膍腃 腀 腤 腀 腃 WHEREAS. the Government desires to avail itself of the financial resources, technical competence and skill, which the Contractor is capable of applying to the mining operations of the proiect contemplated herein; WHEREAS, the Contractor desires to ioin and assist the GoYernment in the initial rational exploration and possible development and utilization for commercial purposes of certain nickel 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: sEcTroN I SCOPE 1.1. This Agreement is a Mineral Production Sharing Agreement entered into pursuant to the provisions of the Acl and ils implementing rules and regulations. The primary purpose of this Agreement is to provide for the rational exploration, development and commercial utilization of certain nickel 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 provisions of this Agreement. The Contractor shall not, by virtue of this Agreement, acquire any title over the V ContracvMining Area without prejudice to lhe acquisition by the Contractor of the land/surface rights through any mode of acquisition provided for by law. 1.2. The Contraclor shall undertake and execute, for and on behalf of the Govemment, sustainable mining operations in accordance with the provisions of this Agreement, and is hereby constituted and appointed, for the purpose of this Agreement, as the exclusive entity to conduct mining operations in the Contract Area. 1.3. The 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 荾 reimbursement. 1.4. During the term of lhis 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 Government and the Contractor in 鮠 accordance with Section Vlll hereof. 2 II SECTION DEFINITIONS As used in this Agreement, the following words and terms, whether singular plural, shall have the following respective meaning: 2.'1. Act refers to Republic Act No. 7942, otheMise known as the "Philippine Mining Acl 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. Banqko Sentral means Bangko Sentral ng Pilipinas. 2.5. Eldgg! means an estimate of expenditures to be made by Contractor in V mining operations contemplated hereunder to accomplish the Work Program for each particular period. 2.6. Bureau means Mines and Geosciences Bureau. 2.7. Calendar Year or Year means a period of twelve 12) conseculive 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. 2.4. Commercial Production means the production of sufficient quantily of minerals to sustain economic viability of mining operations reckoned from the date of commercaal operation as declared by the Contractor or as stated in the feasibilaty study, whichever crmes first. V 2.9. Constitution or Philippine Constitution means the 1987 Constitution of the Republic of the Philippines adopted by the Constitutional Convention of 1986 on October 15, 1986 and ratified by the People of the Republic of the Philippines on February 2, 1987. 2.10. Contract Area means the area onshore or offshore delineated under ihe Mineral Production Sharing Agreement subject to the relinquishment obligations of tha Contractor and properly defined by latitude and longitude or bearing and distance. 2.11. Contract Year means a period of twelve (12) conseculive months counted from the Effective Date of this Agreement or from the anniversary of such Effective Date. 2.12. Contractor means Galactica Mining and Development Corporation or ils 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. 3 2.13. Declaration of Minino Feasibilitv means a document proclaiming the presence of minerals in a specific site, which are recoverable by socially acceptable, environmentally safe and economically sound methods specified in the Mine Development Plan. 2.14. Department or DENR means the Department of Environment and Natural Resources. 2.15. Director means the Director of Mines and Geosciences Bureau. 2.16. Effective Date means the date of execution of this Agreement by ihe Contractor and by the Secretary on behalf of the Government. 2.17. Environment means all fac€ts of man's sunoundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social. 2.18. Exoloration means searching or prospecting for mineral resources by geological, geophysical and geochamical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quality and quantity of mineral resources and the feasibility of mining them for profit. 2.19. Exploration Period shall mean the p€riod from the Efieclive Dale 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 metallic minerals, subject to the pertinent provisions of the implementing rules and regulations of the Act. 2.20. Force Maieure means acls or circumstances beyond the reasonable control of the Contractor including, but not limited to war, rebellion, insurrection, V riots, civil disturbances, blockade, sabotage, embargo, strike, Iockout, any dispute with surface owners and other labor disputes, epidemics, earthquake, storm, flood or other adverse weather conditions, explosion, fire, adverse action by the Government or by any of its instrumentality or subdivision thereol act of God or any public enemy and any cause as herein described over which the affected party has no reasonable conirol. 2.21. Foreion Exchanoe means any currency other than the currency of the Republic of the Philippines acceptable lo the Govemment and the Contractor. 2.22. Government means the Government of the Republic of the philippines or any of its agencies and instrumentalities. 腊 2.23. Gross Outout means the actual market value of the minerals or mineral producls 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 腓腒 mineral products are sold or consigned abroad by the Contractor under C.l.F. 4 terms, the actual cost of ocean freight and insurance shall be deducled: Provided further, That in the case of mineral concentrates which are not traded in commodity exchanges in the Philippines or abroad such as copper concentrate, the actual market value shall be the world price quotation of the refined mineral products contained thereof prevailing in the said commodity exchanges, after deducting the smelting, refining, treatment, insurance, transportation and other charges incurred in the process of converting mineral concentrates into reflned metal traded in those commodity exchanges. 2.24. Mine Develooment refers lo work undertaken to prepare an ore body or a mineral deposit for mining, including the conslruclion of necessary infraslructure and related facilities. 2.25. Minerals mean all naturally occurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy. 2.26. Mineral Products mean materials derived from mineral ores/rocks and prepared into marketable state by metallurgical processes which include beneficiation, cyanidation, leaching, smelting, calcination and other similar processes. 2.27. Minina Nea means that portion of the Coniract Area identified by the Contractor as defined and delineated in a Survey Plan duly approved by the Oirector/Regional Director concsrned for purposes of development and/or utilization and sites for support facilities. 2.28. Mininq Operations means mining activities involving expioration, feasibility study, environmental impact assessment, development, utilization, mineral processing and mane rehabilitation. V 2.29. Notice means notice in writing, telex or telecopy (authenticated by answer back or mnfirmation received) addressed or sent as provided in Section 16.2 of this Agreement. 2.30. Ore means naturally occurring substance or material 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 andlor land resources of the philippines, or any discharge thereto of any liquid, gaseous or solid wastes or any production of unnecessary noise or any emission of ob.iectionable odor, as will or is likely to creale or render such water, air, and land resourc€s harmful, detrimental or injurious to public health, safety or welfare or which will adversely affect their utilization for domestic, commercial, industrial, agricultural, recreational or other legitimate purposes. 2.32. Secretarv means the Secrelary of the Oepartment of Environment and Nalural Resources. 艤 艴 2.33. State means the Republic of the Philippines. 2.34. Work Prooram means a document which presents the plan of maior mining operations and the coresponding expendiiures of the Contractor in its Contract 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 lechnology, as submitted and approved in accordance with the implementing rules and regulations of the Act. sEcTroN t 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 lerm 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 operations thereafter by other Contractor, this must be through competitive public bidding. After due public€tion of notice, the Contractor shall have the right to equal the highest bid upon reimbursement of all reasonable expenses of the highest bidder. SECTION IV CONTRACT AREA 4.1. Size, Shape, and Location of Contract Area - This Agreement covers a Contract Area of approximately Two Thousand Three Hundred Thirty Seven (2,337) hectares, situated in Mati, Davao Oriental and bounded by the following geographical coordinates (please refer to ANNEX'B'- 1:50,000 scale Location Map/Sketch Plan): V Parcel - I Area = 320 hectares Comer Latitude Longitude 艐 6膋43'3140' 126膋 11'1119' 艑 6膋43'5745' 126膋11'11 19' 艒 6膋43'5745腅 126膋 11'3724' 艓 6膋44'2350腅 126膋11'3724' 艔 6膋44'2350' 126膋12'5539腅 荼 艕 6膋43'5745腅 126膋 12'5539' 艖 6膋43'5745腅 126膋12'0329' 艗 6膋43'3140腅 126膋 12'0329' 辮 6 Parcel * ll Area = 855 hectares Longitude Latitude Comer 艐 126膋11'11 19' 6膋44'2350腅 艑 126膋11'11 19' 6膋44'4953腅 艒 126膋10'4540腅 6膋44'4953腅 艓 10'4540' 6膋45'4130腅126膋 艔 10'3000' 45'4430腅126膋 艕 6膋 10'3000' 6膋46'0738'126膋 艖 11'1119' 46'0738'126膋 艗 6膋 126膋11'1119' 6膋45'4130'' 艘 126膋12'5570' 6膋45'4129" 葟 12'5570" 6膋45'1525腅126膋 腝艐 126膋13'2180" 6膋45'1525腅 腝艑 13'2144' 6膋44'4954''126膋 艓艒 126膋11'3724' 6膋44'4953' 腝艓 126膋11'3724' 6膋44'2350' Parcel - lll Area = 909 hectares LatitudeLongitude Comer 艐 6膋46'0738腅 126膋11'11 19' V 艑 6膋46'3342腅 426膋11'11 19' 艒 6膋 46'3342'126膋10'3000' 艓 6膋47'2551' 126膋10'3000' 艔 6膋47'2551" 126膋11'11 19" 艕 6膋47'5150' 426膋41'11 19' 艖 6膋47'5151" 126膋 12'2970' 艗 6膋47.2547腅 426膋12'2970' 艘 6膋47'2547腅 126膋 12'0353' 腝 艏 6膋46'5942' 426膋12'0353腅 腝艐 6膋46.5942' 126膋12'2970腅 腝 艑 6膋46'0738'' 126膋12'2970' 腃 膌 Parcel - lV Area = 128 hectares Longitude Latitude Comer 艐 13'2144腅 44'2350腅126膋 6膋 艑 126膋13'2144' 6膋44'4954" 艒 126膋14'1354" 6膋44'4954腅 艓 126膋14'1354腅 6膋44.2350" Parcel - V Area = 115 hectares LatitudeLongitude Corner 艐 13'3000' 6膋43'3140'126膋 腛 艑 126膋13'3000'' 6膋43.5745腅 艒 126膋14'0000" 6膋43'5745' 艓 126膋14'0000腅 6膋43'4580腅 艔 126膋14'3000' 6膋43'4580腅 艕 43'3140腅126膋14'3000' 6膋 The Contractor is not allowed to undertake any mining activities within the portion of the Contract Area covered by any DENR Project Areas, Ivithout tha prior consent of the contractor(s)/concessionaire(s) concerned. Portions of the Conlract Area within the proposed Mt. Hamiguitan Range Wildlife Sanctuary, including its buffer zone, and within elevations of 1,000 V meters and above shall be lemporarily excluded in this Agreement, pending final resolution of ths ailendant issues. ln the event that said issues are resolved in favor of the Contractor, such temporarily excluded areas shall be included to and form part of the Contract Area, without need of any further agreement or amendment hereof, subject only to the issuance of the appropriate Order by the Director. Portion of the Contract Area that may be found and verified as old growth ancyor mossy forests shall be automatically excised from said Contract Area. SECTION V EXPLORATION PERIOD 5.1. Timetable for Exploration - The Contractor shall commence Exploration activities not later than three (3) monihs 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 (g) years for metallic 8 minerals, subject to annual review and approval by the Director in accordance with the implementing rules and regulations of the Act. 5.2. Renewal of Exploration Period - ln case the Contractor opts for a renewal of its Exploration Period, it shall file prior to the expiration thereof, a renewal application in the Regional Office concerned, accompanied by the mandatory requirements stipulated in the implementing rules and regulations of the Act. The Director may grant the renewal of the Exploration Period on condition that the Contractor has substantially complied with the terms and conditions of the Agreement. ln cases where further exploration is warranted 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 Contractor shall be required to set up a performance surely equivalent to the expenditure requirement of tho Exploration and Environmental Work Programs. 5.3. 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 Exploration Work Program: lst Contract Year PhP '1,664,000 2nd Contract Year PhP 2,040,000 Total : PhP 3,704,000 For the Environmental Work Program : PhP 370,400 ln the event of renewal of the Exploration Period, the amount to be spent every year shall first be agreed upon by lhe parties. ln the evont of termination of this Agreement, the Contractor shall only be obliged to expend the pro-rata amouni for the period of such Contracl year prior to termination. lf during any Contract year, the Contractor should expend more than the amount lo be expended as provided above, the excess may be subtracled from the amount required to be expended by the Contractor during the succeeding Conlract Years, and should the Contractor, due to unforeseen circumstances or wilh the consent of the Govemment, expend less during a year, then the deficiency shall be applied to the amount to be expended during the succeeding Contract years. 9 5.4. Relinquishment of Total/Portaon of the Contract Area - During the Exploralion 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 Contractor 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 Director may allow the Contractor to hold more than one ('1) final Mining Area subject to the maximum limits set under the implementing rules and regulations of the Act: Provided, That each final Mining Area shall be covered by a Declaration of Mining Feasibility. 5.6. Declaration of Mining Feasibility - Within the term of the Exploration Period, the Contractor shall file in the Regional Office concerned, 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 Contractor shall cause the survey of the perimeter of the Contracl Area/final 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 returns shall be submitted to the Regional Director concerned 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. 5.8. Reporting a. During the Exploration Period, the Contractor shall submit to the Oireclor, through the Regional Director conc€rned, quarterly and annual accomplishment reports under oath on all activities conducted in the Contract Area from the Effective Date of this Agreement. The quarterly report shall be submitted not later than fifteen (15) days at the end of each Calendar Quarter while the annual accomplishment report shall be submitted not later than thirty (30) days from the end of each Calendar Year. Such information shall include detailed financial expenditures, raw and processed geological, geochemical, geophysical and radiomelric data plotted on a map at a minimum 1:50,000 scale, copies of originals of assay results, duplicated samples, field data, copies of originals Jrom drilling reporls, maps, environmental work program implementation and detailed expenditures showing discrepancies/ deviations with approved exploration and environmental plans and budgets as well as all other information of any kind collected during the exploration activities. All information submitted to the Bureau shall be subject to the confidentiality clause of this Agreement. 10 b. Final Report - The Contractor shall submit to the Director, through the Regional Director concerned, a flnal report under oath upon the expiration of the Exploration Period which shall be in the form and substance comparable to published professional reports of respectable intemational institutions and shall incorporate all the findings in the Contract Area including loc€tion of samples, assays, chemical analysis, and assessment of mineral potentials together with a geologic map of 1:50,000 scale at the minimum showing the results of the exploration. Such report shall also include detailed expenditures incuned during the Exploration Period. ln case of diamond drilling, the Contractor shall, upon request of the Director/Regional Director concerned, submil to the Regional Ofiice concerned a quarter of the core samples, which shall be deposited in the Regional Office Core Library for safekeeping and reference. CRelinquishment Report - The Contractor shall submit a separate relinquishment report with a detailed geologic report of the V relinquished area accompanied by maps at a scale of 1:50,000 and results of analyses and detailed expenditures, among others. sEcTtoN vt DEVELOPMENT AND CONSTRUCTION PERIOD 6.1. Timetable - The Contractor shall complete the development of tha mine including the construction of production facilities within thirty six (36) months from the submission of the Declaration ot Mining Feasibiliiy, subject to such extension based on juslifiable reasons as the Director may approve, upon recommendalion of the Regional Director concerned. 6.2. Reporting Annual - The Contractor shall submit, within sixty (60) days afler Oecember 31 of each year, to the Director, through the Regional Direclor concemed, an annual report, which states the major activities, achievements and detailed expendilures during the year covered, including maps, assays, rock and mineral analyses and geological and environmental progress reports during the Development and Construction Period. b. Final Report - Within six (6) months from the comptetion of the development and mnstruction activities, the Contractor shall submit a final report to the Director, through the Regional Director mncemed. Such report shall integrate all information in maps of appropriate scale and quality, as well as in monographs or reports in accordance with international standards. 11 VII SECTION 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 ulilizatlon 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 Operation Work Program and Budget - During the Operating Period, the Contractor shall submit to the Director, through the Regional Director concerned, Work Programs and Budgets covering a period of three (3) years each, \which shall be submitted not later than thirty (30) days before the expiralion of the period covered by the previous Work Program. The Contraclor shall conduct Minang Operations and other activities for the duration of the Operating Period in accordance with the duly approved Work Programs and conesponding Budgets. 7.3. Expansion and Modiflcation 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 operalions: Provided, That such plans shall be embodied in an aPpropriate Work Program approved by the Director. 7.4. Reporting a. Quarterly Reports - Beginning with the firsi Calendar Quarter following the commencement of the Operating Period, the Contractor shall submit, within thirty (30) days after the end of each Catendar Quarter, to the Director, through the Regional Director concemed, a Quarterly Report stating the tonnage of production in terms of ores, concentrates, and their corresponding grades and other types of products, value, destination of sales or exports and to whom sold, terms of sales and expenditures. b. Annual Reports - During the Operating period, the Contractor shall submit within sixty (60) days from the end of each Calendar year, to the Oirector, through the Regional Director concerned, an Annual Report indicatang in sufficient detail: b.1. The total tonnage of ore reserves, whether proven, probable, or inferred, the total tonnage of ores, kind by kind, broken down between tonnage mined, tonnages transported from the minesite and their corresponding destination, tonnages stockpiled in the mine and elsewhere in the philippinis, tonnages sold or committed for export (whether a;ually shipped from the philippines or not), tonnages actually shipped 12 from the Philippines (with full details as to purchaser, destination and terms of sale), and if known to the Contractor, tonnages refined, processed or manufactured in the Philippines with full specifications as to the intermediate products, by- products or final products and of the terms at which they were disposed; b.2. Work accomplished and work in progress ai the end of the year in question with respect to all the inslallations and facilities related to the utilization program, including lhe investment actually made or committed; and b.3. Profile of work force, including managemenl and staff, stating particularly their nationalities, and for Filipinos, their place of origin (i.e., barangay, town, province, region). The Contractor shall also comply with other reporting requirements provided for in the implementing rules and regulations of the Act. sEcTloN un FISCAL REGIME 8. 1. General Principle - The fiscal regime of this Agreement shall be governed by the principle according to which the Govemment expecls a reasonable retum in economic value for the utilization of non-renewable mineral resour@s under its national sovereignty while the Contractor expects a reasonable retum on its investment with special account to be taken for the high risk of exploration, the terms and conditions prevailing elsewhere in the industry and any special efficiency to be gained by a particularly good performance of the Contractor. V 8.2. Registration Fees - Within fifleen (15) days upon receipt of the notice of approval of the Agreement from the Regional Office concemed, the Contractor shall cause the registration of this Agreement with the said Regional Office and pay the registration fee at the rate provided in the existing rules and regulations. Failure of the Contractor to cause the registration of this Agreement within the prescribed period shall be sufficient ground for cancellation of the same. 8.3. Occupation Fees - Prior to registration of this Agreement and at the same date every year thereafter, the Contractor shall pay to the Municipaucity Treasurer concemed an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations. lf the fee is not paid on the date specified, the Contractor shall pay a surcharge of twenty five percent (25%) of the amount due in addition to the occupation fees. 4.4. Share of the Govemment - The Govemment Share shall be the excise tax on mineral products at the time of removal and at the rate provided for in Republic Act No. 7729 amending Section 15j (a) of the N;tional tnternal Revenue Code, as amended, as well as other taxes, duties and fees levied 13 by existing laws. The Excise Tax shall bo timely and completely paid to the nearest Bureau of lnternal Revenue Ofrice in the province concerned. For purposes of determining the amount of the herein Government Share, the Contractor shall strictly comply with the auditing and accounting requirements pres$ibed under existing laws and regulations. The Government Share shall be allocated in accordance with Sections 290 and 292 of Republic Act No. 7160, olherwise 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 mmmissions and related fees and shall negotiate for more advantageous terms and conditions sub.iect to the right to enter into long-term sales or marketing contracls or foreign exchange and commodity hedging contracts, which the Government acknowledges to be acceptable notwithstanding that the sale price of the minerals and by?roducts may from time to time be lower, or lhe terms and conditions of sales are less favorable, than that available elsewhere. The Contractor shall seek to strike a balance between long-term sales or markeling contracls or foreign exchange and mmmodaty hedging mntracts comparable to policies followed by independent producers in the intemational mining industry. The Contractor shall likewise seek a balanced distribution among consumers. lnsofar as sales io Contractois affiliate(s) are concemed, prices shall be al arm's length standard, and competing offers for large scale and long-term conlracts shall be procured. Before any sale and/or shipment of mineral product is made, existing and future marketing contract(s)/sales agreement(s) shall be submitted to the Director, copy fumished lhe Regional Director concerned, for registration. At the same time, the Contractor shall regularly infom the Director in writing of any revisions, changes or additions in said contract(s)/agreement(s). The Contractor shall reflect in its Monthly/euarterly Report on production, Sales and lnventory of Minerals, as well as in the lntegrated Annual Report, the. coresponding registration number(s) jt lhu marketing contract(s)/agreement(s) governing the export orsale of minerals 8.6. Associated Minerals - lf minerals other than nickel are discovered in commercial quantities in the Contract Area, the value thereof sha be added to the yalue of the princapal mineral in mmputing the Govemmeni snare. sEcTtON tx WORK PROGRAMS 9.',. Submission to Government - Wthin the periods stated herern, the sha prepare and submit to tre oiredior, - irrrorlnin" Contractor concerned, a Work program and corresponding ii"iion"r oir"aol. Bu-dget for the'Contract nrea 14 stating the Mining Oparations 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. 9.2. Government's Examination and Revision of Work Program - Should the Government decide to propose a revision to a certain specilic feature in the Work Program or Budget, it shall, within thirty (30) days afler receipt thereof, provide a Notice to lhe Contractor specifying in reasonable detail its reasons therefore. Promptly thereafter, the Government and Contractor will meet and endeavor to agree on the revision proposed by the Government. ln any event, the revision of any portion of said Work Program or Budget in which the Government shall fail to notify the Conttactor of the proposed revision shall, insofar as possible, be carried out as prescribed herein. lf the Govemment should fail within sixty (60) days from receipt thereof to notiry Contractor of the proposed revisions, the Work Program and Budget proposed by the Contractor shall be deemed to be approved. 腀裪 腀 腪 9.3. Contractofs Changes to Work Program - lt is recognized by the Government and the Contractor that the details of any Work Program may require changes in the light of changing circumstances. The Contractor may make such changes: Provided, That it shall not change the general objective ofthe Work Program: Provided further, That changes which entail a variance of at least twenty percent (20%) shall be subject to the approval of the Director. 9.4. The Govemment's approval of a proposed work Program and Budget will not be unreasonablywithheld. sEcTtoN x ENVIRONMENTAL PROTECTION AND MINE SAFETY AND HEALTH 10.1. The Contractor shall manage its Mining Operations in a technically, financially, socially, culturally and environmentally responsible manner to achieve the sustainable development objectives and responsibilities as provided for under the implementing rules and regulations of the Act. 10.2. The Contractor shall ensure that the standards of environmental protection are met in the murse of the Mining Operations. To the extent possible, conkol of pollution and the kansformation of the mined-out areas or materials into economically and socially productive forms must be done simullaneously with mining. 10.3. The Contraclor shall submit an Environmental Work program during the 腊 Exploration Period as prescribed in the implementing rules and regulations of the Act. 10.4. An Environmental Compliance Certificate (ECC) shall bo secured first by the 鎯 Contractor prior to the conduct of any development works, construction of production facilities and/or mine product,on activities in the Conlracl Area. 裪 艔 10.5. The Contractor shall submit within lhirty (30) calendar days after the issuance and receipt of the ECC, an Environmental Protection and Enhancement Program (EPEP) using MGB Form No. '16-2 covering all areas to be affected by d;velopment, utilization and processing activities under this Agreement. The Contractor shall allocate for its initial environment-related capital expenditures approximalely ten percent (10%) of the total poect cost or in such amount depending on lhe environmental/geological condition, nature and scale of operations and technology to be employed in the Contract Area. 10.6. The Contractor shall submit, within thirty (30) days prior to the beginning of every calendar year, an Annual Environmental Protection and Enhancement Progiam (AEPEP), using MGB Form 16-3, which shall be based on the appioveO eeee. The AEPEP shall be implemented during the year for which it was submitted. To implement its AEPEP, the Contraclor shall allocate annually three to five Percent (3yo-5%\ of its direct mining and milling costs depending on the environmentaugeologic condition, nature and scale of operations and technology employed in the Contract Area. 10.7. The Contractor shall eslablish 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 financial requirements of the approved EPEP as a reasonable environmental deposit to ensure satisfactory compliance with the mmmitments/strategies of the EPEP/AEPEP and availability of funds for the performance of the EPEP/AEPEP during the specitic project phase. The MRF shall be deposited as Trust Fund in a government depository bank and shall be used for physical and social rehabilitation of areas affected by mining activities and for research on the social, technical and preventive aspects of rehabilitation. V The MWTF shall be collected based on the amounts of mine waste and mill tailings generated during the mnduct of Mining Operations. The MWTF collected shall accrue to a Mine Waste and Tailings Reserve Fund and shall be deposited in a government depository bank for payment of compensation for damages c€used by the Mining Operations. 10.8. The Contractor shall set up mitigating measures such as mine waste and mill tailings disposal system, mine rehabilitation or plan, water quality monitoring, etc. to minimize land degradation, air and water pollution, acid rock drainage and changes in hydrogeology. 10.9. The Contractor shall set up an Environmental and Safety Offlce at its minesite manned by qualified personnel to plan, implement and monitor its 腓 approved EPEP. '10.10.The Contractor shall be responsible in the monitoring of environmental,  safety and health conditions in lhe Contract Area and shall stric y comply with all the rules and regulations embodied under DAO No. 2000-98, otherwise known as the 'Mine Safety and Health Standards." 16 1O.11.The Contractor shall be responsible for the submission of a final mine rehabilitation and/or decommissioning plans, including its financial requiroments and incorporating the details and particulars set forth in lhe implementing rules and regulations of the Act. SECT:ON X: expenses or costs incurred by the Government by reason of any such claims, accounts, demands or actions; ln the development of the community: j.1. To recognize and respect the rights, customs and traditions of indigenous cultural communities over their ancestral lands and to allocate royalty payment of nol less lhan one percent (1%) of the value of the gross output of minerals sold, ).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 infraslruclure, livelihood programs, education, water, electricity and medical services. VVI]ere traditional self-sustaining income and the community activities are identified to be present, the Contractor shall assist in lhe preservation and/or enhancement of such activities; To allot annually a minimum of one percent (1olo) of the direct J3 mining and milling costs necessary io implement the activities undertaken in the development of the host and neighboring communities. Expenses for community development may be charged against the royalty payment of at least one percent ('1%) of the gross output intended for the concerned indigenous cultural community; To give preference to Filipino citizens who have established 14 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 j5 To incorporate in the Mining Feasibility Study the planned expendilures necessary to implement 0.1) to 0.3) of this Sectioni k. ln the development of Mining Technology and Geosciences: k.1. ln the course of its operations, to produce geological, geophysical, geochemical and other types of maps and reports that are appropriate in scale and in format and substance which are consistent with the internationally accepted standards and practices. Such maps shall be made available to the scientific 腊 community in the most crnvenient and cost effective forms, subject to the condition that the Contractor may delay release of said information for a reasonable period of time which shall not  exceed three (3) years; 18 k.2. To systematically keep the data generated from the Contracu Minang Area such as cores, assays and other related information, including economic and financial data and make them accessible to students, researchers and other persons responsible for developing mining, geoscience and processing technology subject to the condition that the Contractor may delay release of dala to the science and lechnology 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 alloc€te research and development budget for lhe advancemenl 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 to the science and technology community for conduc{ing research and undertaking other activities which contribute to the development of mining, geoscience and processing technology and the conesponding national pool of manpower talenls: Provided, however, that the release of dala, maps and the like shall be similarly constrained in accordance with (k.1) and (k.2) above, l. To incorporate in the Mining Feasibility Study the planned expenditures necessary to implement all the plans and programs set V 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 conduct Mining Operations within the confines of its ContracuMining Area in accordance with the terms and conditions hereof and without interfering with tho rights of other Contractors/Lessees/Operators/ permittees/permit Hoiders; b. Possession of the Contract Area, wilh full rjghi of ingress and egress and the right to occupy the same, subject to surface and easetnent rights; c. To use and have access to all declassified geological, geophysical, drilling, production and other data relevant to lhe miiing operations; 19 腊 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 Govemment, 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 lhe Contraclor, subject to applic€ble laws and regulations: Provided, That if the employment crnnection of such foreign persons with the Contraclor ceases, the applicable laws and regulations on immigration shall apply to them. Every time foreign technologies are utilized and where alien executives are employed, an effective program of training understudies shall be undertaken. The alien employment shall be limited to technologies requiring highly specialized training and experience sub.iect to the required approval under existing laws, rules and regulations; f. To enjoy easement rights and use of timber, water and other natural resources in the Contract Area subiect to pertinent laws, rules and regulations and the rights of third parties, g. Repatriation of capital and remittance of profits, dividends and interest on loans, subject to existing laws and Bangko Sentral ng Pilipinas rules and regulations; and h. To import when necessary all equipment, spare parts and raw materials required in the operations in accordance with existing laws and regulations. 1 1.3. Obligations of the Government: a. To ensure that the Contractor has the Government's full cooperation in V the exercise of the rights granted to it under this Agreement; b. To use its best efforts to ensure the timely issuance of necessary permits and similar authorizing documents for use of lhe surface of the Contract Area; and To cooperale with the Contractor in its efforts to obtain financing mntemplated herein from banks or other financial institutions: Provided, That such financang arrangements will in no event reduce the Contractor's obligation on Government rights hereunder. sEcnoN x[  ASSETS ANO EQUIPMENT 膺 '12.1. fhe Contractor shall acquire for the Mining Operations only such assets that are reasonably estimated to be required in c€rrying out such Mining 龔 Operations. 20 plant 12.2. All materials, equipment, and other installations of a movable nature erected or placed on the Contract Area by the Contractor shall remain the property of the Contractor. The Contractor shall have the right to remove and re-export such materials and equipment, plant and other installations from the Philippines, subject to existing rules and regulations. ln case of cessation of Mining Operations on public lands occasioned by its voluntary abandonment or withdrawal, the Conlractor shall have a period of one (1) year from lhe 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. sEcTloN xm 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 qualilied: and after Commercial Production commences shall, in consultation and with consent of the Government, prepare and undedake 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 targets of "Filipinization:' 14.2. Any disagreement or dispute which can not be set ed amicably within a period of one (1) year from the time the issue is raised by a party shall be settled by a tribunal of three (3) arbitrators. This tribunal shall be constituted as follows: one to be appointed by the Contractor and the other to be appointed by lhe 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 conducted pursuant lo Republic Act No. 876, otherwise known as the 'Arbitration Act." ln any event, the arbitration shall be conducted applying the substantive laws of the Republic of the Philippines. 14.3. Each parly shall pay fifly 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. SECTION XV SUSPENSION OR TERMINATION OF CONTRACT, TAX INCENTIVES ANO CREDITS 15.1. This Agreement may be suspended for failure of ihe Contractor: (a) to comply with any provision or requirement of the Act and/or its implementing rules and regulations; (b) to pay on time the complete taxes, fees and/or other charges demandable and due the Government. 15.2. This Agreement terminates or may be terminated for the following causes: (a) expiration of its term, whether original or renewal; (b) withdrawal from the Agreement by the Contractor, (c) violation by the Contractor of the Agreemenl's terms and conditions; (d) failure lo pay taxes, fees/or charges or financial obligations for two (2) consecutive years; (e) false statement or V omission of facts by the Contractor; and (0 any other cause or reason provided under lhe Act and its implementjng rules and regulations, or any other relevant laws and regulations. '15.3. All Statements made in this Agreement shall be considered as conditions and essential parts hereof, and any falsehood in said statemenls or omission of facts which may alter, change or affect substantially the fact set forth in said statements shall be a ground for its revocalion and termination. '15.4. The Contractor may, by giving due notice at any time during the term of this Agreement, apply for its cancellation due to causes which,ln he opinion of the Contractor, render continued mining operation no longer feasible or viable. ln this c€se, the Secr€tary sha dicide on the applicaion within thirfy 腁 (30) days from notice: provided, That the Contractor has met all the financiai, fiscal and legal obligations. 荼 '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 Govemment's right to seek recourse and reiief by all other means shall  22 not be construed as a waiver of any succeeding or other default unless the contrary intention is reduced in writing and signed by the party authorized to exercise the waiver. 15.6. 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 tha restoration of the Contract Area in accordance with good mining industry practice. 15.7. The withdrawal by the Contractor from the Mineral Agreement shall not release it from any and all financial, environmental, legal and fiscal obligalions under lhis Agreement. 15.8. The following acts or omission, inter alia shall constitute breach of contract, upon which the Govemment may exercise its right to terminate the Agreement: a. Failure of the Contractor withoul valid reason to commence Commercial Production within the period prescribed; and/or b. Failure of the Contractor to conduct mining operations and other aclivities in accordance with the approved Work Programs and/or any modification thereof as approved by the Director. 15.9. The Government may suspend and cancel tax incentives and credits if the Contraclor fails to abide by the terms and conditions of said incentives and cred,ls. SECTION XVI OTHER PROVISIONS '16.1. Any terms and conditions resulting from repeal or amendment of any existing laws or regulalion or from the enactment of a law, regulalion 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 confirmalion received, or if delivered by hand, upon receipt or ten days after being deposited in the mait, airmail postige prepaid and addressed as follows: 駋 lf to the Government: THE SECRETARY 雐 Department of Environment and Natural Resources DENR Building, Visayas Avenue 龔 Diliman, Quezon City 腏腏 艹艏 lf lo the Contractor: THE PRESIDENT Galactica Mining and Development Corporation 21-C Sta. Teresita Street Brgy. Kapitolyo, Pasig City Either party may substitute or change such address on notice thereof to the other party. 16.3. Governing Law This Agreement and the relation between the parties hereto shall be govemed by and conslrued in acmrdance with the laws of the Republic of the Philippines. The Conlractor hereby agrees and obliges itself to comply with the provisions of the Act, its implementing rules and regulations and other relevant laws and regulations. 16.4. Suspension of Obligation Any failure or delay on the part of any party in the performance of jts obligation or duties hereunder shall be excused to the extent attributable to Force Makure as delined in the Act: provided, That the suspension of Mining Op€rations due to Force Majeure causes shall be subject to approval by the Director. b. lf Mining Operations are delayed, curtailed or prevented by such Force Majeure causes, then the time for enjoying the rights and canying out the obligations thereby affected, the term of this Agreement and all rights and obligations hereunder shall be extended for a period equal to the period involved. The Party, whose ability to perform its obligations is affected by such Force Majeure causes, shall promp0y give Notice to the other in writing of any such delay or failure of performance, the expected duration thereof and ils anticipated effect and shall use its effbds to remedy such delay, except that neither party shall be under any obligation to settle a labor dispute: provided, That the suspension of obligation by the Contractor shall be subject to prior approval by the Oirector. 16.5. Amendments This Agreement shall not be annulled, amended or modified in any respect 腒 except by mutual consent in witing of the herein parties. 腓 龔  24 ACKNOWLEDGMENT Repub腵 c Ofthe Ph腡ippines) Quezon City )SS Before me, a Notary Publac for and in the City of Quezon, personally appeared issued on - , in his capacity as Secretary of ths DeEartment of Environment and NEtural Resources, and Ma No 英莋d膌 n鑆 镪鹥莿 g and Development capacity 荨:靳 as President of a骑 Galactica Mini?tg and 雊3芾 `4菆 known to me and to me known to be the same persons  who executed the foregoing instrument consisting of twenty six (26) pages, including ihis acknowledgment page, and acknowledged to me that the same is their voluntary acts and deeds. TttR,駂 REOl腶 haVe he葟 腵 跥臨