Common use of INTERNAL CONTROL MEASURES Clause in Contracts

INTERNAL CONTROL MEASURES. In order to safeguard the interests of the Company and the Shareholders as a whole, the Company has adopted certain measures in monitoring the transactions under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement. In addition to our compliance with the requirements on annual review by external auditors and independent non-executive Directors under the Listing Rules in respect of continuing connected transactions, the internal compliance review department of the Company is responsible for the review of individual orders on a regular basis to ensure that the terms thereunder are made in accordance with the terms and conditions of the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement. To ensure that transaction prices under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement will be fair and reasonable and on normal commercial terms, the business department of the Group will regularly review and compare the purchase prices incurred and/or to be incurred thereunder with those under the same type of transactions of the Company entered into with third parties who may or may not be connected to the Company for the purchase of the Materials or the Products with the same or similar specifications. To ensure the transactions contemplated under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement do not exceed the respective Annual Cap, the business department of the Group shall fill in and submit statistical charts for the continuing connected transactions at least quarterly. In the event that the amount of the transactions incurred and/or to be incurred under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement for a financial year is expected to reach the relevant Annual Cap, the business department will follow up forthwith by reporting and proposing a response to the management of the Company, and in case that an amendment to the Annual Cap is required, report particulars to the Board and hold a Board meeting for considering the matters thereabout to ensure compliance of the requirements under the Listing Rules. The Company also arranges compliance trainings for the Directors, senior management and staff from the relevant departments of the Company and its subsidiaries, primarily focusing on the rules relating to connected transactions under Chapter 14A of the Listing Rules.

INTERNAL CONTROL MEASURES. In order to safeguard the interests ensure that all continuing connected transactions of the Company and Group comply with the Shareholders as a wholeListing Rules, the Company has adopted certain formulated and continuously improved the management measures for connected transactions which sets forth the procedures for approval of connected transaction contracts and management of continuing connected transactions. Before entering into the Value-Added Services Framework Agreement in its ordinary and usual course of business, the Group has conducted research study on the market price fairness by obtaining and comparing the prevailing price quotations and pricing terms of the same or similar transactions from other independent suppliers in the vicinity according to its internal approval and monitoring procedures for continuing connected transactions, in order to select suppliers upon comprehensive consideration of various assessment criteria (including but not limited to the prices, the level and quality of tailor-made services, suitability, payment terms, and time required for the provision of goods or services) and determine the relevant procurement terms through negotiations based on the business needs of the project, the types and scale of the procurement. Such quotes, together with the offer from the connected person, and the Value-Added Services Framework Agreement shall be reviewed by the management, finance personnel and legal personnel of the Company according to the Group’s internal approval and monitoring procedures. Afterwards, the Value-Added Services Framework Agreement, the continuing connected transactions contemplated thereunder and the annual caps would be submitted to the Board for consideration and approval. The finance department of the relevant members of the Group will be responsible for the monthly reporting of the amount of continuing connected transactions to the finance department of the Company for monitoring the annual caps of the relevant transactions under every month and issuing warning to the New Purchase Framework Agreement Board, relevant departments and business units of the New Materials Procurement Framework AgreementGroup when the utilization rate of annual cap reaches 80%, which will facilitate the Board to consider implementation of relevant response measures such as the revision of annual cap. In addition The continuing connected transactions shall also be subject to our compliance with the requirements on annual review and audit by external auditors and independent non-executive Directors under the Listing Rules in respect of continuing connected transactions, the internal compliance review department of the Company is responsible for the review of individual orders on a regular basis and auditors respectively every year pursuant to ensure that the terms thereunder are made in accordance with the terms and conditions of the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement. To ensure that transaction prices under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement will be fair and reasonable and on normal commercial terms, the business department of the Group will regularly review and compare the purchase prices incurred and/or to be incurred thereunder with those under the same type of transactions of the Company entered into with third parties who may or may not be connected to the Company for the purchase of the Materials or the Products with the same or similar specifications. To ensure the transactions contemplated under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement do not exceed the respective Annual Cap, the business department of the Group shall fill in and submit statistical charts for the continuing connected transactions at least quarterly. In the event that the amount of the transactions incurred and/or to be incurred under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement for a financial year is expected to reach the relevant Annual Cap, the business department will follow up forthwith by reporting and proposing a response to the management of the Company, and in case that an amendment to the Annual Cap is required, report particulars to the Board and hold a Board meeting for considering the matters thereabout to ensure compliance of the requirements under the Listing Rules. The Company also arranges compliance trainings for the Directors, senior management and staff from the relevant departments of the Company and its subsidiaries, primarily focusing on the rules relating to connected transactions under Chapter 14A of the Listing Rules. Among which, the independent auditor shall sample check, among other things, the compliance of such pricing terms with the pricing policies or mechanisms under the Value-Added Services Framework Agreement.

INTERNAL CONTROL MEASURES. In order The pricing policy for all the continuing connected transactions of Group will be supervised and monitored by the relevant personnel and management of the Group in charge to safeguard ensure the relevant continuing connected transactions are conducted on normal commercial terms and will not be prejudicial to the interests of the Company and its Shareholders as a whole. The relevant personnel and management of Shanghai Macalline will review and assess the terms before entering into the specific agreements to ensure they are consistent with the principal terms and provisions set out in the relevant New Framework Agreements. Regular checks will be conducted on a quarterly basis to review and assess whether the transactions contemplated under the relevant continuing connected transactions are conducted in accordance with the terms of their respective agreements and the price charged for a specific transaction is fair and reasonable and in accordance with the aforesaid pricing policy. The independent non-executive Directors will review the transactions contemplated under the New Framework Agreements, and the auditors of the Company will also report on the Group’s continuing connected transactions (including the transactions contemplated under the New Framework Agreements) in accordance with Hong Kong Standard on Assurance Engagements 3000 (Revised) “Assurance Engagements Other Than Audits or Reviews of Historical Financial Information” and with reference to Practice Note 740 “Auditor’s Letter on Continuing Connected Transactions under the Hong Kong Listing Rules” issued by the Hong Kong Institute of Certified Public Accountants. Accordingly, the Directors consider that the internal control mechanism is effective to ensure that the transactions contemplated under the New Framework Agreements will be conducted on normal commercial terms and not prejudicial to the interests of the Company and the Shareholders as a whole, . REASONS FOR AND BENEFITS OF ENTERING INTO THE NEW FRAMEWORK AGREEMENTS Shanghai Macalline and Xingyue Property have been providing the Company Red Star Macalline Group with property management services since 2021. The Board believes that the continuation of the provision of the property management services to the Red Star Macalline Group would allow the Shanghai Macalline Group to make use of its existing strength and experience in shopping malls property management to generate stable business revenue. It is expected that the continuous cooperation between the Shanghai Macalline Group and the Red Star Macalline Group could result in satisfactory synergy effect and further promote the business growth of the Shanghai Macalline Group. The Longzhihui Shanghai Group specializes in professional cleaning and has adopted certain measures in monitoring been providing cleaning services to the transactions Shanghai Macalline and Xingyue Property since 2021. The Board believes that the continued engagement of the Longzhihui Shanghai Group by the Shanghai Macalline Group for the provision of cleaning services on normal commercial terms would enable the Shanghai Macalline Group to ensure the quality of cleaning services provided to the projects under the New Purchase Framework Agreement management the Shanghai Macalline Group in an efficient manner and is therefore beneficial to the New Materials Procurement Framework AgreementShanghai Macalline Group. In addition to our compliance with The Directors (including the requirements on annual review by external auditors and independent non-executive Directors under the Listing Rules in respect of continuing connected transactions, the internal compliance review department of the Company is responsible for the review of individual orders on a regular basis to ensure Directors) consider that the terms thereunder are made in accordance with the terms and conditions of each of the New Purchase Framework Agreement Agreements are fair and reasonable, and the New Materials Procurement Framework Agreement. To ensure that transaction prices under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement will be fair and reasonable and transactions contemplated thereunder are on normal commercial terms, the business department of the Group will regularly review and compare the purchase prices incurred and/or to be incurred thereunder with those under the same type of transactions of the Company entered into with third parties who may or may not be connected to the Company for the purchase of the Materials or the Products with the same or similar specifications. To ensure the transactions contemplated under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement do not exceed the respective Annual Cap, the business department of the Group shall fill in and submit statistical charts for the continuing connected transactions at least quarterly. In the event that the amount of the transactions incurred and/or to be incurred under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement for a financial year is expected to reach the relevant Annual Cap, the business department will follow up forthwith by reporting and proposing a response to the management of the Company, terms and in case that an amendment to the Annual Cap is required, report particulars to the Board and hold a Board meeting for considering the matters thereabout to ensure compliance of the requirements under the Listing Rules. The Company also arranges compliance trainings for the Directors, senior management and staff from the relevant departments interests of the Company and its subsidiaries, primarily focusing on the rules relating to connected transactions under Chapter 14A of the Listing RulesShareholders as a whole.

INTERNAL CONTROL MEASURES. In order Procurement Procedures Xxxxxxx Xxxxx’s procurement department will seek quotations from at least two independent third parties offering the same or comparable products and the head of procurement department will evaluate the fairness and reasonableness of the price offered by Xxxxxxxxxxxx and to safeguard decide if the price offered by Xxxxxxxxxxxx is comparable to or more favourable than those offered by such independent third parties for the same or comparable products based on the quotations received. After the head of procurement department chooses the supplier, the procurement department will contact the chosen supplier and will enter into purchase order(s) with the supplier. The procurement department will then apply internally for the necessary funding and will arrange the payment of the transaction amounts to the supplier. After receiving the silver ingots from the supplier, the procurement department will settle the outstanding balance of the transaction amounts (if any). Other Internal Control Measures The Company will report transactions under the New Framework Purchase Agreement with Longtianyong to the audit committee of the Company for its review (if necessary). Further, the independent non-executive Directors will review the transactions under the New Framework Purchase Agreement annually to check and confirm whether such transactions have been conducted in the ordinary and usual course of business of the Group, on normal commercial terms or better, in accordance with the New Framework Purchase Agreement, and on terms that are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and will review and confirm whether such transactions have been entered into within the relevant annual caps. The Company will also engage its auditor to review such transactions annually pursuant to Rule 14A.56 of the Listing Rules. As part of the general corporate governance measures adopted by the Company, the Board will monitor the internal control procedures put in place by the Company has adopted certain measures in monitoring the transactions under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement. In addition to our compliance with the requirements on annual review by external auditors and independent non-executive Directors under the Listing Rules in respect of continuing connected transactions, the internal compliance review department of the Company is responsible for the review of individual orders on a regular basis to ensure that they are adequate and effective and that the terms thereunder aforesaid transactions are made conducted in accordance with the terms and conditions of the New Framework Purchase Framework Agreement and the New Materials Procurement Framework Agreement. To ensure that transaction prices under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement will be fair and reasonable and on normal commercial terms, the business department of the Group will regularly review and compare the purchase prices incurred and/or to be incurred thereunder with those under the same type of transactions of the Company entered into with third parties who may or may not be connected to the Company for the purchase of the Materials or the Products with the same or similar specifications. To ensure the transactions contemplated under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement do not exceed the respective Annual Cap, the business department of the Group shall fill in and submit statistical charts for the continuing connected transactions at least quarterly. In the event that the amount of the transactions incurred and/or to be incurred under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement for a financial year is expected to reach the relevant Annual Cap, the business department will follow up forthwith by reporting and proposing a response to the management of the Company, and in case that an amendment to the Annual Cap is required, report particulars to the Board and hold a Board meeting for considering the matters thereabout to ensure compliance of the requirements under the Listing Rules. The Company also arranges compliance trainings for the Directors, senior management and staff from the relevant departments of the Company and its subsidiaries, primarily focusing on the rules relating to connected transactions under Chapter 14A of the Listing Rules.

INTERNAL CONTROL MEASURES. The Company has established internal control measures to ensure that (i) terms of the 2024 Hilong Energy CCT Agreements are on normal commercial terms, fair and reasonable, and in the interests of the Company and the Shareholders as a whole; and (ii) the transactions and the pricing policy are conducted in accordance with the terms of the 2024 Hilong Energy CCT Agreements. The Company has adopted and implemented a management system on connected transactions (“Management System”). Under the Management System, an internal control review committee (“CCT IC Committee”) is established and comprises the heads of the financial department, the marketing department, the procurement department and the audit department. The CCT IC Committee will report to the Board for all significant matters related to the continuing connected transactions of the Group. Before entering into the transactions under the Coating Services and Hardbanding Services Agreement as supplemented and amended by the 2024 Supplemental Coating Services and Hardbanding Services Agreement, the relevant staff of the marketing department will obtain at least two quotations from Independent Third Party service providers selected from a list of pre-approved coating services and hardbanding service providers maintained by the Group from time to time (“Pre-approved Supplier List”). The criteria of the Pre-approved Supplier List include, among others, production capabilities and quality, qualifications, reputation, experience and location. The Pre-approved Supplier List is then approved by both the heads of the marketing department and procurement department and is subject to review annually. The selection basis of the two Independent Third Party service providers for quotation include their performance in recent completed projects, current service capacity, delivery timeline and competitiveness of pricing terms offered. The quotations together with the relevant supporting documents will then be reviewed by the financial department and then approved by the CCT IC Committee, to ensure that the pricing and terms of the coating services and hardbanding services provided by Hilong Pipeline Group will be no less favorable to the Group as compared to other quotations received from Independent Third Party service providers. Before entering into the transactions under the 2024 Welding Wire Supply Agreement, the marketing department will closely monitor the prices of the welding wires offered to Hilong Pipeline by evaluating the average price of the welding wires offered to the Independent Third Parties of the Group and the market prices of similar products under similar sales terms and conditions. For the evaluation mentioned above, the marketing department of the Group will first collect market price information available in the public domain. The CCT IC Committee will then discuss and review the prices and conditions of the welding wires offered to Hilong Pipeline (taking into account various factors such as costs, transaction volume, sales channel and market competition). In order the event of market fluctuations, the CCT IC Committee will also convene meetings on an urgent basis. If at any time the relevant departments of the Group become aware that the price of welding wires offered to safeguard Hilong Pipeline is lower than that offered by the Group to Independent Third Parties and/or the terms of welding wires offered to Hilong Pipeline Group are more favorable than those offered by the Group to Independent Third Parties, such findings shall be reported to the CCT IC Committee immediately. The CCT IC Committee shall then discuss with the Board to adjust the price offered to Hilong Pipeline Group and/or amend the relevant terms. Hilong Energy Group will only supply welding wires to Hilong Pipeline Group when the sales prices and conditions offered to Hilong Pipeline Group are no more favorable than those being offered to Independent Third Party and to ensure that all transactions with Hilong Pipeline Group will comply with the terms of the 2024 Welding Wire Supply Agreement. To ensure the transactions contemplated under the 2024 Hilong Energy CCT Agreements do not exceed the respective proposed annual caps, the financial department of the Company will regularly monitor the actual transaction amount under the 2024 Hilong Energy CCT Agreements on a monthly basis and submit monthly reports to the CCT IC Committee to evaluate and review the implementation progress of the continuing connected transactions. If the financial department notices that the transactions under the 2024 Hilong Energy CCT Agreements will have the possibility of exceeding the respective proposed annual caps, it will notify the business and legal departments of the Group at once, as well as the CCT IC Committee to take next steps to ensure compliance with the relevant Listing Rules. The audit department of the Company will review the continuing connected transactions under the Coating Services and Hardbanding Services Agreement as supplemented and amended by the 2024 Supplemental Coating Services and Hardbanding Services Agreement and the 2024 Welding Wire Supply Agreement annually to check and confirm (among others) the fairness of the pricing terms, the implementation of continuing connected transactions, and the compliance of contract approval, ensuring that the internal control processes and operational procedures are complied in accordance with the requirements of the Management System and the Listing Rules. The Company’s external auditors will review the continuing connected transactions under each of the 2024 Hilong Energy CCT Agreements annually to check and confirm (among others) whether the pricing terms have been adhered to and whether the relevant annual caps have been exceeded. Hilong Pipeline Group has agreed to allow the Company and its external auditors to access the information necessary to report on the continuing connected transactions contemplated under the 2024 Hilong Energy CCT Agreements. The independent non-executive Directors will review the continuing connected transactions under the 2024 Hilong Energy CCT Agreements annually to check and confirm whether such continuing connected transactions have been conducted in the ordinary and usual course of business of the Group, on normal commercial terms or better, in accordance with the relevant agreements governing them on terms that are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and whether the internal control procedures put in place by the Company has adopted certain measures in monitoring the transactions under the New Purchase Framework Agreement are adequate and the New Materials Procurement Framework Agreement. In addition to our compliance with the requirements on annual review by external auditors and independent non-executive Directors under the Listing Rules in respect of continuing connected transactions, the internal compliance review department of the Company is responsible for the review of individual orders on a regular basis effective to ensure that the terms thereunder such continuing connected transactions are made conducted in accordance with the terms and conditions of the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement. To ensure that transaction prices under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement will be fair and reasonable and on normal commercial terms, the business department of the Group will regularly review and compare the purchase prices incurred and/or to be incurred thereunder with those under the same type of transactions of the Company entered into with third parties who may or may not be connected to the Company for the purchase of the Materials or the Products with the same or similar specifications. To ensure the transactions contemplated under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement do not exceed the respective Annual Cap, the business department of the Group shall fill pricing policies set out in and submit statistical charts for the continuing connected transactions at least quarterly. In the event that the amount of the transactions incurred and/or to be incurred under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement for a financial year is expected to reach the such relevant Annual Cap, the business department will follow up forthwith by reporting and proposing a response to the management of the Company, and in case that an amendment to the Annual Cap is required, report particulars to the Board and hold a Board meeting for considering the matters thereabout to ensure compliance of the requirements under the Listing Rules. The Company also arranges compliance trainings for the Directors, senior management and staff from the relevant departments of the Company and its subsidiaries, primarily focusing on the rules relating to connected transactions under Chapter 14A of the Listing Rulesagreements.

INTERNAL CONTROL MEASURES. In order to safeguard the interests of the Company and the Shareholders as a wholewhole and to ensure that the pricing policies and the annual caps are complied with, the Company has adopted certain the following internal control measures: • The Group maintains price lists and a database containing historical transaction records and relevant terms and conditions. The information in the database is obtained in the course of the Group’s operations, including information in respect of transactions entered into by different divisions/departments of the Group. The Company will continue to develop and maintain the database so as to include pricing information in relation to materials sold by the Group in the future. Designated personnel of the Group are responsible for the maintenance of the database, and the database is generally updated as soon as practicable after the materialization or consummation of a sales/provision of service transaction. A management personnel of the Group is designated to monitor and supervise the maintenance of the database to ensure that up-to-date records are properly kept. The Company will also conduct random checks on the database so as to ensure that effective and sound internal control measures are in place so that continuing connected transactions with the Kelun Group will be conducted on a fair and reasonable basis. • The relevant business units and departments of Group will regularly monitor and review the prices/ fees of and terms under which continuing connected transactions are conducted with the Kelun Group in order to ensure that such continuing connected transactions are conducted on normal commercial terms, in accordance with the annual caps set by the Company, and the terms are no less favourable to the Group than those available to/from independent third parties. The Company will designate specific personnel from the compliance/internal control department to monitor the continuing connected transactions with the Kelun Group and any irregularities will be reported to the senior management of the Group in a timely manner. • The Group will conduct regular internal checks to ensure that the internal control measures in monitoring respect of the continuing connected transactions under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement. In addition to our compliance with the requirements on annual review by Kelun Group remain intact and effective. • The Company’s external auditors will annually review the relevant continuing connected transactions with the Kelun Group subject to annual view requirement to check and confirm (amongst others) whether the pricing policies have been adhered to, whether the continuing connected transactions were conducted in accordance with the agreements governing them and whether the relevant annual caps have been exceeded. • The independent non-executive Directors under will annually review the Listing Rules in respect of relevant continuing connected transactions, transactions with the internal compliance review department Kelun Group to check and confirm whether such transactions have been conducted in the ordinary and usual course of business of the Company is responsible for the review of individual orders on a regular basis to ensure that the terms thereunder are made in accordance with the terms and conditions of the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement. To ensure that transaction prices under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement will be fair and reasonable and Company, on normal commercial terms, in accordance with the business department agreements governing them, on terms that are fair and reasonable and in the interests of the Group will regularly review Shareholders as a whole, and compare whether the purchase prices incurred and/or to be incurred thereunder with those under the same type of transactions of internal control procedures put in place by the Company entered into with third parties who may or may not be connected are adequate and effective to the Company for the purchase of the Materials or the Products with the same or similar specifications. To ensure the transactions contemplated under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement do not exceed the respective Annual Cap, the business department of the Group shall fill in and submit statistical charts for the that such continuing connected transactions at least quarterly. In with the event that Kelun Group are conducted in accordance with the amount of pricing policies adopted by the transactions incurred and/or to be incurred under the New Purchase Framework Agreement Group and the New Materials Procurement Framework Agreement for a financial year is expected annual caps pursuant to reach the relevant Annual Cap, the business department will follow up forthwith by reporting and proposing a response to the management of the Company, and in case that an amendment to the Annual Cap is required, report particulars to the Board and hold a Board meeting for considering the matters thereabout to ensure compliance of the requirements under the Listing Rules. The Company also arranges compliance trainings for the Directors, senior management and staff from the relevant departments of the Company and its subsidiaries, primarily focusing on the rules relating to connected transactions under Chapter 14A of the Listing Rules.

INTERNAL CONTROL MEASURES. In order to safeguard the interests of the Company and the Shareholders as a whole, the Company has adopted certain measures in monitoring the transactions under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement. In addition to our compliance with the requirements on annual review by external auditors and independent non-executive Directors under the Listing Rules in respect of continuing connected transactions, the internal compliance review department of the Company is responsible for the review of individual orders on a regular basis to ensure that the terms thereunder are made in accordance with the terms and conditions of the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement. To ensure that transaction prices under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement will be fair and reasonable and on normal commercial terms, on top of the mechanism and procedures as detailed in the paragraph headed “THE PURCHASE FRAMEWORK AGREEMENT — Principal terms and price determination” in this announcement, the business department of the Group will regularly review and compare the purchase prices incurred and/or to be incurred thereunder with those under the same type of transactions of the Company entered into with third parties who may or may not be connected to the Company for the purchase of the Materials or the Products with the same or similar specifications. To ensure the transactions contemplated under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement do not exceed the respective Annual Cap, the business department of the Group shall fill in and submit statistical charts for the continuing connected transactions at least quarterly. In the event that the amount of the transactions incurred and/or to be incurred under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement for a financial year is expected to reach the relevant Annual Cap, the business department will follow up forthwith by reporting and proposing a response to the management of the Company, and in case that an amendment to the Annual Cap is required, report particulars to the Board and hold a Board meeting for considering the matters thereabout to ensure compliance of the requirements under the Listing Rules. The Company also arranges compliance trainings for the Directors, senior management and staff from the relevant departments of the Company and its subsidiaries, primarily focusing on the rules relating to connected transactions under Chapter 14A of the Listing Rules.

INTERNAL CONTROL MEASURES. In order Procurement Procedures Xxxxxxx Xxxxx’s procurement department will seek quotations from at least two independent third parties offering the same or comparable products and the head of procurement department will evaluate the fairness and reasonableness of the price offered by Xxxxxxxxxxxx and to safeguard decide if the price offered by Xxxxxxxxxxxx is comparable to or more favourable than those offered by such independent third parties for the same or comparable products based on the quotations received. After the head of procurement department chooses the supplier, the procurement department will contact the chosen supplier and will enter into purchase order(s) with the supplier. The procurement department will then apply internally for the necessary funding and will arrange the payment of the transaction amounts to the supplier. After receiving the silver ingots from the supplier, the procurement department will settle the outstanding balance of the transaction amounts (if any). Other Internal Control Measures The Company will report transactions under the 2024-2026 Framework Purchase Agreement with Longtianyong to the audit committee of the Company for its review (if necessary). Further, the independent non-executive Directors will review the transactions under the 2024-2026 Framework Purchase Agreement annually to check and confirm whether such transactions have been conducted in the ordinary and usual course of business of the Group, on normal commercial terms or better, in accordance with the 2024-2026 Framework Purchase Agreement, and on terms that are fair and reasonable and in the interests of the Company and the Shareholders as a whole, and will review and confirm whether such transactions have been entered into within the relevant annual caps. The Company will also engage its auditor to review such transactions annually pursuant to Rule 14A.56 of the Listing Rules. As part of the general corporate governance measures adopted by the Company, the Board will monitor the internal control procedures put in place by the Company has adopted certain measures in monitoring the transactions under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement. In addition to our compliance with the requirements on annual review by external auditors and independent non-executive Directors under the Listing Rules in respect of continuing connected transactions, the internal compliance review department of the Company is responsible for the review of individual orders on a regular basis to ensure that they are adequate and effective and that the terms thereunder aforesaid transactions are made conducted in accordance with the terms and conditions of the New 2024-2026 Framework Purchase Framework Agreement and the New Materials Procurement Framework Agreement. To ensure that transaction prices under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement will be fair and reasonable and on normal commercial terms, the business department of the Group will regularly review and compare the purchase prices incurred and/or to be incurred thereunder with those under the same type of transactions of the Company entered into with third parties who may or may not be connected to the Company for the purchase of the Materials or the Products with the same or similar specifications. To ensure the transactions contemplated under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement do not exceed the respective Annual Cap, the business department of the Group shall fill in and submit statistical charts for the continuing connected transactions at least quarterly. In the event that the amount of the transactions incurred and/or to be incurred under the New Purchase Framework Agreement and the New Materials Procurement Framework Agreement for a financial year is expected to reach the relevant Annual Cap, the business department will follow up forthwith by reporting and proposing a response to the management of the Company, and in case that an amendment to the Annual Cap is required, report particulars to the Board and hold a Board meeting for considering the matters thereabout to ensure compliance of the requirements under the Listing Rules. The Company also arranges compliance trainings for LISTING RULES IMPLICATIONS As at the Directorsdate of this announcement, senior management Longtianyong is a wholly-owned subsidiary of China Silver Group, the immediate and staff from ultimate holding company of the relevant departments Company. China Silver Group is a connected person of the Company under Rule 14A.07(1) of the Listing Rules. Longtianyong is an associate of China Silver Group under Rule 14A.13(1) of the Listing Rules, and its subsidiarieshence a connected person of the Company under Rule 14A.07(4) of the Listing Rules. The highest Applicable Percentage Ratio calculated with reference to the highest of the proposed annual caps for the three years ending 31 December 2024, primarily focusing on 2025 and 2026 exceeds 5%. Therefore, the rules relating transactions contemplated under the 2024-2026 Framework Purchase Agreement constitute a non-exempt continuing connected transaction for the Company under the Listing Rules, and the 2024-2026 Framework Purchase Agreement, the transactions contemplated thereunder and the proposed annual caps for the three years ending 31 December 2024, 2025 and 2026 are subject to connected transactions the reporting, announcement, circular (including independent financial advice), Independent Shareholders’ approval and annual review requirements under Chapter 14A of the Listing Rules. The Company expects to convene and hold the EGM by the end of 2023 to seek the Independent Shareholders’ approval for the 2024-2026 Framework Purchase Agreement, the transactions contemplated thereunder and the proposed annual caps for the three years ending 31 December 2024, 2025 and 2026. Pursuant to Rule 14A.36 of the Listing Rules, all Shareholders with a material interest (other than by virtue of being a Shareholder) in the transactions contemplated under the 2024-2026 Framework Purchase Agreement are required to abstain from voting on the resolution to be proposed at the EGM for approving the aforesaid matters. China Silver Group (being the ultimate holding company of Longtianyong) and Xx. Xxxx Xxxxxxx (being a director and substantial shareholder of China Silver Group) will abstain from voting on such resolution. The Company has established the Independent Board Committee to review, consider, recommend and advise the Independent Shareholders in respect of the aforesaid matters, and has appointed Messis Capital Limited（ 大有融資有限公司）as the Independent Financial Adviser to advise the Independent Board Committee and the Independent Shareholders in this regard. A circular containing, among other things, (i) further details of the 2024-2026 Framework Purchase Agreement and the transactions contemplated thereunder; (ii) a letter of advice from the Independent Board Committee; (iii) a letter of advice from the Independent Financial Adviser; and (iv) the notice of the EGM, is expected to be dispatched to the Shareholders on or before 24 November 2023.