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Revised Integrated MPSA for Mineral Reservation

MPSA No. 078-97-XIII

made and entered into in Quezon City, Metro Manila, Philippines, this ____ day of
NOV 19 1997 by and between:

THE REPUBLIC OF THE PHILIPPINES, 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 Lot 93 Cluster L, Bagong Nayon
I, Cogeo Village, 1870 Antipolo, Rizal and represented in this act by its Chairman of the
Board, HILARIO G. PAGAUITAN, as authorized by its Board under ANNEX "A"
which forms an integral part hereof.


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 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;

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;


Revised Integrated MPSA for Mineral Reservation

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 Chromite, 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
provision 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 VIII hereof.




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 RA. 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.


Revised Integrated MPSA for Mineral Reservation

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 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.

2.11 Contractor means East Coast Mineral Resources Co., Inc. or its assignee
or assignees of interest, East coast Mineral Resources, co., Inc., under
this Agreement provided the assignment of any of such interest is
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. to
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.


Revised Integrated MPSA for Mineral Reservation

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 quantify 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, storing 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 currently 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, 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.I.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 converting 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 ore/rocks and
prepared into marketable state by metallurgical processes which include


Revised Integrated MPSA for Mineral Reservation

beneficiation, cyanidation, teaching, 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/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
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 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


Revised Integrated MPSA for Mineral Reservation

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 Six Hundred Ninety Seven and 481/10,000 (697.0481)
Hectares, situated at Barangay Valencia Cagdianao, Dinagat lsland,
Surigao del Norte and bounded by the following geographical coordinates
(Please refer to ANNEX “B'')

Corner 1 = latitude

LINES          BEARING           DISTANCES
1-2              N 00° 07' W.,     3,802.00m.
2-3              S 44° 51' E.,       324.37m.
3-4              S 82° 27' E.,       230.37m.
4-5              N 74° 49' E.,      236.43m.
5-6              N 35° 49' E.,      388.96m.
6-7              N 00° 07' W.,     230.42m.
7-8              N 66° 16' E.,      249.20m.
8-9              N 60° 07' E.,      263.00m.
9-10            N 89° 53' E.,      228.29m.
10-11          N 76° 38' E.,      234.56m.
11-12          N 74° 49' E.,      236.42m.
12-13          S 63° 20' E.,       255.72m.
13-14          S 44° 51' E.,       324.39m.
14-15          S 44° 51' E.,       324.36m.
15-16          S 00° 07' E.,       230.42m.
16-17          S 00° 07' E.,       230.43m.
17-18          S 26° 14' W.,     257.15m.
18-19          S 26° 28' E.,       257.16m.
19-20          S 14° 41' W.,     238.33m.
20-21          S 19° 51' W.,     245.16m.
21-22          S 36° 38' W.,     139.94m.
22-23          N 81° 19' W.,     231.04m.
23-24          S 89° 53' W.,      228.31m.
24-25          S 67° 54' W.,      246.21m.
25-26          S 74° 49' W.,      236.44m.
26-27          S 89° 53' W.,      228.31m.
27-28          S 89° 53' W.,      228.31m.
28-29          S 44° 37' W.,      324.39m.
29-30          S 44° 37' W.,      324.39m.
30-31          S 07° 39' E.,       232.42m.
31-32          S 40° 46' E.,       303.72m.
32-33          S 43° 55' E.,       329.89m.
33-34          N 87° 57' E.,      228.44m.
34-35          N 00° 07' E.,      115.21m.
35-36          S 52° 46' W.,      190.90m.
36-37          S 18° 10' W.,      242.67m.


Revised Integrated MPSA for Mineral Reservation

33-34         N 87° 57' E.,      228.44m.
34-35         N 00° 07' E.,      115.21m.
35-36         S 52° 46' W.,      190.90m.
36-37         S 18° 10' W.,      242.67m.



5.1 Timetable for Exploration - The Contractor shall commence
Exploration activities not later than three (3) months after the Effective
Date for a period of two (2) years renewable for like periods but not to
exceed a total term of six (6) years subject to annual review by the
Director to evaluate compliance with the terms and conditions of this
Agreement and the provision of the Act and its implementing rules and

A one-time non-renewable Temporary Exploration Permit with a period
not exceeding one (1) year may be issued by the Director, upon request of
the applicant, when the mineral agreement is recommended to the
Secretary for approval. Period of such Temporary Exploration Permit shall
be included as part of the exploration period of this Agreement. In the
event this Agreement is disapproved by the Secretary, The Temporary
Exploration Permit shall be deemed automatically cancelled.

5.2 Work Programs and Budgets - The Contractor shall strictly comply with
the approved Exploration and Environmental Work Programs together
with their corresponding Budgets (Please refer to ANNEXES "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 of not less than that hereinafter specified for each
of the below Contract Years, as follows:

For the Exploration VVork Program:

1st Contract Year : PhP 815,000.00

2nd contract Year:         921,000,00

Total                       : PhP 1,736,000.00

Total Estimated Budget for the
Environmental Work Program : PhP 200,000.00
Grand Total                                   Php 1,936,000.00

In the event of extension, the amount to be spent every year shall first be
agreed upon by the parties.

In the event of termination of this Agreement, the Contractor shall only be
obliged to expend the pro-rata amount for the period of such Contract
Year prior to termination- If during any Contract Year, the Contractor
should expend more than the amount to be expended as provided above,


Revised Integrated MPSA for Mineral Reservation

the excess may be subtracted from the amount required to be expended by
the Contractor during the succeeding Contract years, and should the
Contractor, due to unforeseen circumstances or with the consent of the
Government expend less during a year, then, the deficiency shall be applied
to the amount to be expended during the succeeding Contract years,

5.3. Relinquishment of Total/Portion of the Contract Area During the
Exploration Period the Contractor may relinquish totally or partially the
original contract area After the Exploration Period and prior to or upon
approval of 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.

5.4 Survey of the Contract Area - The Contractor shall cause the survey of the
perimeter of the Contract Area through an application for survey, together
with mandatory requirements filed with the Bureau/concerned Regional
Office simultaneous with the submission of the Declaration of Mining
Project Feasibility. Survey returns shall be submitted to the
Director/concerned 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

5.5 Declaration of Mining Project Feasibility - During the Exploration period,
the Contractor shall submit to the Director/concerned 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 Program, a complete geologic report of the
area Order for Survey/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.

5.6. Reporting

a) Periodic Reports - During the Exploration period, the Contractor
shall submit to the Regional Director, copy furnished 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


Revised Integrated MPSA for Mineral Reservation

shall include detailed financial expenditures, raw and processed
geological, geochemical, geophysical and radiometric data plotted in
a 1:50,000 scale at a minimum, copies of originals of assay results,
duplicated samples, field data, copies of originals from drilling
reports, maps, environmental work program implementation and
detailed expenditures showing discrepancies/deviations with
approved exploration and environmental plans and budgets as well as
all other information of any kind collected during the exploration
activities- All information submitted to the Bureau shall be subject to
the confidentiality clause of this Agreement.

b) Final Report - The Contractor shall submit to the 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
geological and environmental reports during the development and
construction period.


Revised Integrated MPSA for Mineral Reservation

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.

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:


Revised Integrated MPSA for Mineral Reservation

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 mired, 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 sovereignty while the Contractor expects a
reasonable return on its investment with special account to be taken for the
high risk of exploration , the terms and conditions prevailing elsewhere in the
industry and any special efficiency to be gained by a particularly good
performance of the Contractor.

8.2 Registration Fees - Within fifteen (15) days upon receipt of the Notice of
approval of the MPSA from the Bureau/concerned 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
every year thereafter, the Contractor shall pay to the concerned
Municipal/City Treasurer an occupation Fee over the Contract Area at the
annual rate of one Hundred Pesos (P100) per hectare or fraction thereof. 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.


Revised Integrated MPSA for Mineral Reservation

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 151 (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. 7760, 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

8.6 Associated Minerals - If Minerals, other than Chromite and Nickel 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.



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 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


Revised Integrated MPSA for Mineral Reservation

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.



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 ruIes 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:

10.3 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;


Revised Integrated MPSA for Mineral Reservation

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
commitments/strategies of the EPEP/AEPEP and availability of funds for
the performance of the EPEP/AEPEP during the specffic 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
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.


Revised Integrated MPSA for Mineral Reservation

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

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

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 (1%) 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
miling 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

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


Revised Integrated MPSA for Mineral Reservation

prepare and undertake a training and recruitment program at its

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)

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; and

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)

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 declassiffied 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) 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 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 the 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. [n 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          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

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

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


Revised Integrated MPSA for Mineral Reservation



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 of one (1) year from the time the issue was raised by a Party shall
be settled by a tribunal of three (3) arbitrators, one to be appointed by the
Contractor, another to be appointed by the Government, and the third by
the 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 Act".

In any event, the arbitration shall be conducted applying the substative 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
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 termination.


Revised Integrated MPSA for Mineral Reservation

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. tn 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 or from any and all financial, legal and fiscal obligations under the

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

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

b) 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



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 oi
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


Revised Integrated MPSA for Mineral Reservation

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:

Chairman of the Board & General Manager
East Coast Mineral Resources Co., Inc.
Lot 93 Cluster L, Bagong Nayon I,
Cogeo Village, 18670 Antipolo, Rizal, Philippines

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 here under 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
obligations thereby affected, the 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 remedy such delay, except
that neither Parry 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.


Revised Integrated MPSA for Mineral Reservation

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



Chairman of the Board



Revised Integrated MPSA for Mineral Reservation


Republic of the Philippines)

Quezon City )SS

Before me, a Notary Public for and in the City of Quezon
personally appeared HON. VICTOR O.RAMOS, with Community Tax Certificate No.
5463757 issued on 3-7-97 at Q.C., in his capacity as Secretary of Department
of Environment and Natural Resources and MR. HILARIO G. PAGAUITAN, with
Community Tax Certificate No. 7073357E issued on February 26, 1997 at Antipolo,
Rizal, in his capacity as chairman of the Board of East Coast Mineral Resources co.,
Inc. both known to me and to me known to be the same persons who executed the
foregoing instrument consisting of Twenty Three ( 23 ) pages, including this
acknowledgment page, and acknowledged to me that the same is their voluntary acts and

IN WITNESS WHEREOF,I have hereunto set my hand and affix my notarial seal, this
19th day of November 1997.

Notary Public

Doc. No. 411
Page No. 83
Book No. I
Series of 1997

revised 1/14/97

North Ave., Diliman, Q.C.

The registration fee henceforth
having been paid the foregoing
instrument/s was filed for record
in this Bureau at 10:00 o' clock and
....... minutes ...... on the  29th 
day of December A.D. 1997 .... and has
been recorded in the Book No. 1 ... 
of the records of Mineral Production
Sharing Agreement of this Bureau
as Document No. 12 ......

Registration fee paid under
Official Receipt No. 2662433Q dated 
December 29, 1997 in the amount
of P110.00