腥膍 腀莓 腀腁 膌 :膡 荨 ( N SHARINe AGREEMENT 腡:NERAL PRODuCT葟 lVB No 229腝2007腅 ENT,Pnde andrentered into :NERAL PRODuCT10N SHARINC ACREE腡 This腡 in Que20n C腠 c ofthe Ph::ippines provldes in provides that鏹 膎 State rFlay directly undettako Mineral such a雊Produdion,Joint Venture,o腵 ujes,or n may enter into a C膜 p:no c铳 Produdion Shanng Agreementth F襊ves,partnerships, zens,or coopera腡 rporttons or a腫镚Jon is 膇諺臥 owned by such dizens: : 荑腀 膌 腅 WHEREAS, the Contractor has access to all the financing, technical competence, technology and environmental management skills required to promptly and effectively carry out the objectives of this Agreement; NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual covenants, terms and conditions hereinafter set forth, it is hereby stipulated and agreed as follows: SECTION I SCOPE 1 .1. This Agreement is a Mineral Production Sharing Agreement entered into pursuant to the provisions of the Act and its implementing rules and regulations. The primary purpose of this Agreement is to provide for the rational exploration, development and commercial utilizalion ol nickel, chromite and other associated mineral deposits existing within the Contract Area, with all necessary services, technology and financing to be furnished or arranged by the Contractor in accordance with the provisions of this Agreement. The Contractor shall not, by virtue of this Agreement, acquire any title over the ContracUMining Area without prejudice to the acquisition by the Contractor of the land/surface rights through any mode of acquisition provided for by law. 1.2. The Contractor shall undertake and execute, for and on behalf of the Government, sustainable mining operations in accordance with the provisions of this Agreement, and is hereby constituted and appointed, for the purpose of this Agreement, as the exclusive entity to conduct mining operations in the Contract Area. 13risk such that if no minerals The Contractor shall assume all the exploration in commercial quantity are developed and produced, it will not be entitled to reimbursement. Agreement, total value of production and sale of 14term of this the During the the mining contemplated herein shall be minerals derived from operations accounted for and divided between the Government and the Conlractor in accordance with Section Vlll hereof. sEcTroN il DEFINITIONS As used in this Agreement, the following words and terms, whether singular plural, shall have the following respective meaning: 2.1. Act refers to Republic Act No. 7942, otherwise known as the "Philippine Mining Act of 1995." 2.2. Aqreement means this Mineral Production Sharing Agreement. 2.3. Associated Minerals mean other ores/minerals, which occur together with the principal ore/mineral fl .%- W t j`0 2.4. Banqko Sentral means Bangko Sentral ng Pilipinas. 2.5. Budqet means an estimate of expenditures to be made by Contractor in mining operations contemplated hereunder to accomplish the Work Program for each particular period. 2.6. Bureau means Mines and Geosciences Bureau. 2.7. Calendar Year or Year means a period of twelve 12) consecutive months starting with the first day of January and ending on December 31, while "Calendar Quarter" means a period of three consecutive months with the first calendar quarter starting with the first day of January. 2.8. Commercial Production means the production of sufficient quantity of minerals to sustain economic viability of mining operations reckoned from the date of commercial operation as declared by the Contractor or as stated in the feasibility study, whichever comes first. 2.9. Constitution or Philippine Constitution means the 1987 Constitution of the Republic of the Philippines adopted by the Constitutional Convention of 1986 on October 15, 1986 and ratified by the People of the Republic of the Philippines on February 2, 1987. 2.'10. Contract Area means the area onshore or offshore delineated under the Mineral Production Sharing Agreement subject to the relinquishment obligations of the Contractor and properly defined by latitude and longitude or bearing and distance. 2.1'1 . Contract Year means a period of twelve (12) consecutive months counted from the Effective Date of this Agreement or from the anniversary of such Effective Date. 2.12. Conlraclor means Citinickel Mines and Development Corporation or its assignee(s) of interest under this Agreement: Provided, That the assignment of any of such interest is accomplished pursuant to the pertinent provisions of the implementing rules and regulations of the Act. 2.13. Declaration of Minino Proiect Feasibilitv means a document proclaiming the presence of minerals in a specific site, which are recoverable by socially acceptable, environmentally safe and economically sound methods specified in the Mine Development Plan. 2.14. Department or DENR means the Department of Environment and Natural Resources. 2.15. Director means the Director of Mines and Geosciences Bureau. 2.16. Effective Date means the date of execution of this Agreement by the Contractor and by the Secretary on behalf of the Government. 2.'17. Environment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social. 2.1 8. Exploration means searching or prospecting for mineral resources by geological, geophysical and geochemical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the l)/ A :., d4 w[Kl lv 腂 腵 腌 腎 膌 膜 膜 purpose of determining the existence, extent, quality and quantity of mineral resources and the feasibility of mining them for profit. 2.19. Exploration Period shall mean the period from the Effective Date of this Agreement, which shall be for two (2) years, renewable for like periods but not to exceed a total term of six (6) years for nonmetallic minerals and eight (8) years for metallic minerals, subject to the pertinent provisions of the implementing rules and regulations of the Act. 2.20. Force Maieure means acts or circumstances beyond the reasonable control of the Contractor including, but not limited to war, rebellion, insurrection, riots, civil disturbances, blockade, sabotage, embargo, strike, lockout, any dispute with surface owners and other labor disputes, epidemics, earthquake, storm, flood or other adverse weather conditions, explosion, fire, adverse action by the Government or by any of its instrumentality or subdivision thereof, act of God or any public enemy and any cause as herein described over which the affected party has no reasonable control. 2.21. Foreiqn Exchanqe means any currency other than the currency of the Republic of the Philippines acceptable to the Government and the Contractor. 2.22. Government means the Government of the Republic of the Philippines or any of its agencies and instrumentalities. 2.23. Gross Outout means the actual market value of the minerals or mineral products from each mine or mineral land operated as a separate entity, without any deduction for mining, processing, refining, transporting, handling, marketing or any other expenses: Provided, That if the minerals or mineral products are sold or consigned abroad by the Contractor under C.l.F. terms, the actual cost of ocean freight and insurance shall be deducted: Provided further, That in the case of mineral concentrates which are not traded in commodity exchanges in the Philippines or abroad such as copper concentrate, the actual market value shall be the world price quotation of the refined mineral products contained thereof prevailing in the V said commodity exchanges, after deducting the smelting, refining, treatment, insurance, transportation and other charges incurred in the process of converting mineral concentrates into refined metal traded in those commodity exchanges. 2.24. Mine Development refers to work undertaken to prepare an ore body or a mineral deposit for mining, including the construction of necessary infrastructure and related facilities. 2.25. Minerals mean all naturally occurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy. 2.26. Mineral Products mean materials derived from mineral ores/rocks and prepared into marketable state by metallurgical processes which include beneficiation, cyanidation, leaching, smelting, calcination and other similar processes. 2.27. Minino Area means that portion of the Contract Area identified by the urVi苎:an duly approved by the钪 荙 ,o膜 Director/Regional Director concerned for purposes of development and/or utilization and sites for support facilities. 2.28. Minino Operations means mining activities involving exploration, feasibility study, environmental impact assessment, development, utilization, mineral processing and mine rehabilitalion. 2.29. Notice means notice in writing, telex or telecopy (authenticated by answer back or confirmation received) addressed or sent as provided in Section '16.2 of this Agreement. 2.30. Ore means naturally occurring substance or material from which a mineral or element can be mined and/or processed for profit. 2.31. Pollution means any alteration of the physical, chemical and/or biological properties of any water, air and/or land resources of the Philippines, or any discharge therelo of any liquid, gaseous or solid wastes or any production of unnecessary noise or any emission of objectionable odor, as will or is likely to create or render such water, air, and land resources harmful, detrimental or injurious to public health, safety or welfare or which will adversely affect their utilization for domestic, commercial, industrial, agricultural, recreational or other legitimate purposes. 2.32. Secretarv means the Secretary of the Department of Environment and Natural Resources. 2.33. State means the Republic of the Philippines. 2.34. Work Prooram means a document which presents the plan of major mining operations and the corresponding expenditures of the Contractor in its Contract Area during a given period of time, including the plan and expenditures for development of host and neighboring communities and of local geoscience and mining technology, as submitted and approved in accordance with the implementing rules and regulations of the Act. : SECT:ON腡 TERM OF AGREEMENT (25) years from 31This Agreement have a term of twenty five Effective shall Date, and may be renewed thereafter for another term not exceeding twenty five (25) years. The renewal of this Agreement, as well as the changes in the terms and conditions thereof, shall be upon mutual consent by the parties. ln the event the Government decides to allow mining operations thereafter by other Contractor, this must be through competitive public bidding. After due publication of notice, the Contractor shall have the right to equal the highest bid upon reimbursemenl of all reasonable expenses of he hOhed bddeL 詏 5 ,苆 芨 SECT:ON:V CONTRACT AREA 腒腵 裪 |膜 膜 SECTION V EXPLORATION PERIOD 51Timetable for - The Contractor shall commence Exploration Exploration activities not later than three (3) months after the Effective Date for a period of two (2) years, renewable for like periods but not to exceed a total term of six (6) years for nonmetallic minerals and eight (8) years for metallic minerals, subject to annual review and approval by the Director in accordance with the implementing rules and regulations of the Act. 52- ln the Contraclor opts for a renewal of Renewal of Exploration Period case its Exploration Period, it shall llle prior to the expiration thereof, a renewal application in the Mines and Geosciences Bureau Central Office, accompanied by the mandatory requirements stipulated in the implementing rules and regulations of the Act. The Director may grant the renewal of the Exploration Period on condition that the Contractor has substantially complied with the terms and conditions of the Agreement. ln cases where further exploration is warranted beyond the six (6) - or eight 腛 (8)-year period and on condition that the Contractor has substantially implemented the Exploration and Environmental Work Programs as verified by the Bureau, the Director may further granl renewal of the Exploration Period: Provided, That the Contractor shall be required to set up a performance surety equivalent to the expenditure requirement of the Exploration and Environmental Work Programs. - The shall strictly comply with the 53and Budgels Contractor Work Programs approved Exploration and Environmental Work Programs together with their corresponding Budgets (please refer to ANNEXES 'C" and "D"). The amount to be spent by the Contractor in conducting Exploration activities under the terms of this Agreement during the Exploration Period shall be in the aggregate of not less than that specified for each of the Contract Years. as follows: For the Exploration Work Program: : PhP l,364.50000 1st Contract Year : PhP 4,481.00000 2nd Contract Year PhP 5,84550000 Total PhP 300,00000 For the Environmental Work Program : ln the event of renewal of the Exploration Period. the amount to be spent every year shall llrst be agreed upon by the parties. ln the event of termination of this Agreement. the Contractor shall only be obliged to expend the pro-rata amount for the period of such Contract Year prior to termination. lf during any Contract Year, the Contractor should expend more than the amount to be expended as provided above, the excess may be subtracted from the amount required to be expended by the Contractor during the succeeding Contract Years, and should the contractor. due to unforeseen "{7",U;{ with the consent ot tne* I 腒腵 腃 腀 腎 裪 腅 Government, expend less during a year, then the detlciency shall be applied to the amount to be expended during the succeeding Contract Years. 54- Relinquishment of Total/Portion of the Contract Area During the Exploration Period, the Contractor may relinquish totally or partially the original Contract Area. After the Exploration Period and prior to or upon approval of a Declaration of Mining Project Feasibility by the Direclor, the Contractor shall finally relinquish any portion of the Contract Area not necessary for mining operalions and nol covered by any Declaration of Mining Project Feasibility. 55- may allow the Contractor to hold more than Final Mining Area The Director one (1) final Mining Area subject to the maximum limits set under the implementing rules and regulations of the Act: Provided, That each final l\4ining Area shall be covered by a Declaration of Mining Project Feasibility. 裪 腏 节 艏 Declaration of Mining Project Feasibility - Within the term o, the Exploration Period. the Contractor shall file in the Regional Ofrice concerned, the Declaration of Mining Project Feasibility of the Contract Area/final Mining Area supported by Mining Project Feasibility Study, Three (3)-Year Development and Construction or Commercial Operation Work Program, complete geologic report, an application for survey and the pertinent Environmental Compliance Certificate, among other applicable requirements. Failure of lhe Contractor to submit the Declaration of Mining Project Feasibility during the Exploration Period shall be considered a substantial breach of this Agreement. - The shall cause the survey of the 57the Contract Area Contractor Survey of tor perimeter of the Contract Area/final Mining Area through an application survey, complete with requirements, filed in the Regional Office concerned simultaneous with the submission of the Declaration of Mining Feasibility. Survey returns shall be submitted to the Regional Director concerned for approval within one (1) year from receipt of the Order of Survey complete with the mandatory requirements stated in the implementing rules and regulations of the Act. V 58Reporting a. During the Exploration Period, the Contractor shall submit to the Director, through the Regional Director concerned, quarterly and annual accomplishment reports under oath on all activities conducted in the Contract Area from the Effective Date of this Agreement. The quarterly report shall be submitted not later than fifteen (15) days at the end of each Calendar Quarter while the annual accomplishment reporl shall be submitted not later than thirty (30) days from the end of each Calendar Year. Such information shall include detailed financial expenditures, raw and processed geological, geochemical. geophysical and radiometric data plotted on a map at a minimum 1:50,000 scale, copies of originals of assay results, duplicated samples, field data, copies of originals from drilljng reports, maps, environmental work program implementation and detailed expenditures showing discrepancies/ deviations with approved exploration and environmental plans and budgets as well as all other information of any kind collected during the exploration activities. All information submitted to the Bureau shall be subject to the 覿 襊陼腎雊  苨 镳 腧 腧 wement b - Final Report The Contractor shall submit to the Director, through the Regional Director concerned, a final report under oath upon the expiration of the Exploration Period which shall be in the form and substance comparable to published professional reports of respectable international institutions and shall incorporate all the findings in the Contract Area including location of samples, assays, chemical analysis, and assessment of mineral potentials together with a geologic map of 1:50,000 scale at the minimum showing the results of the exploration. Such report shall also include detailed expenditures incurred during the Exploration Period. ln case of diamond drilling, the Contractor shall, upon requesl of the Director/Regional Director concerned, submit to the Regional Office concerned a quarter of the core samples, which shall be deposited in the Regional Office Core Library for safekeeping and reference. CRelinquishment Report - The Contractor shall submit a separate relinquishment report with a detailed geologic report of the relinquished area accompanied by maps at a scale of 1:50,000 and results of analyses and detailed expenditures, among others. SECTION VI DEVELOPMENT AND CONSTRUCTION PERIOD 6.'l . Timetable - The Contractor shall complete the development of the mine including the construction of production facilities within thirty six (36) months from the submission and approval of the Declaration of Mining Project Feasibility, subject to such extension based on justifiable reasons as the Director may approve, upon recommendation of the Regional Director concerned. 6.2. Reporting a. Annual - The Contractor shall submit, within sixty (60) days after December 3l of each year, to the Director, through the Regional Director concerned, an annual report, which states the major activities, achievements and detailed expenditures during the year covered, including maps, assays, rock and mineral analyses and geological and environmental progress reports during the Development and Construction Period. b. Final Report - Within six (6) months from the completion of the development and construction activities, the Contractor shall submit a final report to the Director, through the Regional Director concerned. Such report shall integrate all information in maps of appropriate scale and quality, as well as in monographs or reports in accordance with international standards. 2,f.. (w 9 腒腒 腎腁 SECTION VII OPERATING PERIOD 7.1. Timetable - The Contractor shall submit, within thirty (30) days before completion of mine development and construction of production facilities, to the Director. through the Regional Director concerned, a Three-Year Commercial Operation Work Program. The Contractor shall commence commercial utilization immediately upon approval of the aforesaid Work Program. Failure of the Contractor to commence Commercial Production within the period shall be considered a substantial breach of the Agreement. 7.2. Commercial Operation Work Program and Budget - During the Operating Period, the Contraclor shall submit to the Director, through the Regional Director concerned, Work Programs and Budgets covering a period of three (3) years each, which shall be submitted not later than thirty (30) days before the expiration of the period covered by the previous Work Program. The Contractor shall conduct Mining Operations and other activities for the duration of the Operating Period in accordance with the duly approved Work Programs and corresponding Budgets. 7.3. Expansion and Modification of Facilities - The Conlractor may make expansions, modifications, improvements, and replacements of the mining facilities and may add new facilities as the Contractor may consider necessary for the operalions: Provided, That such plans shall be embodied in an appropriate Work Program approved by the Director. 7.4. Reporting a. Quarterly Reports - Beginning with the first Calendar Quarter following the commencement of the Operating Period, the Contractor shall submit, within thirty (30) days after the end of each Calendar Quarter, to the Director, through the Regional Director concerned, a Quarterly Report stating the tonnage of production in terms of ores, concentrates, and their corresponding grades and other types of productsi value, destination of sales or exports and to whom sold, terms of sales and expenditures. b. Annual Reports - During the Operating Period, the Contractor shall submit within sixty (60) days from the end of each Calendar Year, to the Director, through the Regional Oirector concerned, an Annual Report indicating in sutficient detail: b.1. The total tonnage of ore reseryes, whether proven, probable, or inferred, the total lonnage of ores, kind by kind, broken down between tonnage mined, tonnages transported from lhe minesite and their corresponding destination, tonnages stockpiled in the mine and elsewhere in the Philippines, tonnages sold or committed for export (whether actually shipped from the Philippines or not), tonnages actually shipped from the Philippines (with full details as to purchaser, destination and terms of sale), and if known to the Contractor, tonnages refined, processed or manufactured in the Philippines *ith fil;e""ifi2ff ""0lP *" intermediatef4 I' 10 products, by-products or final products and of the terms at which lhey were disposed, b.2. Work accomplished and work in progress at the end of the year in question with respect to all the installations and facilities related to the utilization program, including the investment actually made or committed; and b.3. Profile of work force, including management and staff, stating particularly their nationalities, and for Filipinos, their place of origin (i.e., barangay, town, province, region). The Contractor shall also comply with other reporting requirements provided for in the implementing rules and regulations of the Act. SECTION VIII FISCAL REGIME 8.1. General Principle - The fiscal regime of this Agreement shall be governed by the principle according to which the Government expects a reasonable return in economic value for the utilization of non-renewable mineral resources under its national sovereignty while the Contractor expects a reasonable return on its investment with special account to be taken for the high risk of exploration, the terms and conditions prevailing elsewhere in the industry and any special efficiency to be gained by a particularly good performance of the Contractor. 8.2. Registration Fees - Within fifteen (15) days upon receipt of the notice of approval of the Agreement from the Regional Office concerned, the Contractor shall cause the registration of this Agreement with the said Regional Office and pay the registration fee at the rate provided in the existing rules and regulations. Failure of the Contractor to cause the registration of this Agreement within the prescribed period shall be sufficient ground for cancellation of the same. 8.3. Occupation Fees - Prior to registration of this Agreement and at the same date every year thereafter, the Contractor shall pay to the Municipal/City Treasurer concerned an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations. lf the fee is not paid on the date specified, the Contractor shall pay a surcharge of twenty five percent (25%) of the amount due in addition to the occupation fees. 8.4. Share of the Government - The Government Share shall be the excise tax on mineral products at the time of removal and at the rate provided for in Republic Act No. 7729 amending Section 151 (a) of the National lnternal Revenue Code, as amended, as well as other taxes' duties and fees levied by existing laws. The Excise Tax shall be timely and completely paid to the nearest Bureau of lnternal Revenue Office in the province concerned. For purposes of determining the amount of the herein Government Share, the Contractor shall strictly comply with the auditing and accounting requirements prescribed under existlng laws and regulati' $ ilA z#- dr I The Government Share shall be allocated in accordance with Sections 290 and 292 ol Republic Act No. 7160, otherwise known as "The Local Government Code of 199'1." 8.5. Pricing of Sales - The Contractor shall dispose of the minerals and by- products produced at the highest market price prevailing in the locality: The Contractor shall also pay the lowest achievable marketing commissions and related fees and shall negotiate for more advantageous terms and conditions subject to the right to enter into long{erm sales or marketing contracls or foreign exchange and commodity hedging contracts, which the Government acknowledges to be acceptable notwithstanding that the sale price of the minerals and by-products may from time to time be lower, or the terms and conditions of sales are less favorable, than that available elsewhere. The Contractor shall seek to strike a balance between long-term sales or marketing contracts or foreign exchange and commodity hedging contracts comparable to policies followed by independent producers in the international mining industry. The Contractor shall likewise seek a balanced distribution among consumers. lnsofar as sales to Contractor's affiliale(s) are concerned, prices shall be at arm's length standard, and competing otfers for large V scale and long-lerm contracts shall be procured. Before any sale and/or shipment of mineral product is made, existing and future marketing coniract(s)/sales agreement(s) shall be submitted to the Director, copy furnished the Regional Director concerned, for registration. At the same time, the Contractor shall regularly inform the Director in writing of any revisions, changes or additions in said contract(s)/agreement(s). The Contractor shall reflect in its lronthly/Quarterly Report on Production, Sales and lnventory of Minerals, as well as in the lntegrated Annual Report, the corresponding registration number(s) of the marketing contract(s)/agreement(s) governing the exporl or sale of minerals. 8.6. Associated Minerals - lf minerals other than nickel and chromite ate discovered in commercial quantities in the Contract Area, the value thereof shall be added to the value of the principal mineral in computing the V Government share. SECTION IX WORK PROGMMS 9.1. Submission to Governmenl - Within the periods slated herein, the Contractor shall prepare and submit to the Director, through the Regional Director concerned, a Work Program and corresponding Budget for the Contract Area stating the Mining Operations and expenditures which the Contractor proposes to carry out during the period covered with the details and particulars set forth elsewhere in this Agreement or in the supporting documents. 9.2. Government's Examination and Revision of Work Program - Should the Government decide to propose a revision to a certain specific feature in the Work Program or Budget, it shall, within thirty (30) days after receipt thereof, provide a -Notice to the Conkactor.specifyinsr[gson"Ot" a"tail its reasons Y ^[lr f{ 12 therefore. Promptly thereafter, the Government and Contractor will meet and endeavor to agree on the revisaon proposed by the Government. ln any event, the revision of any portion of said Work Program or Budget in which the Government shall fail to notify the Contractor of the proposed revision shall, insofar as possible, be carried out as prescribed herein. lf the Government should fail within sixty (60) days from receipt thereof to notify Contractor of the proposed revisions, the Work Program and Budget proposed by the Contractor shall be deemed to be approved. 9.3. Contractor's Changes to Work Program - lt is recognized by the Government and the Contractor thal the details of any Work Program may require changes in the light of changing circumstances. The Conlractor may make such changes: Provided, That it shall not change the general objective of the Work Program: Provided further, That changes which entail a variance of at least twenty percent (20%) shall be subject to the approval of the Director. proposed 94 The Government's approval of a Work Program and Budget will not be unreasonably withheld. sEcTtoN x ENVIRONMENTAL PROTECTION AND MINE SAFETY AND HEALTH 10.1. The Contractor shall manage its Mining Operations in a technically, financially, socially, culturally and environmentally responsible manner lo achieve the sustainable development objectives and responsibilities as provided for under the implementing rules and regulations of the Act. '10.2. The Contractor shall ensure that the standards of environmental protection are met in the course of the Mining Operations. To the extent possible. control of pollution and the transformation of the mined-out areas or materials into economically and socially productive forms must be done simultaneously with mining. '10.3. The Contractor shall submit an Environmental Work Program during the Exploration Period as prescribed in the implemenling rules and regulations of the Act. '10.4. An Environmental Compliance Certificate (ECC) shall be secured first by the Contractor prior to the conduct of any developmenl works, construction of production facilities and/or mine production activities in the Contract Area. '10.5. The Contractor shall submit within thirty (30) calendar days after the issuance and receipt of the ECC, an Environmental Protection and Enhancement Program (EPEP) using MGB Form No. 16-2 covering all areas to be affected by development, utilization and processing activities under this Agreement. The Contractor shall allocate for its initial environmen!related capital expenditures approximalely ten percent (10%) of the total project cost or in such amount depending on the environmental/geological condition, nature and scale of operalions and 10.6. The Contractor shall submit, within thirty (30) days prior to the beginning of every calendar year, an Annual Environmental Protection and Enhancement Program (AEPEP), using MGB Form 16-3, which shall be based on the approved EPEP. The AEPEP shall be implemented during the year for which it was submitted. To implement its AEPEP, the Contractor shall allocate annually three to five percenl (3%-5%) of its direct mining and milling costs depending on the environmental/geologic condition, nature and scale of operations and technology employed in the Contract Area. '10.7. The Contractor shall establish a Contingent Liability and Rehabilitation Fund (CLRF) which shall be in the form of the Mine Rehabilitation Fund (MRF) and the Mine Waste and Tailings Fee (MWTF). The MRF shall be based on the financial requirements of the approved EPEP as a reasonable environmental deposit to ensure satisfactory compliance with the commitments/strategies of the EPEP/AEPEP and availability of funds for the performance of the EPEP/AEPEP during the specific project phase. The MRF shall be deposited as Trust Fund in a government depository bank and shall be used for physical and social rehabilitation of areas affected by mining activities and for research on the social, technical and preventive aspects of rehabilitation. The MWTF shall be collected based on the amounts of mine waste and mill tailings generated during the conduct of Mining Operations. The MWTF collected shall accrue to a Mine Waste and Tailings Reserve Fund and shall be deposited in a government depository bank for payment of compensation for damages caused by the Mining Operations. 10.8. The Contractor shall set up mitigating measures such as mine waste and mill tailings disposal system, mine rehabilitation or plan, water quality monitoring, etc. to minimize land degradation, air and water pollution, acid rock drainage and changes in hydrogeology. 10.9. The Contractor shall set up an Environmental and Safety Office at its minesite manned by qualified personnel to plan, implement and monitor its approved EPEP. 10.1 0. The Contractor shall be responsible in the monitoring of environmental, safety and health conditions in the Contract Area and shall strictly comply with all the rules and regulations embodied under DAO No. 2000-98, otherwise known as the 'Mine Safety and Health Standards." 1 0.1 1 . The Contractor shall be responsible for the submission of a final mine rehabilitation and/or decommissioning plans, including its financial requirements and incorporating the details and particulars set forth in the implementing rules and regulations of the Act. SECT!ON X: aTo exclusively conduct sustainable Mining Operations within the Contract Area in accordance with the provisions of the Act and its implementing rules and regulationsl b any facilities specified under the Mineral To construct and operate Agreement or approved Work Program; CTo determine the exploration, mining and treatment process to be utilized in lhe lvlining Operations; d and dispose of any tailings as authorized by To exlract, remove, use an approved work Program; eTo secure all permits necessary or desirable for the purpose of Mining Operations; f To keep accurate technical records about the Mining Operations, as well as financialand marketing accounts, and make them available to Government representatives authorized by the Director for the purpose of assessing the performance and compliance of the Contractor with the terms of this Agreement. Authorized V representatives of other Government Agencies may also have access to such accounts in accordance with existing laws, rules and regulations; g Bureau all the data and information gathered from the To furnish the Contract Area and thal all the books of accounts and records shall be open for inspection; h to Government during reasonable hours in To allow access pertinent inspecting the Contract Area and examining records for purposes of monitoring compliance with lhe terms of this Agreement; | To hold the Government free and harmless from all claims and accounts of all kinds. as well as demands and aclions arising out of the accidents or injuries to persons or properties caused by Mining V Operations of the Contractor and indemnify the Government for any expenses or costs incurred by the Government by reason of any such claims, accounts, demands or actions; l ln the development of the community: j.1. To recognize and respect the rights, customs and traditions of indigenous cultural communilies over their ancestral lands and to allocate royalty payment of not less than one percent (1%) of the value of the gross output of minerals sold; j.2. To coordinate with proper authorities in the development of the mining community and for those living in the host and neighboring communities through social infrastructure, livelihood programs, education, water. electricity and medical services. Where traditional self-sustaining income and the community activilies are identified to be present, the Contractor shall assist in the preservation and/or enhancement of such activities; , - 9- ^//t'i:' W tfrt t" lu 15 j.3. To allot annually a minimum of one percent (1%) of the direct mining and milling costs necessary to implement the activities undertaken in the development of the host and neighboring communities. Expenses for community development may be charged against the royalty payment of at least one percent (1%) ot the gross output intended for the concerned indigenous cultural community; j-4. To give preference to Filipino citizens who have established domicile in the neighboring communities, in the hiring of personnel for its mining operations. lf necessary skills and expertise are currently not available, the Contractor must immediately prepare and undertake a kaining and recruitment program at its expense; and j.5. To incorporate in the Mining Project Feasibility Study the planned expenditures necessary to implement (1.1) to (j.3) of this Section; k. ln the development of Mining Technology and Geosciences: k.'1. ln the course of its operations, to produce geological, geophysical, geochemical and other types of maps and reports that are appropriate in scale and in format and substance which are consistent with the internationally accepted standards and practices. Such maps shall be made available to the scientific community in the most convenient and cost effective forms, subject to the condition that the Contractor may delay release of said information for a reasonable period of time which shall not exceed three (3) years; k.2. To systematically keep the data generated from the ContracU Mining Area such as cores, assays and other related information, including economic and financial data and make them accessible to students, researchers and other persons responsible for developing mining, geoscience and processing technology subject to the condition that the Contractor may delay release of data to the science and technology community within a reasonable period of time which shall not exceed three (3) years; k.3. To transfer to the Government or local mining company the appropriate technology it may adapt in the exploration, development and commercial utilization of the minerals in the Contract Area; k.4. To allocate research and development budget for the advancement of mining technology and geosciences in coordination with the Bureau, research institutions, academe, etc.; and k.5. To replicate data, maps and reports cited in (k.1) and (k.2) and furnish the Bureau for archiving and systematic safekeeping which shall be made available to the science and 葙轂 luuCtlU ICSCtt research and technology community for conducting 苃 镢 16 undertaking other activities which contribute to the development of mining, geoscience and processing technology and the corresponding national pool of manpower talents: Provided, however, that the release of data, maps and the like shall be similarly constrained in accordance with (k.1 ) and (k.2) above; l. To incorporate in the Mining Feasibility Study the planned expenditures necessary to implement all the plans and programs set forth in this Agreement; and m. To pay all other taxes and fees mandated by existing laws, rules and regulations. 11.2. Rights of the Contractor: a. To conduct Mining Operations within the confines of its ContracUMining Area in accordance with the terms and conditions hereof and without interfering with the rights of other Contractors/Lessees/Operators/ Permittees/Permit Holders; b. Possession of the Contract Area, with full right of ingress and egress and the right to occupy the same, subject to surface and easement rights; c. To use and have access to all declassified geological, geophysical, drilling, production and other data relevant to the mining operations; d. To sell, assign, transfer, convey or otherwise dispose of all its rights, inlerests and obligations under the Agreement subject to the approval of the Government; e. To employ or bring into the Philippines foreign technical and specialized personnel, including the immediate members of their families as may be required in the operations of the Contractor, subject to applicable laws and regulations: Provided, That if the employment connection of such foreign persons with the Contractor ceases, the applicable laws and regulations on immigration shall apply to them. Every time foreign technologies are utilized and where alien executives are employed, an effective program of training understudies shall be undertaken. The alien employment shall be limited to technologies requiring highly specialized training and experience subject to the required approval under existing laws, rules and regulations; f. To enjoy easement rights and use of timber, water and other natural resources in the Contract Area subject to pertinent laws, rules and regulations and the rights of third parties; g. Repatriation of capital and remittance of profits, dividends and interest on loans, subject to existing laws and Bangko Sentral ng Pilipinas rules and regulations; and h. To import when necessary all equipment, spare parts and raw materials required in the operations in accordance with existing laws 迮 and regulations. 釅 4= u(r 腝 艖 11.3. Obligations of the Government: a. To ensure that the Contractor has the Government's full cooperation in the exercise of the rights granted to it under this Agreement; b. To use its best efforts to ensure the timely issuance of necessary permits and similar authorizing documents for use of the surface of the Contract Area; and c. To cooperate with the Contractor in its efforts to obtain financing contemplated herein from banks or other financial institutions: Provided, That such financing arrangements will in no event reduce the Contractor's obligation on Government rights hereunder. SECTION XII ASSETS AND EQUIPMENT 12.1 . fhe Contractor shall acquire for the Mining Operations only such assets that are reasonably estimated to be required in carrying out such Mining Operations. 12.2. All materials, equipment, plant and other installations of a movable nature erected or placed on the Contract Area by the Contractor shall remain the property of the Contractor. The Contractor shall have the right to remove and re-export such materials and equipment, plant and other installalions from the Philippines, subject to existing rules and regulations. ln case of cessation of Mining Operations on public lands occasioned by its voluntary abandonment or withdrawal, the Contractor shall have a period of one ('l ) year from the time of cessation within which to remove its improvements; otherwise. all social infrastructures and facilities shall be turned over or donated tax free to the proper government authorities, national or local, to ensure that said infrastructures and facilities are continuously maintained and utilized by the host and neighboring communities. sEcTloN xlll EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL 13.1. The Contractor agrees to employ, to the extent possible, qualified Filipino personnel in all types of mining operations for which they are qualified; and after Commercial Production commences shall, in consultation and with consent of the Government, prepare and undertake an extensive training programme suitable to Filipino nationals in all levels of employment. The objective of said programme is to reach within the timetable set forth below thefollowing targetsof "Filininization:" d 5+