seduli sutter gold mine - lincoln-comet gold project

High-Grade│Low Risk│Fully Permitted│Close to Production

Lincoln-Comet Gold ProjectSutter Creek, California USA

sēdulī

Lincoln-Comet Gold Project│Information Memorandum│25 February 2020

sēdulīDisclaimer

This Information Memorandum (or “IM”) contains a restricted offering made to you (“Recipient”) personally. It is provided on the basis that it is lawful to do so without registration or requirement to comply with the securities laws of the jurisdiction in which it is provided. This is not a prospectus under the Corporations Act and it has not been lodged with the Australian Securities and Investments Commission. This IM does not constitute an offer of securities for issue or sale or an invitation to apply for the issue of securities or to purchase securities in any jurisdiction in which, or to any person to whom, it would be unlawful to make such an offer or invitation. This IM is being provided to a limited number of prospective investors and does not constitute an offer to the public generally. It is only open to sophisticated high net worth investors.

The statements contained in this IM that are not historical facts are forward-looking statements. These forward-looking statements are based on current expectation, estimates and projections about the industry and markets in which the Company, as the case may be, operates or will operate. Words such as “expects”, “anticipates”, “should”, “intends”, “plans”, “believes”, “seeks”, “estimates”, “projects” and any variations of those words or similar expressions, are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance and involve certain risks, uncertainties and assumptions which are difficult to predict. Actual outcomes and results may differ materially from, and be significantly less favourable than, what is expressed or forecast in forward-looking statements. No representations, warranties or other assurances are made as to the accuracy, completeness or reasonableness of any forward-looking statements, which should not be relied upon as indicative of, or as a guarantee of, any future value or future result.

While reasonable care has been taken preparing this IM, and all information provided in this IM has been provided in good sēdulī

faith and has been obtained or derived from sources believed to be reliable, neither the Company, nor any of their respective officers, employees, advisors or agents makes or gives any representation, warranty or guarantee, whether expressed or implied, that the information contained in this IM has been audited or independently verified, or is complete, accurate or reliable, or accepts any responsibility arising in any way (including by reason of negligence) for errors or omissions. All representations, warranties and guarantees in relation to the information contained in this IM are expressly excluded to the maximum extent permitted by the law.

The distribution of this IM in certain jurisdictions may be restricted by law. Recipients of this IM (and any other person into whose possession this IM comes) must inform themselves about and observe any such restrictions. This IM does not constitute and may not be used for or in conjunction with an offer or solicitation by any person in any jurisdiction in which such offer or solicitation is not authorised or to any person to whom it is unlawful to make such offer or solicitation.

ConfidentialityThis IM is provided to prospective investors on a confidential basis. By accepting this IM, each prospective investor agrees that neither it nor any of its affiliates, nor any of its or their respective officers, employees, advisors or agents will use the information contained in this IM or any other information or material provided by Primat Mining Pty Ltd (trading as “Seduli”- the “Company”) for any purpose other than for evaluating a potential investment nor will it or any of them divulge any such information to any other person. This IM must not be photocopied, reproduced or distributed to others without the prior written consent of the Company. If a prospective investor determines not to acquire an interest in the Company, it must promptly return to the Company, without retaining any copies, this IM and all other information or material supplied by the Company.

Notice to residents of the United StatesThe shares being offered under this IM may not be offered or sold in the United States of America (“US”) or to or for the account of or benefit of US persons. Accordingly neither this IM nor the Application Form may be sent to persons in the US or otherwise distributed in the US.


sēdulīInvestment Summary

The PlanPrimat Mining Pty Ltd, Trading as Seduli, is selling equity to raise capital to restart gold production at the Lincoln-Comet project. The capital raised will partly pay to refurbish the processing plant, finalise the revised mine plan and re-estimate the resources in light of the change in mining method and understanding of the geology of the deposit.

The OfferSeduli is looking to sell up to 49% equity in the Lincoln-Comet project by selling shares in either the Australian or US holding companies to raise between US$7.5 and US$9.0 million in two tranches.

✦ Tranche 1 will sell 33% of Seduli to raise US$3 million.

✦ Tranche 2 will sell up to 24.2% with the aim of raising US$4.5–6 million.

The SituationThe advanced nature of the project means there is a short time frame to production. Capital in excess of US$30 million has already been spent to make the orebody immediately accessible from the existing decline. The required modifications to the processing plant are straight forward.

The RiskThe project risk is considered to be low because of its advanced stage. A large volume of detailed technical studies have been completed. The project has low capital requirements, a high grade orebody and is fully licenced and permitted for mining and processing.

The environmental risk is also considered low. Management plans for waste rock, tailings and water have been approved. A cyanide destruction plant will be employed.

Sovereign risk is considered low because all major and operating licences and permits have been gained and the USA and California are considered low risk jurisdictions.

The ReturnThe project will generate a gross profit after tax of US$32.1 million in the first three-year stage, representing a return between 58.3% and 70% p.a. for this stage.

The planned Stages 2 and 3 will make it possible to extend these annual returns for more than seven years.

Potential exists because of the high grade deposit and low capex requirements resulting from the projects advanced stage.

Cumulative gross profit (Lincoln-Comet and Keystone indicated, inferred A&B).

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

-20

0

20

40

60

80

100

120

140

US$

Mill

ion

1.75

yea

rs


sēdulīExecutive SummarySeduli has acquired the Lincoln-Comet gold project and is planning to restart production in the short term and build an operation that produces 60 koz Au per annum that is sustainable over the long term.

Lincoln-Comet is a fully permitted and licensed gold mining project presently on care and maintenance.

There is a low requirement for capital and short time frame to restart gold production.

This is an advanced mining project with over US$30 million capital spent by previous owners to build the mine and surface infrastructure including an 880m decline, ore drives, processing plant, offices and workshop.

NI 43-101 resource with potential for increases to expand production. Lincoln-Comet has a high grade (9.8 g/t) 189 000 oz gold resource with excellent near mine exploration potential along the strike and down dip. Historically, mines along the strike mined ore to depths of 1,200m.

Improvements throughout the production chain from resource estimation, mining method and redesign of the processing plant will create a highly profitable operation.

Implementation of bulk long hole stoping and reconstruction of the processing plant will make Lincoln-Comet one of the lowest cost per ounce gold operations globally.

Restarting production requires a new resource estimate, mine design and modification of the decline, and redesign and modification of the processing plant. Seduli believes it will take 15–19 months and cost US$14 million to start gold production.

The base case three-year economic model produces gross profit of US$45.1 million, and US$151 million after six years.

Seduli is looking to raise US$ 7.5–9.0 million in equity for 45–49% in two stages and then approximately the same in debt to fund the capex and working capital required to recommence gold production at Lincoln-Comet.

Gold ore underground


sēdulī

Gold ore in drill core

Historic InterestLeland Stanford (pictured) was a one-time resident of Sutter Creek and an investor in the mining operations.

To settle a debt at his grocery store in Sacramento, Stanford was paid with an interest in the Union Mine, but upon seeing the losses accumulate was determined to sell the mine (renamed the Lincoln by then) for $5,000.

However, the mine foreman, Robert Downs, talked Stanford into giving the mine one more chance, and it paid off.

A rich vein was discovered within the year, and produced $2.2 million in gold between 1860 and 1873.

Stanford sold his interest in the mine for $400,000, and later went on to partner in the building of the transcontinental railroad.

Stanford later became governor of California and a U.S. Senator, as well as the founder of Stanford University.

(www.sfmuseum.net)

Contents1. Introduction.............................................................1

1.2 Seduli .........................................................................1

1.3 Summary ..................................................................4

1.4 The Mother Lode .....................................................5

1.5 Project History..........................................................6

1.6 What went Wrong for the Previous Owners? ......7

2. Our Strategy ............................................................8

3. Technical Aspects....................................................9

3.1 Previous Work ..........................................................9

3.2 Deposit Overview ....................................................9

3.3 Project Geology ......................................................10

3.4 Resources ...............................................................10

3.5 Orebody Geology ...................................................11

3.6 Mine Plan ................................................................12

3.7 Metallurgy ...............................................................12

4. Path to Production................................................14

4.1 Eighteen Months to Restart Gold Production ....14

4.2 Mine Life Extension ...............................................15

4.3 Resource Extension and Discovery .....................16

5. Investment Proposition .......................................17

5.2 Projected Financial Outcome ...............................18

5.3 Financing .................................................................19

5.4 Milestones for the First 36 Months .....................19

5.5 The Transaction .....................................................20

Appendix ...................................................................21

sēdulī

Lincoln-Comet Gold Project│Information Memorandum│25 February 2020│Page 1

1. IntroductionSeduli has purchased the assets, leases and licences that make up the Lincoln-Comet project from the previous owner, Sutter Gold Mining Corporation, which was put into receivership by the Rand Merchant Bank Australia (RMB Australia) in May 2019.

The project has been on care and maintenance since 2012 after a critical failure in the processing plant during the commissioning phase. At the time RMB was the sole creditor and held 48% of the common shares in SGMI. RMB rejected a request for more capital funds and ordered the operation go into care and maintenance, which it has been funding since mining ceased in 2012.

Remediation of the plant to establish production was reported by consulting metallurgists Tons Per Hour (TPH) to be US$1.85 million. Although production was initially stopped by failure of an agitator in a thickener tank, there appears to have been a history of equipment failure during the commissioning leading up to this. RMB’s decision not to fund the remedial work appears to be based on the recognition of systemic deficiencies throughout the plant. Major systemic deficiencies were identified during site visits by Seduli and its associates in 2015 and again in August 2019. From this it is clear the account by TPH of issues in the processing plant preventing recommencement was not comprehensive. Much of the existing plant is unserviceable in its current configuration and failure was inevitable. The state of the plant and other aspects of the operation reflect abject failure by previous management on multiple fronts. Having already sunk nearly US$30 million into the operation, RMB’s position is understandable.

RMB has been trying to sell its debt (which grew to around US$60 million before putting SGMI into receivership) and equity stake in SGMI since 2014. However, this proved to be an overly complex and risky arrangement for potential counterparties as it would require them to put SGMI into receivership in order to take control of the assets. Additionally, RMB is exiting the resource industry and this is the last asset to be disposed of.

The Lincoln-Comet project consists of high grade ore (13.8g/t), that can be immediately access by underground infrastructure; including a 880m decline, 300m of ore drive development in preparation for stoping, ventilation shafts and equipment, and dewatering and ancillary equipment. Surface infrastructure includes modern offices, equipped workshops and stores and processing plant housed in a concrete and steel building. The majority of the equipment in the plant is salvageable with circuit reconfigurations and equipment additions.

The project is fully licensed and permitted for mining and processing. No further licences or permits are necessary to recommence gold production.

Coarse and fine ore bins are full of ore and there are stockpiles of ore underground as well.

The Lincoln-Comet gold project requires modest capital expenditure to rebuild the processing plant and get the mine back into production. It should be possible to recommence production within 18 months of starting works.

The low capital requirement, short time to production; owing to existing infrastructure, and high-grade ore make this a mining venture with unusually low risk.

Seduli’s experience with the Lincoln-Comet project was invaluable to making an offer for the assets of SGMI when it was placed into receivership. Seduli was introduced to the Lincoln-Comet project at the beginning of 2015 when it was engaged by another party to undertake a due diligence investigation. At the time RMB was seeking offers in the range of US$25-30 million for its debt and equity stakes in the project. Our familiarity with all aspects of the project gained from work over four years has been advantageous in acquiring the project.

1.2 Seduli(seduli: masculine plural; diligent, industrious)

Seduli was started by Dr Toby Davis and Mr Russell McBeath with the aim of acquiring small gold deposits. This segment of the industry was selected because it is characterised by low capital requirements to get projects into production. Such projects are typically characterised by high variable costs but low fixed costs as a result of the small scale of the operations. This is different from most other operators who strive for profits by exploiting economies of scale. The contra strategy of Seduli has two clear benefits. Firstly, the relatively low capital requirements, in the context of mining operations, substantially reduce the risk of the investments by being able to recover investment early in the project life. Secondly, Seduli’s combination of deep expertise in structural geology and mechanised narrow vein mining are uniquely ideal for reducing variable costs and provide a path to unlocking value for investors that is rarely available.

sēdulī


Russell McBeath EXECUTIVE DIRECTOR, COO & GM OPERATIONSMr McBeath has 25 years’ experience as a mining engineer in production and management roles across multiple commodities and mining systems with specialist capabilities in narrow vein mining. He has a considerably successful track record of constructing, commissioning and managing mining operations.

Notable experience includes managing the Feasibility Study and mine commencements of the OK (a A$50 million NPV underground) and North Royal (a A$65 million NPV open pit) mines while at Norseman Gold.

He has significant experience in due diligence and mining project studies including; a mine plan review of the Second Fortune mine (resulting in a A$12 million, 100% NPV improvement); a scoping study for the Thursdays Gossan deposit (including rail haulage concept development); innovating and developing to pre-feasibility an In-Wall ramp at the E42 orebody Cowal Gold Operations, which resulted a $124 million increase of NPV of the operation; introduction of zipper blasting to the Cracow underground mine making it possible to mine ore that was previously considered to be stranded.

The Director’s fee has been waived while undertaking the additional combined COO and GM role.

Toby DavisEXECUTIVE DIRECTOR, CEO & GM GEOLOGYDr Davis has a BSc (Hons) in Applied Geology from the University of New South Wales and PhD from James Cook University for his research on the structural geology of the Mount Isa Cu-Pb-Zn-Ag deposit.

He started his career as a mine geologist at the Yilgarn Star underground gold mine in Western Australia before undertaking postgraduate studies. He has worked as a consultant structural geologist since completing his PhD in 2004, initially for SRK Consulting in Perth, and then Impel Geoscience which he started in 2008 to provide specialist structural geology consulting services to the mining and exploration industries.

He has a proven track record of discoveries as a direct result of his contributions. The most notable of these include: 2.5 million oz Au at Komana West (Mali), 3 million oz Au at Bullabulling (Western Australia), 80 million lb U3O8 at Eagle Point (Saskatchewan), 700 Kt Cu at Mowana (Botswana) and 100 Kt Ni at Cosmos (Leinster WA).

He has extensive international experience in all stages of the exploration-mining spectrum. Although his speciality is in structural geology, he has wide-ranging experience in developing strategies in operational and commercial contexts.

The Director’s fee has been waived while undertaking the additional CEO role.

Directors

David FrancesCHAIRMANMr Frances is an International mining executive of over 25 years. He has expertise in corporate governance and risk management as well as in equity capital and debt markets. David has a track record of developing assets in Australia and Africa. Most recently he was Executive Chairman at Tiger Resources (Democratic Republic of Congo) where he completed the restructure of both the corporate and operational teams. David led Mawson West (TSX: MWE) from 2006- 2012 where he transformed it from a Western Australian gold hopeful into a significant international copper producer, developer, and explorer in the DRC. Mr Frances completed the largest base metals capital raise and IPO in the world for 2010 with a market capitalisation of approx. $250 million when the Company relisted on the TSX. He managed the South Australian office for Dominion Mining from soon after the discovery of the high-grade Challenger gold mine through development to the establishment of the mining operation.

sēdulī


Kelvin MayDIRECTOR AND CFO

Kelvin is a Certified Practicing Accountant (CPA), with a Bachelor of Business Degree from Curtin University, and a Masters of Business Administration from the Curtin Graduate School of Business. He is also a certificated member of the Governance Institute of Australia (formerly Company Secretaries Australia).

Kelvin has nearly 40 years business experience, including 30 years post graduate experience in senior financial management positions with large corporates in Australia.

Kelvin has previously been a director of an LSE:AIM & ASX dual-listed company, and held Company Secretary positions for both listed public and private companies in Australia.

sēdulī


1.3 Summary ✦ The Lincoln-Comet mine is located near Sutter Creek, 34 miles east-southeast of Sacramento in Central California.

✦ It is located along the historically famous Mother Lode, which was the centre of the 19th century Californian Goldrush.

✦ The project contains a NI 43-101 Resources:

✦ 285 Koz Gold Resource at Lincoln-Comet operation

✦ 140 Koz accessible from existing decline for US$32.1 million gross profit after tax (Year 3).

✦ All major and operating permits have been granted.

✦ Licensed to mine and process 1,000 tons per day (tpd).

✦ 2888 ft (880m) decline with ore drives developed and ore ready for stoping.

✦ Good potential for expansion of resources and operations.

Lincoln-CometGold Project

Jackson

Plymouth

SutterCreek

N

N

Lincoln-CometGold Project

Jackson

Plymouth

SutterCreek

N

N

Figure 1: Location of the Lincoln-Comet mine.

sēdulī


1.4 The Mother LodeA 120 MILE LONG SERIES OF GOLD DEPOSITS IN THE WESTERN FOOTHILLS OF THE SIERRA NEVADA.

Plymouth

Jackson

SutterCreek

N

Sutter CreekJackson Plymouth

LINCOLN-COMET PROJECT

Longitudinal SectionLooking West

LINCOLN COMET

NORTHSOUTH

NPlan View

Figure 3: Top: Plan of leases (yellow).Centre: Longitudinal section looking west illustrating historic mines and the location of Lincoln and Comet orebodies. Bottom: Historic production for the different parts of the Mother Lode between Jackson and Plymouth are given.

Figure 2: Regional geology map between Jackson and Plymouth.

Plymouth

Jackson

SutterCreek

N

Sutter CreekJackson Plymouth

LINCOLN-COMET PROJECT

Longitudinal SectionLooking West

LINCOLN COMET

NORTHSOUTH

NPlan View

✦ Gold was first mined on the Mother Lode in 1848 at Sutter Mill.

✦ Historic production of 13.6 million ounces.

✦ 7.76 Moz Au mine from the 10 mile Jackson-Plymouth segment, including 3.4 Moz Au from mines located in the Lincoln-Comet Project (red shapes on centre diagram, below right).

✦ Mining on the Mother Lode ceased in 1958 due to cost pressures.

✦ Lincoln and Comet veins were a blind discovery in 1986.

✦ Surrounding deposits mined to 4,000 ft (1,200m).

sēdulī


1.5 Project History1983 Callahan Mining Corp started exploration at Lincoln-Comet.

1989-1990 Mining of 2,885 ft (880m) exploration decline.

1998 All permits for mining and milling obtained.

2008 RMB acquired 48% of Sutter Gold Mining Inc. Plus US$20 million debt.

2011-2012 Construction of plant and offices.

2012 Plant failed on commissioning.

2012-present Care and maintenance funded by RMB while trying to sell debt and equity.

��

��

��

��

Figure 4: Aerial photograph of the mine site (above). Below: Longitudinal section of in situ ore blocks.

sēdulī


1.6 What went Wrong for the Previous Owners?

The operation was put on care and maintenance in 2012 during commissioning of the processing plant due to failure of critical components in the plant.

SYSTEMIC MANAGEMENT FAILURE THROUGH ENTIRE OPERATION

1. Construction of processing plant cut corners leading to multiple failures during commissioning.

The primary reason for stopping production was failure of an agitator in a thickening tank but this was the final of multiple failures as a result of either poor design, missing vital components or inappropriate equipment selection. For example, there were no wear plates in ore bins; no vibratory feeder plates on ore chutes - meaning material in the bins rest directly on conveyors; the crusher is in a location where it cannot be accessed for maintenance; there is no furnace in the gold room; and pumps were not appropriate to pump the slurry.

Commissioning of the plant was not completed because RMB refused to provide further funding after multiple failures.

2. Deliberately selected slow and expensive mining method to stretch out the reserve for 5 years.

The previous owners chose to mine the deposit using underhand cut and fill with airleg, mining five 8-hour shifts a week. The cost and slow rate of mining made the operation uneconomic. The mining rate was 100 tpd (1/10 of the licensed rate). In order to do this they decided to mine the veins with airlegs – hand held drills – which is slow and expensive. Additionally, and in line with these decisions, a deterministic approach was taken to define the ore resulting in ore blocks that do

not reflect the real nature of the deposit. As a result a lot of high grade gold was excluded from the resource estimate. This material could easily be mined with significant increase in metal produced with only a small reduction in the overall grade.

3. Management supervision of operations was minimal.

A lack of supervision and survey errors resulted in miners developing an ore drive several metres into an adjacent lease.

4. Optimistic expectation of sale of complex corporate mess.

RMB spent 4 years trying to sell its debt (ballooned to US$60 million) and 48% equity stake in the parent company for US$12–30 million. During this time RMB was funding the care and maintenance, which added to the debt.

sēdulī


2. Our StrategyRe-establish the Mother Lode as a world class gold mining district

Build a 60 koz per annum gold operation leveraging off the current 60 koz Au indicated resource (13.8 g/t) and additional resources at Lincoln-Comet area that can be immediately accessed from the existing decline.

We will mine the existing indicated resource and progressively convert the inferred to indicated resources while also exploring outside of the existing resources.

RESOURCE PRODUCTION DEVELOPMENT PRIORITIES 1. Lincoln-Comet. (189–240 koz; Ind and Inf 2011/2008).

2. Keystone Res A. (110 koz; Inferred 2008).

3. Keystone Res B. (183 koz; Inferred 2008).

4. Wildman, Mahoney, Old Lincoln. (71 koz; Inferred 2008).

5. Other sites on the Jackson-Plymouth segment.

sēdulī


3. Technical Aspects3.1 Previous WorkThere has been a large and comprehensive volume of work on all aspects of the project typical of a mine start-up covering the following:

Resource estimates and geology ✦ First estimate completed in 1996 and the latest in 2011.

✦ Systematic documentation of typical mine geology.

✦ 277 core holes (190 U/G) and two reverse circulation holes.

Mining engineering ✦ Development and stope designs, ventilation, scheduling, equipment, backfill.

Metallurgy ✦ Bench and commercial scale tests.

✦ Bulk sample.

✦ Flow sheet.

Feasibility studies ✦ 2011 Technical Study.

Licencing and permitting ✦ Two 2018 Golder reports.

Review of processing plant after shutdown ✦ TPH review of metallurgy.

3.2 Deposit Overview ✦ Blind discovery in 1986 within a 1.5 km gap between Keystone and Wildman mines.

✦ Mines along strike go to 1,600 to 4,000 ft (500–1200m) depth.

✦ Lincoln-Comet not drilled below 500 ft (150m).

DeclineKeystone mineworkingsCometLincoln

450m

20 m drill bu�er

Wildman mineworkings

SOUTH NORTH

Figure 5: Top: Longitudinal section looking west of the Lincoln-Comet project.Bottom: Longitudinal section of Jackson-Plymouth segment.

✦ Comet orebody immediately accessible from decline.

✦ Lincoln needs small amount of development to access the orebody.

sēdulī


3.3 Project Geology ✦ Hosted in Jurassic Mariposa Formation; conglomerates-siltstone with included mafic volcanic rocks.

✦ Lincoln-Comet orebody centered on 160–230 ft (50–70m) wide basalt (80/060 dip/direction).

✦ Surrounded by highly deformed siltstones and shales.

Figure 6: Surface geology map of the Jackson-Plymouth segment. Inset: Surface geology map of the Lincoln-Comet Project.

3.4 Resources ✦ Estimated and reported in the Technical Report (2011) for the Feasibility Study.

✦ Series of estimates dating back to 1990 are presented in the Technical Report and tabulated in the Appendix.

✦ Economic Analysis for restarting the mine is based on the NI 43-101 resources listed here:

NI 43-101 Resources (4.1 g/t cutoff) (t=tonnes and oz = Troy)

Lincoln-Comet:

Indicated 138Kt @ 13.8 g/t for 61 Koz Au

Inferred 495Kt @ 8.7 g/t for 128 Koz Au

Total 189 Koz Au

PLUS

Keystone:


Tietz P. G, Prenn N. B. and Ristorcelli S. 2011: Technical Report Lincoln-Comet Project Anador County, California. Report. Mine Development Associates. Nevada pp. 246.

sēdulī


3.5 Orebody Geology ✦ Orebodies consist of shear zone hosted lodes.

✦ Comet: NNW-striking (sub vertical). And,

✦ Lincoln: NW-striking (60/220).

✦ Peak mineralisation at intersection with NW-striking shear zones (80/213).

✦ Lodes have pinch-and-swell shapes.

✦ Wide zones 15’-35’ (5-10m) wide breccias.

✦ Narrow zones 4”-3’ (0.1-1.0m).

✦ Open Down Dip and along strike.

70000' N

71000' N

72000' N

4100

0' E

4200

0' E

4100

0' E

70000' N

71000' N

72000' N

Plan of Lodes

N

COMET

LINCOLN

East Lode(vein

42)

Medial Lode

West Contact Lode

Lincoln Main Lode

Lincoln West Lode

Swell Breccia

Pinch Vein

< 2.42.4 - 5.05.0 - 8.68.6 - 14.0>14.0

Gold (g/t)1m comps

Traversing HSZ

Gold Lode

Mafic Volcanic500' RL

1000' RL

1.5 g/t Au2.5 g/t Au

4.5 g/t Au

10 g/t Au

1.5 g/t Au

2.5 g/t Au

4.5 g/t Au7.5 g/t Au Lincoln

Comet

500 Feet

Gold ContoursLongitudinal Section

Looking to 240

SSE NNW

Drillhole buffer

NW-striking structure.

Figure 7: Longitudinal section in the plane of the NNW-striking lodes. Grade trends follow the intersecting structures. The black shapes illustrate where drill holes intersect the main host structure and show the deposit is open at depth and along strike.

Figure 8: Plan of mine geology. The coloured points are drilling assay points. The highest grades (pink >14 g/t Au) are located at the intersection of the lodes with NW shear zonesUpper Inset: Vein array (breccia) in thick high grade zone.Lower Inset: Narrow vein that link vein arrays.

sēdulī


3.6 Mine PlanModernise mining by introducing:

✦ Bulk long-hole stope system with trackless equipment to extract the full mineralised zone in a single-pass.

✦ Development with twin boom electric–hydraulic jumbos.

✦ 750t per day mining and treatment rate.

✦ 30m floor to floor level interval (100ft).

✦ Paste backfill aiming to use 100% of mine tailings and thereby avoid long term tails dam requirements.

✦ Safer and higher productivity mine production will be achieved compared to over-hand, hand-held entry methods previously proposed.

✦ Continue selling barren waste rock to concrete/road contractor.

Figure 9: Current drive size mined manually.

Figure 10: Example of drive dimensions and electric-hydraulic drill rig.

Figure 11: Example of haul truck similar to proposed.

3.7 Metallurgy

REQUIRED PROCESSING PLANT MODIFICATIONS = US$6.98 MILLION.

Implement consulting metallurgists, TPH, recommendations for processing plant costing US$1.85 million. Includes:

✦ Grinding circuit alterations including addition of Vertical Shaft Impact (VSI) secondary crusher.

✦ Nugget trap inclusion.

✦ Gold room security and furnace.

✦ Tailings management improvements.

✦ Process control instrumentation upgrades.

✦ Laboratory upgrade.

Additional changes required as identified by Seduli costing US$3.51 million:

✦ Upgrades to the ore pad and grizzly.

✦ Alterations to both the coarse and fine ore bins.

✦ Upgrading of the milling circuit.

✦ Addition of Acacia Reactor to directly recover gold from gravity and flotation concentrates on site.

✦ Ore pad loader.

TOTAL CONTINGENCY ALLOWANCE OF US$1.62 MILLION

sēdulī


✦ No further test work is required due to extensive work already completed.

✦ Undertake competitive contract bid for Engineering Procurement Construction and Management (EPCM) contract to undertake design work incorporating both TPH and Seduli identified changes. Contract to be “gated” at the completion of engineering stage to allow approval of final upgrade capital spend. US$ 250K allowance for engineering stage.

✦ Approve PCM portion of contract and implement.

✦ Commission upgraded plant using current ore stocks in coarse and fine ore bins and underground stockpiles.

Figure 12: Processing plant Figure 13: Rod mill

sēdulī


4. Path to Production4.1 Eighteen months to restart gold production

1. Restructure: (Mo 1–2) Legal review, staffing, plant EPCM tender,

expenditure review, geological review.

2. Detailed Operational Planning: (Mo 3–5) Plant engineering, mine design and scheduling,

resource estimation, mining contract tender.

3. Construction: (Mo 5–10) Plant construction, decline modification.

4. Initial Production: (Mo 11–17) Initial ore drive development in preparation for

stoping.

5. Production from stopes: (Mo 18 onwards)

Figure 14: Stages to restart production

sēdulī


4.2 Mine Life Extension

EXCELLENT POTENTIAL TO EXTEND PRODUCTION BEYOND CURRENT RESOURCES

FOUR STAGES TIMEFRAME

1. Lincoln-Comet 2011 NI 43-101 Resource (189 koz). Years 1–4

2. Keystone (2008 Ind. 34 koz then 2008 Inf. A). Years 5–6

3. Keystone (2008 Inf B). Years 7–9

4. Wildman-Mahoney-Old Lincoln (not tabulated below) Year 10+

RESOURCE DEVELOPMENT MININGRe-estimate 2011 NI 43-101 Construct plant

Assess Keystone Indicated (Payne, 2008) 60 Koz Lin-Com (2011 Ind)

Assess Keystone Inf A (Payne, 2008) 70 Koz Lin-Com (2011 Inf)

Assess Keystone Inf B (Payne, 2008) 50 Koz Lin-Com (2011 Inf)

Assess Wildman-Mahoney-Old Lincoln 34 Koz Keystone (2008 Inf)

30 Koz Keystone (2008 Inf A)

Explore Jackson-Plymouth NW 40 Koz Keystone (2008 Inf A)

70 Koz Keystone (2008 Inf B)

Note: Colours in table link resources and mining of them in Figure 15.

Decline

KeystoneCometLincoln

450m

20 m bu�er

Wildman

SOUTH NORTH

1 2

31’4

1/1’: Lincon-Comet2: Keystone Ind 2008

3: Keystone Inf 20084: Wildman-Malhoney-Old Lincoln

2 million oz AuTarget

500 K oz AuTargets

Figure 15: Longitudinal section looking west illustrating the location of resources/mining targeted in the four project life scenarios.

sēdulī


4.3 Resource Extension and Discovery

TWO STRATEGIES FOR EXPLORATION:1. Extension and nearby discovery Around existing resources. Large gaps in drilling are

highlighted by the red boxed areas below. These aim to confirm inferred resources and extend resources.

2. New discoveries and historic potential

Lincoln-Comet Project

StrategicExploration Areas

Figure17: New discovery exploration. Regional geology map indicating the areas of interest.

Figure 16: Resource Extension and Nearby Discovery. Longitudinal section looking west. The black shapes denote 20 buffer zones around drill holes intersecting the target structure. Boxes red boundaries indicate the target areas.

sēdulī


5. Investment PropositionAnalysis is based on mining the published NI 43-101 resources in the first fours years. Following this exploration based on resources reported before 2011 that need to be confirmed with drilling.

NI 43-101 Resources (4.1 g/t cutoff) (t=tonnes and oz = Troy)

Lincoln-Comet:

Indicated 138Kt @ 13.8 g/t for 61 Koz Au


Total 189 Koz Au

PLUS

Keystone:


Tietz P. G, Prenn N. B. and Ristorcelli S. 2011: Technical Report Lincoln-Comet Project Anador County, California. Report. Mine Development Associates. Nevada pp. 246.

Figure 18: Cumulative gross profit (Lincoln-Comet and Keystone indicated, inferred A&B).

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7

-20

0

20

40

60

80

100

120

140

US$

Mill

ion

1.75

yea

rs

sēdulī


5.2 Projected Financial Outcome

Notes to the Financial Evaluation

1. Nominal values are used.2. Values are in US$ using an Exchange Rate of 0.65c US$/AU$3. Existing NI 43-101 Resource mined. 4. Gold price based on the average for the past three years. 5. Model inputs estimates are based on market research. 6. Mining and treatment costs are based on previous SGMC studies. These are significantly higher than equivalent Australian

costs and so it is considered there is scope to improve these. Initial studies are aimed at better defining these costs.

FINANCIALS (US$) YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5 YEAR 6 YEAR 7

Ounces Sold 37,530 65,309 55,336 54,286 64,294 64,294

Gold Price (US$) 1,350 1,350 1,350 1,350 1,350 1,350

Total Revenue 50,665,005 88,167,303 74,703,211 73,286,613 86,796,951 86,796,951

Mining Costs 26,275,000 25,965,000 31,952,000 31,500,000 25,000,000 25,000,000

Treatment Costs 9,126,720 12,439,680 12,439,680 12,382,080 12,000,000 12,000,000

Total Operating Cost 35,401,720 38,404,680 44,391,680 43,882,080 37,000,000 37,000,000

Total Gross Margin 15,263,285 49,762,623 30,311,531 29,404,533 49,796,951 49,796,951

G&A costs 1,377,957 3,145,740 3,198,700 3,198,703 3,198,706 3,198,709 3,198,712

Refining and Royalties 1,809,145 1,515,804 2,489,894 1,504,166 1,669,145 2,741,661

Total Overheads 1,377,957 4,954,885 4,714,504 5,688,597 4,702,872 4,867,854 5,940,373

EBIT -1,377,957 10,308,400 45,048,119 24,622,934 24,701,661 44,929,097 43,856,577

Capital Expenditures 3,912,700 14,749,405 7,120,000 7,620,000 1,120,000 370,000 5,750,000

GROSS PROFIT -5,290,657 -4,441,005 37,928,119 17,002,934 23,581,661 44,559,097 38,106,577

Cumulative Gross Profit -5,290,657 -9,731,662 28,196,457 45,199,391 68,781,053 113,340,149 151,446,727

sēdulī


5.3 Financing

CAPITAL REQUIREMENTUS$14 million is required to restart production.

From:

✦ US$7.5 to 9.0 million equity.

✦ US$5.0 to 6.5 million debt for capex.

Plus:

✦ US$3.5 million debt working capital.

EQUITY CAPITAL ✦ Initial Round: 33% to raise US$3 million.

✦ Second Round: 24.2% to raise (est.) US$ 4.5 to 6.0 million.

5.4 Milestones for the First 36 Months

YEAR 1 ✦ Raise US$ 3.0M.

✦ Restructure operations.

✦ Geological review confirming Lincoln–Comet.

✦ Treatment plant engineering design and costing.

✦ Detailed operational plan.

✦ Staff recruitment.

✦ Renounceable rights capital raising for US$ 4.5 to 6.0 million (Tranche 2).

✦ Commence treatment plant rebuild.

✦ Mining contract tender.

YEAR 2 ✦ Complete treatment plant rebuild and commission.

✦ Mobilise underground contractor and commence mining operations.

✦ Produce first gold.

✦ Reach steady-state production of 5 koz per month.

✦ Commence geological review of Keystone area.

YEAR 3 ✦ Continue production.

✦ Decline extension for expanded Lincoln-Comet resources.

✦ Complete Keystone resource review.

✦ Expand detailed operational plan to include Keystone.

sēdulī


5.5 The TransactionSeduli, a Private Australian Pty Ltd Company, is seeking to raise approximately US$ 9 million sell equity in the Lincoln-Comet project over two offerings. The first offering is for 310 shares with renounceable rights at AU$ 15,000 per share. There are currently 630 shares issued (non-renounceable). Total shares after the first raise is 940. The second raising shall be for up to 300 shares at AU$ 31,000 per share.

New shares issued under this IM as a percentage: ...........................33%

Shares held by existing: ........................................................................67%

New shares issued under the second raise as a percentage: .......24.2%

Shares held by first raising investors: ..............................................25.0%

Shares held by existing: .....................................................................50.8%

A royalty is payable to previous lease owners of a 4% net profit up to US$ 4.0 million and 1% net profit thereafter.

A deferred payment agreement between Seduli and RMB Australia based on a tiered amount per ounce of production is payable to RMB Aust (see following table). This has been accounted for in the economic modelling.

DEFERRED PAYMENT SCHEDULE TO RMB AUST.

Recovered Range (oz)

Amount per ounce (US$/oz)

Range Amount (US$)

0 to 10,000 0 0

10,001 to 61,000 55 2,804,945

61,001 to 189,000 20 2,559,980

189,001 to 286,000 15 1,454,985

286,001 to 694,000 5 2,039,995

More than 694,000 0 0

Total 8,859,905

Appendix

Appendix

sēdulī

sēdulī


Previous Work ✦ 30 years of work. Vast amount of studies and reports consistent with development of a mine.

✦ 17 GB of data for:

✦ Geology.

✦ Metallurgy.

✦ Mining engineering.

✦ Economic analysis.

✦ Risk and opportunity.

✦ Assessment of plant after failure.

✦ Environmental.

✦ Permitting and licensing.

Figure A1: SGM data room folder structure

sēdulī


GeologySeduli Technical DetailThe gold deposits of the Mother Lode are hosted in faults and shear zones and classified as orogenic lode gold deposits. At Lincoln-Comet there are five curvi-planar lodes hosted in shear zones that traverse a mafic volcanic surrounded by highly deformed fine-grained sedimentary rocks within the Mariposa Formation.

The deposit contains four zones (Lincoln, Comet, Medean and String Bean Alley) collectively containing fourteen discrete planar veins. The ore to be mined in the first three years come from the Lincoln and Comet Zones within which ten individual veins have been identified. There are additional resources in other zones. The mine plan and reserve estimated by the previous operators intended to mine individual veins separately resulting in a hugely complicated and laborious mine plan.

The interpretation of highly planar vein shapes reflects an erroneous understanding of the structural geology that controlled mineralisation. This fed into the way the ore body was interpreted and resources estimated. This highly deterministic interpolation left ore out of the resource to comply with a highly selective mining method.

The ore bodies are really wider collections of several veins meaning more gold should be recovered with only a small decrease in the average grade resulting in higher gold production and profit quicker than that defined by the existing resource estimate and mine plan.

Figure A2: Deposit geology

sēdulī


Original SGMI Geology ✦ Comprehensive Sectional Interpretations.

✦ Resource Estimates (1990, 1992, 1993, 1994, 2006, 2008, 2011).

✦ Stope Wireframes.

✦ Data Verifications.

✦ QA/QC.

✦ Rock Chip samples and face mapping.

✦ UG Mapping.

✦ Block Models.

✦ Geotechnical Studies.Figure A2: Ribbon structures seen in the back of the sub-levels along the number 40 vein

sēdulī


Resource EstimatesThere is an extensive history of resource estimates. The 1993-2008 estimated included deposits defined from drilling prior to 1983. The deposits were excluded in 2011 due to statutory changes around NI 43-101 (Bold).

Table A1: Reported Resources (Proven and Probable and *Possible/Indicated and *Inferred)

YEAR TONS OPT OZ TONNES G/T OZ AU AREA

1990 631,217 0.35 221,557 572,631 12.0 221,511 L & C

1992 573,834 0.39 221,500 520,574 13.2 221,454 L & C

*1993 998,733 0.31 312,603 906,036 10.7 312,538 *Lincoln, Comet, Keystone, others

*1994 2,860,000 0.19 546,260 2,594,549 6.5 546,146

*2006 2,697,400 0.19 520,598 2,447,041 6.6 520,489

*2008 2,377,900 0.19 451,801 2,157,195 6.5 451,707

2011 152,000 0.40 60,952 137,892 13.7 60,939 Indicated

2011 506,000 0.25 128,524 459,036 8.7 128,497 Inferred

sēdulī


Mine PlanOriginal SGMI Mine Plan

✦ Airleg mining systems with “dry” sandfill.

✦ Highly selective, only mining narrow veins.

✦ Use large amounts of timber, air scrapers, and small trucks (10t per load).

✦ Based on extending 60 Koz reserve beyond 5 years.

✦ Very low productivity.

✦ Labour intensive.

✦ Leaves highly economic ore behind that should be mined.

✦ High risk in terms of safety.

✦ Extremely high mining costs compared to standard methods used in Australian industry (US$ 200/t v US$ 45/t).

Upper: Schematic illustration of the airleg mining system previously used.

Seduli Mine PlanSeduli plans to implement a modern mining system that is commonly used in Western Australia. This will reduce costs through mechanisation and increasing the scale of the operation to fill the licensed capacity.

1. Increase decline size to allow the use of 45 tonne capacity haul trucks

✦ Make decline higher by striping 1.5m from the floor or backs to make it 5.1mH x 4.6mW.

✦ 4.0m x 4.0m Level Development to allow use of long-hole rig that can drill 55mm to 89mm diameter holes capable of mining stope widths between 0.7m to more than of 8.0m with up-dip stope height of up to 36m.

2. Level and decline development by same size jumbo unit.

3. Nominal stope height of 26m (extraction of narrow stopes requiring smaller drill hole size will require special stope design such as up and down holes within the same panel rather than single pass).

Above: Example of haul truck similar to proposed.Right: Example of drive dimensions and electric-hydraulic drill rig.

Above: Actual airleg ore drive at Lincoln-Comet.

sēdulī


MetallurgyPrevious Work Detail

✦ Large number of historic reports and studies on Lincoln Comet project.

✦ Plant constructed.

✦ Design specification of 210t per day (10tphr - 90kpta).

✦ 60 – 70% Gravity Recovery.

✦ 20 – 25% Flotation recovery.

✦ Plant Operability not achieved.

✦ Operating Review undertaken by Tons Per Hour Inc. in 2014.

✦ Excessively large feed to Rod Mill.

✦ Inefficient regrind circuit.

✦ Inefficient flotation circuit.

✦ Inefficient tails dewatering.

✦ Poor jaw crusher location.

✦ Gold room not functional or secure.

✦ Assay lab capacity limited.

✦ Plant and site water balance incomplete.

✦ Limited plant automation and process control.

✦ Additional Seduli reviews.

✦ COB grizzly poor quality.

✦ COB/FOB feed conveyors inappropriate design.

✦ Changes to Gold room recovery approach required.

✦ Allowances for maintenance access throughout the plant inappropriate.

✦ Rod Mill to refit as Ball Mill.

Above: Installation of rod mill at Lincoln-CometBelow: Workshop

Above: Processing plant buildingBelow: Mill as presently installed

sēdulī


Previous Work DetailFeasibility StudiesNumerous feasibility studies. Most recent in 2011 before construction phase.

Licences and PermitsAll major and operational permits and licence are granted.

Will need to revise some permits to fit with intended modifications to operations.

sēdulī


Major Permits and ApprovalsSummary of Operating Permits and Approvals

sēdulī


seduli sutter gold mine - lincoln-comet gold project

Documents