sizes of 20 mn by 4 me by 20 mrl parent cells is also considered appropriate to the data distribuon. CSA Global considers that the classificaon appropriately represents the level of certainty in the esmate. The classificaon criteria reflect the quality of the input data, data density, the choice of esmaon method and confidence in the overall interpretaon and does not represent a material risk to the ongoing development, mining or global value of the project Toms Gully The Toms Gully mine consists of an open pit (mined to a vercal depth of 90 m) and underground workings developed to a vercal depth of 260 m. The current decline was extended in 2009 and provides access to over 1,000 m of mineralisaon in the down-dip direcon, with historic ore stoping essenally restricted to the inial 200 m of the decline. The Toms Gully MRE was completed in June 2013, largely as an update to account for addional bulk density measurements located in archived data files. All data, assumpons and methodologies as used in the April 2013 esmate remained unchanged. The June 2013 update was based on a larger density dataset and a different method for esmang bulk density into the block model. The local geology of the Toms Gully resource consists of a shallow dipping quartz reef hosted in graphic shale and siltstone of the Wildman Siltstone unit. The mineralisaon lies enrely within an 800 m wide, planar quartz sulphide vein which strikes east-west and dips south at approximately 30 based on outcropping exposures, to near horizontal at approximately 1,500 m down dip (280 m vercal depth). Locally the sediment package dips to the south and the reef appears to be conformable with the sediments. The sediments are generally well banded with litle structural fabric, however, within 1 m to 2 m of the reef, a deformaon fabric consisng of varying degrees of shearing and brecciaon is typically present. Gold mineralisaon is associated with one or more south-southwest plunging sulphidic ore shoots which are inmately associated with possible thrust related brecciaon and re-crystallisaon of early barren quartz. When early quartz is absent from the thrust, gold mineralisaon is not well developed, indicang that the secondary britle fracturing was essenal for sulphide and gold deposion. Gold also occurs in CSA Global Report Nº R

186 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets the enveloping sheared and brecciated wall rocks so that the mineralised envelope averages around 2 m in thickness. Two sub-vercally dipping south-southwest striking fault zones bound the reef to the east and west. The mineralised quartz reef has a thickness of ranging from 0.5 m up to 4 m and a strike length of 800 m. Surface drilling indicates that the mineralised shoot extends down plunge for over 1,500 m. Data Collection Techniques Primary Gold provided Cube with the Crocodile data files containing exploraon and grade control databases, survey data, interpretaons of the mineralised domains and geological boundaries, and project topography. All drilling and grade control data was consolidated into one database then validated prior to updang the interpretaons for the mineralised domain. The database comprised drilling from 1987 to 2010, by a variety of companies summarised in Table 25. There was very litle informaon available to Cube regarding data collecon techniques, CSA Global s assessment is based on largely descripons provided in Cube s 2013 resource report. Percussion, RC and diamond core were drilled, most diamond core holes were pre-collared with RC and finished off with diamond core tails. Diamond core sizes was not recorded in the historical databases but reports and core photos seen by Cube indicated that HQ and NQ diameter core was commonly drilled. All holes were drilled from surface and the maximum depth of drilling was 340 m. Figure 14 summarises the different drillholes in the Toms Gully area. Open pit blast hole grade control sampling was completed at 2.5 m or 5 m vercal intervals. Underground channel rock chips samples from face or wall locaons was completed by Renison in No addional exploraon acvies in the Toms Gully area was completed since mining stopped in October The drillhole density is variable at Toms Gully, with most holes being completed north of 4800N, and the highest density of holes in the unmined resource between 4000 mn and 4800 mn. South of this area, the density of drilling is lower. Most of the drillholes (84 out of 103, or 82%) in the unmined mineralised zone were diamond drillholes. No percussion holes were used to define the current resource. These holes were almost enrely confined to the mined-out pit area or very shallow levels of the remaining resource and would have had minimal effect on the resource esmate. Drillhole informaon from percussion holes and pit blast holes were only used as a guide for interpretaon trends due to the close spaced nature of the drill informaon. No RC sampling procedure details were available to Cube. However, these holes were mostly confined to the mined-out pit area and of minimal effect on the esmate. Many of the RC holes were reported to have been drilled using a crossover sub rather than face sampling hammers, with resultant potenal for smearing or contaminaon of samples. The mineralisaon envelope interpretaons were modified where necessary to take this into account. RC drillholes were typically sampled on 1 m intervals, starng from approximately 180 m from the collars. Previous reports examined by Cube noted a systemac submission of duplicates, barren flushes, standards and blanks into the sample stream. Diamond core was logged in detail including degree of weathering, lithological contacts, structural contacts, alteraon, mineralisaon and geotechnical informaon. Most diamond holes were drilled vercally. All diamond holes were sampled selecvely, limited to the mineralised reef or other visually idenfied mineralisaon. Sample intervals were defined by geological boundaries, the most common sample length was 0.5 m. Each tray was photographed prior to sampling. Half-core was sampled. Much of the mineralised core not inially analysed was subsequently used for metallurgical test work. The 2009 to 2010 drilling included 29 diamond holes which infilled an area of significant mineralised intersecons from previous drilling. Holes were drilled vercally, with deeper holes liing and deviang mostly to the northwest. Core recovery data was recorded, overall the recovery was reasonable with the majority of CSA Global Report Nº R

187 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets intersecons with >90% recovery. Samples were dispatched to the laboratory on a regular basis during the drilling campaign. At the compleon of each hole, the core was moved to a secure site and the trays shelved for future retrieval, if warranted. Vercal channel or chip sampling perpendicular to the geological domain was completed in underground headings. Sample lengths varied from 0.1 m to 5 m. Sample boundaries were based on geological contacts and changes in nature of mineralisaon. Table 26 summarises the data included in, and excluded from, the resource esmate. Figure 14: Toms Gully drillhole traces, coloured by type Source: Cube, 2013 Table 25: Toms Gully historical drilling Company Percussion RC RC/Diamond Total Holes Metres Holes Metres Holes Metres Holes Metres Carpentaria ( ) , , ,128 Kakadu (1993) , ,227 Sirocco (1996) Renison ( ) , , ,810 Crocodile ( ) , ,517 Total , , , ,304 Source: Cube, 2013 CSA Global Report Nº R

188 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 26: Toms Gully drill database statistics Drill type Hole prefixes No. of holes Metres drilled Average depth (m) % of drill metres Comment RC/Diamond ( ) TGDDH 34 10, % Data used in 2013 model RC/Diamond TG, TGD, TGK , % Data used in 2013 model RC only P, TG, TR, WB 34 3, % Data used in 2013 model Underground face data Various 694 2, % Data used in 2013 model Subtotal , % Percussion TGP , Pit grade control TGB , Subtotal 1,195 25,399 TOTAL 2,162 79,468 Source: Cube, 2013 Data not used in 2013 model Data not used in 2013 model Drill collar spacing for resource drilling was generally 40 m by 20 m in the northern area covering the open pit, expanding to 80 m by 40 m toward the south. Cube note that original QC data was not reviewed for the Toms Gully Project. Previous technical reports sighted by Cube had referenced QAQC analyses of the sample control data for Toms Gully, but this detailed informaon could not be located. Cube was however sufficiently confident that the historical data/database was adequately validated to be suitable for resource esmaon. A review by Mike Stewart (of Quantave Group) of the data and Cube s approach in the March 2013 esmate also indicated that the data was of an acceptable standard to support a Mineral Resource esmate. CSA Global Assessment CSA Global s selecve review of the database did not encounter any material issues, parcularly considering the classificaon that has been applied to the esmates. Geological Interpretation and Modelling Density modelling is discussed in this secon as there has been a significant body of work completed with regard to density at Toms Gully by Renison which owned the project at the me. Cube reported that in the 2004 resource esmate, measurements of dry density were made on 126 individual core samples from 39 drillholes. Renison considered that a correlaon exists between Au grade and density due to the relaonship between gold and arsenopyrite and pyrite and developed a regression formula based on the assayed arsenic value and the logged proporons of arsenopyrite and pyrite. Each sample in the reef was assigned a calculated density based on the formula: BD (Calc.) = [(aspy % x 6.2)+(py% x 5.02)+(relative rock% x 2.65)] (aspy% + py% + rel. rock%) The esmate of density for each sample length was based on visually esmated pyrite and arsenopyrite percentages using mineral densies of 5.02 t/m 3 for pyrite, 6.2 t/m 3 for arsenopyrite and 2.65 t/m 3 for country rock. This was checked visually on approximately 30 holes and Renison stated that esmates were shown to be reasonably consistent and reliable compared to measured values. This method resulted in an overall mean bulk density (BD) of 3.01 t/m 3 when compared with the measured samples of 3.04 t/m 3 CSA Global Report Nº R

189 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Where there was no logging, then the density calculaon was based purely upon assayed arsenic values and converng them to theorecal arsenopyrite content. This method resulted in an overall mean BD of 3.01 t/m 3 when compared with the measured samples of 3.04 t/m 3 : BD (Calc.) = [(aspy ppm x 6.2)+(py ppm x 5.02)+((10 6 aspy ppm py ppm) x 2.65)] Where: Aspy ppm = As ppm / 0.46 (0.46 = % of As in arsenopyrite) Py ppm = Fe ppm / 0.46 (0.46 = % of Fe in pyrite) Fe ppm = As ppm *(8.75/4) (rao of 8.75:4, average rao of Fe: As) 10 6 The results from this were very similar to the method using visual esmaon, with an overall calculated mean BD of 2.95 t/m 3 when compared with the measured samples of 3.04 t/m 3. The standard deviaon of measured BD was 0.34 compared with a standard deviaon of 0.51 for calculated density. For the 2006 resource esmate, Cube described the process for calculang bulk densies to create a variable density model below: Measured density: The model was compared against measured density of core over approximately 35 assay sample intervals. As the sample intervals were commonly around 0.5 m to 1.5 m, this required mulple density measurements per assay sample interval. Intervals where the complete assay interval could not be measured were avoided. Bulk densies were determined by water immersion methods on full and competent core. Calculated density: As with the 2004 calculaons, this was based on assayed As (ppm) and the visually logged pyrite to arsenopyrite rao by geologists and a base rock bulk density of 2.65 t/m 3. No other sulphides which may be present were taken into account, which therefore assigned slightly lower bulk densies for modelling in the higher-grade areas which contained significantly higher base metal sulphides compared to the rest of the deposit. Cube considered the theorecal formula method (as used in 2004 and 2006) to be a reasonable approach, as Cube was of the opinion that there was compelling evidence that gold grade was closely associated with the presence and amount of arsenopyrite. Hence a formula which used the logged sulphide percentage was used to calculate a density value for sample intervals without an actual measurement for the June 2013 model. As a check, the mean density of the total set of 222 measured samples was compared against the corresponding theorecal values as calculated by the formula, with only 1% difference (3.04 t/m 3 measured compared to 3.01 t/m 3 calculated). The strong correlaon between gold and sulphide percentage, and the variable nature of the sulphides within the mineralised zone. was observed by Cube in all diamond core holes reviewed by Cube. CSA Global Assessment CSA Global finds this to be an unusual approach towards the treatment of density, however there is documentary evidence of some rigour in Cube s report to support the approach. Cube elected to apply a simplified interpretaon to the mineralised zone applying a 3D geological domain encompassing previously separate reef, sub-reef, shear and vein models. For the deeper, more sparsely drilled areas, Cube s aim was to establish lode connuity and thickness in a mineralised envelope that would have reasonable prospects for eventual economic extracon. The wireframe was interpreted based on the logged quartz reef/shear zone within the mafic sequence, using a nominal 1.0 g/t Au grade boundary. Geological domains were not separated by oxide and transional weathering domains from CSA Global Report Nº R

190 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets the old data. The enre mineralised reef domain was interpreted to be within the primary or fresh sulphide zone. Interval composing was applied, whereby each drillhole intercept was composited into one point, rather than mulple composites based on a 1 m downhole length. CSA Global concurs that this is an acceptable alternave with narrow domains that are unlikely to require mining selecvity within the domain. Interval composites were generated for each mineralised lode, using wireframe coding of the database to control composing. An addive variable was then used to weight against each interval composite, and the interval composites weighted by their respecve vercal width lengths to result in an accumulaon variable. The gold (Au) accumulaon variable D31 was calculated by mulplying the uncut Au variable (D1) and the vercal width variable (D15). A cut gold (Au) accumulaon variable was calculated by applying a threshold value of 60 gram x metre to the uncut Au accumulaon variable. The cut accumulaon variable for gold was then used for variogram analysis and interpolaon. CSA Global Assessment CSA Global is sasfied that the pseudo-two-dimensional (2D) applied by Cube is an acceptable approach to modelling narrow high-grade vein hosted deposits. The broad-scale controls to the mineralisaon are appropriately represented and understood. The approach provides an acceptable foundaon for Mineral Resource esmaon. Statistical and Estimation of Mineral Resources Basic stascal analysis of the composite data reflects a skewed distribuon in the gold grade histogram. The spaal grade relaonship of the composite data was reviewed to determine if high grade gold assay cuts were necessary. Frequency distribuons for the underground face data suggested a 20 g/t Au assay top-cut while those for drilling suggest about 30 g/t Au. It should be noted that grades for the face data are highly variable within two small clustered areas of the underground. A gold accumulaon top-cut was then assessed as was potenally a more relevant cap, considering variable vercal width intersecons along with high grade outliers. A high-grade gold accumulaon cut of 60 g/t Au was deemed appropriate to apply to the intercept composites for the quartz reef mineralised domain. Variography for Toms Gully was problemac given that the mineralisaon occurred in narrow undulang quartz reefs and veins where the orientaon of the quartz reef was potenally affected by regular structural offsets and bifurcaons. Accumulaon variogram analysis was undertaken to get average distance values and nugget effect value to beter reflect grade distribuon, appropriately matching the density of data and grade in the drillhole informaon. Variograms were completed separately for face data and drilling data. The final variogram used for the esmate is summarised in Table 27. Table 27: Toms Gully variogram model for the quartz vein (domain 1001) Spherical 1 Spherical 2 Spherical 3 Variable Nugget sill Sill Range (m) Sill Range (m) Sill Range (m) Au x VW (OK) Source: Cube, 2013 A 2D projecon method of interpolaon was ulised for the Toms Gully quartz reef mineralised domain. In the 2D modelling approach, the mineralised vein was bounded by a hangingwall and a footwall surface, then the vein was composited over its vercal thickness, and a gold by thickness accumulaon calculated. The resulng composite file was transformed into 2D space and the variograms calculated from this data. The data was then smoothed according to the variable thickness of the vein. Ordinary block kriging of intercept composites was used for grade esmaon, and then a 3D block model was created to represent the final grade and volume model for reporng. Density was also esmated using a similar approach. CSA Global Report Nº R

191 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Once the interpolaon run was completed, the block model was validated by comparing composite data derived from the drillhole calculated BD composites compared with the block model values spread across the mineralised domain. Figure 15 illustrates the validaon swathe plot. CSA Global Assessment The non-standard approach to grade esmaon at Toms Gully was selected by Cube as the best method to model the narrow high-grade veins, in scenario where the most eventual economic extracon was going to be via an underground mining opon. CSA Global endorses this approach as reasonable, and likely to minimise material risk to the ongoing development, mining or global value of the project. Mineral Resource Classification and Statement Resource blocks within the Toms Gully esmate were classified as Indicated resources, defined inially by 40 m by 40 m spaced drilling and a slope of regression greater than The indicated boundary was then modified based on connuity illustrated by underground mapping and face data informaon. The Mineral Resources classified as Indicated were defined by a substanal number of drillholes, with intercept spacing being generally less than 40 m by 40 m. The connuity and posion of the quartz reef was consistent with the interpretaon validated by extensive surface and underground mining. Figure 15: Toms Gully block model validation plot (northing) Inferred resources were defined by 80 m by 80 m spaced drilling toward the south west down plunge extent. The inferred category assumes confidence in the east-west connuity of the mineralised reef. Subsequently, the inferred boundaries terminated at the Williams Fault and Crabb Fault. The Mineral Resources classified as Inferred represented the sparsely drilled, down-plunge extension of the quartz reef. This area was defined by wide spaced drilling, with the geological interpretaon consistent with the more well-defined up-dip parts of the resource model. The mined-out areas from open pit operaons and underground mining were depleted from the esmate. CSA Global Report Nº R

192 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 28: Toms Gully classified Mineral Resource >6.0 g/t Au (June 2013) Indicated Inferred Total Tonnes Au (g/t) Au (oz) Tonnes Au (g/t) Au (oz) Tonnes Au (g/t) Au (oz) 815, , , ,000 1,065, ,000 CSA Global Assessment Source: Cube 2013 Model 2D OK Method CSA Global considers that while an unusual approach has been applied to the esmaon of resources for Toms Gully, a sound raonale has been adopted to arrive that the selected approach. The approach was also reviewed independently and found to be appropriate (prior to CSA Global s review). A reasonably cauous judgement on Mineral Resource confidence was applied, given the paucity of informaon relang to the data acquision process and quality of the input data. CSA Global considers that the classificaon categorisaon appropriately reflects the level of confidence in the interpretaon, sampling density and interpreted geological controls. CSA Global therefore considers that the way Mineral Resource esmaon and classificaon was completed does not represent a material risk to the ongoing development, mining or global value of the project. 3.7 Mining Studies Primary Gold undertook a feasibility study (FS) in 2013 on the Toms Gully underground. While progressing through the regulatory approvals process, Primary Gold undertook successful exploraon programs increasing the size of the Rustlers Roost Mineral Resource. This led to Primary Gold iniang a scoping study in late 2016 to undertake an assessment of inial the operang parameters and financial metric for a large-scale operaon from the exisng Mount Bundy Project resource base of 26.9 Mt at 1.5 g/t Au (for Moz Au). Brief summaries of these studies are provided in the following secons Feasibility Study Toms Gully Underground In August 2013, Primary Gold reported the findings of a FS of the Toms Gully underground mine and processing facility (Primary Gold, ASX Announcement dated 27 August 2013). The outcome of the FS at the me supported a low-cost return to gold mining and producon and included a maiden Probable Ore Reserve of 775,000 t at 6.9 g/t Au for 175,000 oz Au, esmated in accordance with the JORC Code (2012 Edion) Mount Bundy Scoping Study In April 2017, Primary Gold reported a posive scoping study for the Mount Bundy Project (Primary Gold ASX Announcement dated 19 April 2017) and the board of Primary Gold commited to the next stage of exploraon and development by progressing through to a PFS. CSA Global cauons that it is a preliminary technical and economic study for the potenal viability of the Mount Bundy Project. It is based on low level technical and economic assessments that are not sufficient to support the esmaon of Ore Reserves. Further exploraon and evaluaon work and appropriate studies are required before Primary Gold will be able in a posion to esmate Ore Reserves or to provide any assurance of an economic development case or that the conclusions of the scoping study will be realised. The scoping study is stated to be to an accuracy level of ±15 20% for mining costs and ±30% for processing costs. For Primary Gold to achieve the outcomes indicated in the scoping study, funding in the order of A$150 million will likely be required. The Mineral Resources used in the scoping study comprised of Moz Au, which are not the current Mineral Resources as detailed in Secon 3.6. The mining profile from the scoping study indicates that, CSA Global Report Nº R

193 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets based on an assumed producon profile staged to ramp-up to a peak producon of 145 koz per annum, that the following assumpons can be made: For the first three years of producon all the ore can be sourced from the Indicated Mineral Resources For years 4 to 9, 80% of producon can be sourced from Indicated Mineral Resources. The potenal open pit and underground mines have esmated combined All-in Sustaining Costs (AISC) for the first full three producon years of approximately A$900 oz Au. Applying a producon ounce weighted calculaon to the potenal Life of Mine (LOM) AISC, the Mount Bundy Project has an esmated average AISC of A$1,054 oz Au. The key scoping study findings are presented in Table 29. Table 29: Scoping study key findings Item Units Value Life of Mine Open pit years 9 Underground years 4 Total years 9 Mineral inventory Waste Mt 46.3 Ore Mt 26.9 Infrastructure capital Capital A$/t ore $5.77 Capital A$M $155 Mining costs Open pit mining A$/t ore open pit $8.46 Underground mining A$/t ore underground $ Processing costs Processing A$/t ore $17.50 Mine overheads Overheads A$/t ore $1.50 Notes: Infrastructure capital includes A$130 million for plant and A$25 million for underground refurbishment and capex. A gold price of A$1,700/oz Au has been assumed. Assuming 100% ownership of the project. Primary Gold currently owns 100% of the Toms Gully and Quest tenements and 80% of the Rustlers Roost tenements. No provision for royalties have been included in the study. Source: Primary Gold ASX Announcement dated 19 April CSA Global Report Nº R

194 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 4 Valuation Valuaon of Mineral Assets is not an exact science and a number of approaches are possible, each with varying posives and negaves. While valuaon is a subjecve exercise, there are several generally accepted procedures for establishing the value of Mineral Assets. CSA Global consider that, wherever possible, inputs from a range of methods should be assessed to inform the conclusions about the Market Value of Mineral Assets. The valuaon is always presented as a range, with the preferred value idenfied. The preferred value need not be the median value and is determined by the Praconer based on their experience and professional judgement. Refer to Appendix 1 for a discussion of Valuaon Approaches and Valuaon Methodologies, including a descripon of the VALMIN classificaon of Mineral Assets. 4.1 Commodities Market The gold price history in US$/oz and A$/oz for the five years prior to 1 March 2018 is illustrated in Figure 16. The variaon in the gold price within Figure 16 over me in US$ and A$ terms, highlights the need to normalise transacons to account for variaons in commodity prices and foreign exchange rates over me. 4.2 Previous Valuations Figure 16: Five-year spot gold price in US$ and A$ Source Data: SNL.com CSA Global is not aware, nor has been made aware of any previous valuaons over either the Coolgardie or Mount Bundy projects. 4.3 Comparable Transactions Valuation Mineral Resources CSA Global idenfied 15 transacons from the last three years involving gold Mineral Resources in Australia at a similar developmental stage to Primary Gold s deposits, considered to be comparable for CSA Global Report Nº R

195 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets valuaon purposes. Transacons involving operang mines were excluded, as were transacons from companies in administraon. These transacons are summarised and analysed in Table 46 of Appendix 2. The normalised A$/oz values were calculated using the spot gold price as at 1 March 2018 being A$1,684.40/oz (US$1,305.33/oz). The use of a weighted average limits the influence of transacons involving small Mineral Resources but does increase the influence of transacons involving larger Mineral Resources. CSA Global considers the highest value transacon with an implied value of A$60.53/oz to be an outlier, the transacon involves a small Mineral Resource and a large area of exploraon tenure. In CSA Global s professional judgement, the value of the transacon reflects a large proporon of value atributed to the exploraon tenure. Therefore, this transacon has been excluded from our analysis. A summary of the Mineral Resource transacons is presented in Table 30 and Figure 17. These transacons encompass a range of grade, metallurgical performance, and mining scenarios. Table 30: Summary statistics of selected transactions of gold Mineral Resources in Australia Statistic Implied value (A$/oz) Normalised value (A$/oz) All data Less outlier All data Less outlier Minimum Maximum Mean Median Weighted average Figure 17: Comparison of selected gold Mineral Resource transactions Note: Bubble size represents contained gold ounces. Box and whiskers plot shows normalised outlier, range, interquartile range and mean value. CSA Global Report Nº R

196 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Coolgardie Project Mineral Resources CSA Global has valued the Mineral Resources outside of the present mine schedule (residual Mineral Resources). The total Coolgardie Project Mineral Resources have been reduced by 69,000 oz (approximately 13,000 oz Measured, 45,000 oz Indicated and 11,000 oz Inferred) (Primary Gold, 2017) that are included in the mine schedule that have been valued separately by BDO. CSA Global considers the Coolgardie residual Mineral Resources to be Pre-Development Mineral Assets. CSA Global considered the value of the Coolgardie residual Mineral Resources in terms of the valuaon factors derived from CSA Global s analysis of comparave market transacons. CSA Global has considered the royales applicable to the residual Mineral Resources in deriving its value range and preferred values. CSA Global has selected a preferred implied value lower than the normalised weighted average due to these Mineral Resources being residual Mineral Resources, not part of the current mine schedule. These residual Mineral Resources require improved economics, specifically a higher gold price to make them viable due to the high strip rao. CSA Global have not differenated between the different classified Mineral Resources, due to them being residual to the mine schedule. Based on CSA Global s professional judgement a preferred implied value of A$12.00/oz was selected for the Coolgardie residual Mineral Resources (131,600 oz of Au). Following common industry pracce, we have derived a valuaon range by applying a ±20% factor, giving a range of A$9.60 to $ In our opinion this provides a reliable value range for the residual Mineral Resources of the Coolgardie Project. A range greater than 20% creates too broad a range in our opinion, and a range less than 20% does not reflect the uncertainty of a pre-development stage project. This resulted in a valuaon range of A$1.3 million to A$1.9 million, with a preferred value of A$1.6 million (Table 31). Table 31: Mineral Resource Coolgardie Project residual Mineral Resource valuation by comparable transactions Category Gold (oz) Equity (%) Low (A$M) Valuation Preferred (A$M) High (A$M) Macphersons Measured, Indicated and Inferred 100, Tycho Indicated and Inferred 28, Franks Find Inferred 2, Total Measured, Indicated and Inferred 131, Note: The valuation has been compiled to an appropriate level of precision; minor rounding errors may occur. Mount Bundy Mineral Resources CSA Global considers the Mount Bundy Mineral Resources to be Pre-Development Mineral Assets. CSA Global considered the value of the Mount Bundy Mineral Resources in terms of the valuaon factors derived from CSA Global s analysis of comparave market transacons. CSA Global has differenated between the different classified Mineral Resources in valuing the Mount Bundy Project (Table 32). CSA Global has considered the royales applicable to the Mount Bundy Mineral Resources in deriving its value range and preferred values. CSA Global Report Nº R

197 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 32: Mount Bundy valuation factors by Mineral Resource classification Mineral Resource Rustlers Roost and Quest 29 Toms Gully Classification Valuation factors (A$/oz) Low Preferred High Indicated Inferred Indicated Inferred CSA Global has selected preferred implied value for the Rustlers Roost and Quest 29 Inferred classified Mineral Resources using the normalised weighted average value in Table 30. The higher preferred value assigned to the Indicated Mineral Resources reflects the greater geological confidence in the Indicated classified material over the Inferred classified material. CSA Global in its professional judgment selected values higher than the average normalised value of the comparable transacons in Table 30 for the Indicated classified material as addional studies have been undertaken, specifically a scoping study and are currently subject to a PFS. CSA Global selected a preferred implied value for the Toms Gully Inferred and Indicated Mineral Resources at the higher end of the range of comparable transacons, reflecng the higher grade (8.9 g/t Au) of these Mineral Resources. Part of the Indicated Mineral Resources ( 73%) have Probable Ore Reserves (175,000 oz). An example of a transacon which also contained Ore Reserves was the Dalgaranga Project transacon for A$41.92/oz on a normalised basis. CSA Global selected a preferred value for Toms Gully s Indicated Mineral Resources rounded up from the Dalgaranga transacon. CSA Global in its professional judgement assigned a higher range and preferred value to the Indicated classified Mineral Resources reflecng the greater geological confidence in the Indicated classified material over the Inferred classified material. The Toms Gully Inferred Mineral Resources have a higher value range and preferred value than Rustlers Roost and Quest 29 Mineral Resources due to its considerably higher grade. As with the Coolgardie Project, we have derived valuaon ranges by applying a ±20% factor, as shown in Table 33. In our opinion this provides a reliable value range for the Mineral Resources of the Mount Bundy Project. A range greater than 20% creates too broad a range, and a range less than 20% does not reflect the uncertainty of a pre-development stage project. Applicaon of these implied values resulted in a valuaon range of A$30.3 million to A$57.4 million, with a preferred value of A$43.9 million (Table 33). CSA Global Report Nº R

198 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 33: Mount Bundy Project Mineral Resource valuation by comparable transactions Mineral Resource Rustlers Roost Toms Gully Quest 29 Total Category Gold (oz) Equity (%) Low (A$M) Valuation Preferred (A$M) High (A$M) Indicated 1,028, Inferred 304, Indicated 242, Inferred 73, Indicated 98, Inferred 50, Indicated and 1,795,000 80/ Inferred Note: The valuation has been compiled to an appropriate level of precision; values may not add up due to rounding Prospecting Licences CSA Global considered the value of the Coolgardie Project prospecng licences in terms of the valuaon factors derived from CSA Global s analysis of comparave market transacons of projects with prospecng licences prospecve for gold in WA in the four years prior to the valuaon date. These transacons are summarised in Table 47 of Appendix 2. CSA Global idenfied nine transacons of projects solely of prospecng licences. Table 34 presents the summary stascs of all the transacons showing the implied price in A$/km² at the me of the transacon and the normalised price per km² using the 1 March 2018 gold spot price of A$1,684.40/oz (US$1,305.33/oz). A subset removing two transacons considered outliers (one on the low side and one on the high side) is also shown. Table 34: Summary statistics of selected prospecting licence transactions prospective for gold Statistic All transactions Subset of transactions Implied (A$/km²) Normalised (A$/km²) Implied (A$/km²) Normalised (A$/km²) Number of transactions Minimum ,353 5,449 Maximum 347, ,283 65,749 65,555 Median 27,439 25,734 27,439 25,734 Mean 61,031 58,408 28,790 27,699 CSA Global considers the prospecvity of the prospecng licences to be good with several gold prospects located on them. They are also considered strategic; surrounding the mining licences that contain the Macphersons, Tycho and Franks Find Mineral Resources. CSA Global has assigned a value range of A$28,000/km 2 to A$65,000/km 2 and a preferred value of A$46,500/km 2 to apply to the area (25.44 km 2 ) of the Coolgardie Project prospecng licences. The low end of the range is based on the average normalised value of the prospecng licence transacons. The highest value transacon dated 5 January 2018 was for tenement P15/6071, which forms part of the current Coolgardie Project. Tenement P15/6071 is considered a very prospecve tenement and forms the upper end of the range. The preferred value is the mid-point of the range. Table 35 presents the valuaon factors for the Coolgardie Project prospecng licences, the range of A$0.7 million to A$1.7 million and the preferred value of A$1.2 million. CSA Global Report Nº R

199 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 35: Coolgardie Project prospecting licences valuation Prospecting licences Area (km 2 ) Primary Gold equity (%) Value factors cost per km 2 Valuation (A$M) Low Preferred High Low Preferred High All ,000 46,500 65, Note: The valuation has been compiled to an appropriate level of precision; values may not add up due to rounding Mount Bundy Project Exploration Licences CSA Global considered the value of the Mount Bundy Project exploraon licences in terms of the valuaon factors derived from CSA Global s analysis of comparave market transacons of projects with exploraon licences prospecve for gold in Australia in the four years prior to the valuaon date. These transacons are summarised in Table 48 of Appendix 2. CSA Global idenfied 30 transacons of projects solely of exploraon licences prospecve for gold in Australia with an area greater than 50 km2. Table 36 presents the summary stascs of all the transacons idenfied and a subset of 17 transacons of exploraon licences with a total area between 50 km2 and 250 km2 and another subset of 13 transacons of exploraon licences >250 km2, showing the implied price in A$/km² at the me of the transacon and the normalised price per km² using the 1 March 2018 gold spot price of A$1,684.40/oz (US$1,305.33/oz). Statistic Table 36: Summary statistics of selected exploration licence transactions prospective for gold All transactions; all exploration licences Implied (A$/km²) Normalised (A$/km²) Transaction areas ( km 2 ) Implied (A$/km²) Normalised (A$/km²) Transaction areas (>250 km 2 ) subset (less outliers) Implied (A$/km²) Normalised (A$/km²) Number of transactions Minimum Maximum 13,633 14,119 13,633 14,119 6,182 7,459 Median 2,547 3,035 2,912 3,441 1,694 1,872 Mean 3,009 3,304 3,543 3,874 2,311 2,559 Based on CSA Global s valuaon experience of gold projects in Australia, generally, early exploraon projects were found to range from A$100/km 2 to A$1,000/km 2, average or mature exploraon projects ranged from A$1,000/km 2 to A$5,000/km 2, advanced projects with good prospecvity ranged from A$5,000/km 2 to A$10,000/km 2, with projects with excellent prospecvity or having a strategic significance to the buyer having values >A$10,000/km 2. In general, as the area transacted gets larger the lower the price paid per square kilometre. This can be seen in Table 36, with the lower median and mean values per square kilometre for the transacons with areas >250 km 2 compared to the transacons with areas between 50 km 2 and 250 km 2. CSA Global has undertaken a high-level assessment of the Mount Bundy Project exploraon licences (total area of 1,444.7 km 2 ) based on publicly available informaon and data supplied by Primary Gold. CSA Global in its professional judgement has selected ranges and preferred values based on the exploraon stage and prospecvity of the tenure. CSA Global considers the southern exploraon licences (EL29330, EL29362, EL29520 and EL29521) to be relavely early stage exploraon tenements and have therefore assigned a range of A$500/km 2 to A$2,500/km 2 with a preferred value of A$1,500/km 2 to this group of tenements. The northern exploraon licences, which surround the Rustlers Roost, Toms Gully and Quest 29 Mineral Resources, have had more exploraon than the southern tenements but are sll at an early exploraon stage. But the tenements do have more early-stage targets for follow-up than the southern tenements. CSA Global have assigned a range of A$1,000/km 2 to A$3,000/km 2 with a preferred value of A$2,000/km 2. CSA Global Report Nº R

200 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 37 presents the valuaon factors applied to the Mount Bundy Project exploraon licences. The value of the exploraon licences is considered to be in the range of A$1.3 million to A$4.2 million with a preferred value of A$2.8 million. Table 37: Mount Bundy Project exploration licences valuation Exploration licence Area (km 2 ) Primary Gold equity (%) Value factors cost per km 2 Valuation (A$M) Low Preferred High Low Preferred High EL ,500 2, EL ,500 2, EL ,500 2, EL ,500 2, EL ,000 2,000 3, EL ,000 2,000 3, EL ,000 2,000 3, EL ,000 2,000 3, EL ,000 2,000 3, EL ,000 2,000 3, Total 1, Note: The valuation has been compiled to an appropriate level of precision, values may not add up due to rounding 4.4 Yardstick Order of Magnitude Check CSA Global used the Yardsck method as an order of magnitude check on the Coolgardie and Mount Bundy Mineral Resources valuaon completed using comparable transacons. The Yardsck order of magnitude check is simplisc (e.g. it is very generalised and does not address project specific value drivers but takes an industry-wide view). It provides a non-corroborave valuaon check on the primary comparave transacons valuaon method, allowing CSA Global to assess the reasonableness of the derived comparave transacons valuaon and whether there are any potenal issues with their preferred primary valuaon method. For the Yardsck order of magnitude check, CSA Global used the spot price for gold as at 1 March 2018, being A$1,684.40/oz (US$1,305.33/oz). In addion, CSA Global ulised the following commonly used Yardsck factors: Inferred Mineral Resources: 0.5% to 1% of spot price Indicated Mineral Resources: 1% to 2% of spot price Measured Mineral Resources: 2% to 5% of spot price. Probable Ore Reserves: 5% to 10% of spot price. The spot price for gold as at 1 March 2018 used for the Yardsck order of magnitude check was consistent with that used for the evaluaon of Comparave Transacons data so that the results could be compared Coolgardie Project Yardstick A summary of the Yardsck order of magnitude check for the Coolgardie Project residual Mineral Resource, based on the Yardsck factors above, is presented in Table 38. Appendix 3 contains the detailed breakdown for each individual Mineral Resource based on Primary Gold s atributable equity interest used in deriving Table 38. This method resulted in a check valuaon range of A$2.0 million to A$4.2 million, with a preferred value of A$3.1 million. Table 38: Summary of Yardstick order of magnitude check of the Coolgardie Project Mineral Resources CSA Global Report Nº R

201 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Resource category Gold (oz) Primary Gold equity (%) Yardstick factors Valuation (A$M) Low Preferred High Low Preferred High Measured 17, % 3.50% 5.00% Indicated 49, % 1.50% 2.00% Inferred 64, % 0.75% 1.00% Total 131, Note: The valuation has been compiled to an appropriate level of precision; values may not add up due to rounding Mount Bundy Project Yardstick A summary of the Yardsck order of magnitude check for the Mount Bundy Project, based on the Yardsck factors above, is presented in Table 39. Table 50 in Appendix 3 contains the detailed breakdown for each individual Mineral Resource/Ore Reserve based on Primary Gold s atributable equity interest used in deriving Table 39. The Toms Gully Indicated Mineral Resource (242,000 oz) was reduced by the number of gold ounces (175,000 oz) within the Toms Gully Ore Reserve. This method resulted in a check valuaon range of A$34.5 million to A$68.9 million, with a preferred value of A$51.7 million. Table 39: Summary of Yardstick order of magnitude check of the Mount Bundy Project Resource Primary Gold Yardstick factors Valuation (A$M) Gold (oz) category equity (%) Low Preferred High Low Preferred High Probable 175, % 7.50% 10.00% Indicated 1,193,000 80/ % 1.50% 2.00% Inferred 427,000 80/ % 0.75% 1.00% Total 1,795,000 80/ Note: The valuation has been compiled to an appropriate level of precision; values may not add up due to rounding. 4.5 Geoscientific Factor Valuation The Geoscienfic Factor method of valuaon requires the consideraon of those aspects of a mineral property, which enhance or downgrade the intrinsic value of the property. The first and key aspect of the Geoscienfic Factor method described by Kilburn (1990) is the derivaon of the Base Acquision Cost (BAC) that is the basis for the valuaon. Goulevitch and Eupene (1994) discuss the derivaon of BAC. The BAC represents the average cost to idenfy, apply for and retain a base unit of area of tenement. A BAC for NT mineral exploraon licences has been esmated using the following data: Based on the NT Department of Primary Industry and Resources tenement database as of 1 March 2018 and the NT minerals tles act, it is determined that the average age of exploraon licences in NT is 4.4 years, and the average size of these licences is approximately km² or 64.2 blocks. An average cost to idenfy an area of interest of A$10,000 was chosen, as well as A$250,000 for the cost of landowner noces, negoaons, legal costs and compensaon. An applicaon fee of A$402/licence is payable. An administraon fee of A$287/licence is payable. The holding cost includes a rental of A$35/block in years 1 and 2, A$71/block in years 3 and 4 and A$143/block in years 5 and 6. The NT s Mineral Titles Act includes a minimum annual expenditure requirement of A$10,000 + A$150/block in year 1, A$10,000 + A$250/block in year 2, A$10,000 + A$500/block in in year 3, A$10,000 + A$750/block in year 4 and A$10,000 + A$1,000/block in year 5. It should be noted that at present the NT is not enforcing these minimum expenditures, due to the downturn in exploraon in the NT. CSA Global Report Nº R

202 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets No shire rates are payable on mineral exploraon licences in the NT. This suggests a BAC for a NT exploraon licence of A$506/km², as shown in Table 40. Table 40: Estimation of the BAC for NT mineral exploration licences Statistic Unit Value Average licence size km²/block 203.7/64.2 Average licence age years 4.4 Application fee A$ per licence 402 Administration fee A$ per licence 287 Annual rent years 1 and 2 A$ per block 35 Annual rent years 3 and 4 A$ per block 71 Annual rent years 5 and 6 A$ per block 143 Minimal annual expenditure Year 1 A$10,000 plus A$ per block 150 Minimal annual expenditure Year 2 A$10,000 plus A$ per block 250 Minimal annual expenditure Year 3 A$10,000 plus A$ per block 500 Minimal annual expenditure Year 4 A$10,000 plus A$ per block 750 Minimal annual expenditure Year 5 A$10,000 plus A$ per block 1,000 Deemed cost of identification of a licence A$ per licence 10,000 Costs of landowner notices, negotiations, legal costs and compensation A$ per licence 250,000 BAC of average licence A$ per block 1,606 A$ per km² 506 CSA Global used the Geoscience Factor method as a reasonableness check on the Mount Bundy exploraon licences valuaon that was completed using Comparable Transacons in Secon Factors indicated in Table 44 (Appendix 1) were considered in assessing the Technical Value of each of the tenements. The rangs for the Mount Bundy Project exploraon licences are indicated in Table 51 (Appendix 4). A Market Factor of 50% was applied based on CSA Global s professional judgement with reference to the valuaon factors idenfied, (see Table 51 in Appendix 4), to derive a Fair Market Value from the Technical Value. The 0.5 market factor applied to the geoscienfic valuaon method derived average values for the tenement package of approximately A$2,343/km2 for the exploraon licences, based on the preferred value (A$3.4 million divided by the area 1,444.7 km2). The value derived is relavely consistent with those of the Comparave Market Transacons valuaon method (see Secon 4.3.2). A summary of the secondary valuaon method, based on Geoscience Factors, is presented in Table 41. Table 41: Summary of Geoscience Factor valuation of Mount Bundy Project exploration licences Tenements Area (km 2 ) Equity interest Low (A$M) Preferred (A$M) High (A$M) EL29330, EL29717, EL30128, EL30234, EL29362, EL29520, EL29521, EL30255, EL30809, EL , % Note: The valuation has been compiled to an appropriate level of precision; values may not add up due to rounding. CSA Global Report Nº R

203 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 4.6 Valuation Summary Coolgardie Project Valuation Summary At BDO s request, CSA Global undertook an assessment of the technical inputs into the Coolgardie mine schedule so that BDO could undertake a Discounted Cash Flow (DCF) model valuaon. In forming an opinion on the market value of the Coolgardie Project residual Mineral Resources, CSA Global has considered valuaons derived from the Comparable Transacons as a primary method and Yardsck valuaon as a secondary method (Figure 18). CSA Global in its professional judgement has decided to use the value range of A$1.3 million to A$1.9 million with a preferred value of A$1.6 million, derived by the comparable transacons valuaon method. CSA Global has chosen to rely on the one valuaon method (Comparable Transacons) to value the Coolgardie Project prospecng licences. CSA Global considers this reasonable as it includes a market transacon dated 5 January 2018 for one of the prospecng licences being valued as at 1 March This transacon provides a highly relevant guide to the value of the other prospecng licences. CSA Global in its professional judgement has decided to use the value range of A$0.7 million to A$1.7 million with a preferred value of A$1.2 million, derived by the Comparable Transacons valuaon method for the Coolgardie Project prospecng licences. Figure 18: Coolgardie Mineral Resources comparison of valuation techniques Mount Bundy Project Valuation Summary In forming an opinion on the market value of the Mount Bundy Project Mineral Resources, CSA Global has considered valuaons derived from the Comparable Transacons (primary) and Yardsck (secondary) valuaon methods. CSA Global in its professional judgement has derived a value range of A$35.1 million to A$52.6 million with a preferred value of A$43.9 million (see Figure 19). The preferred value is the mid-point of the range, with the range reflecng the esmated scoping study value (low) and the Comparable Transacons primary valuaon method high value as the high of the range. CSA Global Report Nº R

204 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Figure 19: Mount Bundy Mineral Resources comparison of valuation techniques and CSA Global s valuation In forming an opinion on the market value of the Mount Bundy Project exploraon licences, CSA Global has considered valuaons derived from the comparable transacons (primary) and Geoscience Rang Factor (secondary) valuaon methods (Figure 20). CSA Global in its professional judgement has decided to use the value range of A$1.3 million to A$4.2 million with a preferred value of A$2.8 million, derived by the primary comparable transacons valuaon method. Figure 20: Mount Bundy exploration licences comparison of valuation techniques Primary Gold s Projects Valuation Summary CSA Global has valued the Coolgardie Project on the residual Mineral Resources, i.e. those not included in BDO s DCF valuaon and the exploraon potenal of the surrounding prospecng licences. At the Mount Bundy Project, CSA Global has valued the project on its Mineral Resources and exploraon potenal of the surrounding exploraon licences, which contain early stage targets prospecve for gold that warrant further exploraon. CSA Global Report Nº R

205 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets CSA Global s opinion on the Market Value of Primary Gold s Australian Mineral Assets (Table 42), as at 1 March 2018, is that it lies within a range of A$38.4 million to A$60.4 million, with a preferred value of A$49.4 million. Project Coolgardie Mount Bundy Table 42: Mineral Assets Summary valuation of Primary Gold s Mineral Assets Primary Gold interest Valuation (A$M) Low Preferred High Residual Mineral Resources 100% Prospecting Licences 100% Mineral Resources 80/100% Exploration Licences 100% Total Various 80/100% Note: The valuation has been compiled to an appropriate level of precision; values may not add up due to rounding. CSA Global Report Nº R

206 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 5 References Besserer, DJ, Price, J, and Capp, S 2005, Technical Report for the Coolgardie Gold Project, Coolgardie District, Western Australia. Unpublished Technical Report prepared on behalf of Matador Exploraon Inc. and the Redempon Joint Venture, May 27, 2005, pp Coolgardie Mining Company 2003, Summary of Exploraon Potenal and Proposed Programme and Budget , Unpublished Internal Document Prepared on Behalf of Coolgardie Mining Company, pp. 15. Dufresne, M 2006, Coolgardie Project Western Australia, Combined Annual Technical Report C2/2002, For the Period 1st January 2005 to 31st December Fitzpatrick, B 2013, Resource Esmate Technical Report Toms Gully Gold Project, Cube Consulng Pty Ltd, Report No. 2012_057, pp 80. Fitzpatrick, B 2014, Resource Esmate Technical Report Quest 29 Gold Projects, Cube Consulng Pty Ltd, Report No. 2014_059, pp 92. Fitzpatrick, B 2017, Mineral Resource Esmate Rustlers Roost Gold Project, Cube Consulng Pty Ltd, Report No , pp 110. Hunter, WM 1993, Geology of the Granite-Greenstone Terrane of the Kalgoorlie and Yilmia 1:100,000 sheets, Western Australia, Geological Survey of Western Australia Report 35, pp. 78. Jeffery, RG 1998, Report on Geological Mapping of the Mystery Mint Joint Venture Area and the Patricia Jean Area, Coolgardie, Western Australia, Unpublished Internal Report Prepared on Behalf of Herald Resources Ltd, pp. 34. Joint Ore Reserves Commitee Australasian Code for Reporng of Exploraon Results, Mineral Resources and Ore Reserves. The JORC Code, 2012 Edion. Prepared by: The Joint Ore Reserves Commitee of The Australasian Instute of Mining and Metallurgy, Australian Instute of Geosciensts and Minerals Council of Australia (JORC). Knight, JT 1994, The Geology and Genesis of Archaean Amphibolite-Facies Lode Gold Deposits in the Coolgardie Goldfield, Western Australia, with Special Emphasis on the Role of Granitoids, Unpublished Ph.D. Thesis, University of Western Australia, pp MPI Mines Ltd and Herald Resources Ltd 2004, Invitaon to the Sale Process and Terms, Unpublished internal Document Prepared by Prime Corporate Finance on behalf of MPI Mines Ltd. and Herald Resources Ltd, pp. 44. Nelson, DR 1998, Compilaon of SHRIMP U-Pb Zircon Geochronology Data, 1997, Western Australia Geological Survey, Western Australia Record 1998/2. Phillips, N 2011, Geology of the MacPhersons Reward Gold Deposit, Coolgardie Goldfield, WA, Internal Report for MacPhersons Reward Gold. Primary Gold Limited, 2013, Toms Gully Feasibility Study Supports Low Cost Gold Operaon, ASX Announcement 27 August Primary Gold Limited, 2017, Posive Scoping Study For Mount bundy Gold Project, ASX Announcement 19 April Primary Gold Limited, 2017, New Strong Geochemical Anomalies Idenfied at Coolgardie Project, ASX Announcement 1 December Primary Gold Limited, 2017, Ore Reserve Esmate and Posive Pre-Feasibility Study results for the Coolgardie Project, ASX Announcement 17 October Primary Gold Limited, 2018, Receipt of Final Approval Paves Way for Start of Mining at Coolgardie Project, ASX Announcement 3 January CSA Global Report Nº R

207 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Standing, J 2001, New Insights Into the Structural and Stragraphic Seng of the Coolgardie District: Implicaons for Gold Exploraon, Unpublished report prepared by Fluid Focus Pty Ltd on Behalf of MPI Mines Ltd, pp. 74. Swager, CP, Griffin, TJ, Wit, WK, Wyche, S, Ahmat, AL, Hunter, WM and McGoldrick, 1990, Geology of the Archaean Kalgoorlie Terrane An Explanatory Note, Geological Survey of Western Australia Record 1990/12 (now Report 48), pp.55. VALMIN Commitee 2015, Code for the Technical Assessment and Valuaon of Mineral and Petroleum Assets and Securies for Independent Expert Reports, 2015 edion. Weeber, L 2016, Final Surrender Report for the Period 2 October 2008 to 1 August 2016 MacPhersons Project, MacPhersons Reward Pty Ltd, pp. 28. Wyche, S 1996, Riverina, W.A. Sheet 3038: Western Australia Geological Survey, 1: Geological Series. CSA Global Report Nº R

208 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 6 Glossary Below are brief descripons of some terms used in this report. For further informaon or for terms that are not described here, please refer to internet sources such as Wikipedia amphibolite: amphibolite facies: Archaean: basalt A metamorphic crystalline rock consisting mainly of amphiboles and some plagioclase. The set of metamorphic mineral assemblages (facies) which is typical of regional metamorphism between C. Widely used term for the earliest era of geological time spanning the interval from the formation of Earth to about 2,500 million years ago. Is a common extrusive igneous (volcanic) rock formed from the rapid cooling of basaltic lava exposed at or very near the surface. batholith A large, generally discordant plutonic mass that has more than 40 square miles (100 km 2 ) of surface exposure and no known floor. dolerite gabbro granodiorite greenschist facies gneiss monzogranite A dark, medium-grained igneous rock, typically with ophitic texture, containing plagioclase, pyroxene, and olivine. It typically occurs in dykes and sills. Refers to a large group of dark, often phaneritic (coarse-grained), mafic intrusive igneous rocks chemically equivalent to basalt, being its coarse-grained analogue. Is a phaneritic-textured intrusive igneous rock similar to granite, but containing more plagioclase feldspar than orthoclase feldspar. Are metamorphic rocks that formed under the lowest temperatures and pressures usually produced by regional metamorphism, typically between 300 C and 450 C. Is a common distributed type of rock formed by high-grade regional metamorphic processes from pre-existing formations that were originally either igneous or sedimentary rocks. Are biotite granite rocks that are considered to be the final fractionation product of magma. CSA Global Report Nº R

209 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets 7 Abbreviations and Units of Measurement $/t degrees 2D 3D dollar per tonne two-dimensional three-dimensional A$ Australian dollars AAS AISC AJP JV AMETS ASIC ASX BAC BD BDO capex Carpentaria Exploration CRM Crocodile Croesus CSA Global Cube DCF DD DGPS DTM FS GPS g/t ha Kalassay km km 2 KNA koz kt/a atomic absorption spectroscopy all-in sustaining cost AJP Joint Venture Australian Mining and Exploration Title Services Australian Securities and Investments Commission Australian Securities Exchange base acquisition cost bulk density BDO Corporate Finance (WA) Pty Ltd capital expenditure/costs Carpentaria Exploration Company Pty Ltd certified reference material Crocodile Gold Corporation Croesus Mining NL CSA Global Pty Ltd Cube Consulting Pty Ltd Discounted Cash Flow diamond drillhole differential global positioning system digital terrain model feasibility study global positioning system grams per tonne hectares Kalgoorlie Assay Laboratory of Inspectorate Kalassay Ltd kilometres square kilometres kriging neighbourhood analysis thousands of ounces thousands of tonnes a year, kt/yr CSA Global Report Nº R

210 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets LOM m M Ma Moz Mt Kersey Mt Mt/a NT OK opex oz PFS Primary Gold pxrf QAQC QC QQ RAB RC Renison Roebuck SG Spinifex STS t US$ WA life of mine metre(s) million(s) million years ago millions of ounces Mt Kersey Mining NL million tonnes millions of tonnes per annum Northern Territory ordinary kriging operating expenditure/costs ounces prefeasibility study Primary Gold Limited portable x-ray fluorescence quality assurance and quality control (for sampling and assaying) quality control quantile-quantile rotary air blast (drillhole) reverse circulation (drillhole) Renison Consolidated Mines NL Roebuck Resources NL specific gravity Spinifex Gold NL Strategic Tenement Services Pty Ltd tonne(s) United States dollars Western Australia CSA Global Report Nº R

211 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Appendix 1: Valuation Approaches Background Mineral Assets are defined in the VALMIN Code as all property including (but not limited to) tangible property, intellectual property, mining and exploraon Tenure and other rights held or acquired in connecon with the exploraon, development of and producon from those Tenures. This may include the plant, equipment and infrastructure owned or acquired for the development, extracon and processing of Minerals in connecon with that Tenure. Business valuers typically define market value as The price that would be negoated in an open and unrestricted market between a knowledgeable, willing, but not anxious buyer, and a knowledgeable, willing but not anxious seller acng at arm s length. The accounng criterion for a market valuaon is that it is an assessment of fair value, which is defined in the accounng standards as the amount for which an asset could be exchanged between knowledgeable, willing pares in an arm s length transacon. The VALMIN Code defines the value of a Mineral Asset as its Market Value, which is the esmated amount (or the cash equivalent of some other consideraon) for which the Mineral Asset should exchange on the date of Valuaon between a willing buyer and a willing seller in an arm s length transacon aer appropriate markeng where the pares had each acted knowledgeably, prudently and without compulsion. Market Value usually consists of two components, the underlying or Technical Value, and a premium or discount relang to market, strategic or other consideraons. The VALMIN Code recommends that a preferred or most-likely value be selected as the most likely figure within a range aer taking into account those factors which might impact on Value. The concept of Market Value hinges upon the noon of an asset changing hands in an arm s length transacon. Market Value must therefore take into account, inter alia, market consideraons, which can only be determined by reference to comparable transacons. Generally, truly comparable transacons for Mineral Assets are difficult to idenfy due to the infrequency of transacons involving producing assets and/or Mineral Resources, the great diversity of mineral exploraon properes, the stage to which their evaluaon has progressed, percepons of prospecvity, tenement types, the commodity involved and so on. For exploraon tenements, the noon of value is very oen based on consideraons unrelated to the amount of cash which might change hands in the event of an outright sale, and in fact, for the majority of tenements being valued, there is unlikely to be any cash equivalent of some other consideraon. Whilst acknowledging these limitaons, CSA Global has idenfied what it considers to be comparable transacons that have been used in assessing the values to be atributed to the Mineral Assets. Valuation Methods for Exploration Projects The choice of valuaon methodology applied to Mineral Assets, including exploraon licences, will depend on the amount of data available and the reliability of that data. The VALMIN Code classifies Mineral Assets into categories that represent a spectrum from areas in which mineralisaon may or may not have been found through to Operang Mines which have well-defined Ore Reserves, as listed below: Early-stage Exploraon Projects tenure holdings where mineralisaon may or may not have been idenfied, but where Mineral Resources have not been idenfied. Advanced Exploraon Projects tenure holdings where considerable exploraon has been undertaken and specific targets idenfied that warrant further detailed evaluaon, usually by drill CSA Global Report Nº R

212 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets tesng, trenching or some other form of detailed geological sampling. A Mineral Resource esmate may or may not have been made but sufficient work will have been undertaken on at least one prospect to provide both a good understanding of the type of mineralisaon present and encouragement that further work will elevate one or more of the prospects to the Mineral Resources category. Pre-Development Projects tenure holdings where Mineral Resources have been idenfied and their extent esmated (possibly incompletely) but where a decision to proceed with development has not been made. Development Projects tenure holdings for which a decision has been made to proceed with construcon or producon or both, but which are not yet commissioned or operang at design levels. Economic viability of Development Projects will be proven by at least a Prefeasibility Study. Producon Projects tenure holdings parcularly mines, wellfields and processing plants that have been commissioned and are in producon. Each of these different categories will require different valuaon methodologies, but regardless of the technique employed, consideraon must be given to the perceived market valuaon. The Market Value of Exploraon Properes and Undeveloped Mineral Resources can be determined by four general approaches: Cost; Market; Geoscience Factor or Income. Cost Appraised Value or Exploration Expenditure Method considers the costs and results of historical exploraon. The Appraised Value Method ulises a Mulple of Exploraon Expenditure (MEE), which involves the allocaon of a premium or discount to past expenditure through the use of the Prospecvity Enhancement Mulplier (PEM). This involves a factor which is directly related to the success (or failure) of the exploraon completed to date, during the life of the current tenements. Guidelines for the selecon of a PEM factor have been proposed by several authors in the field of mineral asset valuaon (Onley, 1994). Table 43 lists the PEM factors and criteria used in the Report. Table 43: Prospectivity Enhancement Multiplier (PEM) factors PEM range Criteria Exploration (past and present) has downgraded the tenement prospectivity, no mineralisation identified Exploration potential has been maintained (rather than enhanced) by past and present activity from regional mapping Exploration has maintained, or slightly enhanced (but not downgraded) the prospectivity Exploration has considerably increased the prospectivity (geological mapping, geochemical or geophysical activities) Scout drilling (RAB, air-core, reverse circulation percussion) has identified interesting intersections of mineralization Detailed drilling has defined targets with potential economic interest A Mineral Resource has been estimated at Inferred JORC category, no concept or scoping study has been completed Indicated Mineral Resources have been estimated that are likely to form the basis of a Prefeasibility Study Indicated and Measured Resources have been estimated and economic parameters are available for assessment CSA Global Report Nº R

213 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Market Market Approach Method or Comparable Transacons looks at prior transacons for the property and recent arm s length transacons for comparable properes. The Comparable Transacon method provides a useful guide where a mineral asset that is comparable in locaon and commodity has in the recent past been the subject of an arm s length transacon, for either cash or shares. In an exploraon joint venture or farm-in, an equity interest in a tenement or group of tenements is usually earned in exchange for spending on exploraon, rather than a simple cash payment to the tenement holder. The joint venture or farm-in terms, of themselves, do not represent the Value of the tenements concerned. To determine a Value, the expenditure commitments should be discounted for me and the probability that the commitment will be met. Whilst some praconers invoke complex assessments of the likelihood that commitments will be met, these are difficult to jusfy at the outset of a joint venture, and it seems more reasonable to assume a 50:50 chance that a joint venture agreement will run its term. Therefore, in analysing joint venture terms, a 50% discount may be applied to future commited exploraon, which is then grossed up according to the interest to be earned to derive an esmate of the Value of the tenements at the me that the agreement was entered into. Where a progressively increasing interest is to be earned in stages, it is likely that a commitment to the second or subsequent stages of expenditure will be so heavily conngent upon the results achieved during the earlier phases of exploraon that assigning a probability to the subsequent stages proceeding will in most cases be meaningless. A commitment to a minimum level of expenditure before an incoming party can withdraw must reflect that party s percepon of minimum value and should not be discounted. Similarly, any up-front cash payments should not be discounted. The terms of a sale or joint venture agreement should reflect the agreed value of the tenements at the me, irrespecve of transacons or historical exploraon expenditure prior to that date. Hence the current Value of a tenement or tenements will be the Value implied from the terms of the most recent transacon involving it/them, plus any change in Value as a result of subsequent exploraon. Where the tenements comprise applicaons over previously open ground, litle to no exploraon work has been completed and they are not subject to any dealings, it is thought reasonable to assume that they have minimal, if any Value, except perhaps, the cost to apply for, and therefore secure a prior right to the ground, unless of course there is compeon for the ground and it was keenly sought aer. Such tenements are unlikely to have any Value unl some exploraon has been completed, or a deal has been struck to sell or joint venture them, implying that a market for them exists. High quality Mineral Assets are likely to trade at a premium over the general market. On the other hand, exploraon tenements that have no defined atributes apart from interesng geology or a good address may well trade at a discount to the general market. Market Values for exploraon tenements may also be impacted by the size of the land holding, with a large, consolidated holding in an area with good exploraon potenal atracng a premium due to its appeal to large companies. Geoscience Factor The Geoscience Factor method seeks to rank and weight geological aspects, including proximity to mines, deposits and the significance of the camp and the commodity sought. The Geoscience Factor (or Kilburn) method, as described by Kilburn (1990) and expanded on by Goulevitch and Eupene (1994), provides an approach for the technical valuaon of the exploraon potenal of mineral properes, on which there are no defined resources. Valuaon is based upon a calculaon in which the geological prospecvity, commodity markets, and mineral property markets are assessed independently. The Geoscienfic Factor method is essenally a CSA Global Report Nº R

214 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets technique to define a Value based upon geological prospecvity. The method appraises a variety of mineral property characteriscs: Locaon with respect to any off-property mineral occurrence of value, or favourable geological, geochemical or geophysical anomalies Locaon and nature of any mineralisaon, geochemical, geological or geophysical anomaly within the property and the tenor of any mineralisaon known to exist on the property being valued Number and relave posion of anomalies on the property being valued Geological models appropriate to the property being valued. The Geoscienfic Factor method systemacally assesses and grades these four key technical atributes of a tenement to arrive at a series of mulplier factors (Table 44). The Basic Acquision Cost (BAC) is an important input to the Geoscienfic Factor method and it is calculated by summing the applicaon fees, annual rent, work required to facilitate granng (e.g. nave tle, environmental etc.) and statutory expenditure for a period of 12 months. Each factor is then mulplied serially by the BAC to establish the overall technical value of each mineral property. A fih factor, the market factor, is then mulplied by the technical value to arrive at the fair market value. Yardstick The Rule-of-Thumb (Yardstick) method is relevant to exploration properties where some data on tonnage and grade exist may be valued by methods that employ the concept of an arbitrarily ascribed current in situ net value to any Ore Reserves (or Mineral Resources) outlined within the tenement (Lawrence 2001, 2012). Rules-of-Thumb (Yardsck) methods are commonly used where a Mineral Resource remains is in the Inferred category and available technical/economic informaon is limited. This approach ascribes a heavily discounted in-situ value to the Resources, based upon a subjecve esmate of the future profit or net value (say per tonne of ore) to derive a rule-of-thumb. This Yardsck mulplier factor applied to the Resources delineated (depending upon category) varies depending on the commodity. Typically, a range from 0.4% to 3% is used for base metals and PGM, whereas for gold and diamonds a range of 2% to 4.5% is used. The method esmates the in situ gross metal content value of the mineralisaon delineated (using the spot metal price and appropriate metal equivalents for polymetallic mineralisaon as at the valuaon date). The chosen percentage is based upon the valuer s risk assessment of the assigned JORC Code s Mineral Resource category, the commodity s likely extracon and treatment costs, availability/proximity of transport and other infrastructure (parcularly a suitable processing facility), physiography and maturity of the mineral field, as well as the depth of the potenal mining operaon. Income The Income Approach is relevant to exploraon properes on which undeveloped Mineral Resources have been idenfied by drilling. Value can be derived with a reasonable degree of confidence by forecasng the cash flows that would accrue from mining the deposit, discounng to the present day and determining a net present value (NPV). The Income Approach is not appropriate for properes without Mineral Resources. CSA Global Report Nº R

215 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 44: Geoscience Factor Ranking Rating Address/Off-property factor On-property factor Anomaly factor Geological factor 0.5 Very little chance of mineralisation; Concept unsuitable to the environment 1 Exploration model support; Indications of prospectivity; Concept validated 1.5 Reconnaissance (RAB/aircore) drilling with some scattered favourable results; Minor workings 2 Several old workings; Significant reverse circulation percussion drilling leading to advanced project 2.5 Abundant workings; Grid drilling with encouraging results on adjacent sections 3 Mineral Resource areas defined 3.5 Abundant Workings/mines with significant historical production; Adjacent to known mineralisation at PFS stage 4 Along strike or adjacent to Resources at Definitive Feasibility Study stage 4.5 Adjacent to development stage project 5 Along strike from operang major mine(s) Valuation Approaches by Asset Stage Very little chance of mineralisation; Concept unsuitable to the environment Exploration model support; Indications of Prospectivity; Concept validated Exploratory sampling with encouragement Several old workings; reconnaissance drilling or reverse circulation percussion drilling with encouraging intersections Abundant workings; Core drilling after reverse circulation percussion with encouragement Advanced resource definition drilling (early stages) Abundant workings/mines with significant historical production; Mineral Resource areas defined Adjacent to known mineralisation at PFS stage Along strike or adjacent to Resources at Definitive Feasibility Study stage Adjacent to development stage project Extensive previous exploration with poor results Extensive previous exploration with encouraging results; Regional targets Several early stage targets outlined from geochemistry and geophysics Several well-defined targets supported by recon drilling data Several well-defined targets with encouraging drilling results Several significant subeconomic targets; No indication of size Several significant subeconomic targets; Potential for significant size ; Early stage drilling Marginally economic targets of significant size advanced drilling Marginal economic targets of significant size with well drilled Inferred Resources Several significant ore grade co-relatable intersecons Generally unfavourable lithology; No alteration of interest Deep cover; Generally favourable lithology/alteration (70%) Shallow cover; Generally favourable lithology/alteration (50% to 60%) Exposed favourable; Lithology/alteration Strongly favourable lithology, alteration Generally favourable lithology with structures along strike of a major mine; Very prospective geology Regardless of the technical application of various valuation methods and guidelines, the valuer should strive to adequately reflect the carefully considered risks and potentials of the various projects in the valuation ranges and the preferred values, with the overriding objective of determining the fair market value. Table 45 below shows the valuaon approaches that are generally considered appropriate to apply to each type of mineral property. CSA Global Report Nº R

216 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 45: Valuation approaches for different types of mineral properties (VALMIN, 2015) Valuation approach Exploration properties Mineral Resource properties Development properties Production properties Income No In some cases Yes Yes Market Yes Yes Yes Yes Cost Yes In some cases No No Valuation Bibliography AusIMM (1998): "VALMIN 94 Mineral Valuaon Methodologies". Conference Proceedings. AusIMM (2012): VALMIN Seminar Series Conference Proceedings, 161pp. CIMVAL (2003). Standards and Guidelines for Valuaon of Mineral Properes. Goulevitch, J and Eupene, G. (1994): Geoscience Rang for Valuaon of Exploraon Properes - Applicability of the Kilburn Method in Australia and Examples of its Use in the NT. Mineral Valuaon Methodologies Conference, Sydney October AusIMM. pp Gregg, L. T. and Pickering, S.M. Jr (2007). Methods for Valuing Previous Exploraon Programs During Consideraon of Prospecve Mineral Ventures in 42nd Industrial Minerals Forum in Asheville, NC. Kilburn, L.C. (1990) Valuaon of Mineral Properes which do not contain Exploitable Reserves CIM Bullen, August Lawrence, R.D. (2000). Valuaon of Mineral Properes Without Mineral Resources: A Review of Market-Based Approaches in Special Session on Valuaon of Mineral Properes, Mining Millennium 2000, Toronto, Canada. Lawrence, M. (2001). An Outline of Market-based Approaches for Mineral Asset Valuaon Best Pracce. Proceedings VAMIN 2001 Mineral Asset Valuaon Issues for the Next Millennium. Pp AusIMM. Lawrence, M. (2011). Consideraons in Valuing Inferred Resources. VALMIN Seminar Series AusIMM. P Onley, P.G. (2004). Mulples of Exploraon Expenditure as a Basis for Mineral Property Valuaon. In Mineral Valuaon Methodologies Conference. AusIMM. pp Thompson, I.S. (2000) A crique of Valuaon Methods for Exploraon Properes and Undeveloped Mineral Resources in Special Session on Valuaon of Mineral Properes, Mining Millennium 2000, Toronto, Canada. VALMIN Commitee, 2015, Code for the Technical Assessment and Valuaon of Mineral and Petroleum Assets and Securies for Independent Expert Reports, 2015 edion. CSA Global Report Nº R

217 CSA Global Report Nº R PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Appendix 2: Comparable Transactions Table 46: Selected comparative transactions of gold Mineral Resources in Australia Date Project Buyer Seller Mineral Resource grade (g/t) Mineral Resource contained Au (Moz) Measured and Indicated Resources (%) Transaction value (100%) A$M Implied value A$/oz 29-Jan-18 Horse Well Alloy Resources Ltd Doray Minerals Ltd % Dec-17 Eureka Tyranna Resources Ltd Central Iron Ore Ltd % Jun-17 Tuckabianna Westgold Resources Ltd Silver Lake Resources Ltd % May-17 Kat Gap Classic Minerals Ltd Sulphide Resources Pty Ltd Unknown May-17 Black Cat Beacon Minerals Ltd Flinders Exploration Ltd % Apr-17 Bundarra Saracen Mineral Holdings Ltd Bligh Resources Ltd % Mar-17 Ant Hill Intermin Resources Ltd Echo Resources Ltd % Feb-17 Blayney Regis Resources Ltd Aeris Resources Ltd % Dec-16 Dalgaranga Gascoyne Resources Ltd Private Vendor % Dec-16 Trojan Overland Resources Ltd Westgold Resources Ltd % Nov-16 Cargo Agricultural Equity Investments Pty Ltd Golden Cross Resources Ltd % Aug-16 Coolgardie Primary Gold Ltd MacPhersons Resources Ltd % Jul-16 Lake Carey Matsa Resources Ltd Fortitude Gold Pty Ltd % May-16 Plutonic Dome Vango Mining Ltd Dampier Gold Ltd % May-16 Zeus Hanking Gold Mining Pty Ltd Cazaly Resources Ltd % Mar-16 Gunga West Metals X Ltd Kidman Resources Ltd % Jan-16 Burbanks & Gunga West Kidman Resources Ltd Blue Tiger Mines Pty Ltd % Dec-15 Twin Hills Melrose Resources Pty Ltd Golden Deeps Ltd % Dec-15 Spring Hill PC Gold Pty Ltd Thor Mining Plc % Nov-15 Cheritons Find Hanking Gold Mining Pty Ltd Riedel Resources Ltd % Oct-15 Karlawinda Malagasy Minerals Ltd Greenmount Resources Pty Ltd % Normalised value A$/oz

218 Transaction value (100%) A$K Transaction value (100%) A$K CSA Global Report Nº R Implied value A$/km 2 Implied value A$/km 2 Normalised value A$/km 2 Normalised value A$/km 2 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 47: Comparative transactions of prospecting licences prospective for gold in Western Australia Date Project Buyer Seller Prospective commodities Transaction type Notes: Prospective commodities; Au gold. The Joint Venture transaction earn-in percentage is the first earn-in percentage. 5-Jan-18 Queenslander Primary Gold Ltd Private seller Au Acquisition 100% 19 65,749 65, Jun-17 Mertondale Kin Mining NL Kazoo Nominees Pty Ltd Au Acquisition 100% Jan-17 Transfield Extended Southern Gold Ltd Private seller Au Option to Acquire 100% , ,283 9-Dec-16 Not Stated Syndicated Metals Ltd Private seller Au Acquisition 100% 25 9,653 8,944 8-Dec-16 Violet Navigator Resources Ltd Private seller Au Acquisition 100% 23 27,439 25, Nov-16 Not Stated Western Mining Network Ltd Redfield Pty Ltd Au Acquisition 100% 3 27,273 25, Oct-16 Mainlode East Primary Gold Ltd Private seller Au Acquisition 100% 39 36,981 36, Feb-16 Goongarrie Intermin Resources Ltd Cove Resources Ltd Au Acquisition 100% 40 5,353 5, Mar-15 Ora Banda South Siburan Resources Ltd Western Resources Pty Ltd Au Joint Venture 51% ,080 26,349 Table 48: Comparative transactions of exploration licences prospective for gold in Australia Date Project Buyer Seller Prospective commodities Transaction type 26-Feb-18 Queen Lapage Riversgold Ltd Alloy Resources Ltd Au Joint Venture 70% 448 1,392 1, Jan-18 Mary River Pantoro Ltd Private Seller Au Acquisition 100% 80 1,246 1, Dec-17 Dalgaranga Gascoyne Resources Ltd Private Seller Au Acquisition 100% 499 3,868 3,976 8-Nov-17 Croydon Top Camp Coziron Resources Ltd Creasy Group Companies Au Joint Venture 70% 1,829 5,768 5,800 5-Sep-17 Yandal East Overland Resources Ltd Zabina Minerals Pty Ltd Au Option to acquire 75% 1,030 3,146 3, Aug-17 Pilbara De Grey Mining Ltd Private Seller Au Joint Venture 30% 3,081 13,633 14,119 6-Jun-17 Dumbleyung Ausgold Ltd Chalice Gold Mines Ltd Au Acquisition 100% Jul-16 Monument Syndicated Metals Ltd Monument Exploration Pty Ltd Au Acquisition 100% 250 1,190 1, May-16 Mt Gill & Mt Howe Gold Road Resources Ltd Breaker Resources Ltd Au Acquisition 100% Mar-16 Doolgunna DGO Gold Ltd Tasex Geological Services Pty Ltd Au-Cu Joint Venture 80% 170 2,499 2,528 4-Nov-15 Duffy Well Doray Minerals Ltd Mithril Resources Ltd Au Joint Venture 51% 579 5,910 6,389 8-Sep-15 Jillewarra Timpetra Resources Ltd Zebina Minerals Pty Ltd Au Joint Venture 80% 731 3,275 3,441

219 CSA Global Report Nº R PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Date Project Buyer Seller Prospective commodities Transaction type Transaction value (100%) A$K 1-Sep-15 Combaning, Barellan Faraday Resources Pty Ltd Carpentaria Exploration Ltd Au Joint Venture 90% Implied value A$/km 2 Normalised value A$/km 2 20-Jul-15 Prospect Creek Cape Clear Minerals Pty Ltd ActiveEX Ltd Au Joint Venture 50% 372 4,598 5, Jul-15 Duketon Regis Resources Ltd Duketon Mining Ltd Au Joint Venture 75% 1,345 3,607 3,916 2-Jul-15 Fraser Range Legend Mining Ltd Creasy Group Companies Au-Ni-Cu Acquisition 70% 4,286 1,694 1, May-15 Lyndon Shine Resources Pty Ltd Latitude Consolidated Ltd Au-BM Acquisition 45% Apr-15 Mt Windsor Red River Resources Ltd NRE Exploration Pty Ltd Au-Cu Joint Venture 51% 505 3,278 3, Sep-14 Supplejack ABM Resources NL Ord River Resources Au Option to Joint Venture 70% 747 2,461 2, Sep-14 Cape Clear Cape Clear Minerals Pty Ltd Predictive Discovery Ltd Au Joint Venture 51% 467 2,912 3, Jul-14 Gnaweeda Doray Minerals Ltd 23-Jun-14 Fraser Range South MRG Metals Ltd Archean Star Resources Australia Pty Ltd Tasex Geological Services Pty Ltd Au Acquisition 88% 568 3,190 3,865 Au-Ni Option to acquire 100% 153 1,027 1, May-14 Highland Rocks Ramelius Resources Ltd Tychean Resources Ltd Au Joint Venture 85% May-14 (Near Twin Bonanza) ABM Resources NL Toro Energy Ltd Au Acquisition 100% Apr-14 Marymia Riedel Resources Ltd Australian Mines Ltd Au-Cu Joint Venture 51% 2,628 6,182 7, Mar-14 Plumridge Segue Resources Ltd Fraser Range Metals Group Ltd Au-Ni-Cu Joint Venture 51% 2,176 3,395 4, Mar-14 Telfer Area Newcrest Operations Ltd Ram Resources Ltd Au-Cu Acquisition 100% 646 8,418 9,538 7-Mar-14 Mystique Gold Parmelia Resources Ltd Black Fire Minerals Ltd & Entree Gold Inc. Au Acquisition 100% 306 1,494 1, Feb-14 Zanthus Rumble Resources Ltd Blackham Resources Ltd Au-Ni-Cu Joint Venture -20% Jan-14 Charteris Creek Fortescue Metals Group Riedel Resources Ltd Au-BM-Fe Joint Venture 51% 340 2,595 3,099 Notes: Prospective commodities; Au gold, BM base metals, Cu -copper, Fe iron ore and Ni nickel. The Joint Venture transaction earn-in percentage is the first earn-in percentage.

220 CSA Global Report Nº R PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Appendix 3: Detailed Yardstick Valuation Table 49: Coolgardie Project Detailed Yardstick Valuation Deposit Classification Ounces Equity Macphersons Tycho Yardstick Factors Valuation A$M Low Preferred High Low Preferred High Measured 1 17, % 2.00% 3.50% 5.00% Indicated 2 46, % 1.00% 1.50% 2.00% Inferred 3 36, % 0.50% 0.75% 1.00% Subtotal 100, Indicated 4 2, % 1.00% 1.50% 2.00% Inferred 25, % 0.50% 0.75% 1.00% Subtotal 28, Franks Find Inferred 2, % 0.50% 0.75% 1.00% TOTAL Measured 17, % 2.00% 3.50% 5.00% Indicated 49, % 1.00% 1.50% 2.00% Inferred 64, % 0.50% 0.75% 1.00% TOTAL 131, Note: The valuation has been compiled to an appropriate level of precision; values may not add up due to rounding. 1 Macphersons Measured gold ounces reduced by 13,000 oz. 2 Macphersons Indicated gold ounces reduced by 20,100 oz. 3 Macphersons Inferred gold ounces reduced by 11,000 oz. 4 Tycho Indicated gold ounces reduced by 24,900 oz.

221 CSA Global Report Nº R PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Note: The valuation has been compiled to an appropriate level of precision, values may not add up due to rounding Table 50: Mount Bundy Project Detailed Yardstick Valuation Deposit Classification Ounces Equity Yardstick Factors Valuation A$M Low Preferred High Low Preferred High Indicated 1,028,000 80% 1.00% 1.50% 2.00% Rustlers Roost Inferred 304,000 80% 0.50% 0.75% 1.00% Subtotal 1,332, Probable 175, % 5.00% 7.50% 10.00% Toms Gully Indicated 67, % 1.00% 1.50% 2.00% Inferred 73, % 0.50% 0.75% 1.00% Subtotal 315, Indicated 98, % 1.00% 1.50% 2.00% Quest 29 Inferred 50, % 0.50% 0.75% 1.00% Subtotal 148, Probable 175, % 5.00% 7.50% 10.00% TOTAL Indicated 1,193,000 80%/100% 1.00% 1.50% 2.00% Inferred 427,000 80%/100% 0.50% 0.75% 1.00% TOTAL 1,795,000 80%/100%

222 Appendix 4: Detailed Geoscientific Factor Rating Valuation CSA Global Report Nº R PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Table 51: Mount Bundy Project exploration licence Geoscientific Factor Rating valuation Tenement Equity Area (km 2 ) Off property On property Anomaly Geology Valuation (A$M) Low High Low High Low High Low High Low Preferred High EL % EL % EL % EL % EL % EL % EL % EL % EL % EL % Total 100% 1, Notes: The BAC used was A$506/km 2 and a 0.5 market factor was applied

223 CSA Global Report Nº R PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Appendix 5: Tenement Schedules Western Australia Please note the above-listed tenements in the name of Vaclav Dvorak have been purchased by Primary Gold and a Tenement Sale Agreement between Vaclav Dvorak & Primary Gold Ltd was fully executed on ID Status Holders Share Locality Area termfrom termto Exp Curr Rent Curr Rates (16-17) Report Project Report Date P 15/5719 Granted Macphersons Reward Pty Ltd 100 Burbanks 1km East of 145 HA 24-Jan Jan-21 $5, $ $ MacPhersons 28-Sep-18 P 15/5720 Granted Macphersons Reward Pty Ltd 100 Burbanks 3km East of 200 HA 24-Jan Jan-21 $8, $ $ MacPhersons 28-Sep-18 P 15/5721 Granted Macphersons Reward Pty Ltd 100 Burbanks 3kms East of 149 HA 24-Jan Jan-21 $5, $ $ MacPhersons 28-Sep-18 P 15/5722 Granted Macphersons Reward Pty Ltd 100 Burbanks 2km South 126 HA 24-Jan Jan-21 $5, $ $ MacPhersons 28-Sep-18 East P 15/5723 Granted Macphersons Reward Pty Ltd 100 Burbanks 3km South 187 HA 24-Jan Jan-21 $7, $ $ MacPhersons East 28-Sep-18 P 15/5724 Granted Macphersons Reward Pty Ltd 100 Burbanks 3km South East 172 HA 24-Jan Jan-21 $6, $ $ MacPhersons 28-Sep-18 P 15/5725 Granted Macphersons Reward Pty Ltd 100 Burbanks 3km South EAst 179 HA 24-Jan Jan-21 $7, $ $ MacPhersons 28-Sep-18 M 15/148 Granted Macphersons Reward Pty Ltd 200 BURBANKS 7.75 HA 04-Feb Feb-27 $10, $ $ MacPhersons 28-Sep-18 M 15/128 Granted Macphersons Reward Pty Ltd 96 COOLGARDIE HA 26-Feb Feb-27 $19, $3, $4, MacPhersons 28-Sep-18 P 15/6085* Granted Dvorak, Vaclav 100 Burbanks 9.71 HA 13-Mar Mar-21 $2, $26.00 N/A MacPhersons 28-Sep-18 P 15/6086* Granted Dvorak, Vaclav 100 Burbanks 6.84 HA 13-Mar Mar-21 $2, $26.00 N/A MacPhersons 28-Sep-18 P 15/6087* Granted Dvorak, Vaclav 100 Burbanks HA 13-Mar Mar-21 $7, $ $ MacPhersons 28-Sep-18 P 15/6088* Granted Dvorak, Vaclav 100 Burbanks 149 HA 13-Mar Mar-21 $5, $ $ MacPhersons 28-Sep-18 P 15/6089* Granted Dvorak, Vaclav 100 Burbanks 180 HA 13-Mar Mar-21 $7, $ $ MacPhersons 28-Sep-18 P 15/6090* Granted Dvorak, Vaclav 100 Burbanks 195 HA 13-Mar Mar-21 $7, $ $ MacPhersons 28-Sep-18 M 15/40 Granted Macphersons Reward Pty Ltd 200 BAKER HA 31-May May-26 $21, $3, $5, MacPhersons 28-Sep-18 M 15/1808 Granted Macphersons Reward Pty Ltd 100 Lady Grace 9.69 HA 28-Jun Jun-34 $10, $ $ MacPhersons 28-Sep-18 M 15/133 Granted Macphersons Reward Pty Ltd 100 TINDALS HA 08-Jul Jul-27 $10, $1, $1, MacPhersons 28-Sep-18 P 15/5261 Granted Macphersons Reward Pty Ltd 100 Burbanks 177 HA 11-Aug Aug-18 $7, $ $ MacPhersons 28-Sep-18 L 15/312 Granted Macphersons Reward Pty Ltd 100 Tindals 10.2 HA 10-Sep Sep-33 N/A $ N/A N/A P 15/5892 Granted Macphersons Reward Pty Ltd 100 Burbanks HA 31-Oct Oct-18 $4, $ $ MacPhersons 28-Sep-18 P 15/5901 Granted Macphersons Reward Pty Ltd 100 Burbanks East 200 HA 31-Oct Oct-18 $8, $ $ MacPhersons 28-Sep-18 P 15/5902 Granted Macphersons Reward Pty Ltd 100 Burbanks East HA 31-Oct Oct-18 $5, $ $ MacPhersons 28-Sep-18 M 15/147 Granted Macphersons Reward Pty Ltd 96 BAKERS FIND 9.7 HA 11-Dec Dec-26 $10, $ $ MacPhersons 28-Sep-18 L15/375 Granted Macphersons Reward Pty Ltd 100 FRANKS FIND 9.96 HA 02-Jan Jan-39 N/A $ N/A N/A N/A P15/6071 Granted Macphersons Reward Pty Ltd 100 COOLGARDIE ha 14-Feb Feb-21 $2, $75.4 N/A Individual 14-Apr-18 L 15/352 Application Macphersons Reward Pty Ltd 100 Tindals 11.2 HA N/A N/A N/A N/A N/A N/A M15/1838 Application Macphersons Reward Pty Ltd 100 FRANKS FIND 9.69 HA N/A N/A N/A N/A N/A N/A * Subject to fully executed Tenement Sale Agreement Vaclav Dvorak & Primary Gold Ltd 30th November th November The Tenement Sale Agreement is presently with the Western Australian Office of State Revenue for assessment of Stamp Duty.

224 ML29781 Granted 100% 140 Ha 1/11/82 6/02/13 5/02/23 4/02/23 31/01/19 31/01/19 n/a n/a $2,800 $230 5/02/19 ML29782 Granted 100% 80 Ha 1/11/82 6/02/13 5/02/23 4/02/23 31/01/19 31/01/19 n/a n/a $1,600 $230 5/02/19 ML29783 Granted 100% 285 Ha 1/11/82 6/02/13 5/02/23 4/02/23 31/01/19 31/01/19 n/a n/a $5,700 $230 5/02/19 ML29785 Granted 100% 40 Ha 1/11/82 6/02/13 5/02/23 4/02/23 31/01/19 31/01/19 n/a n/a $800 $230 5/02/19 ML29786 Granted 100% Ha 1/06/73 6/02/13 5/02/23 4/02/23 31/01/19 31/01/19 n/a n/a $2,260 $230 5/02/19 ML29812 Granted 100% 158 Ha 6/06/89 6/02/13 5/02/23 4/02/23 31/01/19 31/01/19 n/a n/a $3,160 $230 5/02/19 ML29814 Granted 100% Ha 6/06/89 6/02/13 5/02/23 4/02/23 31/01/19 31/01/19 n/a n/a $1,700 $230 5/02/19 MLN1058 Granted 100% Ha 12/02/88 3/08/89 2/08/39 2/07/39 31/01/19 31/01/19 n/a n/a $13,640 $230 2/08/18 MLN1083 Granted 80% Ha 24/07/89 4/03/91 31/12/20 31/11/20 31/01/19 31/01/19 n/a n/a $15,120 $230 check LC $303,616 EL29330* Granted 100% /01/12 23/10/12 22/10/18 22/09/18 31/01/19 31/01/19 22/10/18 $43,000 $13,266 $287 22/10/18 EL29362 Granted 100% /02/12 23/10/12 22/10/18 22/09/18 30/08/18 30/08/18 n/a $5,000 $804 $287 22/10/18 EL29520 Granted 100% /06/12 15/01/13 14/01/19 14/12/18 30/08/18 30/08/18 n/a $5,000 $804 $287 14/01/19 EL29521** Granted 100% /06/12 15/01/13 14/01/19 14/12/18 30/08/18 30/08/18 14/01/19 $10,000 $1,608 $287 14/01/19 EL29717 Granted 100% /01/12 8/01/14 7/01/20 7/12/19 31/01/19 31/01/19 7/01/20 $12,000 $2,613 $287 7/01/19 EL30128 *** Granted 100% /10/13 20/05/14 19/05/20 19/04/20 31/01/19 31/01/19 19/05/18 $10,000 $1,001 $287 19/05/18 EL30234 Granted 100% /12/13 11/08/15 10/08/21 10/07/21 31/01/19 31/01/19 10/08/19 $7,500 $639 $287 11/08/18 EL30255 Granted 100% /01/14 1/03/16 28/02/22 28/01/22 31/01/19 31/01/19 1/03/20 $7,500 $781 $287 1/03/19 EL30809 Granted 100% /11/14 30/06/15 29/06/21 29/05/21 31/01/19 31/01/19 29/06/19 $110 $10,792 $287 29/06/18 EL30824 Granted 100% /11/14 3/07/15 2/07/21 2/06/21 31/01/19 31/01/19 2/07/19 $135,000 $13,135 $287 3/07/18 CSA Global Report Nº R Current Covenant Rent Admin fee Rent Due Date MMP Security $449,800 $2,081,358 PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Northern Territory: PRIMARY MINERALS NL -SCHEDULE OF TITLES, AS AT 07 MARCH 2018 Title Status Percentage Current Blocks/Ha Sq Km Applied Date Grant Date Expiry Date Next Renewal Due Annual Reporting Due Date Expenditure Report Due Date Next Reduction Due ML24828 Application 100% 931 Ha 2/08/05 MLN1155 Application 100% /12/96

225 CSA Global Report Nº R PRIMARY GOLD LIMITED Independent Technical Assessment and Valuation of Mineral Assets Registered Holder for all tenure is Primary Minerals NL * Rent based on full waiver of reduction requested ** Rent based on full waiver of reduction requested. *** Rent based on full waiver of reduction requested.

226