I { This FrtirAlrcrAr oR- IEfl.{rCAr, AS.fSXAN.E- AGBEEI,TENT (thls rli*!:"[TJJ,,li'ffi Sitei]-",','.t'Il]i:*^';,,'":ft,iiiJt,":*: ?rIE RtpuBt.rc oT,1T represenEed by -p..Eajrl in r.hiE Ehe office -pflILrpprNEs, 3c! of uh€ pa1ac6, r,r:iriri rir,e "coiiin[;i,i;ii;". ". Malacanans, -and- ,{ ffin EITNESSEIE: \ !trtritu5ru,tt"-*+llii$r,ffi':{,+*i#;fl i*i;I m*irHttrg+ffiE+i#q'u'$trf:Hl V tr#ff i.r..u:iiT4ti:l$:i$rf 1or;r.,,rii"."."L?t,r* "*ii,*,i}:E;t"y$, frr:**l+i*.+S;ry;,g',".,or,uurff j ,TiilHr.$'"#i]'Iil:{..T'"Hi*,si:fi"t*l#s1.**.r may co- with * s. ARIMCO FTAA/P.2 ciEizetrs. or corporations or. ass;ociatiolls at least sixty Pillpino of ,ho="-"u;ii: i- i - b)' iuch citizetrsi per centum " "t'ned WHEREAS, the constitution further proviiectite ,A utilization '-it'" 'pr:"=ident may wittr the f orelgn :L of the secfbtary, f-., proponent; \-/ WHEREAS, DENR Administrat-ive order llo' 63' Series of 1991 : provldes for the c'iiltiin"= for tlre Accepl-ance' conslderatlon and ..'( Evaluariorr or rr;;;Ji;i-,ii- rJ,r"r,ni"oi Assistance Agreenent Proposals; by CIimax Mining ,, WHEREAS, CoNTRACTOR is ovrtred atrd cotrtrrllle'-l n:td related *iiin n""='ut.uriuil mining company ' Ltd., a publi"rv iitrti -i.t,n. teams corporation. ,rno"r.- uiu i; un raws vrh icl-t lrave expl ora!i r:n res'onsible roa nt',o,,t"ir= =utt"e=';f tll tl isc:ovet:ies of gold copper "t"ir"Ji"=-tn various parts olr ther wot:Icl; ,/l'JHEREAST coHT Rac'fon is wilti rrg ancl able to Iinanr:e the high risk / exploratiou or .r"iiuii ,i"ii,,y'"raims ,ino areas located in remote provi nc"= tf Ntl''u'r. viscaya atrd Qu lrino on the places within ttte for mining u,tV -p"niif'I€: ores Iocated in basls that tne rew'ards ni"u -trn.6lr.,a'iit.,'r dell i.erl wirl Lre shared the Exproratron conl'rl*"t- i ng Lo terms and condit-ions of with the GovERllM;Ni u-"tot.if -t:lre sharing agreemeqf either this egreeil.na the riinr:ral i,"roir"ti",r the GoVERNMEN-! ". uy the col'litltAc roR wi't'h whlch lrill n" .rttti"J into of lts 9IHEREAS, coN'tF'Ac1'oR is l]ounnr1:)1y with a-11 19' I obllgation= ,nOo..]ttr" ML.ota,ldurn 66 1r;rer:ment daLerI November isgo'."a the Ad(lendum rodrrc:ed therefrom as may be permitted under: the terms; of thi.s A<;reement. 1.5 Durlng the term of t:his Agreenenl: the value of prcrdu<:tion an(l :;a Ie of Minera ts cler j.vetl f rom the Mlning Operatlons corrtemplat€rd lrereirr slrall. be accountetl for and divided betr.reen Lhe GOVERNME:N'II atrd CoN'rnACTOR Ln accordance wlth Section XI hereof. AECTION II DETINITIOI{S As used in this Agr:eenlent, the follor,ring words and terrns, v.rhether in the singular and plural , slrall have the f()llowing respective meanings: 2.1 rrAddendumrr means tllat agree EXCCU Jorge G. cotrzaIes, Geophi ppi.rres, Inc., :tnmex Aumex PhiI ippines, Inc. a d Arimco llining Corporatlon dated March 9 | t99L, r istered with the neglon 2 Offlce of the Department- of Environment and Natur Resoufces, Tuguegarao on A il 23, 1t)91, coverl area of inf lr:errce r,lithin LIr d es and I ong i tudes : Nortlrern Boun(lary latitude t6o ?-z ni.ntttes:lo secon(ls Eastern Boun(lilry Iongituclet 12|o :to rni rruhes O se(:onds 9-- n (L{- ti .l ARIMCO FTAA/P. s Southern Boundary latitude 1(;o^17 urj.nutes o secoltds Western Boundary I ong i tude LZl" 2:t nr i nu tes O seconds The agreement referred to i.n this Section i.s attached hereto as Annex F. n 2.2 rrAdde_n_dum c,Lej][q{ne-_E-s, means Jorge c. conzales hlmself and . on beha.lf Jel-otn€) - p-- ''O"f o=o .nA f or conzal-es, who are _of Davld C. e,ight percenL (st) entitted to a rree ecluity: ".lftf""i,Lirl Ir the Progrert.ies as ?f_?ny-"p".uting--.niity established over f ormed .by ttrr: aefined irr ff,,r''ao-a.-r,aun,, that shall be thls Asreenrerrt coN,rRAcToR pu.nr.i,ini--lJ Section 13.3 (a) of smelter and !: !l]",";;iiy;i t"t^io percent (2t) of ner return, as lrere i na f ter ,le l. i rred. j A,',, , 2.3 rri![_.EiIiatqts'r means 1ny col:poraLion or business entit.y ytlt:ll ,directly or inairL"Jrl';;r;,i,,.;;;,, rs conrr()tted by c,1. rs; under _comm,rn corrLr.oJ. wiUi Ure <:irri,iiiic.r,on , For the purpose of tlre prececl.[ncr serrLenc?, trr" ,.,,,.,i,i.,i"i, an. worrl ,controlrl shall includer, irut noh necessar.i It-;; -[i,u-;"ri;;;-;;";;.";;i;;i,,;,. of f()rty' percert: 4o?) or ror",ri iirnited t-o, ownershio stlch corporati.<>n or. an .ounet:slrip j llter-€,st of forty percent (4ot) or more in sucl) oUrer f"=i,i.,="'-uintity. n 2.4 Aqreemeig-,, mr:arrs r is Finarrcial or t'echn ica I Assistance Agreemen t . 2.5 " lLcs-s-si-aled U uc-E_e-t_s r means or.e rrrineral-s which occur together wit.tr the pr.incipat ".n, *i*.ui. 2.6 rrBudgetrr means an r:stirnate of expenditures to be by the coNTRAcToR in the r,ri,i"."-f "'#p.[oration or made Minlng operations conte;pi,;t;;"r,o.3L,ro., to in the accomptlsh the Work program f or each purti.,uf ., p,-"iioa. . l -A 2.7 "ca lglod_qr _yc!!r, or X_e_qr..',. mean.; a period. consecuLive ', of twerve (D) ending on months ii.artin.g tii i,t*'"ir.=a of January and Decenrber 11, "i perlod aonslst:i no w[ire .r,cJendq]. ouarterrr mean' a "r tnree ?:i t i r" rnon rs wlth the qttarter "iiiil":, i.ti;.t r:"'"ndar =u.rL i,i,v" w-i"ti, ttr" rirst day or l 2.8 " gqpj!-ql " mearrs canital .equi1;rnent purcllased or Frocured bv the CoNTRAC:Ton f or'c,arrying juf ,Jii.eraI Mining operatiorrs undr:r'uris -d;;,;;i." Exploratlon and 2.9 " g_e-!0!_E-e I .p,ar!i" means the Central. ank of the Republ of the plrilippines. ic 2. 10 .Comntercial t,roclrll-:_t.io.I, ntearrs the: production suf f jcient orinr i'iy n,in,:.a l= ;; sustai.n of viabi lity oi I,tininq "r economic approved Worp. o;:erations as specif ied in the [,roo.ram. I?r()ducL ion of copper, silver ore required..to t..c -",iji#' J.u,=t gold anrl system or. su;r1:rly a pi Iot pf unt 'ii.*l.i-t,rf op a processtnr; s,rctr testing shal I 1+ .1. I ARIMCO FI'AA/P.6 not be cons idered in the deternrination of Commerclal Productiorr. 2 t 11 rrConstitutig.t1tr or 'rIIIL _l_i._p p i11e_ g-=o!-eg1!-U!_r--e.11,, neans the ,/ 1s82. consb.irrrtton th; R,Ipiurl" eniiippines, . adopted by tl-re "i "FE-" October 15, Constltutional Comrnission of f s'so on Phlllppiires 1986, and r:atif ied by tlre peopJ.e of tlre on February z, tgs7. 2.12 itContract- yeart means a per: iod of tr^relve (12) consecutlve .months count ed from the tiffectlve Date of - th 1s Agreenent or fron tl.re anrrir,'ersary of such Effective Date. 2.13 TiCoNTRAcI'OR" means n r imco M.i.rri rr<1 Corpor:ation and its asslgnee or as;sigrrr:es of arry- inteie:;t unrlei thls Agreement provlcled such assignmerrl_ .f ;r.y such interest ls accomplished pur.suant to the -prc,vi sions lir:r.eof . I 2. t4 rrDate .9f gqlnelcemerrt 9-f C,Z_tuttsr-f_C i a,L .!ll:oduction" shall I mean the first day of the ".t "liaai ,luarter followlng the quarter in whi.cir production erlua I:; fifteen p;;;;;t (15t). -of th.e pro'l ect,s j.nil:ial arinual design as outlined irr the t)eclaration of, Mirring "lpactty hereinafter defined Feasibiiity u'" 2. 15 " De-sJ.iLLq.t.r a.o g.!. l!!.! rt.ix-q -E_e.cqli h.i, -],:,-tJ_, means a documerrt proclalrnl.g tlre presence or inineiii;-.i,., u speciflc sfte itrit are recoverable by soclally acceptable, errv i ronmenta l Iy 6afe and. ec:onornlcalLy soun(1, methods, as re:guirerl to fe sufmittea by the coNl'RAcl'oR undei sectlon vII of urj.s Agreement. -...) 2.t6 rrD_EINR means .Adrn i. rr i,S!]re&::g_!: o E_dCl N9-_. .6_3-- =seri.es- of 1991n and the culdel.inesi tor Lhe Accept-anc,1 consiaeratl6n t:valuation of Irinancial or l'echnica.[ nssistance Agreetnent proposa Is issueor dis;putes, egr j.dermic, t:arthquake, storn, flood or ottrer adverse r,reather condl.tlons, exploslon, f lre, advers;e order or direr:tiorr of any goverriment d12 jure or d_q .[_i:_q]: o or any i n s t: r: rr nr e rr t er l. i.ty- oi subdlvlslon thererof , acf. o,; cocl or ttre pul)lic enerny, trreakdown of machinery ha.ting a m;r jor ef f ect on H.re operations, and any cause (wlretheir or not of the lduction straii.ng agreement: the cOVERNMI y the coNTRitcToR withirr the Phi lippines do not e:f commercl a I Productlon, and (b) any other credits offseLting the above costs. . 4 2.41 "Prdie.q! AEggrr means the provinces of Nueva Viscaya and qulrlnb wht:re t-lte ExpIoraE.ion Corrtract. Area is loca ted ; . ..2.44 " P-E_g_p_q r_!y,, meitns any assel: purchased or acquired, i. lnstallect or bullt [ry the coi.ll'RAcitoR whlch nis th; fol lowlng attr.[butes: '( a) tras an estimated use fu I Ilf e of :nore than one yeari (b) is usecl in the operatlons of the i \,/ CoNTRACToR unrler ttris Agreement; arrcl ,1s1 ls not lntended for saLe in the orrli-nar1, course of buslness. The. term r,Pioperty'i shall inc.tucie, thougll not necessarllv Iimihecl to, roacls, piers, rlams a.cl other -in,provement" ;hi;i, the COI{TRAC'IoR has bui 1t, purchcrsecl , acquir;d or instaiieA pursuant Lo this Agreernent and s;llaI] c()ver boLh those locat'ecl within and without the tlxprloration contract Area, and also that purchaserl and helcl in trust for th; CONI'RAC'I'OR b1, 11t" cOV [;ltNM EN,l' . v 2,45 rrBplated c-S_Lp qf.alio_tt shail nr().u.r a bc,dy corporate or other entlty i n whiclr the colJ,t'ttActoR orjns an' lnterest ln excess of fot:ty percent (40*). t - ._.1' z .46 I'Segretdiyrr means the secret.ary of the Department of ! Envlronment and llatura I Resources. 1 2 .47 r,W-q-f-k Prog.f-A.U" means a document r,rh ich presents the plan of ma j or mi n inc; act i vi t les and tti. corresionding expenditures a r.Ld Budget of the CONTRACTOR in th; Exploration Contract Area or.in Ure Mining area durlnt a give. perlod -of tirne, rncrtrding re prarr an-d expendrtures for envirohnerrt:al. protection and rehabilltation, development of lrost and neighboring communitles: and of local geoscience and minera I ter:htiolog1,, as submltted and approved purstrarrt. to this Agreenent, q I AttrMco FTAA/ P. L2 AECTION III i TEnu or AGuEEMENT' I I I 3.1 The I initial te:rnr of thls Agreement shall be twenty- I ( 25 contract Years f rorn the Effective Date fiv| ) perlod of l-wenty-f J.ve (25) year6 renewable for another term of this .-, / under the same terms and contploratJ-on \ Corrtract Area . . ,! t- ,/ //r az- ARIMcO HtAA/P.14 sEc.rIoN v EXPLORATION PROGRA!,{I.rES ATID BUDGETE! 5.1 Mln !_g ! fe. f or E_ xpl ef atlon. coNTRACTOR shalI commence ral Exploratlon hereu nder not later than three (3) hs after the Effective Datr:. I 5.2 Proqramme qll.d Budoets (a) I the .coNTRAC'r'oR shall stricLly comply wlth the MLneral Exp{oratlon work program subm l tt:ecl to and approved by the GoVERNMEI'|I'. A copy of the Mineral Ilxploratlon Worl< program Is attached llereto as Annex ,rC". ( b) I'lte ;rmount-_ to be sperrt by C:oN,IRAC.IoR in conductlng llineral Explo.ration pursuant to t:tre t"ims -;;* t;i: Agreentent durl.ng the Explorat j.olt period -t;; I aggregate, be not Iess shaIl, ln i thalr tlr.t l)ere:i.naf ter ripecif t-a L_ for each of the below specJ t=i.ed contract ylars as fol lows : First contract year us$ 2oo, ooo Second Contrdct year uss 4 00, 0oo Thlrd Corrtract year us$ 6OD, OOO Fourth Contract year us$ B00, ooo Fifth ContracL year us$1, o00, ooo Al-l peso expend j.tures straII be converted to US dollars at tlr.: average rate for the rnonth in wfrictr--[tre expend ltur.e was 'j ncurrerd. .1.!.)'__Il ,an. event of terminatiorr of this Agreenbnt, coNTRAcToR shalJ. only be obligated to e>:pend the p."_ii[. amount: for the period of suc:lr contraCt vear piloi io termination subject to paragral)h (rl) below. (d) - If duri.ng any contra(:t year, coNTRAcToR should expend more than the amount r.equired to be expended -as provicled above, the excess may be subtracted 'from the amount -.of none), reclulred to be expended aurfng [i;e succeeding contr:act . years; antl srrorrrd the coNTRAcroR, due to unforeseen circumstances o*itt tt -".ri..,ii-.r ggyunTMENl. expencl Iess rploratlon perlod, CONTII,ACTOR 6lral I srrpply to the cover.nment ttrrough the Secretaryr copy furnished the Directdr of the Mines & Geosclences Bure:ru, dII geological, geophyslcal, radtometric and other information relatinS- to th; Exploratlon Contract: Area and j.ts acl:l.vlties by annual reports to be submlLt.ed wlUrl.n !!ixty (60) daysl from the end of each contract year. such informition shatl lnclude f ln:rlrcial expendltures, rEru and processed analytlcal data, co1;Ies of oric; inals of assay results, duplicate samples, f ielles of originals from drlll lng reports, an,i al.l other j-nf ornratlon of any klnd collected drrr.lng Mlneral ExpIorat.[on. All such lnf or:mation' shall be confidential. subJect to the provisJ.ons elsewhere provlded herein. (b) FlnaI Report. The coNTRAc,IoR shall submit to the cover:nment through the SecreLary, c,)py furnlshed the Dlrector of the Mines and ceosciencej -Bureau, a flnal report withilr six (6) non rs from the explration of the Exploratlon Perlocl whlch shaII be ln the form and subsLance comparable to publishecl professional reports of respected internatlonal institutlons and ln.ff incorporate all the. findings in the Axptoratlon contract Area, including IocaLions ol:i samplesj assays, chemical ana lys is, and assessmen t of mlneril potenttli. Such .report shall al.so. include complete,' detalled expendltures incurred during the ExploraLlon period (c) Confidentiatlty. The informatlon and report.s submitted by the coNTRACToR pursuant to paraqraphi (a) and (b) of this Sectiorr stratt tre subjett f"'i""ti"i, 13.5(f) of this Agreement governing conf l,ae-ntlatity. I ARTMCO FTAI\/P. 17 AECIION VII FEASIBILITY 6TUDY A!{D R EI,I NQU I SIIMENT [7 .t Min{nq reasib:ili!y. trurirrg the [:xploration perlod, the CONTRA(lTOn CONTRA(lTOn .shaII .shaII conduct conduct feasibllity feasibllity studles studles for for anyany parF parF of of the the Exploratlotr Exploratlotr Corrt.ract Corrt.ract Areq Areq as as may may bebe war*atrted. warr{arrte9. At anvtime anytime prlor: orlor to sly l6l montlr< rrarn tra At to slx (6) months frofr the expIratlon of tlre Exploration period, the CONTRACTOR, if ltt elects to transform the Exploration contract Area lnt{ a MlnJ.ng Area as providr:d i;r Secti.on VIII of thls AgrPement, sha I I submlt a Declaratlon of Mlnlng Fea{ibllity r.,ith a Work progratn and Budget for development forl the next succeeding three ( I ) years inatcitlng there.in the. Mining Area. Areas not d;llneated as pari: of the Mlnlng Area shal1 be relinqr:ished pursuani to the follovring section. Failure of the CoN,fRAcTOR to submit a Declaration of MInlng Feasibllity rvithirr the pr.escribed perlod shall be corrsidered a wa iver of Ure CONTRAC'IOd, s right to transform the Exploration Contract Area into a l,tintng Area as provided in Section VIII of Uris Aqreement. . 7.2 Rellnquisttnent, 'l'he max.[mun area in i:tre prct ject shall be subjecL to r e I i n q u i s lr m e rr t to the Area ninety-five percent (95t) of t.her e>ltent of Area after five (5) years of Exploratlon Contract such larger area as tl-re Mineral Exploratlon or _ Se<:rr:tar1r may approve, provlded, that the minimum relinqui!rhmen€ per' year sha.I I .aveEage ten Jrercent ( 10%) of the exploration contrac:t Ar'ea at ahy one time ancl providecl further that the melximum retainecl area at t.he conclusion of the Exploration t,eriod shall l;e 5, ooo hectares or 62 merldional l)Iocks .or such larger area as the Secretary I.y appro.v'e.. I f the area rei inquishid in any contracl Year rs in excess of the re<1ui rerl ten percent (1Ot) to be relinqulshed in that contract year, the coNTRACToR can credit the excess area rel.inrluished to the area required to be relirrLion to entLr into a separate nlineral productlon shari.ng agreement or a tirrancial or technlcal ass lstance agreement under the sane terms and conclitions or this Agreenent or Anllex tiDt' trerel:o ln the case of nineral production sharin,, agreement over the area encompassing Lhe same. 4.2 Notice e-f C alr vqrs-!-oll. I'he coNI'RAcT'oR shall nobify the GoVERNMENT in vrriting withi.n thirty (30) days fron the date it has passecl tlre. appropriate corporate board resolution of lts intentlon tr: convert to a mlneral prodrrction sharing agreemerrt in the form of Annex lrDrl hereto. 8.3 Revisions durl to' qs-nJCfEi oo. Al I rr:visions suggested and clesired by the coNTRAct'oR to Annex rrDrr hereto shall be N submitted to the covERNMEltT r.rithin si>:ty (60) days fron .\ fillng of the CONTRAC'IOR ' r; lntention to c:onvert to a nLneral productlon sharl.ng agreernerrt. Revisions to Annex IDtr ahall be blndirrg onl.y when put into writing ancl slgned by both the .!- GoVERNMEI{T and the CONTRACTOR. { @A ? .t ARIMCO FTAA/P.19 8.4 lqultv Requlrement. In case the CoNTRACTOR elects to .tralsform lts Explorabion Contract Area lnto a Mlnlng Arel-'under a miieral 'production sharl.irg a{reement f ; thei form of Annex i'Drt hereto, the CONTRACTOR shaIl be glven a. perlod of one (1) year trithin whlch to 6atl6fy thelequity requirement of sixty percent (6ot) Filiptno capltaL for such type of agreement or such lesser equ{ty requlrenrent. as may l:e imposed by law at the tj.me of sucli conversion, subject to an extenslon of one (1) year as maylbe approved by the secretary. taking into consideratlon. the lrelevant economic factors . 8.5 I Rlqht o! Conversion into g j.rreral Second M EfgdUSt:[ql Sharlnq Aqreement . (a) Notwlthstanding 1:hat the CON,f RAC,I'OR has elected to contlnue to be qoverned by the terms r>f thls Agreernent pursuant to Section 9.1(a) above, shoul"d the CONTRACTOR or any of lts assignr:e. wtrether Af f ilizrtes, Related Corporatlon or any.other errtity recognlzed by lzrw, at anyt.lme durlng the ef fect.lvity of ttris Agreement, be a eualified nntlty, lL may opt to convert this Agreement to a mineral production sharlng agreement envisloned under Executlve order No. 21g and nore part.icularly in lhe form of Annex rrDrt attached hereto . (b) Should at anytime dut.ing the effectivlty of thls Agreement, the corrditions menti.oned irr (a) above occur, then the coNTRAcToR shoultl wtthin thirty (io) days from the occurrence of such conditions serve notice to the covERNMENT that .[t wants to exercl.se .Its r:ptiorr to convert thls Agreement to a nrineral product-ion slraring agreement in the form of Annex rrDrr attached hereto (the (Converslon Noticer). (c) All revlsions to Annex rrD[ required or may be necessary, phall be submltted to the covERNMENT r.rlthln slxty (60)I: days fron the service of the converslon Hotice by Hib coN,tRAcToR to the GoVERNMENT. Amendnrents of Annex rr[)rr ment.loned above shall be bJ.ndirrg only;;t'rhen put into writ.ing and signed by both the GOVERNMENT and the CONI,RACToR. sECTION IX DEVEIJOPI'{ENT AND CPNSTRUCTION PERIOD : 9. 1 T_Lmetable, ,Ihe CONI'RACI'OR sha.tL complete the development of the mlne includlng the cons;tru,:tion tf prc,ductlor-r falitltles wlthln thirty-six (36) months fr:om the dat.e of the approval of the Declaration .of Mlning Feastbi Iity, subject to suctr ' extenslon base(l on jus;hifiable r:e.lsclns as the Secretary may approve. ['? .{ AIrr.Mco FTAA/P. 2O 9.2 Progranr and _B.!d.AeL. The coN'fRACTolt shal l develop and construct the. production facilities ln the Mlnlnq Are in accordance with the Work Program lncLuded ln the Declaratlon of Mlnlng Feaslbillty referred lto 1n seq lon 7.L of this Agreement, spendlng at least us$ O, 0OO, OOO less any amount of Exp J-oratL on ltures lt tras already spent. 9.3 (a) Atf n_U_aI. The coNl'RAcl'oR shal I submlt to the Govlrnment, through the secl:etary, copy furnlshed the Dlr{ctor of the Mlnes and ceosciences Bureau, an annual repqrt wlthin sixty (60) days after Decembr:r 31 of each year wht+h states the major activities, irchlevements and expbndlture6 durlng t-he yeat: cor,.ered, includlng maps, assay6, rock and mineral analyses and progress geologLcal and sirnilar reports during ttre clevelopmerrt: and constructlon perlod. A copy of the proposed budget arrd expendltures durlng the construction period wiII br: included ln the Work Program submitted with the l-teclaratlon of Mlnlng Feaslbility referred to j.n siection i.t of this Agreement. (b) Final. e"=p_AE!. t,rlthin six (6) months from the completion of the development ancl constructlon actlvitles, the CoNTRAcToR shaII submit to the covernment, through the Secretary. copy ftrrnisheer j.ocl of up to flve (5) corrtract Years, cortnted from the Date of commencement of Conmercial Producti.on rvithin which to recover lts: (a) PreoperatJ.ng Bxpenses; and (b) Pr.operty expenses incurred during the period in which Preoperatlng Expenses are recoverecl , after which perlod only shall the .right of the covERNMEN'f to :share in the Net Revenue, as hereinafter defined, accrue. llowever, i f after the I apse of the per iod mentioned in the preceditrg paragraph, the CONTRACTOR has not yet fully recovered ibs Preoperating Expenses and Property expense lncurred dur:ing Ehe Perj.od in vrhlch Pre-operatlng Expenies were incurred, lt shaII be all.owed to recover ttre same as a depreciatlon all.owance dedrrctlble agalnst the distributable Net Revenues over the period of the succeedlng three Contract Years. Property expenses incurred during ttre period in ihlch Preoperatlhg Expenses are recovered shall not for the purpose of this Section j.nclude Major Capital Expenditure as deflned in section 11.7. AII taxes, dtrties, fees, costs, lerzies' and inposts pald by the CoN'I'RACTOR and which are detrimental to the CONTRACTC,R, s recovery of Preoperatlng Exl)en::er; arrd Property Expenses durlng the flve (5) Contract Years contemplated ln thls Sectlon shall be recoverable by the CONTRACToR, whenever possible during the year(s) such expenditures vrere actually incurred. Any amourrt not iecovererl shall be deducted from the GoVERNMEN'I, s Share as more specifically provLded ln Section l. 1.5 of this Agreement, unl ess legislatlon ls requlred to allow the necessary deductions, ln whlch case the deductions shall be made only after the approprlate leglslation has been passed All tlre itenrs recoverabl_e by the CoNTRACToR under thls \ Section LL.Z, includlng the on-golng Mlneral Exploration costs incurred by Lhe Col.tTRAaToR - durlng Ure /Lt 4n + + ArtrMco trl'AA/P.25 perlod, fiv -year recovery rrNet slra L.[ be recovered from Net Rev nue, as the term Revenue" is defirred under Sectlon 11. of thls Agredment. 11.3 Pa id -t-e A4-d e-!rl!_D -C_IO-Ul_iZr.r_!r_eJ:-;1 and Surf dce The 2* net smelter ro)'alty and the Bt free carfled interest paid or payable by the CONTRACI'OR to the I Addendum Clalmowners as specified in Sectlon 11 . $ ( e ) a nd ( f) , and the royalties payable to the Surllace owners from the date of commencemerrt of procluction, wh I otherwise r.rolrld have been a reduct.lon to the GOV 's share, as provided in section 11.5 hereof, but $/hlgh were not recovered by tlre CONI'RACT oR for the coryesponding contract Year wlren pa lct shaII be carrled for!,lard, for as long as the COII'I'RACTOR has not been fully reinibursed by the GOVERNMENT of tlre amourrt paid, as an addltlotral deductlon tc, the covnItllMENl', s share rvhen the Iatter itccrues and beconres payable. 11.4 8srySl1]le sharilrg. Frorn tlre start of conrmerclal Product ion, the Net Revenue sha I I be shared by the GOVERNI'EI{T and CONTRACTOR on a 6O-4O basIs, of whlch 60* of the net wiII t>e the cOVITRNMEIIT,:; share and the remaining ,1ot will be that of tlre coN'IllAcTOR, unless a hlgher share in the net revenue is ,;iven t:he CONTRACIOR by agreement of both parties heret:o, provitled no statutory prohibition exists to the clrarrL to the CONIIIACTOR of such hlgher share in the net reverrue. 'l'he COIITRAC'I'OR's corporate tax of 351, any excise tax curr:errt.1y imposed and pald by the CoNTRACToR, and a.tI otlrer t;rxes, duties, fees, Ievles and royalties payabLe by the Cjolll'RAC'IOR, lncluding any tax due on clividend 1>ayments l)y tlre CoNTRAcToR to lts stockholder(s) and any tax due orr i.nterest payments on forelgn loans extended to the coNl'RAcToR by lts stockholder (s) , shall be incltrded in tlre 6Ot GOVERNMENT share as more specifically provided jn Section 11.5 hereof, unless legislation is required to allow such inclusi.on, in which case ther inclusiorr shall be made only after the appropriaLe legierlation lras been passed, Net Revenue means Gross Mi.n.ing Revenues derlved from operati.ons Iess allowable deductions which are attrlbuted to exploration, development and actual Commerc:ial Productlotr. Expenses relatirrq to Cornmercial Production shaII lnclude expenses relating to mlning, utillzation/processln.J, marketing and depreclatlon of Properties used in the operatlons. Al lowable deductions to cf os:; I,l ining ,' O.u.nu.o shall include, but are nLrt trecessaril.y I lrnited, to the fo1low ing: (a) I"lininq, MilIing, lrarrdlin<; and marketlng expenses which are not cleductibLe f rrrrn gross sal.esl (lr) conLj.nuin.J Miner;r1 E::pected llfe lf the lat{er is more than ten (10} years. However, replacement andfor working capiLal I)urchaselpertise are currently not avallabl-e, the CONTRACT6R wiLl prepare - and commence ,tra ining and recruitment program vrlthln the firsC year of Comrnercial pt:oduction at lte expense. Development of Geo-science and l4:herel Tec.h-D-e L-e.qy. !. (1) The coNTRAcToR, in the ' "our=" of lts operatlons, shall produce geological, geophyslcal, geochemlcal and other types of maps ancl reports -tn scale, fornat ancl rromenclature corrsistent with lhternatlonally accepted practices and standards. ..i (it) The coNTRACToR shall, wh j.te this Agreement remalns eYtant, systematlcaI.Ly keep Ure data gen6ratecl from the tllnlng Area such as cores, assays and other related lnformatlon, " includlng ecorromic and' flnanclal, inJ -;h;ii make them accesslble to stuclerlts, researchers and other person-s .-responslble for developinr; gbosclence and mineral EEchnr>Iogy after declar;sil icat:ion. +' h k--- ARTMCO F'r'AA/P.39 Protection and I.!1d!s'LEiaI Ei![e!y : The CONTRACToR sha1l prepare a plan of mlnlng Eto tha its damaoe to the environment wlll be its damage possl-ble, min 11. extent reasonably na1. To the con l of poltutLon and the transformation of the rnlned-out are or or materLals materlaLs into into econonrically econonrically and and socJ-atly soclally productlveproct for s must be done simultaneously wlth mlnlng. app oprlate Envlronmental Impact statement (EIS) must be mad r accbrdlng to the form prescrlbed by proPer 90v rnnent authorlties and shall be requlrid int of any of the feaslbllity studles .pf the mlne. The e activitles rnust be reflecLecl clearLy ln the a oprlate work Prog ram. 13.4 Bj-SX!_C 9l tlre coNTRAcToR Quriryg the. Development,-' g-o-nS!-E!S!r-aI And Produc!:kr-tt Pgriod. - The coNTRAcToR shall: (a) ttave the right to corrduct: l'tinirrg operatlons 1n ! the Mlnlng Area ln accordance wlth the terms and conditlons hereof. (b) Have the right of possession of the Minlng Area, wlth fulJ right of ingress and egress and the rlght to occupy the same. (c)(i) subject to the pro,ri:;ion:: of Pr:esldentlal Decree No. stz , not be pre.retrted from entry lnto prlvate lands by surface owtrers and/or occupants thereof when prospectirrg. exploring and exploltJ-ng for mlnerals therein. (i1) Have the riglrt to re<1uire the GovERNMENT at the coNTRAcToR's own cost, to purchase or acqulre the surface areas over ttre l'tining Area or the rlght to purchase ttre surface areas for and on rlli behalf of the covERNMEIIT, at such prlce and terms as may be acceptable to it provided that it shaII be reimb-ursecl by the sa Ie by publlc auction or tender of tthe surface rlghts at ttre terminatLon of thls Agreement. (d) tlave the right to use and have access to all declass if lerl geological, geophysical, drltllng, productlon and other informatlon held by the GovrnnurHr br any agency or enterprlse thereof norv or in the future, relating to ttre contract Area. (e) (t) llave the rlght bo selI, asslgn, Lransfer, 'convey or otherwlse dispose of all lts r19hts, lnterests and obligatlons under thls Agreenenit, subjecC to the approva1 of the Secretary, lrhlch approval wlll not be unreasonably withhcl.d, except that no such approval i^rould be requlr:ed rrnlploration, development, exploitatlon, utillzatibn or operatlon of the Minlng Area by the coNTRAcToR. 13.5 Obllcrations _o_! qhe_ covElll["ljll T. - I T'he cOVERNMENT shall: (a) Ensure that Col.lTRAC'l'OIr lras the cOVERNMENT,s full cooperation in the exercise of ttre rlghts granted lt under thls Agreement. (b) Ensure that no governmental agency lnterferes ln the peaceful arrd timel1' prosecutir:n of the proJects contemplated in this Agreement and wtll use its - best efforts to ensure the timely lssuance of necessary permlts and simllar authorlzing documents and Ilftlng .of lmpedlng regulations or reservat lons for use oi surface of the Exploratlon contract Area, (c) If col'ITRACToR seeks to obtaln financlng contenplated herein from banks or other flnanclng lnstltutions, cooperate r,rith coNTRACTOR in such efforts provided that such f lnatrcing arrartgements wl11 ln no event reduce CONTRACTOR, s obllgat.iorrs or the GOVERNMENTTs rlghts hereunUer. (d)(i) rf the coN'IRACl'oR so requests at lts optlon, the GOVERNMENT shall use iLs off j.ces and legal powers to assist in the acf inf ormat.ion submltted to the DENR in January lggz | ()r as anended ln writlng to the DENR 1ater, including: i, , DescripLion_ gf, r'TAA Application Area and map showlng' FTAA Application Area. Mirrera I Exploratiorr Work pro(rran * Ar1mco Mining Corp o ra L. ion: Technica I and Fianncial capabi l lty '' *' The Contractor * I'echnica l- capabilities * Mlnlng The Contractor I'echnica I Capabilitler; * Exploiatlon The Contractor Technical Capabilltlel; * Flnanclal Annual Reports cl i.max Minlrrg Limtted 199i Petroleum Securities Au:;traIia t,imited l99o aene+'lts to ure phiIipplnes \ Sutltmary Introduction Revenue Spreadsheets q ,lrl' ARTMeO FtAA/P.45 Arl"nco Mining CorporaLion Security I r-lf ormat.ion ArticIes. and By-laws Agreement between Arimco Mlning corporat.lon, arrd Aumex Philipplnes, I.nc., fnmex Ltd., ceoph l l lppines, Inc. and PIRITI (Metoorandum of Agreernent), and Arlmco Mining corporation, irorge Gonzales, phlls.,Inc. ceophlllpplnes Inc., Inmex Ltd. and Aumex (Addendum Agreement) and the covenantsr representations and warrantle6 of the CONTRACToR set forth ln this Agreenent and that the GOVERIIMENT relled on a1l oE the foregolng. Notwithstanding any right of the CoVERI{HENT to fulty inveshigate the affairs of the CONTRACTOR, and notwJ-thstanding any knowledge of f act.s deternlned or determlnable by ttre cOVERI{MEN'f pursuant to such investlgation or rlght of lnvestigatlon, the GoVERI{MENT has the right t.o rely fulty upon the covenants, {fpresentatlons and warrantles contained ln thls Agreemeht. SECTION XIV ASSETS NND T:QUI PI{EN'T 14.1 The coNTRAc'foR shall acqulre for Mineral Exploratlon and Mlnlng Operatl.ons orrly such assets a€r are reasonably estimated to be required ln carrylng out such MLneral Exploratlon and Mirrlng operations. L4.2 AtI materials, equlpment, plant and other lnsta llatlons erected or placed on the. ExploratLon Contract Area or the Mlnlng Area by the CoNTRACTOR shaIl remain the property of the CoNTRACToR and upon the termination of this Agreement. as .provlded In Sectlon XIX hereof, the. cONTIIACToR shall have the rlght to remove and export suctr mate.pials, equlpment, plant and other lnstallatlons, eicept bulldlngs, brldges, uarehou6es, and other soclal Infrastructuies whlch were bullt speciflcally lior the beneflt of the communlty vrhere the mlnlng proJect ls located. All materials, equlpment, plant arrd other lnstallatlons not removed wlthln twelve (L2) ntonths fron the termin4tlon of this Alrreement e;hall belong to the GOVERNMEN'T. ? +v- ARIMCO ITTAA/P.46 14.3 A11 Property as deflned in thls Agreement shaII . belong to the CoNTRAqTOR. sEcrroN xv EMPI,OYIIENT AND TRAINING OF PHIIJIPPINE PERSONNEI., 15.1 The coNTRAcTOR agrees to etnplo)', to the extint posbible, quallfied- Flllplno peisoinel ln lts Hlnlng operatl-onsi and after Comnercial Productlon commence6 shall, ln consultation and lrith the consent of the Secretatry, undertake an elaborate anc'l extenslve tlalnlng programfie for employrnent of suitable f'lliplno natlonals at all levels of emplo),ment, The objective of.said progranne shall be to reach vrithin the time-tablr: set fort.h below the following targets of Filipinization,': lILs&LLIgd skllled clerl(iql- I]Laleq&Ilet llanadement Year I 10 01 50r 100t lor 10r \ear 2 t00r 60r 100 c 15t l5r Year 3 t00r 70$ 100 x 201 20t Year 5 10 01 75r 100 r 30r 301 Year 7 loor l00r l00r 401 401 Year 10 100c 100x 100 $ 501 50t Year 15 100r 100x lOOrt 601 60r L5.2 costs and expetrses of tralnir.t