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No. 276-2009‐ CAR

into in Quezon City, Philippines, this day of JAN 19 2009 by and

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


NEVADA, JR., Filipino citizens of legal age, herein referred to as the
CONTRACTOR, with office at No. 68 Legarda Road, Baguio City and
represented in this act by Philex Mining Corporation as represented by
Mr. Jose Ernesto C, Villaluna, Jr., as authorized by the Heirs and the company's
Board of Directors (please refer to ANNEX "A")


WHEREAS, the 1987 Constitution of the Republic of the Philippines provides in
Article XII, 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, Baldomero Nevada, Sr., Trinidad Nevada and Baldomero Nevada, Jr.,
were mining lessees under previous mining laws;

WHEREAS, the Heirs of Baldomero Nevada, Sr., Trinidad Nevada and Baldomero
Nevada, Jr, have authorized Philex Mining Corporation to file and secure approval of
their mining application pursuant to their mining agreement, as amended;

WHEREAS, the contractor desires to join and assist the Government in the
development and utilization for commercial purposes of copper, gold 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 effectively carry out the objectives of this Agreement;

NOW, THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants, terms and conditions hereinafter set-forth, it is hereby
stipulated and agreed as follows:



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
sustainable development and commercial utilization of copper, gold and
other associated mineral deposits existing within the contact 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, responsible 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. 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 VI hereof.



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 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 Heirs of Baldomero Nevada, Sr., Trinidad Nevada and
Baldomero Nevada, Jr. 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 Mining Project Feasibility 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 Project Feasibility Study.
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 for
 the purpose of determining the existence, extent, quality and quantity of
 mineral resources and the feasibility of mining them for profit.
2.19. 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.
2.20. Foreign Exchange means any currency other than the currency of the
 Republic of the Philippines acceptable to the Government and the
2.21. Government means the Government of the Republic of the Philippines
or any of its agencies and instrumentalities.
2.22 Gross Output means the actual market value of the minerals or mineral
products from each mine or mineral land operated as a separate entity,
without any deduction for mining, processing, relining, 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 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.
2.23. Mine Development refers to work undertaken to prepare an ore body or
a mineral deposit for mining, including the construction of necessary
infrastructure and related facilities.
2.24. Minerals mean all naturally occurring inorganic substances in solid,
liquid, gas or any intermediate state excluding energy materials such as
coal, petroleum, natural gas, radioactive materials and geothermal

2.25. 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
2.26. 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/Regional Director concerned for purposes of development
 and/or utilization and sites for support facilities.
2.27. Mining Operations means mining activities involving exploration,
 feasibility study, environmental impact assessment, development,
 utilization, mineral processing and mine rehabilitation.
2.28. Notice means notice in writing, telex or telecopy (authenticated by
 answer back or confirmation received) addressed or sent as provided in
 Section 13.2 of this Agreement.
2.29. Ore means naturally occurring substance or material from which a
mineral or element can be mined and/or processed for profit.
2.30. 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.
2.31. Secretary means the Secretary of the Department of Environment and
 Natural Resources.
2.32. State means the Republic of the Philippines.
2.33. Work Program means a document which presents the plan of major
mining operations and the corresponding expenditures of the Contractor
 in its Contract Area during a given period of time, including the plan and
 expenditures for development 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.



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. In 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.

The execution of this Agreement automatically terminates Lode Lease
Contract Nos. V-324 to V-327 granted to the Contractor.



4.1. Size, Shape, and Location of Contract Area ‐This Agreement covers a
total area of Eighty and 6,688/10,000 (80.6688) hectares, situated in
Tuba, Benguet and bounded by the following technical description (please
refer to ANNEX "B"):
A. For the Whole Contract Area:

Corner Latitude Longitude

1 16° 16' 3.2064" 120° 37' 7.2678"

Line   Bearing  Distance (m)

1 - 2 S 65° 00 'E 844.41
2 - 3 Due South 131.51
3 - 4 S 25° 00 'E 780.78
4 - 5 N 65° 00 'W 900.00
5 - 1 N 25° 00 'E 900.00

B.Contract Area for the Heirs of Baldomero Nevada, Jr.:
Lot 1 - A

Corner Latitude Longitude

1 16° 16' 3.2064" 120° 37' 7.2678"

Line  Bearing Distance (m)

1 - 2 S 65° 00 'E 600
2 - 3 S 25° 00 'W 300
3 - 4 S 65° 00 'W 600
4 - 1 N 25° 00 'E 300

Lot 1 - B

Corner Latitude Longitude

1 16° 15' 41.3911" 120° 37' 7.9389"

Line  Bearing Distance (m)

1 - 2 S 65° 00 'E 300
2 - 3 S 25° 00 'W 300
3 - 4 S 65° 00 'W 300
4 - 1 N 25° 00 'E 300


C. Contract Area for the Heirs of Trinidad Nevada, Jr.:

Lot 2 - A

 Corner Latitude Longitude

1 16° 15' 54.3544" 120° 37' 3.0304"

 Line  Bearing Distance (m)

1 - 2 S 65° 00 'E 600
2 - 3 S 25° 00 'W 300
3 - 4 S 65° 00 'W 600
4 - 1 N 25° 00 'E 300

Lot 2 ‐ B

 Corner Latitude Longitude

1 16° 15' 37.2841" 120° 37' 17.1114"

 Line  Bearing Distance (m)

1 - 2 S 65° 00 'E 300
2 - 3 S 25° 00 'W 300
3 - 4 S 65° 00 'W 300
4 - 1 N 25° 00 'E 300

Lot 2 ‐ C

 Corner Latitude Longitude

1 16° 15' 54.9903" 120° 37' 25.6029"

 Line  Bearing Distance (m)

1 - 2 S 65° 00 'E 244.41
2 - 3 Due South 131.54
3 - 4 S 65° 00 'W 180.78
4 - 5 N 25° 00 'W 300
5 - 1 N 25° 00 'E 300

D. Contract Area for the Heirs of Baldomero Nevada, Sr.:

Lot 3 - A

 Corner Latitude Longitude

1 16° 15' 45.5008" 120° 36' 58.7852"

 Line  Bearing Distance (m)

1 - 2 S 65° 00 'E 300
2 - 3 S 25° 00 'W 300
3 - 4 S 65° 00 'W 300
4 - 1 N 25° 00 'E 300

Lot 3-B

 Corner Latitude Longitude

1 16° 15' 46.1385" 120° 37' 21.3495"

 Line  Bearing Distance (m)

1 - 2 S 65° 00 'E 300
2 - 3 S 25° 00 'W 300
3 - 4 N 65° 00 'W 300
4 - 1 N 25° 00 'E 300

4.2 Survey Plan of the Contract Area - The Contractor shall submit for
approval by the Regional Director concerned, a survey plan for the
Contract Area within sixty (60) days from the effectivity of this Agreement.



5.1. Timetable - The Contractor shall continue commercial utilization activity
immediately upon approval and registration of this Agreement. The
Contractor shall conduct mining operations and other activities for the
duration of the Operating Period in accordance with the duly approved
Work Program and Budget and Environmental Compliance Certificate
(please refer to ANNEXES "C" and "D"). Failure by the Contractor lo
undertake commercial utilization within the period in accordance with the
said Work Program shall be considered a substantial breach of the

5.2. 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.

The amount to be spent by the Contractor during the Operating period
under the term of this Agreement shall not be less than that specified in
the approved Work Programs, such that during the first three (3) years of
the Operating Period, this amount shall be as follows:


First Contract Year PhP 4,373,000,000.00

Second Contact Year PhP 4,426,000,000.00

Third Contract Year PhP 4,512,000,000.00

Should the Government wish 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. In any event, any portion of said
Work Program or Budget as to which the Government shall fail to notify
the Contractor of proposed revision shall, in so far as possible, be carried
out as prescribed herein. If 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.

It 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 (20%) shall be subject to the approval of the Director.

In case of any positive variance in the future, the Contractor shall submit
to the Bureau and Regional Office concerned a copy each of the revised
Work Programs, for information.

The Government's approval of a proposed Work program and Budget will
not be unreasonably withheld.

5.3. Expansion and Modification of Facilities - The Contractor may make
expansions, modifications, improvements, and replacements of the mining
facilities and may add new facilities as the Contractor may consider
necessary for the operations: Provided, That such plans shall be
embodied in an appropriate Work Program approved by the Director.

5.4. Reporting
a. Quarterly Reports - Beginning with the first Calendar Quarter
following the approval of this Agreement, 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 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 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 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 under consideration in relation to the Work 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).

The Contractor shall also comply with other reporting requirements as
provided in the implementing rules and regulations of the Act.



6.1. 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.

6.2. 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.

6.3. 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. If 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


6.4. 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 Internal
Revenue Code, as amended, 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 Internal Revenue Office in the province

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 1991."

6.5. 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 time be lower, or the 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. Insofar 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-term 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 Inventory of Minerals, as well as in the Integrated Annual
Report, the corresponding registration number(s) of the marketing
contract(s)/agreement(s) governing the export or sale of minerals.

6.6. Associated Minerals - If minerals other than copper and gold 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.



7.1. 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.

7.2. 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.

7.3. 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.

7.4. 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
environment-related capital expenditures approximately ten percent (10%)
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.

7.5. 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 imptemented during
the year for which it was submitted. To implement its AEPEP, the
Contractor shall allocate annually three to five percent (3%-5%) of its
direct mining and milling costs depending on the environmental/geologic
condition, nature and scale of operations and technology employed in the
Contract Area.

7.6. 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/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.

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.

7.7. 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.

7.8. 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.

7.9. 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."

7.10. The Contractor shall be responsible for the submission of a final mine
rehabilitation and/or decommissioning plans, including its financial
requirements and incorporating the details and particulars set forth in the
implementing rules and regulations of the Act.



8.1. Obligations of the Contractor:
a. To exclusively conduct sustainable 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 facilities specified under the Mineral
Agreement or approved Work Program:

c. To determine the exploration,mining and treatment process to be
utilized in the Mining Operations;

d. To extract remove, use and dispose of any tailings as authorized
by an approved Work Program;

e. To secure a‖ permits necessary or desirable for the purpose of
Mining Operations;

f. To keep accurate technical records about the Mining Operations,
as we‖ 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

i. 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 such claims, accounts, demands or actions;

j. In the development of the community:

j.1. To recognize and respect the rights, customs and traditions
of indigenous cultural communities over their ancestral lands
and to allocate royalty payment of not less than one percent
(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 social infrastructure,
livelihood programs, education, water, electricity and
medical services. Where traditional self-sustaining income
and the community activities are identified to be present, the
Contractor shall assist in the preservation and/or
enhancement of such activities;

j.3. To allot annually a minimum of one percent (1%) of the
direct mining and milling costs necessary to implement the
activities undertaken in the development of the host and
neighboring communities. Expenses for community
development may be charged against the royalty payment of
at least one percent (1%) of the gross output intended for
the concerned indigenous cultural community;

j.4. To give preference to Filipino citizens who have established
domicile in the neighboring communities, in the hiring of
personnel for its mining operations. If necessary skills and
expertise are currently 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 (j.1) to (j.3) of
this Section;

k. In 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 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)

k.2. To systematically keep the data generated from the
Contract/Mining Area such as cores, assays and other
related information, including economic and financial data
and make them accessible to students, researchers and
other persons responsible for developing mining, geoscience
and processing technology subject to the condition that the
Contractor may delay release of data to the science and
technology community within a reasonable period of time
which shall not exceed three (3) years;

k.3. To transfer to the Government or local mining company the
appropriate technology it may adapt in the exploration,
development and commercial utilization of the minerals in
the Contract Area;

k.4. To allocate research and development budget for the
advancement of mining technology and geosciences 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
safekeeping which shall be made available to the science
and technology community for conducting research and
undertaking other activities which contribute to the
development of mining, geoscience and processing
technology and the corresponding national pool of
manpower talents: Provided, however, that the release of
data, maps and the like shall be similarly constrained in
accordance with (k.1) and (k.2) above;

l. To incorporate in the Mining Project 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.

8.2. Rights of the Contractor:

a. To conduct Mining Operations within the confines of its
Contract/Mining Area in accordance with the terms and conditions
hereof and without interfering with the rights of other
Contractors/Lessees/Operators/ Permittees/permit Holders;

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. To use and have access to all declassified geological, geophysical,
drilling, production and other data relevant to the mining

d. To sell, assign, transfer, convey or otherwise dispose of all its
rights, 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
families as may be required in the operations of the Contractor,
subject to applicable laws and regulations: Provided, That if the
employment connection of such foreign persons with the
Contractor ceases, the applicable laws and regulations on
immigration shall apply to them. Every time foreign technologies 
are utilized and where alien executives are employed, an effective 
program of training understudies shall be undertaken. The alien 
employment shall be limited to technologies requiring highly
specialized training and experience subject to the required approval 
under existing laws, rules and regulations;

f. To enjoy easement rights and use of timber, water and other
natural resources in the Contract Area subject to pertinent laws,
rules and regulations and the rights of third parties;

g. Of repatriation of capital and remittance of profits, dividends and
interest on loans, subject to existing laws and Bangko Sentral ng
Pilipinas rules and regulations; and

h. To import when necessary all equipment, spare parts and raw
materials required in the operations in accordance with existing
laws and regulations.

8.3. 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
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
c. 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 reduce
the Contractor's obligation on Government rights hereunder.


9.1. The Contractor shall acquire for the Mining Operations only such assets
that are reasonably estimated to be required in carrying out such Mining

9.2. All materials, equipment, plant and other installations of a movable nature
erected or placed on the Contract Area by the Contractor shall remain the
property of the Contractor. The Contractor shall have the 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 (1) year from the time of cessation within which to remove its
improvements; otherwise, all social infrastructures and facilities shall be
turned over or donated tax free to the proper government authorities,
national or local, to ensure that said infrastructures and facilities are
continuously maintained and utilized by the host and neighboring



10.1. The Contractor agrees to employ, to the extent possible, qualified Filipino
personnel in all types of mining operations for which they are qualified;
and after Commercial Production commences shall, in consultation and
with consent of the Government, prepare and undertake an extensive
training programme suitable to Filipino nationals in all levels of
employment. The objective of said programme is to reach within the
timetable set forth below the following targets of "Filipinization;"

 Unskilled Skilled  Clerical  Professional  Management
  (%)   (%)  (%)   (%)   (%)
Year 1   100   100   100   80   75
Year 3   100   100   100   85   75
Year 5   100   100   100   85   80
Year 7   100   100   100   90    85
Year 10   100   100   100   95   90
Year 15   100   100   100   95   90

10.2. Costs and expenses of training such Filipino personnel and the
Contractor's own employees shall be included in the Operating Expenses.

10.3. The Contractor shall not discriminate on the basis of gender and shall
respect the right of women workers to participate in policy and decision-
making processes affecting their rights and benefits.



11.1. 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 11.2. below.

11.2. Any disagreement or dispute which can not be settled amicably within
a period of one (1) year from the time the issue is raised by a party shall be
settled 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 arbitrators
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, otherwise
known as the "Arbitration Act."

In any event, the arbitration shall be conducted applying the substantive
laws of the Republic of the Philippines.

11.3. 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.



12.1. This Agreement may be suspended for failure of the Contractor: (a) to
comply with any provision or requirement of the Act and/or its
implementing rules and regulations; (b) to pay on time the complete taxes,
fees and/or other charges demandable and due the Government.

12.2. 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.

12.3. All statements made in this Agreement shall be considered as conditions
and essential parts hereof, and any falsehood in said statements or
omission of facts which may alter, change or affect substantially the fact
set forth in said statements shall be a ground for its revocation and

12.4. 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. In 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.

12.5. 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.

12.6. In case of termination, the Contractor shall pay all the fees and other
liabilities due up to the end of the year in which the termination becomes
effective. The Contractor shall immediately carry out the restoration of the
Contract Area in accordance with good mining industry practice.

12.7. 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.

12.8. The following acts or omission, inter alia 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.

12.9. 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.



13.1 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.

13.2. Notice

All notices, demands and other communications required or permitted
hereunder shall be made in writing, telex or telescopy and shall be deemed
to have been duly given notice, in the 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:

If to the Government:

The Secretary
Department of Environment and Natural Resources
DENR Building, Visayas Avenue
Diliman, Quezon City

If to the Contractor:
Mr. Elmo M. Nevada
68 Legarda Road, Baguio City


The President
Philex Mining Corporation
27 Brixton St., Pasig City

Either party may substitute or change such address on notice thereof to
the other party.

13.3. 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.

13.4. 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 to 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 Director.

b. If 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.

13.5. Amendments

This Agreement shall not be annulled, amended or modified in any
respect except by mutual consent in writing of the herein parties.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement, as
of the day and year first above written



Department of Environment and Natural Resources



T.I.N. No. 000-283‐ 731-000




(Signature over Printed Name) (Signature over Printed Name)


FEB 19 2009


Republic of the Philippines
Department of Environment and Natural Resources
Cordillera Administrative Region
#80 Diego Silang St., Baguio City


The filing fee therefore having been paid, the foregoing instrument was filed for
record in this Office at 11 o'clock and 30 minutes A.M. on the 18th day of February 2009
and has been recorded in Book No. 1 of the Records of Miscellaneous Documents of this
Region on page no. 155 as Document No. 5.

Filling fee paid under Official Receipt No. 3641937 dated February 18, 2009 in the
amount of twenty thousand (P20,000.00) Pesos.

Regional Director
Republic of the philippines)
Quezon City )ss

Before me, a Notary public, for and in the City of Quezon, personally appeared
JOSE L. ATIENZA, JR., with Community Tax Certificate No. 16461275
issued on Feb. 5 2008 at QUEZON CITY, in his capacity as
Secretary of Department of Environment and Natural Resources, and
JOSE ERNESTO C. VILLALUNA, JR., with Community Tax Certificate No.
16303871 issued on January 12, 2008 at Quezon City, in
his capacity as President, of Philex Mining Corporation, both known to me and to
me known to be the same persons who executed the foregoing instrument
consisting of twenty one (22) pages, including this acknowledgment page, and
acknowledged to me that the same is their voluntary acts and deeds.

IN WITNESS WHEREOF, I have hereunto set my hand and affix my notarial
seal, this __________ day of JAN 19 2009.

Notary Public

Notary Public
Comission No. NP.006 (Expires on
IBP No. 747096, 12-12-08
PTR No. 1119367, 1-5-09/q4
Attorney's Roll No. 34845

Doc. No. 263
Page No. 53
Book No. VI
Series of 2009