PricewaterhouseCoopers

REPRESENTATION: SELL-SIDE MANDATE Financial Advisors, Inc.

PROJECT CLASSIFICATION: IRON ORE MINING AND STEEL MFTG 29th Floor Philamlife Tower
DEAL VALUE: USD1 billion 8767 Paseo de Roxas
1226 Makati City
Philippines
November 12, 2009 Telephone + 63 (2) 845 2728
Facsimile + 63 (2) 845 2806
www.pwc.com

TKC Steel Corp.

Unit 3C, Zone 4, 3rd Floor Corinthian Plaza
121 Paseo de Roxas, Legaspi Village
Makati City

Attention: Mr. Ben C. Tiu and Mr. Dexter Y. Tiu

Gentlemen:

Subject: Letter of Engagement to Manage the Global Bid Process (PROJECT

IRONMAN)

This letter confirms that we, PricewaterhouseCoopers Financial Advisors, Inc. (“PwCFA” or
the “Firm”), have been retained by you, TKC Steel Corp. (the “Company”) to provide the
services (the “Services”) set out below. This letter outlines the Services to be provided and
the fees to be paid for those Services.

Background

We understand that the Company is the largest producer of steel billets in the Philippines, is
listed in the Philippine Stock Exchange (PSE), and heads the TKC Group which includes
Treasure Steelworks Corp., Pacifico Sul Mineracao Corp., and Zhang Zhou-based ZZ
Stronghold Steel Works Co. Ltd. Further, the Company is seeking strategic partners and/or
investor/s for its plans to expand and create the largest fully integrated steel manufacturing
facility in the Philippines which will be executed in the following phases:

Phase 1: To fund the expansion of TKC Steel and create the largest fully integrated steel
manufacturing facility in the Philippines.
Phase 2: To backward integrate and consolidate iron ore mining interests (onshore/offshore)
under TKC.
Phase 3: Eventual exit of TKC as the biggest steel maker in the Philippines by divestment of
the holding company or a special purpose vehicle (SPV) and all its assets and
mining rights or further regional expansion as an option.
 Scope of Services

PwCFA will undertake to advise and project manage the transaction on your behalf and assist
you in concluding the proposed transaction. You are not under any obligation to accept
specific proposals presented by us, and the ultimate decision as to whether to proceed with
the transaction will be yours.

“Investment” or “Transaction” in this proposal will mean any of the following:

Fund raising via joint venture (JV) and/or an SPV for the acquisition expansion of the steel
manufacturing companies business and the acquisition of mining rights.

Aside from fund raising and the creation of the largest fully integrated steel manufacturing
facility in the Philippines, the Transaction may include but may not be limited to the following:

• Possible acquisition of Pacifico Sul Mineracao Corp. or its mining rights.

• Possible aAcquisition of Colossal Mining Corp. or its mining rights.
• Possible aAcquisition of Mindanao Mining Corp. or its mining rights.
1. Reverse take over of the Company in London, New York, Australia, or Singapore if a
regional expansion takes place.
2. Initial public offering (IPO) in London, New York, Australia or Singapore (last resort).

We have outlined below the key areas where PwCFA can assist to ensure the smooth and
timely progress of the Transaction:

Project Management:

Throughout the entire process, we will project-manage the Transaction, liaising with the
Company, potential investors, and other professionals. This role includes assisting the
Company in:

• Preparing a work program for evaluation of the Transaction, including timetable,

resource requirements, and issues that need to be addressed;
• Overall management of the Transaction and the co-ordination with other advisors;
• Identifying potential investors and circulating the relevant marketing materials;
• Preparing relevant analysis and presentations to be made to the potential investors ;
• Evaluating the various offers and identifying their pros and cons;
• Short-listing potential investors based on agreed criteria;
• Commenting on relevant legal documentation, in conjunction with its other advisors;
• Coordinating the closing of the Transactions and the receipt of any consideration in
connection therewith.

At all times, when PwCFA deals with the potential investors, we shall only do so on the
instructions and authorization of the Company. Nothing in our reports should be construed as

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advice to proceed or not to proceed with the transaction. While our work may be a factor
which is taken into account when deciding whether or not to proceed, regard must be given to
the restrictions on the scope of our work, as set out in this letter and our reports, and to a
large number of other factors, commercial and otherwise, which come (or should come) to the
notice of you and your advisors by means other than the procedures carried out by us.

Prior to performing any kind of financial review or preparation for the transaction/s, PwCFA
will meet with you to clarify and confirm your objectives, and finalize the schedule of the work
program. We will assist the Company in considering an appropriate deal structure prior to any
negotiations.

We will assist in the preparation of the necessary documents and materials for preliminary
marketing, and the succeeding deal process. This will include the preparation of a base case
“vanilla” financial model andn information memorandum (IM) for the Company.

We will assist in the completion of documentation and deal closure. However, the primary
responsibility of securing the relevant documents and Board approvals, the detailed legal
documentation and shareholder agreement, etc., will be with you and your appointed legal
counsel. The Company’s legal advisers will be responsible for drafting, reviewing, and
making available the necessary documentation for completing the transaction and identifying
or addressing legal issues in this regard. Our service will be limited to coordination or
facilitation of the process in concluding the transaction.

The Company will confirm the factual accuracy of all information presented in the IM that we
will rely on for the purpose of this engagement. We will not audit any financial information
included in the IM, nor seek to verify management opinions. We do not take responsibility for
the reliability of information to be included in the IM. The Company assumes responsibility in
on the accuracy and fairness of the facts and the fairness of the opinion in the IM

In other words, PwCFA’s assistance in compiling the IM will be based solely on information
provided by the Company. We will not be expected to undertake a statutory audit or a due
diligence review of the information and accounts under this assignment or a feasibility study
of the business. Our assistance in this regard will not constitute a legal, tax, or audit due
diligence, nor will it constitute a fairness opinion on the value of the Company.

Our scope of work does not include the preparation of a financial model. We expect to
receive soft copies of the detailed computations of any financial projections and underlying
assumptions that may be deemed necessary to include in the financial model and IM.

Further, the Company will not be under any obligation to accept specific proposals presented
by PwCFA. It is important to note that the ultimate decision as to whether to proceed with the
Transaction lies on the management and shareholders of the Company.

Initial Legal Advice

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Initial legal advice will be provided by a correspondent law firm of PwCFA which will address
the following:

• The appropriate corporate vehicle and equity structure for the project, compliance with
Executive Order No. 226 or The Omnibus Investment Code of 1987 (including
subsequent amendments), the Board of Investments (BOI), Securities and Exchange
Commission (SEC), and other laws related to investments
• Compliance with the Department of Environment and Natural Resources (DENR),
Mines and Geosciences Bureau (MGB), Republic Act 7942 or the Mining Act of 1995
(including subsequent amendments), and other laws related to mining and the
environment
• Compliance with the Bureau of Internal Revenue (BIR) and the tax incentives that can
be availed of

Services outside the Scope of This Letter

For detailed legal advisory services including preparation of legal documentation, we would
be pleased to introduce you to our correspondent law firm, if required. Further, other advisory
related services such as due diligence, valuation and process improvement can be provided
upon your request. Responsibilities for and fees in respect of other advisory work are
excluded from the scope of this letter.

We trust that the above fairly reflects the work that you require us to perform. However, we
will inform you if the scope of our work changes significantly as the assignment progresses.

Timetable

The specific outputs and estimated timetable per Phase are presented below:

1st Month - project preparation, and Information Memorandum (IM) and financial model

2nd Month - distribution of IM globally and submission of Initial Legal Advice

3rd Month - collation of written responses from interested parties and firm offers

4th Month - short listing of candidates

5th Month - negotiation process with shortlisted candidates and identification of ideal tax
structure

6th Month - due diligence (buy-side - investor) and/or registration of JV or SPV co (if
applicable)

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 7th Month - Memorandum of Agreement signing to confirm offer

8th Month - capital infusion to JV or SPV and/or transaction closing

Please note that the timetable is indicative and may vary depending on the results of the work
performed. This will be impacted by the availability of information, the structure of the
Transaction, and the level of interest of potential investors. In the event that we anticipate
that the estimated timetable cannot be met, we will notify you as soon as reasonably
practicable so we could adjust and agree on it as necessary. The shortest time for completion
is six (6) months.

Project Team Structure

The key engagement team members shall be:

Mary Jade T. Roxas-Divinagracia, CFA

Managing Director

Jade is a Managing Director in our Philippine office. She manages and monitors valuation,
project finance, and privatization engagements, particularly those in the infrastructure,
government, and utilities sectors. Her areas of specialization include corporate finance,
privatization, market and financial feasibility studies, and corporate restructuring and
rehabilitation. Her industry experience covers logistics, manufacturing and food, consumer
goods, retail and trade services, power and energy, infrastructure and utilities, banking and
financial services, real estate and property, broadcast media and entertainment, healthcare
and hospital services, and education and non-profit organizations.

Jade is a Certified Public Accountant and has earned the right to use the Chartered Financial
Analyst (CFA) designation. She holds a Master in Business Administration degree from the
University of Hawaii in Manoa and Japan - American Institute of Management Science.

Paul I. Moñozca
Project Director

Paul Monozca is the Investments & Special Projects Director of the Firm. His career of 16
years has been spent in Singapore and the United States handling alliances, investments,
and over-all business development for multi-national corporations such as Quaker, Siemens,
Accenture and PwC. He is known to build and expand family-run businesses and provide
strategic directions for diversification plans of companies. He is a licensed investment banker
by the Monetary Authority of Singapore and has been credited with deals in logistics, media,
property, transport, mining and agriculture in the region. He is a Singapore government
awardee for various philanthropic initiatives and continues to be the point person for the firm
on international investments covering joint-ventures, greenfield projects and mergers &
acquisitions. Paul was educated in La Salle Bacolod and the University of the Philippines.

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PricewaterhouseCoopers Working Team

A multi-disciplinary support staff with competencies in finance, accounting, and economics

will be assigned to undertake day-to-day fieldwork. These consultants will provide assistance
in data gathering, primary analysis, and routine tasks generated by the assignment, will be
drawn from the professional pool of PricewaterhouseCoopers personnel.

Proposed Fees

Our fees for this engagement will be based on a Success Fee. The Success Fee for this
engagement will be 4% of the deal value per signed transaction agreement. The proposed
fees are exclusive of out-of-pocket expenses (OPEs) and valued-added tax (VAT).

In addition to the fees, we will seek reimbursement of out-of-pocket expenses (OPEs)

incurred during the project upon commencement of the due diligence review of the Company.
OPEs typically pertain to research, courier services, communications, printing, per diems,
travel and accommodation, local transportation, meals, etc. We shall endeavor to keep OPEs
to a minimum. We do not anticipate OPEs to exceed Php100,000. In case it will be greater
than Php100,000, we will seek your approval prior to incurring them. Further, we will advise
you once OPEs reach Php50,000 so we can discuss mutually acceptable ways to minimize
the same.

We will commence the project upon receipt of the signed Engagement Letter. Fees and
oOut-of-pocket expenses will be invoiced as our work progresses. The Success Fee shall be
payable: (1) upon signing of the pertinent transaction agreements between the involved
parties and (2) when the initial investment has been received by your company.

All payments are to be settled within fifteen (15) days of the invoice. In cases where we do
not receive the respective professional fee payment for the project after the 15-day
settlement time, we have the right to halt the project until the outstanding fee is received.
In such cases, the agreed delivery time schedule for the project will also be pushed back
accordingly.

If in the course of our work it appears that the nature and scope of work is significantly
modified from that which is contemplated in this letter, we will advise you if our fee will
need to be negotiated.

Termination Fees (“Walk-away” Fees)

This contract may be terminated by either of us after giving written notice 30 days prior to
effectivity of termination. Where you terminate the contract, you will pay us reasonable fees
and expenses, taking into account the circumstances of termination, for time spent in
providing the services up to the date of termination. Where you terminate the contract before

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 its completion, other than for material breach, you will pay any additional costs that we
reasonably incur in connection with the early termination.

If you withdraw from the transaction anytime after the short listing of candidates following the
completion of the information memorandum, teasers and long-listing of investors under the 1st
Month, you agree to pay us a termination fee equivalent to Php1500,000 million or our time
charges up to the date of the sale process is terminated, whichever is higher, with a
maximum chargeable amount of Php15 million.

Fee for Completion after Termination of our Engagement

If you terminate this engagement before successful completion but then complete a
transaction within two one years from your withdrawal with one of the parties previously
indentified by us during the course of this engagement, we will be entitled to the fees we
would have properly charged had the engagement continued to completion. This obligation
will not apply if it is judicially determined that we were grossly negligent in the provision of
Services to you or if there has been a breach of contract by us.

We will be pleased to act as the Company’s exclusive financial advisor in connection with the
Transaction. This exclusivity will continue for a period of 12 months from the date of your
agreement to this letter. If the Transaction is successfully completed, PwCFA will have the
right of first refusal to handle the regional expansion, reverse take over, divestment or any
fund raising or sale transaction the shareholders of the Company wish to execute. This
exclusivity will also apply should the shareholders of the Company or the Company opt to
divest its assets, shareholdings in the Company, or the JV/SPV which was created in this
engagement. The agreement will be subject to termination by either party as set out in the
attached Terms and Conditions.

Confidentiality and Independence

We require strict adherence by our partners, directors, and staff to the ethical rules of our
profession and our Firm. In all aspects of our practice, our partners, directors and staff
maintain a strict standard of confidentiality towards information that is obtained in the course
of carrying out our professional duties. Furthermore, the Firm and its people maintain
complete independence of interest and mental attitude in relationships with clients.

Terms of Business

All our engagements are subject to standard PwCFA Terms of Business attached as Annex
A to this proposal.

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Indemnification and Liability Cap

PwCFA shall have no responsibility for any decisions made by management relating to this
engagement. We shall have no responsibility to address any legal matters or questions of
law.

Our liability to pay damages for all losses, including consequential damages, economic loss
or failure to realize anticipated profits, savings or other benefits, incurred by the Company , as
a direct result of breach of contract or negligence or any other tort by us in connection with or
arising out of the engagement or any addition or variation thereto shall be limited to that
proportion only of the actual loss of the Company, which was directly and solely caused by us
and in any event, our liability shall in no circumstances exceed in the aggregate the amount of
our fees actually paid by you for this engagement.

Notwithstanding the paragraph above, in no circumstances shall we be liable to pay any

damages to the Company, for losses arising out of or in any way connected with the provision
of information to us by the Company, or failure of the same to provide information to us either
punctually or at all or any fraudulent act, misrepresentation or willful default on the part of the
Company.

Notwithstanding our liability for the acts and omissions of our partners, principals, directors,
staff and employees, the Company accepts and acknowledges that no legal proceedings
arising from or in connection with the engagement (or any variation or addition thereto) will be
commenced against any of our partners, principals, directors, staff or employees personally.

Except for any willful misconduct or gross negligence by us, the Company agrees to
indemnify us to the fullest extent permitted by law against all liabilities, losses, claims,
demands and reasonable expenses, including but not limited to legal fees and expenses and
internal management time and administrative costs, brought against us by any party or
person whatsoever, in connection with or arising out of the engagement.

We thank you for this opportunity to present our services. We are confident that we can add
value to your business, and we look forward to working with you on this engagement.

Should you have any questions, please call us at 845-2728 local 2070/71.

Sincerely,

Mary Jade T. Roxas-Divinagracia, CFA

Managing Director
Transactions and Corporate Finance

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Confirmation of the Contract

I have read the Contract terms set out in this letter dated November 12, 2009 and the Terms
of Business provided with this letter. I accept these contract terms on behalf of the Company
and represent that I am authorized by TKC Steel Corp. to do so.

Signed: ……………………………………………

Ben C. Tiu - Chairman

TKC Steel Corp.

Signed: ……………………………………………

Dexter Y. Tiu - Treasurer

TKC Steel Corp.

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Date: ……………………………………………..

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