PMY - Leverage to Silver Price increases, page-2

Method used in the calculations in the table.

So let's do a back of the envelope calculation to see how much Sorby "may" be leveraged to the silver price.

Based on the Euroz initiation report lets say the Metallurgical results and assays deliver an NPV improvement to $350m -

"The sensitivity on the uplift factor is large – a 1.5x uplift would more the half the pre tax NPV, similarly if a 2.5x uplift could be achieved the pre tax NPV would increase to >$300m." Euroz Initiation Report page 10.

Then let's say that the recent drilling to convert the existing inferred to indicated results in a 50% increase in Indicated Resources to 15mt -

"Expansion Potential The PFS study was just based on Indicated resource. There is some 19.1mt of similar grade material in the inferred category and a clear opportunity to convert a portion of this inferred resource into the indicated category and hence probable reserves.The current 6,000m drilling program is targeted to both infill and extend the current resource. We see potential upside for the Indicated resource to increase to >15mt which could justify a plant expansion to 1.5mtpa, producing ~ 45-50ktof Pb and 1.6moz of Ag pa and similar margins. This potential expansion will be explored in the optimsed PFS that is underway and will be dependent on drilling success and the economics.The capital cost is likely to go up but prima facie the economics are likely to be compelling and could result in pre tax NPV8 increasing to >$300m. We assume no expansion in our current model." Euroz Initiation Report page 11.

Combined that gives us a revised NPV of $525m, or an uplift of 216%.

Now let's apply that to the sensitivity analysis for silver. With the revised NPV, each 25% improvement in the price of silver beyond $15.40 USD then potentially adds $47m. When silver doubles to $30.80 USD, that is $188m.

I will let the readers play around with the numbers, do not rely on mine. As always do your own research.

Remember too that PMY owns 75% of Sorby, so we need to factor that in as well.


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