WHEREAS, the Govemment desires to avail itself of the financial resources, technical competence and skill which the contractor is capable of applying to the mining operations of the projec{ contemplated herein; WHEREAS, the Contractor desires to join and assist the Government in the sustainable development and utilization for commercial purposes of certain chromite, nickel, platinum and other associated mineral deposits existing in the Contract Area (as herein defined); WHEREAS, the Contractor has access to all the financing, technical competence, technology and environmental management skills required to prompfly and efreclively 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: 腄 sEcTroN r 腃 腀 腒 腪 腄 SCOPE 龔 1.1. This Agreement is a Mineral Production Sharing Agreement entered into pursuant to the provisions of the Act and its implementing rules and 苣 regulations. The primary purpose of this Agreement is to provide for the rational exploration, development and commercial utilization of certain chromite, nickel, platinum and other associated mineral deposits existing within the Contract Area, with all necessary senrices, technology and financing to be fumished or arranged by the contractor in accordanCe with the provisions of this Agreement. The contractor shall not, by virtue of this Agreement, acquire any title over the ContracUMining Area without prejudice to the acquisition by the Contractor of the land/surface rights through any mode of acquisition provided for by law. 芵 12 The Contractor shall undertake and execute, for and on behalf of the Government, sustainable mining operations in accordance with the provisions of this Agreement, and is hereby constituted and appointed, for the purpose of this Agreement, as the exclusive entity to conduct mining operations in the Contract Area. 13 The conlractor shall assume all the exploration risk such that if no minerals in commercial quantity are developed and produced, it will not be entifled to reimbursement. 14 During.the term of this Agreement, the total value of production and sale of minerals derived from the mining operations contemplated herein shall be accounted for and divided between the Government and the contractor in accordance with Section Vlll hereof.ER ,/ ,1T[ 2 SECTloN:: DEF:NITIoNS whdh菐 Jngd菁 腸 菐 :11:L膪 译 i鞐 轒 譲 腡  软 TR 腶 醪 軹 :iand brm腁 2膡 cAd No 7942,dhe雊 se knom as he腧 Pm苬 雈 ne h腶賻 遑 117铕 lu葜 莔 _ 2.1 3. Declaration of Minino Feasibilitv means a document proclaiming the presence of minerals in a specific site, which are recoverable by socially acceptable, environmentally safe and economically sound methods- specified in the Mine Development Plan. 2.14. Department or DENR means the Department of Environment and Natural Resources. 2.1 5. Director means the Direclor 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. ln caie an Exploration Permiuremporary Exploration permit had been availed of by the contractor, the Effective Date of this Agreement shall be the date of issuance of said Exploration PermiUTemporary Exploration permit. 2.17. Environment rneans all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social. 腒 v 2.1 8. Exploration 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 meansior the purpose of determining the existence, extent, quality and quantity of mineral 芈 resources and the feasibility of mining them for profit. 2.19. Exploration Period shall mean the time period from the Effective Date of 苡 this Agreement which shall be for two (2) years, renewable for like periods but not to exceed a total term of six (6) years for nonmetallic minerals and eight (8) years for metallic minerals, subject to the pertinent provisions of the implementing rules and regulations of the Act. 2.20. Fgrge Maieure means acts or circumstances beyond the reasonable control 腒 of the contractor including, but not limited to war, rebellion, insurrection, riots, civil disturbances, brockade, sabotage, embargo, strike, rockout, any dispute with surface owners and other labor disputes, epidemics, earthquake, storm, frood or other adverse weather condiiions, exprosion, fire, ad.vg1s9 action by the Government or by any of its instrumentariiy or subdivision thereof,. act of God or any publii enemy and any cause as herein described over which the affected party has no reasonabrre contror. 2'zt' Eqelg+-Elgherge -. rreans any currency other than the cu,ency of the Republic of the phirippines acceptaote to the Government and the Contractor. 2'22. Govemment means the Government of the Repubric of the phirippines or any of its agencies and instrumentalities. 2'23' Gross output means the actuar market varue of the minerars or minerar products from each mine or minerar rand operated as a separate entity, without any deduction for mining, processing, retinlnj, -transpJrtirg, handling, marketing or any other erp"-ns"s, piovioJo, -rrat if-ihe ;iil;; or 莈 腒 荻 mineral products 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 commodity exchanges in the Philippines or abroad such as copper concentrate, the actual market value shall be the world price quotation of the refined mineral products contained thereof prevailing in the said commodity exchanges, after deducting the smelting, refining, treatment, insurance, transportation and other charges incurred in the process of converting mineral concentrates into refined metal traded in those commodity exchanges. 2.24. Mine Develooment 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, gis or any intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy' 芵materials derived from mineral ores/rocks and 2.26. Mineral Products mean by metallurgical processes which include prepared into marketable state calcination and other similar beneficiation, cyanidation, leaching, smelting, processes. 2.27. Minino Area means that portion of the contract Area identified by the Contiactor as defined and delineated in a Survey Plan duly approved by the Director/concerned Regional Director for purposes of development and/or utilization and sites for support facilities. 2.28. MininO Ooerations means mining activities involving exploration, feasibility study, environmental impact assessment, development, utilization, mineral processing and mine rehabilitation. 2.29. Notice 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. 2.30. Ore means naturally occurring substance or material from which a mineral or element can be mined and/or processed for profit. 2.31. Pollution means any alteration of the physical, chemical and/or biological properties of any water, air andlor land resources of the Philippines, or any discharge thereto of any liquid, gaseous or solid wastes or any production of unnecessary noise or any emission of 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, recreational or other legitimate purposes. 2.33. State means the Republic of the philippines. 2.34- Work Prooram means a document which presents the plan of major mining operations and the corresponding expenditures of the Contractor in ita 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 submitied 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 thereafter for another term not exceeding twenty tive (25) years. The renewal of this Agreement, as well as the changes in the terms and conditions thereof, shall be upon mutual consent by the plrties. ln the event the Government decides to allow mining operations thereafter by V other Contractor, this must be through competitive public bidding. After due 腒 publication of notice, the Contractor shall have the right to equal the highest bid upon reimbursement of all reasonable expenses oi the highest biddei. 芡 SECTION IV CONTRACT AREA 4.1. Size, Shape, and Location of Contract Area - This Agreement covers a total are of three thousand seven hundred sixty five & 3853/10000 hectares (3,765.3853 has.), situated in Sta. Cruz and Candelaria, Zambales and bounded by the following geographicat coordinates (please refer to ANNEX "8" - 1:50,000 scale Location Map/Sketch plan): 腜 LOT l CORNER LAT:TUDE LONG:TUDE 艐 15膋 44'00.00" 120膋 03'00.00" 艑 15腅 44'30.00' 120膋 03'00.00" 艒 15膋 44'30.00" 120膋 03'15.00' 艓 15膋 44'15.00' 120膋 03'15,00" 艔 15膋 44'15.00" 120腅 03'45.00' 艕 15膋 44'30.00'' 120膋 03'45.00" 艖 15膋 44:30.00' 120膋 艗 04'00.00' 15膋 42'45.00" 120膋 艘 04'00.00" 15膋 42'45.00" 120膋 艐艏 04'15.00" 15膋 43'00.00" 艐腝 120腅 04'15.00" 15腅 43'00.00' 艐艑 120膋 04'30.00" 15膋 41'30.00" 腝艒 120膋 04'30.00" 15膋 41'30.00" 腝艓 120膋 04'00.00" 15膋38'30.00' 腝艔 120膋 04'00.00" 15膋 38'30.00" 腝艕 120腅 03'30.00' 15膋 39'30.00" 腝艖 120膋 03'30.00" 15膋 39'30.00" 腝艗 15膋 39'38.00" 1:::::11:il蹉 = 6 腝艘 15膋 39'3800'120膋03'0840" 艑腂 15膋394770"120膋03'0840" 艑腝 15膋39'4770" 120腅03'3000" 艑 15膋40'0000"120膋03'3000" 艑艒 15膋 40'0000"120膋03'0000" 艑艓 15膋 40'3000"120膋03'0000' 艑艔 15膋40'3000" 120膋02'3000" 艑艕 15膋40'0000"120膋02'3000" 艑艖 15膋 40'0000"120膋02'4500" 艑艗 15膋394500"120腅024500" 艑艘 15膋394500"120膋03'0000' 艒艏 15膋39'3800'120膋03'0000" 艒腝 15膋39'3800"120膋03'0840" 艒艑 120膋 15膋39'0870"03'0840" 艒艒 15膋39'0870'120膋03'0000" 艒艓 15膋39'0000"120膋03'0000" 艒艔 15膋120膋024820" 39'0000" 膇 15膋38'5730"120膋02'4820" 艒艖 38'5730"03'0000" 15膋120膋 艒艗 15膋38'3000'120膋 030000" 膇 15膋38'3000"120膋02'0000" 艓艏 15膋38'4070腅120腅02'00.00" 艓腝 15膋384070"120膋02'1000" 腒 艑 腒 _ 15膋39'0000"02'1000' 120膋 艓艒 02'0000" 15膋39'0000"120膋 腧 芾 15膋120膋02'0000" 38'4070" 艓艔 38'3000"120膋02'0000" 15膋 艓艕 芒 15膋38'3000"120膋01'3000" 艓艖 15膋40'5580" 120膋01'3000" 艓艗 莊 15膋40'5580"120膋02'05,70" 艓艘 腒 15膋41'0600"120腅020570" 艔艏 15膋41'0600"120膋02'2560" 艔腝 15膋41鹂550"120膋02'2560" 腨 15膋41'25,50'120膋02'3560" 艔艒 15膋414500'120膋02'3560" 腧 15膋41'4500"120膋02'4560' 艔艔 15膋42'0000腅120膋02'4560" 腧 15膋42'0000"120膋024500" 艔艖 15膋42'0400"120膋024500腅 艔艗 15膋42'0400"120膋02'5700" 艔艘 15膋43'0000"120膋02'5700' 艕艏 15膋43'0000"120膋024680腅 艕腝 15膋43'2120"120膋02膜 680" 艕艑 15膋43'2120"03'0000腅 120膋 艕艒 15膋43'4035" 120膋03'0000" 腧 15膋434035" 120膋02'5700" 艕艔 15膋43'3000"120膋 02'5700" 腧 15膋43'3000" 120膋02'3000' 艕艖 15膋 42'3000"02'3000" 120膋 艕艗 15膋42'3000" 120膋02'0000" 艕艘 15膋42'0000" 120膋02'0000" 艖艏 15膋42'0000腅 120膋02'0500" 艖腝 15膋 41'2500" 02'0500" 120膋 艖艑 15膋41'2500" 120膋01'5500" 艖艒 15膋414465' 120膋01'5500" 膡 15膋414465" 120膋01'4500" 艖艔 15膋41'2500" 120膋01膡500" 艖艕 15膋 41'2500" 120膋01'3500" 艖艖 15膋 41'54.40" 120膋01'35.00" 艖艗 15膋 41'5440' 120膋 01'4500' 艖艘 15膋424340" 120膋 01'4500" 艗腂 15膋 42'4340" 120膋 01'5510" 艗腝 %2"葟 郘T5讗 膊 若 腧 7 艗艑 120膋02'0500" 42'5290" 15膋 艗艒 02'0500" 120膋 15膋43'1250" 艗艓 01'5500腅 120膋 43'1250" 15膋 艗艔 01'5500腅 120膋 15膋43'3000腅 Area of Lot l=3,681 7837 Hectares 2 Lot腝 LONG:TUDE LAT:TUDE CORNER 艐 02'0000" 120膋 37'2060" 15膋 艑 02'3000" 120膋 37'2060" 15膋 艒 02'3000" 120膋 15膋37'1080" 艓 120膋02'1100" 15膋37'1080' 艔 02'1100' 120膋 37'0000" 15膋 艕 120膋02'0000" 15膋37'0000腅 Area of Lot 2=37 8002 Hectares Lot-3 腒 LONGITUDE LAT:TUDE CORNER 腒 艐 02'5000" 120膋 38'0000" 15膋 艑 芢 0215000" 120膋 15膋38'1000腅 艒 02'3000" 120膋 38'1000" 15膋 艓 02'3000" 120膋 38'2000腅 15膋 艔 03'1000" 120膋 15膋38'2000'' 艕 120膋03'1000" 15膋38'1000" 艖 03'0000" 120膋 15膋38'1000腅 艗 03'0000" 120膋 38'0000" 15膋 Area of Lot 3 = 45.8014 Hectares SECTION V EXPLOMTION PERIOD 腛for Exploration - The Contractor shall commence Exploration 5.,1 . Timetable (3) months after the Effective Date for a period activities not later than three periods not to exceed a total term of of two (2) years, renewable for iike but six(6)yearstornonmetallicmineralsandeight(8)yearsformetallic minerits, subject to annual review and approval by the Director to .evaluate compliance with the terms and conditions of this Agreement: Provided, That furtherrenewalmaybegrantedbytheSecretaryundercircumstancesas defined in the implementing rules and regulations of the Act' The one ('t)-year term of the Temporary Exploration Permit^-(TEP) denominatedasTEPNo.lll-004-20o2andissuedonMarch21,2002is counted as part of the Exploration Period (please refer to ANNEX "C")' 5.2. Work Programs and Budgets - The Contractor shall strictly comply with the approved -Exploration and Environmental work Programs together with their corresponding Budgets (please refer to ANNEXES "D" and "*r,rrf( 8 The amount to be spent by the Contractor in conducting Exploration activities under the terms of this Agreement during the Exploration Period shall be in the aggregate of not less than that specified for each of the Contract Years, as follows: For the Exploration Work Program: 1st Contracl Year : PhP 22,000,00000 2nd : PhP 41,000,00000 Contract Year Total : PhP 63,000,00000 For the Environmental Work Program : PhP 5,000,00000 ln the event of renewal of the Exploration Period, the amount to be spent every year shatl 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 Contract Year 荖 prior to termination. lf during any Contract Year, the Contractor should 腒 expend more than the amount to be expended as provided above, the excess may be subtracted from the amount required to be expended by the Contractor during the succeeding Contract Years, and should the Contractor, 芳 due to unforeseen circumstances or with the consent of the Government, expend less during a year, then the deficiency shall be applied to the amount to be expended during the succeeding Contract Years. 53 Relinquishment of Total/Portion of the Contract Area - During the Exploration Period, the Contractor may relinquish totally or partially the original Contract Area. After the Exploration Period and prior to or upon approval of a Declaration of Mining Feasibility by the Director, the Contractor shall finally relinquish any portion of the Contract Area not necessary for mining operations and not covered by any Declaration of Mining Feasibility. 腝 54 Final Mining Area - The Director may allow the Contractor to hold more than one (1) final Mining Area subject to the maximum limits set under the implementing rules and regulations of the Act: Provided, That each final Mining Area shall be covered by a Declaration of Mining Feasibility. 5.5 Declaration of Mining Feasibility - During the Exploration period, the Contractor shall submit to the Director, through the concerned Regional Director, a Declaration of Mining Feasibility of the contract Area/final Mining Area supported by a Mining Feasibility Study, a Three (3)-year Development and Construction or Commercial Operation Work program, a complete geologic report, an application for survey and the pertinent Environmental Compliance Certificate, among other applicable requirements. Failure of the Contractor to submit a Declaration of Mining Feasibility during the Exploration Period shall be considered a substantial breach oi this Agreement. 56 survey of the contract Area - The contractor shall cause the survey of the perimeter of the contract Area/final dl lVlll lll苨 Mining Area through 葟 an application 臤 foy 腎 裳譲 遛 莵 9 t荭 survey, complete with requirements, filed in the concerned Regional Office simultaneous with the submission of the Declaration of Mining Feasibility. Survey returns shall be submitted to the concerned Regional Director 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. 5.7. Reporting a. During the Exploration Period, the Contractor shall submit to the Director, through the concerned Regional Director, quarterly and annual accomplishment reports under oath on all activities conducted in the Contract Area from the 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 thlrty (30) days from the end of each Calendar Year. Such information shall include detailed financial expenditures, raw and processed geological, geochemical, 腒 geophysical and radiometric data plotted on a map at a minimum V 1:50,000 scale, copies of originals of assay results, duplicated samples, field data, copies of originals from drilling reports, maps, 荮 environmental work program implementation and detailed expenditures showing discrepancies/ deviations with approved exploration and environmental plans and budgets as well as all other information of any kind collected during the exploration activities. All information submitted to the Bureau shall be subject to the confidentiality clause of this Agreement. b. Final Report - The Contractor shall submit to the Director, through the concerned Regional 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 repo(s of respectable international institutions and shall incorporate all the findings in the Contract Area including location of samples, assays, chemical analysis, and assessment of mineral pctentials together with a geologic map of 1:50,000 scale at the minimum showing the results of the exploration. Such report shall also include detailed expenditures incurred during the Exploration Period. ln 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 safekeeping and reference. c. Relinquishment Report - The Contractor shall submit a separate relinquishmeni report with a detailed geologic report of the relinquished area accompanied by maps at a scale of 1:50,000 and results of analyses and detailed expendil arnong - -dK-'lures' "tn";r*t 10 SECTION V! DEVELOPMENT AND CONSTRUCTION PERIOD Timetable - The contractor shall complete the development oJ mine 61 -the in"fuorg tn" construction of production iacilities within thirty six (36) months from the submission ot tne blcraration of Mining Feasibility, subject to such O".ed on justifiable reasons as the Director may approve' upon "*i"nti"n of the concerned Regional Director' recommendation 62Reporting a. Annual - The Contractor shall submit' within sixty (60) days after December 31 ot each year, to the Director' through the concerned Regional Director, report which s'tates the major activities' "n "i'n'if during the year covered, achievements ano ue;iteo expenditures and geological and including ,"p., to"ft "nb mineral analyses Development and ".t"yt, reports during the environmental progieis Construction Period. 腒 b. Final Report - Within six (6) months lroq the completion of the development anO construaion activities' the Contractor shall submit a 趡 tinri tdpott to tne Oirector, through the concerned Regional Director' Sucn rdport snarr iniei-te all infoimation in maps of appropriate scale qriitv, as weti-a'i in monographs or reports in accordance with "nJ standards. international SECTION VII OPERATING PERIOD Timetable - The Contractor shall submit, within thirty (30) days before 71 ;;;il;" ot mine development and construction of production facilities' to -olieJor, 芶the concerned Regional Director' a Three-Year in" through Lorr"t""f 'Operati-on Work Program The Contractor shall commence commercial utilization irr"Airt"ti upon approval of the aforesaid Work F;ilril Failure of the ContraCtor to commence Commercial Production *tf,], in" period shall be considered a substantial breach of the Agreement' Operation Work Program and Budget - During the Operating 72Commercial i"rioJ, the Contractor shall subrn'it to the Director, through the concerned R;gil"i Director, Work Programs and Budgets covering a period of three iij y#; each, which shall bi submitted not later than thirty (30) davs before iheLxpiration of the period covered by the previous Work Program' The Contractor shall conduct Mining operations and other activities for the duration of the operating period in iccordance with the duly approved work Programs and conesponding Budgets' and Modification of Facilities - The Contractor may make 73Expansion expansions, modifications, improvements, and replacements of the mining, 5+\ ,,fitJ // 腌 facilities and may add new facilities as the Contractor may consider necessary for the operations: Provided, That such plans shalt 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 Quarter, to the Director, through the concerned Regional Direc{or, a Quarterly Report stating the tonnage of production in terms of ores, concentrates, and their corresponding grades and other types of products; value, destination of sales or exports and to whom sold; terms of sales and expenditures. b. Annual Reports - During the Operating Period, the Contractor shall submit within sixty (60) days from the end of each Calendar Year, to the Director, through the concerned Regional Director, an Annual Report indicating y in sufficient detail: 腒 b.1. The total tonnage of ore reserves, whether proven, probable, or inferred, the total tonnage of ores, kind by kind, broken down between tonnage mined, tonnages transported from the 苤 minesite and their corresponding destination, tonnages stockpiled in the mine and elsewhere in the philippines, tonnages sold or committed for export (whether actually shipped from the Philippines or not), tonnages actuaily 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 weie \ts-' disposed; b.2. work accomplished and work in progress at the end of the year in question with respect to all the instaflations and faciiities related to the utilization program, including the investment actually made or committed; and b.3. Profile of work force, incruding management and staff, stating particularly their nationalities, and for Filipinos, their place oi origin (i.e., barangay, town, province, region). The contractor shall also eomply with other reporting requiregnents provided for in the implementing rules and regulations of the Ait. ,rff( Z'-t\ 12 膡 SECTION V]II FISCAL REGIME this Agreement shall be governed by 81fiscal regime of General Principle - The the principle according to which the Government expects a reasonable return in economic value for the utilization of non-renewable mineral resources under its national sovereignty while the Contractor expects a reasonable return on its investment with special account to be taken for the high risk of exploration, the terms and conditions prevailing elsewhere in the industry and any special efficiency to be gained by a particularly good performance of the Contractor. (15) notice of 82days upon receipt of the Registration Fees - Within fifteen approval of the Agreement from the concerned Regional Office, the Contractor shall cause the registration of this Agreement with the said Regional Office and pay the registration fee at the rate provided in the existing rules and regulations. Failure of the Contractor to cause the registration of this Agreement within the prescribed period shall be sufficient 腎 艭 腛 ground for cancellation of the same. the same 83this and at Occupation Fees - Prior to registration of Agreement date every year thereafter, the Contractor shall pay to the concerned Municipal/City Treasurer an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations. lf the fee is not paid on the date specified, the Contractor shall pay a surcharge of twenty five percent (25o/o) ot the amount due in addition to the occupation fees. 84 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 Section 151 (a) of the National lntemal Revenue Code, as amended, as well as other taxes, duties and fees levied by existing laws. For purposes of determining the amount of the herein Government Share, 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 B.epublic Act No. 7160, othenrvise known as "The Local Government Code of '1991 ." 8.5. Pricing of Sales - The Contractor shall endeavor to obtain the best achievable price for its production and pay the lowest achievable marketing commissions and related fees. lt shall seek to strike a balance between long{erm sales comparable to policies followed by independent producers in the international mining industry. The contractor shall likewise seek a balanced distribution among consumers. lnsofar as sales to Contractor's affiliates are concerned, prices shall be at arm's length standard and competing offers for large scale and long{e 2+= l-terD ,l({ 13 contracts shall be procured. The Bureau shall be furnished a copy of the said Sales Agreement subject to confidentiality between the Bureau and the Contractor. 8.6. Associated Minerals - lf minerals other than chromite, nickel and platinum are discovered in commercial quantities in the Contract Area, the value thereof shall be added to the value of the principal mineral in computing the Government share. sEcTtoN tx WORK PROGRAMS - Within the periods stated herein, the Contractor 91to Submission Government shall prepare and submit to the Director, through the concerned Regional Director, a Work Program and corresponding Budget for the Contract Area stating the Mining Operations and expenditures which the Contractor proposes to carry out during the period covered with the details and 腟 v particulars set forth elsewhere in this Agreement or in the supporting 腒 documents. and Revision of Work Program - Should the 荮 92Examination Government's propose to a certain specific feature in the Government wishes to a revision Work Program or Budget, it shall, within thirty (30) days after receipt thereof, provide a Notice to the contractor specifying in reasonable detail its reasons therefore. Promptly thereafter, the Government and Contractor will meet and endeavor to agree on the revision proposed by the Government. ln any event, the revision of any portion of said Work Program or Budget in which the Government shall fail to notify the contractor of the proposed revision shall, insofar as possible, be carried out as prescribed herein. lf the Government should fail within sixty (60) days from receipt thereof to notify Contractor of the proposed revisions, the Work Program and Budget \>/ proposed by the Contractor shall be deemed to be approved. to Work Program - lt is recognized by the Government 93 Contractor's Changes the details of any Work Program may require and the Contractor that The Contractor may make changes in the light of changing circumstances. such changes: Provided, That it shall not change the general objective of the Work Program: Provided further, That changes which entail a variance of at least twenty percent (20%) shall be subject to the approval of the Director. of a proposed Work Program and Budget will not 94approval The Government's be unreasonably withheld. SECTION X ENVIRONMENTAL PROTECTION AND MINE SAFETY AND HEALTH 10.1. The Contractor shall manage its Mining Operations, including the care and mainlenance and/or rehabilitation of the old mining area(s) within the Contract Area, in a technically, financially, socially, culturally agd 26t- ,ff( 14 environmentally responsible manner to achieve the sustainable development objectives and'responsibilities as provided for under the implementing rules and regulations of the Act. 10.2. The Contractor shall 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 the implementing rules and regulations of the Act. 10.4. An Environmental compliance certificate (ECC) shall be secured first by the contractor prior to the conduct of any development works, construction of production iacilities and/or mine production activities in the Contract Area. 10.5. The contractor shall submit within thirty (30) calendar days after the 腒 issuance and receipt of the ECC, an Environmental Protection and 芰Program (EPEP) using MGB Form No. 16-2 covering all areas Enhancement utilization and processing activities under this to be affected by dlvelopment, for its initial environment-related 腁 Agreement. The Contractor shall allocate project.cost cipital expenditures approximately ten percent (1OYo) ot the total or' in such amount depending on the environmental/geological condition, nature and scale of operations and technology to be employed in the Contract Area. 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 (3Yo-SYo) of its direct mining and milling costs 芰the environmental/geologic condition, nature and scale of depending on operations and technology employed in the Contracl Area. 10.6. 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 specific project phase. The MRF shall be deposited as Trust Fund in a government depository bank and shall be used for physical and social rehabilitation of areas affected by mining activities and for research on the social, technical and preventive aspects of rehabilitation. 10.7. The Contractor shall set up mitigating measures such as mine waste and mill tailings disposal system, mine rehabilitation or plan, water quality monitoring, attderp膋ll钿雊d葟豶a魺 襪 譏 裗 談 軻赦闫 镩 15 10.8. 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. 10.9. The contractor shall be responsible in the monitoring of environmental, safety and health conditions in the contract Area and shall strictly comply with all the rules and regulations embodied under DAO No. 2000-98' otherwise known as the "Mine Safety and Health Standards." 1 O.1 O. The Contractor shall be responsible for the submission of a final mine rehabilitation andlor decommissioning plans, including its financial requirements and incorporating the details and particulars set forth in the implementing rules and regulations of the Act. sEcTloN xl RIGHTS AND OBLIGATIONS OF THE PARTIES 龔 1 1 .1 . Obligations of the Contractor: v' 腁 a. To exclusively conduct sustainable Mining Operations within the Contract A.rea in accordance with the provisions of the Act and its implementing rules and regulations; b. To construct and operate any facilities specified under the Mineral Agreement or approved Work Program; c. To determine the exploration, mining and treatment process to be utilized in the Mining OPerations, d. To extract, remove, use and dispose of any tailings as authorized by an approved Work Program; e. To secure all permits necessary or desirable for the purpose of Mining Operations; f. To keep accurate technical records about the Mining Operations, as well as financial and marketing accounts, and make them available to Government representatives authorized by the Director for the purpose of assessing the performance and compliance of the Contractor with the terms of this Agreemant. Authorized representatives of other Government Agencies may also have access to such accounts in accordance with existing laws, rules and regulations; g. To furnish the Bureau all the data and information gathered from the Contract Area and that all the books of accounts and records shall be open for inspection; >ft. 16 h reasonable hours inspecting To allow access to Government during in the Contract Area and examining pertinent records for purposes of monitoring compliance with the terms of this Agreement; To hold the Govemment fr6e and harmless from all claims and accounts of all kinds, as well as demands and actions arising out of the accidents or injuries to persons or properties caused by Mining Operations of the Contractor and indemnify the Government for any expenses or costs incurred by the Government by reason of any such claims, accounts, demands or actions; ln the development of the c,ommunity: j.1 . To recognize and respect the rights, customs and traditions of indigenous cultural communities over their ancestral lands and to allocate royalty payment of not less than one percent ('lo/o) ot the value of the gross output of minerals sold; 龔 j.2. To coordinate with proper authorities in the development of the 腛 mining community and for those living in the host and 荬 neighboring communities through social infrastructure, livelihood programs, education, water, electricity and medical services. Where traditional self-sustaining income and the community aclivities are identified to be present, the Contrac'tor shall assist in the preservation and/or enhancement of such activities; j.3. To allot annually a minimum of one percent (1olo) of the direct mining and milling costs necessary to implement the activities undertaken in the development of the host and neighboring communities. Expenses for communily development may be charged against the royalty payment of at least one percent (1olo) of the gross output intended for the concerned indigenous 腛 cultural community; i.4. To give preference to Filipino citizens who have established domicile in the neighboring communities, in the hiring of personnel for its mining operations. lf necessary skills and expertise are curently not available, the Contractor must immediately prepare and undertake a training and recruitment program at its expense; To incorporate in the Mining Feasibility planned i5the expenditures necessary to Study implement (t.1 ) to (1.3) of this Section; ln the development of Mining Technology and Geosciences: k.1 . In the course of its operations, to produce geological, geophysical, geochemical and other types of maps and reports that are appropriate in scale and in format and substance which 腣 腣 腣 腣腣 苦 負 17 are consistent with the internationally accepted standards and ;;;"ti;;. Such maps shall be made available to the scientific iommunity in the most convenient and cost effective forms' .rbi""t toin" condition that the Contractor may delay release of said information for a reasonable period of time which shall not exceed three (3) Years; To systematically keep the data generated from the ContracU tvtining Rrea such as cores, assays and other related intormiatlon, including economic and financial data and make them accessible to students, researchers and other persons i"tfon.iUf" for developing mining, geoscience and. processing technology subject to the condition that the Contractor may olr"vi"rEi." oi d"t" to the science and technology community *itnih reasonable period of time which shall not exceed three " (3) years; 腒 To transfer to the Government or locai mining company the k3 appropriate technology it may adapt jn the. exploration' 莓and commercial utilization of the minerals in the 芢 Jlvelopment Contract Area; To allocate research and development budget for the k4 advancement of mining technology and geosciences in cooiOination with the Buieau, research institutions' academe' etc.; k.5. To replicate data, maps and reports citecl in (k'1) and (k 2) and turnlsn ine Bureau for archiving and systematic safekeeping wnicn snait be made available tb the science and technology "orrrnity for conducting research and undertaking other activitieswhichcontributetothedevelopmentofmining, ~ geoscience and processing technology and the corresponding 腜national pool of manpoweitalents: Provided' however' that the retea=e'olt oatr, maps and the like shall be similarly constrained in accordance with (k 1) and (k 2) above; l. To incorporate in the Mining Feasibility Study the planned expendituies necessary to implement all the plans and programs set forth in this Agreement, and m.Topayallothertaxesandfeesmandatedbyexistinglaws'rulesand regulations. 11.2. Rights of the Contractor: a. To conduct Mining Operations within the confines of its contracuMining AreJ in accordance with the terms and conditions hereof and without interfering with the rights of other PermitHoldersittff Operatoli:腸 Lessees荭 nlractors荭 C膋 IIIIttees荭 18 b. Of possession of the Contract Area, with full right of ingress and egress and the right to occupy the same, subject to surface and easement rights; c.Touseandhaveaccesstoalldeclassifiedgeological,geophysical' drilling,productionandotherdatarelevanttotheminingoperations; d.Tosell,assign,transfer,conveyorotherwisedisposeofallitsrights, interests and obligations under the Agreement subject to the approval of the Government; e. To employ or bring into the Philippines foreign technical and specialized personnel, including the immediate members of their familiesasmayberequiredintheoperationsofthecontractor, subject to appiicable laws and regulations: Provided, That if the employmentconnectionofsuchforeignpersonswiththeContractor  ceasei, the applicable laws and regulations on immigration shall apply tothem.Everytimeforeigntechnologiesareutilizedandwherealien executives are employed, an effective program of kaining 腁 understudiesshallbeundertaken.Thealienemploymentshallbe limitedtotechnologiesrequiringhighlyspecializedtrainingand experiencesubjecttotherequiredapprovalunderexistinglaws,rules and regulations; f.Toenjoyeasementrightsanduseoftimber,waterandothernatural resourcesintheContractAreasubjecttopertinentlaws,rulesand regulations and the rights of third parties; S. Of repatriation of capital and remittance of profits, dividends and - interest on loans, subject to existing laws and Bangko Sentral ng Pilipinas rules and regulations; and h. To import when necessary all equipment, spare parts and raw \-.r' materials required in the operations in accordance with existing laws and regulations. 1 1.3. Obligations of the Government: a. To ensure that the Contractor has the Government's full cooperation in the exercise of the rights granted to it under this Agreement; b. To use its best efforts to ensure the timely issuance of necessary permits and similar authorizing documents for use of the surface of the Contract Area; and To cooperate with the Contractor in its efforts to obtain financing contemplated herein from banks or other financial institutions: Provided, That such financing arrangements will in no event ,pduce the Contractor's obligation ":lK"r"rt rights hereund"tr$( 19 sEcTtoN xlr ASSETS AND EQUIPMENT 12.1. The Contractor shall acquire for the Mining Operations only such assets that are reasonably estimated to be required in carrying out such Mining Operations. 12.2. All materials, equipment, plant and other installations of a movable nature erected or placed on the Contract Area by the Contractor shall remain the property of the Contractor. The Contractor shall have tho right to remove and re-export such materials and equipment, plant and other installations from the Philippines, subject to existing rules and regulations. ln case of cessation of Mining Operations on public lands occasioned by its voluntary abandonment or withdrawal, the Contractor shall have a period of one ('l) year from the time of cessation within which to remove its improvements, otherwise, all social infrastructures and facilities shall be turned over or  donated tax free to the proper government authorities, national or local, to ensure that said infrastructures and facilities are continuously maintained | _ and utilized by the host and neighborlng communities. 腊 sEcTroN xnl EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL 13.1. The Contractor agrees to employ, to the extent possible, qualified Filipino personnel in all types of mining operations for which they are qualified; and after Commercial Production commences shall, in consultation and with consent of the Govemment, prepare and undertake an extensive training programme suitable to Filipino nationals in all levels of employment. The objective of said programme shall be to reach within the timetable set forth below the following targets of "Filipinization:" 腛 Unski腡Sk腡 ed (%) 100 100 100 100 100 100 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 resorting to arbitration as provided for in Section 14.2. below. 14.2. Any disagreement or dispute which can not be settled amicably within a peiiod of one (1) year from the time the issue is raised by a Party shall be setfled by a tribunal of three (3) arbitrators. This tribunal shall be constituted as follows: one to be appointed by the Contractor and the other to be appointed by the secretary. The first two appointed arhitrators shall consider names of qualified persons until agreement on a mutually acceptable 龸 chairman of the tribunal is selected. such arbitration shall be initiated and conducted pursuant to Republic Act No. 876, othenvise known as the 'Arbitration Act." 芤 芯 ln any event, the arbitration shall be conducted applying the substantive laws of the Republic of the Philippines. 14.3. Each party shall pay fifty percent (50%) of the fees and expenses of the Arbitrators and the costs of arbitration. Each party shall pay its own costs and attorney's fee. SECTION XV SUSPENSION OR TERMINATION OF CONTRACT, TAX INCENTIVES ANO CREDITS 15.1 . This Agreement may be suspended for failure of the Contractor: (a) to comply 裪 with any provision or reguirement of the Act and/or its implementing rules and regulations; (b) to pay taxes, fees and/or other charges demandable and due the Government. '15.2. This Agreement terminates or may be terminated for the following causes: (a) expiration of its term, whether original or renewal; (b) withdrawal from the Agreement by the Contractor; (c) violation by 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 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 r 21F\ ano termination;'( 21 15.4. The Contractor may, by giving due notice at any time during the term of this Agreement, apply for its cancellation due to causes which, in the opinion of the Contractor, render continued mining operation no longer feasible or viable. ln this case, the Secretary shall decide on the application within thirty (30) days from notice: Provided, That the Contractor has met all ihe financial, fiscal and legal obligations. 15.5. No delay or omissions or course of dealing by the Government shall impair any of its rights under this Agreement, except in the case of a written waiver. The Govemment's right to seek recourse and relief by all other means shall not be construed as a waiver of any succeeding or other default unless the contrary intention is reduced in writing and signed by the party authorized to exercise the waiver. 15.6. ln case of termination, the Contractor shall pay all the fees and other liabilities due up to the end of the year in which the termination becomes 苝 effective. The Contractor shall immediately carry out the restoration of the Contract Area in accordance with good mining industry practice. \-, 15.7. The withdrawal by the Contractor from the Mineral Agreement shall not 腒 release it from any and all financial, environmental, legal and fiscal obligations under this Agreement. '15.8. The following acts or omission, inter a/,a shall constitute breach of contract, upon which the Govemment may exercise its right to terminate the Agreement; a. Failure of the Contractor without valid reason to commence Commercial Produclion within the period prescribed; and/or b. Failure of the Contractor to conduct 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 condilions of said incentives and credits. sEcTtoN xvt OTHER PROVISIONS 16.1. Any terms and conditions resulting from repeal or amendment of any existing laws or regulation or from the enactment of a law, regulation or administrative order shall be considered a part of this Agreement. 16.2. Notice All notices, demands and other communications required or 芄 hereunder shall be made in writing, telex or telecopy and shall be 艮 芄 have been dJy g蹳 en nolce,h the case莔 tdex Or tdecopy,r 22 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 SEGRETARY DEPARTMENT oF ENVTRoNMENT ANo NATUMT REsouRcEs DENR Building , Visayas Avenue Diliman, Quezon City lf to the Contractor : THe Pnestoelr Cnnu MtruEnnl RESoURoES CoRpoRATtoN 1-E Sra. Maria Street, Brgy. Kapitolyo Pasig City, Metro Manila 药 Either party may substitute or change such address on notice thereof to the other party. 腒 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 other relevant laws and regulations. 16.4. Suspension of Obligation a. Any failure or delay on the part of any party in the performance of its obligation or duties hereunder shall be excused to the extent attributable lo Force Majeure as defined in the Act: t,rovided, That the suspension of Mining Operations due to Force Majeure causes shall be subject to approval by the DENR Secretary. b. lf 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 term of this Agreement and all rights and obligations hereunder shall be extended for a period equal to the period involved. c. The Party, whose abirity to perform irs obligations is affected by such Force Majeure causes, shall prompfly give Notice to the other in writing of any such delay or failure of performance, the expected duration thereof and its anticipated 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 the suspension of obligation by the Contractor shall be subject to prior approval by the Director. 'Ela..t 23 I 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 VVITNESS WHEREOF, the Parties hereto have executed this Agreement, as of the day and year first above written THE REPUBLIC OF THE PHILIPPINES BY: 腍 腒 4`'p ACKNOWLEDGMENT 鞲 P蝖 蹳 8詔 ss  陼 !gllr:-a", a Notary pubtic for and in the City of euezon, personaily appeared ELISES G. GOZUN, wilh Communitv Tax Cerriticate Ho. i grl 1^;'' --i;;ued Department of Environment-EndTiG'lEi Resources, and MoDEsro B. 雊 cab No_2醽 苂 069菇 l 遴鏜l葘PFi荣,COmttnW Tax c观 膍  譏 _0,臤荂 dl苍  軹郣 F膡 鉕 龸 軭 裗 遄辔芽轑 鞐 鉮鏱隄豒鞂 l.nsyn lo be_the same persons who exec,ted ttre toregoing insrrumeniGr-isti-ng or twentyfi.ve (25) pages, including this acknowledgr"nt pr6", ,nO to me that the same is their voluntary ac{s and deedi. ""f,nowi"Jg; y鶚 鞿 