I I l' organized and existing under the laws of the Republic of the Philippines, herein referred to as the CdNTRACToR, with office ai 3RD floor, ALPAP I Building, No. 140 Leviste Street, Salcedo Village, Makati City and represented in this act by its President, ENRIQUE C. FERNANDEZ, as authorized by its Board of Directors (please refer to ANNEX'4") WITNESSETH: WHEREAS, the 1987 Constitution of the Republic of the Philippines provides in Article Xll, Section 2 thereof that all lands of the public domain, waters, minerals, coal, petroleum and other natural resources are owned by the State and that their exploration, development and utilization shall be under the full control and supervision of the State; WHEREAS, the Constitution further provides that the State may directly undertake such activities, or it may enter into a Co-Production, Joint Venture, or Mineral Production Sharing Agreement with Filipino citizens, or cooperatives, partnerships, corporations or associations at least sixty per centum of whose capitalization is owned by such citizens; WHEREAS, pursuant to Republic Act No. 7942, otherwise known as "The Philippine Mining Act of 1995," which took effect on 09 April 1995, the Secretary of the Department of Environment and Natural Resources is authorized to enter into Mineial production Sharing Agreements in furtherance of the objectives of the Government and the Constitution to bolster the national economy through sustainable and systematic development and utilization of mineral lands; WHEREAS, the Government desires to avail itself of the financial resources, technical competence and skill, which the contractor is capable of applying to the 2#--.- 艰 裪 mining operations of the project contemplated herein; WHEREAS, the Contractor desires to join and assist the Government in the initial rational exploration and possible development and utilization for commercial purposes of certain nickel, cobalt, chromite and other associated mineral deposits existing in the Contract Area (as herein defined); 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 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 utilization of certain nickel 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. shall undertake and execute, for and on behalf of the 1.2.The Contractor 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. Contractor shall assume all the exploration risk such that if no 1.3.The minerals in commercial quantity are developed and produced, it will not be entitled to reimbursement. the term of this Agreement, the total value of production and sale 1.4.During of minerals derived from the mining operations contemplated herein shall be accounted for and divided between the Government and the Contractor in accordance with Section Vlll hereof. zt<.t 鷴 2 裪 II SECTION 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. Aqreement means this Mineral Production Sharing Agreement. 2.3. Associated Minerals mean other ores/minerals, which occur together with the PrinciPal ore/mineral. 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 Philiopine 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 obligationsofthecontractorandproperlydefinedbylatitudeand longitude or bearing and distance. 2.11. 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. Contractor means Eramen Minerals, lncorporated or its assignee or pursuant to the """igr"*ofinterestunderthisAgreement:.Provided'Thatthe assilnment of any of such interest is accomplished pert'irent provisioni of the implementing rules and regulations of the Act. zr._ 苉 裪 2.13. Declaration of Mininq 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 DENREnvironment and means the Department of Natural Resources V 莄 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 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. Mininq Area means that portion of the Contract Area identified by the Contractor as defined and delineated in a Survey Plan duly approved by the Director/Regional Director concerned for purposes of development and/or utilization and sites for support facilities. 2.28. Mininq Operations means mining activities involving exploration, feasibility study, environmental impact assessment, development, utilization, mineral processing and mine rehabilitation. 2.29. Notice means notice in writing, telex or telecopy (authenticated by answer back or confirmation received) addressed or sent as provided in V 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 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. 2.32. Secretarv means the Secretary of the Department of Environment and Natural Resources. 2.33. State means the Republic of the Philippines. a腒 苍 5 裪 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. SECTION III TERM OF AGREEMENT 3.1. This Agreement shall have a term of twenty five (25) years from Effective Date, and may be renewed thereafler 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 reimbursement of all reasonable expenses of the highest bidder. SECT10N iV CONTRACT AREA V Block 2 Area = 9 Has. LatitudeLongitude Corner 15047!35.162''120000130.156" 1 15膋47'35.162"120膋00:40.235" 2 120000'40.235" 3 15047.25.401" 15047:25.401"120膋00:30.156" 4 Block 3 Area=349.964 Has. Longitude Latitude Corner 120膋01:43.831" 15膋48'09.202" 1 120腅02141.178" 48'09.202" 15膋 2 120膋02:41.178'' 47'54.683" 15膋 3 02'51.258" 120膋 47'54.683" 15膋 4 120膋02'51.258" 15膋47'44.923" 5 120膋03'21.498" 47'44.923" 15膋 6 120膋03:21.498" 47]54.863" 15膋 7 03:31.576" 120膋 15膋47'54.863" 8 03i31.576" 120腅 15膋48'04.444" 9 03'41.605" 120膋 48'04.444" 15膋 10 03'41.605" 120膋 48!14.105" 15膋 11 03151.792" 120膋 15膋48'14.105" 12 120膋03'51.792" 15膋48'04.444" 13 120膋04:21.963" 48104444" 15膋 14 04:21.963" 120膋 15膋47!54.863" 15 120膋04:11.985" 47'54.863" 15膋 16 04:11.985" 120膋 15膋47'45.103" 17 04'01.807" 120膋 47.45.103" 15膋 18 04:01.807" 120膋 47'35.501" 15膋 19 V 03:51.279" 120膋 47'35.501" 15膋 20 03151.279" 120膋 47'25.302" 15膋 21 03:41.950" 120膋 15膋47.25.302" 22 03!41.950" 120膋 47'23.452" 15膋 23 02154.221'' 120膋 47:23.452'' 15膋 24 120膋02:54.221'' 47'33.185" 15膋 25 02'34.168" 120膋 47.33.185" 15膋 26 02i34.168" 120膋 47:42.954" 15膋 27 02124.601" 120膋 47'42.954" 15膋 28 02124.601" 120膋 47152.505" 15膋 29 01:50.582" 120膋 47:52.505" 15膋 30 01143.831" 120膋 47152.505'1 15膋 31 7 BIock 4 Area=108 794 Has Latitude Corner Longitude 1 15腂47:15641"120膋 03'44717" 15047`15641" 2 120004'01807" 15047'25402"120004101807" 3 15腂47'25402"120膋 4 04il1 886" 15腂47'35162" 5 120004'11885" 6 15047735162"120膋 04:21963" 15膋46:56120" 7 120004'21963" 8 15膋46756120" 120004101807" 15046.46359" 9 120004'01807'' 't0 15046'46359" 120003'44717" Block 5 Area=1,609 39 Has Latitude Corner Longitude 15044'25317" I l19膋58:27110" 2 15044'25317"119膋58i47217" 3 15腂44i29790"119膋58147217" 15腂44'29790" 4 120膋00'30687" 15膋46:29790"120膋 5 00'30687" 15腂46'29790"120腅 6 00'30156" 15腂46'36799"120膋00'30156" 7 15046'36799" 8 120膋00120077" 15腂46:56120"120膋00120077'' I 15膋46156120''120膋00:30,156" 10 15膋47'05981"120膋00'30156'' 11 15膋47'05981"120膋00'40235'' 12 46'56126"120膋00'40235'' 15膋 13 15膋46'56126"120膋00'50314" 14 V 15膋47'03903"120膋00'50314'' 15 15膋47'03903"120膋01'00323" 16 120膋01i00323" 15膋46'56120" 17 46:56120"120膋01120550'' 15膋 18 47'03903''120膋01:20550" 15膋 19 01:50786" 15膋47'03903"120膋 20 120膋01'50786" 15膋46'57863'' 21 120膋01'24220'' 15膋46157863" 22 01'24220" 46'47010"120膋 15膋 23 120膋01'20550'' 15膋46`47010" 24 120膋01'20550'' 15膋46117083" 25 120膋01:24220'' 15膋46017083" 26 120膋01'24220" 15膋45'57563" 27 120膋01'40710" 15膋45'57563" 28 02'00867" 120膋 15膋45'57563" 29 120膋02'00867" 15膋45i48369" 30 鍾 裪鑎 8 120膋01'53540" 45'48369" 15膋 31 01'53540" 120膋 15膋45'47799" 32 120膋01'50788" 45'47799" 15膋 33 120膋01'50788'' 15膋45`30000" 34 01i30000'' 120膋 15膋45'30000'' 35 120膋01'30000'' 15膋43i50672" 36 01118448" 120膋 43i50672" 3715膋 120膋01118448" 43:46277" 15膋 38 00'58291" 120膋 43'46277" 3915膋 120膋00'58291" 15膋43'26756" 40 120膋00'38134" 43'26756" 15膋 41 00i38134" 120膋 15膋43:46277" 42 59'27584" 119膋 15膋43`46277" 43 119膋59'27584" 43'36516" 15膋 44 119膋59'17505" 15膋43:36516" 45 59(17505" 119膋 43:46277" 15膋 46 58157348" 119膋 43:46277" 15膋 47 119膋58157348'' 43'36516" 15膋 48 58'47269" 119膋 43i36516" 15膋 49 119膋58147269" 43'46277" 15膋 50 58i37190" 119膋 15膋43:46277" 51 58:37190" 119膋 15膋44'15559" 52 58127110'' 119膋 15膋44'15559" 53 BIock 6 Area=162 053 Has Longitude Latitude Corner 57'56874" l19膋 15膋46:02192" 1 58'17032" 119膋 46'02192" 15膋 2 58'17032'' 119膋 15膋45'33641" 3 58'27110" 119膋 15膋45:33641" 4 58'27110" 119膋 44'35078" 15膋 5 V 58117032'' 119膋 44'35078" 15膋 6 58:17032" 119膋 54599" 15膋44腅 7 119膋58'06954" 44'54599" 15膋 8 58'06954" 119膋 15膋45;14120" I 57'56874" 119膋 45114120" 15膋 10 BIock 7 Area=2,240 042 Has Longitude Latitude Corner 58:43586" l19膋 42133402" 15膋 1 59'03743" 119膋 42'33402" 15膋 2 59'03743" 119膋 15膋42'23642" 3 59'13822" 119膋 42'23642" 15膋 4 59113822' 119膋 42i13881" 15膋 5 59'23900" 119膋 42'13881" 15膋 6 59:23900'' 119膋 42'04121" 15膋 7 4 腩艢 艗 119膋 15膋42:04121"59'33979" 艘15膋41'54200"119膋59'33979'' 腝艏15膋41'54200"119膋59:44057" 腝艐 119膋59'44057" 15膋42'04121" 腝艑42104121"119膋59154136" 15膋 誶 59'54136'' 15膋42713881"119膋 腝艓15膋42113881"119膋59:44057" 15膋42i23642''119膋59144057" 15 119膋59'33979'' 1615膋42'23642" 15膋42'33402"119膋59i33979'' 17 15膋42'33402"119膋59123900'' 18 119膋59i23900" 1915膋43131966" 15膋43:31966"120膋00'34350" 20 120膋00'34350" 2115膋43'22205" 120膋01'04686" 2215膋43i22205" 120膋01'04686" 15膋43'46275" 23 43'46275"120膋01'18447" 2415膋 120膋01:18447" 43'50670" 2515膋 43'50670''120膋01'34922" 15膋 26 120膋01'34922" 15膋43'41726" 27 120膋01i55079" 43'41726" 2815膋 120膋01i55079" 15膋43112445" 29 02'05158" 120膋 15膋43t12445" 30 120膋02'05158" 43'02684" 3115膋 01'55079" 120膋 15膋43'02684" 32 120膋01'55079" 15膋42143163" 33 01'45001" 120膋 15膋42i43163" 34 120膋01'45001'' 15膋41154360" 35 120膋01134922'' 41154360" 15膋 36 120膋01'34922" 15膋41'25079" 37 120001145001" 41:25079" 15膋 38 V 01'45001" 120膋 41'44600" 15膋 39 120膋01'55079" 15膋41144600" 40 01755079" 120膋 15膋41'25079" 41 120膋02'15237" 41:25079" 15膋 42 120膋02'15237" 41144600" 15膋 43 120膋02'25315" 15膋41:44600" 44 02:25315" 120膋 41'54360" 15膋 45 02:05158" 120膋 15膋41'54360" 46 120膋02'05158" 42'04121" 15膋 47 02'15237" 120膋 42'04121" 15膋 48 120膋02'15237'' 15膋42'23642" 49 02'45470" 120膋 15膋42123642" 50 02'45470" 120膋 15膋42'43163" 51 02'55548" 120膋 42'43163" 15膋 52 02`55548" 120膋 42104121'' 15膋 53 02'45470" 120膋 15膋42'04121" 54 02145470" 120膋 41'44600" 15膋 55 莿裪 5615膋41:44600"120膋02'35394" 5715膋41'25079"120膋02135394" 5815膋41'25079''120膋02125601" 5915膋41:05557"120膋02'25601" 6015膋120腅02705158" 41105557" 02i05158" 6115膋40:55797''120膋 6215膋40'55797"120膋01124844'' 120膋01124844" 6315膋40'46036'' 15膋40i46036"120膋 6400'24372'' 6515膋41'05557"120膋00.24372" 41'05557"120膋 6615膋00'34350" 6715膋41'15318"120膋00134350" 00124372" 6815膋41115318"120膋 6915膋41'25079"120膋00'24372" 00104215" 7015膋41'25079"120膋 7141'15318"120膋00'04215" 15膋 00'00000" 7215膋41:15318"120腅 00:00000" 7315膋41:30000"120膋 119膋 7415膋41'30000"59i30000" 15膋42'00000''119膋59'30000" 75 119膋59'13822" 15膋42'00000" 76 119膋59'13822" 42104121" 7715膋 119膋59:03743" 15膋42'04121" 78 119膋59'03743" 7915膋42'13881" 58'43586" 15膋42'13881"119膋 80 B:ock 8 Area=36 7102 Has Longitude Latitude Corner 01i50786" 120膋 15膋45'38037" V 1 120膋01:50786" 15膋45147804" 2 120膋01:53540" 15膋45'47804" 3 01i53540" 120膋 15膋45'38606" 4 E 120膋02:03761" 15膋45:38606" 120膋02:03761" 15膋45'47799" 6 02:10944" 120膋 45'47799" 15膋 7 120膋02i10944" 15膋45'57563" 8 120膋02i13841" 45157563'' 15膋 9 't0 120膋02113841" 15膋45'48369" 120膋02:23921" 45'48369" 15膋 11 02'23921" 120膋 15膋45'57563" 12 120膋02:30970" 45'57563" 15膋 13 02'30970" 120膋 15膋45'38070" 14 裪艰 BIock 9 Area=7 9248 Has Comer Latitude Longitude l 15膋 46'47010" 120膋01'24220" 2 15膋 46'47010" 120膋 01120550" 3 15膋 46'17083" 120膋01120550" 4 15膋 46'17083" 120膋 01'24220" The Contractor is not allowed to undertake any mining activities within the portion of the Contract Area covered by any DENR Project Areas, without the prior consent of the contractor(s)/concessionaire(s) concerned. Any portion(s) of the Contract Area that may be found and verified as old grovvth and/or mossy forests shall be automatically excised from said Contract Area. SECTION V EXPLORATION PERIOD 51 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 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 Renewal of Exploration Period - ln case the Contractor opts for a renewal of its Exploration Period, it shall file prior to the expiration thereof, a renewal application in the Regional Office concerned, accompanied by the 荖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 (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 grant 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. shall strictly comply with 53The Work Programs and Budgets - Contractor the 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 荷 艘 苂 観 裪 shall be in the aggregate of not less than that specified for each of the Contract Years, as follows: For the Exploration Work Program: 'lst Contract Year : PhP 8,765,000.00 2nd Contract Year : PhP 7,200,000.00 Total : PhP 15,965,000.00 For the Environmental Work Program : PhP '1 ,600,000.00 ln 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 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 Conhactor during the succeeding Contract Years, and should the Contractor, due to unforeseen circumstances or with the consent of the Government, expend less during a year, then the deficiency shall be applied to the amount to be expended during the succeeding Contract Yea rs. 5.4. 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 Feasibility by the Director, the Contractor shall finally relinquish any portion of the Contract Area not necessary for mining operations and not covered by any Declaration of Mining Feasibility. 5.5. Final Mining Area - The Director may allow the Contractor to hold more than one (1) final Mining Area subject to the maximum limits set under the implementing rules and regulations of the Act: Provided, That each final Mining Area shall be covered by a Declaration of Mining Feasibility. 5.6. Declaration of Mining Feasibility - Within the term of the Exploration Period, the Contractor shall file in the Regional Office concerned, the Declaration of Mining Feasibility of the Contract Area/final Mining Area supported by Mining 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 the Contractor to submit the Declaration of Mining Feasibility during the Exploration Period shall be considered a substantial breach of this Agreement. =- 荽 腵 13 57 Survey of the Contract Area腜銚he Contractor sha腡 cause the survey of 腌 SECT]ON VI DEVELOPMENT AND CONSTRUCTION PERIOD 6.1 . Timetable - The Contractor shall complete the development of the mine including the construction of production facilities within thirty six (36) months from the submission of the Declaration of Mining 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 - (60) Annual The Contractor shall submit, within sixty days after December 31 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 (6) Final Report - Within six 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. 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 Contractor 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 submifted 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 Bl2-. 鉄 15 裪 Work Programs and corresponding Budgets. 7.3. 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. 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 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 of each Calendar Year, to the Director, through the Regional Director concerned, an Annual Report indicating in sufficient detail: b.'l . The total tonnage of ore reserves, whether proven, probable, or inferred, 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 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 with full specifications as to the intermediate products, by-products or final products and of the terms at which they 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. zfl 酎 16 裪 SECT:ON V蝖 FiSCAL REGIME 81 Genera!Principle腜 膥 prices shall be at arm's length standard and competing offers for large scale and long-term contracts shall be procured. Before any sale and/or shipment of mineral product is made, existing and future marketing contract(s)/sales agreement(s) shall be submifted to the Director, copy furnished the Regional Director concerned, for registration. At the same time, the Contractor shall regularly inform in writing of any revisions, changes or additions in said contract(s)/agreement(s). The Conhactor shall reflect in its Monthly/Quarterly Report on Production, Sales and lnventory of Minerals, as well as in the lntegrated Annual Report, the corresponding registration numbe(s) of the marketing contract(s)/agreement(s) governing the export or sale of minerals. 8.6. Associated Minerals - lf minerals other than nickel, cobalt, chromite are discovered in commercial quantities in the Contract Area, the value thereof shall be added to the value of the principal mineral in computing the Government share. SECTION IX WORK PROGRAMS 9.1 . Submission to Government - Within the periods stated 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 Contractor specifying in reasonable detail its reasons therefore. Promptly thereafter, the Government and Contractor will meet and endeavor to agree on the revision 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 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 percent (20%) shall be subject to the zr-- 1B 莆 approval of the Director. 9.4. The Government's approval of a proposed 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 to 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 Operation. 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 implementing 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 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 (1 0%) of the total project cost or in such amount depending on the environmental/geological condition, nature and scale of 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 ContractArea. -Bt\ 膓 19 裪 To allot annually a minimum of one percent (1%) of the i3 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%) ofthe gross output intended forthe concerned indigenous cultural community; To give preference to Filipino citizens who have established i4 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 training and recruitment program at its expense; and j5 To incorporate in the Mining Feasibility Study the planned expenditures necessary to implement (.1) to (.3) of this Section; k Technology ln the development of Mining 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; Zf\ 鷴裪 22 k4 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 technology community for conducting research and 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; To incorporate in the Mining Feasibility Study the planned expenditures necessary to implement all the plans and programs set forth in this Agreement; and mTo 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 ContracVMining 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, 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 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 Gl3.- 艰 23 裪 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 of capital and remittance of profits, dividends and Repatriation subject to existing laws and Bangko Sentral ng interest on loans, Pilipinas rules and regulations; and h necessary all equipment, spare parts and raw To import when in the operations in accordance with existing materials required laws and regulations. 1 1 .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 flnancing 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. 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 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 installations 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 (1) a{\- 醁 24 裪 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. sEcfloN xill 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 shall be to reach within the timetable set forth below the following targets of "Filipinization:" Unskilled Sk腡 14.2. Any disagreement or dispute which can not be seftled amicably within a period of one (1) year from the time the issue is raised by a Party shall be settled by a tribunal of three (3) arbitrators. This tribunal shall be constituted as follows: one to be appointed by the Contractor and the other 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." ln any event, the arbitration shall be conducted applying the substantive laws of the Republic of the Philippines. 14.3. Each party shall pay fifty percent (50%) 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 SUSPENSION OR TERMINATION OF CONTRACT, TAX INCENTIVES AND CREDITS 15.1. This Agreement may be suspended for failure of the Contractor: (a) to comply with any provision or requirement of the Act and/or its implementing rules and regulations; (b) to pay taxes, fees and/or other charges demandable and due the Government. 15.2. This Agreement terminates or may be terminated 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 and 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. All 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 from notice: Provided, That the Contractor has met all the financial, fiscal and legal obligations. 莆 26 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. ln 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 15.7. The withdrawal by the Contractor from the Mineral Agreement shall not release it from any and all financial, environmental, legal and fiscal obligations under this Agreement. 1 5.8. 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/or b. Failure of the Contractor to conduct mining operations and other activities in accordance with the approved Work Programs and/or any modification thereof as 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 of said incentives and credits. SECTION XVI OTHER PROVISIONS 16.'1. Any terms and conditions resulting from repeal or amendment of any existing laws or regulation or from the enactment of a law, regulation or administrative order shall be considered a part of this Agreement. 16.2. Notice All notices, demands and other communications required or permitted hereunder shall be made in writing, telex or telecopy and shall be deemed to have been duly given notice, in the case of telex or telecopy, if answered back or confirmation received, or if delivered by hand, upon receipt or ten days after being deposited in the mail, airmail postage prepaid and addressed as follows: A+ 裪 艰 27 膌 .腁 .腁 lf to the Government: The Secretary Department of Environment and Natural Resources DENR Building, Visayas Avenue Diliman, Quezon City lf to the Contractor: The President Eramen Minerals, lnc. 3'd Floor, ALPAP I Building No. 140 Leviste Street Salcedo Village, Makati City Either party may substitute or change such address on notice thereof to the other party. \r '16.3. Governing 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 itself to comply with the provisions of the Act, its implementing rules and regulations and other relevant laws and regulations. 16.4. 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 Force Maieure as defined in the Act: Provided, That the suspension of Mining Operations due to Force Maieure causes .\-, shall be subject to approval by the Director. b. lf Mining Operations are delayed, curtailed or prevented by such Force Majeure causes, then the time for enjoying the rights and carrying out the obligations thereby affected, the term of this Agreement and all rights and obligations hereunder shall be extended for a period equal to the period involved. c. The Party, whose ability to perform its obligations is affected by such Force Majeure causes, shall promptly give Notice to the other in writing of any such delay or failure of performance, the expected duration 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: Provided, That the suspension of obligation by the Contractor shall be subject to prior approval by the Director '>F-=_ 酎 腪 16.5.Amendments ed,amended or rnodified in any respect not be annu腡 銚his Agreement sha腡 V V ,.. ACKNOWLEDGMENT Republic ofthe Philippines) Quezon City )SS Before me, a Notary Public for and in the City of Quezon, personally appeared MICHAEL T. DEFENSOR, with Community Tax Certificate No. tflr51t41 issued on Januurq ,5,lttTt at Quc+n Ot+ , in his @ryoftheDepartmenYofEnvironmentandNatural-Resources, and ENRIQUE C. FERNANDEZ with Community Tax Certificate No. t3q80xru issued on ,bnu,u,'U l(',looi at i\anilti , in the@identofEramenMinerals,lncorporated,bothknowntome and to be the same persons who executed the foregoing instrument consisting of thirty (30) pages, including this acknowledgment page, and acknowledged to me that the same is their voluntary acts and deeds- have hereunto set my hand and affix my notarial :N WITNESS WHEREOF,| V 腝 腝 day of seal,this il 迣 Doc. No. 荇 Page No. 莆 Book No. 赧 Series of ,v C3/CompanyEramen/proforma/mpsa/Feb.4, 2005 詏 艘腌 30