Revir€d fflegrared MPSA for Mh(ral Rscr|ali{n 莋IINERAL PRODUC膡ON SIARING AGREEIIENT MPSA N腂 048腅腡 m腝龺 (3MR) This MINERAL PRODUCTION SHARING AGREEMENT (this "Agreement") is made and entered into in Quezon City, Metro Manila, Philippines, this _ day of ilOl/ l9 1f,97 byandbetween: TEf, REPUBLIC OF TEE PIilLPPINES ,hereinafter referred to as the GOVERNMENT, represented in this Act by the Secretary of the Department of Environment and Natural Resources, with offices at Department of Natural Resources Buildhg, Visayas Avenue, Diliman, Quezon City, Metro Manila and EAST COAST MINERAL RESOIIRCES CO., INC., a corporation duly organized and existing under the laws of the Republic of the Philippines , hereinafter referred to as the CONTRACTO& with offices at the Lot 93 Cluster L, Bagong Nayon V [, Cogeo Village, 1870 Antipolo, Riza] and represented in this act by its Chairman of the Board, HTI ARIO G. PAGAUITAN, as authorized by its Board under ANNEX ..A,' which forms an integral part hereof. WITNESSETH: WHEREAS, the 1 987 constitution of the Republic of the philippines (the "constitution") provides in Article )OI, Section 2 that a]l lands of the public domain, waters, mirerals, coal, petroleum, and other natural resources are owned by the State and that the exploration, development and utilization shall be under the full control and supervision of the State; V WHEREAS, the constitution further provides that the state may directly undertake such activities, or it may enter into a co-Production, Joint venture, or Mjneral production Sharilg.Agreement with Filipino citizens, or cooperatives, partnerships, corporations or associations at least sixty per centum ofwhose capital;zation is ownedLy such citizens; WHEREAS, pursuant to Republic Act No. 7942, otherwise known as ,.The philippine Mning Act of i 995", which took effect on 09 April 1995, the Secretary oi' the Department of Environment and Natural Resources is authorized to enter into Mneral Production Sharing Agreements in furtherance of the objectives of the Government and the constitution to borster the.national economy throu-gh sustainabre and systematic development and utilization ofmineraj lands; WHEREAS, the government desires to avail itself of the financial resources, technicar competence and skilr which contractor is capabre of applying to the mining operations of the project contemplated herern; 腒 Rcvised lutegrdld MPSA for Min€ral Ress-vrtirn WHEREAS, the Contractor has, or has access to all the financing technical competence, technology and environmental management shlls required to promptly and effectively carry out the objectives ofthis Agreement. NOW, TT{EREFORE, for and in consideration of the premises. the mutual covenants, terms and conditions hereinafter set fortt! it is hereby stipulated and agreed as follows: SECTION I SCOPE f.i This Agreement is a lrfineral Production Sharing Agreement entered into pursuant to the provisions of the Act (R,A No. 7942) and its Revised lmplementing Rules and Regulations. The primary purpose of this Agreanent is to provide for the exploratio4 sustairable development and commercial utilization of Chromite, Nckel ard other mineml deposits existing within the Contract Area, with all necessary services, technology and financing to be fumished or arranged for by the Contractor in accordance with the provisions of this Agreement. The Contractor shall not, by virtue of this Agreement, acquire any title over the contract/mining area without prejudice to the acguisition by the Contractor of the land/zurface rights through any mode of ac4uisition provided for by law. 12 The Contractor shall undertake and execute, for and on behalf of the Government, sustainable mining operations in accordance with the provisiom of this Agreernent, and is hereby constituted and appointed, for the purpose of this Agreement, as the exclusive entity to conduct mining operations in the Contract Area. 13 The Contractor shall assume all the exploralion risk such that if no minerals in commercial quantity are developed and produced, it will not be entitled for reimbursernent. 14 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 Covernment and the Contractor in accordance with Section VIII hereof SECTION tr DEFINITIONS As used in this Agreement the foliowing words and terms , \yhether singular or plural, shall have the following respeaive meaning : 2.1 '"the Act" refers to RA. No. 7942, otherwise known as the ?hilippine Mning Act of 1995" 2.2 Agreement means this lvfineral Production Sharing Agreernent 2.3 Associated Mnerals mean other oreVminerals which occur together with the principal ore/ mineral. 2 Raiised Idtegrated MPSA for I{in€ral Resrvajm 2.4 Bangko Sentral means Bangko Sentral ng Pilipinas. 2.5 Budget means an estimate of expenditures to be made by Contractor in mining operations contemplated hereunder to accornplish the Work Program for each particular period. 2.6 Calendar Year or Year means a period of twelve (12) consecutive months starting with the first day of January and ending on December 31, while "Calendar Quarter" means a period of three consecutive months with the first calendar quarter starting with the first day of January. 2.7 Commercial Production means the production of sufficient quantity of minerals to sustain economic viability of mining operations reckoned from the date of commercial operation as declared by the Contractor or as stated in the feasibiiity study, whichever comes first. 2.8 Constitution or Philippine Constitution means the 1987 Constitution of the Republic of the Philippines adopted by the Constitutional Convention of 1986 on October 15. 1986 and ratified by the People of the Republic of the Philippines on February 2,1987. 2.9 Contract Area means the area onshore or offshore delineated under the IWneral Production Sharing Agreernent subject to the relinquishment obligations of the contractor and properly defined by latitude and longitude. 2.10 Contract Year means a period of twelve (12) consecutive months counted from the Effective Date of this Agreement or from the anniversary of such Effective Date. 2.11 Contractor means East Coast Mineral Resources Co., Inc. or its assignee or assignees of interest, East coast Mineral Resources, co., rnc., under this Agreement provided the assignment of any of such interest is accomplished purzuant to the provision of the Implementing Rules and Regulations (DAO 9640). 2-12 Declaration of Mining Feasibiiity means a document proclaiming the presence of minerals in a specffic site that are recoverable by socially acceptable, environmentally safe and economicaliy sound methods specified in the Mine Development Plan. 2.I3 Department or DENR means the Department of Environment and Natural Resources. 2.14 Director means the Director of Mines and Geosciences Bureau. Z.l5 Effective Date means the date of execution of this Agreement by the Contractor and by the DENR Secretary in behalf of the Government. to cases, wherein an Exploration Permit/Temporary Exploration permit is iszued, the effective date of this Agreement shall be the date of issuance of the Exploration Permit/Temporary Exploration permit. 2.16 Env'ironment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional, and social. 芤 艏 Revfo€d lrtelrded MPSA for L{ineral Reservatim 2.17 Exploration means searching or prospecting for mineral resources by geological, geophysical, geochemical surveys, remote sensing, test pitting trenching drilling, shaft sinking, tunneling, or any other means for the purpose of determining the existence, extent, quality, and quantify of mineral resources and the feasibility of mining them for profrt. 2.18 Exploration Period shall mean the time period from the effective date of this Agreement which shall be for fwo (2) years, renewable for like periods but not to exceed a total term of six (6) years: Provided, That the Contractor has complied with all the requirements of the Revised lmplementing Rules and Regulations. 2.I9 Force Majeure means acts or circumstances beyond the reasonable control of Contractor including but not iimited to, war, rebelliorq insurrection, riots, civil disturbances, blockade, sabotage, embargo, strike, and lockout, any dispute with surface owners and other labor disputes, epidemics, earthquake, storrrq flood, or other advers€ rveather 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. 2.20 Foreign Exchange means any currenry other than the currency of the Republic of the Philippines acceptable to the Government and the Contractor. 2.21 Government means the Government of the Republic of the Philippines or any of its agencies and instrumentalities. 2.22 Gross Output means the actual market value of the minerals or mineral products from each mine or mineral land operated as a separate entrty, without any deduction for mining, processing, refining, transporting, handiing, marketing, or any other expenses: Provided, That if the minerals or mineral products are sold or consigned abroad by the Contractor under C.I.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 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 concenmtes into refined metal traded in those commodity exchanges. 2.23 Mine Development refers to work undertaken to prepare an ore body or a mineral deposit for mining, including the construction of necessary infrastructure and related facilities. 2.24 Minerals mean all naturally occurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal, petroleurL natural gas, radioactive materials and geothermal energy- 2.25 Mineral Products mean materials derived from mineral oreJrocks and prepared into marketable state by metallurgcal processes which inctude 4 Rs/h€d InteFr-i€d MPSA lq Mir6el Rs.rvdicm beneficiatiorl cyanidation, teaching smelting, calcination and other similar processes. 2.26 Mining Area means that portion of the Contract Area identified by the Contractor as defined and delineated in a Survey Plal duly approved by the Director/Concemed Regional Offices for purposes of development and/or utilization and sites for support facilities. 2.27 Mining Operations means mining activities involving exploration, feasibility study, emdronmental impact ass€ssment, development, utilization, mineral processing, and mine rehabilitation. 2.28 Notice means notice in writirg, or by telex or by telecopy (authenticated by answer back or confirmation received) addressed or sent as provided in Section 16.2 of this Agreernent. 2.29 Qfg means naturally occrrring substance or materiai lrom which a mineral or element can be mined and/or processed for profit. 2.3O Pollution means any alteration of the physical, chemica.l and/or biological properties of any water, air and/or land resources ofthe Philippines, or any discharge thereto of any liquid, gaseous or solid wastes or any production of umecessary noise or any emission of objectionable odor, as will or is likely to create or render zuch water, air, and land resources harmful, detrimental or irlurious to pubtc healt\ safety or welfare or which will adversely affect their utilization lor domestic, commercial, industrial, agriqrltural, recreationai or other legitimate purposes, 2.31 Secretary means the Secretary of the Department of Environment and Nalural Resources. 2.32 State means the Republic of the Philippines. 2.33 Work Program means a document which presents the plan of major mining operations and the corresponding expenditures of the Contractor in its Contract Area during a given period of time, including the plan and expenditures for development ofhost and neighboring communities and of local geoscience and mineral technoiogy, as submitted and approved in accordance with the Revised Implemanting Rules and Regulations. SECTION Itr TERM OF AGREEMENT 31 This Agreement shall have a term of twenty-five (25) years from effective date, and may be renewed thereafter for another term not exceeding twenty five (25) years. The renewal of this Agreement, as well as the changes in the terms aod conditions shall be upon mutual consent by the parties. In the event the Government decides to allow mining operations thereafter by other Contractor, this must be tinough comp€titive public bidding. After due publication of notice, rhe Contractor shall have the right to equal the Revtsed Irtegrded MPSA for N iner-al Reseruatim highest bid upon reimbursement of all reasonable expenses of the highest bidder SECT10N IV CONTRACT AREA 4.l Size荴 Shape,a膡 Raiiscd Integrated N{PSA for }r{iner-al Reserrztion 257.161n. 37-38260 i4',W., s 236.501n. 38-39s 120 54',W., 070 25',W., 232371膡 39-40s . gg0 40-153'w., 94375m s SECTION V EXPLORATION PERIOD 5_1The Timetable for Exploration 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 totai term of six (6) years subject to annual review by the Director to evaluate compliance with the terms and conditions of this Agreement and the provision of the Act and its implementing rules and regulations. A one-time non-renewable Temporary Exploration Permit with a period not exceeding one (l) year may be issued by the Director, upon request of the applicant, when the mineral ggreement is recommended to the Secretary for approval. Period of such Temporary Exploration Permit shall be included as part of the exploration period of this Agreement. In the event this Agreement is disapproved by the Secretary, The Temporary Exploration Permit shall be deemed automatically cancelled. 5.2 Work Programs and Budgets - The Contractor shall strictly comply with the approved Exploration and Environmental Work Programs together with their corresponding Budgets @lease refer to ANNEXES uC" and ..Drr). 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 aggregale of not less than that hereinafter specified for each of the below Contract Years, as follows: For the Exploration VVork Program: 1铕 Contract Year i PhP 815,000.00 2nd contract Year: 921,000,00 Total : PhP l,736,CX30.CXI Total Estimated Budget for the 7ork Prograln : Envlronmental腒 裗 PhP 200,000.00 Grand irotal PhP 1,936,OC10.CXI ln the event of extensiorq the amount to be spent every year shall first be agreed upon by the parties. In the event of termination of this Agreement, the Contractor shall only be obliged to expend the pro-rata amount for the period of such Contract Year prior to termination- If during any Contract Year, the Contractor should expend more than the amount to be expended as provided above, 7 Rwhdd Idtegded N{PSA fo.Mineral Resgvariea the excess may be subtracted from the amount requird to be expended by the Contractor during the succeeding Conffact years, and should the Contractor, due to unforeseen circumstances or with the consent of the Government expend less during a year, then, the deficiency shall be applied to the amount to be expended during the srcceeding Contract years, 53 Relinquishment of Total/Portion of the Contract Area - During the Exploration Period the Contractor may relinquish totaliy or partially the original contract area After the Exploration Period and prior to or upon approval of the Declaruion of Mining Project Feasibility, the Contractor shall finally relinquish any portion of the contract area not necessary for mining operations and not covered by any declaration of mining project feasibility. Each midng area after final relinquishment shall not be more than five thousand (5,000) hectares for metaliic minerals or two thousard (2,000) heclares for non-metallic minerals. The Contractor may be allowed by the Director, with the approval of the Secretary, to hold a larger mining area depending upon the nature of the deposit zubject to technical verification and evaluation by the Bureau as to the technicaUfi nancial capability of the Contractor. 54 Survey ofthe Cont.a"t Area - The Contractor sha1l cause the survey ofthe perimeter ofthe Contract Area through an application for suwey, together with mandatory requirementg fiied with the Bureau,lconcerned Regional 0ffice simultaneous with the submission of the Declaration of Mining Proj ect Feasibility. Survey retums shall be submitted to the Director/concerned Regional Director for approval within one (l) year from receipt of the Order of Survey complete with the mandatory requirements stated in the revised implementing rules and regulations of the Act. 55 Declaration of Mining Project Feasibility - During the Exploration period, the Contractor sha11 submit to the Director/concerned Regional Director a Declaration of Mining Project Feasibility together with a Mining project Feasibility Study, a Three (3) Year Deveiopment and Construction/ or Commercial Operation Work Progranq a complete geologic report of the are4 Order for Survey/approved survey plan and an Environmental Compliance Certfficale. Failure of the Contractor to submit a Declaration of I!fining project Feasibility during the Exploration period shall be considered a substantial breach of this Agreement. 56 Reporting ") Periodic Reports - During the Exploration period, the Contractor shall submit to the Regional Director, copy furnished the Drector, quarterly and annuat accomplishment reports under oath on all aaivities 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 euarter while the a-nnual accornplishment report shall be srbmitted not later than thirty (30) days from the end of each Calendar year. Such information 8 Revised lntegrated IvIPSA for Mineral Ressvation shall include detailed financial expenditures, raw and processed geological, geochemical, geophysical and radiometric data plotted in a 1.50,000 scaie at a minimum, copies of originals of assay results, duplicated sampies, field data, copies of originals from drilting reports, maps, environmental rvork program implementation and detailed expenditures showing discrepancies/deviations with approved exploration and environmental plans and budgets as well as ali 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 Regional Director, copy furnished the Director, a final report under oath upon the expiration of the Exploration Period which shall be in the form and substance comparable to published professional reports of respectable international institutions and shail incorporate all the findings in the Contract Area including location of samples, assays, chemical analysis, and assessment of mineral potentials together with a geologic map of 1:50,000 scale at the minimum showing the results of the exploration. Such report sha1l also include detailed expenditures incurred during the Exploration Period. In case of diamond drilling, the Contractor shall, upon request of the Director/concerned Regional Director, submit to the Regional Office a quarter of the core samples which shall be deposited in the Regional Office Core Library for safe keeping and reference. c) Relinquishment Report - The Contractor sha1l submit a separate relinquishment report with a detailed geologic report of the relinquished area accompanied by maps at a scale of 1:50,000 and results of analysis as well as detailed expenditures, among others. SECTION \II DEVELOPI}MNT ANI} CONSTRUCTIOI.{ PERIOD 61 Timetable - The Contractor shall complete the development of the mine including the construction of production facilities within thirry six (36) months from the submission of the Declaration of Mining Project Feasibility, subject to such extension based on justifiable reasons as the Secretary may approve, upon recommendation of the Director/concerned Regional Director. 芭苂 菒 腌 Reporting a) Annual - The Contractor shall submit, within sixty (60) days after December 3l of each year, to the Regional Directoq copy furnished the Director, an annual report which states the major activities, achievements and detailed expenditures during the year covered, including maps, assays, rock and mineral analyses and progress geological and environmental reports during the development and construction period. 9 Rer.iscd Ir(egrated lv{PSA lbr N{ineral Reservalion b) Final Report - Within slx (6) months from the completion of the development and construction activities, the Contractor shall submit a final report to the Regional Director, copy furnished the Director. Such report shal1 integrate all information in maps of appropriate scale and quality as well as in monographs or reports in accordance with international standard s. SECTION YII OPERATING PERIOD within thirty (30) days before 71The shall submit, Timetable - Contractor completion of mine development and construction of production facilities, to the Secretary through the Director/ concerned Regional Director, a Three Year Commercial Operation Work Program and Budget. The Contractor shall commence Commercial Production 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. Budget - During the Operating 72Program and Commercial Operation Work Period, the Contractor shall submit to the Secretary through the Director/concerned Regional Director, Work Programs covering a period of three (3) years each which shall be submitted not later than thirty (30) days before the expiration of the period covered by the previous Work Programs. The Contractor shall conduct mining operations and other activities for the duration of the Operating Period in accordance with the duly approved Work Programs and corresponding Budgets and any modification thereof shall be approved by the Secretary. 73may make Expansion and Modification of Facilities - The Contractor expansions, modifications, improvements, and replacements of the mining facilities and may add new facilities as the Contractor may consider necessary for the operations, provided such plans shall be embodied in an appropriate Work Program approved by the Secretary. 7.4 Reporting Quarterly Reports - Beginning with the first Calendar 膨 Quarter following the commencement of the Operating Period, the Contractor shall submit, within thirry (30) days after the end of each Calendar Quarter, to the Secretary through the Regional Director, copy furnished the Director, a Quarterly Report stating the tonnage of production in terms of ores, concentrates, and their corresponding grades and other types of products; value, destination of sales or exports and to whom sold; terms of sales and expenditures. b)During Annual Reports - the Operating Period, the Contractor shall submit, within sixty (60) days from the end of each Calendar Year, to the Secretary through the Regional Director, copy furnished the Director, an Annual Report indicating in sufficient detail: 10 Rerised lntegrated Ir{PSA for h{ineral Reservalioo b,1) The total tonnage of ore reserves whether proven, probable, or hferred, the total tonnage of ores, kind by kind, broken do\.r'n between tonnage mired, tonnages transported from the minesite and their corresponding destination, tonnages stockpiled in the mine and elsewhere in the Philippines, tonnages sold or committed for exporr (rvhether actually shipped from the Philippines or not), tonnages actually shipped from the Philippines (with full details as to purchaser, destination and terms of sale), and if known to the Contractor, tonnages 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 at the end of the year in question with respect to all the installations and facilities related to the utilization progranr, including the investment actually made or committed; b.3) Profile of work force, including management and stafi, stating particularly their nationalities, and for Filipinos, their place of origin (i-e., barangay, town, province, region ); and b-4) Ownership of the Contractor, particularly with respect to nationality. SECTION Wtr FISCAL REGIME 81 General Principle - The financial regime of this Agreement shall be governed by the principle according to which the Government expects a reasonable return in economic value for the utilization of non-renewable natural resources under its natural sovereignty v,,hile the Contractor expects a reasonable return on its investment with special account to be taken for the 膥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. 8.2Fees (15) Registration - Within fifteen days upon receipt of the Notice of approval of the MPSA from the Bureau/concerned Regional Office, the Contractor shall cause the registration of this Agreement at the Burear:./concerned Regional Office and pay the registration fee in the amount of P100 and an additional PlO for P.D. 1856 Failure of the Contractor to cause the registration of this Agreement within the prescribed period shall be sufficient ground lor cancellation of the same. 8.3 occupation Fees - Upon registration of this Agreement and on the same date every year thereafter, the Contractor shall pay to the concerned Municipavcity Treasurer an occupation Fee over the Contract Area at the annual rate of one Hundred Pesos (P100) per hectare or fraction thereof. If the fee is not paid on the date specffied, the Contractor shall pay a surcharge of twenty five percenilm (25%o) of the amount due in addition to the occupation fees. Rcr.isirJ Inlcgatcd Ir'IPSA lbr lr{ineral Res€n'ation The goverrrment share shall the excise tax on 84- be Share of the Government mineral products at the time of its removal and at the rate provided for in Republic Act No. 7729 arnending Section 151 (a) of the National Internal Revenue Code, as amended, in addition to a royalty of not less than five percentum (5%) of the gross output as well as other taxes, duties, and fees levied by existing laws. The excise tax shall be paid to the nearest Bureau of Internal Revenue office in the concerned province while the royalty shall be paid directly to the Bureau. For purposes of determining the amount of the herein government share and royalty, the Contractor shall strictly comply with the auditing and accounting requirements prescribed under existing laws and regulations. The government share shall be allocated in accordance with Sections 290 and 292 of R. A. No. 7760, otherwise known as 'The Local Government Code of 1991". The endeavor to obtain the best achievable 85Contractor shall Pricing of Sales - price for its production and pay the lowest achievable marketing commissions and related fees. Contractor shall seek to strike a balance between long-term sales comparable to policies followed by independent producers in the international mining industry. The Contractor shall likewise seek a balanced distribution among consumers. Insofar as sales to Contractor's affiliates are concerned, prices shali be at arm's length standard and competing offers for large scale and long-term contracts shall be procured. The Bureau shall be furnished a copy of the said Sales Agreement subject to confidentiality between the Bureau and the Contractor. Nickel are 86Minerals If Minerals, than and Associated - other Chromite discovered in commercial quantities in the Contract Areq the value thereof shall be added to the value of the principal mineral in computing the share of the government. SECTION D( WORK PROGRAMS periods 91 Submission to Government - Within the stated hereirg the Contractor shall prepare and submit to the Secretary through the Director/concerned Regional Director, Work Programs and corresponding Budgets for the Contract Area stating the mining operations and expenditures which the Contractor proposes to carry out during the period covered with the details and particulars set forth elsewhere in this Agreement. 9.2 Government's Examination and Revision of Work Program - Should the Government wish to propose a revision to a certain specific feature in the Work Program or Budget it shall, within thirry (30) days after receipt thereof, provide a Notice to the Contractor specifying in reasonable detail 12 Rer"Lsed Integrated N{PSA for }r{ineral Reservatioo its reasons therefore. Promptly thereafter, the Govemment and Contractor will meet and endeavor to agree on the revision proposed by the Government. In any event, any portion of said Work Program or Budget as to which the Government shall fail to notifu the Contractor of proposed revision shall insofar as possible be carried out as prescribed herein. If the Government should fail within sixty (60) days from receipt thereof to notifu Contractor of the proposed revisions, the Work Program and Budget proposed by the Contractor shall be deemed to be approved. to Work Program - It is recognized by the 93Changes Contractor's 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 they do not change the general objective of the Work Prograrrg and provided further, that changes which entail a variance ofat least twenty (20) percentum shall be subject to the approval ofthe Secretary. 9.4 The Government's approval of a proposed Work Program and Budget will not be reasonably withheld. SECTION X EN\TIRONMENTAL PROTECTION , ITIINE SAFETY AND HEALTH i0.1 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 revised implementing ruIes and regulations of the Act; 10-Z The Contractor shall prepare a plan of mining so that its damage to the environment will be minimal. To the extent possible, control of pollution and the transformation of the mined-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 Section 168 in the revised implementing rules and regulations of the Act, 10,4 An Environmental Compliance Certificate (ECC) shall be secured first by the Contractor prior to the conduct of any mine development work and construction of production facilities in the Contract Area; 10.5 The Contractor shall submit within thirry (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 mining development, utilization and processing under this Agreement. The Contractor shall allocate for its initial environment-related capital expenditures approximately ten percent (10%) of the total project cost or in such amount depending on the environment/geological condition, nature and scale of operations and technology to be employed in the Contract Area; Rcr"ised Inlegrated I{PSA lor N{ineral Rcservalion 10.6 The Contractor shall submit, within thirty (30) days prior to the beginning of every calendar year, an Annual Environmental Protection and Enhancement Program (AEPEP) using MGB Form 16-3 which shall be based on the approved EPEP. The AEPEP shall be implemented during the year for which it was submitted. To implement its AEPEP, the Contractor shall allocate annually three to five percent (3%-5%) of its direct mining and milling cost depending on the environment/geologic conditioq nature and scale of operations and technology employed in the Contract Area; lO.7 The Contractor shall establish a Mine Rehabilitation Fund (MRF) based on the financial requirements of the approved EPEP as a reasonable environmental deposit to ensure satisfactory compliance with the commitments/strategies of the EPEP/AEPEP and availability of funds for the performance of the EPEP/AEPEP during the specffic 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; 10.8 The Contractor shall set-up mitigating measures such as mine waste and V mill tailings disposal system, mine rehabilitation or plan, water quality monitoring, etc. to minimize land degradatioq air and water pollution, acid rock drainage and changes in hydrogeolog.v; 10.9 The Contractor shall set-up an Environmental and Safety Office at its minesite manned by qualified personnel to plan, implement and monitor its approved EPEP; 10.10 The Contractor shal1 be responsible in the monitoring of environmental safety and health conditions in the Contract Area and shall strictly comply with all the rules and regulations embodied under Mines Administrative Order No. 51, Series of 1991, otherwise known as the "Revised Mine Safety Rules and Regulations", and V 10.11 The Contractor shall be responsible for the submission of a final mine rehabilitation an#or decommissioning plans including its financial requirements and incorporating the details and particulars set forth in the revised implementing rules and regulations of the Act. 蝖 SEC膡ON RIG蝕TS AND OBLIGA膡 ONS OF l鉕 E PARTIES 11.1 0bligations Ofthe Contractori a) To exclusively conduct sustainable mining operations within the Contract Area in accordance Act and its with the provisions of the revised implementing rules and regulations; b) To construct and operate any facilities specified under the Mineral Agreement or approved Work Program. 14 Reuis€d lntegrated NIPSA for lr{inral Resen'alion the exploratiorl mining and treatment process to be C) To determine utilized in the mining operations; remove, use and dispose of any tailings as authorized by d)To extract, an approved Work Program; To all permits necessary or desirable for the purpose of mining e)secure operations, To keep accurate technicai records about the mining operations as 苂marketing make them available to well as financial and accounts and the Director for the Government representatives authorized by purpose of assessing the performance and compliance of the Contractor with the terms of this Agreement, Authorized representatives of other Government Agencies may also have access to such accounts in accordance with existing Laws, Rules and Regulations; To furnish the Bureau all the data and information gathered on the D Contract Area and that all the books of accounts and records shall be open for inspection, free and harrnless lrom a1l claims and h)hold the Government To arising of accounts of all kinds, as well as demands and actions out the accidents or injuries to persons or properties caused by Mining Operations of the Contractor and indemnify the Government for any expenses or cost incurred by the Government by reason of any such claims accounts, demands or actions; In the development of the community, To recognize and respect the rights, customs and traditions of indigenous tribal communities over their ancestral lands and to allocate royalty payment of not less than one percent (1%) of the value of the gross output; V proper i_2)with in To coordinate authorities the development of the mining community, as well as for those lirritg in the host and neighboring communities through social infrastructure, livelihood programs, educatiorq 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; (1%) 1.3)To allot annually minimum percent a of one of the direct mining and miling costs necessary to implement the activities undertaken in the development of the host and neighboring communities. Expenses for community development maybe charged against the royaltv payment of one percent (1%) of the gross output intended for the indigenous cultural community; i.4) To give preference to Filipino citizens who have established domicile in the host and neighboring communities in the hiring of personnel lor its mining operations. If necessary skills and expertise are currently not available, the Contractor must immediately 艣裪 Rcvised Irtegrated lr'{PSA lbr Mineral Rcsfl'xtion prepare and undertake a training and recruitment program at its expense; i) In the development of Mining Technology and Geosciences: j.r ) In the course of its operations, to produce geological, geophysical, geochemical and other types of maps and reports that are appropriate in scaie and in format and substance which are consistent with the internationally accepted standards and practices. Such maps shall be made available to the scientific community in the most convenient and cost effective forms, subject to the condition that the Contractor may delay release of said information for a reasonable period of time which shall not exceed three (3) years, j.2) To systematically keep the data generated from the contract/mining area such as cores, assays and other related informatioq 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 data to the science and technology community within a reasonable period of time which shali not exceed three (3) years; and j3) 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. j4) To allocate research and development budget for the advancement of mining technology and geosciences in coordination with Bureau, Research [nstitutions, Academe, etc. js) To replicate data, maps and reports cited in (.1) and (j.2) and furnish the Bureau for archiving and systematic safekeeping which shali be made available to the science and technology community for conducting research and undertaking other activities which contribute to the development of mining, geoscience and processing technology and the corresponding national pool of manpower talents: provided, however, that the release of dat4 maps and the like shall be similarly constrained in accordance with fi l) and fi 2) above. k) To incorporate in the mine project feasibility study the planned expenditures necessary to implement plans and programs set forth in this Agreement; and l) To pay all other taxes and fees mandated by existing laws, rules and regulations. 11.2 Rights ofthe Contractor The Contractor shall have the right: 艏膌 Rs.iscd Integralert N,{PSA lbr lr{ineral Rservalion a) To conduct mining operations within the confines of its Contract/ Mining Area in accordance with the terms and conditions hereof and that it shall not interfere with the rights of other Contractors/ Lessees/Op erators/P ermittees, b) Of possession of the Contract Area, with fulI right of ingress and egress and the right to occupy the same, subject to surface and easement rights.; have to all declassffied geological, geophysical, C)To and access use drilling, production and other data relevant to the mining operations, convey or othenrrise all its rights, d)To transfeq dispose of sell, assign, interests and obligations under the Agreement subject to the approval of the Government; bring into the Philippines foreign technical and e)To employ or specializsd personnel, including the immediate members of their families, as maybe required in the operations of the Contractor, subject to applicable laws and regulations: provided, that if the employment connection of such foreign persons with the Contractor ceases, the applicable laws and regulations on immigration shall apply to them. Everytime foreign technologies are utilized and where alien executives are employed, an effective program of training understudies shall be undertaken. Such alien employment shall be limited to technologies requiring highly specialized training and experience subject to the required approval under eisting laws, mles and regulations; To enjoy easement rights and use of timber, water and other natural resources in the Contract Area subject to pertinent laws, rules and regulations and the rights of third parties, g) Of repatriation of capital and remittance of profits, dividends and interest on loans, subject to existing laws and Bangko Sentral rules and regulations; and h) To import when necessary all equipment, spare parts and raw materials required in the operations in accordance with existing laws and regulations. 11.3 Obligations of the Government The Government shall: Ensure that the Contractor has the Government's full cooperation in 膨 the exercise of the rights granted to it under this Agreement; b)to Use its best efforts ensure the timely issuance of necessary permits and similar authorizing documents for use of surface of the Contract Area; and C) To cooperate if Contractor seeks to obtain financing contemplated herein from banks or other financial institutions provided, that such 17 Rer.lsed lntegrated lr.{PSA lbr lt{ineral Resil'ation financing arrangements will in no event reduce Contractor's obligation on Government rights hereunder. SECTION Xtr ASSETS AND EQUIPMENT 12.1 Contractor shall acquire for the Mining Operations only such assets that Ne reasonably estimated to be required in carrying out such Mining Operations. 12.2 A11 materials, equipment, plant and other installations erected or placed on the Contract Area of a movable nature by the Contractor shall remain the property of the Contractor and 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. [n case of cessation of Mining Operations on public lands occasioned by its voluntary abandonment or rvithdrawal, 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 donated tax free to the proper government authorities, national or loca^l, to ensure that said infrastructures and facilities are continuously maintained and utilized by the host and neighboring communities. SECTION XItr EMPLOYI}IENT AND TR{INING OF PHILIPPINE PERSONNEL 13.1 The Contractor agrees to employ, to the extent possible, qualified Filipino personnel in all types of mining operations for which they are qualified; and after Commercial Production commences shall, in consultation and with consent of the Government, prepare and undertake an extensive training progranrme suitable to Filipino nationals in all levels of employment. The objective of said programme shall be to reach within the time table set forth below the following targets of 'Tilipinization". Unskilled Skilled Clerical PrOfessiOnal Manttement 1000/腂 Year 1 100% 100% 90% 90% Year 100% 3 100% 1000/0 950/腂 95% Year 100% 5 100% 1000/0 950/0 95% Year 7 1000/01000/腂 100膋 /0 100% 1000/腂 Year 100%100% 10 100% 100% 100% 1000/0100% Year 15 100% 100%100% 13.2 Cost and expenses of training such Filipino personnel and the Contractor's own employees shall be included in the Operating Expenses. 13.3 The Contractor shal1 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. 18 Rer"ised Irtegrated MPSA for Mineral Resergatim SECTION XIV ARBITRATION 14.1 The Government and the Contractor shall consult with each other in good faith and shall exhaust all available remedies to settle any and all disputes or disagreements arising out of or relating to the validity, interpretations, enforceability, or performance of this Agreement before resulting to arbitration as provided for in Section 14.2 below. 14.2 Any disagreement or dispute which can not be settled amicably within a period of one (1) year from the time the issue was raised by a Party shall be settled by a tribunal of three (3) arbitrators, one to be appointed by the Contractor, another to be appointed by the Government, and the third by the arbitrators shall continue to consider narnes of qualified persons until agreement on a mutually acceptable Chairman of the tribunal is needed. Such arbitration shall be initiated and conducted pursuant to Republic Act No. 876, otherwise known as the "Arbitration Act". ln any event, the arbitration shall be conducted app$ing the substative laws of the Republic of the Philippines. 14.3 Each party shall pay fifty per centum (50%) of the fees and expenses of the Arbitrators and the costs of arbitration. Each party shall pay its own costs and attorney's fee. 10N XV SEC腵 菎RDIINAT10N OF CONTRACT, SUSPENS10N OR TAX NCENTR袠 腬 S AND CREDITS 15.1 This Contract may be suspended for failure of the Contractor: (a) to comply with any provision or requirement of the Philippine Mining Act of 1995 and/or its Revised Implementing Rules and Regularions; O) to pay taxes, fees and/or other charges demandable and due the Government- 15.2 This Agreement terminates or may be terminated for the following causes: (a) expiration of its term whether original or renewal; (b) withdrawal from the agreement by the Contractor; (c) violation by the Contractor of the Agreement's terms and conditions; (d) failure to pay taxes, fbeyor charges or financial obligations for two(2) consecutive years; (e) false statement or omission of facts by the Contractor; and (0 any other caus€ or reason provided under the Act and its Implementing Rules and Regulations, or any other relevant laws and regulations. 15.3 All statements made in this Agreement shall be considered as conditions and essential parts hereof, and any falsehood in said statements or omission of facts which may alter, change or affect substantially the fact set forth in said statements shall be a ground for its revocation and termination. 19 Revis€d llrerr.(cl MPSA for Mincral Rrservaricn 15.4 The Contractor may, by giving due notice at any time during the term of this Agreement, apply lor its cancellation due to causes whictq in the opinion of the Contractor, render continued mining operation no longer feasible or viable. tn this case, the Secretary shall decide on the application within thirty (30) days from notice, provided that the Contractor has met all the financial, fiscal and legal obligations, 15.5 No delay or omissions or cou.rse of dealing by the Government shall impair any of its rights under this Agreement, except in the case of a written waiver. The Government's right to seek recourse and relief by all other means shall not be construed as a waiver ofany succeeding or other default unless the contrary intention is reduced in writing and signed by the party authorized to exercise the waiver, 15.6 In case of termination, the Contractor shall pay all the fees and other liabilities due up to the end of the year in which the termination becomes effective. The Contractor shall immediately carry out the restoration of the Contract Area in accordance with good mining industry practice. 75.7 The witbdrawal by the Contractor from the N4neral Agreement shall not releas€ ot from any and all fuancial, legal and fiscal obligations under the 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 contract: a) Failure of the Conlractor without valid reason to cornmence Commercial Production within the period prescribed; and b) Failure of the Contractor to conduct quarrying operations and other activities in accordance with the approved Work programs and,/or any modification thereof as approved by the Secretary. 15.9 The Government may suspend and cancel tax furcentives and credits if the Contractor fails to abide by the terms and conditions of said incentives and credits. SECTION XVI OTHT'R PROVISIONS 16.l Any terms and conditions resulting from repeal or amendment of any existing laws or regulation or from the enactment of a law, regulation oi administrative order shall be considered a part ofthis agreement. 16.2 Notice All notices, demands and other communications required or permitted herarnder shalt be made in writing or by telex o, t"l""opy and shall be deemed to have been dury given in the case of terex or terecopy notice if answered back or con-firmation received or if delivered by hand upon 20 Revfo€d ktegldEd MPSA fr Mini:r-al Reservalim receipt or ten days after being deposited in the mail, airmail postage prepaid and addressed as follows: lfto the Government: TIM STCNETARY Department of Environment and Natural Resources DENR Building, Visayas Avenue Diliman, Quezon City If to the Contractor : MR HTI,ARIO G. PAGAUITAN Chairman of the Board & General Manager East Coast N'fineral Resources Co., [nc. Lot 93 Cluster L, Bagong NaYon I, Cogeo Village, 18670 Antipolo, Rizal, Philippines Either party may substitute or change such address on notice thereof to the other party 16.3 Goveming 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 other relevant laws and regulations. 16.4 Suspension of Obligation a) Any failure or delay on the part of any party in the perlormance of its obligation or duties hereunder shall be excused to the extent attributable to Force Majzure. b) tf Mining Operations are delayed curtailed or prevented by such Force Majeure causes , then the time for enjoying the rights and carrying out the obligations thereby affected, the terrn of this Agreement and all rights and obligations hereunder shall be ortended for a period equal to the period involved. c) The party whose ability to perform its obligations shall promptly give Notice to the other in writing of any srch delay or faiture of performance, the expected duration thereof, and its anticipated effect on the Party expected to perform and shall use its efforts to remedy zuch delay, except that neither Parry shall be under any obligation to settle a labor dispute- 16.5 Amendments This Agreement shall not be annulled, amended or modified in any respect except by mutual consent in writing of the herein parties. 21 Revi!€d Ifl€grdld MPSA for Mha'al Res€ri31ion IN WITNESS WEEREOF, the Parties hereto have executed this Agreement, as of the day and year first above written lllE REPUBLIC OF TBE PH:LIPPINES BY: / VICTOR O.RAIIIOS Sec苈 苨 韙膌膍膍 D膜D7,葟膍莿膍莿荏 蹬芰 腧 膡7腝aF R膌s臥菁ces N蹒 V 裪 腪 SIGNED IN THE PRESENCE OF clpmferrn \rrpss.irE doc 794u4-97 72:57:72 All 22 Re6€d ldegr.t€d MPSA for l\6ne.al Res<1dioD ACKNOWLEDGEMENT Republic of the Pfrilippines) )SS 芢 閫 Before me, a Notary Public for and in the City of personally appcarcd 蝕 ON.腒関 CTO腔0.RAMOS,with Co_Funi膍 Ta ce腧i3Cate No ,C腒 C腒 J膍芨Sucd On J7腝 9膡at 芢菆 芤閄 ,i