the Govemment desires to avail itself of the financial resources, WHEREAS, and skill, which the Contractor is capable of applying to the technical competence herein, mining operations of the project contemplated WHEREAS, the Contractor desires to join and assist the Government in the initial rational exploration and possible development and utilization for commercial purposes of ceiain copper, gotd, motybdenum and other associated mineral deposits existing in the Contract Area (as herein defined); WHEREAS, the Contractor has access to all the financing, technical comPetence, technology and environmental management skills required to promptly and effectively carry out the objectives of this Agreement, NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual covenants, terms and conditions hereinafter set forth, it is hereby stiPulated and agreed as follows: sEcTtoN I SCOPE 1.1. This Agreement is a Mineral Production Sharing Agreement entered into pursuant to the provisions of the Act and its implementing rules and regulations. The primary purpose of this Agreement is to provide for the rational exploration, development and commercial utilization of certain cgpryr, gold, molybdenum and other associated mineral deposits existing within the Contract Area, with all necessary services, technology and financing to be furnished or arranged by the Contractor in accordance with the provasions of this Agreement. The Contractor shall not, by virtue of this Agreemant, acquire any title oyer the Contract/Mining Area without Prejudice to the acquisition by the Contractor of the lancusurface rights through any mode of acquisition provided for by law. 1.2. The Contractor shall undertake and execute, for and on behalf of the 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 lhe 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 quantity are developed and produced, it will not be entitled to reimbursement. 1.4. During the term of this Agreement, the total value of production and sale of minerals derived from the mining operations contemplated herein shall be accounted for and divided between the Govemment and the Contraclor in accordance with Section Vlll hereof. a., 腒 .--)/ 艩 ,oilfr I sEcTloN DEFINITIONS As used in this Agreement, the following words and terms, whether singular or plural, shall have the iollowing respective meaning: 2.1. Act refers to Republic Act No. 7942, otheMise known as the "Philippine Minang Act of 1995.' 2.2. Aoreement means this Mineral Production Sharing Agreement. 2.3. Associated Minerals mean other ores/minerals, which occur together with the principal ore/mineral. 2.4. Banoko Sentral means Bangko Sentral ng Pilipinas 2.5. Budoet means an estimate of expenditures to be made by Contractor in mining operations contemplated hereunder to accomplish the Work Program for each particular Period 2.6. Bureau means Mines and Geosciences Bureau. 2.7. Calendar Year or Year means a period of tvvelve (12) consecutive months starting with the first day of January and ending on December 31, while "Calendar Quarte/' means a period of three consecutive months with the first calendar quarter starting with the first day of January. 2.A. Commercial Production means the production of sufficient quantity of minerals to sustain economic viability of mining operalions reckoned from the date of commercial operation as declared by the Contraclor or as stated in the feasibility study, whichever comes first. 2.9. Constitution or Philippine Constitution means the 1987 Constitution of the Republic of the Philippines adopted by the Constitutional Convention of 1986 on Octobe ls, 1986 and ratified by the People of the Rapublic of the Philippines on Febuary 2, 1987. 2.10. Contract Area means the area onshore or offshore delineated under the Mineral Produclion Sharing Agreement subject to the relinquishment obligations of the Contractor and properly defined by latitude and longilude or bearing and dislance. 2.1 1. Contract Year means a period of twelve ('12) consecutive months counled from the Effeclive Date of this Agreement or from the anniversary of such Effective Date. 2.12. Contaclot means Colet Mining and Development Corporation 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. .uffi Declaration of Mininq Feasibilitv means a document proclaiming the 2.13. pr"sen"" tf fi**rals in a specific site, wtrich are recoverable by socially acceptable, environmentally safe and economically sound methods specified in the Mine Development Plan. 2.'14. Deoartment or DENR means the Department of Environment and Natural Resources. 2.15. Director means the Director of Mines and Geosciences Bureau' 2.16. Effective Date means the date of execution of this Agreement by the Gntractor and by the Secretary on behalf ot the Govemment' 2.17. Environment means all facets of man's surroundings: physical, ecological' aestt.tic, clJltural, economic, historic, institutional and social' 2.18. ExDloration means searching or prospecting for mineral resources by ,""1"S".1, geophysic€l and geochemic€l surveys, remote sensing, test iltting, trenching, drilling, shaff sinking, tunneling or any other means for the purpdse of determining the existence, extent, quality and quantity of mineral resources and the feasibility of mining them for profit. 2.19. Exoloration Period shall mean the period from the Effective Date of this Agreement, which shall be for two (2) years, renewable for like periods but not to exceed a total term of six (6) years for nonmetallic minerals and eight (8) years for melallic minerals, subject to the pertinent proYisions of the implementing rules and regulations of the Act. 2.20. Force Maieure means acts or circumstances beyond the reasonable conlrol 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 Iabor disputes, epidemics, earthquake, storm, flood or other adverse weather conditions, explosion, fire, adverse action by the Government or by any of its instrumentality or subdivision thereof. act of God or any public enemy and any cause as herein described over which the affecled party has no reasonable control. 2.21. Foreion Exchanoe means any currency other than the currency of the Republic of the Philippines acceptable to the Government and the Contractor. 2.22. Govemment means the Government of the Republic of the Philippines or any of its agencies and instrumentalities. 2.23. Gross OutDut means lhe aclual 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 ar6 sold or consigned abroad by the Contraclor under C.l.F. terms, the actual cost of ocean freight and insurance shall be deducled: Provided further, That in the case of mineral concentrates which are not 腞 \ 芶 \-/\ 'CIJflfr traded in commodity exchanges in the Philippines or abroad such as copper conc€ntrate, 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 incuned in the process of converting mineral concentrates into refined metal traded in those commodity exchanges. 2.24. Mine Develooment refers to work undertaken to prepare an oro body or a mineral deposit for mining, including lhe construction of necessary infrastructure and related facilities. 2.25. Minarals mean all naturally occurring inorganic substances in solid, liquid' ges or any intermediale state excluding energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy 2.26. Mineral Products mean materials derived from mineral ores/rocks and pr.pareO i.,to marketable state by metallurgical processes which include beneficiation, cyanidation, leaching, smelting, calcination and other similar processes. 2.27. Minino Area means lhat portion of the Contract Area identified by the Contractor as defined and delineated in a Survey Plan duly approved by the Director/Regional Director concerned for Purposes of developmant and/or utilization and sites ior support facilities. 2.28. Minino Operations means mining activities involving exploration, feasibility study, environmental impact assessment, development, utilization, mineral processing and mine rehabilitalion. 2.29. Notice means notice in writing, telex or telecopy (aulhenticated by answer back or confirmation received) addressed or senl as provided in Seclion 16.2 of this Agreement. 2.30. Ore means naturally occuning substanc€ or maierial from which a mineral or element can be mined and/or processed for profit. 2.31. Pollution means any alteration of the physical, chemical and/or biologic€l properties of any water, air and/or land resources of the Philippines, or any discharge lhereto of any liquid, gaseous or solid wastes or any production of unnec€ssary noise or any emission of objectionable odor, as will or is likely to create or render such water, air, and land resources harmful, detrimental or injurious to public health, safety or welfare or which will adversely affect their utilization for domeslic, commercial, industrial, agricultural, recreational or other legitimale purposes. 2.32. Secretarv means the Secretary of the Department of Environment and Natural Resources. Work Prooram means a document which presents the plan of maior mrning 2.34. operations'anO the corresponding expenditures of the Contractor in its iontract Area during a given period of time, including the plan and expenditures for development of host and neighboring communities and of local geoscience and mining technology, as submitted and approved in accordance with lhe implementing rules and regulations of the Act sEcroN lll TERM OF AGREEMENT 3.1. This Agreement shall have a term of twenty-five (25) years from Effective Date, and may be renewed thereafter for another term not exceeding twenty flve (25) years. The renewal of this Agreement, as well as the changes in the terms and conditions thereof, shall be upon mutual consent by the parties ln the event the Government decides to allow mining operations thereafter by other Contraclor, 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 oi all reasonable expenses of the highest bidder' SECT:ON iV CONTRACT AREA 腜 This Agreement covers a ea on of Contract A腵 44 Size, Shape, and Loca Long:tude Latitude Comer 腅艓 122膋33'2258" 9膋41'36.02" 腝艔 33'2258" 122膋 41'4577'' 腅艕 9膋 122膋33'1272" 9膋41'45.77" 腝艖 33'12.72'' 122膋 9膋41'5554" 腝艗 122腅33'1272" 9膋41'5651" 腝艘 32'5676" 122膋 41'5651'' 艑腂 9膋 122膋32'5676'' 9膋42'15.86'' 艑腝 32'46.13'' 122膋 9膋42'1586" 艑艑 32'4613" 122膋 9膋42'5540" 艑艒 122膋32'2191" 9膋42'5540" 艑 122腅32'2191" 9膋43'0549" 艑艔 32'1204" 122膋 9膋43'05.49" 艑艕 32'12.04" 122腅 43'2418'' 艑艖 9膋 122腅31'56.93" 9膋43'2418'' 艑艗 31'5693" 122膋 9膋43'3393" 艑艘 122腅31'4708" 9膋43'33.93" V 艒腂 122腅31'4708" 9膋43'4369" 艒腝 122膋31'4350" 9膋43'4369" 艒艑 31'43.50" 122膋 9膋44'0400" 艒艒 122膋31'3400" 9膋0400" 4膍 艒艓 122膋31'34.00" 9膋44'2300" 艒艔 32'0350" 122膋 9膋44'2300'' 艒艕 122腅32'0350" 9膋 访1350" 艒艖 122膋32'2300" 9膋44'1350" 艒艗 122膋32'2300" 9膋44'04.00'' 艒艘 122膋32'3600" 9膋44'04.00'' 腧 122腅32'3600" 9膋44'13.50'' 艓腄 32'5600" 9膋122膋 44'13.50'' 艓艑 122膋32'5600" 9膋44'0400" 腧 122膋33'00.00" 9膋44'0400" 腧 122膋33'00.00" 9膋44'5373" 腧 122膋33'35.50" 9膋44'5373" 艓艕 9膋44'5203"122膋33'3550'' 艓艖 33'5438" 9膋44'5203"122膋 芨 9膋膍r5203"122膋33'59.97" 艓艘 9膋45'0000"122膋33'5997" 艔腂 9膋45'00.00''122膋35'0000" 艔腄 9膋42'4215''122膋35'00.00" 艔艑 9膋42'4215"122膋35'03.97" 艔艒 9膋42'32.38''122膋35'0397" 艔艓 9膋42'3238"122膋35'00.19" 艔艔 9膋42'29.07" 122膋35'00.19" 艔艕 9膋42'29.07" 122膋35'02.67" 艔艖 9膋42'27.97'' 122膋35'0267" 艔艗 9膋42'2797'' 122腅35'1093" 艔艘 9膋 42'0845" 122腅35'1093" 艕腂 9膋42'08.45'' 122膋 35'3063" v sEcTloN EXPLORATION PERIOD 5.1. Timetable for Exploration - The Contractor shall commence Exploration activities not later than three (3) months after the Effective Date for a period of two (2) years, renewable for like periods but not to exceed a total term of six (6) years for nonmetallic minerals and eight (8) years for metallic minerals, subject to annual review and approval by the Direclor in accordance with the implementing rules and regulations of the Act 5.2. Renewal of Exploration Period - ln case the Contractor opts for a renewal of its Exploration Period, it shall file prior to the expiration thereof, a renewal application in the Mines and Geosciences Bureau Central Office, accompanied by the mandatory requirements stipulated in the implementing rules and regulations of the Act The Director may grant the renewal of the Exploration Period on condition that the Contractor has substaniially V complied with the terms and conditions of the Agreement. ln cases where further exploration is warranled beyond the six (6)- or eight (8)-year period and on condition that the Contractor has substantially implemented the Exploration and Environmental Work Programs as verified by the Bureau, the Director may further grant renewal of the Exploration Period: Provided, That the Conlractor shall be required lo set up a performanc€ surety equivalent to the expenditure requirement of the Exploration and Environmontal Work Programs. 5.3. Work Programs and Budgets - The Contractor shall strictly comply with the approved Exploration and Environmental Work Programs togelher with their corresponding Budgets (please refer to ANNEXES "C' and "O'). The amount to be spent by the Contraclor in conducting Exploration aclivities under the terms of lhis Agreement during the Exploration Period shall be in the aggregate of not less than that specified for each of the Contract Years, as follows: For the Exploration Work Program. 1st Contract Year PhP 18,000,000.00 2nd Contract Year PhP 8,870,000.00 Total PhP 26,870,000.00 For the Environmental Work Program : PhP 2,687,000.00 ln the event of renewal of the Exploration Period, the amounl lo be spent every year shall flrst be agreed upon by the parties. 8 ln the event of termination of this Agreement, the Contraclor 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 excesF may be subtracted from the amount required to be expended by the Co;tractor during the succeeding Contract Years, and should the Contractor, due to unforeseen circumstances or with the consent of the Governmont' expend less during a year, then the deficiency shall be applied to the amount to be expended during the succeeding Contract Years. 5.4. Relinquishment of Total/Portion of the Contracl Area - During the Exploration Period, the Contractor may relinquish totally or partially the original Contract Area. After the Exploration Period and prior to or upon approval of a Declaration of Mining Feasibility by the Director, the Contraclor shall finally relinquish any portion of the Contract Area not necessary for mining operations and not covered by any Declaration of Mining Feasibility. 5.5. Final Mining Area - The Oirector may allow the Contractor to hold more than one (1) final Mining Area subject to the maximum limits set under the implementing rules and regulations of the Act: Provided, That each final Mining Area shall be covered by a Declaration of Maning Feasibility. 5.6. Declaration of Mining Feasibility - Within the term of the Exploration Period, the Contractor shall file in the Regional Office erncemed, the Declaration of Mining Feasibility of the Contract Area/final Mining Area supported by Mining Feasibility Study, Three (3)-Year Development and Construction or Commercial Operation Work Program, complete geologic report, an application for survey and the pertinent Environmental Compliance Certificate, among other applicable requirements. Failure of the Contractor to submit the Declaration of Mining Feasibility during the Exploration Period shall be considered a substantial breach of this Agreement. 5.7. Survey of the Contract Area - The Contraclor shall cause the survey of the perimeter of the Contract Area,fiinal Mining Area through an application for survey, complete with requirements, filed in the Regional Office concerned simultaneous with the submission of the Declaration of Mining Feasibility. Survey retums shall be submitted to the Regional Director concerned for approval within one (1) yoar from receipt oi the Order of Survey complete with the mandatory requirements stated in the implementing rules and regulations of the Ac1. 5.8. Reporting a. During the Exploration Period, the Contractor shall submit to the Director, through the Regional Director concemed, quarterly and annual accomplishment reports under oath on all activities conducted in the Contract Area from the Effective Date of this Agreement. The quarterly report shall be submitted not later than fifteen (15) days at the end of each Calendar Quarler 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 9 expenditures, raw and processed geological' geochemical, geophysical and radiometric data plotted on a map al a mlnlmum i:sfj,oilo scate, copies of originals of assay results, duplicated samples, field data, copies of originals from drilling reports, maps, enviionmental work program implementation and detailed expenditures showing discrepancies/ deviations with approved exploration and environmenlal plans and budgets as well as all other infbrmation of any kind coll€cted during the exploration activities All information submitted to the Bureau shall be subject to the confidentiality clause of this Agreement. b Final Report - The Contractor shall submit to the Director, through the Regionai Director concerned, a final report under oath upon the expiration of the Exploration Period which shall be in the form and sulstance comparable to published professional reports of respectable intemational institutions and shall incorporate all the findings in the Contract Area including location of samples, .assay-s, chemical analysis, and assessment of mineral potentials together with a geologic mJp of 1:50,0O0 scale at the minimum showing the results oflhe eiploration. Such report shall also include detailed expenditures incurred during the Exploration Period. ln case of diamond drilling, the Contraclor shall, upon request of the Direclor/Regional Director concerned, submit to the Regional Offlce concerned a quarter of the core samples, which shall be dePosited in the Regional Office Core Library for safekeeping and reference. CRelinquishment Report - The Contraclor shall submit a separale relinquishment report with a detailed geologic report of the relinquished area accompanied by maps at a scale of 'l:50'000 and results of analyses and detailed expenditures, among others. SECTION VI DEVELOPMENT AND CONSTRUCTION PERIOD 6.1. Timetable - The Contractor shall complete the develoPment of the mine including the construction of production facilities within thirty six (36) months from the submission of the Declaration of Mining Feasibility' subiect to such extension basod on justifiable reasons as the Director may approve, upon recommendation of the Regional Director concerned. 6.2. Reporting a. Annual - The Contractor shall submit, within sixty (60) days afier December 31 of each year, to the Direclor, through the Regional Oirector concerned, an annual report, which states the major activities, achievements and detailod expenditures during the year covered, including maps, assays, rock and mineral analyses and geological and 花膌 10 progress reports during the Development and environmental Construction Period. b. Final Report - Within six (6) months from the completion of the development and construction activities, the Contractor shall submit a Iinal report to the Oirector, through the Regional Director concemed. Such report shall integrate all intormation in maps of appropriate scale and quality, as well as in monographs or reports in accordance with internationai standards. SECTION VII OPERATING PERIOD 7.'1. Timetable - The Contractor shall submit, within thirty (30) days before completion of mine development and construction of production facilities, to the Director, through the Regional Director concerned, a Three-Year Commercial Operation Work Program. The Contractor shall commence commercial utilization immediately upon approval of the aforesaid Work Program. Failure of the Contractor to commence Commercial Production within the period shall be considered a substantial breach of the Agreement. 7.2. Commercial Operaiion Work Program and Budget - During the Operating Period, the Contractor shall submit to the Director, through the Regional Director mncerned, Work Programs and Budgets covering a period of three (3) years each, which shall be submitted not later than thirty (30) days before the expiration of the period covered by the previous Work Program. The Contractor shall mnduct Mining Operations and other activities for the duration of the Operating Period in accordance with the duly approved Work Programs and corresponding Budgets. 7.3. Expansion and Modification of Facilities - The Contractor may make expansions, modifications, improvements, and replacements of the mining facilities and may add new facilities as the Contractor may consider necessary for the operations: Provided, That such plans shall be embodied in an appropriate Work Program approved by the Direclor. 7 .4. Reporting a. Quarterly Reports - Beginning with the first Calendar Quarter following the commencement of the Operaling Period, the Contractor shall submit, within thirty (30) days after the end of each Calendar Quarter, to the Director, through the Regional Direclor concemed, a Quarterly Report stating the tonnage of production in terms of ores, crncentrates, and their corresponding grades and other types of producis; value, destination of sales or exports and to whom sold; terms of sales and expendilures. 膁 芶 b. Annual Reports - During the Operating Period, the Contractor shall submit within sixty (60) days from the end of each Calendar Year, to the Director, through the Regional Director concemed, an Annual Report indicating in sufficient detail: b.1. The total tonnage of ore reserves, \,vhelher proven, Probable, or inferred, the total tonnage of ores, kind by kind, broken down between tonnage mined, tonnages transported from the minesile and their crnesponding destination, tonnages stockpiled in the mine and elsewhere in the Philippines, tonnages sold or committed for export (whether actually shipped from the Philippines or not), tonnages actually shipped from the Philippines (with full details as to purchaser, destination and terms of sale), and if known to the Contractor, tonnages rerined, processed or manufactured in the Philippines with full specifications as to the intermediate products, by- products or final producls and of the terms at which they were disposed; b.2. Work accomplished and work in progress at the end of the year in question with respect to all the installations and facilities related to the utilization program, including the investment actually made or committed; and b.3. Profile of work force, including management and staff, stating particularly their nationalities, and for Filipinos, their place of origin (i.e., barangay, town, province, region) The Contractor shall also comply with other reporting requirements provided for in the implementing rules and regulations of the Act. SECTION VIII FISCAL REGIiIIE 8.1. General Principle - The fiscal regime of this Agreement shall be governed by the principle according to which the Government expects a reasonable return in economic value for the utilization of non-renewable mineral resources under its national sovereignty wl'lile the Contractor expects a reasonable return on its investment with special account to be taken for the high risk of exploration, the terms and conditions prevailing elsewhars in the industry and any special efficiency to be gained by a particularly good performance of the Contractor. ('15) of the notice of 82- fifteen days upon receipt Registration Fees Within the concerned, the approval of the Agreement from Regional Office with the said Contraclor shall cause the registration of this Agreement Regional Office and pay the registration fee at the rate provided in the existing rules and regulations. Failure of the Contractor to cause the 腜 腏 膫 臚 of this Agreement within the prescribed period shall be sufficient registration ground for cancellation of the same 8.3. Occupation Fees - Prior to registration of this Agreement and at the same date every year thereafter, the Contractor shall pay to the Municipal/City Treasurer concerned an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations. lf the fee is not paid on the date specified, the Contractor shall pay a surcharge of twenty five percent (25016) of the amount due in addition to the occupation fees. 8.4. Share of the Government - The Government Share shall be the excise tax on mineral products at the time of romoval and at the rate provided for in Republic Act No. 7729 amending Section 151 (a) of the National lntemal Revenue Code, as amended, as well as other taxes' duties and fees levied by existing taws. The Excise Tax shall be paid to the nearesl Bureau of lntemal Revenue Office in the province concemed. For purposes of determining the amount of the herein Government Share, lhe Coniractor shall strictly comply with the auditing and accounting requirements prescribed under existing laws and regulations. The Govemment Share shall be allocated in accordance with Sections 290 and 292 oI Republic Act No. 7160, otherwise known as 'The Local Govemment Code of 1991.' 8.5. Pricing of Sales - The Contractor shall dispose of the minerals and by- products produced at the highest market price prevailing in the locality: The Contractor shall also pay the lowest achievable marketing crmmissions and related fees and shall negotiate for more advantageous terms and conditions sub.iect to the right to enter into long-lerm sales or marketing mntracts or foreign exchange and commodity hedging contracts, which the Government acknowledges to be acceptable notwithstanding that the sale price of the minerals and by-produc{s may from time to time be lower, or the terms and conditions of sales are less favorable, than that available elsewhere The Contraclor shall seek to strike a balance between long-term sales or marketing contracts or foreign exchange and commodity hedging contracts mmparable to policies followed by independent producers in the intemational mining industry. The Contractor shall likewise seek a balanced distribution among consumers. lnsofar as sales to Contracto/s affiliate(s) are crncerned, Prices shall be at arm's length standard, and competing offers for large scale and long-term contracts shall be procured. Before any sale and/or shipment of mineral product is made, existing and future marketing mntracl(s)/sales agreemenl(s) shall be submitted to the Director, copy furnished the Regional Oirector concerned, for registration. At the same time, the Contractor shall regularly inform the Director in writing of any revisions, changes or additions in said contract(s)/agreement(s). The Contractor shall reflect in its Monthly/Quarterly Report on Produciion, Sales and lnventory of Minerals, as well as in the lntegrated Annual Report, 腏 艏 the corresponding registration number(s) of the marketing contract(s)/agreement(s) governing the export or sale of minerals 8.6. Associated Minerals - lf minerals other than copper, gold, molybdenum are discovered in commercial quantities in the Contract Area, the value thereof shall be added to lhe value of the principal mineral in computing the Govemment share. sEcrloN lx WORK PROGRAMS 9.1. Submission to Goyernment - Within the periods stated herein, the Contractor shall prepare and submit to the Direclor, through the Regional Director concemed. a Work Program and conesponding Budget for the Contract Area statang the Mining Operations and expenditures which the Contractor proposes to carry out during the period covered with the details and particulars set forth elsewhere in this Agreement or in the supporting documents. g.2. Government's Examination and Revision of Work Program - Should the Government decide to propose a revision to a certain specific feaiure in the Work Program or Budget, it shall, within thirty (30) days after receipt thereof, provide a Notice to the Contractor specifying in reasonable detail its reasons therefore. Promptly thereafter, the Government and Contraclor will meet and endeavor to agree on the revision proposed by the Govemment. ln any event, the revision of any portion of said Work Program or Budget in which the Government shall tail to notify the Contractor of the proposed revision shall, insofar as possible, be carried out as prescribed herein. lf the Government should fail within sixty (60) days from receipt thereof to notify Contractor of the proposed revisions, the Work Program and Budget proposed by the Contractor shall be deemed to be approved. 9.3. Contracto/s Changes to Work Program - lt is recognized by the Govemment 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 obiective of the Work Program: Provided further, That changes which entail a variance of at least twenty percent (2oolo) shall be subject to the approval ofthe Director. 9.4. The Govemment's approval of a proposed Work Program and Budget will not be unreasonably withheld. SECT10N X achieve the sustainable development objectives and responsibilities as provided for under the implementing rules and regulations of the Acl 10.2. The Contractor shall ensure that the standards of environmenlal protection are met in the course of the Mining Operations. To the extent possible, control of pollution and lhe lransformation of the mined-out areas or materials into economically and socially productive forms must be done simultaneously with mining. 10.3. The Contractor shall submit an Environmental Work Program during the Exploralion Period as prescribed in the implementing rules and regulations of the Act. 10.4. An Environmental Compliance Certificate (ECC) shall be secured first by the Contractor prior to the conducl of any development works, construction of produclion facilities and/or mine production activities in the Contraci Area' 10.5. The Contraclor shall submit within thirty (30) calendar days after the issuanc€ and receipt of the ECC, an Environmental Protection and Enhancement Program (EPEP) using MGB Form No l6-2 covering all areas to be affected by development, utilization and processing activities under this Agreement. The Contractor shall allocate for its initial environment-related capital expenditures approximately ten percent (10%) of the total project cost or in such amount depending on the environmental/geological condition, nature and scale of operations and technology to be employed in the Conlract Area. 10.6. The Contractor shall submit, within thirty (30) days prior to the beginning of every calendar year, an Annual Environmental Protection and Enhancement Progiam (AEPEP), using MGB Form 16-3' which shall be based on the appioved 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 (3o/.-5o/o) ol its direct mining and milling costs V depending on the environmental/geologic condition, nature and scale of operations and technology employed in the Contract Area 10.7. The Conlractor shall establish a Contingent Liability and Rehabilitation Fund (CLRF) which shall be in the form of the Mine Rehabilitation Fund (MRF) and the Mine Waste and Tailings Fee (MWTF). The MRF shall be based on the flnancial 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 proiecl phase. The MRF shall be deposited as Trust Fund in a government depository bank and shall be used for physical and social rehabilitation of areas affected by mining activities and for research on the social, technical and prevenlive aspecls of rehabilitation. The MWTF shall be collected based on the amounts of mine waste and mill tailings generated during the conduct of Mining Operations. The MWTF 15 shall accrue to a Mine Waste and Tailings Reserve Fund and shall collected in a government depository bank for payment of compensation be deposited for damages caused by the Mining Operations. 1o I 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 complience with the commitments/strategies of the EPEP/AEPEP and availability of funds for the performance of the EPEP/AEPEP during the specific project phase The MRF shall be deposited as Trust Fund in a government depository bank and shall be used for physical and social rehabilitation of areas afiected by mining activities and foi research on the social' technical and prevenlive aspects of rehabilitation. 10.9. The Contractor shall set up mitigating measures such as mine waste and mill tailings disposal system, mine rehabilitation or plan, water quality monitoring, etc. ti minimize land degradation, air and water pollution, acid rock drainage and changes in hydrogeology. 色 lO.1O.The Contraclor shall set up an Environmental and Safety Office at 腀 minesite manned by qualified personnel to plan, implement and monitor 色 approved EPEP. 'lo.'l1.The Contractor shall be responsible in the monitoring of environmental, safety and health conditions in the Contract Area and shall strictly comply with all the rules and regulations embodied under DAO No' 2000-98, otherwise known as the 'Mine Safety and Health Standards " 10.12.The Contractor shall be responsible for the submission of a final mine rehabilitation and/or decommissioning plans, including its flnancial requirements and incorPorating the detaits and particulars set forth in the implementing rules and regulations of the Act. SECT:ON Xl To extract, remove, use and dispose of any tailings as authorized by d. an aPProved Work Program; e. To secure atl permits necessary or desirable for the purpose of Mining Operationsi To keep accurate technical records about lhe Mining Op€rations, as welt as flnancial and marketing acrounts, and make them available to Government representatives authorized by the Director for the purpose of assessing the performance and compliance of the Contraclor with the terms of this Agreement. Authorized representatives of other Govemment Agencies may also have access to such acrounts 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 acrounts and records shall be open for insPection; h To allow access to Govemmenl during reasonable hours in inspeclang 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 c€used by Mining Operations of the Contractor and indemnify the Government for any exponses or costs incurred by the Govemmant by reason of any such claims, accounts, demands or actions; ln the development of the community: j.1. To recognize and respect the rights, customs and tradilions of indigenous cultural communities over their ancestral lands and to alloc€te royalty payment of not less than one percent ('l %) of the value of the gross output of minerals sold; j.2. To coordinate with proper authorities in the development of the mining community and for those living in the host and neighboring communities through social infrastructure, livelihood programs, education, water, eleclricity and medical services. Where traditional self-sustaining income and the mmmunity activities are identified to be present, the Contractor shall assist in the preservation and/or enhancement of such activities, 鏩 腎 j3 To allot annually a minimum of one percent (1%) of t 躓 mining and milling costs necessary to implement the 芇 芈 节 裴 undertaken in the development of the host and nei 芍 腨 腎 communities. Expenses for community development 腀 艢 覢 腞 膫 腃 膌 腞芎 charged against the royalty payment of at ieast one percent (1%) of the gross output intended for the concemed indigenous cultural community; j.4. To give preference to Filipino citizens who have establishad domicile in the neighboring communities, in the hiring of personnel for its mining operations. lf necessary skills and expertise are currently not available, the Contractor must immediately prepare and undertake a training and recruitment Program at its exPense; and j.5. To incorporate in the Mining Feasibility Study the planned expenditures necessary to implement 0.'1) to (J.3) of this Section; kthe development of Mining Technology and Geosciences: ln k.1. ln the course of its operations, to produce geologic€|, geophysical, geochemical and other types of maps and reports that are appropriate in scale and in format and substance which are consistenl with the internationally accepted standards and practices. Such maps shall be made available to the scientific community in the most convenient and cost effective forms, subject to the condition that the Contractor may delay release of said information for a roasonable period of time which shall not exceed three (3) years; k.2. To systematically keep the data generated from the Contracu Mining Area such as cores, assays and other related information, including economic and financial data and make them accessible to students, researchers and other persons responsible for developing mining, geoscience and processing technology subject to the condition that the Contractor may V 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., and k.5. To replicate data, maps and reports cited in (k.1) and (k.2) and furnish the Bureau for archiving and systematic safekeeping which shall be made available lo the science and technology community for conducting research and undertaking other 誽 腒 18 a 腌 which contribute to the development of mining, activities processing corresponding geoscienc€ and technology and the 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 Mining Feasibility Siudy tho planned expenditures necessary to implement all the plans and programs set forth in this Agreement; and m. To pay all other taxes and fees mandated by existing laws, rules and regulations. 11.2. Rights of the Contractor: a. To crnducl Mining Operations within the conlines of its ContracuMining Area in accordance with the terms and conditions hereof and without interfering with the rights of other Contractors/Lessees/Operators/ Permittees/Permit Holders; 腒 b. Possession of the Contracl Area, with full right of ingress and egress and the right to occupy the same, subject to surface and easement rights; c. To use and have acc€ss lo all declassifled geological, geophysical, drilling, produc{ion and other data relevant to the mining operations; d. To sell, assign, transfer, convey or otheMise disPose of all its rights, interests and obligalions under the Agreement subject to thg approval of lhe Government, e. To employ or bring into the Philippines foreign technical and specialized personnel, including the immediate members of their families as may be required in the operations of the Contractor, subject to applicable laws and regulations: Provided, That if the employment connection of such foreign persons with the Contractor ceases, the applicable laws and regulations on immigration shall apply to them. Eyery time foreign technologies are utilized and where alien executives are employed, an effeclive 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; r To enjoy easement rights and use of timber, water and other natural resources in the Contract Area subject to pertinent laws, rules and regulations and the rights of third parties; g. Repatriation of capital and remittanc€ of profits, dividends and interest on loans, subject to existing laws and Bangko Sentral ng 膂 rules and regulations; and 芶 19 To import when necessary all equipment, spare parts and raw h. the operations in accordance with existing laws materials required in and regulations 1 1.3. Obligations of the Govemment: a. To ensure that the Contractor has the Government's full cooperation in the exercise of the rights granted lo it under this Agreement; b. To use its best efforts to ensure the timely issuanc€ of necessary permits and similar authorizing documents for use of the surface of the Contract Area, and c. To cooperate with the Contractor in its efforts to obtain financing contemplated herein from banks or olher flnancial institutions: Provided, That such financing alTangements will in no event reduce the Contractor's obligation on Goyernment rights hereunder. SECTION XII ASSETS AND EQUIPMENT 121. fhe Contraclor shall acquire for the Mining Operations only such assets that are reasonably estimated to be required in c€rrying out such Mining Operations. '12.2. All materials, equipment, plant and other installalions of a movable nature erected or placed on the Contract Area by the Contractor shall remain the property of the Contractor. The Contractor shall have the right to remove and re-export such materials and equipment, plant and other installations from the Philippines, subjec{ to existing rules and regulations. ln case of cessation of Mining Operations on public lands occasioned by its volunlary abandonmenl or withdralval, the Contractor shall have a period of one (1) year from the time of cessation within which to remove ils improvements; otherwise, all social infrastructures and facilities shall be tumed over or donated tax free to the proper government authorities, national or local, to ensure thal said infrastructures and facilities are conlinuously 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 in all types of mining operations for which they are qualified; and after Commercial Production commences shall, in consultation and with consent of the Government, prepare and undertake an extensive training 20 膫 programme suitable to Filipino nationals in all levels of employment. The objeclive of said programme is to reach within the timetable set forth below the following targets of "Filipinization:" calManagement ledSk腡ledClo镓Professional Unsk腡 (%) (%)(%) (%) (%) 艖艔 艖艔 100 100 100 Yeat 1 艗艏 艗腂 100 100 100 Year 3 艘艏 艘腂 400 100 100 Year 5 艘艔 艘艔 100 100 100 Yeat T 艘艔 艘艔 100 100 100 Year 10 艘艔 艘 艔 400 400 400 Year 15 13.2. Cost and expenses of training such Filipino personnel and the Contractois own employees shall be included in the Operating Expenses. 腒13.3. The Contractor shall not discriminate on the basis of gender and shall respect the right of women workers to participate in policy and decision- making processes atfecting their rights and beneflts. SECTION XIV ARBITRATION 141. fhe Government and the Contractor shall consult 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 菕 arbitration as provided for in Section 14.2. belo\ . '14.2. Any disagreement or dispute which can not be settled amicably within a period of one (1 ) year from lhe time the issue is raised by a Party shall be settled by a tribunal of three (3) arbitrators. This tribunal shall be constituied as follows: one to be appointed by the Contractor and the other to be appointed by the Secretary. The first two appointed arbitrators shall consider names of qualified persons until agreement on a mutually acceptable Chairman of the tribunal is selected. Such arbitration shall be initiated and crnducled pursuant to Republic Act No. 876, otheMise known as the 'Arbitration Act." ln any event, the arbatration shall be conducted applying the substantive laws of the Republic of the Philippines. 14.3. Each party shall pay fifty percent (50%) of the fees and expenses of the Arbitrators and the costs of arbitration. Each party shall pay its own costs and attorney's fee. 艓苂 XV SECTION 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 ancyor its implementing rules and regulations; (b) to pay on time the complete taxes, fees and/or olher charges demandable and due the Government. 15.2. This Agreement lerminates or may be terminated for the following causes: (a) expiration of its term, whether original or renewal; (b) withdrawal from the Agreement by the Contractor; (c) violation by the Contraclor of the Agreement's terms and conditions; (d) failure to pay taxes, fees/or charges or flnancial obtigations for two (2) consecutive years; (e) false statement or omission of facts by the Contractori and (f) any other cause or reason provided under the Act and its implementing rules and regulalions, or any other relevanl laws and regulations. 15.3. All statements made in this Agreement shall be considered as conditions and essential parts hereof, and any falsehood in said statements or omission of facts which may alter, change or affect substantially the fact set forth in said statements shall be a ground for its revocaiion and lermination. 15.4. The Contractor may, by giving due notice at any time during the term of this Agreement, apply for its c€ncellation 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 trom notice: Provided, That the Contrac{or has met all the financial, flscal and legal obligations. 15.5. No delay or omissions or course of dealing by the Government shall impair any of its rights under this Agreement, except in the case of a written waiver. The Government's right to seek recourse and relief by all other means shall not be construed as a waiver of any succeeding or other default unless the contrary intention is reduced in writing and signed by the party authorized to exercise lhe 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 lermination becomes effective. The Contraclor shall immediately carry out the resioration of the Contract Area in accordance with good mining industry practice. 15.7. The withdrawal by the Contraclor from the Mineral Agreement shall not release it from any and all financial, environmental, legal and fiscal obligations under this Agreement. 15.8. The following acts or omission, inter alia shall constitute breach of contract, upon which the Government may exercise its right to terminate the Agreement: 菒艑 22 Failure of lhe Contractor without valid reason to commence a. period prescribed; Commercial Production within the ancuor b. Failure of the Contractor to crnducl mining operations and other activities in accordance with the approved Work Programs and/or any modificalion thereof as approved by the Director. 15.9. The Govemment may suspend and cancel tax incentives and crediis if the Contractor fails to abide by the terms and conditions of said incentives and credits. SECTION XVI OTHER PROVISIONS '16.'l. Any terms and conditions resulting from repeal or amendment of any existing laws or regulation or from the enactment of a law, regulation or administrative order shall be considered a part of this Agreement. 16.2. Notice All notices, demands and other communications required or permitted hereunder shall be made in writing, telex or telecopy and shall be deemed to have been duly given notice, in the case of telex or telecopy, if answered back or confirmation received, or if delivered by hand, upon receipt or ten days after being deposited in the mail, airmail postage prepaid and addressed as follows: lf to the Governmenl: V THE SECRETARY Department ot Environment and Natural Resources DENR Building, Visayas Avonue Diliman, Quezon City lf to the Contractor: THE PRESIDENT Colet Mining and Development Corporation Suite 303 SOLMAC Building No. 84 Dapitan corner Banaue Streets Quezon Cily 腞 菒 23 party may substitute or change such address on notice thereof to the Either of other party: Provided, That tha Contractor shall, in case of any change address during the term of this Agreement, notify the Director in writing. Failure to do such notification shall be deemed as waiver by the Contractor to be informed about any communications as providad in Seclion '16.2 above. '16.3. Govarning Law This Agreement and the relation between the parties hareto shall be governed by and construed in accordance wiih the laws of lha Republic of the Philippines. The Contractor hereby agrees and obliges itself to mmply with the provisions of the Act, its implementing rules and ragulations and other relevant laws and regulations. 16.4. Suspension of Obligation a failure or delay on the part of any party in the performance of its Any hereunder shall be excused to the extent obligation or duties attributable to Force Majeure as defined in the Act: Provided, That the suspension of Mining Operations due to Forcp Majeure causes shall be subject to approval by the Director. b ars delayed, curtailed or prevented by such lf Mining Operations Force Majeure causes, then lhe time for enjoying the rights and carrying out the obligations thereby affec{ed, the term of this Agreement and all rights and obligations hereunder shall be exended for a period equal to the period involved. C perform The Party, whose abilily to its obligations is afiecled by such Force Majeure causes, shall promptly give Notice to the other in V writing of any such delay or failure of performanca, the expecled duration thereof and its anticipated effecl and shall use its efforts to remedy such delay, except that neither Party shall be under any obligation to settle a labor dispute: Providad, That the suspension of obligation by the Contractor shall b€ subject to prior approval by the Direclor. 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. 24 lN WTNESS WHEREOF, the Parties hereto have executed this Agreement, as of the day and year flrst above written Department of Environment and Natural 艱 芅 色 艮 芕 芒 芃 芅 芓 艬 艬 芍 裪 ACKNOWLEDGMENT ippines) Republic ofthe Ph腡 Quezon City )SS Before me, a Notary Public for and in the City of Quezon, personally appeared MICHAEL f. oefgttsOn, with Community Tax Certificate No 1565il41 the Department oI EnYironmenl