China Polymetallic Mining : Terms of Reference of the Audit Committee

(the "Company")

TERMS OF REFERENCE OF THE AUDIT COMMITTEE

(the "Committee")

(Revised and adopted by the Company pursuant to a resolution passed at the Board meeting held on July 25, 2017)

1. Members of the Committee shall be appointed by the board of directors of the Company (the "Board").

2. The Committee must consist of a minimum of three members, all of whom must be non-executive directors.

3. The majority of the members of the Committee shall be independent non-executive directors of the Company, at least one of whom is an independent non-executive director with appropriate professional qualifications or accounting or related financial management expertise as required under Rule 3.10(2) of The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules").

4. The Committee shall be chaired by an independent non-executive director of the Company.

5. A former partner of the Company's existing auditing firm should be prohibited from acting as a member of the Committee for a period of one year commencing on the date of his ceasing:

6. ) to be a partner of the firm; or

7. to have any financial interest in the firm, whichever is the later.

8. The appointment of the members of the Committee may be revoked, and new member can be appointed in place by resolutions passed by the Board and by the Committee.

9. No alternate Committee member can be appointed.

   Secretary

10. The Company Secretary shall be the secretary of the Committee. In the absence of the company secretary, his/her delegate(s) or any person elected by the members present at the meeting of the Audit Committee, shall attend the meeting of the Audit Committee and take minutes.

    Proceedings of meetings

11. Unless otherwise specified hereunder, the provisions contained in the Company's Articles of Association (as amended from time to time) for regulating meetings and proceedings of directors shall apply to the meetings and proceedings of the Audit Committee.

    Frequency of meetings

12. The Committee shall hold at least two regular meetings in a year to review and discuss the interim and annual financial statements of the Company. Additional meetings should be held as and when the Committee considers necessary.

13. The Audit Committee shall meet with the external auditors at least twice a year in the absence of the management. The external auditors may request a meeting if they consider necessary.

14. The chairman of the Committee may convene additional meetings at his discretion.

15. The external auditors may also request a meeting if they consider that one is necessary.

    Quorum

16. The quorum of a meeting shall be two members of the Committee, both of whom shall be independent non-executive directors.

    Attendance at meetings

17. Members of the Audit Committee may attend meetings of the Audit Committee either in person or through other electronic means of communication or in such other manner as the members may agree.

18. The Chief Financial Officer of the Group (as defined hereunder) (or any officer(s) assuming the relevant functions but having a different designation) and a representative of the external auditors shall normally attend meetings. Other Board members may be invited to attend a particular meeting in order to answer specific questions or concerns. Where an internal audit function exists, the Head of Internal Audit should normally attend meetings.

    Notice of meetings

19. A meeting of the Committee may be convened by any of its members or by the company secretary.

20. Unless otherwise agreed by all the members of the Committee, notice of meetings shall be given to all members of the Committee at least seven days before the regular meeting. For all other meetings of the Committee, reasonable notice shall be given.

21. Agenda and accompanying supporting papers shall be sent to all members of the Committee and to other attendees as appropriate at least 3 days before the date of the meeting (or such other period as the members may agree).

    Minutes of meetings

22. Draft and final versions of minutes of Committee meetings shall be sent to all Committee members for their comment and records within a reasonable time after the meeting.

23. Minutes of the Committee shall be kept by the company secretary and shall be available for inspection by any member of the Committee or the Board at any reasonable time on reasonable notice.

    Written resolutions

24. A resolution in writing signed by all the members of the Committee shall be as valid and effectual as if it had been passed at a meeting of the Committee and may consist of several documents in like form each signed by one or more of the members of the Committee. Such resolution may be signed and circulated by fax or other electronic communications. This provision is without prejudice to any requirement under the Listing Rules for a Board or Committee meeting to be held.

    Authority

25. The authorities of the Committee shall include such authorities set out in the relevant code provisions of the Corporate Governance Code (the "CG Code") as contained in Appendix 14 of the Listing Rules (as amended from time to time).

26. The Committee is authorised by the Board to investigate any activity within its terms of reference and all employees are directed to cooperate as requested by members of the Committee.

27. The Committee is authorised by the Board to obtain outside legal or other independent professional advice if deemed required and to invite the attendance of outsiders with relevant experience and expertise if it considers necessary

28. The Committee shall have oversight over Company's compliance with the highest ethical standards in all its operations, and shall report to the Board on any suspected frauds and irregularities, failures of internal control or suspected infringements of/non-compliance with laws, rules and regulations (in particular real estate certificates and licenses requirements in the People's Republic of China ("PRC")) which come to its attention and are of sufficient importance to warrant the attention of the Board.

29. The Committee is to be provided with sufficient resources to discharge its duties.

    Responsibility

30. The responsibilities of the Committee shall include such responsibilities set out in the relevant code provisions of the CG Code as contained in Appendix 14 of the Listing Rules (as amended from time to time).

31. The Committee is to serve as a focal point for communication between other directors, the external auditors and the internal auditors (where an internal audit function exists) as regards their duties relating to financial and other reporting, internal controls, external and internal audits and such other financial and accounting matters as the Board determines from time to time.

32. The Committee is to assist the Board in providing an independent review and supervision of the effectiveness of the financial reporting process, internal control and risk management system of the Company and its subsidiaries (the "Group"), overseeing the audit process and performing other duties and responsibilities as assigned by the Board.

    Duties, powers and functions

33. Without prejudice to any requirement under the CG Code, the duties of the Committee include the following:-

    Relationship with the Company's auditors

34. be primarily responsible for making recommendation to the Board on the appointment, reappointment and removal of the external auditor, and to approve the remuneration and terms of engagement of the external auditor, and any questions of resignation or dismissal of that auditor;

35. review and monitor the external auditor's independence and objectivity and the effectiveness of the audit process in accordance with applicable standard. The Committee should discuss with the auditor the nature and scope of the audit and reporting obligations before the audit commences. In this connection, the Committee shall:

    • consider all relationships between the Company and the audit firm (including the provision of non-audit services);