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MINERAL PRODUCTION SHARING AGREEMENT
No. 191 -2004-III
This MINERAL PRODUCTION SHARING AGREEMENT is made and entered into in Quezon City, Philippines, this ______ day of MAY 22 2004 by and between:
THE REPUBLIC OF THE PHILIPPINES, herein referred to as the GOVERNMENT, represented in this act by the Secretary of the Department of
Environment and Natural Resources, with offices at the Department of Environment and Natural Resources Building, Visayas Avenue, Diliman, Quezon City
and
CRAU MINERAL RESOURCES CORPORATION, a corporation duly organized and existing under the laws of the Republic of the Philippines, herein referred to as the CONTRACTOR, with office at 1-E Sra. Maria Street, Brgy. Kapitolyo, Pasig City, Metro Manila, and represented in this act by MODESTO B. BERMUDEZ, President, as authorized by its Board of Directors (please refer to ANNEX'A')
WITNESSETH:
WHEREAS, the 1987 Constitution of the Republic of the Philippines provides in
Article Xll, Section 2 thereof that all lands of the public domain, waters, minerals, coal, petroleum and other natural resources are owned by the State and that their exploration, development and utilization shall be under the full control and supervision of the State; WHEREAS, the Constitution further provides that the State may directly undertake such activities, or it may enter into a Co-Production, Joint Venture, or Mineral Production Sharing Agreement with Filipino citizens, or cooperatives, partnerships, corporations or associations at least sixty per centum of whose capitalization is owned by such citizens;
WHEREAS, pursuant to Republic Act No. 7942, otherwise known as "The Philippine Mining Act of '1995," which took effect on 09 April 1995, the Secretary of the Department of Environment and Natural Resources is authorized to enter into Mineral Production Sharing Agreements in furtherance of the objectives of the Government and the Constitution to bolster the national economy through sustainable and systematic development and utilization of mineral lands.
WHEREAS, the Government desires to avail itself of the financial resources,
technical competence and skill which the contractor is capable of applying to the mining operations of the project 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 promptly and effeclively 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:
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 certain
chromite, nickel, platinum and other associated mineral deposits existing
within the Contract Area, with all necessary services, technology and
financing to be furnished or arranged by the contractor in accordance with
the provisions of this Agreement. The contractor shall not, by virtue of this
Agreement, acquire any title over the Contract Mining Area without prejudice
to the acquisition by the Contractor of the land/surface rights through any
mode of acquisition provided for by law.
1.2 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.
1.3 The Contractor shall assume all the exploration risk such that if no minerals
in commercial quantity are developed and produced, it will not be entitled to
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.
SECTION II
DEFINITIONS
As
used in this Agreement,the following words and terms,whether singular or
plural, shall have the
following respective meaning:
2.1 Act refers
to Republic Act No 7942, otherwise known as the ``Philippine Mining Act of
1995"
2.2 Agreement means this
Mineral Production Sharing Agreement
2.3 Associated Minerals
mean other ores/minerals which occur together with the principal
ore/mineral
2.4 Bangko Sentral
means Bangko Sentral ng Pilipinas.
2.5 Budget means an estimate of expenditures to be made by Contractor in mining operations contemplated hereunder to 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 Quarter" 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 means an estimate
of expenditures to be made by Contractor in mining operations
contemplated hereunder to accomplish the Work Program for each particular period 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 15, 1986
and ratified by the People of the Republic of the Philippines on February 2,1987.
2.10 Contract Area
means the area onshore or offshore delineated under the Mineral Production Sharing
Agreement subject to the relinquishment obligations of the Contractor 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 CRAU MINERAL RESOUCES CORPORATION or its assignee or assignees of
interest under this Agreement: Provided, That the assignment of any of such
interest is accomplished pursuant to the pertinent provisions of the implementing rules
and regulations of the Act.
2.13. Declaration of Mining Feasibilitv means a document proclaiming the
presence of minerals in a specific site, which are recoverable by socially
acceptable, environmentally safe and economically sound methods- specified
in the Mine Development Plan.
2.14. Department or DENR means the Department of Environment and
Natural Resources.
2.15. Director means the Director of Mines and Geosciences Bureau.
2.16. Effective Date means the date of execution of this Agreement by the
Contractor and by the Secretary on behalf of the Government. ln case an
Exploration Permit/Temporary Exploration permit had been availed of by the
contractor, the Effective Date of this Agreement shall be the date of issuance
of said Exploration Permit/Temporary Exploration permit.
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 for the purpose of determining the existence, extent, quality and quantity of mineral resources and the feasibility of mining them for profit.
2.19. Exploration Period shall mean the time 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, frood 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 Foreign Exchange
means any currency other than the currency of the Republic the Philippines
acceptable to the Government and the 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 deduction for
mining, processing, refining, transporting, handling, marketing, 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 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 Development refers to work undertaken to prepare an ore body or a mineral deposit for mining, including the construction of necessary
infrastructure and related facilities.
2.25. Minerals mean all naturally occurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal,
petroleum, natural gas, radioactive materials and geothermal energy'
2.26. Mineral Products mean materials derived from mineral ores/rocks and
prepared into marketable state by metallurgical processes which include
beneficiation, cyanidation, leaching, smelting, calcination and other similar
processes.
2.27 Mining Area means that portion of the contract Area identified by the
Contractor as defined and delineated in a Survey Plan duly approved by the
Director/concerned Regional Director for purposes of development and/or
utilization and sites for support facilities.
2.28.Mining 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 Secretary means the Secretary Of the Department of Environment and
Natural Resources
2.33. State means the Republic of the philippines.
2.34 Work Program 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 submitted and approved in
accordance with the implementing rules and regulations of the Act.
SECTION III
TERM OF AGREEMENT
3.1. This Agreement shall have a term of twenty five (25) years from EffectiveDate, and may be renewed thereafter for another term not exceeding twentyfive (25) years. The renewal of this Agreement, as well as the changes in theterms and conditions thereof, shall be upon mutual consent by the plrties. lnthe event the Government decides to allow mining operations thereafter byother Contractor, this must be through competitive public bidding. After duepublication of notice, the Contractor shall have the right to equal the highestbid upon reimbursement of all reasonable expenses oi the highest bidder
SECTION IV
CONTRACT AREA
4.1.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 geographical coordinates (please refer to ANNEX Size, Shape, and Location of Contract "B" - 1:50,000 scale Location Map/Sketch plan):
―
LOT l
CORNER
LONG:TUDE
120° 03'00.00"
1
LAT:TUDE
4
120° 03'15.00'
120° 03'15,00"
15° 44'15.00'
15° 44'15.00"
120・ 03'45.00'
7
120° 03'00.00"
15° 44'30.00"
6
3
15・ 44'30.00'
5
2
15° 44'00.00"
15° 44'30.00''
120° 03'45.00"
8
15° 44:30.00'
120° 04'00.00'
9
15° 42'45.00"
120° 04'00.00"
0
1
15° 42'45.00"
120° 04'15.00"
︲
1
15° 43'00.00"
120・ 04'15.00"
2
1
15・ 43'00.00'
120° 04'30.00"
3
︲
15° 41'30.00"
120° 04'30.00"
4
︲
15° 41'30.00"
5
︲
15° 38'30.00'
120° 04'00.00"
120° 04'00.00"
6
︲
15° 38'30.00"
120・ 03'30.00'
7
︲
15° 39'30.00"
120° 03'30.00"
8
︲
15° 39'30.00"
15° 39'38.00"
=
6
394770"
120° 03'0840"
15°
120° 03'0840"
15° 39'4770"
15° 40'0000"
120・ 03'3000"
120° 03'3000"
15° 40'0000"
120° 03'0000"
15° 40'3000"
120° 03'0000'
15° 40'3000"
120° 02'3000"
15° 40'0000"
120° 02'3000"
15° 40'0000"
120° 02'4500"
394500"
15° 394500"
120° 03'0000'
15° 39'3800'
120° 03'0000"
15° 39'3800"
120° 03'0840"
120° 03'0840"
15°
15° 39'0870"
15° 39'0870'
120・ 024500"
15° 39'0000"
120° 03'0000"
120° 03'0000"
15° 39'0000"
120° 024820"
15° 38'5730"
120° 02'4820"
15° 38'5730"
120° 03'0000"
15° 38'3000'
120° 030000"
15° 38'3000"
120° 02'0000"
15° 38'4070・
120・ 02'00.00"
384070"
120° 02'1000"
15° 39'0000"
15° 38'4070"
120° 02'1000'
120° 02'0000"
120° 02'0000"
15° 38'3000"
120° 02'0000"
15° 38'3000"
120° 01'3000"
15° 40'5580"
120° 01'3000"
15°
15° 39'0000"
15° 40'5580"
120° 02'05,70"
15° 41'0600"
120・ 020570"
15° 41'0600"
120° 02'2560"
550"
120° 02'2560"
15° 41曖
15° 41'25,50'
120° 02'3560"
414500'
120° 02'3560"
15° 41'4500"
120° 02'4560'
15°
15° 42'0000・
120° 02'4560"
15° 42'0000"
120° 024500"
15° 42'0400"
15° 42'0400"
120° 024500・
120° 02'5700"
15° 43'0000"
120° 02'5700'
15° 43'0000"
15° 43'2120"
120° 024680・
120° 02● 680"
15° 43'2120"
120° 03'0000・
15° 43'4035"
120° 03'0000"
15°
434035"
15° 43'3000"
120° 02'5700"
120° 02'5700"
15° 43'3000"
120° 02'3000'
15° 42'3000"
120° 02'3000"
15° 42'3000"
120° 02'0000"
15° 42'0000"
120° 02'0000"
15° 42'0000・
120° 02'0500"
15° 41'2500"
120° 02'0500"
15° 41'2500"
120° 01'5500"
414465'
15° 414465"
15°
120° 01'5500"
15° 41'2500"
15° 41'2500"
120° 01■ 500"
120° 01'3500"
15° 41'54.40"
120° 01'35.00"
15° 41'5440'
120° 01'4500'
15°
424340"
15° 42'4340"
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“
7
♀
ょ
120° 01'4500"
120° 01'4500"
切
T5距
120° 01'5510"
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9。︲
34567890︲2345
7 8
0︲
3
567890︲”3“5“7890︲23“5“7890︲23
56789。︲
︲2222222222333333∞33∞4424“4444455
5
5
5556666
6
6667777■7777788
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15° 39'3800'
2 15° 42'5290" 120° 02'0500"
8
3
8
4
8
5
8
15° 43'1250"
120° 02'0500"
120° 01'5500・
15° 43'3000・
120° 01'5500・
15° 43'1250"
Area of Lot l=3,681 7837 Hectares
Lot‐ 2
CORNER
1
2
3
4
5
6
LAT:TUDE
LONG:TUDE
15° 37'2060"
120° 02'0000"
15° 37'2060"
15° 37'1080"
15° 37'1080'
15° 37'0000"
120° 02'3000"
15° 37'0000・
120° 02'3000"
120° 02'1100"
120° 02'1100'
120° 02'0000"
Area of Lot 2=37 8002 Hectares
CORNER
ヽ
LAT:TUDE
1
2
15° 38'0000"
3
15° 38'1000・
4
15°
38'1000"
5
15° 38'2000・
6
15° 38'2000''
7
15° 38'1000"
8
15° 38'1000・
15° 38'0000"
LONGITUDE
120° 02'5000"
120° 0215000"
120° 02'3000"
120° 02'3000"
120° 03'1000"
120° 03'1000"
120° 03'0000"
120° 03'0000"
Area of Lot 3 = 45.8014 Hectares
SECTION V
EXPLORATION PERIOD
5.1 Timetable for Exploration - The Contractor shall commence Exploration
period activities not later than three (3) months after the Effective Date for a
of of two (2) years, renewable for like periods but not to exceed a total term
six(6)years for nonmetallic minerals and eight (8) years for metallic minerals, subject to annual review and approval by the Director to .evaluate compliance with the terms and condition of this Agreement. Provided, that further renewal may be granted by the Secretary under circumstances as defined in the implementing rules and regulations of the Act.
The one (1) year term of the Temporary Exploration Permit (TEP) denominated as TEP No. III-004-2002 and issued on March 21, 2002 is 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 "E")
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 Contract Year : PhP 41,000,00000
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 shall first be agreed upon by the parties.
In the event of termination of this Agreement, the Contractor shall only be obliged to expend the pro-rata amount for the period of such Contract Year prior to termination. If during any Contract Year, the Contractor should expend more than the amount to be expended as provided above, 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.
5.3 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.
5.4 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.
5.6 Survey of the Contract Area - The Contractir shall cause the survey of the perimeter of the Contract Area/final Mining Area through an application for
survey, complete with requirements, filed in the 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.
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
V
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
published professional repo(s of
substance comparable
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.
to
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-dK-'lures'
expendil
arnong
-
10
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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
SECTION V!
DEVELOPMENT AND CONSTRUCTION PERIOD
61
Timetable
- The contractor shall complete the development
mine
-the
thirty six (36) months
in"fuorg tn" construction of production iacilities within
Feasibility, subject to such
from the submission ot tne blcraration of Mining
upon
O".ed on justifiable reasons as the Director may approve'
"*i"nti"n
recommendation
62
oJ
of the concerned Regional Director'
Reporting
a.
sixty (60) days after
the concerned
December 31 ot each year, to the Director' through
report which s'tates the major activities'
Regional Director,
"i'n'if expenditures during the year covered,
ue;iteo
achievements ano"n
mineral analyses and geological and
to"ft
including ,"p.,
"nb
during the Development and
progieis reports
environmental ".t"yt,
Annual
- The Contractor shall submit' within
b.
Final Report
-
Within six (6) months lroq the completion of the
shall submit a
development anO construaion activities' the Contractor
Director'
tinri tdpott to tne Oirector, through the concerned Regional
of appropriate scale
Sucn rdport snarr iniei-te all infoimation in maps
qriitv, as weti-a'i in monographs or reports in accordance with
"nJ
international standards.
SECTION VII
OPERATING PERIOD
71
じ
Timetable
-
The Contractor shall submit, within thirty (30) days before
to
facilities'
ot mine development and construction of production
;;;il;"
-olieJor,
Regional Director' a Three-Year
through the concerned
Work Program The Contractor shall commence
Lorr"t""f
aforesaid Work
commercial utilization irr"Airt"ti upon approval of the
commence Commercial Production
F;ilril Failure of the ContraCtoratosubstantial
breach of the Agreement'
*tf,], in" period shall be considered
in"
72
'Operati-on
the Operating
Commercial Operation Work Program and Budget - During
the concerned
i"rioJ, the Contractor shall subrn'it to the Director, through period
three
a
R;gil"i Director, Work Programs and Budgets covering (30) davsofbefore
each, which shall bi submitted not later than thirty
iij
iheLxpiration of the period covered by the previous Work Program'
y#;
The Contractor shall conduct Mining operations and other activities for the
work
duration of the operating period in iccordance with the duly approved
Programs and conesponding Budgets'
73
Expansion and Modification of Facilities - The Contractor may make
expansions, modifications, improvements, and replacements of the mining,
5+\
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Construction Period.
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
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
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.
. the commencement of the Operating Period, the Contractor
in
b.
b.1.
The total tonnage of ore reserves, whether proven, probable, or
inferred, the total tonnage of ores, kind by kind, broken down
between tonnage mined, tonnages transported from the
minesite and their corresponding destination, tonnages
stockpiled in the mine and elsewhere in the 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, byproducts or final products and of the terms at which they weie
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
\ts-'
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.
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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 in sufficient detail:
■
SECTION V]II
FISCAL REGIME
81
General Principle - The fiscal regime of this Agreement shall be governed by
the principle according to which the Government expects a reasonable return
in economic value for the utilization of non-renewable 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.
82
Within fifteen (15) days upon receipt of the notice of
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
ground for cancellation of the same.
83
Occupation Fees - Prior to registration of this Agreement and at the same
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
l-terD
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Registration Fees
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
Submission to Government - Within the periods stated herein, the Contractor
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
particulars set forth elsewhere in this Agreement or in the supporting
documents.
92
Government's Examination and Revision of Work Program - Should the
Government wishes 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 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.
93
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 variance of at
least twenty percent (20%) shall be subject to the approval of the Director.
94
The Government's approval of a proposed Work Program and Budget will not
be unreasonably withheld.
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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
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91
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
げ
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 dlvelopment, utilization and processing activities under this
Agreement. The Contractor shall allocate for its initial environment-related
cipital expenditures approximately ten percent (1OYo) ot 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.
げ
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
depending on the environmental/geologic condition, nature and scale of
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,
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production iacilities and/or mine production activities in the Contract Area.
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
v'
11
.1
.
Obligations of the Contractor:
a.
To exclusively conduct sustainable Mining Operations within
b.
To construct and operate any facilities specified under the Mineral
the
Contract A.rea in accordance with the provisions of the Act and its
implementing rules and regulations;
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;
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16
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RIGHTS AND OBLIGATIONS OF THE PARTIES
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 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
.
the value of the gross output of minerals sold;
j.2.
ー
j.3.
ー
i.4.
To coordinate with proper authorities in the development of the
mining community and for those living in the host and
neighboring communities through social infrastructure,
livelihood programs, education, water, electricity and medical
services. Where traditional self-sustaining income and the
community aclivities are identified to be present, the Contrac'tor
shall assist in the preservation and/or enhancement of such
activities;
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
cultural community;
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;
i5
To incorporate in the Mining Feasibility Study the
expenditures necessary
to
implement
Section;
(t.1
) to
(1.3)
planned
of this
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
…… ………
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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
and
are consistent with the internationally accepted standards
shall be made available to the scientific
;;;"ti;;. Such maps
iommunity in the most convenient and cost effective forms'
.rbi""t toin" condition that the Contractor may delay release of
shall not
said information for a reasonable period of time which
exceed three (3) Years;
To systematically keep the data generated from the ContracU
tvtining Rrea such as cores, assays and other related
and make
intormiatlon, including economic and financial data
persons
them accessible to students, researchers and other
processing
i"tfon.iUf" for developing mining, geoscience and.
may
technology subject to the condition that the Contractor
oi d"t" to the science and technology community
reasonable period of time which shall not exceed three
olr"vi"rEi."
"
(3) years;
company the
To transfer to the Government or locai mining
jn
the. exploration'
appropriate technology it may adapt
k3
ン
the
Jlvelopment and commercial utilization of the minerals in
Contract Area;
allocate research and development budget for the
in
advancement of mining technology and geosciences
academe'
cooiOination with the Buieau, research institutions'
To
k4
etc.;
k.5.
(k 2) and
To replicate data, maps and reports citecl in (k'1) and
safekeeping
turnlsn ine Bureau for archiving and systematic
wnicn snait be made available tb the science and technology
for conducting research and undertaking other
"orrrnity
activitieswhichcontributetothedevelopmentofmining,
geoscience and processing technology and the corresponding
that the
national pool of manpoweitalents: Provided' however'
constrained
retea=e'olt oatr, maps and the like shall be similarly
in accordance with (k 1) and (k 2) above;
―
l.
Mining Feasibility Study the
planned
set
programs
expendituies necessary to implement all the plans and
forth in this Agreement, and
To
incorporate
in the
m.Topayallothertaxesandfeesmandatedbyexistinglaws'rulesand
regulations.
11.2. Rights of the Contractor:
confines of its
a. To conduct Mining Operations withinthethe
terms and conditions
contracuMining AreJ in accordance with
hereof and without interfering with the rights of other
PermitHoldersittff
C° nlractorsノ Lesseesノ Operatoli:』
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18
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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
employmentconnectionofsuchforeignpersonswiththeContractor
ceasei, the applicable laws and regulations on immigration shall apply
tothem.Everytimeforeigntechnologiesareutilizedandwherealien
executives are employed, an effective program of kaining
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.
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1
equipment, spare parts and raw
materials required in the operations in accordance with existing laws
and regulations.
To import when necessary all
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
rights hereund"tr$(
the Contractor's obligation
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19
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familiesasmayberequiredintheoperationsofthecontractor,
subject to appiicable laws and regulations: Provided, That if the
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
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:"
ー
Professiona!
(%)
Management
l° /o)
0
0
0
7
0
6
0
0
0
7
5
6
0
0
5
7
5
7
0
0
0
8
0
8
0
0
5
8
5
8
0
0
5
9
5
9
0
0
100
0
0
100
100
100
100
100
0
0
10
15
(%)
l°/o)
5
7
T
(%)
Clencal
0
7
1
3
5
Sk‖ ied
0
5
Yeer
Year
Year
Yeat
Year
Year
Unski‖ ed
13.2. Cost and expenses of training such Filipino personnel and the Contractor's
own employees shall be included in the Operating Expenses.
13.3. The Contractor shall not discriminate on the basis of gender and shall
respect the right of women workers to participate in
and decision-
20
鼈 ゛
│ _
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.
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
け
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
一
15.1
.
This Agreement may be suspended for failure of the Contractor: (a) to comply
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 ano termination;'(
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21
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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
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."
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 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 written
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 default
unless the contrary intention is reduced in writing and signed by the party
authorized to exercise the waiver.
15.7. The withdrawal by the Contractor from the Mineral Agreement shall not
release it from any and all financial, environmental, legal and fiscal
obligations under this Agreement.
15.8. The following acts or omission, inter a/,a shall constitute breach of contract, upon which the Government may exercise its right to terminate the
Agreement;
a. Failure of the Contractor without valid reason to commence Commercial Production 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 conditions of said incentives and
credits.
SECTION XVI
OTHER PROVISIONS
16.1. Any terms and conditions resulting from repeal or amendment of any existing laws or regulation or from the enactment of a law, regulation or administrative order shall be considered a part of this Agreement.
16.2. Notice
All notices, demands, and other communications required or permitted hereunder shall be made in writing, telex or telecopy and shall be
deemed to have been duly given notice, in case of telex or telecopy, if answered
back or confirmation received, or if delivered by hand, upon receipt or ten
days after being deposited in the mail, airmail postage prepaid and
addressed as follows:
lf to the Government:
THE SECRETARY
DEPARTMENT ENVIRONMENT AND NATURAL RESOURCES
DENR Building , Visayas Avenue
Diliman, Quezon City
lf to the Contractor
THE PRESIDENT
CRAU MINERAL RESOURCES CORPORATION
1-E Sra. Maria Street, Brgy, Kapitolyo
Pasig City, Metro Manila
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. Provided, 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 ability to perform its obligations is affected by such
Force Majeure causes, shall promptly give Notice to the other in
writing of any such delay or failure of performance, the expected
duration thereof and its 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.
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 WITNESS WHEREOF, the Parties hereto have executed this Agreement, as of the day and year first above written
THE REPUBLIC OF THE PHILIPPINES
BY:
ELISEA G. GOZUN
Secretary
Department of Environment and Natural Resoruces
CRAU MiNERAL RESOURCES CORPORATION
BY:
MODESTO B. BERMUDEZ
President
TIN ____________________
SIGNED IN THE PRESENCE OF:
__________________________________
(Signature over printed name)
__________________________________(Signature over printed name)
ACKNOWLEDGMENT
Republic of the
Philippines
Quezon City
Before me, a Notary
Public for and in the City of Quezon personally appeared ELISEA G. GOZUN, with Community Tax Certificate No. 13762020 issued on January 12, 2004 at
Quezon City in her capacity as Secretary of Department of
Environment and Natural Resources and MODESTO B. BERMUDEZ, with Cornmunity Tax
Certificate No. 23306931 issued on March 3, 2004 at Baguio City, in his
capacity as President of CRAU MINERAL RESOURCES CORPORATION both known to me and to
me known to be the same persons who executed the foregoing instrument
consisting of twenty five (25) pages, including this acknowledgment page, and acknowledged to me
that the sarne is their voluntary acts and deeds.
IN WITNESS THEREOF,
I have herunto set my hand and affix my notarial seal, this 9th day of June 2004
ANSELMO
C. ABANGAN
Notary
Public
Doc. No. 103
Page No. 21
Book No.111
Series of 2004