WHEREAS, the Contractor desires to join and assist the Government in the initial rational exploration and possible development and utilization for commercial purposes of chromite, nickel and other associated mineral deposits existing in the Contract Area (as herein defined); WHEREAS, the Contraclor 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, lhe mutual covenants, terms and conditions hereinafter set forth, it is hereby stipulated and agreed as follows: sEcTtoN I SCOPE V 1.1. This Agreement is a Mineral Production Sharing Agreement entered into pursuant to the provisions of the Act and its implementing rules and regulations. The primary purpose of this Agreement is to provide for the rational exploration, development and commercial utilization of chromite, nickel and other associated mineral deposits existing within the Contracl 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 Contraclor shall not, by virtue of this Agreement, ac4uire any title over the ContracvMining Area without prejudice to the acquisition by the Contractor of the land/surface rights through any mode of acquisition provided for by law. 1.2. The Contractor shall undertake and execute, for and on behalf of the Govemment, 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. 1.3. The Contraclor shall assume all the exploration risk such that if no minerals in commercial quantity are developed and produced, it will not be entitled to reimbursement. '1.4. During the term of this Agreement, the total value of production and sale of minerals derived from the mining operations contemplated herein shall be accounted for and divided bemeen thend the Contractor in accordance with Section V- 芶 / 臥, 膜 荨 驢 起遅陼鹏 SENR07 011368 蝛I腡蝖陑轖腡蝖腡 2 sEcTloN ll 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, otheMise known as the'Philippine Mining Act of '1995.' 2.2. Aoreement means this Mineral Production Sharing Agreement. 2.3. Associated Minerals mean other ores/minerals, which occur together with the principal orelmineral. 2.4. Banoko Sentral means Bangko Sentral ng Pilipinas. 2.5. Budgq! means an estimate of expenditures to be made by Contractor in mining operations contemplated hereunder to accomplish the Wo* Program for each particular period. 菋 2.6. Bureau means Mines and Geosciences Bureau. 2.7. Calendar Year or Year means a petiod of twelve (12) mnsecutive months starting with the first day of January and ending on December 3'1, while "Calendar Quarter" means a period of three (3) consecutive months with the first calendar quarter starting with the first day of January. 2.8. Commercial Production means the production of suflicient 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 Philipoine Conslitution means the '1987 Constitution of the Republic of the Philippines adopted by the Constitutional Convention of 1986 on October 15, 1986 and ratmed by the People of the Republic of the Philippines on February 2, 1987. 2.10. Contract Area means the area onshore or offshore delineated under the Mineral Production Sharing Agreement subject to the relinquishment obligations of the Contractor and properly defined by latitude and longitude or bearing and distance. 2.1'1. Contract Year means a period of twelve ('12) consecutive months counted from the Effective Date of this Agreement or from the anniversary of such Effective Date. 2.12. Contractor means Norweah Metals and Minerals Company, lnc. or its assignee(s) or operator(s) of interest under this Agreement: provided, That the assignment of any of such interest is accomplished pursuant to the pertinent provisions of the implementing rules and regulations of the Act. 2.'13. Declaration of Mininq Proiect Feasibilitv means a document proclaiming the presenc€ of minerals in a specific site, which are recoverable by socially 裪 腪 苉 | 迸 腁 酎 腧 m 饓 量 蝖 acceptable, environmentally safe and economically sound methods specified in the Mine Development Plan. 2.'14. Deoartment or DENR means the Department of Environment and Natural Resources. 2.15. Director means the Direclor of Mines and Geosciences Bureau. 2.16. Effective Date means the date of execution of this Agreement by the Contractor and by the Secretary on behalf of the Government. 2.17. Enyironment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social. 2.18. ExDloration means searching or prospecting for mineral resources by geological, geophysical and geochemical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quality and quantity of mineral resourc€s and the feasibility of mining them for profit. 2.19. Exploration Period shall mean the period from the Effective Date of this Agreement, which shall be for two (2) years, renewable for like periods but not to exceed a total term of six (6) years for nonmetallic minerals and eight (8) years for melallic minerals, subject to the pertinent provisions of the implementing rules and regulations of the Act. 2.20. Force Maieure means acts or circumstances beyond the reasonable control of the Contractor including, but not limited to war, rebellion, insurrection, riots, civil disturbances, blockade, sabotage, embargo, strike, lockout, any dispute with surrace owners and other labor disputes, epidemics, earthquake, storm, flood or other adverse weather conditions, explosion, fire, adverse action by the Government or by any of its instrumentality or subdivision thereof, act of God or any public enemy and any cause as herein described over which the affected party has no reasonable control. 2.21. Foreiqn Exchanqe means any currency other than the currency of the Republic of the Philippines acceptable to the Government and the Contractor. 2.22. Government means the Government of the Republic of the Philippines or any of its agencies and instrumentalities. 2.23. Gross Output means the actual ma*et value of the minerals or mineral products from each mine or mineral land operated as a separate entity, without any deduction for mining, processing, refining, transporting, handling, marketing or any other expenses: provided, That iithe minerals or mineral products are sold or consigned abroad by the Contractor under C.l.F. terms, the actual cost of ocean freight a;d insurance shall be deducted: Provided further, That in the case o] mineral concentrates which are not traded in commodity exchanges in the philippines or abroad such as copper con@ntrate, the actual market value shall be the world price quotation of the refined mineral produc{s contained thereof prevailing in the sa,id commodity exchanges, after deducting the smelting, refining, 腝 ~ ~ 0' ~ 蝖腝~腍||腝| treatment,腒 腣, 腶 crnverting 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 mnstruction of necessary infraslructure and related facilities. 2.25. Minerals mean all naturally ocrurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal, pelroleum, natural gas, radioactive materials and geothermal energy. 2.26. Mineral Producls mean materials derived from mineral ores/rocks and prepared into marketable state by metallurgical processes which include beneficiation, cyanidation, leaching, smetting, calcination and other similar processes. 2.27. Minino Area means that portion of the Contract Area identified by the Contractor as detined 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. Minino 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 Section 16.2 of this Agrcement. 2.30. Ore means naturally oc,cuning substance or material from which a mineral or element can be mined and/or processed for profrt. 2.31. Polluiion means any afteration of the physical, chemical and/or biological properties of any water, air and/or land resources of the Philippines, or any V 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, detrimenlal 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 Repubtic of the phitippines. 2.34. Work Proqram means a document which presents the plan of major mining operations and the corresponding expenditures of the Contractor in iti Contract Area during a given period ot time, including the plan and expenditures for development of host and neighboring corimunities and of lo9 _S-"_*i"l99. "nd mining .rechnology, as-submiied and approved irl 趌3苔 軈菌 诃h:镩 腡 :X I软 :饈 諭 膍 苉 莊: 荕 _苉荪荒 5 雴陼韕 莿 豸 c荶 7 5 腝赼 腣 蝖 腡lllllEi腡 蝖 l III SECTION TERM OF AGREEiIENT 3.1. This Agreement shall have a term of twenty five (25) years from Effective Date, and may be renewed thereafter for another term not exceeding twenty five (25) years. The renewal of this Agreement, as well as the changes in the terms and conditions thereof, shall be upon mutual consent by the parties. ln the event ihe Govemment 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. sEcrloN lv CONTRACT AREA 4.1. Size, Shape, and Location of Contract Area - This Agreement covers a Contract Area of approximately Two Thousand Three Hundred Fourteen and 2018/10000 (2,314.2018) heclares, situated in Tubajon, Lib,o and Cagdianao, Surigao Del Norte, within Parcel lll of the Surigao Mineral Reservation and bounded by the following geographical coordinates (please refer to ANNEX "8" - 1:50,000 scale Location Map/Sketch Plan): Lotl = 2,006./t651 hectares Comel Latitude Lqngiiude 1 100 12', 3o.OO" 1250 37 oO.OO' 2 100 14', OO.OO' 1250 37', 00.00' 3 100 14', O0.OO" 1250 36' 3o.OO" 腛 4 100 14' 07 50" 1250 36', 3o.OO" 5 100 14', 07.50" 1250 35' 37.50" 6 fio u' 22.50" 1250 36' 37.50', 7 fio $' 22 so" 1250 36', 45.00" I 1oo't4'37.50' 1250 37', OO.OO" 9 100 14' 37.50" 1250 37', 07.50' 10 100 14', 30.00" 1250 37', 15.00', 11 100 14', 3o.Oo', 1250 37' 22.so" 12 fio u' 22.s0" 1250 37', 3o.OO' 13 fio fi' 22.50" 1250 37', 45.00' 14 100 14' 3o.OO" Pso 37' 4s.oo" 15 100 14', 37.50' 12so o7' s2.so' 16 'I oo 14' 45.00" 1250 37' 52.50" 17 100 14', 52.50' 1250 38', 00.00' 18 100 15', OO.OO" 1250 38', 00.00', 19 100 15', 0o.oo' 1250 38', 07.50', 20 100 14', 37.50', 1250 38', 15.00', 21 100 14', 3o.OO" 1250 38' 'l5.oo' 22 1oo u' 22.50" 1250 38' 37.50', 23 100 14' 07.50' 1250 38', 45.00' ---------- 0000" 4500"1250 39', 24100 13', 3750腅5250腅 13', 1250 38', 25100 4500'' 3750'' 1250 38', 26100 13' 3750腅 3000腅1250 38', 27100 13' 5250" 3000"1250 38' 28100 13', 2250腅0000腅 1250 39', 29100 13', 0750腅 0750'1250 39', 30100 13', '1250 39' 0000腅 100 0000腅 3113', '1250 39' 0000腅 325250腅 fio 12' 0750" 4500腅1250 39', 331oo 12' 0000腅 3750.`1250 39', 34100 12' 0000'' 3000'1250 39' 351oo 12' 2250' 3000'1250 39', 36100 12' 2250'' 2250腅1250 39', 37100 12', 'I 1500'3000" 1250 39' 38oo 12' 3000' 0000"1250 39' 1oo 3912', 2250'' 5250'1250 39', 40100 1 1', 0000腅 3750''1250 39', 41100 11' 3750' 3000"1250 38' 42100 11', 1500''3750腅 431250 38', 100 11', V 3000" 1500"1250 38', 44100 11' 2250腅 0750腅1250 38', 45100 1 1', 1500腅 0750腅1250 38', 46100 11' 3750腅 1500.`1250 38', 47100 1 1', 0000" 1500腅1250 38' 48100 11', 0000" 3000'1250 38', 49100 1 1', 4300腅 5250腅1250 37' 50100 11', 5250腅1250 37' 5000' 51100 1 1', 5000' 0000腅1250 37' 521oo 12' 4300'' 0000"1250 97', 53fio 12' 4300' 5250腅1250 37', 54100 I 1', 1500腅 3000''1250 37', 55100 12', 腛 Lot:: = 3077367hectares ComerLongitude Latitude 125iJ 37 22 50" 1 100 10' oo.oo" 2100 10' '15.00" 1250 37', 22.50" 3100 1o'37.50" fi54 37' 37 .50" 4100 10' 37.50" 1250 37' 52.50" 5100 10'45.00" 1250 38' OO.OO' 6loo 10'45.00" 1250 38', 07.50" 7100 10'37.50" 1250 38', 15.00" 8100 10' 37.50" 1250 38' 45.00', 9100 10' 3o.oo" 1250 38', 52.50', 101250 38' 52.50', 100 10'_oo.oo" t-.' 艐 腞 腞 骒遑郃 豸 SEIIR17 111373 邾 7 腡 i蝖腡蝖雚 蝖腡l SECTION V EXPLORATION PERIOD 5.'1. 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 tolal term of six (6) years for nonmetallic minerals and eight (8) years tor metallic minerals, subject to annual review and approval by the Director in accordance with the implementing rules and regulations of the Act. 5.2. 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 Mines and Geosciences Bureau Central Office, accompanied by the mandatory requirements stipulated in the implementing rules and regulations of the Act. The Director may grant the renewal of the Exploration Period on condition that the Contractor has substantially complied with the terms and mnditions of the Agreement. ln cases where further exploration is warranted beyond the six (6)- or eight (8)-year period and on condition that the Contraclor has substantially implemented ihe 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 equivalenl to the expenditure requirement of the Exploration and Environmental Work Programs. 5.3. Work Programs and Budgets - The Contractor shall strictly mmply with 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 Contraclor in conducting Exploration activities under the terms of this Agreement during the Exploration Period shall be in the aggregate of not less than that specilied for each of the Contract Years, as follows: For the Exploration Work Program: PhP 920,00000 1st Contract Year 2nd Year PhP 2,170,00000 Contract Total PhP 3.090,00000 For the Environmental Work Program PhP 310,00000 ln the event of renewal of the Exploration period, the amount to b€ 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 dudng any Contract year, the Contraclor should expend more than the amount to be expended as provided above, the excess may be subtracted from the amo 艗 花 腜 腜 腜 骒 鳝鶛 膌 豸 艩 SENR07膜11374 蝖腡腡 蝖鏩腡讌腡 Contractor during the succeeding Contract Years, and should the Contractor, due to unforeseen circumstances or wilh the consent of the Govemment, expend less during a year, then the deficiency shall be applied to the amount to be expended during the succeeding Contract Years. 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 Poject Feasibility by the Director, the Contractor shall linally relinquish any portion of the Contract Area not necessary for mining operations and not covered by any Declaration of Mining Project 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 Project Feasibility. 5.6. Declaration of Mining Projeci Feasibility - Within the term of the Exploration Period, the Contractor shall file in the Regional Ofrice concerned, the Declaration of Mining Projecl Feasibility of the Contract Area/Jinal Mining Area supported by Mining Projecl Feasibility Study, Three (3)-Year Oevelopment 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 oI Mining Project Feasibility during the Exploration Period shall be considered a substantial breach of this Agreement. 5.7. Survey of the Contract Area - The Contractor shall cause the survey of the perimeler of the Contract Area/final Mining Area through an application for survey, complete with requiremenls, tiled in the Regional Oftice mncerned simuttaneous with the submission of the Declaration of Mining Feasibility. Survey returns shall be submitted to the Regional Director conc€rned for approval within one (1) year from receipt of the Order of Survey complete with the mandatory requirements stated in the implementing rules and regulations of the Act. 5.8. Reporting a During the Exploration Period, the Contractor shall submit to lhe Director, through the Regional Director concerned, quarterly and annual accomplishment reports under oath on all aciivities conducted in the Contract Area from the Effective Date of this Agreement. The quarterly report shall be submitted not later than fifreen (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 of each Calendar Year. Such informaiion shall include detailed financial expenditures, raw and processed geological, geochemical, geophysical and radiometric data plotted on a map at a minimum 1:50,000 scale, mpies of originals of assay results, duplicated samples, field data, mpies of originals from drilling reports, maps, environmental work program implementation - and detaiied expenditures showing discrepanciev deviations with approved exploration and environmental plans and budgets as well as ail othe, SEIIR0701375 蝖 腡腡EIEI蝖 陑 information of any kind collected during the exploralion activities. All information submitted to the Bureau shall be subject to the confidentiality clause of this Agreement. bFinal Report - The Contractor shall submat to the Director, through the Regional Director concerned, a final report under oath upon lhe expiration of the Exploration Period which shall be in the form and substance comparable to published professional reports of respectable international institutions and shall incorporate all the findings in the Contract Area including location of samples, assays, chemical analysis, and assessment of mineral potentials together with a geologic map of 1:50,000 scale at the minimum showing the results of lhe exploation. Such report shall also include deiailed expenditures incurred during the Exploration Period. ln case of diamond drilling, the Contraclor shall, upon request of the Director/Regional Director concerned, submit to the Regional Office concerned a quarter of the core samples, which shall be deposited in the Regional Office Core Library for safekeeping and reference. CRelinquishment Report - The Contractor shall submit a separate relinquishment report with a detailed geologic report of the relinquished area accompanied by maps at a scale of 1:50,000 and results of analyses and detailed expenditures, among others. sEcTtoN vt 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 and approval of the Declaration of Mining Project Feasibility, subject to such extension based on justifiable reasons as the Director may approve, upon recommendation of the Regional Director concerned. 6.2. Reporting a. Annual - The Contractor shall submit, within sixty (60) days after December 3'l of each year, to the Director, through the Regional Director concerned, an annual report, which states the major activities, achievements and detailed expenditures during the year covered, including maps, assays, rock and mineral analyses and geological and environmental progress reports during the Development and Construction Period. b Final Report - Within six (6) months from the completion of the development and construction activities, the Contractor shall submit a final report to the Director, through the Regional Director concerned. Such report shall integrate all information in maps of appropriate scale t , and quality, as well as in monographs or roports in iccoidance with lV intemational standards. _ _.^, 41, I l, L.---- -^, Ut) 跓 譀 觜 誄Jl閣软鉉韕1讌. 腡 腡 腡:lilll蝖 ll SECTION VII OPERATING PERIOD 7.1. Timetable - The Contractor shall submit, within thirty (30) days before completion of mine development and construction of produclion facilities, to the Director, through the Regional Director mncemed, a Three-Year Commercial Operation Work Program. The Contractor shall commence commercial utilization immediately upon approval of the aforesaid Work Program. Failure of ihe Contractor to commenc€ 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 mncerned, Work Programs and Budgets covering a period of three (3) years each, which shall be submitted not later than thirty (30) days before the expiration of the period covered by the previous Work Program. The Contractor shall conduct Mining Operations and other activities for the duration of the Operating Period in accordance with the duiy approved Work 荖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 Operaiing Period, the Contractor shall submit, within thirty (30) days after ihe 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 mrresponding 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 Direclor, through the Regional Director conc€rned, an Annual Report indicating in sufficient detail: b.1. The total tonnage of ore reserves, whether proven, probable, or inferred, the total lonnage 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 aontractor, with full specifications as to the intermediate producfs, 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 respecl 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. sEcTloN vlll FISCAL REGI E 8.1. General Principle - The fiscal regime of this Agreement shall be governed by the principle according to which the Government expecls a reasonable relurn in economic value for the utilization of non-renewable mineral resources under ils national sovereignty while the Contractor expects a reasonable retum on its investment with special account to be taken for the high risk of exploration, the terms and conditions prevailing elsewhere in the industry and any special efficiency to be gained by a particularly good performance of the Contraclor. 8.2. Registration Fees - Within frfteen (15) days upon receipt of the notice of approval of the Agreement from the Regional Office concerned, the Contractor shall cause the registration of this Agreement with the said Regional Office and pay the registration fee at the rate provided in the existing rules and regulations. Failure of the Contractor to cause the registration of this Agreement within the prescribed period shall be sufficient ground for cancellation of the same. 8.3. Occupation Fees - Prior to registration of this Agreement and at the same date every year thereafter, the Contractor shall pay to the Municipal/City Treasurer concemed an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations. lf the fee is not paid on the date specitied, the Contractor shall pay a surcharge of twenty five percent (25%) of the amount due in addition to the occupation fees. 8.4. Share of the Govemment - The Government Share shall be the excise tax on mineral products at the time of removal and at the rate provided for in Republic Act No. 7729 amending Section 151 (a) of the National lnternat Revenue Code, as amended, in addition to a Royalty of not less than five percent (5%) of the gross output, as well as other taxes, duties and fees levied by existing laws. The Excise Tax shall be timely and completely paid to the nearest Bureau of lntemal Revenue Office province in ~~~~鏱 the conjerned  苉he Royaw shal腧 Bu轮 PT靛 迣 I郃 閾 CI" 譀 | 膼 -7tt O膡 腜 腧 / ~T=豸 SENR17膜11373 l 腡i蝖腡腡蝖蝖讌 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, otheMise known as "The Local Govemment Code of 199'1.' 8.5. Pricing of Sales - The Contracior shall dispose of the minerals and by- products produced at the highest market price prevailing in the locality: The Contractor shall also pay the lowest achievable marketing commissions and related fees and shall negotiate for more advantageous terms and conditions subject to the right to enter into long-term sales or marketing contracts or foreign exchange and commodity hedging contracts, which the Government acknowledges to be acceptable notwithstanding that the sale price of the minerals and by-products may from time to time be lower, or the terms and conditions of sales are less favorable, than that available elsewhere. The Contractor shall seek to strike a balance between long{erm sales or marketing contracls or foreign exchange and commodity hedging contracts V comparable to policies followed by independent producers in the international mining industry. The Contractor shall likewise seek a baianced distribution among consumers. lnsofar as sales to Contractor's affiliate(s) are mncerned, prices shall be at arm's length standard, and competing offeG 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 submitted to the Oirector, copy furnished the Regional Director concerned, for registration. At the same time, the Contractor shall regulady inform the Director in writing of any revisions, changes or additions in said contract(s)/agreement(s). The Contractor 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 number(s) of the marketing contract(s)/agreement(s) goveming the export or sale of minerals. 8.6. Associated Minerals - lf minerals other lhan chromite and nickel are discovered in mmmercial quantities in the Contracl Area, the value thereof shall be added to the value of the principal mineral in computing the Government share. SECT:ON IX WORK PROGRAMS 91 SubmissiOn to Govemment腜 particulars set forth elsewhere in this Agreemeni or in the supporting documents. 9.2. Govemmenl's Examination and Revision of Work Program - Should the Govemment decide to propose a revision to a certain speciric 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 Govemment and Contraclor will meet and endeavor to agree on the revision proposed by the Government. ln any event, lhe revision of any portion of said Work Program or Budget in which the Government shall fail to notry the Contractor of lhe proposed revision shall, insofar as possible, be canied out as prescribed herein. lf the Govemment should fail within sixty (60) days from receipt thereof to notify Contractor of the proposed revisions, the Work Program and Budget proposed by the Contraclor shall be deemed to be approved. 9.3. Contraclor's Changes to Work Program - lt is recognized by lhe Government and the Contraclor 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 obiective ot V the work Program: Provided further, That changes which entail a variance of at least twenty percent (20%) shall be subjecl to the approval of the Director. 9.4. The Govemment's approval of a proposed Wo* 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 Operations. To the extent possible, control of pollution and the transformation of the mined-out areas or materials into economically and socially productive forms must be done simultaneously with mining. 10.3. The Contractor shall submit an Environmental Work program during the Exploration Period as prescribed in the implementing rules and regulations of the Act. 10.4. An Environmental Compliance Certific€te (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 Conlract Area. '10.5. The Contractor shall submit within thirty (30) calendar days after the issuance and receipt of the ECC, an Environmental protection and 腞 腞 钻 雔 鑫铴 艐 llli誗 跻 顟lll Enharcement 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 environmeni-related capital expenditures approximately ten percent (10olo) 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 Enhanc€ment 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 submitled. 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 contingent Liability and Rehabilitation Fund (CLRF) which shall be in the form of the Mine Rehabilitation Fund (MRF) and the Mine Waste and Tailings Fee (MWTF). V The MRF shall be based on the financial requirements of the approved EPEP as a reasonable environmental deposit to ensure satisfactory compliance with the commitmenwstrategies of the EPEP/AEPEP and availability of funds for the performance of the EPEP/AEPEP during the specific project phase. The MRF shall be deposited as Trust Fund in a government depository bank and shall be used for physical and social rehabilitation of areas affected by mining activities and for research on the social, technical and preventive aspects of rehabilitation. The MWTF shall be collecled based on the amounts of mine waste and mill tailings generated during the conduct of Mining Operations. The MWTF collected shall accrue to a Mine Waste and Tailings Reserve Fund and shall be deposited in a government depository bank for paymenl of compensation for damages caused by the Mining Operations. 10.8. 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 commitmentsi/strategies of the EPEP/AEPEP and availabilrty of funds for the performan@ of the EPEP/AEPEP during the specific project phase. The MRF shall be deposited as Trust Fund in a government depository bank and shall be used for physical and social rehabilitation of areas affected by mining activities and for research on the social, technical and preventive aspects of rehabilitalion. '10.9. 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 drainag! and changes in hydrogeology. 10.10.The Contractor shall set up an Environmental and Safetv Office at its minesite manned by qualified personnel to plan, implement ind monitor approved EPEp. 覵 苟芷 鞞 韕 荒 "Mu nu靰 SENR07 011381 腡 譲 蝖 蝖蝖 跲|腡 10.ll.The Contractor shall be responsible in the monitoring of environmenlal, safety and health conditions in the Contract Area and shall strictly comply with all the rules and regulations embodied under DAO No. 2000-98, otherwise known as the'Mine Safety and Health Standards." 10.12.The Contractor shall be responsible for the submission of a final mine rehabilitation and/or decommissioning plans, including its financial requirements and incorporating the details and particulars set forth in the implementing rules and regulations of the Act. sEcrloN xl RIGHTS AND OBLIGATIONS OF THE PARTIES 1 1 .'l . Obligations of the Contractor: a. To exclusively conduct sustainable Mining Operations within the V Contract Area in accordance with the provisions of the Act and its implementing rules and regulations; b. To construct and operale any facilities specified under the Mineral Agreement or approved Work Program; c. To determine the exploration, mining and treatment process lo be utilized in the Mining Operations; d. To extract, remove, use and dispose of any tailings as authorized by an approved work Program; e. To secure all permits necessary or desirable for the purpose of Mining Operations; V f. To keep accurate technical recrrds about the Mining Operations, as well as financial and marketing accounts, and make them available to Government representatives authorized by the Director for the purpose of assessing the performance and compliance of the Conlractor with the lems of this Agre€ment. Authorized representatives of other Govemment Agencies may also have access to such accounts in accordance with existing laws, rules and regulations; g. To furnish the Bureau all the data and information gathered from the Contract Area and that all the books of acmunls and records shall be open for inspection; h. To allow access to Government during reasonable hours in inspecting the Contract Area and examining pertinent records for purposes oi monitoring mmpliance with the terms of this Agreement; i. To hold the Government free and harmless from all claims a芎 芄腧 accounts of all kinds, as well as demands and aclions arising out 鞒 鎭苉 ~ 荠 貀 跗 鑸 鑫 Hn"A,连 111382 _ SEHR17腅 葘 lilllil賻 :llll麽 111 the accidents or injuries to persons or properties caused by Mining Operations of the Contractor and indemnify the Govemment for any expenses or costs incurred by the Government by reason of any such claims, accounts, demands or actions; ln the development of the community: j.1. To recognize and respect the rights, customs and traditions of indigenous cultural communities over their ancestral lands and to allocate rcyalty payment of not less than one percent ('l%) of the value of the gross output of minerals sold; j.2. To coordinate with proper authorities in the development of the mining community and for those living in the host and neighboring communities through social infrastructure, livelihood programs, education, water, electricity and medical services. Where traditional self-sustaining income and the community activities are identified to be present, the Contractor shall assist in the preservation and/or enhancement of such activities: 膥 To allot annually a minimum of one percent (1%) of the direct ,3 mining and milling costs necessary to implement the activities undertaken in the development of the host and neighboring mmmunities. Expenses for community development may be charged against the royalty payment of at least one percent (1olo) of the gross output intended for lhe concemed indigenous cuttural community; To give preferenc€ to Filipino citizens who have established i4 domicile in the neighboring communities, in the hiring of personnel for its mining operalions. lf necessary skills and expedse are cunently not available, the Contractor must immediately prepare and undertake a training and recruitment V program at its expense; and To incorporate in the Mining Feasibility Study the planned i5 expendilures necessary to implement (j.1) to 0.3) of this Section; k ln the development of Mining Technology and Geosciences: k.1. ln the course of its operations, to produce geological, geophysical, geochemical and other types of maps and reports that are appropriate in scale and in format and substance which are consistent with the internationally accepted standards and practices. Such maps shall be made available to the scientific community in the most convenient and cost effective forms, subiect 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 systematic€lly keep the data generated from Mining Area such as cores. assays and 辬 鑎 裸 閔鏒 豸 t腝膡3o 遭 "腝 SEIIR07膜 11383 / 腡 蝖腡 腡鏩 蝖I讌 information, including economic and financial data and make them accessible to students, researchers and other persons responsible for developing mining, geoscienc€ and processing technology subject to lhe 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; the k3Government or local mininq company To transfer to the may in the exploration, appropriate technology it adapt development and commercial utilization of the minerals in the Contract Area: budget for the k4research and development To allocate of mining technology and geosciences in advancement coordination with the Bureau, research institulions, academe, etc.i and (k.1)and (k.2) k5reports cited in and To replicate data, maps and furnish the Bureau for archiving and systematic safekeeping V 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 mpay To all other taxes and fees mandated by existing laws, rules and regulations. 膥 11.2. Rights of the Contractor: a. To conduct Mining Operations within the conlines of its ContracvMining Area in accordance with lhe terms and mnditions hereof and without interfering with the rights of other Contractors/Lessees/Operators/ PermifteeyPermit 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 rightsi c. To use and haye access to all declassified geological, geophysical, drilling, production and other data relevant to the mining operations; d. To sell, assign, transfer, convey or otheMise dispose of all its rights, intercsts and obligations under the Agreement subject to the approval of the Government; 芢 腅 鉌 鳝 _2 陑腡 覾 fillI酏 腡蝖 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 employmenl connection of such foreign persons with the Contractor c€ases, the applicable laws and regulations on immigration shall apply to them. Every time foreign technologies are utilized and where alien executives are employed, an effective program of training understudies shall be undertaken. The alien employment shall be limited to technologies requiring highly specialized training and experience subjecl to the required approval under existing laws, rules and regulations; f. To enioy easement rights and use of timber, waler and other natural resourc€s in the Contract Area subiect to pertinent laws, rules and regulations and the rights of third parties; g. Repatriation of capital and remittance of profits, dividends and interest on loans, subject to existing laws and Bangko Sentral ng Pilipinas rules and regulations; and 菕 h. To import when necessary all equipment, spare parts and raw materials required in the operations in accordance with existing laws and regulations. 1 1.3. Obligations of the Government: a. To ensure thal the Contractor has the Government's full cooperation in the exercise of the rights granted to at under this Agreementi b. To use its best efforts to ensure the timely issuance of necessary pemits and similar authorizing documents for use of the surface of the Contract Area: and c. To croperate with the Contraclor in its efforts to obtain financing contemplated herein from banks or other financial institutions: Provided, That such financing anangemenls will in no event reduce the Contractor's obligation on Govemment rights hereunder. sEcTloN x[ 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 installalions of a movable nature erecled or placed on the Contract Area by the Contractor shall remain the property of the Contractor. The Contractor shall have the r(Jht to remove and re-export such materials and equipment, plant and other installations from the Philippines, subject to existDq rules and regulations. ln case of 腝 19 苤 袱 鞓雔 趤 鑎 閉 5__ SENR07膡 膡膡 / l Ell蝖 llll腡 蝖 cessalion of Mining Operations on public lands occasioned 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 lax free to the proper govemment authorities, national or local, to ensure that said infrastructures and facilities are continuously maintained and utilized by the host and neighboring communities. sEcTloN xfir EMPLOYIENT AND TRAINING OF PHILIPPINE PERSONNEL 13.1. The Conlractor agrees lo 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 consenl of the Government, prepare and undertake an extensive training programme suitable to Filipino nationals in all levels of employment. The objective of said programme is to reach within the timetable set forth below the following targets of "Filipinization:" led sk腡 unsk腡 settled by a tribunal of three (3) arbitrators. This tribunal shall be conslituted as follows: one to be appointed by the Contractor and the other to be appointed by the Secretary. The ,irst 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 iniliated and conducted pursuant to Republic Act No. 876, otherwise known as the 'Arbitration Act." ln any event, the arbitration shall be conducled applying the substantive laws of the Republic of the Philippines. 14.3. Each party shall pay ffty percent (50%) of the fees and expenses of the Arbitrators and the costs of arbitration. Each party shall pay its own costs and attomey's fee. sEcfloN xv V 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 requiremenl of the Ac1 and/or its implementing rules and regulations; (b) to pay on time the complete 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 linancial obligations for two (2) consecutive years; (e) false statement or omission of facts by the Contractor; and (0 any olher 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 pa(s hereof, and any falsehood in said statements or omission of facts which may alter, change or affect substantially the fact set fo(h 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 shalldecide on the application within thirty (30) days from notic€: Provided, That the Contractor has met all the financial, fiscal and legal obligations. '15.5. No delay or omissions or murse 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 mntrary intention is reduced in writilq and signed by the party authorized to exercise the waiver \ ^ ^ 镢 赼鞓釙 豸 SENR07011387 苧 腡豐蝖li 腡蝖蝖 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 effeclive. 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. '15.8. The following acts or omission, inter alia shall constitute breach of contract, upon which the Govemment may exercise its right to terminate the Agreement: a. Faalure 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 V 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 condilions of said incentives and credits. sEcTtoN xvr 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. V 16.2. Notice All notices, demands and other mmmunications 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: lf to the Government: Resources r腝 赼 鞓 豸 鑸 22 花 蝖 量 趄i零 腡 詈 膌 lf to the Contractor: THE PRESIOENT Norweah Metals and Minerals Company, lnc. Lot 39A Cluster M, Bagong Nayon I Cogeo Village, Antipolo City Either party may substitute or change such address on notice thereof to the other party: Provided, That the Coniractor shall, in case of any change of address during the term of this Agreement, notify the Director in writing. Failure to do such notification shall be deemed as waiver by the Contractor to be informed about any communications as provided in Section 16.2 above. 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 itself to comply with the provisions of the Act, its implementing rules and regulations and V 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 attibutable lo Force Majeure as defined in the Act: Provided, That the suspension of Mining Operations due to Force Majeure causes shall be subject to approval by the Director. b. lf Mining Operations are delayed, curtailed or prevented by such Force Majeurc 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 Majeurc 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 subjecl to prior approval by the Director. '16.5. Amendments This Agreement shall not be annulled, amended or modified in any respe except by mutual consent in wdting of the herein parties. q{t u' r腝 Fl趌 韼 腊 花 _腜 / 譲 i龴 鯞 lN WTNESS WHEREOF, the Parties hereto have executed this Agreement, as of the day and year first above written THE REPUBL!C OF THE PHILiPP:NES BY: 軹 Department 菐 Enu鑇诙詤dnturalResources 陼郃 豸 H 膡蝛ltt酠, 膜 SEIIR0701300 ]lll蝖腡ll 鏩蝖 V ACKNOWLEDGMENT Republic of the Philippines) Quezon City )SS Before me, a Notary Pub腡 V V " , ar^r ri,a,','ro oF llECrsrRATl()N Mln.. tDd Ceorclcncd Brr.ru Nonh Ave., Dilinan, Quezon City Tn. Eeijlr.rton fe. lhcrefor hr!rng bcen paid. lhc r*.,oin. tnsu;enr consisrine of 15 pag6 wls r€3rsrcr'd V ! . rh; Office or Noeabor l5.Ar7 and record.d in " '.i"-z ",.,, lljltr.] F*.t-ko-t=-- -- u oocumcnt No.l-. Reeistrartotr fee Daid under O{ficial R'ccipt No AttJ22?!il- aur.a Voi.tbc B' ?oa. rhe a,ount of r.,Plg-eeq.ll. 誶 軇 雴 酎 DrectOr 荃