Hanzhong Zinc Co., Ltd. (hereinafter referred to as "the company") recognizes the risk of possible adverse effects from mining, trading, processing and exporting mineral resources in "conflict affected and high-risk areas", and recognizes our obligation to respect human rights, not to promote conflict and not to adversely affect the environment and society, we are committed to adopting and widely disseminating the second edition of the Due Diligence Guidelines for Mineral Supply Chains in China and the third edition of the OECD Due Diligence Guidelines for Responsible Supply Chains for Ores from Conflict-Affected and High-Risk Areas, it is incorporated into contracts and agreements with suppliers.
These 1 policies provide a reference for the entire supply chain process involving conflict-sensitive procurement activities and for suppliers to raise their risk awareness. We are committed not to engage in any activities that would finance the conflict and to abide by relevant United Nations sanctions resolutions.
The Company is committed to adopting a due diligence 5 step methodology in its supply chain operations practices, I .e., the Company fulfills the following methods:
Step 1 Establish a sound enterprise supply chain due diligence management system.
Step 2 Identification and Assessment of Supply Chain Risks
Step 3 Develop and implement response strategies for identified risks
Step 4 Conduct an independent third-party audit of the identified key links in the supply chain
Step 5 Report on the supply chain risk management process and results
At the same time, the company is committed to identifying and managing the following risks in its supply chain operations practices:
1. serious violations relating to the extraction, transport or trade of minerals:
1. When conducting procurement or business activities in "conflict-affected and high-risk areas", we will neither tolerate nor in any way benefit, assist, assist or facilitate any party:
a. Any form of torture, cruel, inhuman and degrading treatment;
b. Any form of forced or compulsory labor. Forced or compulsory labor means labor or services provided by any individual who is extracted under threat of punishment and is not provided voluntarily by that individual;
c. Worst forms of child labor;
d. Other serious violations and abuses of human rights, such as widespread sexual violence;
e. war crimes or other serious violations of international humanitarian law, crimes against humanity or genocide.
Risk Mitigation Strategies:
2．If we have reasonable grounds to believe that there is a risk that an upstream supplier is purchasing from, or is associated with, any party that has committed the serious infringement described above, we will immediately suspend or terminate our cooperation with that supplier.
2. on direct or indirect support to non-State armed groups:
3．We will not tolerate any direct or indirect support to non-State armed groups through the extraction, transport, trade, processing or export of minerals. The provision of "direct or indirect support" to non-State armed groups through the extraction, transport, trade, processing or export of minerals includes, but is not limited to, the purchase of minerals from, payment to, or other provision of logistical support or equipment to non-State armed groups or their affiliates. These armed groups or associated parties:
i．Unlawful control of mine sites, or otherwise control of transportation routes, mineral trading points, and upstream actors in the supply chain; and/or
ii．unlawfully taxing or extorting money or minerals at the entrance to a mine site, along a transportation route or at a point where the minerals are traded; and/or
iii．Illegal taxation or extortion of middlemen, export enterprises, or international traders.
Risk Mitigation Strategies:
4．If we have reason to believe that an upstream supplier procures from or has a relationship with any party that provides direct or indirect support to non-state armed groups, we will immediately suspend or terminate our cooperation with that supplier.
3. about public or private security armed:
5．We do not provide direct or indirect support to public or private security forces that illegally control mine sites, transport routes and upstream supply chains, illegally collect taxes or demand money or minerals at mine site entrances, along transport routes or at mineral trading points, or illegally collect taxes or extort from intermediaries, exporters or international traders.
6．We recognize that the role of public or private security forces at the mine site and/or its surrounding areas and/or along transport roads is only to maintain the rule of law, including safeguarding human rights, protecting the safety of miners, equipment and facilities, and protecting the mine site or transport routes from interference with legitimate mining and trade.
7．Where we or any business in our supply chain has a contract with a public or private security force, we undertake or will require that such security force be recognized by recognized international standards and guidance documents for dealing with public or private security forces. In particular, we will support or take steps to apply screening policies to ensure that individuals or armed security units known to have committed serious human rights violations are not recruited.
8．We will support or take measures to work with central or local governments, international organizations and civil society organizations to find workable solutions on how to improve transparency, proportionality and accountability of armed security costs for public safety.
9．We will support or take measures to interact with local governments, international organizations and civil society organizations to avoid or minimize the negative impact of public or private security forces on mining sites on vulnerable groups, especially artisanal miners.
Risk Mitigation Strategies:
10．If we find that there is a certain level of such risk, we will immediately develop, adopt and implement risk management plans for upstream suppliers and other stakeholders, depending on the specific position of the enterprise in the supply chain, so that the risk of providing direct or indirect support to public or private security forces is contained or reduced. If the risk management plan is not effective after six months of implementation, we will temporarily suspend or terminate cooperation with upstream suppliers. we find that there is a certain possibility of a violation of paragraphs 8 and 9 above, the same response will be taken.
4. fraudulent misrepresentation of bribery and mineral origin:
11．We will not offer, promise, make or solicit any bribes and will resist the temptation to bribe in order to conceal or falsify the origin of minerals and to misstate taxes, fees and royalties payable to the Government for mining, trading, handling, transporting, exporting, etc.
On money laundering:
12．If we have reason to believe that there is a money laundering risk arising from or related to mining, trading, processing, transporting or exporting minerals that are illegally taxed or extorted at the entrance to the mine site, along the transportation route, or where the upstream supplier minerals trade, we will support or take measures to contribute to the effective elimination of money laundering.
In respect of taxes, fees and royalties paid to the Government:
13．We will ensure that all legitimate taxes, fees and royalties related to mining, trade and export of ore from conflict-affected and high-risk areas are paid to the Government and undertake to disclose such payments in accordance with the requirements of the country in which the enterprise is located along the supply chain for disclosure of taxes and fees paid to government authorities.
Risk Mitigation Strategies:
14．Depending on the company's specific location along the supply chain, we are committed to working with suppliers, central or local government authorities, international organizations, civil society and affected third parties, as appropriate, to improve or track performance with the aim of taking significant measures to prevent or reduce the risk of negative impacts within a reasonable time frame. If the risk reduction measures do not work, we will temporarily suspend or terminate cooperation with upstream suppliers. We will conduct additional risk assessments for risks that need to be mitigated following the adoption of a risk management plan. If the risk management plan does not achieve significant results within six months, and the risks of bribery, fraudulent misrepresentation of mineral origin, money laundering, and payment of taxes, fees, and royalties to the government are not contained or reduced, we will temporarily suspend or interrupt cooperation with suppliers for at least the 3 month, and revise the risk management plan while temporarily suspending cooperation, clarify the performance objectives to be achieved by the improvement work prior to the resumption of trade relations.
Based on the principle of continuous improvement, the company will integrate the policy into the company's management system and the responsibilities of relevant departments. The policy also applies to all of the Company's suppliers, and the Company will take active steps to pass the policy to the suppliers, which will take effect from the date of publication and will be published on the Company's website.
Hanzhong Zinc Industry Co., Ltd.
October 2025