腫,鏺腒R Xi l110S lj This ITIINERAL PRODUCTTON SHARTNG AGREEMENT ("Agreement") is made and :1fl".1#:.",," or..on city, Phitippines, this _ day ll-d&-__ o, $tt u" THE REPUBLIC OF THE pHtLtpptNES, herein referred to as the GOVERNMEIIT, represented in this act by the Secretary of the Department of Environment and Natural Resources, with oflices at the Department of Environment and Natural Resources Building, Visayas Avenue, Diliman, euezon City and KING EAGLE EXPLORATTON & il[NtNG CORPORAT|ON, a corporation duly organized and existing under the laws of the Republic of the philippines, herein refered to as the CONTMCTOR, with office at 2nd Ftr., Door 4, Atdevinco Shopping Arcade, Roxas Avenue, Davao City and represented in this act by its presicieni Noe B. Taojo, as authorized by its Board of Oirectors (please refer IoANNEX A) WTNESSETH : WHEREAS, the 1987 Constitution of the Repubtic of the philippines provides in Article Xll, Section 2 thereof that all lands of ihe public domain,'waiers, minerals, coal, petroleum, and other natural resources are owned by the dtate and that their exploration' doveropment and utirization shafl be undlr the fufl contror and supervision of the State; WHEREAS, the Constitution further provides that the State may direc{y undertake such activities, or it may enter into a Co-production, .foint Venture, or Mineral Production Sharing Agreement with Filipino citizens, or cooieiaiivef partnersnips, corporations or associations at least sixty per centum of whose caphalization is owned by such citizens; YIl,!l?:, qrf:g: to Repubtic Acl No. 7942, orherwise known as "The phitippine Mrntng Acl of 1995", which took eJfecl on Og April 1995, the Secretary of the Department of Environment and Natural Resources i" *ff,ori.J io enter into Mineral Production Sharing Agreements in furtheranc€ of the objectives ot tne uovemment and the Constitution to bolster the national economy through sustainable and systematic development and utilization of mineratla;d;; WHEREAS, the Govemment 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 proiect contemplated herein; WHEREAS, the Contractor desires to ioin and assist the Government in the sustainable development and utilization for commercial purposes of certain gold, copper, silvor and other associated mineral deposits existing in the Contract Area ( as herein defined)' ,. WHEREAS, the Contractor has access to all the financing, technical compelence, technology and environmenlal management skills required to prompfly and effectively carry out the objectives ofthis Agreement. NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual covenants, terms and conditions hereinafter set forth, it is hereby stipulated and agreed as follows: sEcTtoN I SCOPE This Agreement is a Mineral produclion Sharing Agreement entered into pursuant lo the provisions of the Act and its implementing rules and rcgulations. The primary purpose of this Agreement is to pr;vide for the rational exploration, development and commercial utiliza tion of certain gold, copper, silyer and other associated mineral deposits existing within the Contract. Area, with alt necessary services, technology and fin;ncing to be fumished or ananged by the Contractor in accordance-with the provislons of this Agreement. The Contractor shall not, by virtue of this Agreement, acquire any title over the ConlracuMining Area without prejudiie to the acquisition by the Contractor of the land/surface rights through any mode of acquisition provided for by law. 腱 艹 The Contractu shall undertake and execute, for and on behalf of G.ovemment, sustainable mining operations in accordance the of lhis Agreemenl, and is hereby Wth the piorisions ol this Agreement, constituted and appointed. for the purpose as the exclusive entity to conduct mining operations in the Conlract Area 13 The Contractor shall assume all the exploration risk such that if no minerals in commercial quantity are developed and produced, it will not be entifled to reimbursement- 14 During.the term of this Agreement, the total value of production and sale of minerals derived from the mining operations conlemplated herein shall be accounted for and divided between the Govemment and the Contractor in accordance with Section Vlll hereof -?+( 腔 腁 腁腝 腞荶 腞腞 腞 2 sEcTroN I DEFINITIONS As used in this Agreement, the following words and terms, whelher singular or plural, shall have the following respective meaning : 2.1 'Act" refers to Republic Act No. 7942, otheMise known as the .philippine Mining Act of 1995'. 2.2 Aqreement means this Mineral Production Sharing Agreement. 2.3 Associaled Minerals mean olher ores/minerals which occur logether with lhe principal ore/mineral. 2.4 Banqko Sentral means Bangko Sentral ng Pilipinas. 2.5 Budqet means an estimate of expenditures to be made by Contractor in mining operations contemplated hereunder to accomplish lhe Work program for each particular period. 2.6 Calendar Year or Year means a period of twelve (12) mnseculive months sta ng with ihe first day of January and ending on Oecember 31, while "Calendar Quarted means a period oflhree consecutive months with the first calendar quarter slarting with the first day of January. 2.7 Cgmmercial 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 Philipoine Constitution means the 1987 Constitution of the Republic of the Philippines adopted by the Constitutional Convention of 19g6 on Octobe|ls, 1986 and ratified by the peopte of the Repubtic of the Philippines on February 2, 1987. 2.9 Contracl Area means the area onshore or offshore delineated under the Mineral Production Sharing Agreement subject to the relinquishment obligations of the Contractor and properly defined by latitude and longitude or bearing and distance. 2.10 _Contract lggr 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 KING EAGLE RXPLORATTON AND M|NING CORPORATION or its assignee or assignees of interest under this Agreement: provided, That the assignmtnt of any of suctr lnterest is accomplished pursuant to the pe(inent provisions of thl implementing rules and regulations of the Act. 2.12 Declaration of Minino Feasibility means a document proclaiming the presence of minerals in a specific site that are recoverable by socially \,,, 腏艏 ) 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 Geoscienc€s 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. ln case an Exploration PermiuTemporary Exploration Permil had been availed of by the Contractor, the Effective Date of this Agreement shall be the date of issuance of said Exploration PermivTemporary Exploration Permit. 2.16 Environment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social. 2.17 ExDloration means searching or prospecting for mineral resources by geological, geophysical and geochemical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling, or any other means for the purpose of determining the exislence, extent, quality, and quantity of mineral resources and the feasibility of mining them for profrt. 2.'18 Exploration Period shall mean the time period from the Effective Date of this Agreement which shall be for two (2) years, renewable for like periods but not to exceed a total term of eight (8) years subiecl to the pertinent provisions of the implementing rules and regulations of the Act. 2.19 Force Maieure means acts or circumstances beyond the reasonable control of the-Contrac{or including, but not limited to war, rebellion, insunection, riots, civil disturbances, blockade, sabotage, embargo, strike, lockout, any dispute with surface owners and olher labor disputes, epidemics, earthquake, storm, flood, or other adverse r,veather conditions, explosion, fire, adverse action by the Govemment or by any of its instrumentality or subdivision thereof, act of God or any public enemy and any cause as herein described over which the affected party has no reasonable control. 2.20 Eqlglg!-Elebelge means any cunency other than the cunency of the Republic of the Philippines acceptable to the Govemment and the Contractor. 2.21 Government means the Government of the Republic of the philippines or any of its agencies and instrumentalities. 222 Gross Output means the actual market value of the minerals or mineral producls from each mine or mineral land operated as a separate entity, :'119:j_i"y 9:dr"tion for minins, processing, ietining, transportino, ninOtirg, mafielrng. or any other expenses: provided, That if the mineralJor mineril producls are sotd or consigned abroad by the Contractor rnaui C.if. t.r_", the.aclual cost of ocean freight and insurance snaff Ue aeAuAJ: proviOea Iunher, that in the case of mineral conc€ntrates which are not traded in commodity exchanges in the philippines or abroad su"t a" -copper concentrate, the actual market value shall be the world price quotation of the rerined mineral products contained thereof preYailing in the said commodity exchanges, after deducting the smelting ,refining, trealment, insurance, transportation and other charges incurted 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 deposil for mining, including the construction of necessary infraslructure and related facilities. 2.24 Minerals mean all naturally occuning inorganic subslances 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 beneficiation, cyanidation, leaching, smelting, calcination and other similar processes. 2.26 Mininq Area means that portion of the Contract Area identilied by the Contraclor as delined and delineated in a Survey Plan duly approved by the Director/concemed Regional Director for purposes of development and/or utilization and sites for support facilities. 2.27 Mininq Operations means mining activities involving exploration, feasibility study, environmental impact assessment, development, utilization, mineral processing, and mine rehabilitation. 2.28 Notice means notice in writing, telex or lelecopy (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 materialfrom 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 unnecessary noise or any emission of objectionable odor, as will or is likely to creale or render such water, air, and land resources harmful, detrimentai or injurious to public health, safety or welfare or which will adversely affect their utilization for domestic, commercial, industrial, agricultural, recreational or other legitimate purposes. 2.31 qecretarv means the Secretary of the Department of Environment and Natural Resources. State means the Republic of the Philippines. 2.33 Work Proqram means a document which presents operations and the corresponding expenditures Contract Area during a gven period of time, -5,f\ 艮芆 expenditures for development of host and neighboring communities and 芉 local geoscience and mining technology, as submitted and approved 芎 accordanc€ with the implementing rules and regulations of the Act. SECTION III TERM OF AGREEMENT 34 This Agreement shall have a term of twenty-five (25) years from Effective Date, and may be renewed thereafter for another term not exceeding twenty five (25) years. The renewal of this Agreement, as well as the changes in the terms and conditions thereof, shall be upon mutual consent by the parties. ln the event the Government decides to allow mining operalions thereafter by other Contraclor, this must be through competitive public bidding. After due publication of nolice, 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 41 Size, Shape, and Location of Contract Area. This Agreement covers a total area of two thousand six hundred seventy{hree hectares (2,673.00 has.), siluated- in Pantukan, Compostela Valley and bounded by the following geographical coordinates (please refer to ANNEX "8" _ -1:5O,OOO scale Location Map/Sketch Plan): CORNER LAT:TUDE LONG:TUDE 艐 7膋11'00" 126膋 01'30" 艑 7膋 13'00腅 126腅 01'30腅 艒 7膋 13'00" 126膋 02'00' 艓 7膋 11'oO" 126膋 02'00腅 SECT:ON V EXPLORAT:ON PER:OD 51 Timetable for Exproration - The contractor shafl commence Exproraiion activities not tater than three (3) months atter tne gfeitive -Orf" fo-i! punoO of two (2) years, renewabte for lrke periods bri;"ii;;;;"d ;tIrti"rm or six .(8) years, subject to annuat review ,no inl'-fjioa", t" evaluale compliance with the terms and "pi.r"i'-oy Provided, That further renewat condltions of'tnis noreement, circumstances as defined in .ry ou grrni"J"Ly'tnl i""r"ilri"rrou, Act. the implemeniing rules and ,.grLtionl ot tn" ln 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 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 Exploralion Work Program: 1st Contract Year : PhP 645,000.00 2nd Contract Year : PhP 1,700,000.00 Total : PhP 2,345,000.00 For the Environmental Work Program PhP 537,000.00 ln the event of renewal of the Exploration Period, the amount to be spent every year shall first be agreed upon by the parties. ln the event of termination of this Agreement, the Conlractor shall only be obliged to expend the pro-rata amount for the period of such Contract Year prior to termination. lf during any Contract Year, the Contractor should expend more than the amount to be expended as provided above, the excess may be subtracted from the amount required to be expended by the 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 applied to the amount to be expended during the succeeding Contract years. 53 Relinquishment of Total/Portion of the Contract Area - During the Exploration Period, the Contractor may relinquish totally or partially the original Contract Area. After lhe Exploration Period and prior to or upon approval of a Declaralion of Mining Project Feasibility, 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. 54 Final Mining Area - The final Mining Area shall not be more than five thousand hectares (5,000 has.) for metallic minerals. The Director may allow the Conlractor to hold more than one (1) finat 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 supported by a Mining project Feasibility Study, lopmenuutilization Work Program and application for survey. '-==tc' (.- 荐莓 腅 腟 腛 - The Contractor shall cause the survey of the 55Contract Area Survey of the perimeter ot 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 Project Feasibility. Survey returns shall be submitted to the concerned Regional Director for approval within one ('l) year from receipt of the Order of Survey complete with the mandatory requirements stated in the implementing rules and regulations of the Act. 56- During Exploration Period, the Declaration of Mining Project Feasibility the Contraclor shall submit to the Director through the conerned Regional Director, a Declaration of Mining Project Feasibility together with a Mining Project Feasibility Study, a Three (3)-Year Development and Construction or Commercial Operation Work Program, a complete geologic report of the area and an Environmental Compliance Certificate. The Mining Project Feasibilily 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. 5.7 Reporting a) Periodic Reports - During the Exploration Period, the Contractor shall submat to the Director through the concerned Regional Director, quarterly and annual accomplishment reports under oath on all activities conducted in the Contract Area from the EtFective 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 'l: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 subjecl to the confidentiality clause of this Agreement. b) Final Report - The Contractor shall submit to the Director through the concerned Regaonal Director, a final repo( under oalh upon the expiration of the Exploration period which shall be in the form and substance comparable to published professional reports of respectable inlernational institutions and shall incorporate all the lindings in the Conkact Area including location of samples, assays, chemicaianalysis, and ass€ssment of mineral potentials together with a geologic map of 1:50,000 scale at the minimum showing the results oflhe Jxploration. Such report shall also include detailed expenditures incurred during the Exploration Period. ln case of diamond drilling, lhe Contractor shall, quarter Regional Office a 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 repo( with a detailed geologic report of the relinquished area accompanied by maps at a scale of 1:S0,0OO and results of analyses and detailed expenditures, among others. sEcTtoN vt OEVELOPMENT AND CONSTRUCTION PERIOD 64 Timetable - The Contraclor shall complete the development of the mrne including the construction of production facilities within thirty six (36) months from the submisslon of the Declaration of Mining project Feisibility, subject lo such extension based on justifiable reasons as the Director may approve, upon recommendation of the concerned Regional Director. 莿 苂 菒 艓 Reporting a) Annual - The Contractor shall submit, within sixty (60) days after December 31 of each year, to the Director through the concerned Regional Director, an annual report which states thie major activities, achievements and detailed expenditures during the yjar covered, including maps, assays, rock and mineral analysJs and ieotogicat anO environmental progress reports during the Oeveiopme"ni ana Construction Period. b) Final. Report - Within six (6) months from the completion of the oevetopment and construction activilies, the Contractor shall submit a final report to the Director through the concerned negion; biiecto, Such report sha integrate all informatron in rnap" of ap'propiiJe scale and quality, as well as in monographs or reports in iiloiJan"e w,tt international standards. SECT:ON V腡 OPERAT:NC PER10D  龿 ll The COntractOr sha腡 commence lpOn approva1 0r the afOresald vvOrk tO commence cOmme腵 cial Produc10n within the period sha腡 (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 and any modification thereof shall be subject to approval by the Director. 腃 腏 膌艏 Expansion and Modification of Facilities - The Contractor may make expansions, modifications, improvements, and replacemenls of the minrng facilities and may add new facilities as the Conlractor may consider necessary for the operations: Provided, That such plans shall be embodied in an appropriale Work Program approved by the Director. 74 Reporting a) Quarterly Reports - Beginning with the first Calendar Quarter following the commencement of the Operating Period, the Contractor shall submit, within thirty (30) days after the end of each Calendar Quarter, to the Director through the concerned Regional Director, a euarterly Report stating the tonnage of production in terms of ores, concentrates, and lheir 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 siny (60) days from the end of each Calendar year, to the Director through the concerned Regional Director, an Annual Report indicating in sufficient detail: b.1) The total lonnage of ore reserves, whether proven, probable, or inferred, the lotal tonnage of ores, kind by kind, bioken down between tonnage mined, tonnages transported from the minesite and lheir corresponding destination, tonnages stockpiled in the mine and elsewhere in the philippines, tonnages sold or committed for export (whether actually shipped from th; 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, lonnages refined, processed or manufactured in the Philippines with full specifications as to the intermediate products, by-products or final products and ot the terms at which tirey were disposed; b.2) Work accomplished and work in progress at the end of the vear tn question with respect io all the installations and lacilities rel;ted to the utilization program, including the investment actually made or committed; b.3) Profile,of work force, including management and staff, stating particularly their nationalities, and for Filipinos, their place of origii (i.e., barangay, town, province, region); and -={'\.- li) b.4) Ownership of the Contractor, particularly with respect to nationality. The Contractor shall also comply with other reporting requirements provided for in the implementing rules and regulations of the Act. SECT:ON V蝖 : FISCAL RECIME 81governed General Principle - The fiscal regime of thas Agreement shall be by the principle according to which the Governmenl expects a reasonable return in economic value for the ulilization of non-renewable mineral resources under its nalional sovereignty while the Contractor expects a reasonable return on ils investment with special account to be taken for the high risk of exploration , the terms and conditions prevailing elsewhere in the industry and any special efficiency to be gained by a particularly good performance of the Contraclor. Registration Fees - Within fifteen (15) days upon receipt of the notice of approval of the Agreement trom the concerned Regional Otflce, the Contraclor shall cause the registration of lhis 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 registrataon of this Agreement within the prescribed period shall be sufficient ground for cancellatton of the same. Occupation Fees - Prior to registration of this Agreement and at the same date every year lhereafter, the Contractor shall pay to the concerned Municipaucity Treasurer an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations. lf the fee is not paidonthe date specitied, the Contractor shall paya surcharge of twenty five percenlum (25%) ofthe amount due in addition to the occupalion fees. Share of the Govemment - The Govemment Share shall be the excise tax on mineral products at lhe time of removal and at the rate provided for in Republic Act No. 7729 amending Section 151 (a) of the National lnternal Revenue Code, as amended, as well as olher taxes, duties, and fees levied by existing laws. For purposes of determining the amount of the herein Government Share, the Contractor shall skictly comply with the auditing and accounting requirements prescribed under exisling laws and regulations. The Goyernment Share shall be allocated in accordance with Sections 290 and 292 of Republic Act No. 7160, otheMise known as .The Local Government Code of 199'1". Pricing of Sales - The Contractor shall endeavor to obtain the best achievable price for its production and pay the lowest achievable marketing commissions 荥 莉 F菈荔 term sales comparable to policies followed by independent producers in the international mining industry. The Contractor shall likewise seek a balanced dislribution among consumers. lnsofar as sales to Contractor's afJlliates 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 furnished a copy of the said Sales Agreement subject to confidentiality between the Bureau and the Contractor. 8.6 Associated Minerals - lf minerals other than gold, copper, silver and other associated deposits 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. sEcTtoN tx WORK PROGRAMS 91 Submission to Government - Within the periods stated herein, the Contractor shall prepare and submit to the Director through the concerned Regional Director, a Work Program and corresponding Budget for the Contract Area stating the Mining Operations and expenditures which the Contractor proposes to carry out during the period covered with the details and particulars set forth elsewhere jn this Agreement or in the supporting documents. 9.2 Government's Examination and Revision of Work program _ Should the Government wish to propose a revision to a certain sp;cific feature in the Work Program or Budget, it shall, within thirty (30) days after receipt thereof, provide a Notice to the Contractor specifying in reasonable detail iis reasons therefore. Promptly thereafter, lhe Government and Contractor will meet and endeavor to agree on the revision proposed by the Government. In any event, the revision of any portion of said Work program or Budget in which the.Government shall fail lo notify the Contraclor of the propoied revision shall, insofar as possible, be carried out as prescribed herein. lf the Government should fatl withtn sixty (60) days from .eceipl thereof to notify Conlractor of the proposed revisions, the Work program and Budget proposed by the Contractor shall be deemed to be approved. 93program Contractois Changes to Work - lt is recognized by the Government and the Contractor thal the details of any Woik progiam may require changes in the light of changing circumstances. The Contractor mav make s!ch changes: Provided, That it shall not change the general objective of the Work Program: Provided further, That changeJ which-entail a variance of at least twenty perc€ntum (20%) shall be iubject to the approval ;f the Director 94 The Government's approval of a proposed Work program and Budget will not be unreasonably withheld. ->+1-_ 12 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 sustainable development ob.iectives and responsibilities as provided for under the implementing rules and regulations of the Aci; 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 of the mined-oul areas or materials into economically and socially productive forms must be done simultaneously with miningi 10.3 The Contractor shall submit an Environmental Work program during the Exploration Period as prescribed in the implementing rules and regulations of the Act; 10.4 An Environmentat Compliance Certificate (ECC) shalt be secured lirst by the Contractor prior to the conducl of any developmenl 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 Environmenlal protection and Enhanc€ment 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 initiaienvironment_related capital expenditures approximately ten percent (.lO%) of the total project cost or in such amount depending on the environmentaUgeologicai condition, nature and scale of operalions and technology to b=e eriployed in the Contract Area: '10.6 The Conlractor shall submit, within thirty (30) days prior to the beginning of every calendar year, an Annual Environmental protection and EnhincemLnt Program (A-EPEP), using MGB Form .16-3, which shall be baseO on the approved EPEP. The AEpEp sha be implemented during the year for which it was..submitted. To implement its AEpEp, tne Contrictor 'snall allocate annually three to five percent (3%_S.k) ot its direct mining and milling costs depending on the environmentaUgeoiogic conOition, naiure and scale of operations and technology employed in the Contract Aiea; 10.7 The Contractor shall establish a Mine Rehabilitation Fund (MRF) based on the. financial requiremenls of the approved EpEp as' ; reasonable environmental deposit to ensure satisfactory comptiincl with the commitments/strategies of the EpEp/AEpEp a;d avaitabilitv;ifunds for the performance of the EpEp/AEpEp during tte spec,nc frolecii:iase. fne UCf shalt be deposited as Trust Fund in a jovernment depo'iiio&- Janr anO snarr p^ly:l:ll1y sociar reha6irilation 腜腜 腝腝腒腝 腜腜腜腝 腝 by :`v minins J ,,"'腧 ::,,.r.,:* lT" "r ",J"" "n6J.o 1O.B The Contractor shall set up mitigating measures such as mine waste and mill tailings disposal system, mine rehabilitation or plan, water quality monitoring, etc. lo minimize land degradation, air and water pollution, acid rock drainage and changes in hydrogeology; 10.9 The Contractor shall set up an Environmental and Safety Office at its minesite manned by qualified personnel to plan, implement and monitor its approved EPEP; 10.10 The Conlractor shall be responsible in the monitoring of environmental, safety and health conditions in the Contract Area and shalt stricfly comply with ail the rules and regulations embodied under DAO No. 2O0O-9g, olhenvise 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 lhe Act. sEcTtoN xt RIGHTS AND OBLIGATIONS OF THE PARTIES 11.1 Obligations of the Contractor: a) To exclusively conduct sustainable Mining Operations wrthin the Contract Area in accordance with the provisions of ths Act and its implementing rules and regulations; b) To construct and operate any facilities specified under the Mineral Agreement or approved Work program; c) To-. determine the exploration, mrning 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 l\Iining Operations: To keep accurate technical records about the mining operations as well as linanciat and marketing accounts and make"the; ;;;idl"'I" \rovernment represenlatives authorized by the Director for the ouroose of assessing the performance and comptiance of th;4."i.;;;ii'il; terms of this Agreement. Authoiized ,.pr.."ntrtir."'-ti" oti,ur. G-overnment Agencies may also have to accordance wilh existing laws, rules """""i """n-r";ni.';n and regulattons: 詏 14 g) To furnish the Bureau all the data and information gathered from the Contracl Area and that all the books of accounts and records shall be open for inspection, g) To allow access to Government during reasonable hours in inspecttng the Contract Area and examining pertinent records for purposes of monitoring compliance with the terms of this Agreement; To hold the Governmenl free and harmless from all claims and accounts of all kinds, as well as demands and actions arising out of the accidents or injuries lo 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: 1) j.1) To recognize and respect the rights, customs and traditions of indigenous cultural communities over their ancestral lands and to allocate royalty payment of not less than one percent (1%) of the value of the gross output of minerals sold: j.2) To coordinate with proper authorities in the development of the mining community and for those living in the host and neighboring communities through social infrastruclure, Iivelihood programs, education, water, electricity and medical services. ivhere 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 annualty a minimum of one percent (1%) of the direct mining and milling costs necessary to implemeni the activities underlaken in the development of the host and neighboring communities. Expenses for community development itay be charged against the royalty payment of at teast one percent (1%) of the gross output intended for the concerned indrgenous iulturat community; j.4) T! give preference to Filipino citizens who have established domicile in.the neighborjng communities, in the hiring of personnel for its mining operations. lf necessary stitts anO-expertiie are currently not available, the Contractor must immediately preoare and undertake a tratning and recruilment program at its ex;e;s; j.5) To incorporate in the Mining prorect Feasrbility Study the planned expendirures necessary to imptement U.1 ) lo (J.i) of th; Seciio;: k) ln the development of Mining Technology and Geosciences: ttt菌 膋g轖 , 鷣譐 轢 IS:鏘 腸 maps and repOrts that a腵 e 荃 =duCe gedOg ca,geop膍腌 腌 苝 膜 艏 appropriate in scale and in format and substance which are consistent with the internationally accepted standards and practices. Such maps shall be made available to the scientific community in the most convenient and cost effective forms, subject to the cpndition that the Contractor may delay release of said information for a reasonable period of time which shall not exceed three (3) years, k.2) To systematically keep the data generated from the ContracuMining Area such as cores, assays and other related information, including economic and financial data and make them accessible to students, fesearchers 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; k.4) To allocate research and development budget for the advancement of mining technology and geosciences in coordination with the Bureau, research institutions, academe, 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 olher a;ivities which contribute to the development of mining, geoscience and processing technology and lhe conesponding 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 Mrning project Feasibrlity Study the planned expenditures necessary to tmplement all the plans and programs set forth in lhis Agreement; and m) To pay all other taxes and fees mandated by existing laws, rules and regulations. 1 1.2 Rights of the Contractor The Contractor shall have the right: a) To conduct Mining operat Ons腁 possession b) Of of the Contract Area, with full right of ingress and egress and the right to occupy lhe same, subject to surfac€ and easement rights; c) To use and have access to all declassified geological, geophysical, drilling, production and other data relevant to the mining operations; d) To sell; assign, transfer, convey or otherwise dispose of all its rights, interests and obligations under the Agreement subject to the approval of the Government; e) To employ or bring into the Philippines foreign technical and specialized personnel, including the immediate members of their families as may be required in lhe operations of the Conlractor, 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. EveMime foreign technologies are utilized and where alien executives are employed, in 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 ipproval under existing laws, rules and regulationsi f) To enjoy easement rights and use of timber, water and other natural resources in the Contracl Area subject to pertinent laws, rules and regulations and the rights of third parties; g) Of repatriation of capital and remittance of profits, dividends and interest on loans, subject to existing laws and Bangko Sentral rules and regulalions; and h) To import when necessary all equipment, spare parts and raw materaals required in the operations in accordance with existing laws and regulattons. 1 1.3 Obligation of the Government The Government shall: a) Ensure that the Contractor has lhe Government,s full cooperation in the exercise of the rights granted to it under this Agreement, b) Use its best efforts to ensure the timely issuance of necessary permits and similar authorizing documents for ule of the surface oithe Contract Area; and c) To cooperate with the cOntractO腵 in ts efforts to obtain nnancing 腝腎 腜 腜 腜 腜腜 莇 sEcTtoN xI ASSETS AND EQUIPMENT 12.1 Ihe Contractor shall acquire for the Mining Operations only such assets that are reasonably estimated to be required in carrying out such Mining Operations. 12.2 All materials, equipment, plant and other installations erected or placed on the Contract Area of a movable nature by the Contractor shall remain the property of lhe Contractor. The Contractor shall have the right to remove and re-export such materials and equipment, plant aod other inslallations from the Philippines, subject to existing rules and regulations. ln case of cessation of Mining Operations on public Iands 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 turned over or donated tax free to the proper government authorities, national or local, to ensure that said infrastructures and facilities are continuously maintained and utilized by the host and neighboring communities. sEcTtoN x t EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL 13.1 The Contractor agrees to employ, to the extent possible, qualified Filipino personnel an all types of mining operations for which they are qualified; and after Commercial Production commences shall, in consultalion and with consent of the Government, prepare and undertake an extensive training programme suitable to Filipino nationals in all levels of employment. The objective of said programme shall be to reach within the timetable set forth below the following targels of "Filipinization": Unskilled Skilled Clericat Professional Management (y.) (y.) (%) (%) (y") Year 1 100 100 '100 80 70 Year 3 100 100 100 80 70 Year 5 100 100 100 80 80 Year 7 '100 100 100 90 90 Year 10 '100 100 100 100 '100 Year 15 100 100 100 100 100 13.2 Cost and expenses of training such Filipino personnel and the Contractor,s own employees shall be included in the Operating Expenses. 13.3 The Contractor shall not discriminate on the basis ofgender and shall respect the right of women workers to participate in poliiy and decision-making processes affecting their rights and benefits. tt / ~ 腒 腒 艐 腞 18 腞 SECTION XIV ARBITRATION 14.1 The Government and the Contractor shall consull with each other in good faith and shall exhaust all available remedies to settle any and all disputes or disagreements arising out of or relating to the validity, interpretations, enforceability, or performance of this Agreement before resorting to arbitration as provided.for in Section 14.2 below. 14.2 Any disagreement or dispute which can not be settled amicably within a period of one (1) year from the tame the issue was raised by a party shall be settled by a tribunal of three (3) arbilrators. This tribunal shall be constituted as follows: one to be appointed by the Contractor and another to be appointed by the Secretary. The first two appointed arbitrators shall consider names of qualified persons until agreement on a mutually acceptable Chairman of the tribunal is selected. Such arbitration shall be initiated and conducled pursuant to Republic Act No. 876, othen/vise known as lhe 'Arbitration Act'. ln any event, the arbitration shall be conducted applying the substantive laws of the Republic ofthe Philippines. '14.3 Each party shall pay lifty per centum (50%) of the fees and expenses of the Arbitrators and the costs of arbitration. Each party shall pay its own costs and attorney's fee. SECTION XV SUSPENSION OR TERMINATION OF CONTRACT, TAX INCENTIVES AND CREDITS 15.1 This Agreement may be suspended for failure of the Contractor: (a) to comply with any provision or requirement of the Act and/or its implementing rules and regulations; (b) to pay taxes, fees and/or other charges demandable and due the Government. 15.2 This Agreement terminates or may be terminated for the following causes: (a) expiration of its term, whether original or renewal; (b) withdrawal from the Agreement by the Contractor; (c) violation by ih; Contractor of the Agreement's terms and conditions; (d) failure to pay taxes, fees/or charges or financial obligations for two (2) consecutive yeais; (e) ialse statement or omission of facts by the Contractor; and (D any oiher caus" or reason provided under the Act and its implementing rules and regulations, or any other relevant laws and regulations. 15.3 All statements made in this Agreement shall be considered as condilions and essential parts hereof, and any falsehood in said statements or omission of facts which may alter, change or affect substantially lhe fact set fortn-in saiO sta ll be a ground for its revocation and termination. -=t\ .\., 腁 腝 艐 腞 19 腞 '15.4 The Contractor may, by giving due notice at any time during the term of this Agreement, apply for its cancellation due to causes which, in the opinion of the Contractor, render continued mining operation no longer feasible or viable. ln this case, the Secretary shall decide on the application within thirty (30) days from notace: Provided, That the Contractor has met allthe financial, fiscal and legal obligations. '15.5 No delay or omissions or course of dealing by the Government shall impair any of its rights unde. this Agreernent, 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 wilh good mining industry practice. '15.7 The withdrawal by the Contractor from the Mineral Agreement shall not release it from any and all financial, environmental, legal and fiscal obligations under thas Agreementi 15.8 The following acts or omission, inter alia shall constitute breach of contract upon which the Government may exercise its right to terminate the Agreement: a) Failure of the Contractor without valid reason to commence Commercial Production within the period prescribed; and b) Failure of the Contractor to conduct mining operations and other activities in accordance with lhe 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. sEcTtoN xvt OTHER PROVISIONS '16.1 Any terms and conditions resulting from repeal or amendment of any existing laws or regulation or from the enaitment oi a law, ,egrt.tion oi-"Oministratir. order shall be considered a pa( of this Agreemeni. 16.2 Notice back or confirmation received, or if delivered by hand, upon receipt or ten days after being deposited in the mail, airmail postage prepaid and addressed as follows: lf lo the Government: THE SECRETARY Department of Environment and Natural Resources DENR Buildang , Visayas Avenue Diliman, Quezon City lf to the Contractor : THE PRESIDENT King Eagle Exploration and Mining Corporation 2"o Flr., Door 4. Aldevinco Shopping Arcade Roxas Avenue, Davao 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 governed by and construed in accordance with the laws of the Republic of the Philippines. The Contractor hereby agrees and obliges itself to comply with the provisions of the Act, its implementing rules anA regulations and other relevant laws and regulations_ 16.4 Suspension of Obligation a) Any failure or delay on the part of any party in the performance of its obligation or duties hereunder shall be excusLd to theextent attributable lo Force Majeure.as defined in the Act. b) f_ Mining Operations are delayed, curtailed or prevented by such Force Majeure causes, then the,lime for enloying the rights an;'carrying out the.obligations thereby affecled, the terni of thi; Agreement and all rights and obligations hereunder shall be extended tor"i perioo equat to the period involved. c) The Party, whose abrlity to perform tls obligatrons rs affected bv such :?:? t:l.i* ,"?"ses, sha prompfly give Norice ro the other in writrng or any such delay or failure of performance, the expected duration jll,.:".:t^:lll".:T,:ipated efrect an-d sh"[ use iis enorts"to-rJiJ] suct to settle a 芤 荃 荂 荭 腟 腏 艹 16.5 Amendments This Agreement shall not be annulled, amended or modified in any respect except by mutual consent in writing of the herein parties. lN WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of the day and year first above written THE REPUBLIC OF THE PHILIPPINES BY : IEC 0I 2m2 :ALVAREZ Natural Resources KING EAGLE T10N AND MININC CORPORAT:ON TIN No BY: ~ 莉荎 莓 腌膌 NOE tt TAO腶 O Prdsident SIGNEDIN THE PRESENCE OF 膌 膌 荭 腏苂 艹腒 ACKNOVVLEDGMENT Republic ofthe Phi腡ppines) 00EZOAI Crry)ss Before me, a Notary Pub腡 c for and in the City of Quezon, personally appeared H邐 h Community Tax Certificate No. (l ALi苉 :鉹 腡 , in his capacity as Setretary of the Department