ON SIIARING ACREEMENT 蝗EINERAL PRODUC膡 CAR 2腝2000腝 IPSA No腂 1莉 腔 :鿹; 铬靈鉵 W铰鉵 ,隄鞂  and beh膍een: T蝕 the Contractor has access to all the financing, technical competence, WHEREAS, promptly technology and environmental management skills required to and effectively carry out the objectives ofthis Agreement; NOW, TIIEREFORE, for and in consideration of the foregoing premises, the mutual covenants, terms and conditions hereinafter set forth, it is hereby stipulated and agreed as follows: SECTION I SCOPE This Agreement is a Mineral Production Sharing Agreement entered into pursuant to the provisions of the Act and its implementing rules and regulations. The primary purpose of this Agreement is to provide for the sustainable development and commercial utilization of gold' copper, silver and other related mineral deposits existing within the Contract Area, with all necessary services, technology and financing to be fumished or arranged by the Contractor in accordance with the provisions of this Agreement. The Contractor shall not, by virtue of this Agreement, acquire any title over the Contract/IVlining Area without prejudice to the acquisition by the Contractor of the land/surface rights through any mode of acquisition provided for by law. 苂 英 The Contractor shall undertake and execute, for and on behalf ofthe Government, sustainable mining operations in accordance with the provisions of this Agreement, and is hereby constituted and appointed, for the purpose of this Agreement, as the exclusive entity to conduct mining operations in the Contract Area. 1.3 The Contractor shall assume all the exploration risk such that if no minerals in commercial quantrty are developed and produced, it will not be entitled to reimbursement . Agreement, the total value of production and sale of 14term of this During the herein shall be minerals derived from the mining operations contemplated accounted for and divided between the Government and the Contractor in accordance with Section VIII hereof SECTION tr DEFINITIONS As used in this Agreement, the following words and terms, whether singular or plural, shall have the following respective meaning : 2.1 "Act" refers to Republic Act No. 7942, otherwise known as the '?hilippine Mining Act of 1995" 2.2 Agreement means this Mineral Production Sharing Agreement. 2.3 Associated Minerals mean other oreVminerals which occur together with the principal ore./mineral. 26 2.4 Bangko Sentral means Bangko Sentral ng Pilipinas. 2.5 Budget 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 Calendar Year or Year means a period of twelve (12) consecutive months starting with the first day of January and ending on December 3 I , while 'Calendar Quarter" means a period of three consecutive months with the first calendar quarter starting with the fust day of January. 2.7 Commercial Production means the production of sufficient quantity of minerals to sustain economic viability of mining operations reckoned from the date of commercial operation as declared by the Contractor or as stated in the feasibility study, whichever comes first. 2.8 Constitution or Philippine Constitution means the 1987 Constitution of the Republic of the Philippines adopted by the Constitutional Convention of 1986 on October 15, 1986 and ratified by the People of the Republic of the Philippines on February 2, 1987. 2.9 Contract Area means the area onshore delineated under the Mneral Production Sharing Agreement subject to the relinquishment obligations ofthe Contractor and properly defined by latitude and longitude or bearing and distance 2.lO Contract Year means a period of twelve (12) consecutive months counted from the Effective Date of this Agreement or from the anniversary of such Effective Date. 2.11 Contractor means Itogon - Suyoc Mincs, Inc. or its assignee or assignees of interest under this Agreement: Provided, That the assignment of any of such interest is accomplished pursuant to the pertinent provisions of the implementing rules and regulations of the Act. 2.12 Declaration of Mining Feasibility means a document proclaiming the presence of V minerals in a specific site that are recoverable by socially acceptable, environmentally safe and economically sound methods specified in the Mine Development Plan. 2.13 Department or DENR means the Department of Environment and Natural Resources. 2.14 Director means the Director of Mines and Geosciences Bureau. 2,15 Effective Date means the date of execution of this Agreement by the Contractor and by the Secretary on behalf of the Government. In case an Exploration Permit/Temporary Exploration Permit had been availed of by the Contractor, the Effective Date of this Agreement shall be the date of issuance of said Exploration Permit/Temporary Exploration Permit. 216 Environment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social. 2.17 Exoloration means searching or prospecting for mineral resources by geological, geophysical and geochemical surveys, remote sensing, test pitting, trenching, 荐 膌 芙 drilling, shaft sinking, tunneling, or any other means for the purpose of determining the existence, exent, quality, and quantity of mineral resources and the feasibility of mining them for profit. 2.18 Exoloration Period shall mean the time period from the Effective Date of this Agreement which shall be for two (2) years, renewable for like periods but not to exceed a total term of eight (8) years subject to the pertinent provisions of the implementing rules and regulations of the Act. 2.lg Force Majeure means acts or circumstances beyond the reasonable control of the Contractor including, but not limited, to war, rebellion, insurrection, riots, civil disturbances, blockade, sabotage, embargo, strike, lockout, any dispute with surface owners and other labor disputes, epidemics, earthquake, storm, flood, or other adverse weather conditions, explosion, fue, adverse action by the Government or by any of its instnrmentality or subdMsion thereof, act of God or any public enemy and any cause as herein described over which the affected party has no reasonable control. 2.20 Foreign Exchange means any currency other than the currency ofthe Republic of the Philippines acceptable to the Govemment and the Contractor' V 2.21 Government means the Govemment of the Republic of the Philippines or any of its agencies and instrumentalities. 2.22 Gross Outout means the actual market value of the minerals or mineral products from each mine or mineral land operated as a separate entity, without any deduction for mining, processing, refining, transporting, handling, marketing, or any other expenses: Provided, That if the minerals or mineral products are sold or consigned abroad by the Contractor under C.LF. terms, the actual cost of ocean freight and insurance shall be deducted: Provided further, That in the case of mineral concentrates which are not traded in commodity exchanges in the Philippines or abroad zuch as copper concentrate, the actual market value shall be the world price quotation of the refined mineral products contained thereof prevailing in the said commodity exchanges, after deducting the smelting ,refining, treatment, insurance, transportation and other charges incurred in the process of converting mineral concentrates into refined metal traded in those commodity exchanges. 2.23 Mine Development refers to work undertaken to prepare an ore body or a mineral deposit for mining, including the construction of necessary infrastructure and related facilities. 2.24 Minerals mean all naturally occurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy. 2.25 Mineral Products mean materials derived from mineral ores/rocks and prepared into marketable state by metallurgical processes which include beneficiatiorl cyanidatiorl leaching, smelting, calcination and other similar processes. 2.26 Mining fuea means that portion of the Contract Area identified by the Contractor as defined and delineated in a Survey Plan duly approved by the Director/concerned Regional Director for purposes of development and/or utilization and sites for support facilities E1E..t 膌 艖 艐 艐 I 2.27 Minin&Ooerations means mining activities involving exploratioq feasibility study, environmental impact assessment, development, utilizatio4 mineral processing and mine rehabilitation 2.28 Notice means notice in writing telex or telecopy (authenticated by answer back or confirmation received) addressed or sent as provided in Section 16.2 of this Agreement. 2.29 Ore means naturally occurring substance or material from which a mineral or element can be mined and/or processed for profit. 2.30 Pollution means any alteration of the physical, chemical and/or biological properties of any water, air and/or land resources of the Philippines, or any discharge thereto of any liquid, gaseous or solid wastes or any production of unneoessary 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 afflect their utilization for domestic, comrnercial, industrial, agricultural, recreational or other legitimate purposes. 2.31 Secretary means the Secretary of the Department of Environment and Natural Resources. 2.32 State means the Republic of the Philippines. 2.33 Work Program means a document which presents the plan of major mining operations and the corresponding expenditures of the Contractor in its Contract Area during a given period of timg including the plan and expenditures for development of host and neighboring communities and of local geoscience and mining technology, as submitted and approved in accordance with the implementing rules and regulations of the Act. SECTION trI TERM OF AGREEMENT 31 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. In the event the Government decides to allow mining operations thereafter by other Contractor, this must be through competitive public bidding. After due publication of notice, the Contractor shall have the right to equal the highest bid upon reimbursement of all reasonable expenses of the highest bidder. =5l\ ) 莌 鮝 膌 SECTION IV CONTRACT AREA Area. This Age€ment covers a total area 41Location of Contract Size, Shape, and ofone thousand seven hundred twenty eight and 8535/10000 hectares (1,728.8535 has.), situated at Mankayan, Benguet and bounded by the following technical description (please refer to ANNEX'ts" - l:50,000 scale Location Map/Sketch Plan): Tie Point: S 48'23' W, 640.39 meters to Comer No. I from BLBM No. l, Suyoc, Mankayan, Benguet 49'094978'' Latltude 16膋 Conlcr No l Location i 47'485694'' Longltude 120膋 DISTANCE ol.) BEARING LINE 31Xl.IXl Dlle E膡st l腝2 66.47 Due North 2腝3 181.64 Due East M 201.09 N14腂27'E 45 108.63 N14腂19'E ,6 187.42 N Cb003'E 6-7 235.33 S85腂42'E 7-8 302.52 55'E S82腂 8-9 169.15 N08腂15'E %10 65.15 56'E 陭S89膋 1賂11 003'W 31Xl.CXl N膇 11腝12 3CXl.IXl N89膋47'E 12腝13 210.16 N89膋57'E 13腝14 227.92 Due South 14-15 81.91 53' VV S14膋 1,16 56.90 38'W N88膋 16腝17 34.37 04' W S19膋 17-18 493.64 04' W S19膋 18-19 210.56 50'E S81膋 19-20 294.85 14' W S10膋 2膜21 (苨2m.膇 N83腂 21腝22 'W 256.96 S19003' W 22腝23 15.75 30' W S05膋 2)24 膋 04'W291.75 25S腧 24腝 膋 S腧04'W277.72 2326 膋 04'W129.89 26腝27S腧 46'E637.53 27腝28S15膋 14'W209.42 28腝29S50膋 807.87 S01059'VV 29-30 腝31Due East35.29 Due South421.78 31-32 33Due West37Q37 32腝 Due South317.21 33-34 01'W256.26 34腝35S45膋 35腝3612'W259.08 S51膋 36腝37N29膋29'W268.28 37腝38N03027'E127.85 51'W 38-39S75膋201.44 39腝40N21膎5'W374.86 4HlDue North478.04 41腝42S37002'W764.16 42腝43362.57 S37005'W 腒 43-44 S39膋18'W 129.10 4445 S03膋29'W 8.40 4546 S37004'W 239.75 蹇47N89腂56'W 76 155腂 4748 S m膋04'W 133.38 4849 N89膋56'W 164.15 4)5Cl 躩M'W S韌67.26 腝51 Sm膋04'W223.90 51腝52 S37004'W11.07 52-53 N89056'W 293.35 5}54 S臥躩M'W 3CXl.IXl 54-55 N89056'W 3膇.IXl 5356 S m004'W3CXl.IXl 56-57N89膋鉶6'W 膡Xl.4Xl 57腝58N m004'E l,24Xl.IXl 58-59N IXl膋11'E 2C19.54 59(0N89腂224.47 'W 61161N Om辟 345.57 'E 腧 61(2 N89056'W888.36 62(3 N m004'E2,274.41 63腝64 Due West144.15 6465Due North 61Xl.膇 65腝66 Due Enst145.38 66腝67N CX1002'E 813.68 67腝6857'E1,354.25 S89膋 68-69 Due North387.21 69腝70Due East 1,073.61 7菇71 Due North268.38 71腝72Due East 2".腧 72腝73f12'E S IXl膋IXl.CXl 7}74Due East 149.61 74腝7532'W S01膋268.46 7,76Due South 1541.膇 76-77 Due East 219.76 77腝78Due South lm.膇 78-79Due South JXl.O葟 79腝80Due West 159.98 80腝81Due South 3Xl.4Xl 81-32N89046'E 166.87 82腝8337'W S16膜54.28 83腝34 S02056'E59.97 84-8557'E S02膋517.99 85-86 S67027'E 216.94 86-87 S16003'E 1541.14 87腝88 35'E S89膋92.96 88腝89 S06膋32'W 178.41 89腝90 腫苄 S89膋216.05 'E 9菇91 S m004'W922.17 91-92 Duc East 21.07 92腝93 N36膋56'E 947.35 94 9膡 N19002'E 173.70 94-95 N19膋44'E 743.70 9'96 N m003'E' 400.79 96-97 N83008'W 203.18 97-98 N83025'W 586.86 98腝99 S82038' W 104.38 99-llXl S82腂54' W 39.03 lCX1101 S82037' W 161.45 101腝1 N67007'W 151.35 荓 腁 莋 艖 芌 菇 ON V SEC膡 EXPLORAT10N 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 total term of eight (8) years, subject to annual review and approval by the Director to evaluate compliance with the terms and conditions of this Agreement: Provided, That further renewal may be granted by the Secretary under circumstances as defined in the implementing rules and regulations of the Act. In case where a Temporary Exploration Permit was issued, the Period of such Temporary Exploration Permit shall be included as part of the Exploration Period of this Agreement. 5.2 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 'C" and 'D"). The amount to be spent by the Cootractor in conducting exploration activities under the terms of this Agreement during the Exploration Period shall be in the aggreBate of not less than that specified for each ofthe Contract Years, as follows: For the Exploration Work Program: I PhP 2,770,00000 Ist Contract Year : PhP 9,230,00000 2nd Contract Ycar: : PhP 12,000,00000 Total For the Enwiromlental Work Program PhP 294,14000 Total In the event of edension ofthe Exploration Period, the amount to be spent every V year shall first be agreed upon by the parties. In the event of termination ofthis Agreement, the Contractor shall only be obliged to expend the pro-rata amount for the period of such Contract Year prior to termination, If during any Contract Year, the Contractor should expend more than the amount to be expended as provided above, the excess may be subtracted from the amount required to be expended by the Contractor during the succeeding Contract Years, and should the Contractor, due to unforeseen circumstances or with the consent ofthe Government, expend less during a year, then the deficiency shall be applied to the amount to be expended during the succeeding Contract Years. 花 苂 膌腃 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 the Declaration of Mining Project Feasibility, the Contractor shall finally relinquish any portion ofthe Contract Area not necessary for mining operations and not covered by any Declaration of Mning Project Feasibility. -F... 荧 腛 腝 54 Survey of the Contract Area - The Contractor shall cause the survey of the perimeter of the Contract Area through an application for survey, complete with requirements, filed with the concerned Regional Office simultaneous with the submission of the Declaration of Mining Pdect Feasibility. Survey retums shall be submitted to the concerned Regional Director for approval within one (l) year from receipt of the Order of Survey complete with the mandatory requirements stated in the implementing rules and regulations of the Act. 55 Declaration of Mining Project Feasibility - During the Exploration Period, the Contractor shall submit to the Director through the concerned Regional Director, a Declaration of Mining Project Feasibility together with a Mning Project Feasibility Study, a Three (3)-Year Development and Construction or Commercial Operation Work Progranr, a complete geologic report of the area and an Environmental Compliance Certificate. The Mining Project Feasibility Study and Work Program are subject to approval by the Director. Failure of the Contractor to submit a Declaration of Mining Project Feasibility during the Exploration Period shall be considered a substantial breach of this Agreement. 56 Reporting a) Periodic Reports - During the Exploration Period, the Contractor shall submit to the Director tkough the concerned Regional Drector, quarterly and annual accomplishment reports under oath on all activities conducted in the Contract Area from the Efiective 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 submined 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 tnap at a minimum l:50,000 scale, copies of originals of assay results, duplicated samples, field dat4 copies of originals from drilling reports, maps, environmental work program implementation and detailed expenditures showing discrepancieVdeviations 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 ofthis Agreement. b) Final Report - The Contractor shall submit to the Director through the concemed Regional Director, a final report under oath upon the expiration of the Exploration Period which shall be in the form and substance comparable to published professional reports of respectable international institutions and shall incorporate all the findings in the Contract Area including location of samples, assays, chemical analysis, and assessment of mineral potentials together with a geologic map of l:50,000 scale at the minimum showing the rezults ofthe exploration. Such report shall also include detailed expenditures incurred during the Exploration Period. In case of diamond drilling, the Contractor shall, upon request of the Director/concemed Regional Director, submit to the Regional Office a quarter of the core samples which shall be deposited in the Regional Office Core Library for safekeeping and reference. A..\ 荧 艘 腛 莌 c) Relinquishment Report - The Contractor shall submit a separate relinquishment report with a detailed geologic report ofthe relinquished area accompanied by maps at a scale of l:50,000 and results of analyses and detailed expenditures, among others. SECTION VI DEVELOPMENTAND CONSTRUCTION PERIOD mine including 61complete the development of the Timetable - The Contractor shall the construction of production facilities within thkty six (36) months from the submission of the Declaration of Mining Project Feasibilrty, subject to such extension based on justifiable reasons as the Director may approve, upon recommendation of the Regional Director. 62 Reporting a) Annual - The Contractor shall submit, within sixty (60) days after December 3l of each year, to the Director through th€ concerned Regional Director, an armual report which states the major activities, achievements and detailed expenditures during the year covered including rnaps, assays, rock and mineral analyses and geological and environmental reports progress 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 concerned Regional Director. Such report shall integrate all information in maps of appropriate scale and quality as well as in monographs or reports in accordance with intemational standards. ON Vll SEC膡 OPERATING HERIOD 71Timetable腝The Contractor shali sub雊t,withi thic(30)dayS befOre completion of雊 72 73 Expansion and Modification of Facilities - The Contractor may make expansions, modifications, improvements, and replacements of the mining facilities and may add new facilities as the Contractor may consider necessary for the operations: Provided, That such plans shall be embodied in an appropriate Work Program approved by the Director. 74 Reporting a) Quarterly Reports - Beginning with the first Calendar Quarter following the commencement of the Operating Period, the Contractor shall submit, within thirty (30) days after the end of each Calendar Quarter, to the Drector through the concemed Regional Director, a Quarterly Report stating the tonnage of production in terms of ores, concentrates, and their corresponding grades and other types of products; value, destination of sales or exports and to whom sold; terms of sales and expenditures. b) Annual Reports - During the Operating Period, the Contractor shall submit within sixty (60) days from the end of each Calendar Year, to the Director through the concerned Regional Director, indicating in sufficient detail: b.l) The total tonnage of ore reserves, whether proven, probable, or inferrd the total tonnage of ores, kind by kind, broken down between tonnage mined, tonnages transported from the minesite and their corresponding destination, tonnages stockpiled in the mine and elsewhere in the Philippines, tonnages sold or committed for export (whether actually shipped from the Philippines or not), tonnages actually shipped from the Philippines (with full details as to purchaser, destination and terms of sale), and if known to the Contractor, tofitages refined" processed or manufactured in the Philippines with full specifications as to the intermediate products, by-products or final products and ofthe terms at which they were disposed; 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 prograrn, including the investment actually made or committed; b.3) Profile of work force, including management and stafr stating particularly their nationalities, and for Filipinos, their place of origin (i.e., barangay, towr; province, region); and b.4) Ovmership of the Contractor, particularly with respect to nationality. The Contractor shall also comply with other reporting requirements provided under Section 270 of the implementing rules and regulations of the Act. SECTION VIII FISCAL REGIME 8.1 General Principle - The fiscal regime of this Agreement shall be govemed by the principle according to which the Government expects a reasonable return in economic value for the utilization of non-renewable mineral resources under its national sovereignty while the Contractor expects a reasonable return on its investment with special account to be taken for the high risk of exploration, the -=+\ 莋 腛 莌 I terms and conditions prevailing elsewhere in the industry and any special efficiency to be gained by a particularly good performance ofthe Contractor. 82 Registration Fees - Within fifteen ( 15) days upon receipt of the notice of approval ofthe MPSA from the concerned Regional Office, 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 ofthe same. 83 Occupation Fees - Prior to registration of this Agreement and at the same date every year thereafter, the Contractor shall pay to the concemed MunicipaVCity Treasurer an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations. Ifthe fee is not paid on the date specified, the Contractor shall pay a surcharge of twenty five percentum (25%) of the amount due in addition to the occupation fees. 84 Share of the Govemment - The Govemment 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) ofthe National Internal Revenue Code, as amended, as well as other taxes, duties, and fees levied by existing laws. For purposes of determining the amount of the herein Govemment Share, the Contractor shall strictly comply with the auditing and accounting requirernents 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 1991". 85 Pricing of Sales - The Contractor shall endeavor to obtain the best achievable price for its production and pay the lowest achievable marketing commissions and related fees. The Contractor shall seek to strike a balance between long-term sales comparable to policies followed by independent producers in the international mining industry. The Contractor shall likewise seek a balanced distribution among consumers. Insofar as sales to Contractor's affiliates are concerned, prices shall be at arm's length standard and competing offers for large scale and long-term contracts shall be procured. The Bureau shall be fumished a copy of the said Sales Agreernent subject to confidentiality between the Bureau and the Contractor. 86 Associated Minerals - If minerals other than gold copper, silver 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 share of the Govemment. SECTION Ix WORK PROGRAMS 91 Submission to Government - Within the periods stated herei& the Contractor shall prepare and submit to the Director through the concemed Regional Drector, a Work Program and corresponding Budget for the Contract Area stating the Mining Operarions and expenditures which the Contractor proposes to carry out -?=f.- .../-" ) 莋 艑 膌 菇 during the period covered with the details and particulars set forth elsewhere in this Agreement or in the supporting documents. 92 Government's Examination and Revision of Work Program - Should the Govemment wish to propose a revision to a certain specific feature in the Work Program or Budget, it shall, within thirty (30) days after receipt thereo{, provide a Notice to the Contractor speciling h reasonable detail its reasons therefor. Promptly thereafteq the Government and Contractor will meet and endeavor to agree on the revision proposed by the Govemment. In any event, the revision of any portion of said Work Program or Budget in which the Government shall fail to notiry the Contractor ofthe proposed revision shall, insofar as possible, be carried out as prescribed herein. If the Govemment should fail within sixty (60) days from receipt thereof to notiry Contractor of the proposed revisions, the Work Program and Budget proposed by the Contractor shall be deemed to be approved. 93 Contractor's Changes to Work Program - It is recognized by the Government and the Contractor that the details of any Work Program may require changes in the light of changing circumstances. The Contractor may make such changes: Provided, That it shall not change the general objective of the Work Program: Provided further, That changes which entail a variance of at least twenty percentum (200lo) shall be subject to the approval ofthe Director. 9.4 The Government's approval of a proposed Work Program and Budget will not be unreasonably withheld. SECTIoN x 1 ENVIRONMENTAL PROTECTIONANDMINE SAF.ETYANDITEALTII 1N 10.1 The Contractor shall manage its Mining Operations in a technically, n r-"i"ffy, \ socially, culturally and environmentally responsible manner to achieve the \ sustainable development objectives and responsibilities as provided for under the \ implementing nrles and regulations of the Act; 10.2 The Contractor shall prepare a plan of mining so that its damage to the environment will be minimal. To the extent possible, control of pollution and the transformation ofthe 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 implemorting rules and regulations of the Act; 10.4 An Environmental Compliance Certificate (ECC) shall be secured first by the Contractor prior to the conduct of any development works, construction of production facilities and/or mine production activities in the Contract Area; 10.5 The Contractor shall submit within thirty (30) Calendar days after the issuance and receipt of the ECC, an Environmental Protection and Enhancement Program (EPEP) using MGB Form No. 16-2 covering all areas to be affected by development, utilization and processing activities under this Agreement. The Contractor shall allocate for its initial environment-related capital expenditures approximately ten percent (10%) of the total project cost or in such amount depending on the environmentaVgeological conditioq nature and scale of operations and technology to be employed in the Contract Area; 荐 腛 腛 10.6 The Contractor shall submit, within thirty (30) days prior to the begnning of every calendar year, an Annual Environmental Protection and Enhancement Program (AEPEP), using MGB Form 16-3, which shall be based on the approved EPEP. The AEPEP shall be implemented during the year for which it was submitted. To implement its AEPEP, the Contractor shall allocate annually three to five percent (3%-5%) of its direct mining and milling coss depending on the environmentaVgeologic condition, nature and scale of operations and technology employed in the Contract Area; 10.7 The Contractor shall establish a Mine Rehabilitation Fund (MRF) based on the financial requirements of the approved EPEP as a reasonable environmental deposit to ensure satisfactory compliance with the commitments/strategies of the EPEP/AEPEP and availability of funds for the performance of the EPEP/AEPEP during the specific project phase. The MRF shall be deposited as Trust Fund in a govemment depository bank and shall be used for physical and social rehabilitation of areas afiected by mining activities and for research on the social, technical and preventive aspects of rehabilitation; 10.8 The Contractor shall set up mitigating measures such as mine waste and mill tailings disposal systenr, mine rehabilitation or plaq water quality monitoring, etc. to minimize land degradation, air and water pollutioq acid rock drainage and changes in hydrogeology; 10.9 The Contractor shall set up an Environmental and Safety Office at its minesite 荲 manned by qualified personnel to plan, implement and monitor its approved EPEP; 10.10 The Contractor shall be responsible in the monitoring of environmental safety and 腒 health conditions in the Contract Area and shall strictly comply with all the rules and regulations embodied under Mines Administrative Order No. MRD-51, Series of 1991, otherwise known as the "Revised Mine Safety Rules and Regulations"; 10. I I 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 ofthe Act. SECTION XI RIGIITS AND OBLIGATIONS OF THE PARTMS I 1.1 Obligations of the Contractor: a) To exclusively conduct sustainable Mining Operations within the Contract Area in accordance with the provisions of the Act and its implementing rules and regulations; b) To construct and operate any facilities specified under the Mineral or approved Work Program; c) To determine the exploratio4 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; g( 腃 艓 艐 膌腞 permits purpose C)To all necessary or desirable for the Mining secure of Operations; 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; 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 be open for inspection; h)inspecting To allow access to Government during reasonable hours in the Contract Area and examining pertinent records for purposes of monitoring compliance with the terms of this Agreement; To hold the Government free and harmless from all claims and accounts of all kinds, as well as demands and actions arising out of the accidents or injuries to persons or properties caused by Mining Operations of the Contractor and indemnifr the Govemment for any expenses or costs incurred by the Govemment by reason of any such claims, accounts, demands or actions; In the development of the community: j.1) To r*ognize and respect the rights, customs and traditions "r\Y indigenous cultural communities over their ancestral lands and to \ allocate royalty payment of not less than one percent (I%) ofthe value \ ofthe 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, educatior\ 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, j 3) To allot annually a minimum of one percent (1%) of the direct mining and milling costs necessary to implement the activities undertaken in the development of the host and neighboring communities. Expenses for community development may be charged against the royalty payment of at least one percent (l%) ofthe gross output intended for the concerned indigenous cultural community; j. ) To give preference to Filipino citizens who have established domicile in the neighboring communities, in the hiring of personnel for its mining operations. If necessary skills and expertise.tre curently not available, the Contractor must immediately prepare and undertake a training and recrultment program at lts expense; EK 膩 艔 腝 腝 j 5) To incorporate in the Mining Project Feasibility Study the planned expenditures necessary to implement (. I ) to (.3) of this Section; k) In the development of Mining Technology and Geosciences: k.1) In 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 intemationally accepted standards and practices. Such maps shall be made available to the scientific community in the most convenient and cost effective forms, subject to the condition that the Contractor may delay release of said information for a reasonable period of time which shall not exceed tkee (3) years; k.2) To systematically keep the data generated from the Contract/Mining Area such as cores, assays and other related informatiorl including economic and financial data and make them a@essible 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 Govemment or local mining company the appropriate technology it may adapt in the exploration, development and commercial utilization of the minerals in the Contract Are4 k.4) To allocate research and development budget for the advancement of mining technology and geosciences in coordination with the Bureau, research institutions, acaderne, etc. ; k.5) To replicate data, maps and reports cited in (k.1) and (k.2) and furnish the Bureau for archiving and systematic safekeeping which shall be made available to the science and technology community for conducting research and undertaking other activities which contribute to the development of mining, geoscience and processing technology and the corresponding national pool of manpower talents: Provided, howevel that the release of dat4 maps and the like shall be similarly constrained in accordance with (k. I ) and (k.2) above; To incorporate in the Mning 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, nrles and regulations. 11.2 Rights ofthe Contractor The Contractor shall have the right: a) To conduct Mining Operations within the confines of its Contract/Mining Area in accordance with the terms and conditions hereof and that it shall not interfere with the rights ofother ContractorylesseeVOp eratorcl lgrnlttees: Of possession ofthe Contract Are4 with full right of ingress and egress and the right to occupy the same, subject to surface and easement rights; To use and have access to all declassified geological, geophysical, drilling, production and other data relevant to the mining operations; To sell, assigrr, transfer, convey or otherwise dispose of all its rights, interests and obligations under the Agreement subject to the approval of the Govemment; To employ or bring into the Philippines foreigrr 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. Everytime foreign technologies are utilized and where alien executives are employeq 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; To enjoy easement rights and use of timber, water and other natural resources in the Contract Area subject to pertinent laws, rules and regulations and the rights of third parties; Of repatriation of capital and remittance of profits, dividends and interest on loans, subject to existing laws and Bangko Sentral rules and regulations; and h) To import when necessary all equipment, spare parts and raw materials required in the operations in accordance with existing laws and regulations. I 1.3 Obligation of the Govemment The Government shall: Ensure that the Contractor has the Govemment's full cooperation in the exercise ofthe rights granted to it under this Agreement; Use its best efforts to ensure the timely issuance of necessary permits and similar authorizing documents for use of the surface of the Contract Area; and To cooperate with the Contractor in its efforts to obtain financing contemplated herein from banks or other financial institutions: Provided, That such funncing arangements will in no event reduce the Contractor's obligation on Govemment rights hereunder. SECT10N X蝕 ASSETS AND EQUIPMENT 12.2 All materials, equipment, plant and other installations erected or placed on the Contract Area ofa movable nature by the Contractor shall remain the properry of the Contractor. The Contractor shall have the right to remove and re-export such materials and equipment, plant and other installations from the Philippines, subject to existing rules and regulations. In case of cessation of Mining Operations on public lands occasioned by its voluntary abandonment or withdrawal, the Contractor shall have a period of one (l) year from the time of cessation within which to remove its improvements; otherwise, all social infrastructures and facilities shall be tumed over or donated tax {iee to the proper government authorities, national or local, to ensure that said infrastructures and facilities are continuously maintained and utilized by the host and neighboring communities. I SECT10N X蝕 ILIPPINE PERSONNEL EMPLOYMENT AND TRAINING OF P蝕 on a mutually acceptable Chairman of the tribunal is persons until agreement selected. Such arbitration shall be initiated and conducted pursuant to Republic Act No. 876, otherwise known as the "Arbitration Act". In any event, the a$itration shall be conducted app$ing the substantive laws of the Republic of the Philippines. 14.3 Each party shall pay fifty percentum (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 INCENTIVf,S AND CREDITS l5.l This Agreement may be suspended for failure of the Contractor: (a) to comply with any provision or requirement of the Act and/or its implementing rules and regulations; (b) to pay taxes, fees and/or other charges demandable and due the Government. 15.2 This Agreement terminates or may be terminated for the following causes: (a) expiration of its ternr, whether original or renewal; (b) withdrawal from the by the Contractor; (c) violation by the Contractor of the Agreement's terms and conditions; (d) failure to pay tixes, feeVor charges or financial obligations for two (2) consecutive years; (e) false statement or omission of facts by the Contractor; and (0 any other cause or reason provided under the Act and its implementing nrles and regulations, or any other relevant laws and regulations. 15.3 All statements made in this Agreement shall be considered as conditions and essential parts hereoe and any falsehood in said statements or omission of facts which may alter, change or affect substantially the fact set forth in said statements shall be a ground for its revocation and termination. 15.4 The Contractor may, by giving due notice at any time during the term of this Agreement, apply for its cancellation due to causes which in the opinion of the Contractor, render continued minhg operation no longer feasible or viable. In this case, the Secretary shall decide on the application within thirty (30) days from notice: Provided, That the Contractor has met all the financial, fiscal and legal obligations. 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 cas€ of a written waiver. The Government's right to seek recourse and relief by all other means shall not be construed as a waiver of any succeeding or other default unless the contrary intention is reduced in writing and signed by the party authorized to exercise the waiver. 15.6 In case of termination, the Contractor shall pay all the fees and other liabilities due up to the end of the year in which the termination becomes effective. The Contractor shall immediately carry out the restoration of the Contract Area in accnrdance with good mining industry practice. __F\ 荧 腛 艘 腝 芵 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, inler alia shall constitute breach of contract upon which the Govemment may exercise its right to terminate the Agreement: a) Failure of the Contractor without valid reason to commence Commercial Production within the period prescribed; and b) Failure ofthe Contractor to conduct mining operations and other activities in accordance with the approved Work Programs and/or any modification 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 OTIIER PROVISIONS V 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 ofthis Agreement. 16.2 Notice A1l notices, demands and other communications required or permitted hereunder shall be made in writing, telex or telecopy and shall be deemed to have been dul\ \ given notice, in the case oftelex or telecopy, if answered back or confirmation N received, or if delivered by hand, upon receipt or ten days after being deposited in \.. the mail, airmail postage prepaid and addressed as follows: If to the Govemment: THE SESRETARY Department of Environment and Natural Resources DENR Building , Visayas Avenue Dilimaq Quezon City If to the Contractor : TTc hESDENT Itugon - Suyoc Mines, Inc. 7s Floor, Ortigas Building Ortigas Avenue, Pasig City Either party may substitute or change such address on notice thereof to the other party 16.3 Governing Law This Agreement and the relation between the parties hereto shall be govemed 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 proisions of the 閔 20r 腁 '腒 Act, its implementing rules and regulations and other relevant laws and regulations. 16.4 Suspension of Obligation a) Any failure or delay on the part of any party in the perlormance of its obligation or duties hereunder shall be excused to the extent attributable to Force Majeure. b) If Mining Operations are delayed, curtailed or prevented by such Force Majeure causes, then the time for enjoyng 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 stch Force Majeure causes, shall promptly give Notice to the other in writing of any such delay or failure of performance, the expected duration thereof and its anticipated ef[ect and shall use its efforts to remedy zuch delay, except that neither Party shall be under any obligation to settle a labor dispute- 16.5 Amendments This Agreement shall not be annulled amended or modified in any respect except by mutual consent in writing ofthe herein parties. IN WITNESS WEEREOF, the Parties hereto have executed this Agreement, as of the day and year first above written THE REPUBLIC OF THE BY: OH. r腣 S腧 of Environment and atural Resources ITOGON腜 SUYOC BY: N荮 l菇 腶  莊 _膜 腜 `膜腠 '腅 腵 腣 腣  艳 腎 艤艭艢艤艮艥 SIGNED N 腀 颬 腀 腸 腀 腀 腃 莓 1  苂 鎇 诘 腥 莋 ACKNOWLEDGDIIENT Republic of the Philippines) Ci4t al 6a<,zn ) s s tl Before me, a Notary Public for and in the City of Quezon, personally appeared HON. ANTONIO H. CERILLES, with Community Tax Certificate No. 07460519 issued on January 13, 2000 at Dumalinao, Zamboanga del Sur, in his capacity as Secretary of the Department of Environment and Natural Resources, and ALBERTO M. IVIONTILLA, 酏h Conlmutt T苍 Ced腧赝e No腜 腒遽d腧 ln hS Capactt as PreJdent ofltugon腜Suy(鯔 郻臱 臨 设轒 me a.nd to me known to be the same persons who executed the foregoing instrument 腣(22) pages, consisting of twenty two including this acknowledgment page, and acknowledged to me that the same is their voluntary acts and deeds. IN WITNESS WHEREOF, I have hereunto set my hand and affix my notarial seal, this JlSl day of l4a^,cL L.ovn I V Doc. No. d 4/L  莋 觰 .花 誔 閑菇 豚 陣 :閏 譌 韊遰 Series of 19 l-oo<: V ea:V'roforma\rrysa-i.doc reYised (20-Mar".00) 1 28153 PM 22