JX Metals Smelting LBMA Responsible Gold and Silver GuidanceCompliance Report
The LBMA Responsible Gold Guidance and the LBMA Responsible Silver Guidance havebeen established for Good Delivery Refiners to adopt high standards of due diligence inorder to combat systematic or widespread abuses of human rights, to respectenvironmental, social and governance (ESG) factors, to avoid contributing to conflict, tocomply with high standards of anti-money laundering and combating terrorist financing
practice.
This report summarizes how JX Metals Smelting Co., Ltd. (hereinafter referred to as “JX
Metals Smelting”) has complied with the requirements of the LBMA Responsible Gold
Guidance Version 9 and the LBMA Responsible Silver Guidance Version 1.

Table 1:Refiner’s details
Refiner’s name

JX Metals Smelting Co., Ltd.

Location

14F Okura Prestige Tower
10-4 Toranomon 2-chome
Minato-ku, Tokyo, Japan

Reporting year-end

March 31, 2024

Date of Report

July 31, 2024

Senior management responsible for this report

Yutaka Yasuda
President&

Representative

Director

JX Metals Smelting’s evaluation
Table 2:Summary of activities undertaken to demonstrate compliance
Step 1: Establish strong company management systems
Compliance Statement with Requirement:
We have fully complied with Step 1: Establish strong management systems.

JX Metals Smelting has adopted a supply chain policy regarding due diligence forsupply chains of gold and silver.
Comments and Demonstration of Compliance:
JX Metals Smelting has the Gold, Silver, Platinum and Palladium Supply Chain Policy(hereinafter referred to as “Policy”), which is consistent with the model set out in the
Annex II of the OECD Due Diligence Guidance. The Policy sets out our responsibility
to respect environmental, social and governance (ESG) factors, and not to contributeto conflict, and our commitment to refraining from any action which contributes to thefinancing of conflict. We at least annually review the Policy and revise it as necessary.
We last revised the Policy in December 2022 with an approval by the Board. The Policy
isdisclosedonourwebsitenmm.com/english/sustainability/csr_procurement/conflict_minerals/),(https://www.jxandiscommunicated to all our relevant staff by posting on our intranet and circulating via
email.
JX Metals Smelting has set up an internal management structure to support supply
chain due diligence.
Comments and Demonstration of Compliance:
JX Metals Smelting operated an internal management system to support supply chain
due diligence, which includes the definition of the governance, roles andresponsibilities, internal audit, communication and management review by the Board
as per the Policy. Authority and accountability for supply chain due diligence areassigned to the Board. The Board members were provided training in May and June
2023 to update their knowledge. The Board has assigned the General Manager of
Administration Division as the Compliance Officer who has suitable experience to takeresponsibility for the implementation of the due diligence process, and the Compliance
Officer has a direct line of reporting to the Board. In addition, Pan Pacific Copper Co.,
Ltd.’s Raw Materials Dept. and JX Advanced Metals Corporation’s Metals & Recycling
Division and Marketing Dept. perform supplier risk assessment as part of due
diligence process. If we identify high-risk supply chain through our due diligenceprocess, the Compliance Officer conducts enhanced due diligence and reports theresults to the Board. The Board then determines whether to enter the transaction andgives appropriate instructions to the Compliance Officer. JX Metals Smelting provided
training on due diligence to employees involved in procurement of gold and silver inMarch 2024, focusing on an overview of the conflict minerals issue, the results of thethird-party audit in the previous year, and any necessary actions to be taken by eachdepartment. The training was attended by 167 employees. In addition, The training
materials and internal regulations are posted on the intranet to be made them knownto our employees and are communicated to employees of Pan Pacific Copper Co., Ltd.
and JX Advanced Metals Corporation by circulating via email.
We conducted internal audit in March 2024 and found that some UBOs' identity
documents had not been obtained. In response to this internal audit finding, we
subsequently obtained the UBOs' identity documents and the issue has now been
resolved.
JX Metals Smelting has established a traceability system over gold and silver supply
chains, including chain of custody mapping and identification of supply chain actors.
Comments and Demonstration of Compliance:
JX Metals Smelting has a gold and silver -bearing materials receipt process. Specificdocuments such as those showing the origin of raw materials, weight and assay,
shipping/transportation documents, etc. must be received and transactional details
entered before we process the gold and silver -bearing material. The received
documents are stored in a prescribed database, and the information is accurately
registered in our transaction system on a lot-by-lot basis. We have introduced achecklist for registration of information on new suppliers of recycle materials since
fiscal 2021. Information on new suppliers now cannot be registered in the transaction
system without attaching a completed checklist, which we expect to ensure that
supplier risk assessments be implemented before commencing transactions.
JX Metals Smelting identifies the origin of gold and silver -bearing materials by
obtaining KYC Questionnaires and Certificates of Origin from suppliers and preparing
due diligence screening tables. We also perform supply chain compliance checks using
the Dow Jones Risk Database.
As a result of the foregoing, we identify one high-risk supply chains for fiscal year
2023, although there was no transaction determined zero-tolerance. Against the highrisk supply chain that we identified, the Compliance Officer conducted enhanced due
diligence and reported the results to the Board. The Board then determined to proceedwith the transaction and directed the Compliance Officer to continue monitoring below
for the high-risk supply chain.
-

1. For each shipment, we shall confirm with our suppliers whether there are any
increases or decreases in the number of upstream suppliers of our supplier("Secondary Suppliers”).

-

2. If there is an increase, we shall obtain information on the locations andbusiness types of the Secondary Suppliers and conduct a risk assessment for the
supply chain.

-

3. We shall obtain approval from the Compliance Officer regarding whether tocontinue business relationship with the supplier based on the result of 1.and 2..

JX Metals Smelting has strengthened company engagement with gold and silver
supplying counterparties, and where possible, assisted gold and silver supplying
counterparties in building due diligence capabilities.
Comments and Demonstration of Compliance:
Before entering transactions, we send via e-mail the Policy and the KYCQuestionnaire to our suppliers of gold and silver-bearing materials and request themto commit to the Policy or submit their own policy, and to fill out the KYCQuestionnaire. We have obtained the commitment from our 139 of our 143 suppliersof gold and silver bearing materials to the Policy. Against our 4 suppliers who havenot committed to the Policy, we have reviewed their own policies to ensure that theirown policies are aligned with the Policy. In addition, when the Policy is revised, we
also send via e-mail the Policy to all of our suppliers of gold and silver-bearing
materials and request them to commit to the revised Policy.
There were no due diligence issues on which suppliers/counterparties were specificallyengaged during reporting period.
There were no purchases of gold and silver-bearing raw materials from state-owned
companies operating in EITI countries for fiscal 2023.
JX Metals Smelting has established a company-wide confidential grievancemechanism.
Comments and Demonstration of Compliance:
JX Metals Smelting has a mechanism allowing employees and external stakeholders
to voice concerns anonymously over the gold and silver supply chain or a newly
identified risk via an e-mail contact form(https://www.jxnmm.com/english/sustainability/csr_procurement/conflict_minerals/ , email
address: conflict_minerals@jx-nmm.com). A functional hot-line is established, whichis reviewed by the Compliance Officer. There was no concern raised regarding thegold and silver supply chain in fiscal 2023 and no remaining concerns to be closed
out.
Step 2: Identify and assess risks in the supply chain
Compliance Statement with Requirement:
We have partially complied with Step 2: Identify and assess risks in the supply chain.
JX Metals Smelting has a process to identify risks in the supply chain.
Comments and Demonstration of Compliance:
JX Metals Smelting identifies and assesses risks in the supply chain. Pan PacificCopper Co., Ltd.’s Raw Materials Dept. and JX Advanced Metals Corporation’s Metals& Recycling Division and Marketing Dept. perform supplier risk assessment as partof due diligence process by obtaining KYC Questionnaires and Certificates of Origin

from suppliers, preparing due diligence screening table and checking compliancematters using the Dow Jones risk database. The Compliance Officer is informed of theresult of assessment as above. If a high-risk or zero-tolerance supply chain is not
identified, the Compliance Officer approves the transaction. If a zero-tolerance is
identified, the transaction must not commence or be suspended immediately. If a highrisk supply chain is identified, enhanced due diligence must be conducted and theresults must be reported to the Board. The Board then determines whether to enter
the transaction and gives appropriate instructions to the Compliance Officer. In casethe Board determines to enter the transaction with high-risk supply chain, we request
the supplier to prepare and implement an improvement plan to eliminate the highrisk, and if there is no progress in eliminating the high-risk in accordance with the
improvement plan within 6 months, we shall suspend the transaction. The Board
continues to monitor the progress of the improvement plan.
JX Metals Smelting classifies identified risks in light of the standards of its due
diligence system.

Comments and Demonstration of Compliance:
Supply chain due diligence comprising all measures required by the LBMA
Responsible Gold Guidance Version 9 and the LBMA Responsible Silver GuidanceVersion 1 shall be performed before entering a business relationship with any gold andsilver supplying counterparties, however, during fiscal 2023, all supply chain due
diligence for new suppliers of copper concentrate was performed after entering abusiness relationship. As a result of the above due diligence, we did not identify any
high-risk supply chain. We have once again informed Pan Pacific Copper Co., Ltd.’s
Raw Materials Dept. of the need to conduct due diligence on copper concentrate before
entering a business relationship. We use information provided by Teikoku Databank,Ltd. and Dow Jones and Company, Inc. to assess the risks in our supply chain.
We conduct appropriate scrutiny and monitoring of transactions undertaken throughthe course of the relationship following a risk-based approach. Pan Pacific Copper Co.,
Ltd.’s Raw Materials Dept. and JX Advanced Metals Corporation’s Metals & Recycling
Division and Marketing Dept. perform supplier risk assessments as part of due
diligence process.
JX Metals Smelting has established a process for the identification of Conflict Affected
and High-Risk Areas (hereinafter referred to as “CAHRAs”). We shall review the listat least once a year and make changes to it as necessary. The Compliance Officer is
responsible for keeping the CAHRAs list up-to-date and accessible to anyone involvedin our gold and silver raw material supply chain Due Diligence.
We include in the definition of CAHRAs the Democratic Republic of the Congo(hereinafter referred to as "DRC”), neighboring countries of DRC, and countries whereminerals from DRC or its neighboring countries are known or reasonably suspected totransit.
We shall define CAHRAs based on the following information sources..
-

Sanctions lists (US, UK, EU, UN, and relevant sanctions lists)-

Dodd Frank s. 1502-

EU CAHRA list-

Heidelberg Barometer-

Fragile States Index or equivalent-

UN Human Rights Office of the High Commissioner or equivalent-

Reports (including relevant country reports) by the Financial Action Task Force(FATF)-

Credible market intelligence on high-risk gold centres/transit hubs and on
countries where there is a high risk of money laundering-

LBMA Responsible Sourcing Newsletter

In April 2023, we revised the CAHRAs list according to the process stipulated in ourmanual. In addition, we revised the sources to be considered for identifying CAHRAs.
We revised the sources to be considered for identifying CAHRAs by revising ourmanual in May 2024.
We determine gold or silver

supplied to us is zero tolerance when gold or silver

supplied to us i) originates from areas designated as World Heritage Sites; ii) is
provided by suppliers that are located in countries or regions designated by us as zerotolerance target countries or regions; iii) is confirmed or reasonably suspected tooriginate from, or pass through, countries or regions designated by us as zero tolerance
target countries or regions; or (iv) is sourced in breach of international sanctions; or
supplier, other known upstream companies or their Ultimate Beneficial Owners(UBOs) are known money launderers, fraudsters or terrorists, or have been implicatedin serious human rights abuses, or in direct or indirect support to illegitimate nonstate armed groups. We determine gold or silver supplied to us is high-risk when goldor silver supplied to us meets any of the following criteria.
(1) Mined gold and silver(i) for location-based high risks, the mined gold or silver;-

originates from, has transited or has been transported via CAHRAs;-

is claimed to originate from a country through which gold and silver fromCAHRAs in known, or reasonably suspected to transit;-

is claimed to originate from a country that has limited known reserves or stocks,
likely resources or expected production levels of gold or silver;-

is claimed to originate from recyclable/scrap or mixed sources and has beenrefined in a country where gold or silver from CAHRAs is known or reasonably
suspected to transit;.

(ii) for supplier-based high risks, the supplier;-or its UBOs are located in CAHRAs or are Politically Exposed Persons (PEPs);-

has activities in a higher-risk business activity such as arms, gaming and casino
industry, antiques and art, and sects and their leaders;-has sourced gold and silver-bearing raw materials from CAHRAs in the last 12
months; or-

has material discrepancies/inconsistencies in the documentation provided orhave refused to provide requested documentation.

(iii) for type of material based high risks, the mined gold or silver is;-sourced from Artisanal and Small-scale Mines (ASM);-

produced with the use of mercury; or-contributing to catastrophic harm or highly adverse ESG factors, to the extent

that we are able to identify this (e.g., through a record in the public domain or
in our due diligence file).
(2) Recycled gold and silver(i) for location-based high risks, the recycled gold or silver;-

originates from, has transited or has been transported via CAHRAs;-

is claimed to originate from a country through which gold from CAHRAs is
known, or reasonably suspected, to transit, and/or is unjustifiably claimed tohave originated from a country that has limited exports of gold.

(ii) for supplier-based high risks, the supplier;-

operates in a money laundering high-risk country;-

or its UBOs are located in CAHRAs or are Politically Exposed Persons (PEPs);-

engages in high-risk business activities, such as arms dealing, the gaming andcasino industry, trading of antiques and art, or religious sects and their leaders;-has sourced gold and silver-bearing raw materials from CAHRAs in the last 12
months; or-has significant unexplained geographic routing from their supplier orcounterparty in the supply chain.

(iii) for type of material based high risks, recycled gold or silver is;-from an intermediate refinery or trader with a high-risk supply chain or a
trading counterparty sourcing from an intermediate refinery with a high-risk
supply chain; or-contributing to catastrophic harm or highly adverse ESG factors, to the extent
that we are able to identify this (e.g., through a record in the public domain or
in our due diligence file).

If our due diligence finds that a particular supply chain is high-risk because either
gold/silver supplied to us or a supplier meets any of the above high-risk criteria, weconduct enhanced due diligence, namely, on-site surveys as well as checks andassessments using appropriate information sources, so that the Board can determine
whether or not to proceed with the transaction.
JX Metals Smelting has undertaken EDD measures for identified high-risk supply
chains.
Comments and Demonstration of Compliance:
If high-risk supply chains are identified, the Compliance Officer shall report to theBoard the process and results of enhanced due diligence conducted. We shall conductenhanced due diligence by conducting site visit using the LBMA Site Visit Report
Template to substantiate findings from document-based supply chain due diligence.

The Board must determine whether to approve or disapprove all new suppliers
classified as high risk. The Board retains the ultimate control and responsibility forthe gold or silver supply chain.
If we source recycled gold or silver from intermediate refiners directly, we shallidentify the intermediate refiners’ UBOs, and obtain independent assurance reportson the intermediate refiners’ responsible sourcing practices to confirm whether the
independent assurance report i) includes conformance with an OECD aligned
responsible sourcing scheme; ii) is commissioned by the intermediate refiner; and iii)
is completed before the start of a new business relationship with us.
If we source recycled gold or silver from intermediate refiners indirectly, we shall use
best efforts to identify the intermediate refiners and their UBOs. We shall conduct due
diligence to determine if the supply chain of the intermediate refiners is high-risk. If
the supply chain including the intermediate refiner is determined to be a high-risk
supply chain, we shall determine whether the intermediate refiner’s supply chain due
diligence process is audited against an OECD aligned responsible sourcing scheme,
and the Board must determine whether to enter the transaction and give appropriate
instructions to the Compliance Officer . We did not source any gold or silver fromintermediate refiners for fiscal year 2023.
Since there was one transaction identified as a high-risk supply chain during thereporting year, the Compliance Officer conducted the enhanced due diligence to suchhigh-risk supply chain and reports the results to the Board. As a part of the enhanced
due diligence, a site visit was undertaken at the recycled materials supplier's site
located in a CAHRA by an employee, who was in charge of the transaction of the highrisk supply chain and periodically had taken training on due diligence provided by JX
Metals Smelting. During the site visit, we used the LBMA Site Visit Report Template
to verify information on the supplier's business operations and entire supply chain andassess risk in terms of money laundering, workers and security. As a result of the risk
assessment based on the site visit, we identified no specific underlying issues. The
Board determined to proceed with the transaction and directed the Compliance Officer
to continue proper monitoring for the high-risk supply chain.
Step 3: Design and implement a management system to respond to identified risks
Compliance Statement with Requirement:
We have fully complied with Step 3: Design and implement a management system torespond to identified risks.
JX Metals Smelting has devised a strategy for risk management of an identified risk
by either (i) mitigation of the risk while continuing to trade, (ii) mitigation of the risk

while suspending trade or (iii) disengagement from the risk.
Comments and Demonstration of Compliance:
JX Metals Smelting has devised a strategy for risk management according to thenature of the identified risk whereby the Board decides on one of the following. (i) incase money laundering, terrorist financing, fomenting conflict, human rights abuses,
direct or indirect support for illegal non-state armed groups, or fraudulent
misrepresentation of the country of origin of gold, silver is being taking place, or ishighly likely to be, the transaction must not commence or be suspended immediately;(ii) in case money laundering, terrorist financing, fomenting conflict, human rights
abuses, direct or indirect support for illegal non-state armed groups, or fraudulent
misrepresentation of the country of origin of gold, silver may be taking place orsignificant impact on ESG factors has been recognized the transaction must be
suspended and investigated; or (iii) in case due diligence has concluded that there has
been (a)direct or indirect assistance, bribery, or bribes to public or private security
forces, (b)misrepresentation of country of origin of gold or silver without fraud, (c)noncompliance with taxes, fees and mining fees payable to the government, or(d)violations of environmental, occupational health and safety, local community lawsor (e) material regulatory violations of ESG factors, but the supplier is acting
proportionately and in good faith, the transaction may be continued but risk
mitigation plan must be implemented.
In the case of implementation of risk mitigation plan, JX Metals Smelting requires
suppliers to implement an improvement plan with clear performance targets within areasonable period, continuously monitors the implementation status of the plan, andreports the findings to the Board. If the improvement plan fails to produce results
within a certain period, JX Metals Smelting shall consider suspending or dissolving
the relationship with the supplier.
No reasonable risk of our involvement in money laundering, terrorist financing,
conflict, human rights abuses or violations of ESG factors-related legal requirements
was identified in our due diligence, including enhanced due diligence, conducted infiscal 2023.
Therefore, there was no cases of cooperation with national or local government
authorities regarding high-risk supply chains.
Step 4: Independent third-party assurance
Compliance Statement with Requirement:
We have fully complied with Step 4: Obtain Independent Third-Party Assurance onSupply Chain Due Diligence Practices.
Comments and Demonstration of Compliance:
JX Metals Smelting engaged the services of the assurance provider KPMG AZSA
Sustainability Co., Ltd. (hereinafter referred to as “KPMG AZSA”), and their
independent assurance report is attached. At the Board meeting held in April 2024,
the Board ensured that KPMG AZSA is independent of the organization and has thenecessary effectiveness to carry out the engagement, and approved to enter into
Assurance Service Agreement with KPMG AZSA.
Step 5: Report on supply chain due diligence
Compliance Statement with Requirement:
We have fully complied with Step 5: Report on supply chain due diligence.
The Policy is available on JX Advanced Metals Corporation’s website, and ourCompliance Report with the independent assurance report is available on JX
Advanced Metals Corporation’s website(https://www.nmm.jxgroup.co.jp/english/sustainability/csr_procurement/conflict_minerals/).
JX Metals Smelting’s overall conclusion

Table 3: Management conclusion
Is the Refiner in compliance with the requirements of the LBMA Responsible Gold
Guidance Version 9 and the LBMA Responsible Silver Guidance Version 1. for thereporting period?
No
In conclusion, JX Metals Smelting implemented effective management systems,
procedures, processes and practices to conform to the requirements of the LBMA
Responsible Gold Guidance Version 9 and the LBMA Responsible Silver GuidanceVersion 1, as explained above in Table 2, for the reporting year ended March 31, 2024
except for Step2: Identify and assess risks in the supply chain.. As mentioned in Step2, all supply chain due diligence for new suppliers of copper concentrate was performed
after entering a business relationship. Due diligence has already been completed forthese suppliers and the risk assessment has revealed no issues. We are implementing
remedial measures in response to this deficiency.
JX Metals Smelting is committed to continuous improvement, and any corrective
actions identified will be monitored internally on a regular basis.

Table 4: Other report comments
If users of this report wish to provide any feedback to JX Metals Smelting with respect
to this report, they can send an e-mail to the functional mailbox: conflict_minerals@jxnmm.com.