V MiNERAL PRODUCT10N SHARING AGREEMENT 1 No 31:-2010-X腡 This MINERAL PRODUCT10NI SHARING AGREEMENI s made and entered inlo in Quezon c ty, Ph腡 ippines,tl,s day of , by and bebveen: THE REPUBLIC OF THE PHILIPPINES, herein referred to as the GOVERNMENT, represented in this act by the Secretary of the Department of Environment and Natural Resources, with office at the Department of Environmeni and Natural Resources Building, Visayas Avenue, Diliman, Quezon City CRISNORMAN S. LINCONADA, a Filipino, of legal age, herein referred to as the CONTRACTOR, with office address at El Rio Grande Street, Cabadbaran City, Agusan del Norte WITNESSETH : WHEREAS, the 1987 Constitution of the Republic of the Philippines provides in 腝 Article Xll, Section 2 thereof that all lands of the public domain, waters, minerals, 腒 腅裪 coal, petroleum and other natural resources are owned 腃 腀 by the State and that their 腜 裪 exploration, development and utiljzation 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, pursuani to Republic Act No. 7942, otheMise known as "The Philippine l\,1ining 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 Mineral 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 mining operations of the project contemplated herein, 芵 V WHEREAS, the Contractor desires to join and assist the Government in the initial rataonal exploration and possjble development and utilization for commercial purposes of gold, copper, silver and other associated mineral deposlls existing in the Contract Area (as herein defined); WHEREAS, the Conlractor has access to all the financing, technical competence, technology and environmental management skills required to promp y and effectively carry out the objectives of this Agreement; NOW, THEREFORE, for and in consideralion of the foregoing premises, the mutual covenanls, terms and conditions hereinafter set forth, it is hereby stipulated and aqreed as follows: SECTION I SCOPE 44 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 exploralion, development and commercial utilization of gold, copper, silver 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 provisrons 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 裪腒 acquisition provided for by law. 腅 苂 艓 The Contractor shall undertake and execute, Ior and on behalf of the Government, responsible 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. 腏 艏 The Contractor 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. 14production During the term of this Agreement, the total value of and sale of minerals derived lrom the mining operations contemplated herein shall be accounted for and divided between the Government and the Contractor tn accordance with Section Vlll hereof. SECT:ON腡 DEFIN!T10NS V V 2.1. Act refers to Republic Act No. 7942, otherwise 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 wtth the principal ore/mineral. 2 4. Bangko Sentral means Bangko Sentral ng Pilipinas 2.5. Budoet 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, white "Calendar Quarter" means a period of three consecutjve 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. 臷 2.9. Constitution or Philipoine 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 荵 Philippines on February 2, 1987. 2.'10. Contract Area means the area onshore or offshore delineated under the 荭 l\.4jneral Production Sharing Agreement subiect to the relinquishment obligations of the Contractor and properly defined by latitude and longitude or bearing and distance. 2.11. Contract Year means a period of h^/elve ('12) consecutive months counted from the Effective Date of this Agreement or from the anniversary of such Effective Date. 2.12. Contractor means Crisnorman S. Linconada or his assignee(s) of interest under this Agreement: Provided, That the assignment of any of such interest is accomplished pursuant to the pertinent provisions of the implementing rules and regulations of the Act. 2 '13. Declaralion of Minino Proiect Feasibil!ry means a document proclaiming the presence of minerals in a specific site, wh,ch are recoverable by socially acceptable, environmentally safe and economlcally sound methods specified in the Project Feasibility Study. 豑 V 2.14. Department or DENR means the Department of Environment and Natural Resources. 2.15. Director means the Director of Mines and Geosciences Bureau. 2.16. Effective Date means the date of execution of this Agreement by the Contractor and by the Secretary on behalf of the Government 2.'17. Environment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social. 2.18. Exploration means searching or prospecting for mineral resources by geological, geophysical and geochemical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quality and quantity of mineral resources and the feasibility of mining them for profit. 2.19. Exploration Period shall mean the period from the Effective Date of this Agreement, which shall be for two (2) years, renewable for like periods but not to exceed a totalterm of six (6) years for nonmetallic minerals and eight (8) years for metallic minerals, subject to the pertinent provisions of the implementing rules and regulations of the Act. 2.20. Force Maieure means acts or circumstances beyond the reasonable control of the Contractor including, but not limited to war, rebellion, insurrection, riots, civil disturbances, blockade, sabotage, embargo, strike, lockoul, any dispute with suface 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 anstrumentality 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 covernment and the Contractor. 2.22. Government means the covernment of the Republic of the phitippines or any of its agencies and instrumentalities. 2.23. Gross OutDUt means the actual market value of the minerals or mineral products from each mine or mineral land operated as a separate entity, without any deduction for mining, processing, refining, transporting, handling, marketing or any other expenses: provided, That if the minerals or mineral products are sold or consigned abroad by the Contractor under C.l.F. terms, lhe actual cost of ocean freiqht and insurance shall be 腞 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 菀 quotation of the refined mineral products contained thereof prevailjng in the said commodity exchanges, after deducting the smelting, r;fining, 貀 treatment, insurance, transportation and other charges incuired in th! 4 遪 膥 process of converting mineral concentrates into refined metal traded in those commodity exchanges. 2.24 Mine Development refers to work undertaken to prepare an ore body or a mineral deposit for mining, including the construction of necessary infrastructure and related facilities. 2.25. Minerals mean all naturally occurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy. 2.26. Mineral Products mean materials derived from mineral ores/rocks and prepared into marketable state by metallurgical processes which include beneficiation, cyanidation, leaching, smelting, calcination and other similar processes. 2.27. Minino Area means that portion of the Contract Area identified by the Contractor as defined and delineated in a Survey plan duty approved by the Director/Regional Direclor 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. NaliqC means notice in writing, telex or telecopy (authenticated by answer back or confirmation received) addressed or sent as provided in Section 16.2 of this Agreement. 腒 腁 | 1 腒 腒 腀 2.30. Ore means naturally occurring substance or material from which a 膌 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, ai andlor 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 domeslic, commercial, industrial, agricultural, recreational or other legitimate purposes. 2.32. Secretarv means the Secretary of the Department of Environment and Natural Resources. 2.33. S!a1e means the Republic ofthe phitippines. 2.34. Work Proqram means a document which presents the plan of major mining operalions and the corresponding expenditures of the Contractor in / its Contract Area during a given period of time, including the plan and 莕 expenditures for development of host and neighboring communities and of local geoscience and mining technology, as submitted and approved in 貎 accordance with the implementing rules and regulations of the Act. 腝 腜 膥 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 thereafter for another term not exceeding twenty-five (25) years. The renewal of lhis Agreement, as well as th; changes in the terms and conditions thereof, shall be upon mutual consent by the parties. ln the event the Government decides to allow mining operalions 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 sEcTtoN tv CONTRACT AREA 4.1. Size, Shape, and Location of Contract Area - This Agreement covers a Contract Area of approximately Three Hundred Four and 9,600/10,000 (304.9600) hectares, situated in Santiago and Tubay, Agusan del Norte, and bounded by the following geographical coordinates (please refer to ANNEX 'A" - 1:50,000 scale Location Map/Sketch Plan): TECHNICAL DESCRIPT10N | Corner Latitude Longitude 艐 9膋42'3000腅 125膋腒 34'0000'' 艑 腅膌 9膋13'0000'' 425膋34'0000腅 艒 9膋13'0000'' 125膋 34'3000' 艓 9膋14'0000腅125膋 34'3000腅 艔 9膋14'0000腅125膋 35'0000腅 艕 9膋13'3000'' 125膋 35'0000'' 艖 9膋13.3000' 125膋 35'1840' 艗 9膋13'0000腅 125膋35'1840腅 艘 9膋13'0000'' 125膋34'3000腅 腝艏 9膋12'3000'' 125膋 34'3000' SECT10N V EXPLORATION PERIOD 腞 5.1. Timetable for Exploration - The Contractor shall commence Exploration activities not later than three (3) months after the Effective Date for a period 腖 of two (2) years, renewable for like periods but not to exceed a lotal 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 腖 accordance with the implementing rules and regulations of the Act. 讍 V 膥 The Contractor shall submit the proof of consultation with lhe Sanggunian concerned in the form of Resolution or Certification prior to the implementation of the Exploration Work Program pursuant to the provisions of Section 5 of Department Administrative Order No.2OO7-15. 腒 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 腁 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 (B)-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. 53 Work Programs and Budgets - The Contractor shall strictly comply with the approved Exploration and Environmental Work Programs together with their corresponding Budgets (please refer to ANNEXES "8" and "C"). The amount to be spent by the Contractor in conducting Exploration activities under the terms of this Agreement during the Exploration Period shall be in the aggregate of not less than that specified for each of the Contract Years, as follows: For the Exploration Work Program: 1sl Contract Year 良 芈良 2,000,000 00 2nd Contract Year 良 芈良 300000000 Total : PhP 5,000,000.00 For the Environmental Work Program : PhP 500,000.00 ln the event of renewal of the Exploration Period, the amount to be spent every year shallfirst 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 Conlract Year, the Contractor should expend more than the amount to be expended as provided above, the 腞 excess may be subtracted from the amount required to be expended by the Contractor during the succeeding Contract Years, and should the Contractor. due to unforeseen circumstances or with the consent of the Government, expend less during a year, then the deficiency shall be 镻 applied to the amount to be expended during the succeeding Contract Years. l 54 Relinquishment of Total/Portion of the Contract Area - During the Exploration Period, the Contractor may relinquish totally or partialiy the original Contract Area. After the Exploration period and prior to or upon approval of a Declaration of Mjning Project 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 Project Feasibility. 55 Final N.4ining 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. 56 Declaration of Mining Project Feasibility - Within the term of the Exploration Period, the Contractor shall file in the Regional Office concerned, the Declaration of Mining Pro.iect Feasibjlity of the Contract Areaffinal Mining Area supported by Project Feasibility Study, Three (3)-Year Devetopment and Construction or Commercial Operalion 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 Project Feasibility during the Exploration Period shall be considered a substantial breach of this Agreement. 57 Survey of the Contract Area - The Contractor shall cause the survey of the perimeter of the Contract Area/final Mining Area through an application for survey, complete with requirements, filed in the Regional Offlce concerned | simultaneous with the submission of the Declaration of Mining Feasibility. Survey returns shall be submitted to the Regional Direclor concerned for approval within one (1) year from receipt of the Order of Survey complete 菅 with the mandatory requirements stated in the implementing rules and regulations of the Act. 58 Reporting || a. During the Exploration Period, the Contractor shall submit to the || Director, through the Regional Director concerned, quarterly and annual accomplishment reports under oath on all activities conducted in the Contract Area from the Effective Date of this Agreement. The quarterly report shall be submitted not later than fifteen (15) days at the end of each Calendar Quarter while the annual accomplishment report shall be submitted not later than thirty (30) days from the end of each Calendar Year. Such information shall include detailed financial expenditures, raw and processed geological, geochemical, geophysical and radiometric data plotted on a map at a minimum 1:50,000 scale, copies of originals of assay results, duplicated samples, field data, copies of originals from drilling reports, maps, environmental work program implementation and detailed expenditures showing discrepancies/ deviations with approved exploration and environmental plans and budgets as well as all other information of any kind collected during the exploration activities. All information submitted to the Bureau shall be subject to the confidentiality clause of this Agreement. b Final Report - The Contractor shall submit to the Director, through the Regional Director concerned, a final report under oath upon the expiration of the Exploration Period which shall be in the form and subslance comparable to published professional reports of \ respectable international instilulions and shall incorporate all the \. findings in the Contract Area including localion of samples, assays, \ chemical analysis, and assessment of mineral potentials together L with a geologic map of 1:50,000 scale at the minimum showing the \ results of the exploration. Such report shall also include detailed expenditures incurred during the Exploration Period. ln case of diamond drilling, the Contractor shall, upon 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. C - Relinquishment Report The Contractor shall submit a separate relinquishment report with a detailed geologic report of the relinquished area accompanied by maps at a scale of 1:50,000 and results of analyses and detailed expenditures, among others. SECTION 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 and approval of the Declaration of Mining Project Feasibility, subiect 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, wathin sixty (60) 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. Final Report - Within six (6) months from the completion of the development and construction activities, the Contractor shall submit 膌 艖 a final report to the Director, through the Regional Director 腞 膌 腃 膌 concerned. Such report shall integrate all information in maps of 腜 appropriate scale and quality, as well as in monographs or reports in accordance with international standards. 9 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 J 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 submitted not later than thirty (30) days before the expiration of the period covered by the previous Work Program. The Contractor shall conduct Mining Operations and other activities for the duration of the Operating Period in accordance with the duly approved Work Programs and corresponding Budgets. 7.3 Expansion and Modification of Facilities - The Contractor may make expansions, modifications, improvements, and replacements of the mining facilities and may add new facilities as the Contractor may consider necessary for lhe operations: Provided, That such plans shall be embodied in an appropriate Work Program approved by the Director. Reporting aQuarterly Reports - Beginning with the first Calendar Quarter following the commencement of the Operating Period, the Coniractor 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 - During Annual Reports 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.1. 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 腞 stockpiled in the mine and elsewhere in the Philippines, 膌 tonnages sold or committed for export (whether actually 荭 shipped from the Philippines or not), tonnages actually 腛 腒 V shipped from the Philippines (with futl detaits 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, ancluding 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. sEcTtoN v t FISCAL REGIME 8.1 . General Principle The fiscal regime of this Agreement shall be governed by the principle according to which the Government expects a reasonable return in economic value for the utilization of non-renewable mineral resources under its nalional sovereignty while the Contractor expects a reasonable return on its investment with special account to be taken for the high risk of exploration, the terms and conditions prevailing elsewhere in the industry and any special efficaency to be gained by a particularly good performance of the Contractor. (15) 82- fifteen days upon receipt of the notice of Registration Fees Within approval of the Agreement from the Regional Office concerned, the Contraclor 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. 83at Occupation Fees - Prior to registration of this Agreement and the same date every year thereafter, the Contractor shall pay to the Municipal/City Treasurer concerned an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations. lf the fee js not paid on the date specifled, the Contractor shall pay a surcharge of twenty five percent (25%) of the amount due in addition to the occupation fees. 腞 膍 84- The Share of the Government Government Share shall be the excise tax 鎁 on mineral products at the time of removal and at the rate provaded for rn Republic Act No. 7729 amending Section 151 (a) of the National lnternal 郬 Revenue Code, as amended, as well as other taxes, duties and fees levied 腵 腜 by existing laws. The Excise Tax shall be timely and completely paid to the nearest Bureau of lnternal Revenue Office in the province co;cerned. For purposes of determining the amount of the herein Government Share, the Contractor shall strictly comply with the auditing and accounting requirements prescribed under existing laws and regulations. The Government Share shall be allocated in accordance with Sections 290 and 292 of Republic Act No. 7160, otherwise known as .,The Local Government Code of 199'l . " 85 Pricing of Sales - The Contractor shall dispose of the minerals and by- products produced at the highest market price prevailing in the locality The Contractor shall also pay the lowest achievable marketing commissions and related fees and shall negotiate for more advantageous terms and condations subject to the right to enter into long-lerm 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-term sales or marketing contracts or foreign exchange and commodity hedging contracts comparable to policies followed by independent producers in the international mining industry The Contractor shall likewise seek a balanced distribution among consumers. lnsofar as sales to Contractoas affiliate(s) are concerned, prices shall be at arm's length standard, and competang offers for large scale and long{erm 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 Director, copy furnished the Regional Director concerned, for registration. At the same time, the Contractor shall regularly inform the Director in writing of any revisions, changes or additions in said contract(s)/agreement(s). The Contractor shall reflect in its Monthly/Quarterly Report on Produclion, Sales and lnventory of Minerals, as well as in the lntegrated Annual Report, the corresponding registration number(s) of the marketing contract(s)/agreement(s) governing the export or sale of minerals. 86 Associated Minerals - lf minerals other than gold, copper, silver and other associated mineraldeposlts 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. SECT10N:X WORK PROGRAMS /1 Submission 腜 to Within the pe腵 Government iods stated herein, the Contractor shall prepare and submit to the Director, th腵 ough the Regional Director concerned, a Work 菋 Contract Area stating the Mining Operations and expenditures which the Contractor proposes lo carry out during the period covered with the details and particulars set fo.th elsewhere in this Agreement or in the supporting documents. 92. Government's Examination and Revision of Work Program - Should the Government decide to propose a revision to a certain specific feature jn 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 lherefore. 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 carraed 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 negalive variance of at least twenty percent (20%) shall be subject to the approval of the Director. ln case of any positive variance, the Contractor shall submit to the Director, through the Regional Director concerned, a copy each of the Work Programs, for information. approval of a proposed Work Program and Budget will 94The Government's not be unreasonably withheld. SECTION 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 suslainable development obiectives and responsibilities as provided for under the implementang 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, 腞 control of pollution and the transformation of the mined-out areas or materials into economically and socially productive forms must be done 腖 simultaneously with mining. 郬 腜 腜 腜 腜 腜 腜 腜 program 10.3. The Contraclor shall submil an Environmental Work during the Exploration Period as prescribed in the implementing rules and regulations of the Act. 10.4. An Environmental Compliance Certificate (ECC) shalt be secured first by the Contractor prior to the conduct of any development works, construction of production facilities and/or mine production activities in the Contract Area. '10.5. The Contractor shall submit within thirty (30) calendar days after the issuance and receipt of the ECC, an Environmental protection and Enhancement Program (EPEP) using MGB Form No. 16-2 covering all areas to be affected by development, utilization and processing activities under this Agreement. The Contractor shall allocate for its initial environment-related capital expenditures approximately ten percent ('10%) of the total project cost or in such amount depending on the environmental/geological condition, nature and scale of operations and technology to be empioyed 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 I mining and milling costs depending on the environmental/geologic i condition, nature and scale of operations and technology employed in the Contract Area. 10.7. The Contractor shall establish a Conlingent Liability and Rehabilitation Fund (CLRF) which shall be in the form of the Mine Rehabilitation Fund (N/RF) and the Mine Waste and Tailings Fee (MWTF). The MRF shall be based on the financial requirements of the approved EPEP as a reasonable environmental deposit to ensure satisfactory compliance with the commitments/strategies of the EPEP/AEPEP and availability of funds for the performance of the EPEP/AEPEP during the specific project phase. The MRF shall be deposited as Trust Fund in a government deposilory bank and shall be used for physical and social rehabilitation of areas affected by mining activalies and for research on the social, technical and preventive aspects of rehabilitation. The MWTF shall be collected based on the amounts of mine waste and mill tailings generated during the conduct of Mining Operations. The MWTF collected shall accrue to a Mine Waste and Tailings Reserve Fund and shall be deposited in a government depository bank for payment of compensation for damages caused by the Mining Operations. 10.8. The Contractor shall set up mitigating measures such as mine waste and mill tailings disposal system, mine rehabilitation or plan, water quality monitoring, etc. to minimize land degradation, air and water pollution, acid rock drainage and changes in hydrogeology. 14 菒 10.9. The Contractor shall set up an Environmental and Safety Office at its minesile manned by qualified personnel to plan, implement and monitor its approved EPEP. '10.10.The Contractor shall be responsible in the monitoring of environmental, 腟 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." 10.11.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. sEcTtoN xt RIGHTS AND OBLIGATIONS OF THE PARTIES 11.'l Obligations of the Contractor: a. To exclusively conduct sustainable lvlining Operations within the Contract Area in accordance with the provisions of the Act and its implementing rules and regulations; b. To conslruct and operate any facilities specifled under the Mineral Agreement or approved Work Program; c. To determine the exploration, mining and treatment process to 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; f. To keep accurate technical records 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 Contractor with the terms of this Agreement. Authorized representatives of other Government Agencies may also have access to such accounts in accordance with existing laws, rules and regulations; 腖 g. To furnish the Bureau all the data and information gathered from the Contract Area and that all the books of accounts and records shall 菀 be open for inspection; 腵 腜 菒 h To allow access to Government during reasonable hours in inspecting the Contract Area and examaning pertinent records for purposes of monitoring compliance with the terms of this Agreement; 腟 | To hold the Government free and harmless from all claims and accounts of all kinds, as well as demands and actions arising out of 腁 the accidents or injuries to persons or properties caused by Mining Operations of the Contractor and indemnify the Government for any expenses or costs incurred by the Government by reason of any such claims. accounts, demands or actions; ln the development of the community: j.1. To recognize and respect the rights, customs and traditions of indiqenous cultural communities over their ancestral lands and to allocate royalty payment of not less than one percent (1%) of the value oI 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 Contraclor shall assist in the preservation and/or enhancement of such activities; j.3. To allot annually a minimum of one percenl (1%) of the direct mining and milling costs necessary to implement the activities undertaken in the development of the host and neighboring communities. Expenses for community development may be charged against the royalty payment of at least one percent (1%) of the gross output intended for the concerned indigenous cultural community; i.4. To give preference to Filipino citizens who have established domicile in the neighboring communities, in the hiring of personnel for its mining operations lf necessary skills and expertise are currently not available, the Contractor must immediately prepare and undertake a training and recruitment program at its expense; and j.5. To incorporate in the Mining Proiect Feasibility Study the planned expenditures necessary to implement 0.1) to (.i.3) of this Section; 腞 k of Mining Technology and Geosciences: ln the development 腖 k.'1. ln the course of its operations, to produce geological, 菁 geophysical, geochemical and other types of maps and reports that are appropriate in scale and in format and 芌 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 informalion for a reasonable period of time which shall not exceed three (3) years; k2 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: k4 To allocate research and development budget for the advancement of mining technology and geosciences in coordination with the Bureau, research institutions, academe, elc.; and k.5. To replicate data, maps and reports cited in (k.1) and (k.2) and furnish the Bureau for archiving and systematic safekeepinq which shall be made available to the science and technology community for conducting research and undertaking other aclivities which contribute to the development of mining, geoscience and processing technology and the corresponding national pool of manpower talents: Provided, however, that the release of data, maps and the like shall be similarly constrained in accordance with (k.1) and (k.2) above, l. To incorporate in the Project Feasibility Study the planned expenditures necessary to implement all the plans and programs set forth in this Agreement; and m. To pay all other taxes and fees mandated by existing laws, rules and regulations. 11.2. Rights of the Contractor: 荭 a. To conduct Mining Operations within the confines of its 腖 ContracyMining Area in accordance with the terms and conditions hereof and wathout interfering with the rights of other 荭 Contractors/Lessees/Operators/ permittees/permit Holders. /2 膌 2+-'- 膌 V 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 riqhts; To use and have access to all declassified geological, geophysical, drilling, production and other data relevant to the mining operations; 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 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; 苍 fTo 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; 艒 g. Repatriation of capital and remittance o, profits, dividends and interest on loans, subject to existing laws and Bangko Sentral ng Pilipinas rules and regulations; and 艐 h. To import when necessary all equipment, spare parts and raw materials required in the operations in accordance with existing laws and regulations. 'l 'l.3. Oblagations 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 Conlract Areai and c. To cooperate with the Contractor in its efforts to obtain financing contemplated herein from banks or other financial institutions: Provided, That such financing arrangements will in no event reduce the Contractor's obligation on Government rights hereunder 腝 腝 腝 艐 艐 艐 sEcTtoN x ASSETS AND EQUIPMENT 121. fhe Contractor shall acquire for the Mining Operations only such assets that are reasonably estimaled to be required in carrying out such [,lining 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 regulalions. 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) year from the time of cessation within which to remove its improvemenls, 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 utillzed by the host and neighboring communities. sEcTloN x EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL '13.1. The Contractor agrees to employ, to the extent possible, qualifled 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 Filipano 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:" Unskilled Skilled Clerical Professional Management (./.) f/"\ e ) (%) (%) Yearl 100 100 100 75 75 Year 3 100 100 100 B0 80 Year 5 '100 100 100 90 90 Yeat T 100 100 100 95 95 Year 10 100 100 100 95 95 Year 15 100 100 100 100 95 13.2. Cost and expenses of training such Filipino personnel and the Contractor's own employees shall be included in the Operating Expenses. 腞 13.3. The Contractor shall not discriminate on the basis of gender and shall respect the right of women workers to participate in policy and decision- making processes affecting their rights and benefits. 腖 腛 SECT10N X,V ARBITRAT10N '14.1. The Government and the Contractor shall consult with each other in good faith and shall exhaust all available remedies to settle any and all dispules or disagreements arising out of or relating to the validity, interpretations, 腒 enforceability, or performance of this Agreement before resorting to 腊 arbitration as provided for in Section 14.2. below. 腓 腁 14.2. Any disagreement or dispute which can not be settled 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 flrst 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 lhe Philippines. 14.3. Each party shall pay fifty percenl (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 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 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 Iaws and regulations. 荭 15.3. All statemenls 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 腖 set forth in said statements shall be a ground for its revocation and termination. 腜 腛 '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 th; Contractor, render conlinued 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 Iinancial, fiscal and legal obligations. '15.5. No delay or omissions or course of dealing by the Government shall impair any of its rights under this Agreement, except in the case of a written waiver. The Government's right to seek recourse and relief by all other means shall not be construed as a waiver of any succeeding or other default unless lhe 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 iny and all financial' environmenlal' legal and fiscal obligations under this Agreement. 'T5.8. 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 exiiting laws or regulation or from the enactment of a law, regulation or administrative order shall be considered a part of this Agreement. 荭 16.2. Notice 腖 All notices, demands and other communications required or permifted hereunder shall be made in writing, telex or telecopy and shall be deemed 膁 腜 V V obligation to settle a labor dispute: Provided, That the suspension of obligation by the Contractor shall be subject to prior approval by the Director. 16.5. Amendments Thrs Agreement shall not be annuiled, amended or modified in any respect except by mutual consent in writing of the herein parties lN WITNESS wHEREOF, the Parties hereto have executed this Aqreement, as of the day and year first above written THE REPUBLiC OF THE PHILIPPINES BY: 蝖 闡誛腡 跈1腡質 SENR 025363 腡l llllll蹍 蝖腡 P腔 QUINTO 4 ACing Secretary ndResources n荢Natural Department of Envi芨 0 S LiNCONADA SIGNED IN THE PRESENCE OF: 1 腒 ,4芵膡 腂 (Signature over Printed Name) 菇OS 苖菍 C 膌遡 芽 芽 /腅 ACKNOWLEDGMENT Republic of the Philippines) Quezon City )ss Before me, a Notary Public for and in the City of Quezon, personally appeared ELEAZAR P. QUINTO, with Community Tax Certificate Nc'. e'tct>tcq? rssued on J,h,ant zg,2.vo at a,\EzoN ctr, , in his capacity as Acting Secretary of tfi6-bepartntent of Environment and Natural Resources, and CRISNORMAN S. LTNCONADA, with Community Tax Certificate No. _-O5lg9!g__ issued on A*p4 t , t.r*) - al (2heahararr c:1, , both known to me and to me known to be the same'persons who executed the foregoing instrument consisting of twenty-four (24) pages, including this acknowledgment page, and acknowledged to me that the same is their voluntary acts and deeds. lN WITNESS WHEREOF, I have hereunto set my hand and affix my notarial seal, day of this.lAN 2 I 2gl0 UflEt Daown+cr 31 , )o/o fo*P ac' PrR No. 1229)1L l2'21-og t^k. lv lbP No. 8onB51 蹾 Doc. No 迣 Page No. 迣 Book No. 荇 Series of 24