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Revised Integrated MPSA for Mineral Reservation


MPSA NO. 103-98- XIII (SMR)

made and entered into in Quezon City, Metro Manila, Philippines, this _______ day of
FEB 23 1998 by and between:

, hereinafter referred to as the
GOVERNMENT, represented in this Act by the secretary of the Department of
Environment and Natural Resources, with offices at Department of Natural Resources
Building, Visayas Avenue, Diliman, Quezon city, Metro Manila



organized and existing under the laws of the Republic of the Philippines , hereinafter

referred to as the CONTRACTOR, with offices at the 2nd Floor LPL Mansions Alfaro
St., Salcedo Village Makati City represented in this act by its President MRS. FE M.
LIGTAS, as authorized by its Board under Annex "A" which forms an integral part



WHEREAS, the 1987 Constitution of the Republic of the Philippines (the

"Constitution") provides in Article XII, Section 2 that all lands of the public domain,
waters, minerals, coal, petroleum and and other natural resources are owned by the State and
that the exploration, development and utilization shall be under the full control and

supervision of the State;

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;

Revised Integrated MPSA for Mineral Reservation

WHEREAS, the government desires to avail itself of the financial resources, technical

competence and skill which Contractor is capable of applying to the mining operations of

the project contemplated herein;

WHEREAS the development and utilization for commercial purposes of certain NICKEL

DEPOSIT and other minerals existing in the Contract Area (as hereinafter defined ) and

any other Minerals which may be discovered in such Contract Area;

WHEREAS, the Contractor has, or 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 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 (R.A No. 7942) and its Revised

Implementing Rules and Regulations. The primary purpose of this

Agreement is to provide for the exploration, sustainable development and

commercial utilization of NICKEL and other mineral deposits existing

within the Contract Area, with all necessary services, technology and

financing to be furnished or arranged for by the Contractor in accordance

with the provisions of this Agreement. The Contractor shall not, by virtue

of this Agreement, acquire any title over the contract/mining area without

prejudice to the 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 for 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 VII hereof.


Revised Integrated MPSA for Mineral Reservation



As used in this Agreement, the following words and terms , whether singular or plural,

shall have the following respective meaning :

2.1 "The Act" refers to R.A. 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 Banko 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 Calendar Year or Year means a period of twelve (12) consecutive

months starting with the first day of January and ending on December 31,

while "Calendar Quarter" means a period of three consecutive months

with the first calendar quarter starting with the first day of January.

2.7 Commercial Production means the production of sufficient quantity of

minerals to sustain economic viability of mining operations reckoned from

the date of commercial operation as declared by the Contractor or as

stated in the feasibility study, whichever comes first.

2.8 Constitution or Philippine Constitution means the 1987 Constitution of

the Republic of the Philippines adopted by the Constitutional Convention

of 1986 on October 15, 1986 and ratified by the People of the Republic of

the Philippines on February 2,1987.

2.9 Contract Area means the area onshore or offshore delineated under the

Mineral Production Sharing Agreement subject to the relinquishment
obligations of the Contractor and properly defined by latitude and


2.10 Contract Year means a period of twelve (12) consecutive months

counted from the Effective Date of this Agreement or from the

anniversary of such Effective Date.


CORPORATION or its assignee or assignees of interest, under this
Agreement provided the assignment of any of such interest is


Revised Integrated MPSA for Mineral Reservation

accomplished pursuant to the provision of the Implementing Rules and

Regulations (DAO 96-40).

2.12 Declaration of Mining Feasibility means a document proclaiming the

presence of minerals in a specific site that are recoverable by socially

acceptable, environmentally safe and economically sound methods

specified in the Mine Development Plan.

2.13 Department or DENR means the Department of Environment and Natural


2.14 Director means the Director of Mines and Geosciences Bureau.

2.15 Effective Date means the date of execution of this Agreement by the

Contractor and by the DENR Secretary in behalf of the Government. In

cases, wherein an Exploration Permit/Temporary Exploration Permit is

issued, the effective date of this Agreement shall be the date of issuance of

the Exploration Permit/Temporary Exploration Permit.

2.16 Environment means all facets of man's surroundings: physical,
ecological, aesthetic, cultural, economic, historic, institutional, and social.

2.17 Exploration means searching or prospecting for mineral resources by

geological, geophysical, geochemical surveys, remote sensing, test pitting,

trenching, drilling, shaft sinking, tunneling, or any other means for the

purpose of determining the existence, extent, quality, and quantity of

mineral resources and the feasibility of mining them for profit.

2.18 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: Provided, That the

Contractor has complied with all the requirements of the Revised

Implementing Rules and Regulations.

2.19 Force Majeure means acts or circumstances beyond the reasonable control

of Contractor including but not limited to, war, rebellion, insurrection,

riots, civil disturbances, blockade, sabotage, embargo, strike, and 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.


Revised Integrated MPSA for Mineral Reservation

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, refining, transporting,

handling, marketing, or any other expenses: Provided, That if the minerals

or mineral products are sold or consigned abroad by the Contractor under

C.l.F. terms, the actual cost of ocean freight and insurance shall be

deducted: Provided further, That in the case of mineral concentrates which

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 energy.

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 processes.

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/Concerned Regional Offices for purposes of development

and/or utilization and sites for support facilities.

2.27 Mining Operations means mining activities involving exploration,

feasibility study, environmental impact assessment, development,

utilization, mineral processing, and mine rehabilitation.

2.28 Notice means notice in writing, or by telex or by telecopy (authenticated

by answer back or confirmation received) addressed or sent as provided in

Section 16.2 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

Revised Integrated MPSA for Mineral Reservation

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 timg including the plan and

expenditures for development of host and neighboring communities and of
local geoscience and mineral technology, as submitted and approved in

accordance with the Revised Implementing Rules and Regulations.



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 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




4.1 Size, Shape, and Location of Contract Area. This Agreement covers a

total area of FOUR HUNDRED THIRTY THREE AND 9798/10,000
HECTARES (433.9798), situated at Cagdianao Claver, Surigao del Norte
within the Surigao Mineral Reservation and bounded by the following
geographical coordinates (Please refer to ANNEX "B"):

                  POINT                  LATITUDE                 LONGITUDE

Parcel I      1-2                       9°28'30".00               125°52'00".00
                   2-3                       9°29'00".00               125°52'00".00

Revk{ kt€ried MPSA fu MiErl REeri'lrim



125° 53'00''_00

4‐ 5


125。 53'17'00


9° 29'3σ

125° 53'31"_00



9° 29'37'∞

9° 29'グ '_00







9° 29'30''_00

125。 53'45".00



125° 54'Oσ '_(Ю

9・ 29'α y,_00

125° 54'α y,_00

9° 29'Oα


125° 53'3σ '00

9。 28'3α


125053'3α '_00


9° 29'53"_00

125° 54'42"_50

125° 54'3σ '_∞


9° 29'3σ 'CX1

125° 54'5θ '_00

125054'5げ '.lXl











2‐ 3





125° 53'31"_00

125° 53"52"00




The Cont actor shall commeoc€

51 Timetable for Explomion _

Exploration activities not later than three (3) mornhs after the Etrective

Date for a period of two (2) years renewable for like periods but not to

orceed a total term of six (6) years zubject to anrual review by the

Director to evaluate comptance with tlle terms and conditions of this

Ageem€nt ard the provision of the Act and its implemertig rules and


one-time non-reoewable Temporary Exploration Permit with a period

not €xceeding one (l) year may be isued by the Directoq upon request of

the applicant, when the mineral agreenreirt is recommended to the

Sectetary for approval. Period of zuch Temporary Exploration Permit shall

be inctuded as part of the o
event this Agreement is disapproved by the Secreary, The Temporary

Exploration Permit shall be deemed automatically cancelled.



Rcvisod Intcgrated MPSA for Mincral Resenation


Work Programs and Budgets - The Contractor shall strictly comply with

the approved Exploration and Environmental Work Progtams together

with their corresponding Budgets (Please refer to ANNEXES "C" and


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 ofnot less than that hereinafter specified for each

of the below Contract Years, as follows.

For the Exploration Work Program:


Ist Contract Year


2nd Contract Year





Total Estimated Budget for the

Environmental Work Program




In the event of extension, the amount to be spent every year shall first be

agreed upon by the pa(ies.


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



Relinquishment of Total/Portion of the Contract Area - During the

Exploration Period, the Contractol may relinquish totally or partially the

Revisql Integratcd MI'SA for Mincral Rescrvation

original contract area. After the Exploration Period and prior to or upon

approval of the Declaration of Mining Project Feasibility, the Contractor

shall finally relinquish any portion of the contract area not necessary for

mining operations and not covered by any declaration of mining project


Each mining area after final relinquishment shall not be more than five

thousand (5,000) hectares for metallic minerals or two thousand (2,000)

hectares for non-metallic minerals.

The Contractor may be allowed by the Director, with the approval of the

Secretary, to hold a larger mining area depending upon the nature of the

deposit subject to technical verification and evaluation by the Bureau as to

the technical/financial capability of the Contractor.


Survey ofthe Contract Area - The Contractor shall cause the survey ofthe

perimeter of the Contract Area through an application for survey, together

with mandatory requirements, filed with the Bureau/concemed Regional

Office simultaneous with the submission of the Declaration of Mining


Proj ect Feasibility. Survey retums shall be submitted

Directoriconcerned Regional Director for approval within one (1) year

from receipt of the Order of Survey complete with the mandatory

requirements stated in the revised implementing rules and regulations of

the Act.



Declaration of Mining Project Feasibility - During the Exploration Period,

the Contractor shall submit to the Director/concemed Regional Director a

Declaration of Mining Project Feasibility together with a Mining Project

Feasibility Study, a Three (3) Year Development and Construction/ or

Commercial Operation Work Progtam, a complete geologic report of the

area, Order for Suwey/approved survey plan and an Environmental

Compliance Certificate.

Failure of the Contractor to submit a Declaration of Mining Project

Feasibility during the Exploration Period shall be considered a substantial

breach of this Agreement.




Periodic Reports - During the Exploration Period, the Contractor

shall submit to the Regional Director, copy fumished the 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 thirty

(30) days from the end of each Calendar Year. Such information

shall include detailed financial expenditures, raw and processed

geological, geochemical, geophysical and radiometric data plotted in

a l:50,000 scale at a minimum, copies of originals of assay results,


Revised Integrated MPSA for Mineral Reservation

duplicated samples, field data, copies of originals from drilling
reports, maps, environmental work program implementation and
detailed expenditures showing discrepancies/deviations with
approved exploration and environmental plans and budgets as well
as all other information of any kind collected during the exploration
activities. All information submitted to the Bureau shall be subject
to the confidentiality clause of this Agreement.

b) Final Report - The Contractor shall submit to the Regional Director,
copy furnished the Director, a final report under oath upon the
expiration of the Exploration Period which shall be in the form and
substance comparable to published professional reports of
respectable international institutions and shall incorporate all the
findings in the Contract Area including location of samples, assays,
chemical analysis, and assessment of mineral potentials together
with a geologic map of 1:50,000 scale at the minimum showing the
results of the exploration. Such report shall also include detailed
expenditures incurred during the Exploration Period. In case of
diamond drilling, the Contractor shall, upon request of the
Director/concerned Regional Director, submit to the Regional Office
a quarter of the core samples which shall be deposited in the
Regional Office Core Library for safe keeping and reference.

c)  Relinquishment Report - The Contractor shall submit a separate
relinquishment report with a detailed geologic report of the
relinquished area accompanied by maps at a scale of 1:50,000 and
results of analysis as well as detailed expenditures, among others.



6.1 Timetable - The Contractor shall complete the development of the mine
including the construction of production facilities within thirty six (36)
months from the submission of the Declaration of Mining Project
Feasibility, subject to such extension based on justifiable reasons as the
Secretary may approve, upon recommendation of the Director/concerned
Regional Director.

6.2 Reporting

a) Annual - The Contractor shall submit, within sixty (60) days after
December 31 of each year, to the Regional Director, copy furnished
the Director, an annual report which states the major activities,
achievements and detailed expenditures during the year covered,
including maps, assays, rock and mineral analyses and progress


Revised Integrated MPSA for Mineral Reservation

geological and environmental reports during the development and

construction period.

b) Final Report - Within six (6) months from the completion of the
development and construction activities, the Contractor shall submit

a final report to the Regional Director, copy furnished the Director.

Such report shall integrate all information in maps of appropriate

scale and quality as well as in monographs or reports in accordance

with international standards.



7.1 Timetable - The Contractor shall submit, within thirty (30) days before

completion of mine development and construction of production facilities,

to the Secretary through the Director/ concerned Regional Director, a

Three Year Commercial Operation Work Program and Budget.

The Contractor shall commence Commercial Production immediately

upon approval of the aforesaid Work Program. Failure of the Contractor

to commence Commercial Production within the period shall be

considered a substantial breach of the Agreement.

7.2 Commercial Operation Work Program and Budget - During the Operating

Period, the Contractor shall submit to the Secretary through the

Director/concerned Regional Director, Work Programs covering a period

of three (3) years each which shall be submitted not later than thirty (30)

days before the expiration of the period covered by the previous Work

The Contractor shall conduct mining operations and other activities for

the duration of the Operating Period in accordance with the duly approved

Work Programs and corresponding Budgets and any modification thereof

shall be approved by the Secretary.

7.3 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 such plans shall be embodied in an

appropriate Work Program approved by the Secretary.


Revised Integrated MPSA for Mineral Reservation

7.4 Reporting

a) Quarterly Reports - Beginning with the first Calendar Quarter

following the commencement of the Operating Period, the Contractor

shall submit, within thirty (30) days after the end of each Calendar

Quarter, to the Secretary through the Regional Director, copy

furnished the Director, a Quarterly Report stating the tonnage of

production in terms of ores, concentrates, and their corresponding

grades and other types of products; value, destination of sales or

exports and to whom sold; terms of sales and expenditures.

b) Annual Reports - During the Operating Period, the Contractor shall

submit, within sixty (60) days from the end of each Calendar Year, to

the Secretary through the Regional Director, copy furnished the

Director, an Annual Report indicating in sufficient detail:

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


b.2) Work accomplished and work in progress at the end of the year in

question with respect to all the installations and facilities related to

the utilization program, including the investment actually made or


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 ); and

b.4) Ownership of the Contractor, particularly with respect to nationality.



8.1 General Principle ―The financial regime of this Agreement shall be

governed by the principle according to which the Government expects a

reasonable return in economic value for the utilization of non-renewable

natural resources under its natural sovereign ,while the Contractor expects


Revised Integrated MPSA for Mineral Reservation

a reasonable return on its investment with special account to be taken for

the high risk of exploration, the terms and conditions prevailing elsewhere

in the industry and any special efficiency to be gained by a particularly good

performance of the Contractor.

8.2 Registration Fees - Within fifteen (15) days upon receipt of the Notice of

approval of the MPSA from the Bureau/concemed Regional Office, the

Contractor shall cause the registration of this Agreement at the

Bureau/concerned Regional Office and pay the registration fee in the

amount of P100 and an additional P10 for P.D. 1856. Failure of the

Contractor to cause the registration of this Agreement within the prescribed

period shall be sufficient ground for cancellation of the same.

8.3 Occupation Fees - Upon registration of this Agreement and on the same date

the concerned every year thereafter, the Contractor shall pay to the concerned
Municipal/City Treasurer where the Contract Area is located an Occupation
Fee over the Contract Area at the annual rate of One Hundred Pesos (P100)

per hectare or fraction thereof per year. If the fee is not paid on the date

specified, the Contractor shall pay a surcharge of twenty five percentum

(25%) of the amount due in addition to the occupation fees.

8.4 Share of the Government - The government share shall be the excise tax on

mineral products at the time of its removal and at the rate provided for in

Republic Act No. 7729 amending Section I 51 (a) of the National Internal

Revenue Code, as amended, in addition to a royalty of not less than five

percentum (5%) of the gross output as well as other taxes, duties, and fees

levied by existing laws. The excise tax shall be paid to the nearest Bureau

of Internal Revenue office in the concerned province while the royalty shall

be paid directly to the Bureau.

For purposes of determining the amount of the herein government share and

royalty, the Contractor shall strictly comply with the auditing and

accounting requirements prescribed under existing laws and regulations.

The government share shall be allocated in accordance with Sections 290

and 292 of R. A. No. 7160, otherwise 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. Contractor shall seek to strike a balance

between long-term sales comparable to policies followed by independent

producers in the international mining industry.

The Contractor shall likewise seek a balanced distribution among
consumers. Insofar as sales to Contractor's affiliates are concerned, prices

shall be at arm's length standard and competing offers for large scale and
long-term contracts shall be procured. The Bureau shall be furnished a copy

of the said Sales Agreement subject to confidentiality between the Bureau

and the Contractor.


Revised Integrated MPSA for Mineral Reservation

8.6 Associated Minerals - If Minerals, other than NICKEL DEPOSITS 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 share
of the government.

Section IX

Work Programs

9.1 Submission to Government - Within the periods stated herein, the 
Contractor shall prepare and submit to the Secretary through the
Director/concerned Regional Director, Work Programs and
corresponding Budgets for the Contract Area stating in 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 

9.2 Government's Examination and Revision of Work Program - Should
the Government wish to propose a revision to a certain specific feature in
the Work Program or Budget it shall, within 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 insofar 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.

9.3 Contractor's Changes to Work Program - 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 they do not change the general objective
of the Work Program, and provided further, that changes which entail a 
variance of at least twenty (20) percentum shall be subject to the approval
of the Secretary.

9.4 The Government's approval of a proposed Work Program and Budget will
not be reasonably withheld.

Revised Integrated MPSA for Mineral Reservation



10.1 The Contractor shall manage its mining operations in a technically'
financially, socially, culturally and environmentally responsible manner
to achieve the sustainable development objectives and responsibilities as
provided for under the revised implementing rules and regulations of the

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;

19.3 The Contractor shall submit an Environmental Work Program during the
exploration period as prescribed in Section 168 in the revised 
implementing rules and regulations of the Act;

10.4 An Environmental Compliance Certificate (ECC) shall be secured first by

the Contractor prior to the conduct of any mine development work and

construction of production facilities in the contract Area;

10.5 The contractor shall submit within 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 mining development, utilization and processing

under this Agreement. The Contractor shall allocate for its initial

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

of the total project cost or in such amount depending on the

environment/geological condition, nature and scale of operations and

technology to be employed in the Contract Area;

10.6 The Contractor shall submit, within thirty (30) days prior to the beginning

of every calendar year, an Annual Environmental Protection and

Enhancement Program (AEPEP) using MGB Form 16-3 which shall be

based on the approved EPEP. The AEPEP shall be implemented during

the year for which it was submitted. To implement its AEPEP, the

Contractor shall allocate annually three to five percent (3%-5%) of its

direct mining and milling cost depending on the environment/geologic

condition, nature and scale of operations and technology employed in the

Contract Area;

10.7 The Contractor shall establish a Mine Rehabilitation Fund (MRF) based

on the financial requirements of the approved EPEP as a reasonable

environmental deposit to ensure satisfactory compliance with the

Revised Integrated MPSA for Mineral Reservation

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;

10.8 The Contractor shall set-up mitigating measures such as mine waste and
mill tailings disposal system, mine rehabilitation. or plan, water quality
monitoring etc. to minimize land degradation, air and water pollution,

acid rock drainage and changes in hydrogeology;

10.9 The Contractor shall set-up an Environmental and Safety Office at its
minesite manned by qualified personnel to plan, implement and monitor
its approved EPEP;

10.10 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 Mines Administrative
Order No. 51, Series of 1991, otherwise known as the "Revised Mine
Safety Rules and Regulations; and

10.11 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
revised implementing rules and regulations of the Act.



11.1 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
revised implementing rules and regulations;

b) To construct and operate any facilities specified under the Mineral

Agreement or approved Work Program.

c) To determine the exploration' mining and treatment process to be
utilized in the mining operations;

d) To extract, remove, use and dispose of any tailings as authorized by

an approved Work Program;

e) To secure all permits necessary or desirable for the purpose of

mining operations;

Revised Integrated MPSA for Mineral Reservations

f) To keep accurate technical records about the mining operations as
well as financial and marketing accounts and make them available to
Government representatives authorized by the Director for the

purpose of assessing the performance and compliance of the

Contractor with the terms of this Agreement.

Authorized representatives of other Government Agencies may also

have access to such accounts in accordance with existing Laws,

Rules and Regulations;

g) To furnish the Bureau all the data and information gathered on the
Contract Area and that all the books of accounts and records shall be
open for inspection;

h) 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 cost incurred by the Government by reason of any such
claims accounts, demands or actions;

i) In the development of the community,

i.1) To recognize and respect the rights, customs and- traditions of
indigenous tribal communities over their ancestral lands and to
allocate royalty payment of not less than one percent of the
value of the gross output;

i.2) To coordinate with proper authorities in the development of the

mining community, as well as 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;

i.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 maybe charged against the royalty payment of
one percent (1%) of the gross output intended for the indigenous cultural community;

i.4) To give preference to Filipino citizens who have established
domicile in the host and neighboring communities in the hiring of

personnel 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;

Revised Integrated MPSA for Mineral Reservation

j) In the development of Mining Technology and Geosciences:

j.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) Years;

j.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;


j.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.

j.4) To allocate research and development budget for the advancement
of mining technology and geosciences in coordination with
Bureau, Research Institutions, Academe, etc.

j.5) To replicate data, maps and reports cited in (j.1) and (j.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

(j.1) and (j.2) above.

k) To incorporate in the mine project feasibility study the planned
expenditures necessary to implement plans and programs set forth in
this Agreement; and

l) To pay all other taxes and fees mandated by existing laws, rules and

11.2 Rights of the Contractor

The Contractor shall have the right:

Revised Integrated MPSA for Mineral Reservation

a) To conduct mining operations within the confines of its Contract/

Mining Area in accordance with the terms and conditions hereof and

that it shall not interfere with the rights of other Contractors/


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 operations;

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 maybe required in the operations of the Contractor,

subject to applicable laws and regulations: provided, that if the

employment connection of such foreign persons with the Contractor

ceases, the applicable laws and regulations on immigration shall apply

to them. Everytime foreign technologies are utilized and where alien
executives are employed, an effective program of training
understudies shall be undertaken. Such alien employment shall be

limited to technologies requiring highly specialized training and

experience subject to the required approval under existing laws rules

and regulations;

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

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

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

11.3 Obligations of the Government

The Government shall:

a) Ensure that the Contractor has the Government's full cooperation in

the exercise of tie rights granted to it under this Agreement;

b) Use its best efforts to ensure the timely issuance of necessary permits

and similar authorizing documents for use of surface of the Contract

Area; and

c) To cooperate if Contractor seeks to obtain financing contemplated

herein from banks or other financial institutions provided that such


Revised Integrated MPSA for Mineral Reservation

financing arrangements will in no event reduce Contractor's
obligation on Government rights hereunder.



12.1 Contractor shall acquire for the Mining Operations only such assets that

are reasonably estimated to be required in carrying out such Mining


12.2 All materials, equipment, plant and other installations erected or placed on

the Contract Area of a movable nature by the Contractor shall remain the

property of the Contractor and shall have the right to remove and re-export

such materials and equipment, plant and other installations from the

Philippines, subject to existing rules and regulations. In 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 communities.



13.1 The Contractor agrees to employ, to the extent possible, qualified Filipino

personnel in all types of mining operations for which they are qualified;

and after Commercial Production commences shall; in consultation and

with consent of the Government, prepare and undertake an extensive

training programme suitable to Filipino nationals in all levels of

employment. The objective of said programme shall be to reach within

the time table set forth below the following targets of "Filipinization".

                      Unskilled          Skilled         Clerical      Professional     Management

Year 1           100%                 100%          100%          75%                    75%
Year 3           100%                 100%          100%          80%                    80%
Year 5           100%                 100%          100%          90%                    90%
Year 7           100%                 100%          100%          95%                    95%
Year 10         100%                 100%          100%          95%                    95%
Year 15         100%                 100%          100%          95%                    95%

13.2 Cost and expenses of training such Filipino personnel and the Contractor's

own employees shall be included in the Operating Expenses.


Revised Integrated MPSA for Mineral Reservation

13.3 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.



14.1 The Government and the Contractor shall consult with each other in good

faith and shall exhaust all available remedies to settle any and all disputes

or disagreements arising out of or relating to the validity, interpretations,

enforceability, or performance of this Agreement before resulting to

arbitration as provided for in Section 14.2 below.

14.2 Any disagreement or dispute which can not be settled amicably within a

period ofone (1) year from the time the issue was raised by a Party hall

be seuled by a tribunal of three (3) arbitrators, one to be appointed by the

Contractor, another to be appointed by the Govemment, and the third by

the arbitrators so appointed who shall serve as Chairman. The first two

appointed arbitrators shall continue to consider names of qualified

persons until agreement on a mutually acceptable Chairman of the

tribunal is needed. Such arbitration shall be initiated and conducted

pursuant to Republic Act No. 876, otherwise known as the "Arbitration


In any event, the arbitration shall be conducted applying the substantive

laws of the Republic of the Philippines.

14.3 Each party shall pay fifty per centum (50%) of the fees and expenses of

the Arbitrators and the costs of arbitration. Each party shall pay its own

costs and attorney's fee.




15.1 This Contract may be suspended for failure of the Contractor: (a) to

comply with any provision or requirement of the Philippine Mining Act of

1995 and/or its Revised implementing Rules and 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


Revised Integrated MPSA for Mineral Reservation

provided under the Act and its Implementing Rules and Regulations, or

any other relevant laws and regulations.

15.3 All statements made in this Agreement shall be considered as conditions

and essential parts hereof, and any falsehood in said statements or

omission of facts which may alter, change or affect substantially the fact

set forth in said statements shall be a ground for its revocation and


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. 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.

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.

15.6 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.

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 alia shall constitute breach of

contract upon which the Government may exercise its right to terminate

the contract:

a) Failure of the Contractor without valid reason to commence 
Commercial Production within the period prescribed; and

Failure of the Contractor to conduct quarrying operations and other
activities in accordance with the approved Work Programs and/or
any modification thereof as approved by the Secretary.

15.9 The Government may suspend and cancel tax incentives and credits if the

Contractor fails to abide by the terms and conditions of said incentives

and credits.

Revised Integrated MPSA for Mineral Reservation



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 or by telex or telecopy and shall be

deemed to have been duly given in the case of telex or telecopy notice 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:


Department of Environment and Natural Resources

DENR Building , Visayas Avenue

Diliman, Quezon City

If to the Contractor:


2ND Floor LPL Mansion, Alfaro St.,

Makati City

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

other party

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

to Force Majeure.

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


Revised Integrated MPSA for Mineral Reservation

obligations thereby affected, thc term of this Agreement and all rights and

obligations hereunder shall be extended for a period equal to the period


c) The party whose ability to perform its obligations 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 on the Party

expected to perform and shall use its efforts to rernedy such delay, except

that neither Party shall be under any obligation to settle a labor dispute.

16.5 Amendments

This Agreement shall not be annulled, amended or modified in any respect except by

mutual consent in writing of the herein parties.

, the Parties hereto have executed this Ageement, as of the

day and year first above written





Department of Environment and

Natural Resources




Claver Mineral Development Corporation



Revised Integrated MPSA for Mineral Reservation


Republic of the Philippines)

Before me, a Notary Public for and in the City of _______________________

personally appeared HON. VICTOR O. RAMOS, with Community Tax Certificate No.
_________issued on ____________ at _____, in his capacity as Secretary of Department of
Environment and Natural Resources and Mrs. Fe M. Ligtas with Community Tax

in his capacity as __________ of ____________ both known to me and to me known to
be the same persons- who executed the foregoing instrument consisting of ______
(  )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 23rd day of February, 1998.


Doc. No. 129
Page No. 26
Book No. 1
Series of 1998

revised 1/14/97