PHILEX MININGCORPORATION

Confimation statement from PhiIex’s Board Risk Oversiqht Comm阻ee:

JuIy 24, 2018

The Audit and Risk Management Comm配ee

Fi「st Pacific Company Limited

24th FIoo「, Two Exchange Squa「e

8 Connaught PIace

HongKong

Dea「 Comm阻ee Membe「S,

丁his is to inform you that the Board Risk Ove「sight Committee of Phiiex Mi=ing Co「POration

(Philex) has ∞nducted a review of the effectiveness of Phifex Group’s (including its

subsidia「ies, eXCePt PXP Energy) Enterp「ise Risk Management (ERM) systems fo「 the six-

month period ended 30 June 2018. The review identified material st「ategic’financiai・

OPe「ational and ∞mPiian∞ 「isks"

Piease 「efe「 to the attached summary 「eport fo「 the six-mOnth pe「iod ended 30 June 2018

highlighting the key ente「prise 「isks identified and the co「「esponding mitigation measures to

add「ess those 「isks,

Based on ou「 review of Phiiex’s ERM p「o∞SS, reViewing the pe「iodic ERM 「eport and

discussions with the Chief Risk O鮒Ce「 aS Well as the exte「naI auditors, We have assu「ed

ou「seIves the mate「ial 「isks a「e pe「iodicalIy identified, eValuated’managed and reported

app「op「iateIy by the Management・

We have not noti∞d any mate両al deviation f「om iocal as weII as Hong Kong Listing Rules

requi「ements, incIuding lnside Info「mation.

We hope that this lette「 Su冊∞S yOu「 requi「ements"

Sincerely you「S,

Oscar J, Hiiado

Chai「man of the Boa「d Risk Ove「Sight Committee

Phifex Mining Co「PO「ation Philex Mining Co「po「ation

ADPendix A

PHILEX MINING CORPORATION

STATEMENT OF INTERNAL CONTROL AND MANAGEMENT OF THE丁OP ENTERPRISE RISKS

Corporate Govemance Cerl拍cate of Confirmation to Fi「St Pacific Company

l. Du血g the lst halfof2018, the intemal audit depa巾nent has not iden珊ed any majo「

intemal cont「o=ssues based on its rewiew of the business p「O∞SSeS and system of

intemal controI, The resuIts of the business processes rewiew were regularty reporfed

to the Audit and Board Risk Ove「sight Comm肘ees. Fo「 its pa巾the Management

imp-emented the intemal audito「s】 recommendations on operationai confro=ssues and

P「OCeSS improvements.

2. The G「oup’s extemai auditors, SGV & Co., did not軸d any majo「 intemal ∞ntrOl

issues仙at may mate面ally impact the Company’s師anciai 「eport ended June 30, 2018'

3. The top ente画se risks iden帥ed in the lSt haIf of 2018 and conespo皿ng mit鳴ation

measures we「e as fo11ows:

A。昼e〇ulatory - Con軸uec‖mpiementation of DAO 2017-10 banning open pit mining

and PRRD’s statement in support of肌e same・

Mitigants:

. DiscIose that Silangan prQject is an unde「g「ound mine wi冊a starte「 mine using

Surface mIning method

●　Study options to go ai!-underg「Ound

●　Work and ∞O「dinate cIoseiy with the Chamber of Mines of the P輔ppines

(COMP〉 to educate the public

●　Pioneer the implementation of Canada’s TSM to make known that a P輔ppine

m-nlng ∞mPany can be at pa「with the best

. Lead the g「eening p「pg「am as suggested by DENR Sec. Cima山to show a

positive visuai proof of ge=uine care fo「 envi「Onment du血g operation and also

dし面ng rehab皿ation

●　Con軸ue to highlight SDMP, CSR, CG best p「acti∞S

. con軸uous dialpgues with ∞ncemed agencies to冊the ban

●　Coordinate with indust軌thru COMP, tO develop a concerted and un桐ed stand

B. Strateg垂- Limited capitai ac∞SS tO fund伽e SiIangan PrQject due to:

a. inabirty to extend Padcal’s life-Oトm ne beyond 2022;

b. adverse regulatory envi「Onment; and

C言mpending tax p「OgramS

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州itigants:

●　Firm up the TSF options to evaluate 「ema-nlng mine「al 「esources of Padcal

. Expedite and intens申y expio「ation activities

●　Fac皿ate negotiations in high potentia看and more advanced exp!o「ation stages

C。 Ope「ationaI

l. Deねy in compfe励ng me 7SF3 o俺et d鰍e desdyn fo 625 ML面case ofany

re/evant fechnbaI加)伽lgS h me fo〃ow叩geotechnical inves鴫a的n・

軸itigants:

●　Expedite geotechnica=nvestigation and design wo「ks by GHD

●　Beef up Padcal manpowe「 with p「Qject manage「 and geotechnicaI geoiogist

●　Simuitaneous investigation to 「euse TSF2

●　Complete design by Octobe「2018

2. 1H produc細n fa岬et w〃 not be met because ofundeゆOund conveyor /SSueS

and nonperわmhg pIOduc鍬on /evels

Mitigants:

●　Expedite structu「a=mp「ovements and rehab of Cirouit #3 and sac両Ciai beIt

. commission fou「 (4) new dumping points by May 2018

. continue to commission new ore sources (drawpoints) to ensure ¶exib掴ty to the

OPe「ations

D。 Financiat - Pending legislation on extractive indus帥es (子e" aitemative mining b帥S・

legisiative什anchise, P「OPOSed DOS ban and TRA!N Package 5)

Mitigants:

●　Negotiate and lobby fo「 te「ms equitabie to both govemment and mining

COmPanies

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