THEREFORE, for and in consideration of the foregoing premises, the mutual NOW, set forth, it is hereby stipulated and agreed as covenants, terms and conditions hereinafter follows: SECTION I SCOPE 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 sustainable development urd .o*reicial utilization of certain gold, copper, silver and other associated minerals existing within the Contract Area, with all necessary services, technology and financing to be furnished or arranged by the Contractor in accordance rvith the provisiois of this Agreement. The Contractor shall not, by virtue of this Agreement, acquire uny titl. over the Contract/\4ining fuea without prejudice to th"e acquisition by the Contractor of the land/surface rights through any mode of acquisition provided for bY law. The Contractor shall undertake and execute, for and on behalf of the Government, 12 sustainable mining operations in accordance with the provisions of this Agreement, and is hereby conitituted and appointed, for the purpose of this Agreement, as the exclusive entity to conduct mining operations in the Contract Area. shall assume all the exploration risk such that if no minerals in 13The Contractor commercial quantity are developed and produced, it will not be entitled to reimbursement. Agreement, the total value of production and sale 芏 芆 14of this During the term 节 minerals derived from the mining operations contemplated herein shall 芅 accounted for and divided between the Government and the Contractor 芉腄芌 accordance with Section VIII hereof SECTION II DEFINITIONS As used in this Agreement, the following words and terms , whether singular or 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 Agreement means this Mineral production sharing Agreement. 2.3 Associated Minerals mean other ores/minerals which occur together with the principal ore/mineral. 腜 腜 24 Bangko Sentral means Bangko Sentral ng pilipinas. 龔 腌 / 膁 / 艵 Budget means an estimate of expenditures to be made by the Contractor in the -i"irg operations contemplated hereunder to accomplish the Work Program lbr each particular Period. Year or Year means a period 6f twelve ( 12) consecutive months 26 Calendar @ofJanuaryindendingonDecember3l,whllo..Calondar euarter" means u p"iiod of three consectttive months with the first calendar quarter starting with the first day of Januarv commercial Production means the production of sufficient quantity of minerals to 27 sustain economic uiuUitity of mining operations reckoned from the date of commercial operation as ieclared by the Contractor or as stated in the feasibility rtudy. whlohrvrr somlr firrt' or Philippine Constitution means the 1987 Constitution of the 28 Constitution Convention of 1986 on Republic of the Philippines adopted by the Constitutional October 15, 1986 and ratified by the People of the Republic of the Philippines on February 2,1987. Area means the area onshore or offshore delineated under the Mineral 29 Contract obligations of the Production Sharing Agreement subject to the relinquishment Contractor and properly defined by latitude and longitude or bearing and distance. 2.lO 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.ll Contractor means RAPU-RAPU MINERALS, INC. or its assignee or assignees 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. 2.12 Declaration of Mining Feasibility means a document proclaiming the presence of minerals in a specific site that are recoverable by socially acceptable, environmentally safe and economically sound methods specified in the Mine Development Plan. 2.13 Department or DENR means the Department of Environment and Natural Resources. 2.14 Director means the Director of Mines and Geosciences Bureau. 2.15 Effective Date means the date of execution of this Agreement by the Contractor and by the Secretary on behalf of the Government. In case an Exploration Permit/Temporary Exploration Permit had been availed of by the Contractor, the Effective Date of this Agreement shall be the date of issuance of said Exploration Permit/Temporary Exploration Permit. 2.16 Environment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social. 2.17 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 艨for the purpose of determining 艩 膁 膁 艵 / 菕 the existence, extent, quality, and quantity of mineral resources and the feasibility of mining them lor Profit. 2. l8 Exploration Period shall mean the time period from the Effective Date of this Agreement which shall be for two (2) years, renewable for like periods but not to eiceed a total term of eight (8) years subject to the pertinent provisions o[ the implementing rules and regulations of the Act. 2.19 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 surlace owners and other labor disputes, epidenrics, 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. 2.20 Foreiqn Exchange means any currency other than the currency of the Republic of the Philippines acceptable to the Government and the Contractor. 2.21 Government means the Govemment of the Republic of the Philippines or any of its agencies and instrumentalil ies. 2.22 Gross Output means the actual market value ofthe 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.LF. 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 comrnodity exchanges in the Philippines or abroad such as copper concentrate, the actual market value shall be the world price quotation o[ the refined rnineral products contained therein prevailing in the 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. ) )1 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. 2.24 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 geothennal energy. 225 Mineral Products mean materials derived {iorn mineral ores/rocks and prepared into marketable state by metallurgical processes which include beneficiation, cyanidation, leaching, smelting, calcination and other similar processes. 2.26 Mining Area 芍 芅 芁 芎 that portion ofthe Contract Area identified by the Contractor as defined 芁芎芄 delineated in a Survey Plan duly approved by the Director/concerned Regional Director for 芐芕 芐艮 艢 of development and/or utilization and sites for support facilities. 腝 . 芌 艬 軷 膁 艵 Mining operations means mining activities involving exploration, feasibility study, environmental impact assessment, development. utilization, mineral processing, and mine rehabilitation, Notice means notice in writing, telex or telecopy (authenticated by answer back 2.28 provided in 16.2 of this or confirmation received) addressed or sent as Section Agreement. 2.29 QIg means naturally occurring substatrce or material fi'om rvhich a mineral or element can be mined and/or processed for profit. 2.30 Psllutiall 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 thereto 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. 2.31 Secretary means the Secretary of the Department ol Environment and Natural Resources. 2.32 SIA!9 means the Republic of the Philippines. 2.33 Work Program means a document which presents the plan of major mining operations and the corresponding expenditures ol the Contractor in its Contract Area during a given period of time, including the plan and expenditures for development ol 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. SECTION III TERM OF AGREEMENT (25) years lrom Effective Date, 31have a term of twenty-five This Agreement shall 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. In 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 reimbursement of all reasonable expenses ofthe highest bidder SECTION IV CONTRACT AREA 41 Size, Shape, and Location ol Contract Area This Agreement covers a total area ofone thousand five hundred eighty tive & 8081/10000 hectares (l,5g5.gOSj has.), situated at Rapu-Rapu, Albay and bounded by the following technical description (please refer to ANNEX "B" - I 50,000 scale Location Map/Sketch Planl. f / d UDE LONG11腍 LATITUDE CORNER 124膋11'3000" 11'1230'' 13膋 l 11'3573" 124腅 11'1230" 13腅 2 11'8579'' 124膋 10'56785'' 13膋 3 124膋11'1035" 10'49391" 13膋 4 124膋11'15123'' 10'35585'' 13膋 5 124膋11'22167'' 10'42488'' 13膋 6 腅 124膋11'29211'' 13膋10'35586腍 7 124膋11'36255'' 10'42489'腍 13膋 8 124膋11'43299'' 13膋10'35586'' 9 腅 124膋11'50343'' 13膋10'42488腍 10 124膋11'57387'' 13膋10'35585'' 11 124膋11'5840" 13膋10'36567" 12 124膋11'5840" 13膋10'3350'' 13 124膋11'4680'' 13膋10'3900'' 14 124膋11'43299'' 13膋10'35586'' 15 11'3550" 124膋 10'3350'' 13膋 16 124膋11'3000'' 13膋10'3350" 17 124膋11'1700" 13膋10'3000'' 18 11'400'' 124膋 13膋10'3350'' 19 124膋10'4500" 13膋10'3500" 20 10'2000'' 124膋 13膋10'4850'' 21 124膋10'00'' 13膋10'5500'' 22 124膋10'00" 13膋11'00" 23 124膋10'00'' 13膋12'00" 24 124膋09'30'' 12'00" 13膋 25 124膋09'30'' 13膋12'30'' 26 124膋11'00" 12'30'' 13膋 27 124膋11'00'' 13膋13'00'' 28 124膋10'30'' 13膋13'00'' 29 10'00'' 124膋 13膋13'00" 30 124膋09'30" 13膋13'00'' 31 124膋09'30" 13'30'' 13膋 32 V 124膋10'00'' 13膋13'2700'' 33 124膋10'00'' 13膋13'00'' 34 13'00''124膋10'30" 13膋 35 13膋13'1750''124膋10'3000" 36 124膋 13膋13'1600''10'3600" 37 13'1800''124膋10'4300'' 3813膋 3913膋13'600''124膋10'5250'' 13膋13'450''124膋10'5600'' 40 124膋11'00'' 4113膋13'300'' 124膋11'00" 4213膋13'00'' 124膋 4313膋12'5400''11'30'' 124膋11'30'' 4413膋12'30'' 12'3000''124膋12'1750" 4513膋 124膋12'1850" 4613膋12'2600'' 124膋12'2200" 4713膋12'1950" 124膋12'3000'' 13膋12'800'' 48 124膋 13膋12'00"12'3000'' 49 124膋12'4000" 5013膋12'00" 11'5100"124膋12'4000" 5113膋 124苂12'4400'' 13膋11'4800'' 52 邼 1/% 6 12'3700'' 124膋 11'4200'' 13膋 53 12'3550" 124膋 11'3750'' 13膋 54 12'3550'' 124膋 ll'2500'' 13膋 55 12'4400'' 124膋 11'2200'' 13膋 56 12'4800'' 124膋 ll'1230" 13膋 57 124腂12'5300" 11'800'' 13膋 58 12'5300" 124膋 11'200" 13膋 59 12'5600" 124膋 10'5600'' 13膋 60 12'5100'' 124膋 10'5300'' 13膋 61 12'4838'' 124膋 10'43453" 13膋 62 12'4801'' 124膋 10'43036" 13膋 63 124膋12'4800'' 11'1230'' 13膋 64 124膋12'30'' 13膋11'1230'' 65 12'30'' 124膋 11'3000'' 13膋 66 11'30" 124膋 11'3000'' 13膋 67 11'00'' 124膋 11'3000'' 13膋 68 124膋11'00'' 13膋12'00" 69 124膋11'30" 13膋12'00'' 70 124膋11'30" 11'3000'' 13膋 71 SECTION V EXPLORATION PERIOD 艢 菒 Timetable for Exploration - The Contractor shall commence 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 ol eight (8) years, subject to annual review and approval by the Director to evaluate .on,ptiun". with the terms and conditions of this Agreement: Provided, That further renewal may be granted by the Secretary under circumstances as defined in the implementing rules and regulations ofthe Act 菌艏 with the 菒艓 work programs and Budgets - The contractor shall strictly comply approved -Exploration and Environmental Work Programs together with their 臉 (please refer to ANNEXES "C" and "D") coiresponding Budgets The amount to be spent by the contractor in conducting Exploration activities under the terms of this Agreement during the Exploration Period shall not be less than that specified in the approved work Programs, such that during the first two (2) years oi the Exploration Period, this amount shall be as follows: For the Exploration Work Program: P 14,840,30600 lst Contract Year P 21,643,12500 2nd Contract Year: P36,483,43100 Total Vork Program ronmental腒 Forthe En銈 艕艓艗 艐 P 3, ,343 10 Total 量 7 In the event of renewal of the Exploration Period. the amount to be spent every year shall first be agreed upon by the parties. ln the event oftermination ofthis Agreement. the Contractor shall only be obliged to expend the pro-rata amount lor the period of such Contract Year prior to termination. If during any Contract Year, the Contractor should expend more than the amount to be expended as provided ahove, the excess may be subtracted from the amount required to be eipended by the ('ontractor durlng the succeedlng Contract Years, and should the Contractor. due to unloreseen circumstances or withtheconsentoftheGovernment,expendlessduringayear'thenthedeficiency shall be applied to the amount to be expended during the succeeding Contract Years. of Total./Portion ol the Contract Area - During the Exploration 53Relinquishment Period, the Contractor may relinquish totally or partially the original Contract Area. After the Exploration Period and prior to or upon approval of the Declaration ofMining Project Feasibility, the Contractor shall finally relinquish any portion ofthe Contract Area not necessary Ibr mining operations and not covered ty any Declaration of Mining Project Feasibility' Area - The Contractor shall cause the survey of the 54 Survey of the Contract perimeter ofthe Contract Area through an application for survey, complete with requirements, filed with the concerned Regional O{llce simultaneous with the submission of the Declaration of Mining Project Feasibility. Survey returns shall be submitted to the concerned Regional Director for approval within one (l) year from receipt of the Order of Survey complete with the mandatory requirements stated in the implementing rules and regulations olthe Act. 裪 腌 艔 艔 Declaration of Mining Project Feasibility - During the Exploration Period, the Contractor shall submit to the Director through the concerned Regional Director, a Declaration of Mining Project Feasibility together with a Mining Project Feasibility Study, a Three (3)-Year Development and Construction or Commercial Operation Work Program, a complete geologic report of the area and an Environmental Compliance Certificate. The Declaration of Mining Project Feasibility, Mining Project Feasibility Study Report and Work Programs are V subject to approval by the Director. Failure of the Contractor to submit a Declaration of Mining Project Feasibility during the Exploration Period shall be considered a substantial breach of this Agreement. 芭 腌 荒 艏 Reporting a. Periodic Reports - During the Exploration Period, the Contractor shall submit to the Director through the concerned Regional Director, quarterly and annual accomplishment reports under oath on all activities conducted in the Contract Area from the Effective Date olthis Agreement. The quarterly report shall be submitted not later than fifteen (15) days at the end of each Calendar Quarter while the annual accomplishment report shall be submitted not later than thirty (30) days from the end ofl 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 l:50,000 scale, copies of originals of assay results, duplicated samples, field data, copies of originals from drilling reports, maps, 芾 environmental work program intplernentatittn detailed expenditures 苢 / /i 腁 t,/ l, discrepancies/deviations rvith approved exploration and showing well as all other inlormation ofany kind environlmental plans and budgets as collected during the exploration activities. All inlormation submitted to the Bureau shall be subject to the confidentialitv clause ofthis Agreement. b. Final Report - The Contractor shall submit to the Director through the " ;";;";e Regional Director, a flnal report under oath upon thc cxplratlon of the ExplJration Period which shall be in the form and substance to published professional r1no1s.9f respectable international ".rnp.*Uf" and shall incorporate all the findings in the Contract Area instiiutions of samples, as'uy*, chemical analysis' and assessment of including location mineral -potentials togethei with a geologic map of- l:50'000 scale at the minimum showing the results of the exploration' Such report sha[[ also include detailed expenditures incurred during the Exploration Period- In Diroctor' eubmit to the Regional Office a "u,"ordiamonddrilling,theContractorshall,uponrequest-ofthe Diriotor/con"cmod rcglJnal Offrce quarter of the core samples which shall be deposited in the Regional Core Library for safekeeping and reference. c. Relinquishment 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 l:50,000 and results of analyses and detailed expenditures, among others SECTION VI Df,,VELOPMENT AND CONSTRUCTION PERIOD - The contractor sha[[ complete the development of the mine including 61Timetabte the construction of production facilities within thirty six (36) months from the approval ofthe Declaration of Mining Project Feasibility, subject to such extension based on justifiable reasons as the Director may approve, upon recommendation of the concerned Regional Director. 62Reporting a. Annual - The Contractor shall submit, within sixty (60) days after December 3l of each year, to the Director through the concerned Regional Director, 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 lrom the completion of the development and construction activities, the Contractor shall submit a final report to the Director through the concerned Regional Director. Such report shall integrate all information in maps of appropriate scale and quality, as well as in monographs or reports in accordance with international standardp' / tL /1 l/ t , A\^r SECTION VII OPERATING PERIOD within (30) before completion 71- shall submit, thirty days Timetable The Contractor of production facilities, to the Director of mine development and construction through the concerned Regional Director, 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 ofthe Agreement. 艖腃 膌 艓 Commercial Operation Work Program and Budget - During the Operating Period, the Contractor shall submit to the Director through the concerned Regional Director, Work Programs and Budgets covering a period ol three (3) years each, which shall be submitted not later than thirty (30) days before the expiration ofthe 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 and any rnodification thereof shall be subject to approval by the Director. 73 Expansion and Modification of Facilities - The Contractor may make expansions, modifications, improvements, and replacements of the mining facilities and may add new facilities as the Contractor may consider necessary for the operations: Provided, That such plans shall be embodied in an appropriate Work Program approved by the Director. 74 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 concerned Regional Director, a Quarterly Report stating the V tonnage of production in terms of ores, concentrates, and their corresponding grades and other types of products; 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 oleach Calendar Year, to the Director through the concemed Regional Director, an Annual Report indicating in su0Ecient detail: b. L The total tonnage ofore reserves, whether proven, probable, or inlerred, the total tonnage of ores, kind by kind, broken down between tonnage mined, tonnages transported from the minesite and their corresponding destination, tonnages stockpiled in the mine and elsewhere in the Philippines, tonnages sold or committed lor 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 with full specifications as to the intermediate products, by-products or final products and ofthe terms at which they were disposed. I / f/ \I Work accomplished and work in progress at the end of the year in question b.2. facilities related to the utilization with respect to all the installalions and progru., including the investment aclually made or committed; b.3. profile of work force, including management and staff, stating particularly their nationalities, and lor Filipinos' their place of origin (i e', barangay, town, Province, region); and b.4. Ownership ofthe Contractor, particularly with respect to nationality' The Contractor shall also comply with other reporting requirements provided for in the implementing rules and regulations of the Act' SECTION VIII FISCAL REGIME General Principle - The fiscal regime ol this Agreement shall be governed by the 81 orinciole u".oidine to which the Government expects a reasonable return in 5;;;ff";;;. ioi the utilization of non-renewabte mineral resources under irs naiionuf ,ou"raignty while the Contractor expects a reasonable return on its investment with speciat account to be taken tor the high risk of exploration ' the ter., una conditions prevailing elsewhere in the industry and any special efficiency to be gained by a particularly good performance of the Contractor' 艏艏 of the notice of approval 艏腥 Registration Fees - Within fifteen ( I 5 ) days upon receipt of ihe Agreement from the concerned Regional office, the contractor shall cause the regiiration of this Agreement with the said Regional Office and pay the ,"gistrition fee at the rate provided in the existing rules and regulations. Failure ofthe Contractor to cause the registration of this Agreement within the prescribed period shall be sufficient ground for cancellation ofthe same' Fees - Prior to registration of this Agreement and at the same date 83occupation every year thereafter, the Contractor shall pay to the concerned Municipal/City 腛 Treasurer an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations lf the lee is not paid on the date specified, the Contractor shall pay a surcharge oltwenty five percentum (2570) ofthe amount due in addition to the occupation fees. - The Government Share shall be the excise tax on 84the Government Share of provided for in Republic mineral products at the time of removal and at the rate Act No. 7729 amending Section l5l (a) ofthe National Internal Revenue Code, as amended, as well as other taxes, duties, and fees levied by existing laws' For purposes of determining the amount of the herein Government Share, the contractor shall strictly comply with the auditing and accounting requirements prescribed under existing laws and regulations The Government Share shall be allocated in accordance with sections 290 and 292 of Republic Act No. 7160, otherwise known as "The l.ocal Government Code ol 1991". 85 related lees. The Contractor shall seek to strike a balance between long-term sales comparable to policies lollowed by independent producers in the international mining industry. The Contractor shall likewise seek a balanced distribution among consumers. Insofar as sales to Contractor's affiliates are concerned, prices shall be at arm's length standard and competing offers for large scale and long'term sontnctr rhell be procured. The Bureau shall be t-urnished a copy of the said Sales Agreement subject to confidentiality between the Bureau and the Contractor. Minerals If minerals other than gold, copper, silver and other 86- Associated in commercial quantities in the Contract Area, associated minerals are discovered the value thereof shall be added to the value ol the principal mineral in computing the Government share. SECTION IX WORK PROGRANIS 91periods herein, Submission to Government - Within the stated the Contractor shall prepare and submit to the Director through the concerned Regional Director, a Work Program and corresponding Budget f,or 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 Revision Work Program Should the Government's Examination and of Government wish 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 Contractor specirying in reasonable detail its reasons therefor. Promptly thereafter, the Government and Contractor will meet and endeavor to agree on the revision proposed by the Government. In any event, the revision of any portion of said Work Program or Budget in which the Government shall fail to notify the Contractor ofthe proposed revision shall, insofar as possible, be carried out as prescribed herein. Ifthe Government should fail within sixty (60) days from receipt thereof to noti$ Contractor ofthe 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 - It is recognized by the Government and the Contractor that the details of any Work Program may require changes in the light of changing circumstances. The Contractor 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 percentum (20%) shall be subject to the approval ofthe Director. 9.4 The of a proposed Work 良 芒 腂 芇 芁 芍 and Budget 艶 腤芎 芏芔bc Government's approval 腀 unreasonably withheld. 腞荐 腞 腝腝芌腜 菒 U l2 X SECTION ENVIRONMENTAL PROTECTION AND I\IINE SAFETY AND HEALTH 10. I The Contractor shall manage its Mining Operations in a technically, financially, socially, culturally and environmentally responsible manner to achieve the Sustainable development objeCtives and Iesporrsibilitlos a! provldod fbr und6r tho implementing rules and regulations olthe Act' lO.2 The Contractor shall prepare a plan of mining so that its damage to the environment will be minimal. To the extent possible, control of pollution and the transformation olthe 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 implementing rules and regulations ol the Act; t0.4 An Environmental Compliance Certificate (ECC) shall be secured first by the Contractor prior to the conduct of any development 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 environment-related capital expenditures approximately ten percent (10%) of the total project cost or in such amount depending on the environmentaVgeological condition, nature and scale ol operations and technology to be employed in the Contract Area; 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 percent (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 Mine Rehabilitation Fund (MRF) 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 lor the perlormance 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 fbr physical and social rehabilitation of areas affected by mining activities and for research on the social, technical and preventive aspects of rehabilitation, 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; r The contractor shall set up ar Environnrenlal and Sal'ety ofiice at its minesite l0.g to plan, irnplernent attd monitor its approved EPEP; manned by qualified personnel l0,l0TheContractorshallberesponsibleinthemonitoringofenvironmentalsafetyand healthconditionsintheContractAreaandshallstrictlycomplywithallthe-rules and regulations embodied under Mines Administrative Order No MRD-51' Series oilEeT, othcrwlrc known ar tho "Rcvlsod Mine Safoty Rules and Regulations"; 10. l1 The Contractor shall be responsible for the submission ofa final mine rehabilitation and/or decommissioning plan including its financial requirements and incorporating the details and particulars set forth in the irnplementing rules and regulations ofthe Act. SECT10N XI Contractor and indemnily the Government lbr any expenses or costs incurred by the Government by reason of any such claims, accounts, demands or actions; ln the development olthe community j.l. To recognize and respect the rights, customs and traditions of indigenous cultural communities over their ancestral lands and to allocate royalty payment ofnot less than one percent (l%) ofthe value ofthe gross output of minerals sold; 芤 裪 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 activities are identified to be present, the Contractor shall assist in the preservation and/or enhancement ofsuch activities; To allot annually a minimum of one percent (1%) of the direct mining and i3 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 (l%) of the gross output intended for the concerned indigenous cultural community; domicile in the j4have To give preference to Filipino citizens who established neighboring communities, in the hiring olpersonnel for its mining operations. If necessary skills and expertise are currently not available, the Contractor must immediately prepare and undertake a training and recruitment program at its expense; j 5 To incorporate in the Mining Project Feasibility Study the planned expenditures necessary to implement (.1) to (.3) ofthis Section; k. In the development of Mining Technology and Geosciences. k. 1. ln the course of its operations, to produce geological, geophysical, geochemical and other types ofmaps 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 scientifrc 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; k2. To systematically keep the data generated liom the Contract/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 芁 芐 technology it may adapt in the exploration, development and 膇 utilization o[the minerals in the Contract Area. 1 JJ lt t5 \] To allocate research and development budget for the advancement of mining k.4. technology and geosciences in coordination with the Bureau, research institutions, academe, etc. ; 1r.5, To replicete data, maps and reports cited in (k l) and (k 2) and furnish the Bureau for archiving'and systematic safekeeping which shall be made available to the science and technology contmunity for conducting research ol and undertaking other activities which contribute to the development mining, geoscience and processing technology and the coffesponding 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 Project 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. 腜 11.2 fughts of the Contractor The Contractor shall have the right: a. To conduct Mining Operations within the confines of its Contract/l\4ining Area in accordance with the terms and conditions hereof and that it shall not interlere with the rights of other contractors/Lessees/operatorv Permittees; b. Of 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 ofall its rights, interests 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 ofthe Contractor, subject to applicable laws and regulations. Provided, That if the emplovment connection of such foreign persons with the Contractor ceases, the applicable laws and regulations on immigration shall apply to them. Everytirne 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 ol timber, water and other natural resources in the Contract Area subject to pertinent laws, rules and regulations and the rights ofthird parties; 芒莩 芒 芌 芶 g. Of repatriation ol capital and remittance of prolits' dividends and interest on - loans, subject to existing laws and Bangko Sentral rules and regulations; and h. To import when necessary all equipment' spare pa(s and raw -materials required in the operations in accordance with existing laws and regulations' I L3 Obligation of the Government The Govemment shall: a,EnsurethattheContractorhastheGovernment,sfullcooperationinthe exercise ofthe rights granted to it under this Agreement; b'Useitsbesteffortstoensurethetimelyissuanceolnecessarypermitsand similar authorizing documents for use ol the surface of the Contract Area; and c'TocooperatewiththeContractorinitseffortstoobtainfinancing contempiated herein from banks or other financial institutions. Provided, ThatsuchfinancingarrangementswillinnoeventreducetheContractor's obtigation on Government rights hereunder SECTION XII ASSETS AND EQUIPMENT l2.l The 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 erected or placed on the Contract fuea oi a movable nature 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 installations from the Philippines, subject to existing rules and regulations ln case of cessation of Mining Operations on public laids occasioneld by its voluntary abandonment or withdrawal, the 'contractor shall have a period of one (1) 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. SECTION XIII 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 :li[*,A#::h within the timetable *, .nnf""* the forlowing ,^,r"/r r\, t7 (%) Skilled (%) Clerical (o,'c,) I'rofessional (o/o) Management (%) Unskilled Year I 100 100 t00 100 艕艏 Year 3 100 t00 t00 100 艕腂 100 100 艕 腂 Year 5 100 100 艕 艏 Year 7 100 100 100 100 艕 艏 Year 10 100 100 100 100 艕 艏 Year l5 100 100 100 100 13.2 Cost and expenses of training such Filipino personnel and the Contractor's own omployoor rhall bo includod in thc Oporating Expenses. 13.3 The Contractor shall not discriminate on the basis of gender and shall respect the right of women workers to participate in policy and decision-making processes affecting their rights and benefits. -J SECTION XIV ARBITRATION l4.l The Government and the Contractor shall consult with each other in good faith and shall exhaust all available remedies to settle any and all disputes or disagreements arising out of or relating to the validity, interpretations, enforceability, or performance of this Agreement before resorting to arbitration as provided for in Section 14.2 below. 14.2 Any disagreement or dispute which can not be settled amicably within a period of one (l) year from the time the issue was raised by a Party shall be settled by a tribunal of three (3) arbitrators. This tribunal shall be constituted as follows: one -r- to be appointed by the Contractor and another to be appointed by the Secretary. The first two appointed arbitrators shall consider names of qualified persons until agreement on a mutually acceptable Chairman of the tribunal is selected. Such arbitration shall be initiated and conducted pursuant to Republic Act No. 876, otherwise known as the "Arbitration Act". In any event, the arbitration shall be conducted applying the substantive laws of the Republic of the Philippines. 1,4.3 Each party shall pay fifty per centum (509'0) of the fees and expenses of the Arbitrators and the costs of arbitration. Each party shall pay its own costs and attorney's fee. SECTION XV SUSPENSTON OR TERMINATION OF CONTRACT, TAX INCENTIVES AND CREDITS l5'l This Agreement may be suspended for failure of the Contractor: (a) to comply with any provision or requirement of the Act and/or its implemeniing rules and 腜艨 艥 膁 18 腵 regulations; (b) to pay taxes, fees and/or other charges demandable and due the Government. 15.2 This Agreement terminates or may be terrninated for the following causes: (a) expiration of its term, whether original or renewal; (b) withdrawal from the Agreement by the Contractor; (c) violation by the Contractor of the Agreement's terms aad conditions; (d) failure to pay taxes, fees/or charges or financial obligations for two (2) consecutive years, (e) false statement or omission of facts by the Contractor; and (f) any other cause or reason provided under the Act and its implementing rules and regulations, or any other relevant laws and regulations. 15.3 AII statements made in this Agreement shall be considered as conditions and essential parts hereof, and any falsehood in said statements or omission of facts which may alter, change or affect substantially the fact set forth in said statements shall be a ground for its revocation and termination. 15 .4 The Contractor may, by giving due notice at any time during the term of this Agreement, apply for its cancellation due to causes which, in the opinion of the Contractor, render continued mining operation no longer feasible or viable. ln this case, the Secretary shall decide on the application within thirty (30) days lrom notice: Provided, That the Contractor has met all the financial, fiscal and legal V膌 obligations. 15.5 No delay or omissions or course of dealing by the Government shall impair any of its rights under this Agreement, except in the case of a written waiver. The Government's right to seek recourse and relief by all other means shall not be construed as a waiver of any succeeding or other default unless the contrary intention is reduced in writing and signed by the party authorized to exercise the waiver. 15.6 In case of termination, the Contractor shall pay all the fees and other liabilities due up to the end of the year in which the termination becomes effective. The Contractor shall immediately carry out the restoration of the Contract Area in accordance with good mining industry practice. 菒 15.7 The withdrawal by the Contractor from the Mineral Agreement shall not release it from any and all financial, envirorunental, legal and fiscal obligations under this Agreement; 15.8 The following acts or omission, inter alia shall constitute breach of contract upon which the Government may exercise its right to terminate the Agreement: a) Failure of the Contractor without valid reason to commence Commercial Production within the period prescribed; and b) Failure ofthe contractor to conduct mining operations and other activities in accordance with the approved Work programs and/or any modification thereofas approved by the Director. 15.9 The Government may suspend and cancel tax incentives and credits if the contractor fails to abide by the terms and conditions ofsaid incentives and credits. 腙 膿 苠 19 SECTION XVI OTHER PROVISIONS l6.t Any terms and conditions resulting from repeal or amendment ofany existing laws or -regulations or from the of a ia*, regulation or administrative order "nu"t.irt !h!ll b. oontldorcd a part ofthir Agrcement 16.2 Notice All notices, demands and other communications required or permitted hereunder shalt be made in writing, telex or telecopy and shall be deemed to have been duly given notice, in the case oftelex or telecopy, if answered back or confirmation ieceived, or if delivered by hand, upon receipt or ten days after being deposited in the mail, airmail postage prepaid and addressed as follows: If to the Government. .fHE SECRETARY Department of Environment and Natural Resources DENR Building , VisaYas Avenue Diliman, Quezon City Ifto the Contractor . THE PRESIDENT Rapu-Rapu Minerals, Inc. Suite 23, Legaspi Suites, 178 Salcedo St. Legaspi Village, Makati CitY Either party may substitute or change such address on notice thereof to the other V pany. 16.3 Goveming Law This Agreement and the relation between the parties hereto shall be governed by and construed in accordance with the laws of the Republic of the Philippines The Contractor hereby agrees and obliges itsell to comply with the provisions ol the Act, its implementing rules and regulations and other relevant laws and regulations. l6 4 Suspension of Obligation a) Any failure or delay on the part of any party in the performance of its obligation or duties hereunder shall be excused to the extent attributable to I;orce Majeure . b) If Mining Operations are delayed, curtailed or prevented by such Frlre Majeure causes, then the time for enjoying the rights and carrying out the 觍 obligations thereby affected, the term of this Agreement and all rights and obligations hereunder shall be extendecl fbr a period equal to the period involved. c) The Party, whose ability to perform its obligations is affected by such f;orce Majeure causes, shall promptly give Notice to the other ln wrltlng of any ruoh dolay or failuro of pcrformence, the oxpected drrration thereof and its anticipated effect and shall use its efforts to remedy such delay, except that neither Party shall be under any obligation to settle a labor dispute. 16.5 Amendments This Agreement shall not be annulled, amended or modified in any respect except by mutual consent in writing of the herein parties. IN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of the day and year first above written TIIE REPUBLIC OF THE PHILIPPIN v BY H.CERILl膌 AN ES Depart of Environrnent and Resources RAPU.RAPU MINERALS, INC. BY: Y Z-- GUZMAN t SIGNED IN THE PRESENCE OF: QM*,il- (Signature over Printed Name) Zo.y D. WRT]-. 21 ACKNOWLEDG蝗IENT Republic of the Philippines) C~)SS Of迼 Cl该 Before me, a Notary Public for and in the City of Quezon, personally appeared HON. ANTONIO H. CERILLES, with Community Tax Certificate No. 07460519 issued on January 13, 2000 at Dumalinao, Zamboanga del Sur, in his capacity as Secretary of the Department of Environment and Natural Resources, and JOSE P. DE GUZMAN, with Community Tax Certificate No. 02700235 issued on January 20,2000 at Quezon City, in his capacity as President of Rapu-Rapu Minerals, Inc. , both known to me and to me known to be the same persons who executed the foregoing instrument consisting of twenty two (22) pages, including this acknowledgment page, and acknowledged to me that the same is their voluntary acts and deeds. IN WITNESS WHEREOF, I have hereunto set my hand and affix my notarial seal, this L4+1^ day of :.)a,'nuann t lan I 腪腰 0 wd v苔諏 顎 跛GL韡 腓 覻 Doc. No. 赈裪 Page No. .軹 腡 nl銰 |腅 觰 覙 英 迣 lf陣 荪 Book No腅艑 腶 Series of 腪芵 _i dOcre銈 ca:lprofomahp顈 sed/rapu_rapu192(GDe腧 0)104149 AM 22