CRITICAL RESOURCES LIMITED - Merger & Acquisition 2012

==> picture [297 x 111] intentionally omitted <==

Precious Metal Resources Limited ACN 145 105 148

2 August 2012

Level 2, 131 Macquarie Street Sydney NSW 2000 Tel: +61 2 9251 7177 Fax: +61 2 9251 7500

Company Announcement Office Australian Securities Exchange Limited

Contact Peter Kennewell CEO

Off-market takeover bid by Sovereign Gold Company Limited – Supplementary Target's Statement

email: [email protected]

SUPPLEMENTARY TARGET’S STATEMENT

in response to the off-market takeover offer by

SOVEREIGN GOLD COMPANY LIMITED

(ACN 145 184 667)

to acquire all the ordinary shares issued by

PRECIOUS METAL RESOURCES LIMITED

(ACN 145 105 148)

The Independent Directors of Precious Metal Resources Limited

recommend you ACCEPT the Offer in the absence of a Superior Proposal and a Material Adverse Event.

This is an important document and should be read in its entirety. If you do not understand it or are in doubt as to how to act you should consult your legal, financial or other professional adviser immediately.

SUPPLEMENTARY TARGET'S STATEMENT

This Supplementary Target's Statement has been issued by Precious Metal Resources Limited (ACN 145 105 148) in response to the takeover offer by Sovereign Gold Company Limited (ACN 145 184 667) for all the ordinary shares in Precious Metal Resources Limited not owned by Sovereign Gold.

This Supplementary Target's Statement supplements the Original Target’s Statement dated 25 July 2012.

1. IMPORTANT INFORMATION

1.1 Supplementary Target's Statement

This document is a supplementary target's statement under section 644(1) of the Corporations Act (Supplementary Target's Statement). It supplements the target's statement issued by Precious Metal Resources Limited (ACN 145 105 148) (PMR) dated 25 July 2012 (Original Target's Statement) given in connection with a takeover bid by Sovereign Gold Company Limited (ACN 145 184 667) (Sovereign Gold to acquire your fully paid ordinary shares in PMR (Offer).

A copy of this Supplementary Target's Statement was lodged with ASIC and provided to the ASX on 2[nd] August 2012.

Neither ASIC, ASX or any of their respective officers or employees take any responsibility for the content of this Supplementary Target's Statement.

This Supplementary Target's Statement supplements, and should be read together with, the Original Target's Statement.

1.2 Investment decisions

This Supplementary Target's Statement does not take into account the investment objectives, financial situation or particular needs of any person. Before making any investment decision on the basis of this document you should consider whether that decision is appropriate in the light of those factors and seek independent financial and taxation advice if necessary.

1.3 Offer Information Line

If you have any queries in relation to the Offer or this Supplementary Target's Statement, please contact the Offer Information Line on +61 2 9251 7177 between 9.00am and 5.00pm (AEST) Monday to Friday.

Further information relating to the Offer can be obtained from PMR’s website at www.pmrl.com.au.

2. INDEPENDENT EXPERT'S REPORT

The Independent Expert Report (IER) in the Original Target's Statement (Original IER) is signed by Stuart H. Cameron, as an Authorised Representative of Alpha Securities Pty Limited (Alpha Securities).

Mr Cameron, as an employee of K.S. Black & Co, also signed the auditor's report attached to Sovereign Gold's latest half-year accounts (dated 29 August 2011) and the Investigating Accountant's Report in PMR's IPO prospectus (dated 26 October 2011).

Whilst the Original IER was prepared by Mr Cameron in his capacity as the Authorised Representative of Alpha Securities rather than that of auditor or Investigating Accountant, in order to ensure that there was no question that the guidelines in ASIC's Regulatory Guide 112 Independence of experts were met, PMR commissioned Pitcher Partners NSW Corporate Pty Limited (Pitcher Partners) to prepare a second IER, replacing the Original IER (Replacement IER).

Pitcher Partners have also expanded on the valuation analysis used in determining the value of Sovereign Gold’s Offer.

Pitcher Partners have found the Offer is fair and reasonable. This is the same conclusion reached in the Original IER.

The Replacement IER is attached as Appendix A to this Supplementary Target’s Statement.

3. CHANGES TO ORIGINAL TARGET’S STATEMENT

The Original Target's Statement contains references to the Original IER; accordingly, the following changes to the Original Target’s Statement are made:

Inside Front Cover:

Independent Expert

~~Alpha Securities Pty Ltd Level 2, 22 Pitt Street Sydney NSW 2000~~

~~Telephone: +61 2 9299 9270~~

Is replaced with:

Pitcher Partners NSW Corporate Pty Limited Level 2, MLC Centre 19 Martin Place NSW 2000

Telephone: +61 2 9221 2099

On Page 6:

INDEPENDENT EXPERT’S REPORT

The Independent Expert, ~~Alpha Securities Pty Ltd,~~ Pitcher Partners NSW Corporate Pty Limited has concluded that the Offer is fair and reasonable to PMR Shareholders (see Independent Expert’s Report in Appendix A of the Supplementary Target’s Statement).

On Page 8:

1.3 The Independent Expert has concluded that the Offer is fair and reasonable

PMR engaged ~~Alpha Securities Pty Ltd~~ Pitcher Partners NSW Corporate Pty Limited as an independent expert to provide a report as to whether the Offer is fair and reasonable to PMR Shareholders. The Independent Expert assessed the value of 10 PMR Shares to be between $2.15 and $2.35, and assessed the value of the consideration (9 Sovereign Gold Shares) to be between $2.40 and $2.55.

As the value of the consideration to be received by PMR Shareholders under the Offer equals or exceeds the value of PMR Shares, in the opinion of the Independent Expert, the Offer is fair and, consistent with ASIC Regulatory Guide 111, also reasonable.

The Independent Expert’s Report dated 2[nd] August 2012 is set out in Appendix A to the Supplementary Target’s Statement.

On Page 21:

Clause 7.1 (e) is replaced with: “23.4 cents per PMR Share as at 24 July 2012[3] ”.

On Page 26:

Section 8.9 (a) is replaced with:

“the retention of the Independent Expert to prepare the Independent Expert’s Report in Appendix A of the Replacement Target’s Statement at a cost of $20,000”.

It should be noted that no fees are payable with respect to the Original IER.

On Page 29:

Independent Expert means ~~Alpha Securities Pty Ltd ACN 124 327 064 P~~ itcher Partners NSW Corporate Pty Limited ACN 103 614 446.

Independent Expert’s Report means the report in Appendix A of the Supplementary Target’s Statement.

4. DIRECTORS RECOMMENDATION

The Independent Directors of PMR recommend that you ACCEPT the Offer in respect of all your PMR Shares, subject to there being no Superior Proposal, and no Material Adverse Event having occurred.

The Directors of PMR recommend that you read the Original Target's Statement, including the Replacement IER, in full to ensure that you understand the Independent Expert's conclusions. A full copy of the Independent Expert's Report is contained in Annexure A to this Supplementary Target's Statement.

5. ADDITIONAL INFORMATION

5.1 Defined terms

Capitalised terms used in this Supplementary Target's Statement have the same meaning as given in section 9 of the Original Target's Statement, unless the context requires otherwise.

5.2 Consent to be named

Independent Expert – Replacement IER

This Supplementary Target's Statement contains statements made by, or statements said to be based on statements made by Pitcher Partners NSW Corporate Pty Limited as independent expert (Consenting Party). The Consenting Party has consented to the inclusion of each statement it has made in the form and context in which that statement appears and has not withdrawn that consent at the date of this Supplementary Target's Statement.

Independent Expert – Original IER

Alpha Securities Pty Ltd has given and not withdrawn its consent before the date of this Supplementary Target’s Statement to being named in this Supplementary Target’s Statement in the form and context in which it is so named.

Stuart H. Cameron has given and not withdrawn his consent before the date of this Supplementary Target’s Statement to being named in this Supplementary Target’s Statement in the form and context in which he is so named.

6. AUTHORISATION

This Supplementary Target's Statement has been approved by a resolution passed at a meeting of the PMR Directors.

DATED 2nd August 2012

SIGNED for and on behalf of Precious Metal Resources Limited

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______ Peter Kennewell Director

APPENDIX A

REPLEACEMENT INDEPENDENT EXPERT’S REPORT

Precious
Metal
Resources Limited

Independent
Expert’s
Report

2
August
2012

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Level 22 MLC Centre Postal Address: 19 Martin Place GPO Box 1615 Sydney NSW 2000 Sydney NSW Australia Australia

2
August
2012 The
Directors Precious
Metal
Resources
Limited Level
2,
Hudson
House 131
Macquarie
Street Sydney
NSW
2000

Tel: +61 2 9221 2099 ABN 72 103 614 446 Fax+61 2 92231762 AFS LICENCE NO. 227 719

www.pitcher.com.au [email protected] Pitcher Partners, including Johnston Rorke, is an association of independent firms G Melbourne | Sydney | Perth | Adelaide | Brisbane

Dear
Sirs

**Independent

Expert’s
Report**

1. Introduction

1.1 Pitcher
Partners
NSW
Corporate
Pty.
Limited
(“ Pitcher
Partners ”)
has
been
engaged
by
the Independent
Directors
of
Precious
Metal
Resources
Limited
(“ PMR ”)
to
prepare
an Independent
Expert’s
Report
(“ the
Report ”)
to
express
an
opinion
as
to
whether
or
not
the terms
of
the
off-‐market
takeover
offer
by
Sovereign
Gold
Company
Limited
(“ SOC” )
to
acquire all
or
any
of
the
ordinary
shares
in
PMR
on
the
basis
of
9
shares
in
SOC
for
every
10
shares held
in
PMR
(“ the
Takeover
Offer ”)
is
fair
and
reasonable
to
the
shareholders
of
PMR.
1.2 Pitcher
Partners
NSW
Corporate
Pty
Limited
holds
Australian
Financial
Services
Licence 227719
issued
by
ASIC
pursuant
to
which
they
are
licensed
to
prepare
reports
for
the
purpose of
advising
clients
in
relation
to
proposed
or
actual
mergers,
acquisitions,
takeovers,
corporate reconstructions
or
share
issues.

**2. Summary

of
Opinion**

2.1 In
our
opinion,
and
for
the
reasons
set
out
in
Sections
8
and
10
of
this
report,
the
Takeover Offer
is Fair
and
Reasonable for
the
Shareholders
of
PMR.

Fairness

2.2 In
order
to
assess
the
fairness
of
the
Takeover
Offer,
we
have
compared
the
value
of
the parcel
of
shares
offered
by
SOC
to
the
value
of
the
shares
in
PMR
being
acquired
as summarised
in
the
table
below:

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2.3 As
the
value
of
the
9
shares
in
SOC
being
received
in
consideration
is
greater
than
the
10 shares
in
PMR,
and
in
the
absence
of
other
information,
we
are
of
the
opinion
that
the Takeover
Offer
is
fair.
2.4 A
control
premium
of
between
9%
and
11%
is
included
in
the
offer
by
SOC.
Despite
market averages
being
around
the
25%
to
30%
this
lower
level
is
in
our
opinion
reasonable
given how
close
to
a
merger
of
two
equals
the
transaction
is.

3. Reasonableness

3.1 As
the
Proposed
Transaction
is
fair,
it
is
considered
to
be
reasonable
in
accordance
with
the guidance
provided
by
the
Australian
Securities
and
Investment
Commission
(“ASIC”). However,
we
have
also
considered
the
following
factors
in
our
assessment:
- The
  future
  prospects
  of
  the
  Company
  if
  the
  Proposed
  Transaction
  does
  not
  proceed;
  and
- Any
  other
  commercial
  advantages
  and
  disadvantages
  to
  the
  Shareholders
  as
  a consequence
  of
  the
  Proposed
  Transaction
  proceeding.
3.2 The
key
advantages
of
the
Proposed
Transaction
are:
PMR
shareholders
who
accept
the
offer
will
receive
shares
in
SOC
as
consideration.
SOC
is
a company
with
a
more
diversified
portfolio
of
projects
and
greater
resources
to
manage
the projects
of
PMR.
Overall
savings
in
administration
and
compliance
costs
should
be
achieved,
resulting
in greater
return
to
all
shareholders.
The
shares
in
PMR
currently
escrowed
will
be
released
and
the
shares
in
SOC
acquired
as
a result
will
not
be
restricted.
As
such
there
will
be
considerably
more
securities
available
to be
traded
which
may
increase
liquidity
in
the
shares
in
SOC,
as
compared
to
the
current liquidity
of
the
shares
in
PMR.
SOC
may
be
in
a
better
position
to
raise
capital
to
fund
ongoing
exploration
and development
than
PMR.
3.3 The
key
disadvantages
of
the
Proposed
Transaction
are:
PMR
shareholders
will
hold
a
lesser
%
interest
in
the
shares
in
SOC
than
they
held
in
PMR.
The
Board
of
SOC
will
control
the
future
direction
of
the
business
operations
of
the
PMR assets.
The
release
from
escrow
of
the
PMR
shares
to
enable
the
takeover,
and
the
fact
that
the SOC
shares
acquired
will
not
be
subject
to
restrictions,
may
result
in
substantial
numbers
of shares
being
offered
for
sale
on
the
market,
thus
forcing
prices
down
below
the
expected levels
following
completion.
3.4 We
are
not
aware
of
any
alternative
proposals
which
may
provide
a
greater
benefit
to
the Shareholders
of
PMR
at
this
time.
3.5 In
our
opinion,
the
position
of
the
Shareholders
of
PMR
if
the
Takeover
Offer
is
accepted
is more
advantageous
than
the
position
if
it
is
not
accepted.
Therefore,
in
the
absence
of
any

==> picture [119 x 22] intentionally omitted <==

other
relevant
information
and/or
a
superior
offer,
we
consider
that
the
Proposed
Takeover Offer
is
reasonable
for
the
Shareholders
of
PMR.

**4. Summary

of
Takeover
Offer**

4.1 On
10
July
2012
SOC
announced
an
off-‐market
takeover
bid
for
all
of
the
issued
shares
in PMR.
4.2 On
20
July
2012
SOC
lodged
the
Bidder’s
Statement
dated
20
July
2012
with
the
Australian Securities
and
Investments
Commission
(“ ASIC ”)
and
served
the
Bidder’s
Statement
on
PMR.
4.3 On
25
July
2012
PMR
lodged
a
Target’s
Statement
dated
25
July
with
ASIC.
The
Target’s Statement
included
as
Appendix
B
a
Report
by
Alpha
Securities
Pty.
Limited
which
was
stated to
be
an
Independent
Expert’s
Report.
4.4 On
27
July
2012
ASIC
advised
the
directors
of
PMR
that
they
had
a
number
of
concerns regarding
the
report
included
as
Appendix
B
to
the
Target’s
Statement
relating
to
both
the independence
of
the
author
of
the
report
and
the
failure
of
the
report
to
address
specific issues.
4.5 On
27
July
2012
Pitcher
Partners
were
engaged
by
the
non-‐associated
directors
of
PMR
to prepare
a
new
Independent
Expert’s
report
to
be
issued
in
a
supplementary
Target’s statement.

**5. Purpose

of
the
Report**

5.1 SOC
does
not
currently
hold
a
relevant
interest
in
any
of
the
ordinary
shares
in
PMR.
However SOC
and
PMR
do
have
two
common
directors
and
as
a
result
Section
640
of
the
Corporations Act
2001
(Cth) (“Corporations
Act”) requires
that
a
target’s
statement
given
in
accordance with
Section
638
of
the
Corporations
Act
must
include,
or
be
accompanied
by,
a
report
by
an expert
that
states,
whether,
in
the
expert’s
opinion,
the
takeover
offer
is
fair
and
reasonable and
gives
the
reasons
for
forming
that
opinion.
5.2 This
report
is
to
be
released
as
a
supplementary
target’s
statement
on
or
around
1
August 2012
and
has
been
prepared
for
the
exclusive
purpose
of
assisting
the
shareholders
in
their consideration
of
the
Takeover
Offer
from
SOC.
We
are
not
responsible
to
you,
or
anyone
else, whether
for
our
negligence
or
otherwise,
if
the
report
is
used
by
any
other
person
for
any other
purpose.

**6 Basis

of
Evaluation**

6.1 In
determining
whether
the
Takeover
Offer
is
“fair
and
reasonable”
we
have
given
regard
to the
views
expressed
by
ASIC
in
Regulatory
Guide
111
Contents
of
Expert’s
Reports
(“RG
111”).
6.2 RG
111
states
that:

==> picture [119 x 22] intentionally omitted <==

  - an

offer
is
considered
fair
if
the
value
of
the
offer
price
or
consideration
is
equal
to
or greater
than
the
value
of
the
securities
that
are
the
subject
of
the
offer.
The
comparison should
be
made
assuming
100%
ownership
of
the
target
company
and
irrespective
of whether
the
consideration
offered
is
scrip
or
cash
and
without
consideration
of
the percentage
holding
of
the
offeror
or
its
associates
in
the
target
company;

  - an

offer
is
considered
reasonable
if
it
is
fair.
If
the
offer
is
not
fair
it
may
still
be reasonable
after
considering
other
significant
factors
which
justify
the
acceptance
of
the offer
in
the
absence
of
a
higher
bid.
ASIC
has
identified
the
following
factors
which
an expert
might
consider
when
determining
whether
an
offer
is
reasonable:

     - -‐ the

offeror’s
pre-‐existing
entitlement,
if
any,
in
the
shares
of
the
target
company;

     - -‐ other

significant
shareholding
blocks
in
the
target
company;

     - -‐ the

liquidity
of
the
market
in
the
target
company’s
securities;

     - -‐ taxation

losses,
cash
flow
or
other
benefits
through
achieving
100%
ownership
of
the target
company;

     - -‐ any

special
value
of
the
target
company
to
the
offeror,
such
as
particular
technology and
the
potential
to
write
off
outstanding
loans
from
the
target
company;

     - -‐ the

likely
market
price
if
the
offer
is
unsuccessful;
and

     - -‐ the

value
to
an
alternative
offeror
and
likelihood
of
an
alternative
offer
being
made.

6.3 In
order
to
assess
whether
the
Takeover
Offer
is
fair
and
reasonable
we
have;
assessed
whether
the
Takeover
Offer
is
fair
by
estimating
the
fair
market
value
of
10
shares in
PMR
and
comparing
that
value
to
the
estimated
fair
market
value
of
the
9
shares
in
SOC to
be
received
as
consideration
by
Shareholders
pursuant
to
the
Takeover
Offer;
and
assessed
the
reasonableness
of
the
Takeover
Offer
by
considering
other
advantages
and disadvantages
of
the
Takeover
Offer
to
Shareholders.

7 Independence

7.1 Prior
to
accepting
this
engagement,
Pitcher
Partners
considered
its
independence
with
respect to
the
Takeover
Offer
with
reference
to
the
ASIC
Regulatory
Guide
112
“Independence
of Expert’s
Reports”
(“RG
112”).
7.2 Pitcher
Partners
has
no
professional
involvement
with
any
of
PMR,
SOC,
their
directors
and shareholders,
nor
interest
in,
the
outcome
of
the
approval
of
the
Takeover
Offer
other
than that
of
an
independent
expert.
Pitcher
Partners
is
entitled
to
receive
a
fee
based
on commercial
rates
and
including
reimbursement
of
out-‐of-‐pocket
expenses
for
the
preparation of
this
report.
The
fee
for
this
report
will
be
$20,000
plus
GST.
7.3 Except
for
these
fees,
Pitcher
Partners
will
not
be
entitled
to
any
other
pecuniary
or
other benefit,
whether
direct
or
indirect,
in
connection
with
the
issuing
of
this
report.
The
payment of
this
fee
is
in
no
way
contingent
upon
the
success
or
failure
of
the
Takeover
Offer.
7.4 A
draft
of
this
report
was
provided
to
the
non-‐associated
directors
of
PMR
for
confirmation
of factual
accuracy
of
its
contents.
Other
than
spelling
corrections
no
other
changes
were
made to
the
Report
as
a
result
of
this
review.

==> picture [119 x 22] intentionally omitted <==

**8 Limitations

and
Reliance
on
Information**

8.1 We
have
considered
a
number
of
sources
in
preparing
this
independent
expert’s
report
and arriving
at
our
opinion.
These
sources
of
information
are
detailed
in
Appendix
8.2 This
report
is
based
upon
financial
and
other
information
provided
by
the
non-‐associated directors
of
PMR
and
other
information
available
on
public
record.
We
have
considered
and relied
upon
this
information.
The
information
provided
to
us
has
been
evaluated
through analysis,
enquiry
and
review
for
the
purposes
of
forming
an
opinion
as
to
whether
the Takeover
Offer
is
fair
and
reasonable
to
the
Shareholders
of
PMR.
However
we
do
not
warrant that
our
enquiries
have
identified
all
of
the
matters
that
an
audit,
or
an
extensive
examination or
due
diligence
might
disclose.

9 Qualifications

Ms
Deborah
Cartwright
is
a
director
of
Pitcher
Partners
NSW
Corporate
Pty
Limited.
Ms Cartwright
is
a
Chartered
Accountant
with
extensive
experience
in
the
field
of
corporate valuations
and
the
provision
of
independent
expert’s
reports
and
investigating
accountant reports
for
transactions
involving
publicly
listed
and
unlisted
companies
in
Australia.

10 Consent

Pitcher
Partners
NSW
Corporate
Pty
Limited
consents
to
the
inclusion
of
this
report
in
the form
and
context
in
which
it
is
included
with
the
Supplementary
Target’s
Statement
to
be issued
to
shareholders.
Other
than
this
report,
none
of
the
staff
of
Pitcher
Partners
NSW Corporate
Pty
Limited
has
been
involved
with
the
preparation
of
the
Target’s
Statement
and Supplementary
Target’s
Statement
and
accordingly
we
take
no
responsibility
for
the
contents.

11 Indemnity

PMR
has
indemnified
Pitcher
Partners
and
their
respective
officers
and
employees,
who
may be
involved
in
or
in
any
way
associated
with
this
report,
against
any
and
all
losses,
claims, damages
and
liabilities
arising
out
of
or
related
to
the
performance
of
those
services
by Pitcher
Partners,
occasioned
by
reliance
by
Pitcher
Partners
on
information
provided
by
PMR or
its
representatives
which
is
subsequently
found
to
be
false
or
misleading
or
not
complete.

Complete
information
is
deemed
to
be
information,
which
at
the
time
of
completing
this report
should
have
been
available
to
Pitcher
Partners
and
would
reasonably
been
expected
to have
been
made
available
to
Pitcher
Partners
to
enable
us
to
form
our
opinion.
PMR
will reimburse
any
indemnified
party
for
all
expenses
(including
but
without
limitation,
legal expenses)
on
a
full
indemnity
basis.

Yours
faithfully,

==> picture [143 x 46] intentionally omitted <==

DEBORAH
CARTWRIGHT Director Pitcher
Partners
NSW
Corporate
Pty
Limited

==> picture [119 x 22] intentionally omitted <==

**Independent

Expert’s
Report**

**TABLE

OF
CONTENTS**

Financial Services Guide ........................................................................................................................ 1	Financial Services Guide ........................................................................................................................ 1
1	TERMS OF THE TAKEOVER OFFER .................................................................................................. 2
2	PROFILE OF PRECIOUS METAL RESOURCES LIMITED ..................................................................... 4
3	PROFILE OF SOVEREIGN GOLD COMPANY LIMITED ....................................................................... 7
4	OVERVIEW OF THE PROPOSED MERGED ENTITY ......................................................................... 10
5	VALUATION APPROACH ............................................................................................................... 12
6	VALUATION BASED ON MARKET ACTIVITY .................................................................................. 13
7.	VALUATION BASED ON NET ASSETS ............................................................................................ 20
8.	OPINION AS TO WHETHER TAKEOVER OFFER IS FAIR .................................................................. 21
9.	IS SOC OFFERRING A PREMIUM TO ACQUIRE CONTROL OF PMR ............................................... 21
10.	CONSIDERATION AS TO REASONABLENESS ................................................................................. 21
11.	OTHER CONSIDERATIONS ............................................................................................................ 22
Appendix 1: Valuation Methodologies ................................................................................................ 24
Appendix 2: Sources of Information .................................................................................................... 26

==> picture [119 x 22] intentionally omitted <==

Financial Services Guide

Pitcher Partners NSW Corporate Pty Ltd ABN: 72 103 614 446 AFSL: 227 719

2 August 2012

What is a Financial Services Guide?

This Financial Services Guide (“FSG”) is an important document the purpose of which is to assist you in deciding whether to use any of the general financial product advice provided by Pitcher Partners NSW Corporate Pty Ltd. The use of “we”, “us” or “our” is a reference to Pitcher Partners NSW Corporate Pty Ltd as the holder of Australian Financial Services Licence (“AFSL”) No. 227719. The contents of this FSG include:

who we are and how we can be contacted
what services we are authorised to provide under our AFSL
how we (and any other relevant parties) are remunerated in relation to any general financial product advice we may provide.
details of any potential conflicts of interest
details of our internal and external dispute resolution systems and how you can access them.

Information about us

We have been engaged by you to give general financial product advice in the form of a report to be provided to you in connection with a financial product to be issued by another party. You are not the party or parties who engaged us to prepare this report. We are not acting for any person other than the party or parties who engaged us. We are required to give you an FSG by law because our report is being provided to you. You may contact us by writing to Level 22 MLC Centre, 19 Martin Place, SYDNEY NSW 2000, or by telephone on +61 (02) 9221 2099.

Pitcher Partners NSW Corporate Pty Ltd is ultimately owned by Pitcher Partners NSW Pty Ltd, a provider of accounting, tax, corporate advisory, superannuation, investment advisory and consulting services. Directors of Pitcher Partners NSW Corporate Pty Ltd are directors of Pitcher Partners NSW Pty Limited.

Pitcher Partners NSW Pty Limited is an independent member of Pitcher Partners. As such, neither it nor any of the other independent member firms has any liability for each other’s acts or omissions. Each of the member firms is a separate and independent legal entity operating under the name “Pitcher Partners”, or other related names.

The financial product advice in our report is provided by Pitcher Partners NSW Corporate Pty Ltd and not by Pitcher Partners NSW or its related entities.

We do not have any formal associations or relationships with any entities that are issuers of financial products. However, we and the Pitcher Partners NSW Pty Limited (and its related bodies corporate) may from time to time provide professional services to financial product issuers in the ordinary course of business.

What financial services are we licensed to provide?

The AFSL we hold authorises us to provide the following financial services to both retail and wholesale clients:

to provide general financial advice only in respect to interests in managed investment schemes, excluding investor directed portfolio services, and securities.

Information about the general financial product advice we provide

The financial product advice provided in our report is known as “general advice” because it does not take into account your personal objectives, financial situation or needs. You should consider whether the general advice contained in our report is appropriate for you, having regard to your own personal objectives, financial situation or needs.

If our advice is being provided to you in connection with the acquisition or potential acquisition of a financial product issued by another party, we recommend you obtain and read carefully the relevant Product Disclosure Statement (“PDS”) or offer document provided by the issuer of the financial product. The purpose of the PDS is to help you make an informed decision about the acquisition of a financial product. The contents of the PDS will include details such as the risks, benefits and costs of acquiring the particular financial product.

Level 22 19 Martin Place SYDNEY NSW 2000 Tel: 02 9221 2099 Fax: 02 9223 1762

How are we and our employees remunerated?

Our fees are usually determined on an hourly basis; however they may be a fixed amount or derived using another basis. We may also seek reimbursement of any out-of pocket expenses incurred in providing the services.

Fee arrangements are agreed with the party or partied who actually engage us and we confirm our remuneration in a written letter of engagement to the party or parties who actually engage us.

Neither Pitcher Partners NSW Corporate Pty Ltd nor its directors and officers, nor any related bodies corporate or associates and their directors and officers, receives any commissions or other benefits, except for the fees for services rendered to the party or parties who actually engage us. Our fee will be disclosed in the relevant PDS or offer document prepared by the issuer of the financial product it required.

All of our employees receive a salary with some directors also having an equity interest in the company. We do not receive any commissions or other benefits arising directly from services provided to you. The remuneration paid to our directors reflects their individual contribution to the company and covers all aspects of performance.

We do not pay commissions or provide other benefits to other parties for referring prospective clients to us.

What should you do if you have a complaint?

If you have any concerns regarding our report, you may wish to advise us. Our internal complaint handling process is designed to respond to your concerns promptly and equitably. Please address your complaint in writing to:

The Managing Partner Pitcher Partners NSW Pty Limited Level 19, MLC Centre 19 – 29 Martin Place SYDNEY NSW 2000

If you are not satisfied with the steps we have taken to resolve your complaint, you may contact the Financial Industry Complaints Service (“FICS”). FICS provides free advice and assistance to consumers to help them resolve complaints relating to members of the financial services industry. Complaints may be submitted to FICS at:

Financial Industry Complaints Service Telephone: 1800 335 405 Internet: http://fics.asn.au

The Australian Securities and Investments Commission (“ASIC”) regulates Australian companies, financial markets, financial services organisations and professionals who deal and advise in investments, superannuation, insurance, deposit taking and credit. Their website contains information on lodging complaints about companies and individual persons and sets out the types of complaints handled by ASIC. You may contact ASIC as follows:

Info line: 1 300 300 630 Email: [email protected] Internet: http://www.asic.gov.au/asic/asic.nsf

==> picture [119 x 22] intentionally omitted <==

**DETAILED

REPORT**

**1 TERMS

OF
THE
TAKEOVER
OFFER**

1.1 Background

On
10
July
2012
SOC
announced
an
off-‐market
takeover
bid
for
all
of
the
issued
shares
in PMR.
On
20
July
2012
SOC
lodged
the
Bidder’s
Statement
dated
20
July
2012
with
the
Australian Securities
and
Investments
Commission
(“ ASIC ”)
and
served
the
Bidder’s
Statement
on
PMR.
• On
25
July
2012
PMR
lodged
a
Target’s
Statement
dated
25
July
with
ASIC.
The
Target’s Statement
included
as
Appendix
B
a
Report
by
Alpha
Securities
Pty.
Limited
which
was stated
to
be
an
Independent
Expert’s
Report.
On
27
July
2012
ASIC
advised
the
directors
of
PMR
that
they
had
a
number
of
concerns regarding
the
report
included
as
Appendix
B
to
the
Target’s
Statement
relating
to
both
the independence
of
the
author
of
the
report
and
the
failure
of
the
report
to
address
specific issues.
On
27
July
2012
Pitcher
Partners
were
engaged
by
the
non-‐associated
directors
of
PMR
to prepare
a
new
Independent
Expert’s
report
to
be
issued
in
a
supplementary
Target’s Statement.

**1.2 The

Takeover
Offer**

Under
the
Takeover
offer
SOC
will
acquire
up
to
100%
of
the
issued
capital
of
PMR
under
a conditional
off-‐market
takeover
pursuant
to
Chapter
6
of
the
Corporations
Act.

Under
the
Takeover
Offer,
SOC
has
offered
9
SOC
shares
for
every
10
PMR
shares
held.

No
offer
has
been
made
for
the
Options
issued
by
PMR.
The
options
will
vest
pursuant
to this
offer
becoming
unconditional,
and
option
holders
will
have
the
opportunity
to
exercise the
options
at
the
exercise
price
of
30
cents
per
share.
Each
share
received
by
the
option holders
will
qualify
under
the
terms
of
the
offer
of
9
SOC
shares
for
every
10
PMR
shares held.
As
the
options
are
out
of
the
money
we
do
not
anticipate
that
any
will
be
exercised and
this
report
has
been
prepared
on
that
basis.

**1.3 Key

Conditions
of
the
Takeover
Offer**

The
Takeover
Offer
is
subject
to
the
following
conditions
which
must
be
met
or
waived:

SOC
acquiring
a
relevant
interest
in
at
least
80%
(by
number)
of
PMR
shares;
Receipt
of
all
regulatory
approvals;
No
restraint
arising
that
adversely
affects
the
Offer;
No
conduct
by
PMR
that
is
outside
its
ordinary
course
of
business;
No
PMR
Prescribed
Occurrence
occurring;
No
PMR
Material
Adverse
Change
occurring;
and
Representations
regarding
PMR’s
issued
securities
continue
to
be
true
and
correct.

The
terms
referred
to
in
this
Section
are
all
defined
in
the
Target’s
Statement.

==> picture [119 x 22] intentionally omitted <==

If
SOC
acquires
a
relevant
interest
in
90%
or
more
of
PMR
shares,
and
subject
to
the
other conditions
of
the
Takeover
Offer
being
met
or
waived,
SOC
intends
to
proceed
to compulsorily
acquire
the
remaining
shares
in
PMR.

**1.4 SOC’s

Intentions**

As
set
out
in
Section
7
of
the
Bidder’s
Statement,
upon
completion
SOC
intends
to
maintain PMR’s
tenements
and
work
towards
the
development
of
its
resources.
These
assets,
brought to
development,
may
be
valuable
for
SOC
and
the
Merged
Group.
The
further
intentions
of SOC
then
vary
depending
on
the
level
of
the
relevant
interest
in
PMR
acquired
by
SOC,
as follows;

1.4.1 Intentions
following
SOC
acquiring
a
relevant
interest
in
90%
or
more
of
PMR
Shares .

**(a) Corporate

Matters**

If
it
is
entitled
to
under
the
Corporations
Act,
SOC
will
seek
to
proceed
with
the compulsory
acquisition
of
the
outstanding
PMR
Shares
in
accordance
with
the provision
of
the
Corporations
Act.
At
the
completion
of
the
compulsory
acquisition
process,
PMR
will
be
a
wholly owned
subsidiary
of
SOC
and
SOC
intends
to
make
arrangements
for
PMR
to
be removed
from
the
official
list
of
the
ASX,
subject
to
obtaining
any
required approvals.

**(b) Operations,

developments
and
exploration**

To
operate
and
manage
PMR’s
business
together
with
the
business
of
SOC
Reduce
or
eliminate
costs
arising
from
the
maintenance
of
separate
share
registry, secretarial,
head
office
and
administration
functions
and
costs
associated
with
the listing
of
PMR;
and
Review
all
of
PMR’s
exploration
interests
and
activities
to
determine
appropriate requirements
for
the
operation,
management
and
funding
of
both
PMR’s
and
SOC’s businesses
and,
where
appropriate,
the
integration
of
these
activities
and
tenement holdings
into
a
group
structure.

**(c) PMR

Management**

SOC
intends
that
Mr
Peter
Kennewell,
being
the
only
person
employed
by
PMR
at the
date
of
the
Bidder’s
Statement,
will
be
transferred
to
SOC
with
no
change
to
his entitlements.
No
loss
of
knowledge
is
anticipated.
1.4.2 Intentions
if
SOC
acquires
a
Relevant
Interest
in
at
least
80%
but
less
than
90%
of
PMR Shares.

**(a) Corporate

Matters**

SOC
intends
to
maintain
PMR’s
listing
on
the
ASX
while
it
meets
ASX
requirements for
maintain
a
listing
and
it
is
cost
effective
to
do
so;
If
SOC
becomes
entitled
at
some
later
time
to
exercise
compulsory
acquisition rights
under
the
Corporations
Act,
it
intends
to
exercise
those
rights.

==> picture [119 x 22] intentionally omitted <==

**(b) Assumption

of
control
of
Board
and
management**

Subject
to
the
Corporations
Act
and
the
constitution
of
PMR,
SOC
will
seek
to
add
two members
to
the
Board
of
PMR
to
reflect
SOC’s
proportionate
ownership
interest
in
PMR. Through
its
nominees
on
the
Board,
SOC
will
seek
to
implement
the
intentions
detailed
in Section
1.4.1(b)
above
to
the
extent
that
they
are
consistent
with
PMR
being
a
controlled entity
of
SOC
and
are
considered
to
be
in
the
best
interests
of
all
PMR
shareholders.
SOC
has stated
that
they
have
made
no
decision
as
to
the
identity
of
those
proposed
directors.

**(c) Other

Intentions**

On
the
basis
of
the
information
concerning
PMR
which
is
known
to
SOC
at
the
date
of
the Bidder’s
Statement
and
the
existing
circumstances
affecting
the
business
of
PMR,
it
is
the present
intention
of
SOC
that;

i. The
business
of
PMR
will
be
otherwise
continued
in
substantially
the
same
manner as
it
is
presently
being
conducted;
ii. No
other
major
changes
will
be
made
to
the
business
of
PMR;
iii. There
will
not
be
any
other
redeployment
of
the
fixed
assets
of
PMR;
and
iv. The
present
employee
of
PMR
will
be
employed
by
SOC.

**2 PROFILE

OF
PRECIOUS
METAL
RESOURCES
LIMITED**

2.1 Overview

2.1.1 PMR
is
a
junior
mining
company
listed
on
the
ASX,
exploring
for
gold
in
NSW.
It
was
admitted to
the
official
list
of
the
ASX
on
2
December
2011
and
quoted
on
the
ASX
on
6
December
2011, after
raising
$2m
(before
costs)
through
an
initial
public
offering.
2.1.2 PMR
has
4
tenements
in
Halls
Peak,
80
km
south-‐west
of
Armidale,
NSW
and
1
tenement
near Tarago,
east
of
Canberra,
NSW.
One
of
these
tenements
has
expired
in
January
2012
but
we are
advised
that
renewal
is
pending.
PMR
is
implementing
exploration
work
programmes
to prove
resources
as
soon
as
possible.
Full
details
of
the
tenements
and
the
activities
of
PMR are
set
out
in
the
Target’s
Statement.

**2.2 Capital

Structure
and
Shareholders**

2.2.1 PMR
currently
has
85,000,000
ordinary
shares
on
issue,
of
which
71,250,000
are
subject
to escrow
arrangements
for
a
period
of
24
months
from
the
date
of
official
listing.
2.2.2 Raffles
Capital
Limited
is
the
largest
shareholder,
holding
51,250,000
(60.3%
of
issued
shares) which
are
subject
to
the
escrow
arrangements.
Raffles
Capital
also
holds
an
indirect
interest
of 17.9%
in
SOC,
through
its
investment
in
Hudson
Resources
Limited
( HRS )
and
Hudson Investment
Group
Limited
( HGL ).
2.2.3 The
second
largest
shareholder
is
Code
Nominees
Pty.
Limited,
with
5,000,000
shares,
also subject
to
the
escrow
arrangements.

==> picture [119 x 22] intentionally omitted <==

2.2.4 PMR
also
has
3,600,000
options
outstanding
at
the
date
of
the
Target’s
Statement.
These options
are
all
exercisable
at
30
cents.
The
Takeover
offer
from
SOC
does
not
include
the options,
which
will
lapse
unless
they
are
exercised
prior
to
the
closing
date
of
the
offer.
As
the exercise
price
of
30
cents
is
currently
higher
than
the
market
price
of
PMR
as
traded
on
the ASX
(22
cents)
on
30
July
2012,
it
is
unlikely
that
any
of
these
options
will
be
exercised
prior
to the
closing
date
of
the
takeover
offer.

**2.3 Current

Activities**

2.3.1 On
29
March
2012
PMR
announced
to
the
ASX
that
they
had
entered
into
a
cooperation
and investment
agreement
with
Jiangsu
Geology
and
Engineering
Co, (“SUGEC”) of
Nanjing,
China, under
which
SUGEC
would
contribute
$2m
toward
exploration
on
EL
7679,
before
31
March 2014
at
which
time
SUGEC
will
be
entitled
to
a
30%
interest
in
the
tenement.

**2.4 Financial

Performance**

2.4.1 The
financial
performance
of
PMR
for
the
financial
years
ended
31
December
2010
and
31 December
2011
is
set
out
in
the
table
below
and
has
been
sourced
from
PMR’s
audited financial
statements
for
the
year
ended
31
December

==> picture [388 x 353] intentionally omitted <==

==> picture [119 x 22] intentionally omitted <==

**2.5 Financial

Position**

2.5.1 The
financial
position
of
PMR
as
at
31
December
2010
and
31
December
2011
is
shown
in
the table
below.
The
information
has
been
sourced
from
PMR’s
audited
financial
statements
for the
year
ended
31
December

==> picture [393 x 488] intentionally omitted <==

Net
assets
per
share
$0.03.
-‐

==> picture [119 x 22] intentionally omitted <==

**3 PROFILE

OF
SOVEREIGN
GOLD
COMPANY
LIMITED**

3.1 Overview

3.1.1 SOC
is
a
junior
mining
company
listed
on
the
ASX,
exploring
for
gold
and
other
precious
metals in
NSW
and
Malaysia.
It
was
admitted
to
the
official
list
of
the
ASX
on
29
November
2010
and quoted
on
the
ASX
on
3
December
2010
3.1.2 SOC
is
exploring
large
Intrusion-‐Related
Gold
Systems
(“ IRGS ”)
at
the
Rocky
River-‐Uralla Goldfield
in
New
South
Wales,
a
2,400
square
kilometre
site,
located
21
km
southwest
of Armidale.
3.1.3 SOC
is
also
exploring
for
gold
in
the
Eastern
and
Central
Gold
Belts
of
Peninsular,
Malaysia.
3.1.4 Full
details
of
these
tenements
and
the
activities
of
SOC
are
available
in
the
Bidder’s Statement.

**3.2 Capital

Structure
and
Shareholders**

3.2.1 SOC
currently
has
77,000,000
ordinary
shares
on
issue,
of
which
44,875,000
are
subject
to escrow
arrangements
for
a
period
of
24
months
from
the
date
of
official
listing,
and
are
not available
to
be
traded
until
on
or
after
3
December
3.2.2 Hudson
Resources
Limited
is
the
largest
shareholder,
holding
40,000,000
(51.95%)
of
issued shares),
of
which
all
are
subject
to
the
escrow
arrangements.
Raffles
Capital
Limited,
which holds
9.5%
of
the
shares
in
HRS
and
8.8%
indirectly
through
HGL,
also
holds
60.3%
of
the issued
shares
in
PMR
and
2.1%
of
the
shares
in
SOC.
3.2.3 The
second
largest
shareholder
is
Mr
Li
Ren
with
6,000,000
shares,
none
of
which
are
subject to
the
escrow
arrangements.
3.2.4 SOC
also
has
7,250,000
options
outstanding
at
the
date
of
the
Bidder’s
Statement.
These options
are
all
exercisable
at
30
cents
and
expiring
29
November
As
the
exercise
price of
30
cents
is
currently
higher
than
the
market
price
of
SOC
as
traded
on
the
ASX
(27.5
cents) on
30
July
2012,
it
is
unlikely
that
any
of
these
options
will
be
exercise
prior
to
the
closing
date of
the
takeover
offer.
The
considerations
following
in
relation
to
the
percentage
shareholdings post
the
takeover
offer
are
based
on
no
such
options
in
fact
having
been
exercised.

**3.3 Current

Activities**

3.3.1 On
28
March
2012
SOC
announced
to
the
ASX
that
they
had
entered
into
a
cooperation
and investment
agreement
with
Jiangsu
Geology
and
Engineering
Co, (“SUGEC”) of
Nanjing,
China, under
which
SUGEC
would
contribute
$4m
toward
exploration
on
two
tenements
before
31 March
2014
at
which
time
SUGEC
will
be
entitled
to
a
30%
interest
in
the
respective tenements.

==> picture [119 x 22] intentionally omitted <==

**3.4 Financial

Performance**

3.4.1 The
financial
performance
of
SOC
for
the
financial
years
ended
31
December
2010
and
31 December
2011
is
set
out
in
the
table
below
and
has
been
sourced
from
SOC’s
audited financial
statements
for
the
year
ended
31
December

==> picture [393 x 332] intentionally omitted <==

==> picture [119 x 22] intentionally omitted <==

**3.5 Financial

Position**

3.5.1 The
financial
position
of
SOC
as
at
31
December
2010
and
31
December
2011
is
shown
in
the table
below.
The
information
has
been
sourced
from
SOC’s
audited
financial
statements
for the
year
ended
31
December

==> picture [387 x 510] intentionally omitted <==

Net
assets
per
share
$0.055

==> picture [119 x 22] intentionally omitted <==

**4 OVERVIEW

OF
THE
PROPOSED
MERGED
ENTITY**

4.1 Introduction

4.1.1 There
are
3
possible
outcomes
in
relation
to
the
Takeover
Offer
from
SOC,
as
follows;

That
the
number
of
shares
in
PMR
which
are
offered
to
SOC
under
the
Takeover
Offer are
less
than
80%
of
the
total
issued
shares
in
PMR,
in
which
case
the
Takeover
Offer will
not
proceed;
That
the
number
of
shares
in
PMR
offered
to
SOC
under
the
Takeover
Offer
will
be between
80%
but
less
than
90%,
in
which
case
SOC
will
end
up
with
a
relevant
interest in
the
shares
in
PMR
equal
to
that
%;
or
That
the
number
of
shares
in
PMR
which
are
offered
to
SOC
under
the
Takeover
Offer are
at
least
90%,
in
which
case
SOC
will
move
to
compulsorily
acquire
the
remaining shares
and
will
then
have
100%
relevant
interest
in
all
the
shares
in
PMR.
4.1.2 In
Section
1.4
we
set
out
a
summary
of
the
intentions
of
SOC
in
relation
to
the
merged
entity in
the
case
of
either
the
2[nd] or
3[rd] outcome.

4.2 Directors

4.2.1 The
directors
of
each
company
are
currently
as
follows;

SOC PMR John
S
Dawkins
Non-‐executive
Chairman John
Foley Non-‐executive
Chairman Michael
Leu
–
CEO
and
Chief
Geologist Peter
Kennewell CEO
and
Executive
Director Peter
Meers
–
Non
Executive
Director Bruce
Dennis Non-‐executive
Director Rado
Jacob
Rebek
–
Non-‐executive
Director Michael
Leu Non-‐executive
Director Peter
Meers Non-‐executive
Director

4.2.2 The
above
table
shows
that
the
two
companies
already
have
two
common
directors.
4.2.3 SOC
has
indicated
that
it
intends
to
place
two
nominees
on
the
Board
of
PMR
should
it obtain
between
80
&
90%
of
the
shares,
but
it
has
also
advised
that
it
has
not
yet
identified who
those
directors
would
be.

**4.3 Capital

structure
and
impact
on
the
Shareholders**

4.3.1 In
the
table
below
we
have
summarised
the
top
5
shareholders
of
SOC
and
PMR,
and
their
% interest
in
the
shares,
assuming
either
the
minimum
80%
acceptance
level,
or
100% acceptance
level
following
acceptance
of
at
least
90%
followed
by
compulsory
acquisition.
In preparing
this
table
we
assumed
that
all
5
major
shareholders
in
PMR
will
accept
the Takeover
offer.

According
to
the
Target’s
Statement,
each
Director
intends
to
accept
the Offer
in
respect
of
all
PMR
Shares
controlled
by
them.
This
would
mean
that
if
the
minimum 80%
acceptance
level
is
achieved,
the
acceptance
level
would
be
at
least
82.14%.

==> picture [119 x 22] intentionally omitted <==

	PMR	PMR	PMR	SOC	SOC	SOC
Major Shareholders	Current	100%	80%	Current	100%	80%
Raffles Capital Hudson Resources Michael Leu Code Nominees Mata Li Ren Russell Lay Code Nominees Pty Ltd Bruce Dennis + Boyle Geng Du Lou Antonius Setiawan Other Directors SOC Others	60.29% 2.94% 3.56% 5.88% 5.88% 3.59% 0.00% 0%	100%	82.14% 17.86%	2.08% 51.95% 6.33% 4.57% 7.79% 6.26% 5.19%	31.09% 26.06% 4.64% 4.07% 3.91% 3.14% 2.93% 2.93% 2.60% 1.79% 0.00%	34.13% 28.61% 5.09% 4.46% 4.29% 3.45% 3.22% 3.22% 2.86% 1.96% 0.00%
TOTAL	82.14% 100.00% 100.00%			84.17% 83.16% 91.28%

PMR
currently
has
one
shareholder
with
relevant
interest
of
60.29%
in
its
shares
SOC
currently
has
one
shareholder
with
a
relevant
interest
of
51.95%
in
its
shares
Assuming
the
Takeover
Offer
is
successful
to
either
the
80%
or
100%
level,
SOC
will
have
two substantial
holders,
Raffles
Capital
and
Hudson
Resources,
but
neither
with
a
controlling interest

**4.4 Pro

Forma
Financial
Information**

The
table
below
has
been
prepared
on
the
basis
that
100%
of
the
shares
in
PMR
are acquired
by
SOC.

==> picture [119 x 22] intentionally omitted <==

	PMR	SOC Combined	SOC Combined

	31-Dec-11	31-Dec-11	Pro forma 100% takeover	Source
	$000	$000
Cash and Equivalents Loan at Call Other Tangible Assets Less: Liabilites Plus: Goodwill/PPA values Net Tangible Assets (NTA) Intangibles Net Assets Market Capitalisation Enterprise Value Price:Book NTA - Cents per share Cash - Cents per share Cash + Loan at Call - Cents per share Share Price - Cents At 27/7/2012 Consideration for PMR Shares Ordinary Shares new Issue Ordinary Shares on Issue Ordinary Shares in Escrow Options new Issue 30 Cent Options on Issue	60 1,507 1,113 -14	1,414 2,856 -51	1,474 1,507 3,969 -65 18,371	Dec 2011 Annual Reports Dec 2011 Annual Reports Dec 2011 Annual Reports Dec 2011 Annual Reports Dec 2011 Annual Reports Bloomberg Bloomberg Bloomberg Dec 2011 Annual Reports Dec 2011 Annual Reports Dec 2011 Annual Reports Dec 2011 Annual Reports
	2,666 0	4,219 0	25,256 0
	2,666 18,700 18,640 7.01 3.1 0.1 1.8 22.0 9 for 10 PMR 85,000 71,250 3,600	4,219 21,175 19,760 5.02	25,256 21,038 76,500 153,500 49,875 7,250
		5.5 1.8 1.8 27.5
		77,000 49,875 0 7,250

**5 VALUATION

APPROACH**

**5.1 Definition

of
market
value**

5.1.1 In
forming
our
opinion
as
to
whether
or
not
the
Proposed
Transaction
is
fair
and
reasonable
to the
Shareholders
of
PMR
we
have
assessed
the
value
of
the
10
shares
in
PMR
on
a
fair
value basis
and
compared
that
to
the
value
of
the
9
shares
in
SOC
being
offered
as
consideration. Fair
value
is
generally
defined
as:

“ The
amount
at
which
an
asset
could
be
exchanged
between
a
knowledgeable
and
willing
but not
anxious
seller
and
a
knowledgeable
and
willing
but
not
anxious
buyer
both
acting
at
arm’s length ”.

**5.2 Valuation

Methodologies**

5.2.1 RG
111
outlines
the
appropriate
methodologies
that
a
valuer
should
generally
consider
when valuing
assets
or
securities
for
the
purposes
of,
amongst
other
things,
share
buybacks, selective
capital
reductions,
schemes
of
arrangement,
takeovers
and
prospectuses.
These include:
Discounted
cash
flow
(“DCF”)
method
and
the
estimated
realisable
value
of
any
surplus assets;

==> picture [119 x 22] intentionally omitted <==

Application
of
earnings
multiples
to
the
estimated
future
maintainable
earnings
or
cash flows
of
the
entity,
added
to
the
estimated
realisable
value
of
any
surplus
assets;
Net
assets
basis
as
ongoing
concern;
Quoted
price
for
listed
securities,
when
there
is
a
liquid
and
active
market;
and
Any
recent
genuine
offers
received
by
the
target
for
any
business
units
or
assets
as
a basis
for
valuation
of
those
business
units
or
assets.
5.2.2 Further
details
on
these
methodologies
are
set
out
in
Appendix
1
to
this
report.
Each
of these
methodologies
is
appropriate
in
certain
circumstances.
5.2.3 RG111
does
not
prescribe
the
above
methodologies
as
the
method(s)
that
an
expert
should use
in
preparing
their
report.
The
decision
as
to
which
methodology
to
use
lies
with
the expert
based
on
the
expert’s
skill
and
judgement
and
after
considering
the
unique circumstances
of
the
entity
or
asset
being
valued.
In
general,
an
expert
would
have
regard
to valuation
theory,
the
accepted
and
most
common
market
practice
in
valuing
the
entity
or asset
in
question
and
the
availability
of
relevant
information.

**5.3 Selected

Valuation
Methods**

5.3.1 Both
PMR
and
SOC
are
junior
mining
companies
listed
on
the
ASX.
Both
companies
are
in the
very
early
stages
of
exploration,
with
no
clear
indication
of
what
resources,
if
any,
will eventually
be
proven.
For
this
reason
it
is
not
possible
to
use
neither
the
discounted
cash flow
method
nor
the
earnings
methodologies
to
value
the
shares
of
PMR
or
of
SOC.
5.3.2 We
are
also
not
aware
of
any
recent
takeover
offers
for
either
PMR
or
SOC
prior
to
this Takeover
Offer.
5.3.3 Therefore
the
two
valuation
methodologies
which
we
will
apply
in
considering
the
value
of the
shares
in
PMR
and
SOC
are:
Quoted
prices
for
listed
securities;
Net
Assets
per
share.

**6 VALUATION

BASED
ON
MARKET
ACTIVITY**

**6.1 Share

Price
and
Liquidity
Comparison
–
PMR
and
SOC**

In
considering
the
market
value
of
the
listed
securities
we
need
to
consider
the
current
quoted
price and
historical
weighted
average
prices.
We
also
need
to
consider
the
depth
of
the
market
for
the securities.
If
there
are
few
trades,
and
at
low
volumes,
it
is
not
always
a
fair
indication
of
the underlying
market
value
of
the
securities.
Similarly
if
there
are
factors
which
limit
the
marketability of
the
securities,
the
underlying
market
value
may
not
be
evident
from
the
trading
history.

==> picture [119 x 22] intentionally omitted <==

**6.2 Historical

Share
Trading
Activity**

In
considering
the
value
of
the
company,
we
would
normally
place
most
reliance
on
the
most
recent Volume
Weighted
Average
Price,
but
use
the
medium
term
trading
history
for
context.
For
this purpose
we
have
reproduced
the
6-‐month
trading
charts
of
PMR
and
SOC
below.

**6.2.1 Share

Prices
History
for
PMR**

**6

MONTH
TRADING
CHART:
PMR,
PRECIOUS
METAL
RESOURCES
ORD**

The
chart
of
daily
prices
and
volumes
over
6
months
for
security PMR

==> picture [306 x 210] intentionally omitted <==

Source:
ASX

**6.2.2 Share

Prices
History
for
SOC**

**6

MONTH
TRADING
CHART:
SOC,
SOVEREIGN
GOLD
COMPANY
ORD**

The chart of daily prices and volumes over 6 months for security SOC

==> picture [119 x 22] intentionally omitted <==

==> picture [306 x 210] intentionally omitted <==

Source:
ASX

These
two
charts
show
that
both
stocks
are
now
trading
towards
the
middle
of
the
range
of
market prices
for
the
shares
over
the
last
6
months.

**6.2.3 Share

Prices
Comparison**

SOC
has
consistently
traded
at
a
higher
price
than
PMR
since
PMR’s
listing
on
6
December
2011.
The Ordinary
Shares
of
PMR
and
SOC
(listing
date
3
December
2010)
have
both
traded
above
their
IPO subscription
prices
of
20
cents.

The
graph
below
provides
a
graphical
representation
of
comparative
prices
on
the
same
scale
for
the two
companies
since
the
listing
date
of
PMR.

==> picture [119 x 22] intentionally omitted <==

==> picture [449 x 310] intentionally omitted <==

----- Start of picture text -----

Comparative
Price
Movements
Since
PMR
Listing
Date
30.0
cents
20.0
cents
6
Dec
2011 27
July
2012
PMR
SOC
----- End of picture text -----

**6.2.4 Volume

–
Share
Trading
History**

The
6-‐Month
Trading
Charts
in
Section
6.2.2
for
PMR
and
SOC
above
also
include
Bar
Charts
showing the
daily
turnover
volume
for
each
company.

We
have
provided
analyses
of
the
volume
of
shares
traded
as
a
percentage
of
total
ordinary
shares on
issue
in
the
Average
Volume
Table
and
the
Total
Volume
table
below.

**AVERAGE

VOLUME
TABLE**

Average Volume PMR	Average Volume PMR	SOC Source	SOC Source

Last 5 trading days	6,000	7,700	Bloomberg/ASX
Last 30 trading days	5,100	4,926	Bloomberg/ASX

No. of Days over 0.5% stock traded- last 6 months	5	4	ASX
At 27 July 2012

However,
both
companies
have
a
large
number
of
their
issued
securities
which
are
restricted
and thus
not
available
to
be
traded.

==> picture [119 x 22] intentionally omitted <==

The
Total
Volume
Table
below
provides
an
analysis
of
the
turnover
in
the
6
months
from
January
to June
2012
and
calculates
the
%
of
securities
shares
traded
over
both
total
issued
and
then
only
those available
for
trading:

**TOTAL

VOLUME
TABLE**

Total Volume Jan to Jun 2012 PMR *'000** SOC '000 Source*	Total Volume Jan to Jun 2012 PMR *'000** SOC '000 Source*	Total Volume Jan to Jun 2012 PMR *'000** SOC '000 Source*	Total Volume Jan to Jun 2012 PMR *'000** SOC '000 Source*

Total Shares Traded in Period	4,849	4,287	ASX ASX ASX ASX
OrdinaryShare on Issue	85,000	77,000
- being:
Restricted Securities - in Escrow	71,250	49,875
SharesQuoted on ASX	13,750	27,125
% Traded: Ordinary Share on Issue	5.70%	5.57%
% Traded: SharesQuoted	35.27%	15.80%

So
of
the
shares
available
to
be
traded,
35%
of
PMR
and
16%
of
SOC
were
in
fact
traded
during
this six
month
period.

**6.2.5 Volume

Trading
Comparison**

Trading
volume
has
been
low
and
infrequent
for
each
stock
over
the
period
of
comparison.
The trading
volumes
are
also
quite
low
compared
to
the
number
of
ordinary
shares
issued
by
each company.

The
Average
Volume
Table
demonstrates
the
similarity
between
trading
volumes
for
each
of
PMR, noting
that
PMR
has
about
10%
more
shares
issued,
but
less
Shares
Quoted,
due
to
the
larger percentage
of
the
shares
which
have
been
Restricted
Securities
over
the
periods
analysed.

We
also
note
that
that
both
companies
had
few
days
on
which
trade
volumes
exceed
0.5%
of
the ordinary
shares
on
issue.

However
the
majority
of
the
ordinary
shares
in
both
PMR
and
SOC
are
Restricted
Securities,
and
are held
in
escrow
as
required
under
Chapter
9
of
the
ASX
Listing
Rules.
This
places
a
limit
on
the
supply of
shares
to
the
market.
Since
the
parent
companies
of
PMR
and
of
SOC
have
both
been
locked
in
to their
majority
shareholding
through
the
escrow
arrangements,
this
has
also
reduced
the attractiveness
of
both
companies
to
any
potential
investor
seeking
to
build
a
strategic
stake
in
the company.

The
total
volume
of
shares,
and
the
gross
portion
(5%-‐6%)
of
the
Ordinary
Shares
on
issue
which have
traded
in
the
first
half
of
2012
are
notable
in
this
analysis
for
being
low,
but
also
for
being
of similar
magnitude
for
PMR
and
SOC.
PMR
does
appear
to
have
greater
liquidity
in
one
regard,
in that
more
than
one-‐third
of
available
shares
have
been
traded
over
the
first
half
of
2012,
whereas the
result
for
SOC
is
below
one-‐sixth
of
the
Shares
Quoted
on
the
ASX,
not
being
Restricted Securities
controlled
by
the
ASX
Listing
Rules.

==> picture [119 x 22] intentionally omitted <==

To
the
extent
that
we
can
use
the
market
price
as
a
reliable
indicator,
we
have
concluded
from
this analysis
that
the
market
data
for
PMR
and
SOC
is
comparable
in
that:

Volumes
traded
are
very
similar
in
the
total
percentage
turnover
of
Ordinary
Shares
which have
traded
over
the
period
of
analysis;
There
is
a
similar
pattern
of
trade
over
the
analysis
period,
with
a
similar
number
of
major trades,
and
significant
periods
of
inactivity.
That
the
percentage
of
available
shares
traded
after
taking
into
account
the
Restricted Securities
is
much
higher
than
the
raw
data.

**6.2.6 Post-‐Announcement

Trading
Activity**

The
following
table
sets
out
the
last
five
days
trading
for
PMR,
which
includes
the
day
the
Takeover Offer
became
public,
and
the
most
recent
trading
day
prior
to
that
announcement.

PRECIOUS METAL RESOURCES Last Sale $	PRECIOUS METAL RESOURCES Last Sale $	Volume *'000

26-Jul-12	0.22	30
18-Jul-12	0.22	30
10-Jul-12	0.235	78
6-Jul-12	0.22	10
28-Jun-12	0.22	2

Source:
ASX

The
SOC
table
below
sets
out
the
last
five
days
trading
for
SOC
immediately
following
the
day
the Takeover
Offer
became
public,
and
the
most
recent
trading
day
prior
to
that
announcement.

SOVEREIGN GOLD COMPANY Last Sale $	SOVEREIGN GOLD COMPANY Last Sale $	Volume *'000

27-Jul-12	0.275	2
26-Jul-12	0.26	37
19-Jul-12	0.26	4
18-Jul-12	0.25	6
12-Jul-12	0.28	1
3-Jul-12	0.28	1

Source:
ASX

We
have
also
considered
the
share
trading
activity
of
both
entities
since
the
takeover
became
public on
6
July
2012
when
both
companies
announced
that
discussions
were
taking
place.

Six
Month
Trading
Charts
for
PMR
and
SOC
at
Section
6.2.2
show
the
Daily
Line
Chart
for
the
share price,
and
a
Bar
Chart
representing
the
daily
trading
volume
over
6
months
for
PMR
and
SOC.
The charts
display
no
apparent
change
in
the range
of
share
prices ,
for
the 3
weeks
since
the
Takeover

==> picture [119 x 22] intentionally omitted <==

Offer became
public,
when
compared
to
the 6
months
historic
price
range for
each
company.
There has
been no
increase
in
trading
volume
for
either
stock in
the
final
3
weeks
until
27
July
2012.

PMR
initially
increased
to
a
share
price
close
to
its
3
month
high
price,
but
has
settled
back
to
the pre-‐announcement
price
on
very
low
volume.

SOC
has
continued
to
trade
in
the
same
price
range
over
the
period
since
the
discussions
were announced
on
very
low
volume.
The
price
dropped
by
10%
on
18
July
before
recovering
to
close
to the
pre-‐announcement
price
in
the
following
week.

**6.2.7 Reliability

of
Market
Data**

In
our
opinion,
despite
the
low
volume
of
trade
in
both
PMR
and
SOC,
the
trading
history
is sufficiently
comparable
for
a
reliable
comparison
to
be
made
between
the
market
price
and
liquidity in
these
two
stocks,
for
the
following
reasons:

Post-‐announcement
trading
activity
-‐
There
has
been
no
significant
market
reaction
to
the announcement
of
the
takeover,
with
prices
trading
in
a
similar
range
for
both
stocks
as
in the
prior
three
months,
and
with
trading
volume
remaining
low
for
both
stocks
in
the
period from
6
July
until
27
July
2012;
Share
Prices
Comparison
–
SOC
has
consistently
traded
at
a
higher
price
to
PMR
since
PMR’s listing
on
6
December
2011;
Volume
–
Share
Trading
History
-‐
Market
volumes
traded
in
PMR
and
SOC
are
both
low,
but trading
volumes
and
the
trading
pattern
for
each
company
are
similar
over
the
period
since the
listing
of
PMR,
particularly
when
eliminating
the
effect
of
the
Restricted
Securities.
Comparable
Size
Companies
–
PMR
and
SOC
are
similar
size
companies
with
respect
to Market
Capitalisation,
Ordinary
Shares
issued,
shareholding
structure,
in
their
activities
and type
of
assets
held.

**6.2.8 Value

Comparison
–
9
SOC
Shares
for
10
PMR
Shares**

The
Value
Comparison
Table
below
includes
two
sets
of
analyses
which
utilise
high
and
low
prices for
the
two
stocks
over
periods
of
5
trading
days
and
90
trading
days
prior
to
the
announcement. When
considering
these
high/low
analyses,
it
is
important
to
note:

The
dates
on
which
the
respective
high
and
low
prices
occurred
are
not
the
same
for
each stock;
and,
The
high
and
low
points
are
not
weighted
for
volume
on
the
day
or
for
the
time
period covered
by
any
crest
or
trough
in
the
curve
(see,
for
example,
graph
in
6.2.3,
which
shows short
periods
at
both
extremities).

==> picture [119 x 22] intentionally omitted <==

==> picture [466 x 209] intentionally omitted <==

----- Start of picture text -----

||||||||
|---|---|---|---|---|---|---|
|PMR|SOC|Premium|
|VALUE
COMPARISON|
|Cents|10|Cents|9|Over
PMR|
|per|Shares|per|Shares|Price|
|Share
Price|Share|$|Share|$|%|Source|
|At
27/7/2012|22.0|$2.20|27.5|$2.48|12.50%|Bloomberg/ASX|
|At
9/7/2012|22.0|$2.20|28.0|$2.52|14.55%|Bidder's
Statement|
|At
90
trading
days
VWAP|21.5|$2.15|26.7|$2.40|11.77%|Bidder's
Statement|
|At
90-‐Day
low|20.0|$2.00|22.0|$1.98|-‐1.00%|Bidder's
Statement|
|At
90-‐Day
high|24.0|$2.40|29.5|$2.66|10.63%|Bidder's
Statement|
|Last
5
trade
days-‐
low|22.0|$2.20|25.0|$2.25|2.27%|ASX|
|Last
5
trade
days-‐
high|23.5|$2.35|28.0|$2.52|7.23%|ASX|

----- End of picture text -----

Using
the
data
in
the
Value
Comparison
Table,
we
have
calculated
the
Fair
Value
of
10
shares
in PMR
on
the
basis
of
market
activity,
in
the
range
of
$2.15
to
$2.35.
We
then
calculate
that
the value
of
the
9
shares
in
SOC,
again
from
data
in
the
table,
is
in
the
range
of
$2.40
to
$2.55.

7. VALUATION
BASED
ON
NET
ASSETS

7.1 As
a
cross
check
to
the
value
calculated
in
Section
6
on
the
basis
of
the
price
at
which
the securities
in
both
companies
are
trading,
we
have
also
considered
what
the
value
of
the shares
in
each
company
is
a
on
a
net
asset
basis.
7.2 The
major
assets
of
both
companies
are
the
tenements
held
which
are
carried
in
the accounts
at
the
original
cost
of
acquisition
plus
exploration
costs
incurred
to
date.
It
is
not possible
or
reasonable
to
try
and
actually
put
a
value
on
these
assets
when
they
are
at
such an
early
stage
of
development.
7.3 Based
on
the
audited
Statement
of
each
company
as
at
31
December
2011,
and
contained
in Sections
2
and
3,
we
have
calculated
the
net
assets
per
share
for
each
company,
as
follows;

==> picture [384 x 75] intentionally omitted <==

----- Start of picture text -----

||||
|---|---|---|
|PMR|SOC|
|Net
Assets
per
Audited
Statement|
|of
Financial
Position
as
at
31
Dec
2011|$2,666,404|$$4,218,969|
|Number
of
Issued
Shares|85,000,000|77,000,000|
|Net
Assets
per
Share|$0.03|$0.055|

----- End of picture text -----

7.4 Based
on
the
above
net
assets
per
share
we
have
calculated
that
the
value
of
10
shares
in PMR
is
$0.30
whilst
the
value
of
the
9
shares
in
SOC
being
offered
as
consideration
is
$0.49.
7.5 Whilst
these
values
are
considerably
lower
than
the
values
obtained
based
on
market activity,
it
demonstrates
that
there
is
an
apparent
difference
in
value
of
the
parcel
of
shares in
each
company
of
$0.19
–
or
63%.
The
fact
that
the
market
recognises
the
potential

==> picture [119 x 22] intentionally omitted <==

increase
in
value
to
be
obtained
by
continuing
to
develop
the
tenements
is
evident
in
the difference
between
these
figures
and
the
value
based
on
market
prices.

**8. OPINION

AS
TO
WHETHER
TAKEOVER
OFFER
IS
FAIR**

8.1 In
Section
6
we
have
calculated
that
the
fair
value
of
the
parcel
of
10
shares
in
PMR,
on
the basis
of
the
prices
at
which
securities
have
been
traded
on
the
ASX
is
between
$2.15
to $2.35
whilst
the
value
of
the
9
shares
in
SOC
being
offered
as
consideration
is
between
$2.40 and
$2.55.
8.2 As
the
value
range
of
the
parcel
of
shares
in
SOC
being
offered
as
consideration
is
greater than
the
valuation
range
for
the
shares
in
PMR
to
be
acquired,
we
are
of
the
opinion
that the
Takeover
Offer
is
fair
to
the
Shareholders
in
PMR.

**9. IS

SOC
OFFERRING
A
PREMIUM
TO
ACQUIRE
CONTROL
OF
PMR**

9.1 In
a
takeover
offer
it
is
normal
for
the
offeror
to
include
a
premium
of
around
25%
to
30% above
the
fair
value
of
the
securities
the
subject
of
the
offer,
in
order
to
reflect
the
benefits that
can
be
obtained
by
obtaining
control
of
the
target.
9.2 However
in
cases
where
the
transaction
can
be
considered
to
effectively
be
the
merger
of two
equal
companies
such
a
control
premium
would
not
normally
be
expected.
9.3 We
have
considered
whether
this
Takeover
Offer
really
represents
the
merger
of
two
equal companies,
and
despite
many
similarities
between
the
two
companies,
we
have
formed
the opinion
that
it
is
not
the
merger
of
two
equal
companies
as
SOC
holds
more
tenements
than PMR.
9.4 Given
that
this
is
not
the
merger
of
two
equal
companies
we
would
therefore
expect
SOC
to be
offering
a
premium
above
the
assessed
value
of
the
shares
in
PMR
in
order
to
obtain control.
9.5 Based
of
the
valuation
range
calculated
in
Section
6,
of
$2.15
to
$2.35
for
the
10
shares
in PMR
as
compared
to

$2.40
to
$2.55
for
the
9
shares
in
SOC,
we
have
calculated
that
SOC are
offering
consideration
greater
than
the
fair
value
of
the
securities
being
acquired
of between
9%

and
11%.

9.6 The
control
premium
implied
on
this
Takeover
Offer
of
9%
to
11%
is
below
the
market average
of
around
25%
to
30%.
However
given
how
close
the
transaction
is
to
being considered
a
merger
of
two
equals,
this
lower
premium
is
in
our
opinion
reasonable.

**10. CONSIDERATION

AS
TO
REASONABLENESS**

10.1 In
forming
our
opinion
as
to
whether
or
not
the
transaction
is
reasonable
to
the Shareholders
we
have
again
had
reference
to
RG111,
which
advises
that
a
transaction
is

==> picture [119 x 22] intentionally omitted <==

reasonable
if
it
is
fair.
In
Section
8
we
advised
that
in
our
opinion
the
Takeover
Offer
was Fair,
and
therefore
can
now
also
reach
the
opinion
that
the
Takeover
Offer
is
reasonable.

**10.1

Other
Factors
as
to
Reasonableness**

**10.1.1

Advantages**

PMR
shareholders
who
accept
the
offer
will
receive
shares
in
SOC
as
consideration.
SOC
is company
with
a
more
diversified
portfolio
of
projects
and
greater
resources
to
manage
the projects
of
PMR.
Overall
savings
in
administration
and
compliance
costs
should
be
achieved,
resulting
in greater
return
to
all
shareholders.
The
shares
in
PMR
currently
escrowed
will
be
released
and
the
shares
in
SOC
acquired
as
a result
will
not
be
restricted.
As
such
there
will
be
considerably
more
securities
available
to be
traded
which
may
increase
liquidity
in
the
shares
in
SOC,
as
compared
to
the
current liquidity
of
the
shares
in
PMR.
SOC
may
be
in
a
better
position
to
raise
capital
to
fund
ongoing
exploration
and development
than
PMR.

**10.1.2

Disadvantages**

PMR
shareholders
will
hold
a
lesser
%
interest
in
the
shares
in
SOC
than
they
held
in
PMR.
The
Board
of
SOC
will
control
the
future
direction
of
the
business
operations
of
the
PMR assets.
The
release
from
escrow
of
the
PMR
shares
to
enable
the
takeover,
and
the
fact
that
the SOC
shares
acquired
will
not
be
subject
to
restrictions,
may
result
in
substantial
numbers
of shares
being
offered
for
sale
on
the
market,
thus
forcing
prices
down
below
the
expected levels
following
completion.

**10.2 Opinion

as
to
Reasonableness**

Based
on
the
analysis
above
we
are
of
the
opinion
that
the
Takeover
Offer
is
Reasonable
to
the Shareholders
of
PMR.

**11. Other

considerations**

**Implications

for
Liquidity
If
Takeover
Succeeds**

We
note
that
PMR
shares
only
traded
on
44
of
the
144
trading
days
after
listing.
We
do
not
know, and
are
not
in
a
position
to
forecast,
either
the
volume
of
trade
in
PMR
if
the
takeover
is
not successful,
or
the
liquidity
in
the
replacement
SOC
shares
which
current
PMR
shareholders
would hold
if
the
Takeover
Offer
is
successful.
However,
we
note
the
following
factors
which
may
have
an impact
on
trading
activity
in
the
SOC
shares
if
the
takeover
is
successful,
and
which
therefore
may impact
on
the
value
of
the
consideration
received
by
PMR
shareholders:

1. Shares
Quoted
-‐
When
compared
to
current
position
for
PMR
(13.735
million
Shares Quoted)
and
SOC
(27.125
million
Shares
Quoted)
the
post-‐takeover
SOC
will
have
153.5

==> picture [119 x 22] intentionally omitted <==

million
ordinary
shares,
but
only
49.875
million
Restricted
Securities.
The
new
SOC
will therefore
have
67.5%
of
shares
available
for
trade
until
3
December
2012,
at
which
time 100%
will
become
Shares
Quoted
on
the
ASX.
This
compares
to
only
35.2%
for
SOC
currently not
Restricted
Securities,
and
16.2%
for
PMR.

2. SOC
immediate
post-‐takeover
will
have
a
Share
register
which
will
be
more
open,
with
only two
substantial
shareholders
and
a
wider
spread
of
shareholders;

3. No
parent
company
–
no
shareholder
will
have
an
absolute
majority
of
the
share
in
SOC immediately
after
a
successful
takeover.
One
effect
will
be
to
make
the
company
more attractive
as
a
takeover
target;

4. Funding
Core
Activities
–
If
funding
is
required
for
core
activities,
there
will
be
one,
larger company
which
can
make
a
rights
issue,
with
a
broader
spread
of
shareholders
to
approach for
additional
capital
contributions.

==> picture [119 x 22] intentionally omitted <==

**Appendix

1:
Valuation
Methodologies**

In
assessing
the
fairness
of
the
Proposed
Transaction
we
have
considered
a
range
of
valuation methodologies.
RG
111
proposes
that
it
is
generally
appropriate
for
an
expert
to
consider
using
the following
methodologies:

the
discounted
cash
flow
(“DCF”)
method
and
the
estimated
realisable
value
of
any
surplus assets;
the
application
of
earnings
multiples
to
the
estimated
future
maintainable
earnings
or
cash flows
added
to
the
estimated
realisable
value
of
any
surplus
assets;
the
amount
which
would
be
available
for
distribution
on
an
orderly
realisation
of
assets;
the
quoted
price
for
listed
securities;
and
any
recent
genuine
offers
received.

We
consider
that
the
valuation
methodologies
proposed
by
RG
111
can
be
split
into
three
valuation methodology
categories,
as
follows:

_**Market

Based
Methods**_

Market
based
methods
estimate
the
fair
market
value
by
considering
the
market
value
of
a company’s
securities
or
the
market
value
of
comparable
companies.
Market
based
methods
include:

The
quoted
price
for
listed
securities;
and
Industry
specific
methods.

The
recent
quoted
price
for
listed
securities
method
provides
evidence
of
the
fair
market
value
of
a company’s
securities
where
they
are
publicly
traded
in
an
informed
and
liquid
market.

Industry
specific
methods
usually
involve
the
use
of
industry
rules
of
thumb
to
estimate
the
fair market
value
of
a
company
and
its
securities.
Generally
rules
of
thumb
provide
less
persuasive evidence
of
the
fair
market
value
of
a
company
than
other
market
based
valuation
methods
because they
may
not
account
for
company
specific
risks
and
factors.

_**Income

Based
Methods**_

Income
based
methods
includes:

Capitalisation
of
maintainable
earnings;
and
Discounted
cash
flow.

The
capitalisation
of
earnings
methodology
is
generally
considered
a
short
form
DCF,
where
an estimation
of
the
Future
Maintainable
Earnings
(“FME”)
of
the
business,
rather
than
a
stream
of
cash flows
is
capitalised
based
on
an
appropriate
capitalisation
multiple.
Multiples
are
derived
from
the analysis
of
transactions
involving
comparable
companies
and
the
trading
multiples
of
comparable companies.
The
DCF
technique
has
a
strong
theoretical
basis,
valuing
a
business
on
the
net
present value
of
its
future
cash
flows.
It
requires
an
analysis
of
future
cash
flows,
the
capital
structure
and costs
of
capital
and
an
assessment
of
the
residual
value
or
the
terminal
value
of
the
company’s
cash flows
at
the
end
of
the
forecast
period.

==> picture [119 x 22] intentionally omitted <==

_**Asset

Based
Methods**_

Asset
based
methodologies
estimate
the
fair
market
value
of
a
company’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;
and
net
assets
on
a
going
concern
basis.

The
value
achievable
in
an
orderly
realisation
of
assets
is
estimated
by
determining
the
net
realisable value
of
the
assets
of
a
company
which
would
be
distributed
to
security
holders
after
payment
of
all liabilities,
including
realisation
costs
and
taxation
charges
that
arise,
assuming
the
company
is wound
up
in
an
orderly
manner.
This
technique
is
particularly
appropriate
for
businesses
with relatively
high
asset
values
compared
to
earnings
and
cash
flows.

The
liquidation
of
assets
method
is
similar
to
the
orderly
realisation
of
assets
method
except
the liquidation
method
assumes
that
the
assets
are
sold
in
a
shorter
time
frame.

The
net
assets
on
a
going
concern
method
estimates
the
market
values
of
the
net
assets
of
a company
but
unlike
the
orderly
realisation
of
assets
method
it
does
not
take
into
account
realisation costs.
Asset
based
methods
are
appropriate
when
companies
are
not
profitable,
a
significant proportion
of
the
company’s
assets
are
liquid,
or
for
asset
holding
companies.

==> picture [119 x 22] intentionally omitted <==

**Appendix

2:
Sources
of
Information**

In
preparing
this
report
we
have
relied
upon
the
following
principal
sources
of
information:

Takeover
Bid
Implementation
Agreement
between
Sovereign
Gold
Company
Limited
and Precious
Metal
Resources
Limited
dated
9
July
Bidder’s
Statement
by
Sovereign
Gold
Company
Limited
dated
20
July
2012
Target’s
Statement
by
Precious
Metal
Resources
Limited
dated
25
July
2012
Independent
Expert
Report
by
Alpha
Securities
Pty
Ltd
dated
15
July
ASIC
email
correspondence
dated
27
July
2012
advising
the
directors
of
PMR
that
they
had
a number
of
concerns
regarding
the
Independent
Expert
Report
by
Alpha
Securities
Pty
Ltd
dated 15
July
Annual
Report
of
Precious
Metal
Resources
Limited
for
the
year
ended
31
December
Prospectus
dated
26
October
2011
in
regard
to
the
Initial
Public
Offering
by
Precious
Metal Resources
Limited.
Annual
Reports
of
Raffles
Capital
Limited,
the
immediate
parent
company
of
Precious
Metal Resources
Limited,
for
the
years
ended
31
December
2010
and
31
December
Half
Year
management
accounts
of
Precious
Metal
Resources
Limited
for
the
half
year
ended
30 June
Annual
Reports
of
Hudson
Resources
Limited,
the
immediate
parent
company
of
Sovereign
Gold Company
Limited,
for
the
years
ended
31
December
2010
and
31
December
Annual
Reports
of
Sovereign
Gold
Company
Limited
for
the
years
ended
31
December
2010
and 31
December
Half
Year
management
accounts
of
Sovereign
Gold
Company
Limited
for
the
half
year
ended
30 June
ASX
announcement
by
Precious
Metal
Resources
Limited
concerning
the
Takeover
Offer.
ASX
announcement
by
Sovereign
Gold
Company
Limited
concerning
the
Takeover
Offer.
ASX
trading
data
for
Precious
Metal
Resources
Limited
and
Sovereign
Gold
Company
Limited
for, at
minimum,
the
period
since
PMR’s
listing
date.
Bloomberg
research
and
data
for
Precious
Metal
Resources
Limited
and
Sovereign
Gold Company
Limited
for,
at
minimum,
the
period
since
PMR’s
listing
date.

AI assistant

CRITICAL RESOURCES LIMITED — Merger & Acquisition 2012

64708_rns_2012-08-01_3a528b7e-63e4-41d8-b0e6-a6934d77a5e5.pdf

Precious Metal Resources Limited ACN 145 105 148

SUPPLEMENTARY TARGET’S STATEMENT

SOVEREIGN GOLD COMPANY LIMITED

PRECIOUS METAL RESOURCES LIMITED

SUPPLEMENTARY TARGET'S STATEMENT

1. IMPORTANT INFORMATION

1.1 Supplementary Target's Statement

1.2 Investment decisions

1.3 Offer Information Line

2. INDEPENDENT EXPERT'S REPORT

3. CHANGES TO ORIGINAL TARGET’S STATEMENT

Independent Expert

INDEPENDENT EXPERT’S REPORT

1.3 The Independent Expert has concluded that the Offer is fair and reasonable

On Page 21:

On Page 26:

On Page 29:

4. DIRECTORS RECOMMENDATION

5. ADDITIONAL INFORMATION

5.1 Defined terms

5.2 Consent to be named

Independent Expert – Replacement IER

Independent Expert – Original IER

6. AUTHORISATION

REPLEACEMENT INDEPENDENT EXPERT’S REPORT

**Independent

1. Introduction

**2. Summary

Fairness

3. Reasonableness

**4. Summary

**5. Purpose

**6 Basis

7 Independence

**8 Limitations

9 Qualifications

10 Consent

11 Indemnity

**Independent

**TABLE

Financial Services Guide

2 August 2012

What is a Financial Services Guide?

Information about us

How are we and our employees remunerated?

What should you do if you have a complaint?

**DETAILED

**1 TERMS

1.1 Background

**1.2 The

**1.3 Key

**1.4 SOC’s

**(a) Corporate

**(b) Operations,

**(c) PMR

**(a) Corporate

**(b) Assumption

**(c) Other

**2 PROFILE

2.1 Overview

**2.2 Capital

**2.3 Current

**2.4 Financial

**2.5 Financial

**3 PROFILE

3.1 Overview

**3.2 Capital

**3.3 Current

**3.4 Financial

**3.5 Financial

**4 OVERVIEW

4.1 Introduction

4.2 Directors

**4.3 Capital

**4.4 Pro

**5 VALUATION

**5.1 Definition

CRITICAL RESOURCES LIMITED Merger & Acquisition 2012

**6.2.6 Post-‐Announcement