wHEREAS, the contractor desires to join and assist the Government in the initiar rational exploration and possibre deveropmenr and utirization for commerciar purposes of nicker and other assoclared minerar deposfts existing in th; co;i;ct Area (as herein defined); wHEREAS, the contractor has access to ail the financing, technicar competence, technology and environmentar management skils required to promptty ano effectively carry out the objectives of thii Agreement; NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual covenants, terms and conditions hereinafter set forth, it is neieuy stipuiated and agreed as follows: SECTION I SCOPE 1.1 . This Agreement is a Mineral Production Sharing Agreement entered into pursuant to the provisions of the Act and its implementing rules and regulations. The primary purpose of this Agreement is to provide for the rational exploration, development and commercial utilization of nickel and other associated mineral deposlfs existing within the Contract Area, with all necessary services, technology and financing to be furnished or arranged by the Conkactor in accordance with the provisions of this Agreement. The 腒 Contractor shall not, by virtue of this Agreement, acquire any tifle over the 腀 腥 ContracUMining Area without prejudice to the acquisition by the Contractor of the land/surface rights through any mode of acquisition 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 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 Contractor shall assume all the exploration risk such that if no minerals in commercial quantity are developed and produced, it will not be entitled to reimbursement. 1.4. During the term of this Agreement, the total value of production and sale of minerals derived from the mining operations contemplated herein shall be accounted for and divided between the Government and the Contractor in accordance with Section Vlll hereof. 腒 sEcTtoN il 鮛 DEFINITIONS As used in this Agreement, the following words and terms, whether singular or plural, shall have the following respective meaning: 2.1 . Ag! refers to Republic Act No 7942, otherwise known as the,,philippine Mining Act of 1995." 2.2. Aqreement means this Mineral production Sharing Agreement. 2.3. Associated Minerals mean other ores/minerals, which occur together with the principal ore/mineral. 2.4. Banoko Sentral means Bangko Sentral ng pilipinas. 2.5. Budqet means an estimate of expenditures to be made by Contractor in mining operations contemplated hereunder to accomplish the Work Program for each particular period 2.6. Bureau means Mines and Geosciences Bureau. 2.7. Calendar Year or Year means a period of twelve 12) consecutive months starting with the first day of January and ending on December 31, while "Calendar Quartel'means a period of three consecutive months with the first calendar quarter starting with the first day of January. 2.8. 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 feasibility study, whichever comes first. 2.9. Constitution or Philippine Constitution means the 1987 Constitution of the Republic of the Philippines adopted by the Constitutional Convention of '1986 on October 1 5, 1 986 and ratified by the People of the Republic of the Philippines on February 2, 1987. 2.10. Contract Area means the area onshore or offshore delineated under the Mineral Production Sharing Agreement subject to the relinquishment obligations of the Conkactor and properly defined by latitude and longitude or bearing and distance. 2.11. 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. 2.12. Contractor means C.T.P. Construction and Mining Corporation or its assignee(s) of interest under this Agreement: Provided, That the assignment of any of such interest is accomplished pursuant to the pertinent provisions of the implementing rules and regulations of the Act. 2.13. Declaration of Mininq Proiect 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 腒 in Mine Development Plan 腓 specified the =j.1-- 3 2.14. Department or DENR means the Department of Environment and Natural Resources. 2.'15. Director means the Director of Mines and Geosciences Bureau. 2.16. Effective Date means the date of execution of this Agreement by the Contractor and by the Secretary on behalf of the Government. 2.17. Environment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social. 2.18. 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 means ior the purpose of determining the existence, extent, quality and quantity of mineral resources and the feasibility of mining them for profit. 2.19. Exploration Period shall mean the period from the Effective Date of this Agreement, which shall be for two (2) years, renewable for like periods but not to exceed a total term of six (6) years for nonmetallic minerals and eight (8) years for metallic minerals, subject to the pertinent provisions of the implementing rules and regulations of the Act. 2 20. Force Majeure means acts or circumstances beyond the reasonable control of the Contractor including, but not limited to war, rebellion, insurrection, riots, civil disturbances, blockade, sabotage, embargo, strike, lockout, any dispute with surface owners and other labor disputes, epidemics, earthquake, storm, flood or other adverse weather conditions, explosion, fire, adverse action by the Government or by any of its instrumentality or subdivision thereof, act of God or any public enemy and any cause as herein described over which the affected party has no reasonable control. 2.21. Foreiqn Exchanqe means any currency other than the currency 芈芅 of 芈腀 Republic of the Philippines acceptable to the Government ind 芅 Contractor. 2.22. Government means the Government of the Republic of the philippines or any of its agencies and instrumentalities. 2.23. Gross Output means the actual market value of the minerals or mineral products from each mine or mineral land operated as a separate entity, without any deduction for mining, processing, refining, transporting, handling, marketing or any other expenses: Provided, That if the minerals or 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 腒 are not traded in commodity exchanges in the Philippines or abroad such as copper concentrate, the actual market value shall be the world price 艱 quotation of the refined mineral products contained thereof prevailing in the said commodity exchanges, after deducting the smelting, refining, treatment, insurance, transportation and other incurred in the 裤 豓 4 腟 process of converting mineral concentrates into refined metal traded in those commodity exchanges. 2.24. Mine Development refers to work undertaken to prepare an ore body or a mineral deposit for minrng, including the construction of necessary infrastructure and related facilities. 2.25. Minerals mean all naturally occurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy. 2.26. Mineral Products mean materials derived from mineral ores/rocks and prepared into marketable state by metallurgical processes which include beneficiation, cyanidation, leaching, smelting, calcination and other similar processes. 2.27. Mininq Area means that portion of the Contract Area identified by the Contractor as defined and delineated in a Survey Plan duly approved by the DirectoriRegional Director concerned for purposes of development and/or utilization and sites for support facilities 2.28. Mininq Operations 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 and/or 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. 2.32. Secretarv means the Secretary of the Department of Environment and Natural Resources. 腒 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 five (25) years. The renewal of this Agreement, as well as the changes in the terms and conditions thereof, shall be upon mutual consent by the parties. ln the event the Government decides to allow mining operations thereafter by other Contractor, this must be through competitive public bidding. After due publication of notice, the Contractor shall have the right to equal the highest bid upon reimbursement of all reasonable expenses of the highest bidder. SECTION IV CONTRACT AREA 4.1 . Size, Shape, and Location of Contract Area - This Agreement covers a Contract Area of approximately Four Thousand Five Hundred Forty-Seven and 7630/10,000 (4,547 7630) hectares, situated in Carrascal, Surigao del Sur, within Parcel I of the Surigao Mineral Reservation, and bounded by the following geographical coordinates (please refer to ANNEX ,'B,,- 1:50,000 scale Location Map/Sketch Plan): Corner Longitude 艐 9膋 20' 125膋 54'3000" 艑 9膋 20'125膋 54' 3000" 艒 9膋 20' 125膋 54'0000" 艓 9膋 21'125膋 54' 0000" 艔 9膋 21' 125膋 52'4500" 艕 9膋 21' 125膋4500" 52' 艖 9膋 21' 125膋 52'3000" 艗 9膋 21' 125膋 52'3000" 艘 9膋21' 125膋 51' 4500" 腨 22' 9膋125膋 51'4500" 腝艐 9膋 22' 125膋 51' 3000" 艐釆 24' 9膋125膋 51'3000" 艐艒 9膋 24' 125膋 52' 3000" 艐艓 25' 9膋125膋 52'3000" 艐艔 9膋 25' 125膋 52'1500" 艐艕 26' 9膋125膋1500" 52' 艐艖 9膋 26' 125膋 52'3000" 艐艗 9膋 26'125膋 52'3000" 腒 艐艘 9膋 26' 125膋 53'0000" 艑艏 23' 9膋125膋 53'0000" 鍾 艑艐 9膋 23'125膋 53'3000" 艑艑 24' 9膋125膋 53'3000" 艑艒 9膋 24' 125膋 53'4500" 醽 6 / 腟 艑 艓 9膋 24' 1500" 125膋 53' 4500" 艑 艔 9膋 24' 1500" 125膋 54' 1500" 艑 艕 9膋 24' 0000" 125膋 54' 1500" 艑 艖 9膋 24' 0000" 125膋 54' 4000" 艑 艗 9膋 23' 5000"125膋 54' 4000" 艑 艘 9膋 23' 5000"125膋 54' 5000" 艒 艏 9膋 22' 5500" 125膋 54' 5000" 艒 腝 22' 5500" 9膋125膋 55' 1500" 艒 艑 9膋 23' 1500'' 125膋 55' 1500" 艒 艒 9膋 23' 1500" 125膋 55' 3000" 艒艓 9膋 20' 0000" 125膋 55' 3000" SECTION V EXPLORATION PERIOD 51 Timetable for Exploration - The Contractor shall commence Exploration activities not later than three (3) months after the Effective Date for a period of two (2) years, renewable for like periods but not to exceed a total term of six (6) years for nonmetallic minerals and eight (8) years for metallic minerals, subject to annual review and approval by the Director in accordance with the implementing rules and regulations of the Act. ln case a Temporary Exploration Permit was issued, the one (1)-year term thereof shall be deducted from the Exploration Period. 52- opts for a renewal of Renewal of Exploration Period ln case the Contractor its Exploration Period, it shall file prior to the expiration thereof, a renewal application in the Mines and Geosciences Bureau Central Office, accompanied by the mandatory requirements stipulated in the implementing 荮 may grant the renewal of the 腒腀 rules and regulations of the Act. The Director has 莁 Exploration Period on condition that the Contractor substantially complied with the terms and conditions of the Agreement. ln cases where further exploration is warranted beyond the six (6) - or eight (8)-year period and on condition that the Contractor has substantially implemented the Exploration and Environmental Work Programs as verified by the Bureau, the Director may further grant renewal of the Exploration Period: Provided, That the Contractor shall be required to set up a performance surety equivalent to the expenditure requirement of the Exploration and Environmental Work Programs. - The Contractor shall strictly comply with the 53Programs and Budgets Work with their approved Exploration and Environmental Work Programs together 腒 corresponding Budgets (please refer to ANNEXES "C and "D"). 荾 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 Contract Year PhP 11,770,000.00 2nd Contract Year PhP 12.230.000.00 Total PhP 24,000,000.00 For the Environmental Work Program PhP '1,000,000 00 ln the event of renewal of the Exploration Period, the amount to be spent every year shall first be agreed upon by the parties. ln the event of termination of this Agreement, the Contractor shall only be obliged to expend the pro-rata amount for the period of such Contract year prior to termination. lf during any Contract Year, the Contractor should expend more than the amount to be expended as provided above, the excess may be subtracted from the amount required to be expended by the Contractor during the succeeding Contract 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 succeeding Contract Years. 5.4. 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 Project 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 Project Feasibility. 5.5. Final Mining Area - The Director may allow the Contractor to hold more than one (1) final Mining Area subject to the maximum limits set under the implementing rules and regulations of the Act: Provided, That each final Mining Area shall be covered by a Declaration of Mining Project Feasibility. 5.6. Declaration of Mining Project Feasibility - Within the term of the Exploration Period, the Contractor shall file in the Regional Office concerned, the Declaration of Mining Project Feasibility of the Contract Area/final Mining Area supported by Mining Project Feasibility Study, Three (3)-Year Development and Construction or Commercial Operation Work Program, complete geologic report, an application for survey and the pertinent Environmental Compliance Certificate, among other applicable 腒 requirements. Failure of the Contractor to submit the Declaration of Mining Project Feasibility during the Exploration Period shall be considered a 荸 substantial breach of this Agreement --l-) =+*- 5.7. survey of the conkact Area - The contractor shail cause the survey of the perimeter of the contract Area/finar Mining Area through an apprication ior survey, comprete with requirements, fired in the Regionar office concerned simultaneous with the submission of the DecraratiJn of Mining reasioitiiy. survey returns shall be submitted to the Regional Director cJncerned for approval within one (1) year from receipt of the order of survey comprete with the mandatory requirements stated in the imprementing rures and regulations of the Act. 5.8. Reporting a. During the Exploration Period, the Contractor shall submit to the Director, through the Regional Director concerned, quarterly and annual accomplishment reports under oath on all aciivities 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 annual accomplishment report shall be submitted not later than thirty (30) days from the end of each Calendar year. Such information shall include detailed financial expenditures, raw and processed geological, geochemical, geophysical and radiometric data plotted on a map at a minimum 1:50,000 scale, copies of originals of assay results, duplicated samples, field data, copies of originals from drilling reports, maps, environmental work program implementation and detailed expenditures showing 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 Regional Director concerned, a final report under oath upon the expiration of the Exploration Period which shall be in the form and substance comparable to published professional reports of respectable international institutions and shall incorporate all the findings in the Contract Area including location of samples, assays, chemical analysis, and assessment of mineral potentials together 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/Regional Director concerned, submit to the Regional Office concerned a quarter of the core samples, which shall be deposited in the Regional Office Core Library for safekeeping and reference. c. Relinquishment Report - The Contractor shall submit a separate 腒 relinquishment report with a detailed geologic report of the relinquished area accompanied by maps at a scale of 1:50,000 and 荾 results of analyses and detailed expenditures, among others. ela- 9 SECTION VI DEVELOPMENT AND CONSTRUCTION PERIOD 6.1. Timetable - The contractor shail complete the development of the mine including the construction of production facilities within thirty six (36) ,onth. from the submission and approvar of the Decraration oi Hainini eio;ect Feasibility, subject to such extension based on justifiabre r"r.o,i. Director may approve, upon recommendation -of the Regionar ""ih" concerned. Director 6.2. Reporting a. Annual - The Contractor shall submit, within sixty (60) days after December 31 of each year, to the Director, through the iegional Director concerned, an annual report, which states the 'major activities, achievements and detailed expenditures during the year covered, including maps, assays, rock and mineral analyses -and geological and environmental progress reports Ouiing the Development and Construction period. b. Final Report - Within six (6) months from the completion of the development and construction activities, the contractor shail submit a final report to the Director, through the Regional Director concerned. Such report shall integrate all information in maps of appropriate scale and quality, as well as in monographs or reports in accordance with international standards. SECTION VII OPERATING PERIOD 7.1 . Timetable - The Contractor shall submit, within thirty (30) days before completion of mine development and construction of production facilities, to the Director, through the Regional Director concerned, a Three-year Commercial Operation Work Program. The Contractor shall commence commercial utilization immediately upon approval of the aforesaid Work Program. Failure of the Contractor to commence Commercial production within the period shall be considered a substantial breach of the Agreement. 7.2. Commercial Operation Work Program and Budget - During the Operating Period, the Contractor shall submit to the Director, through the Regional Director concerned, Work Programs and Budgets covering a period of three (3) years each, which shall be submitted not later than thirty (30) days before the expiration of the period covered by the previous Work program. 腒 The Contractor shall conduct Mining Operations and other activities for the 荘 duration of the Operating Period in accordanpe with the duly approved Work Programs and corresponOinO BudOets. ,( 10 73 Expansion and Modification of Facilities - The Contractor may make expansions, modifications, improvements, and replacements of the mining facilities and may add new facirities as the contractor may considei necessary for the operations: Provided, That such plans shall be embodied in an appropriate Work Program approved by the Director. 74 Reporting a. Quarterly Reports - Beginning with the first Calendar euarter 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 Regional Director concerned, 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 臜 the Director, through the Regional Director concerned, an Annual Report indicating in sufficient detail: b.1. The total tonnage of ore reserves, whether proven, probable, or infened, the total tonnage of ores, kind by kind, broken down between tonnage mined, tonnages transported from the minesite and their corresponding destination, tonnages stockpiled in the mine and elsewhere in the philippines, tonnages sold or committed for export (whether actually shipped from the Philippines or not), tonnages actually shipped from the Philippines (with full details as to purchaser, destination and terms of sale), and if known to the Contractor, tonnages 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 program, including the investment actually made or committed, and b.3. Profile of work force, including management and staff, stating particularly their nationalities, and for Filipinos, their place of origin (i.e., barangay, town, province, region). 腒 The Contractor shall also comply with other reporting requirements provided 鏼 for in the implementing rules and regulations of the Act. ..{ 荾 l)0 腜 sEcTtoN vilt FISCAL REGIME 8.1. General Principle - The fiscal regime of this Agreement shall be governed by the principle according to which the Government expects a reisonabre 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. 8.2. Registration Fees - Within fifteen (15) days upon receipt of the notice of approval of the Agreement from the Regional Office concerned, the Contractor shall cause the registration of this Agreement with the said Regional Office and pay the registration fee at the rate provided in the existing rules and regulations. Failure of the Contractor to cause the registration of this Agreement within the prescribed period shall be sufficient ground for cancellation of the same. 8.3. Occupation Fees - Prior to registration of this Agreement and at the same date every year thereafter, the Contractor shall pay to the Municipal/City Treasurer concerned an occupation fee over the Contract Area at the annual rate provided in the existing rules and regulations. lf the fee is not paid on the date specified, the Contractor shall pay a surcharge of twenty five percent (25%) of the amount due in addition to the occupation fees. 8.4. Share of the Government - The Government Share shall be the excise tax on mineral products at the time of removal and at the rate provided for in Republic Act No. 7729 amending Section 151 (a) of the National lnternal Revenue Code, as amended, in addition to a Royalty of not less than five percent (5%) of the gross output, as well as other taxes, duties and fees levied by existing laws. The Excise Tax shall be timely and completely paid to the nearest Bureau of lnternal Revenue Office in the province concerned. For purposes of determining the amount of the herein Government Share, 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 Republic Act No. 7160, otherwise known as "The Local Government Code of 1 991 ." 8.5 Pricing of Sales - The Contractor shall dispose of the minerals and by- products produced at the highest market price prevailing in the locality: The Contractor shall also pay the lowest achievable marketing commissions and related fees and shall negotiate for more advantageous terms and conditions subject to the right to enter into long-term sales or marketing contracts or foreign exchange and commodity hedging contracts, which the Government acknowledges to be acceptable notwithstanding that the sale price of the minerals and by-products may from time to timebq lower, or the 腞 艐 12 terms and conditions of sales are less favorable, than that available elsewhere. The Contractor shall seek to strike a balance between long-term sales or marketing contracts or foreign exchange and commodity hedging contracts 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 affiliate(s) are concerned, prices shall be at arm's length standard, and competing offers for large scale and long{erm contracts shall be procured. Before any sale and/or shipment of mineral product is made, existing and future marketing contract(s)/sales agreement(s) shall be submitted to the Director, copy furnished the Regional Director concerned, for registration. At the same time, the Contractor shall regularly inform the Director in writing of any revisions, changes or additions in said contract(s)/agreement(s). The Contractor shall reflect in its Monthly/Quarterly Report on Production, Sales and lnventory of Minerals, as well as in the lntegrated Annual Report, the corresponding regiskation numbe(s) of the marketing contract(s)/agreement(s) governing the export or sale of minerals. 8.6. Associated Minerals - lf minerals other than nickel and other associated mineral deposlfs 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. sEcTloN lx WORK PROGRAMS 9.1 . Submission to Government - Within the periods stated herein, the Contractor shall prepare and submit to the Director, through the Regional Director concerned, 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 particulars set forth elsewhere in this Agreement or in the supporting documents. 92 Government's Examination and Revision of Work Program - Should the Government decide to propose a revision to a certain specific feature in the Work Program or Budget, it shall, within thirty (30) days after receipt thereof, provide a Notice to the Contractor specifying in reasonable detail its reasons therefore. Promptly thereafter, the Government and Contractor will 腒 meet and endeavor to agree on the revislon proposed by the Government. ln any event, the revision of any portion of said Work Program or Budget in 鍾 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 approvel_ Tr\ I ',,/ dT-...= 13 , )/ -n ,/l ii -) 9.3. Contractor's Changes to Work Program - lt is recognized by the Government and the Contractor that the details of any Work Program may require changes in the light of changing circumstances. The Contractor may make such changes: Provided, That it shall not change the general objective of the Work Program: Provided further, That changes which entail a negative variance of at least twenty percent (20o/o) shall be subject to the approval of the Director. ln case of any positive variance, the Contractor shall submit to the Director, through the Regional Director concerned, a copy each of the Work Programs, for information. 9.4. The Government's approval of a proposed Work Program and Budget will not be unreasonably withheld. SECTION X ENVIRONMENTAL PROTECTION AND MINE SAFETY AND HEALTH 10.'1. The Contractor shall manage its Mining Operations in a technically, financially, socially, culturally and environmentally responsible manner to achieve the sustainable development objectives and responsibilities as provided for under the implementing rules and regulations of the Act. 10.2. The Contractor shall ensure that the standards of environmental protection are met in the course of the Mining Operations. To the extent possible, control of pollution and the transformation of the mined-out areas or materials into economically and socially productive forms must be done simultaneously with mining. 10.3. The Contractor shall submit an Environmental Work Program during the Exploration Period as prescribed in the implementing rules and regulations of the Act. 10.4. An Environmental Compliance Certificate (ECC) shall be secured first by the Contractor prior to the conduct of any development works, construction of production facilities and/or mine production activities in the Contract Area. 10.5. The Contractor shall submit within thirty (30) 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 development, utilization and processing activities under this Agreement. The Contractor shall allocate for its initial 腟 environment-related capital expenditures approximately ten percent (10%) 腓 of the total project cost or in such amount depending on the environmental/geological condition, nature and scale of operations and technology to be employed in the Contract Area. 5tr- 14 10.6. The contractor shall submit, within thirty (30) days prior to the beginning of every calendar yeat, an Annual Environmental protection ind 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 (3o/o-s%) of its direct mining and milling costs depending on the environmental/geologic condition, nature and scale of operations and technology employed in the Contract Area. 10.7. The contractor shall establish a contingent Liability and Rehabilitation Fund (CLRF) which shall be in the form of the Mine Rehabilitation Fund (MRF) and the Mine Waste and Tailings Fee (MWTF). The MRF shall be based on the financial requirements of the approved EPEP as a reasonable environmental deposit to ensure satisfactory compliance with the commitments/skategies 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. The MWTF shall be collected based on the amounts of mine waste and mill tailings generated during the conduct of Mining Operations. The MWTF collected shall accrue to a Mine Waste and Tailings Reserve Fund and shall be deposited in a government depository bank for payment of compensation for damages caused by the Mining Operations. 10.8. The Contractor shall set up mitigating measures such as mine waste and mill tailings disposal system, mine rehabilitation or plan, water quality monitoring, etc. to minimize land degradation, air and water pollution, acid rock drainage and changes in hydrogeology. 10.9. The Contractor shall set up an Environmental and Safety Office at its minesite manned by qualified personnel to plan, implement and monitor its approved EPEP. 1 0.1 0. The Contractor shall be responsible in the monitoring of environmental, safety and health conditions in the Contract Area and shall strictly comply with all the rules and regulations embodied under DAO No. 2000-98, otherwise known as the "Mine Safety and Health Standards." '10.1 1 . The Contractor shall be responsible for the submission of a final mine rehabilitation and/or decommissioning plans, including its financial 腒 requirements and incorporating the details and particulars set forth in the 躧emettng ru es and gu atons d he A臥 葟 貀 腓 芡 / 15 腒 腁 SECTION XI RIGHTS AND OBLIGATIONS OF THE PARTIES 1 1 .1 . Obligations of the Contractor: a. To excrusivery conduct sustainabre Mining operations within the contract Area in accordance with the provisions of the Act and its implementing rules and regulations; b. To construct and operate any facirities specified under the Minerar 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 Agreement. 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; h. To allow access to Government during reasonable hours in inspecting the Contract Area and examining pertinent records for purposes of monitoring compliance with the terms of this Agreement; To hold the Government free and harmless from all claims and accounts of all kinds, as well as demands and actions arising out of the accidents or injuries to persons or properties caused by Mining Operations of the Contractor and indemnify the Government for any expenses or costs incurred by the Government by reason of any 腒 such claims, accounts, demands or actions; 荾 ) ln the development of the community: j.1 . To recognize and respect the rights, customs and kaditions of indigenous cultural communities over their ancestral lands and 膩 -zl* 16 腪 to allocate royalty payment of not less than one percent (1%) of the value of the gross output of minerals sold; j.2. To coordinate with proper authorities in the development of the mining community and for those living in the host and neighboring communities through soci-al infrastructure, livelihood programs, education, water, electricity and medicai services. Where traditional self_sustaining income and the community activities are identified to be present, the Contractor shall assist in the preservation andlot enhancement of such activities; j.3. To allot annually a minimum of one percent (1ok) of the direct mining and milling costs necessary to implement the activities undertaken in the development of the host and neighboring communitles. Expenses for community development may be charged against the royalty payment of at least one peicent (1%) of the gross output intended for the concerned indigenous cultural community; ).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 currenfly not available, the Contractor must immediately prepare and undertake a training and recruitment program at its expense; and j.5. To incorporate in the Mining project Feasibility Study the planned expenditures necessary to implement 0.1) to (J.3) of this Section; k ln the development of Mining Technology and Geosciences: k.1 . ln the course of its operations, to produce geological, geophysical, geochemical and other types of maps and reports that are appropriate in scale and in format and substance which are consistent with the internationally accepted standards and practices. Such maps shall be made available to the scientific 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; 腒 k.2. To systematically keep the data generated from the ContracU Mining Area such as cores, assays and other related information, including economic and financial data and make 荾 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 /"'D n't 2T- 17 community within a reasonable period of time which shall not exceed three (3) years; k.3. To transfer to the Government or local mining company the appropriate technology it may adapt in the explorition, deveropment and commerciar utirization of the minerars in ihe Contract Area; k.4. To allocate research and development budget for the advancement of mining technology and geolciences in coordination with the Bureau, research institutions, academe, etc.; and k.5. To replicate data, maps and reports cited in (k.1) and (k.2) and furnish the Bureau for archiving and systematic safeke'eping which shall be made availablJto the scilnce and technology community for conducting research and undertaking other activities which contribute to the development of mining, geoscience and processing 臜 technology and the corresponding national pool of manpower talents: provided, however, that the release of data, maps and the like shall be similarly constrained in accordance with (k.1) and (k.2) above; l. To incorporate in the Mining Feasibility Study the planned expenditures necessary to implement all the plans and programs set forth in this Agreement; and m. To pay all other taxes and fees mandated by existing laws, rules and regulations. 11.2. Rights of the Contractor: a. To conduct Mining Operations within the confines of its ContracUMining Area in accordance with the terms and conditions hereof and without interfering with the rights of other Contractors/Lessees/Operators/ permittees/permit Holders; b. 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. To use and have access to all declassified geological, geophysical, drilling, production and other data relevant to the mining operations; 腒 d. To sell, assign, transfer, convey or otherwise dispose of all its rights, . interests and obllgations under the Agreement subject to the 芫 approval of the Government; 腓 e. To employ or bring into the Philippines foreign technical and specialized personnel, including the immediate members of their families as may be required in ttm膡 "菐 腧 苢 ]T臥菋 / 18 腛 腟 subject to appricabre raws and regurations: provided, That if the emproyment connection of such for6ign persons with the contractor ceases, the applicable la\,vs and regulations on irmigr"l;n siaff apply to them. Every time foreign tech-norogies utilir""J *r,ur" alien executives employeo, an "r" "nJ understudies .are effeiive projr", ;; ;r;;i"g limited to shail be undert'aken. The arien un.piovr"ni .n.ii o" technologies requiring highty speciatL".i ti"i"rg experience subject to the required appiovat unOer exisiin;l;;;: ".0 and regulations; r;es f. To enjoy easement rights and use of timber, water and other naturar resources in the Contract Area subject to pertinent laws, rules and regulations and the rights of third parties; g Repatriation of capitar 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 materiars required in the operations in accordance wiih existing raws and regulations. 11.3. Obligations of the Government: a. To ensure that the contractor has the Government's fuil cooperation in the exercise of the rights granted to it under this Agreemeni; b. To use its best efforts to ensure the timery issuance of necessary permits and simirar authorizing documents ior use of the surface of the Contract Area; and c. To cooperate wrth the contractor in its efforts to obtain financing contemplated herein from banks or other financial institutions: Provided, That such financing arrangements wifl in no event reduce the Contractor's obligation on Government rights hereunder. SECTiON X腡 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, prant and other instalrations of a movable nature erected or placed on the contract Area by the contractor shall remain the 腒 property of the contractor. The contractor shalr have the right to remove and re-export such materials and equipment, prant and other installations 腓 from the Philippines, subject to existing rures and regurations. rn case of cessation of Mining operations on pubric lands occasioned by its voluntary " r /钼 腒 year from the time of cessation within which to remove its improvements; otherwise, ail sociar infrastructures and racirities shal be trrI"a' orJi' o,. donated tax free to.the proper gor"rnr"ni autnorit;es, nriio*l o. fo"Ii, to ensure that said infrastructureJ and facirities are continuousry maintaineo and utilized by the host and neighboring communities. sEcTtoN Xilt EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL 13 1 The contractor agrees ro emproy, to the extent possibre, quarified Filipino personnel in all types of mining operations for which they are qr"f ifi"a;-"nO after commerciar production iommences shail, in consuttation ,.J'*tt consent of the Government, prepare and undertake an extensive training programme suitabre to Firipino nationars in ail revers of emproyment. The obje-ctive of said programme is to reach within the timetable tortn n"io* the following targets of ,,Filipinization:" ""t Unski腡 consider names of qualified persons until agreement on a mutually acceptable chairman of the tribunar is serected. Such arbitration sr,ail oe initiated and conducted pursuant to Repubric Act No. gzo, otnerwise xnown as the "Arbitration Act.,, ln any event, the arbikation shail be conducted apprying the substantive laws of the Republic of the philippines. 14.3. Each party shail pay fifty percent (50%) of the fees and expenses of the Arbitrators and the costs of arbitration. Each party shail pay its own costs and attorney's fee. sEcTtoN xv SUSPENSION OR TERMINATION OF CONTRACT, TAX INCENTIVES AND CREDITS 15. 1 This Agreement may be suspended for failure of the contractor: (a) to comply with any provision or requirement of the Act and/or its impremeniing rules and regurations; (b) to pay on time the comprete 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 originar or renewar; (b) withdriwar from :` the Agreement by the contractor; (c) vioration by the bontractor of the Agreement's terms and conditions; (d) fairure to pay taxes, fees/or charges or financial obligations for two (2) consecutive yeais; (e) false statemeni or omission of facts by the Contractor; and (f1 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 farsehood in said statements or omission of facts which may alter, change or affect substantially the fact set forth in said statements shail be a ground for its revocition and termination. 15.4. The contractor may, by giving due notice at any time during the term of this Agreement, apply for its canceilation due to causes which,ln the opinion of the contractor, render continued mining operation no ronger feasibre or viable. ln this case, the secretary shall decide on the ap-prication 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 course of dealing by the Government shall impair any of its rights under this Agreement, except in the case of a wrifuen waiver. The Government's right to seek recourse and relief by all other means shall not be construed as a waiver of any succeeding or other 腒 default unless the contrary intention is reduced in writing and sigied by the 饽 party authorized to exercise the waiver. 腙 豶 21 15 6 rn case of termination, the contractor sha, pay a, the fees and other liabilities dve up to.the end of the year in *ni"n the termination becomes effective. The contractor shatt immLoiit"iy .rrry out the restoration of the Contract Area in accordance with gooO ;;ing'inOustry practice-. 15 7 The withdrawar by the contractor from the Minerar Agreement sha, not release it from any _and all financial, environmental, legal and fiscal obligations under this Agreement. '15 8. The following acts or omissio n, inter aria shail constitute breach of contract, upon which the Government may exercise its right to termrnate ine Agreement: a. Failure of the contractor without varid reason to commence Commercial production within the period prescribed; and/or b. Failure of the Conkactor to conduct mining operations and other activities in accordance with the approved -work program, ,nd/o.. any modification thereof as approved by the Director. '15.9. The Government may suspend and cancer tax incentives and credits if the contractor fails to abide by the terms and conditions of said incentives and credits. SECTION XVI OTHER PROVISIONS 16.1 . Any terms and conditions resurting from repear or amendment of any existing laws or reguration or from the enactment of a raw, reguration or administrative order shall be considered a part of this Agreement.- 16.2. Notice All notices, demands and other communications required or permitted hereunder shalr be made in writing, terex or terecopy and shail be deemed to have been dury given notice, in the case of terex or terecopy, if answered back or confirmation received, or if derivered by hand, upon ieceipt or ten days after being deposited in the mail, airmail postage prepaid and addressed as follows: lf to the Government. THE SECRETARYDepartment Of Environment and Natural Resources DENR Building,visayas Avenue Dha Quezon ow芡 腞 腒 艐 賩 22 腟 腛 lf to the Contractor: THE PRESIDENT C.T.p. Construction and Mining Corporation No. .l 1 president Avenue B.F. Homes, parafraque City Elther party may substitute or change such address on notice thereof to the other party: provided, That the contractor shail, in case of anv chanoe of address during the t91m of this Agreement, noiity in"-oir""i",r;;;tirg. Failure to do such notification shail-be deemed as waiver oy in" Conir."to, to be informed about any communications as provided in Section 16.2 above. 16.3. Governing Law This Agreement and the reration between the parties hereto shail be governed by and construed in accordance with the laws of tn" n"prOiic of the Philippines. The contractor hereby agrees and outiges itser tJcompry with the provisions of the Act, its impiemlnting rures a-nd regutatons ano other relevant laws and regulations. 16.4. Suspension of Obligatio a. Any failure or delay on the part of any party in the performance of its obligation or duties hereunder sniil ne excused to the extent attributabre to Force Majeure as defined in the Act: provided, ihat the suspension of Mining Operations due to Force Maleure iauses shall be subject to approval by the Director b. lf Mining Operations are delayed, curtailed or prevented by such Force Majeure causes, then the time for enjoying the righis and carrying out the obrigations thereby anecteo, t[e terni of this Agreement and all rights and obiigations hereunder shall be extended for a period equal to the period involved. c. The Party, whose abirity to perform its obrigations is affected by such Force Majeure causes, shall promptly give Notice to the oiher in writing of any such delay or failure of performance, the expected duration thereof and its anticipated effect and shail use its efforts to remedy such delay, except that neither party shall be under any obligation to setfle a rabor dispute: provided, Tnat ttre suspension of obligation by the Contractor shall be subject to prior approval by the Director. 16.5. Amendments 腔 雞 This Agreement shafl not be annuiled, amended or modified in any respect except by mutual consent in writing of the hereirrParties q{o--- ->J--- o ,z -'r' lX 23 | :l (/ ' \t '\ -/ lN wlrNEss *HERE.F, the parties hereto have executed this Agreement, as of the day and year first above written THE REPUBLiC OF THE PHIL:PPiNES ACKNOWLEDGMENT :::荔 :llillhePhilippineslss Before me, a Notary Pub腡 c fOr and in, 觚  雘腡 韘 貧 讙 諭 讖 陝 雊 趂t詤 鉻[莐 趌 轋 oth knOwn to me and tO me knOwn tO be :鹏 lr:T鷰 臨苇T苦 腷 :;苇  苈:豭 it醡 腡 鉉 in酭 :鵤 邉 菌 貮1臱 ..l菈 ,(`腬 镩 裡t my hand att afflx my notarla seal, 雂 WttREOtthat:赾 1腒 i諌 腡荭 y of鏱 膍 饷 鱝 芲 T鞑 莋 v裠 "g 閞 韍 lt/ 郞 饈 rl%::'醽 腳 Doc No `% ::::臨 :: | l腅 荕 Senes of 诂 访 腒 荾 25 膡膡()N : | : (1.膜 腝 1 :d l. 莅 : !腅 ,I ,腵 腅 2, 腒腍 菁賻 '| O,菁 葋 韍 J腝 "葠 r2 腜 腜 .. 4_ :R膜 |腌Cetpt No 鏱rlie slnoust gf 腝 莿 询 腅 臜 'lUt 臜