the Government desires to avail itself of the financial resources, WHEREAS, and skill, which the Contractor is capable of applying io the technical competence mining operations of the project contemplated herein; WHEREAS, the Contraclor desires to ioin and assist the Government an the initial rational exploralion and possible development and utilization for commercial purposes of certain nickel laterite and other associated mineral deposits existing in the Contract Area (as herein defined); WHEREAS, the Contractor has access to all lhe 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 V SCOPE 1.1. This Agreement is a Mineral Production Sharing Agreement entered into pursuant lo 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 commerciai utilization of certain nickel laterite and other associated mineral deposits existing within the Contract Area, with all necessary services, technology and rinancing 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 lhe ContracuMining Area withoul prejudice to the acquisition by the Conlractor of the land/surface rights through any mode of acquisition V provided for by law. 1 .2. The Contractor shall undertaks and execute, for and on behalf of the Govemment, sustainable mining operations in accordance wilh the provisions of this Agreement, and is hereby constituted and appointed, fo, the purpose of this Agreement, as the exclusive entity to conduct minin operalions 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 reimbursemenl. 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 Government and the Contractor in accordance with Section Vlll hereot 2 sEcIoN DEFINITIONS As used in this Agreemenl, the following words and terms, whether singular or plural, shall have the following respective meaning: 2.1. Act refers to Republic Act No. 7942, olherwise known as the 'Philippine Mining Act of 1995." 2.2. Aqreemenl 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. Budoet means an estimate of expenditures to be made by Contractor in mining operations contemplaled 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) crnsecutive monlhs starting with the first day of January and ending on December 31, while "Calendar Quarted' means a period of three consecutive months with lhe first calendar quarter starting with the first day of January. 2.8. Commercial Productibn means the production of sufficient quantity of minerals lo sustain economic viability of mining operations reckoned from the date of commercial operation as declared by the Contractor or as stated in the feasibilily study, whichever comes first. 2.9. Constitution or Philiopine Constitution means the 1987 Constitution of the Republic of the Philippines adopted by lhe 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. Contracl Area means the area onshore or offshore delineated under Mineral Production Sharing Agreement subject to the relinqui obligations of the Contractor and propedy defined by latitude and longitude or bearing and distance. 2.1'1. Contracl Year means a period of twelve (,12) consecutive months counted from the Effective Date of this Agreemenl or from the anniversary of such Effective Oate. 2.12. Contractor means Oregon ilining and Development Corporation or its assignee or assignees of interest under this Agre;ment: provided, That the assignment of any of such interest is accompliihed pursuant to the pertinent prOvisiOns Ofthe mplementing腵 ules and regulatiOns ofthe Act 3 Declaration of Minino Feasibilitv means a document proclaiming the 2.13. 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. 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 Contractor and by the Secretary on behalf of the Government. 2.17. Environment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, inslitutional and social. 2.18. Exoloration means searching or prospecting for mineral resources by geological, geophysical and geochemical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for lhe purpose of determining the existence, extent, quality and quantity of mineral resourc€s and the feasibility of mining them for profit. 2.19. Exploration Period shall mean the period from the Effective Date of this Agreement, ,/vhich 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 provisions of the implemenling rules and regulations of lhe Act. 2.20. Force Maieure means acts or circumstances beyond the reasonable control of the Contractor including, but not limited to war, rebellion, insurrection, riots, civil disturbances, blockade, sabotage, embargo, strike, lockout, 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 thereof, act of God or any public enemy and any cause as herein described over which the affected party has no reasonable control. 2.21. Foreiqn Exchanoe means any currency other than the currency of the Republic of the Philippines acceptable to the Government and Contractor. 2.22. Gouenmenl means the Government of the Republic of the philippines or any of its agencies and instrumentalities. 2.23. Gross Output means the actual market value of the minerals or mineral products from each mine or mineral land operated as a separate entity, without any doduction for mining, processing, refining, transporting, handling, marketing or any other expenses: provided, That if the minerals or mineral producls are sold or consigned abroad by the Contractor under C.l.F. terms, the actual cost of ocean freight and insurance shall be deducted: provided further, That in the case of mineral concentrates which are not traded in 4 腊 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 lhe said commodity exchanges, afler deducting the smelting, refining, treatment, insurance, transportation and other charges incurred in the process of converting mineral concentrates into refined metal traded in those commodity exchanges. 2.24. Mine Development refers to work undertaken to prepare an ore body or a mineral deposit for mining, including the construction of necessary infrastructure and related facilities. 2.25. Minerals mean all naturally occurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy. 2.26. Mineral Products mean materials derived from mineral ores/rocks and prepared into marketable state by metallurgical processes, which include beneficiation, cyanidation, leaching, smelting, calcination and other similar processes. 2.27. Minino Area means that portion of the Contract Area identified by the Contractor as defined and delineated in a Survey Plan duly approved by the Director/Regional Director concerned for purposes of development and/or utilization and sites for support facilities. 2.28. Minino Operations means mining activities involving exploration, feasibility study, environmental impact assessment, development, utilization, mineral processing and mine rehabilitation. 2.29. Nolice means notice in writing, telex or telecopy (authenticated by answer back or confirmation received) addressed or sent as provided in Section 16.2 of this Agreement. V 2.3O. Ore means naturally occurring substance or material from which a mineral or elemenl c€n be mined and./or processed for proflt. 2.31. Pollution means any alteration of the physical, chemical and/or biologi properties of any water, air andlot land resources of the philippines, or an discharge thereto of any liquid, gaseous or solid wastes or any production of unnecessary noise or any emission of objectionable odor, as will or is likely to create or render such water, air, and land resources harmful, detrimental or injurious to public health, safety or welfare or which will adversely affect their utilization for domestic, commercial, industrial, agricultural, recieational or other legitimate purposes. 2.32. Secretary means lhe Secretary of the Department of Environment and Natural Resources. 2.33. State means the Republic ofthe philippines. 2.34. Work Prooram means a document which presents the plan of major mining operations and the corresponding expenditures of the Contractor in its Contract Area during a given period of 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 the implementing rules and regulations of the Act. SECTION III TERM OF AGREEMENT 3.1. This Agreement shall have a term of twenty- five (25) years from Effective Date, and may be renewed thereafler for anolher term not exceeding twenty- five (25) years. The renewal of this Agreement, as well as the changes in lhe 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 Conlractor, this must be through competitive public bidding. After due publication of notice, lhe Conlractor shall have the right to equal the highest bid upon reimbursement of all reasonabls expenses of the highest bidder. SECTION IV CONTRACT AREA 4.1. Size, Shape, and Location of Contracf Area - This Agreement covers a Contract Area of approximately Seven Hundred Twenty Three and 7986/10,000 hectares (723.7986 has.), situated in Mati, Davao Oriental and bounded by the following geographical coordinates (please refer to ANNEX "8" - 1:50,000 scale Location Map/Skelch Plan): V Parce:: Area=3116136 Has Corner Latitude Longitude 1 6腂40'3800" 126013'4901腅 26042'4072'' 426013'4901'' 36腂 42'4072' 126014'3500' 4 6膋 42'1300'' 126膋14'3881'' 56腂 42'0900' 426014'2000腅 66膋41'3800' 426腂 14'1250'' 76膋44'3000腅 426膋 14'2250腅 86膋 41'1500腅 126014'00 oo' 96腂 40'3800' 426腂 14'000o'' 6 Parce:腡 Area=442 1850 Has Longitude Latitude Comer 126腂 13'0000" 6腂33'3000" 1 426腂13'0000' 6腂37.0000' 2 426膋 13'1800腅 6腂37.0000' 426腂13'1000腅 35'3800腅 4 6膋 426腂13'3000' 6膋35'0000腅 426腂1313000腅 6腂34'3000' b 126腂13'1300'' 6腂33.3000'' 7 126013'3600腅 6腂3311100' I 126腂1313400' 6腂33'0400' 9 The Contractor is not allowed to undertake any mining activities within the portion of the Contract Area covered by any DENR. Project Areas, without the prior consent of the contractor(s)/concessionaire(s) concerned. Any portion(s) of the Contract Area that may be found and verified as old groMh and/or 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) 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 Director in accordance with the implementing rules and regulations of the Act. V 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 implemenling rules and regulations of the Act. The Director may grant the renewal of the Exploration Period on conditi that the Contractor has substantially complied with the terms and conditj 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 菋 implemented the Exploration and Environmental Work programs as verified 腟 by the Bureau, the Director may further grant renewal of the Exploralion Period: Provided, That the Contractor shall be required to set up a performance surety equivalent to the expenditure requirement of the Exploration and Environmental Work programs. 腃 膌 5.3. Work Programs and Budgets - The Contractor shall strictly comply with lhe approved Exploration and Environmental Work Programs logether with their corresponding Budgets (please refer to ANNEXES "C" and 'D"). The amounl 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 lhe Contract Years, as follows: For the Exploration Work Program. 1st Year PhP 565,00000 Contract PhP l,820,00000 2nd Contract Year Total PhP 2,385,00000 For lhe Environmental Work Program : PhP 238,50000 ln the evenl of renewal of the Exploration Period, the amount to be spent every year shall first be agreed upon by the parties ln the event of termination of this Agreement, the Contractor shall only be obliged to expend the pro-rata amount for the period of such Contraci Year prior lo termination. lf during any Contract Year, the Contractor should expend more than the amount to be expended as provided above, the excess may be subtracted from the amount required to be expended by the Contractor during lhe succeeding Contract years, and should the Contraclor, due to unforeseen circumstances or with the consent of the Government, expend less during a year, then the deficiency shall be applied to the amount to be expended during the succeeding Contract years. 5.4. Relinquishment of Total/Portaon of the Contract Area - During the Exploration Period, the Contractor may relinquish totally or partially the original Contract Area. Afler 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 tor mining operations and not covered by any Declaration of Minjng Feasibility. 5.5. Final Mining Area - The Director may allow the Contraclor to hold more t One腧 ea sutted b he ma7蝖 )lna Mhhg腘 腵 i:镹 i韮 ::腡 1赠 |荌 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 Contract 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 (1) 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 Director, through the Regional Director concerned, quarterly and annual accomplishment reports under oath on all activities conducted in lhe Contract Area from the Effective Date of this Agreement. The quarterly report shall be submitted not later than fifteen (15) days at the end of each Calendar Quarter while the annual accomplishment report shall be submitted not later than thirty (30) days from the end of each Calendar Year. Such information shall include detailed financial expenditures, raw and processed geological, geochemical, geophysical and radiometric data plotted on a map at a minimum 1:50,000 scale, copies of originals of assay results, duplicated samples, field data, copies of originals from drilling reports, maps, environmental work program implementation and detailed expenditures showing disc.epancies/ deviations with approved exploration and environmental plans and budgets as well as all other information of any kind collected during the exploration activities. All information submitted to the Bureau shall be subject to the confidentiality clause of this Agreement. b Final Report - The Contractor shall submit to the Director, through the Regional Director concerned, a final report under oath upon the expiration of the Exploration Period which shall be in the form and substance comparable to published professional reports of respeclable international institutions and shall incorporate all the findings in the Contract Area including location of samples, assays chemical analysis, and assessment of mineral potentials together wi a geologic map of '1:50,000 scale at lhe minimum showing the resul of the exploration. Such report shall also include detailed expenditures incuned during the Exploration Period. ln case of diamond drilljng, the Contractor shall, upon request of the Director/Regional Director concerned, submit to the Regional Office concerned a quarter of the core samples, which shall be deposited in the Regional Office Core Library for safekeeping and reference. C 裪 艳芈芅 Relinquishment Report 腀 芔 芈 腀Contractor shall submit a separats relinquishment report 艶 芁 detailed geotogic report of the 9 relinquished area accompanied by maps at a scale of 1:50,000 and results of analyses and detailed expenditures, among others. SECTION VI DEVELOPMENT AND CONSTRUCTION PERIOD 6.1. Timetable - The Contraclor shall complete the development of the mine including the construction of production facilities within thirty- six (36) monlhs from lhe submission of the Oeclaralion of Mining Feasibility, subject to such extension based on justifiable reasons as the Director may approve, upon recommendalion of the Regional Director concerned. 6.2. Reporting a. Annual - The Contractor shall submit, within sixty (60) days after December 31 of each year, to the Director, through the Regional Director concerned, an annual report, which states the major activities, achievements and detailed expenditures during the year covered, including maps, assays, rock and mineral analyses and geological and environmental progress reports during the Development and Construction Period. b. Final Report - Within six (6) months from the completion of the development and construction activities, the Contractor shall submit a final report to the Director, through.the Regional Director concerned. Such report shall integrate all information in maps of appropriate scale and quality, as well as in monographs or reports in accordance with intemational standards. 腛 SECT10N V腡 OPERATINC PER:OD 腜 71 Timetable The Contractor sha腡 subml, wlhin thirly(30) completion of mine development days before and construction of production fac腡 ities, to the Director, through the Regional Direclor concerned, a Three腜Y Commercial Operation Work Program. The Contractor shall 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 Operation Work program and Budget _ During the Operating Period, the Contractor shall submit to the Dire-ctor, througi lhe Aegiona] Director crncerned, Work programs and Budgets mvering 5 period of three (3) years each, which sha be submjtted not laler than lhirt-y (iO) oays before the expiration of the period covered by the previous Worf erogram. 40 The Contractor shall conduct Mining Operations and other activities for the duration of the Operating Period in accordance with the duly approved Work Programs and corresponding Budgets. 7.3. Expansion and Modification of Facilities - The Contractor may make expansions, modiflcat,ons, improvements, and replacements of the mining facilities and may add new facilities as the Contractor may consider necessary for the operalions: Provided, Thal such plans shall be embodied in an appropriate Work Program approved by the Director. 7 .4. Reporting a. Quarterly Reports - Beginning with the first Calendar Quarter following the commencement of the Operating Period, the Contractor shall submit, within thirty (30) days after the end of each Calendar Quarier, to the Director, through the Regional Director concerned, a Quarterly Report stating the tonnage of production in ierms of ores, concentrates, and their corresponding grades and other types of products, value, destination of sales or exports and to whom sold; terms of sales and expenditures. b. Annual Reports - During the Operating Period, the Contractor shall submit within sixty (60) days from the end of each Calendar Year, to the Director, through the Regional Director concerned, an Annual Report indicating in sufficient detail: b. 1. The total tonnage of ore feseryes, 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 Philippines, tonnages sold or commitled for export (whether actually 腜 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 Contrac{or, tonnages refined, processed or manufactured in the Philippines with full specific€tions as to the intermediate products, by- products or final products and of the terms at which they were disposed; b.2. Work accomplished and work in progress at the end of lhe year in question wlth respect to all the installations and facilities related to the utilization program, including the inveslment actually made or crmmitted, 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 Contraclor shall also comply with other reporting requirements provided for in the implementing rules and regulations of the Act. SECTION VIII FISCAL REGIME 8.1. General Principle - The fiscal regime of this Agreement shall be governed by lhe principle accordang to which the Government expects a reasonable retum in economic value for the utilization of non-renewable mineral resources under its national sovereignty while the Contractor expects a reasonable return on its investment with special account to be laken 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. 8.2. Regisiration Fees - Within fifteen (15) days upon receipt of the notice of approval of the Agreement from the Regional Office concerned, the 腛 Contraclor shall cause the registration of this Agreement with the said Regional Offlce 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 lhe same. 8.3. Occupation Fees - Prior lo registration of this Agreement and at the same date every year thereafter, the Contractor shall pay to the Municipal/Cily Treasurer concemed an occupation fee over the Contract Area at lhe 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 lo the occupation fees. 8.4. Share of the Government - The Government 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 Seclion l51 (a) of the National lnternal Revenue Code, as amended, as well as olher taxes, duties and fees levied by exisling laws. The Excise Tax shall be timely and completely paid to the nearest Bureau of lnternal Revenue Office in the province concerned. For purposes of determining the amount of the herein Government Share, t Contractor shall strictly comply with the auditing and accounti requirements prescribed under existing laws and regulations. The Govemment Share shall be allocated in accordance with Sections 290 and 292 of Republic Act No. 7160, otheMise known as ,,The Local Government Code of '199i." 8,5, Pricing of Sales - The Contractor shall dispose of the minerals and by_ products produced at the highest market price prevailing in ttre tocaliiv: fne uonrraclor shaI also pay the lowest achievable marketing commissions and related fees and shall negotiate fomor" uOr"nta!"or" funis. "nO 12 subject to the right to enter into long-term sales or marketing conditions and commodity hedging contracts, which the contracts or foreign exchange that the sale Government acknowledges to be acceptable notwithstanding price of the minerals and by-products may from time to time be lower, or the terms and conditions of sales are less favorable, than lhat available elsewhere. The Contractor shall seek to strike a balance between long-term salss or marketing contracts or foreign exchange and commodity hedging contracls comparable to policies followed by independent producers in the rnternalional mining induslry The Contractor shall likewise seek a balanced distribution among consumers. lnsofar as sales to Contractois affiliate(s) are concerned, prices shall be at arm's length standard, and competing offers for large scale and long{erm contracts shall be procured. Before any sale and/or shipment of mineral product is made, existing and future marketing contract(s)/sales agreement(s) shall be submitted to the Director, copy fumished the Regional Director concerned, for registration. At the same time, the Contractor shall regularly inform the Director in writing of any revisions, changes or additions in said contract(s)/agreement(s). 腛 The reflect in its Monlhly/Quarterly Report on Production, Contractor shall Sales and lnventory of Minerals, as well as in the lntegrated Annual Report, the corresponding registration number(s) of the marketing contracl(s)/agreement(s) goveming the export or sale of minerals. 8.6. Associated Minerals - lf minerals olher than nickel laterite are discovered in commercial quantities in the Contract Area, the value lhereof shall be added to the value of the principal mineral in computing the Government share. sEcTtoN tx WORK PROGRAMS 9.1. Submission to Government - Within lhe periods stated herein, the Contractor shall prepare and submit to the Oirector, through the Regional Director 荮 concerned, a Work Program and corresponding Budget for the Contract Area slating the Mining Operations and expenditures which the Contractor proposes to c: ry out during the period mvered with lhe 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 sp;cific feature in the Work.Program or Budget, it shall, within thirty (30) days after receipt thereol provide a Nolice to the Contractor specifying in reasonable deiail its reasons therefore. Prompfly thereafter, the Government and Contractor will meet and endeavor to agree on the revision proposed by the Goyernment. ln any event the revision of any portion of said Work program or Budget in which the covernment shall fail to notify the Contractor Jf tne profoleO revision shall, insofar as possible, be carried out as prescribeO fieilin. lf the 13 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. Contraclor'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 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 lhe Director. 9.4. The Government's approval of a proposed Work Program and Budget will not be unreasonably withheld. SECTION X ENVIRONMENTAL PROTECTION AND MINE SAFEW AND HEALTH 10.'1. The Contractor shall manage its Mining Operations in a technically, financially, socially, culturally and environmentally responsible manner to achieve lhe sustainable development ob.iectives and responsibililies as provided for under the implemenling rules and regulations of the Act. 1O.2. fhe Contractor shall ensure that the standards of environmenlal protection are mel in the course of the Mining Operations. To the extent possible, control of pollution and the transformation 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 Exploration Period as prescribed in the implementing rules and regulations of 膥 the Act. 10.4. An Environmental Compliance Certificate (ECC) shall be secured first by the Contractor prior to the conduct of any development works, construction of production facilities and/or mine production activities in the Contract Area. 10.5. The Contractor shall submit within thirty (30) c€lendar 芔芈芅 days after 腀 腀 腀 issuance and receipt of the ECC, an Environmental protection 芁芎芄 Enhanc€ment Program (EPEP) using MGB Form No. 16-2 covering all areas to be affected by development, utilization and processing activitiesiJnder this Agreement. The Contractor shall allocate for its initiaf environment_related capital expenditures approximately ten percent (10%) of tho total project cost or.in such. amolnt depending on the environmental/geologicai c;ndition, nature and scale of operations and technology to be eriployed in the Contract Area. 44 10.6. The Contraclor shall submit, within thirty (30) days prior to the beginning of every calendar year, an Annual Environmental Protection and Enhancemenl Program (AEPEP), using MGB Form 16-3, which shall be based on the approved EPEP. The AEPEP shall be implemented during the yearforwhich it was submitted. To implement its AEPEP, the Contractor shall allocate annually three to five percent (3o/o-5o/.) of its direct mining and milling costs depending on the environmental/geologic condition, nature and scale of operations and technology employed in the Contract Area. 10.7. The Contractor 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 lhe approved EPEP as a reasonable environmental deposit to ensure salisfaclory compliance with the commitments/strategies of the EPEP/AEPEP and availability of funds for the performance of the EPEP/AEPEP during the specific project phase. The MRF shall be deposited as Trust Fund in a govemment depository bank and shall be used for physical and social rehabilitation of areas affected by mining activities and for research on lhe social, technical and prevenlive aspects of rehabilitation. The MWTF shall be collected based on the amounts of mine waste and mill tailings generated during the conduct of Mining Operations. The MWTF collected shall accrue to a Mine Waste and Tailings Reserve Fund and shall be deposited in a government depository bank for payment of compensation for damages caused by the Mining Operations. 10.8. The Contractor shall set up mitigating measures such as mine waste and mill tailings disposal syslem, mine rehabilitation or plan, water quality monitoring, etc. to minimize land degradation, air and water pollution, acid rock drainagB and changes in hydrogeology. 荖10.9. The Contractor shall set up an Environmental 色 and Safety Office at 腀 minesite manned by qualified personnel to plan, implement and monilor 色 approved EPEP. 10.10.The Contractor shall be responsible in the monitoring of environmental safety and health conditions in the Contract Area and shall skictly comp with all the rules and regulations embodied under DAO No. 2000-98, otherwise known as the "Mine Safety and Health Standards.,, 10.1'l.The Coniractor shall be responsible for the submission of a f,nal mine 腒 rehabilitation and/or decommissioning plans, including its financial requirements and incorporating the details and particulars set fOrlh in the implementing rules and regulations of the Act. 鷭艩 SECT:ON XI to allocate royalty payment of not less than one percent (1%) of the value of the gross output of minerals sold; j2 To coordinate with proper authorities in the development of the mining community and for those living in the host and neighboring communities through social infrastructure, livelihood programs, education, water, electricity and medical services. Where traditional self-sustaining income and the community activities are identified to be present, the Contractor shall assist in the preservation and/or enhancement of such activities; 腏艕 To allot annually a minimum of one percent ('l %) of the direct mining and milling costs necessary to implement the activities undertaken in the development of the host and neighboring communities. Expenses for community development may b€ charged against the royalty payment of at least one percenl (1%) of the gross output intended for the concerned indigenous cultural community, j4 To give preference to Filipino citizens who have established domicile in the neighboring communities, in the hiring of personnel for ils mining operations. lf necessary skills and expertise are currently not available, the Contraclor must immediately prepare and undertake a training and recruitment program at its expense, and 艔裪 To incorporate in the Mining Feasibility Study the planned expenditures necessary to implemenl (j.'l) to 0.3) of this Section; k ln the development of Mining Technology and Geosciences: 腛 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 whi are consislenl with the internationally accepted standards an practices. Such maps shall be made available to the scientifi community in the most convenieni and cost effective forms, subject to the condiiion that the Contractor may delay release of said information for a reasonable period of time which shall not exceed three (3) years; k.2. To systematically keep the data generated from the Contracu Mining Area such as cores, assays and other relaled information, including economic and financial data and make them accessible to students, researchers anO otner perions responsible for developing mining, geoscience and Drocessino technotogy subject to the condiiroi ttrat tne Conriactoi mai delay release of data to the science and technology aorrrtfi 17 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 Contracl Area, for the k4research and developmenl budget To allocate and geosciences in advancement of mining technology coordination with the Bureau, research inslilulions, 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 communily for conducting research and undertaking other activities which contribute to the development of mining, geoscience and processing technology and lhe corresponding 荗 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 Feasibilily Study the planned expenditures necessary to implement all the plans and programs set forth in this Agreement, and m. To pay all other taxes and fees mandated by existing laws, rules and regulations. 11.2. Rights of the Contractorl a. To conduct Minang Operations within the confines of its 荶 ConlracuMining Area in accordance with the terms and conditions hereof and without interfering with the rights of other Contractors/Lessees/Operators/ Permittees/permit Holders; b. Possession of the Contract Area, with full right of ingress and and the right to occupy the same, subject to surface and ea rights; c. To use and have access to all declassified geological, geophysical, drilling, production and olher data relevant to the mining operations; d. To sell, assign, transfer, convey or otheMise dispose of all its rights, interests and obligations under the Agreemenl subject to the approval of lhe Govemment; e To employ or brng intO the Philippines foreign technical and o::et腶 the imrnediate members of their 閣迭::21跨 ]装 躴 the operations of the Contractor 48 subject to applicable laws and regulations: Provided, That if the employment connection of such foreign persons with the Contractor ceases, the applicable laws and regulations on immigration shall apply to them. Every time foreign technologies are utilized and where alien executives are employed, an effective program of training understudies shall be undertaken. The alien employment shall be limited to technologies requiring highly specialized training and experience subject to the required approval under existing laws, rules and regulations; 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 partjes; g profits, and interest Repatriation of capital and remittance of dividends 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 V 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 cooperalion in the exercise of the rights granted to it under this Agreement; b. To use its best efforls to ensure the timely issuance of necessary permits and similar authorizing documents for use of the surface of the Contract Area; and c. To cooperale with the Contractor in its efforts lo obtain financing conlemplated herein from banks or other rinancial institutions: Provided, That such financing arrangements will in no event reduce the Contractor's obligation on Government rights hereunder. SECT:ON X腡 ASSETS AND EQUIPMENT 12.1. fhe Contractor shall acquire for the Mining Operations only such assets that are reasonably estimated to be required in carrying out such Mining Operations. 12.2. Arr materiars, equipment, prant and other instafiations of a movabre nature erecied or praced on the contract Area by the contractor sharr remain the property of the contractor. The contractor ahafl have the right to remove and re-€xport such materials and equipment, plant and other]nstaltations from the Philippines, subject to existing ruies ,-"grl"tio;..'- In case of cessation of Mining Operations on "nO [ublic f"nO" o""i"ion"J Oy its volunlary 19 abandonment or wilhdrawal, the Contractor shall have a period of one (1) year from the time of cessation within which to remove its improvements; otherwise, all social infrastructures and facilities shall be turned over or donaled 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 xlll EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL 13.1. The Contractor agrees to employ, to the extenl possible, qualified Filipino personnel in all types of mining operations for which they are qualified; and afler Commercial Production commences shall, in consultation and with consent of the Government, prepare and undertake an extensive training programme suitable to Filipino nationals in all levels of employment. The objeclive of said programme is to reach wilhin the timetable set forth below the following targets of "Fjlipinization:' Unsk腡ledSk腡led Clettcal Professional Management ("/') (/"1 (%)(%) (%) Year 100100 1 100 100 100 '100 Year 3 100100 100 100 Year 100 5 100 100 100 100 Yeat '100 7 100 100100 Year 100 10 100100 400 100 100 Year 15 100 100 100 100 100 13.2. Cost and expenses of iraining such Filipino personnel and the Contracto/s V own employees shall be included in the Operating Expenses. '13.3. The Conlractor shall not discriminate on the basis of gender and shall respect the right of women workers to participate in policy and decision_ making processes affecting their rights and benefits. SECT:ON XiV ARB:TRAT:oN '14.1. 荷 The Government and the Contractor shall consult with each other in good faith and sha exhaust all available remedies to setfle any and ilt Oisputes or dis.agreements arising out of or relating to tire valijity, inierpretations, enforceability, or performance of this Agreement before -resorting arbitration as provjded for in Section 14.2. below. to 14'2' any disagreement or dispute which can not be setfled amicabry within a period of one (1) year from the time the issue is ,aiseJly -iarty a stratt be 20 settled by a trabunal of three (3) arbitrators. This tribunal shall be constituled 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 qualilied persons until agreement on a mutually acceptable Chairman of the tribunal is selected. Such arbitration shall be initiated and conducted pursuant to Republic Act No. 876, otheMise known as the "Arbitration Act." ln any event, the arbitration shall be conducted applying the substantive laws of the Republic of the Phi[ppines 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 attomey's fee. SECTION XV V SUSPENSION OR TERMINATION OF CONTRACT, TAX INCENTIVES AND CREDITS 15.1. This Agreement may be suspended for failure of the Contractor: (a) lo 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 o[ renewal; (b) withdrawal from lhe Agreemenl by the Contractor; (c) violation by the Contractor of the Agreement's terms and conditions; (d) failure to pay taxes, fees/or charges or financial obligations for two (2) consecutive years; (e) false statement or omission of facts by the Contractor; and (f) any other cause or reason provided under the Act and its implementing rules and regulations, or any 腛 other relevant laws and regulations. 15.3. All statements made in this Agreement shall be considered as conditions and 菏 essenlial parts hereof, and any falsehood in said stalemenls or omission of facts which may alter, change or affect substantially the fact set forth in sa statements shall be a ground for its revocation and termination. 15.4. The Contractor may, by giving due notice at any time during the term of this Agreement, apply for its cancellation due to causes wnicir,ln the opinion of the Contractor, render conttnued mining operation no lonoer feasible or viable. In this case, the Secretary.sha decide on the applicaion within thirty (30) days from notice: provided, That the Contractor tai meiafl ttre tinancial, fiscal and legal obligations. 65鶣 跫 鳁 韭 隦 讨ih访 LttI銦 誶 銲膋urse and腵 ehef by a腡~ ~ ~膌 Other means sha腡腍 , ,,腝 O o花 ~|'腝 h^,陭 _腧腌 ',腝 ^_ _ not be cOnstrued as a waive腵 ^^^^_`腌 of any succeeding or Othe腵 default unless 腏 艹 contrary intention is reduced in writing and signed by the party authorized to exercise the waiver. 15.6. ln case of termination, the Conlractor shall pay all the fees and other liabilities due up to the end of the year in which the termination becomes effective. The Contractor shall immediately carry out the restoration of the Contract Area in accordance with good mining industry practice. 15.7. fhe withdrawal by the Contractor from the Mineral Agreement shall not release it from any and all financial, environmental, legal and fiscal obligations under this Agreement. '15.8. The following acts or omission, inter alia shall constitute breach of contract, upon which the Government may exercise its right to terminate lhe Agreement: a. Failure of the Contractor without valid reason to commence Commercial Production within lhe period prescribed; and/or V b. Failure of the Contractor to crnduct mining operations and other activities in accordance with the approved Work Programs and/or any modification thereof as approved by the Director. 15.9. The Government may suspend and cancel tax incentives and credits if the Contractor fails to abide by the terms and conditions of said incentives and credits. SECTION XVI OTHER PROVISIONS 16.1. Any terms and conditions resulting from repeal or amendment of any 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 Nouce All notices, demands and other communic€tions required or permi$ hereunder shall be made in writing, telex or telecopy and shall be deemed have been duly given nolice, in lhe 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 Government: THE SECRETARY Department of Environment and Natural Resources DENR Building, Visayas Avenue Diliman, euezon Cily 22 lf to the Contractor: THE PRESIDENT Oregon Mining and Development Corporation No. 35 Dampol Street, Damar Village, Quezon City Either party may substitute or change such address on notice thereof to the other party. 16.3. Governing Law This Agreement and the relation between the parties hereto shall be governed by and construed in accordance with the laws of the Republic of the Philippines. The Contractor hereby agrees and obliges itself to comply with the provisions of the Act, its implementing rules and regulations and 腪 other relevant Iaws and regulations. '16.4. Suspension of Obligation 腌 a. Any failure or delay on the part of any party in the performance of its obligation or duties hereunder shall be excused to the extent attributable to Force Majeure as delined in the Act: Provided, That the suspension of Mining Operations due to Force Majeure causes shall be sub.iect to approval by the Director. b. lf Mining Operations are delayed, curtailed or prevented by such Force Majeure c€ruses, then the time for enjoying lhe rights and carrying out the obligations thereby affected, the term of this Agreement and all rights and obligations hereunder shall be extended for a period equal to the period involved. The Party, whose ability to perform its obligations is affected by such Force Majeure causes, shall promptly give Notice to the other in writing of any such delay or failure of performance, the expected duration thereof and its anticipaled effect and shall use its efforts to remedy such delay, except that neither Party shall be under any obligation to settle a labor dispute: Provided, That lhe suspension obligation by the Contractor shall be subject to prior approval by Director. 16.5. Amendments This Agreement shall not be annulled, amended or modified in any respect except by mutual consent in writing of the herein parties. lN WTNESS WHEREOF, the parties hereto have executed this Agreement, as of the day and year firsi abov6 written 苂腏艕 艓 THE REPUBLiC OF THE PH:L:PP:NES BY: | 腡 蝛  02`.| OMO膜膜 L T DEFENSOR Secretary Department of Environment and Natural Resources TIN: BY: ACKNOWLEDGMENT Republic of the Philippines) Quezon City )SS Before me, a Notary Public for and in the City of Quezon, personally appeared MICHAEL T. DEFENSOR, with Community Tax Certificate No. 15653141 issued on , in his capacity as Secretary of the Department"of Environment and Natural" Resources, and LAURIANO A. issued on BARR10S, wnh Communly TaxCertificate No. 146884n 腷 膊:: 限鍤迺软鑇鹏li:LI铕 趌1限 諭迃諏醋 鞼 譬醛 趔1鑆 same persons who executed the foregoing instrument consisting of twenty-fiYe (25) pages, including this acknowledgment page, and acknowledged to me that the same is their voluntary acts and deeds. 腌 腜 腒