Mr.

Richard Pearshouse
Ms. Julian Kippenberg
Human Right Watch
350 Fifth Avenue, 34th Floor
New York, NY 10118-3299
U.S.A.

Mendrisio, 29 December 2022

Your letter regarding human rights concerns at Lega Dembi gold mine

Dear Mr Pearshouse and Ms Kippenberg,

Thank you for your letter regarding human rights concerns at Lega Dembi gold mine and our recent exchange on this
matter via Teams and for giving us the opportunity to comment your questions.

First of all, we would like to point out that all activities of Argor-Heraeus are based on Swiss legislation, in particular on
the legislation against money laundering and terrorism financing, the Precious Metals Control Act and the Ordinance on
Due Diligence and Transparency in relation to Minerals and Metals from Conflict-Affected Areas and Child Labor, which
impose very high standards on due diligence and processing of or trading in precious metals. Within the value chain, as
a link between suppliers and end customers of precious metals, we are aware of our responsibility for traceable and
responsible sourcing and take this responsibility very seriously.

In addition to Swiss law, Argor-Heraeus adheres to regulatory standards, such as the LBMA regulations on Responsible
Sourcing (LBMA Responsible Gold and Silver Guidance) and the RJC standards (Code of Practices and Chain of Custody).
Argor-Heraeus also aligns with the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from
Conflict-Affected and High-Risk Areas.

Based on the OECD 5-step framework, Argor-Heraeus has set up and implemented a comprehensive and multi-stage
compliance management and control system to check the origin of material and that all processes surrounding the
procurement of such material adhere to the applicable ethical standards. Customers are systematically subjected to a
due diligence process. This includes the analyses of social and environmental standards as well as relationships with
other market participants. We proceed to enhanced due diligence by reviewing the customers of our potential
customers, even outside the statutory requirements, whenever we believe the business model requires it, based on an
established risk evaluation matrix. All customers are subject to continuous monitoring. We continuously evaluate and
further develop our compliance management and control systems.

With regard to your additional questions concerning our letter of April 6, 2021, we would like to firstly indicate that the
persons who signed the letter at that time are no longer available, as they have left our company in the meantime.
The “clarification process” referred to in this letter is an internal clarification process at Argor-Heraeus and was triggered
by internationally accessible public sources that emerged in the course of our permanent monitoring and raised
concerns that serious environmental problems and, as a result, human rights violations could exist. Immediately after
this information became available, Argor-Heraeus initiated a clarification process to verify whether this information was
accurate. For this purpose, Argor-Heraeus got in touch with MIDROC, as stated in the letter from April 06, 2021. MIDROC
has denied all allegations regarding environmental damages. However, while the clarification process was still
underway, MIDROC's license was suspended, whereupon Argor-Heraeus suspended the business relationship with
immediate effect as of May 14, 2018.

As our subsequent investigations within the context of the suspension of the mining license and our inquiries to MIDROC
for clarification and disclosure of the entire facts did not lead to any satisfying result, the business relationship with
MIDROC was terminated. Argor-Heraeus received and processed the last shipment from the Lega Dembi mine in March
2018. Since then, Argor-Heraeus has not refined any material from the Lega Dembi mine and did not resume the
suspended business relationship with MIDROC to date.

Contrary to our expectations, we were unfortunately unable to carry out the audit on working conditions in Ethiopia
referred to in the letter dated April 6, 2021. We have requested via the UNDP and the African Union several third parties
and service providers to audit our processes and business activities on site. Unfortunately, the situation in Ethiopia in
2020/2021 did not allow auditors to work safely and without endangerment. Therefore, no third party was willing to
conduct the audit on site and accept our request at that time.

We apply the highest standards to implement and adhere all legal requirements and standards of self-commitment as
conducted in our compliance management system. In particular, Argor-Heraeus always provides the possibility to raise
concerns regarding our supply chain as set forth in our Code of Conduct and Supply Chain Due Diligence Policy. In
addition, any external stakeholder can anonymously voice concerns via a confidential grievance mechanism in
accordance with our Grievance and Whistleblowing Policy. The process is accessible on Argor-Heraeus’ homepage at all
times: https://argor.adorator.io/wp-content/uploads/2021/07/Grievance-and-Whistleblowing-Policy.pdf.
During the business relationship with MIDROC, Argor-Heraeus did not receive any information or grievance referring to
MIDROC by the relevant mechanisms valid at the respective times.

Our quality management and compliance systems are audited by independent experts every year. We undertake our
best efforts to ensure that our control mechanisms are at the best level possible.

We are always willing to engage in dialogue with other stakeholders, as we strive for transparency in our business. Of
course, we are open to have a joint discussion with you on the case at hand and on ways to proceed. In the meantime,
we hope that we could answer your questions – please do not hesitate to contact us again.

Kind regards,

Hans-Jürgen Deutsch Dr. Robin Kolvenbach