Update of

Sumitomo Metal Mining Co., Ltd.’s Hydrometallurgical Processing Plants

For Low Grade Nickel Ores

In the Philippines

2

SUMITOMO HPAL PROJECTS

54% 100%

From low-grade limonitic laterites stockpiled as

“mine wastes” by RTNMC’s and TMC’s saprolite mining operations,

The HPAL process creates valuable intermediate products

in the form of Mixed Ni and Co Sulfides.

HPAL Technology adds value to materials previously considered as mine wastes

NiO - 0.8 to 1.5 % Ni

CoO – 0.1 to 0.2 % Co

NiS - 55 to 57 % Ni

CoS – 4 to 5 % Co

Palawan HPAL Project Hydrometallurgical Processing Plant (HPP) Coral Bay Nickel Corporation (CBNC)

The Project is located within the industrial facility of Rio Tuba Nickel Mining Corporation (RTNMC) in Brgy. Rio Tuba, Bataraza, Palawan.

Since 1977, RTNMC has been mining saprolitic nickel ores selling them to ferro-nickel smelters abroad. In more than 25 years of operation, it also generated mine wastes of about 25 million tonnes. Called low grade limonitic mine wastes, these are stockpiled around the mine area.

CBNC will process these stockpiles using the technology called HPAL or high pressure acid leach.

Coral Bay Nickel Corporation

Rio Tuba Nickel Mining Corp

HPP LINE 1 (ECC granted July 10, 2002)

July, 2002 to August, 2004 – Construction August, 2004 to March, 2005 – Commissioning

April, 2005 – Start of Commercial Operation

Annual Production 10,000 MT Nickel, 750 MT Cobalt

Capital Investment – US$ 200 Million

PERFORMANCE AFTER 4 YEARS

(April 2005 – April 2009)

Ore Processed – 3,487,000 DMT Ore Grade – 1.26 % Ni, .089 % Co

Production – 37,700 DMT Ni & 2,800 DMT Co Metal Recoveries – 87.2 %Ni, 84.9 % Co

Employed – 2,125 (7.5% Female, 71.3 % Locals) Taxes Paid – Php 993 Million

HPP LINE 2 (ECC granted Feb. 1, 2007)

June, 2006 to Jan. 2009 – Construction

Feb. 2009 to May, 2009 – Commissioning June, 2009 – Start of Commercial Operation

Annual Production

10,000 MT Nickel, 750 MT Cobalt

Capital Investment – US$ 308 Million

COMBINED PRODUCTION CAPACITY

Designed: Annual Nickel Production – 20,000 DMT/yr Annual Cobalt Production – 1,500 DMT/yr

Upgraded: Annual Nickel Production – 24,000 DMT/yr Annual Cobalt Production – 1,860 DMT/yr

Tailings Dam #2

Environmental Protection and Enhancement Program

(EPEP)

Social Development and Management Program

(SDMP)

Final Mine Rehabilitation and Development Program

(FMR/DP)

Particulars Requirements Compliance

1. CAPEX on Pollution Control Facilities

10 % of Project CAPEX Php 3.5B or 14% of CAPEX

2. OPEX on Pollution Control Facilities

3-5% of Operating Costs Php 2B/yr or 18-20% of OPEX

STACK

ELECTROSTATIC PRECIPITATOR

GENERATOR

BOILER

STACK

AUTOCLAVE

FLASH TANKS SCRUBBER

STACK STACK

SCRUBBERS

Particulars Requirements Compliance

3. CLRF – Contingent Liability and Rehabilitation Fund

Php 5.25 M Deposited in 2003 at the Development Bank of the Philippines

4. MRFC – Mines Rehabilitation Fund Committee

9 Members 10 Members (Plus one rep of the Environmental Research and Development Section)

5. MMT – Multi-partite Monitoring Team

10 Members 19 (Plus additional reps from MGB, EMB, PCSD, LGU and the Church + 4 samplers)

6. MEPEO – Mine Environmental Protection and Enhancement Office

1 Office (MEPEO) 1 Office called EMO plus 10 staffs of environmental scientists, forester, marine biologist and 15 IPs for reforestation and industrial wastes handling

Particulars Parameters Standards Actual

1. Effluent Qualities

Siltation pond effluent

pH TSS Temperature Oil and grease Cr +6 Pb

@ 6.5 – 9.0 < 70 mg/L < 3 deg C rise < 5 mg/L < .1 mg/L < .3 mg/L

8.0 – 8.5 < 10

< 1 deg C < 1

< .1 < .05

Tailings dam supernatant

pH TSS Temperature Oil and grease Cr +6 Pb

@ 6.0 – 9.0 < 150 mg/L < 3 deg C rise < 10 mg/L < .2 mg/L < .5 mg/L

8.0 – 8.5 < 10

< 1 deg C < 1

< .1 < .05

Notes: a) Quality of water from the pond and dam are well within the standards. b) As, Hg and Cd contents are also analyzed and are below detection levels.

Particulars Parameters Standards Actual

2. Air Qualities

Plant Emissions

CO NOx SOx Opacity H2S Acid mist

< 500 mg/Ncm < 1,000 mg/Ncm < 700 mg/Ncm < 20 Percent < 7 mg/Ncm < .3 mg/Ncm

60-100 60-100 60-80

10-15 <1

<.07

Ambient Air TSP, at plant TSP, at houses Noise, at plant Noise, at houses

< 300 ug/Ncm < 230 ug/Ncm < 85 Decibels < 60 Decibels

50-250 10-150 60-75 45-50

Notes: a) Actual air quality considerably lower than maximum allowable levels. b) Monitoring done in plant site (for source specific standards) and populated

areas (for ambient air quality standards).

Environmental Monitoring Monthly In-house, by EMO Quarterly Visit, by MMT

Environmental Assessment

Coastal Resources

Fauna Flora

Plant effluents and emissions to be

“beyond compliance” with DENR standards, and had no adverse effect on the environment.

Particulars Requirements Compliance Commitment Remarks

1. Financial Allocations

> 1 % of Direct Mineral Processing Cost

1. 02%, or P149 M for SDMP 1 (2004-2008)

1. 00%, or P439 M for SDMP 2 (2009-2013)

2.9 times higher

Free medical services to all IPs and

indigent non-IPs

Subsidized schooling for non-dependents, up to

high school

1,000 houses to the IPs through the

Gawad Kalinga concept

EDUCATIONAL ASSISTANCE

SDMP scholars during a team building seminar. Out of 600 scholars,

77 graduated from college.

Some of the 7 school buildings, 14 classrooms constructed.

COMMUNITY SERVICES

OTHER COMMUNITY SERVICES

INFRASTRUCTURE PROJECTS

LIVELIHOOD PROJECTS

Particulars Requirements Compliance Commitment Remarks

2. Organization Requirement

Community Relations Office

Com-Rel Section Rio Tuba Nickel Foundation Inc.

Com-Rel Section Rio Tuba Nickel Foundation Inc.

To monitor To implement

3. Coverage 5 Host and 5 Neighboring Barangays

5 Host and 6 Neighboring Barangays

5 Host and 6 Neighboring Barangays

Additional brgy of MNLF rebel returnees

Interested ICCs Twelve (12 ) ICCs Twenty four (24) ICCs

Doubled

Particulars Requirements Compliance Remarks

1. Financial Budget

Php 106 Million To implement within 10 years after closure.

Approved by MGB on Dec. 14, 2009

2. Coordination with LGU

Must align with their CLUP

After MGB approval.

LGU still preparing their CLUP

3. Fund Allocation

To be deposited in a gov’t-assigned bank for 7 years, from 2012 to 2019

To comply.

MGB requirement

HPP Project Site

Area (ha)

End-of-Project Land Use

HPP Complex 35 Forestland

Tailings Dam 1 & 2 Impoundment area Embankments

187

29

Industrial tree plantation

Reconstructed shrubland

Water storage 28

Aquaculture

Sanitary Landfill 4 Sports ground or public open space

Port area including causeway

36

Coconut land

Taganito HPAL Project Hydrometallurgical Processing Plant (HPP) Taganito HPAL Nickel Corp (THPAL)

The Project is located adjacent to the mine site of Taganito Mining

Corporation (TMC) located in Barangay Taganito, Claver, Surigao Del Norte.

Since 1987, TMC has been mining saprolitic nickel ores selling them to ferro-nickel smelters abroad. In more than 20 years of operation, it also generated mine wastes of about 18 million tonnes.

THPAL will process these stockpiles,

as well as in-situ limonites of TMC, using the technology called HPAL or high pressure acid leach.

Taganito HPAL Nickel Corporation

Taganito Mining Corporation

Nature of Project: Nickel Oxide Ore Processing utilizing Hydrometallurgical Process

Project Operator: Taganito HPAL Nickel Corporation (THPAL)

Project Location: Barangays Taganito, Urbiztondo, Hayanggabon and Cagdianao, Claver, Surigao del Norte

Product/Annual Production Capacity: Nickel-Cobalt mixed sulfide (30,000 tons of Ni and 2,600 tons of Co)

Ore Requirement: Approx. 4.9M WMT of low grade nickel oxide ore (limonite) from TMC Estimated Operating Life: 30 years Manpower Requirement: Construction ~ 4,000 Operation ~ 1,000

Project Schedule:

Construction – March 2010

Commissioning – April 2013

Commercial Production –Aug. 2013

Capital Cost: US$ 1.3 Billion

Project Components Site Development Plan

Desalination

Plant

Wharf

Ore Yard

HPAL Plant

Complex

Materials Storage

Facilities

Dormitory

Tailings Storage

Facility

Project Update Government Certificates

ECC 0804-012-3721 granted on Sept. 3, 2008 by EMB-DENR

ECC AMENDMENT granted on Sept 3, 2009 by EMB-DENR

NCIP’s CERTIFICATE OF PRECONDITION granted on November 19, 2009

PEZA Certificate of Registration as ECOZONE EXPORT ENTERPRISE granted on January 7, 2010

Project Update On-going Construction Activities

CONSTRUCTION PROGRESS

Item #

Description Contractor Activity Percent Weight

Progress as of Aug. 20, 2010

Equivalent Percent Weight

1 Site Grading & Road Construction

SMCC 5 60 3.0

2 Wharf SMCC 4 71 2.8

3 Tailings Dam SMCC 7 3.4 0.2

4 Dormitory Complex SMCC 3 13 0.4

5 Power Station Plant FHI 10 0 0.0

6 HPAL Plant (Main Equipt, Road, Bldg.,Piping, and etc.)

TJCP/SMCC 71 0 0.0

Total (%) 100 6.5

Project Update On-going Construction Activities

Environmental Protection & Community Development Activities

IEC and Consultations

CSR Activities