NOTICE: The text below was created automatically and may contain errors and differences from the contract's original PDF file. Learn more here

MINERAL PRODUCTION
SHARING AGREEMENT




No. 209-2005-III



This<b> MINERAL PRODUCTION SHARING AGREEMENT</b> is
made and entered


into in Quezon City, Philippines, this
_______ day of APR 10, 2005 by and between:




<b>THE REPUBLIC OF THE PHILIPPINES</b>, herein referred
to as the Government, represented in this act by the Secretary of the
Department of Environment and Natural Resources, with offices at the Department
of Environment and Natural Resources Building, Visayas Avenue, Diliman, Quezon
City 




and



<b>ERAMEN MINERALS, INCORPORATED</b>, a corporation
duly organized and


existing under the laws of the Republic of the
Philippines, herein referred to as


the CONTRACTOR, with office at 3RD floor, ALPAP
I Building, No. 140 Leviste


Street, Salcedo Village, Makati City and
represented in this act by its President,


ENRIQUE C. FERNANDEZ, as authorized by its Board
of Directors (please refer to ANNEX "A")




<b>WITNESSETH:</b>



WHEREAS, the 1987 Constitution of the Republic
of the Philippines provides in


Article XII, Section 2 thereof that all lands of
the public domain, waters, minerals, coal, petroleum and other natural
resources are owned by the State and that their exploration, development
and utilization shall be under the full control and supervision of the
State;




WHEREAS, the Constitution further provides that
the State may directly


undertake such activities, or it may enter into
a Co-Production, Joint Venture, or Mineral Production Sharing Agreement
with Filipino citizens, or cooperatives, partnerships, corporations or
associations at least sixty per centum of whose capitalization is owned by
such citizens;




WHEREAS, pursuant to Republic Act No. 7942,
otherwise known as "The


Philippine Mining Act of 1995," which took
effect on 09 April 1995, the Secretary of the Department of Environment
and Natural Resources is authorized to enter into Mineral production
Sharing Agreements in furtherance of the objectives of the Government and
the Constitution to bolster the national economy through sustainable and
systematic development and utilization of mineral lands;

WHEREAS, the Government desires to avail itself
of the financial resources,


technical competence and skill, which the
contractor is capable of applying to the 


MINERAL PRODUCTION
SHARING AGREEMENT




No. 209-2005-III



This<b> MINERAL PRODUCTION SHARING AGREEMENT</b> is
made and entered


into in Quezon City, Philippines, this
_______ day of APR 10, 2005 by and between:




<b>THE REPUBLIC OF THE PHILIPPINES</b>, herein referred
to as the Government, represented in this act by the Secretary of the
Department of Environment and Natural Resources, with offices at the Department
of Environment and Natural Resources Building, Visayas Avenue, Diliman, Quezon
City 




and



<b>ERAMEN MINERALS, INCORPORATED</b>, a corporation
duly organized and


existing under the laws of the Republic of the
Philippines, herein referred to as


the CONTRACTOR, with office at 3RD floor, ALPAP
I Building, No. 140 Leviste


Street, Salcedo Village, Makati City and
represented in this act by its President,


ENRIQUE C. FERNANDEZ, as authorized by its Board
of Directors (please refer to ANNEX "A")




<b>WITNESSETH:</b>



WHEREAS, the 1987 Constitution of the Republic
of the Philippines provides in


Article XII, Section 2 thereof that all lands of
the public domain, waters, minerals, coal, petroleum and other natural
resources are owned by the State and that their exploration, development
and utilization shall be under the full control and supervision of the
State;




WHEREAS, the Constitution further provides that
the State may directly


undertake such activities, or it may enter into
a Co-Production, Joint Venture, or Mineral Production Sharing Agreement
with Filipino citizens, or cooperatives, partnerships, corporations or
associations at least sixty per centum of whose capitalization is owned by
such citizens;




WHEREAS, pursuant to Republic Act No. 7942,
otherwise known as "The


Philippine Mining Act of 1995," which took
effect on 09 April 1995, the Secretary of the Department of Environment
and Natural Resources is authorized to enter into Mineral production
Sharing Agreements in furtherance of the objectives of the Government and
the Constitution to bolster the national economy through sustainable and
systematic development and utilization of mineral lands;

WHEREAS, the Government desires to avail itself
of the financial resources,


technical competence and skill, which the
contractor is capable of applying to the 


<b>SECTION II</b><b>



DEFINITIONS</b>



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


plural, shall have the following respective
meaning:




2.1 Act refers to Republic Act No. 7942,
otherwise known as the "Philippine


Mining Act of 1995."



2.2. Agreement means this Mineral
Production Sharing Agreement.




2.3. Associated Minerals mean other
ores/minerals, which occur together


with the principal ore/mineral.



2.4. Bangko Sentral means Bangko Sentral ng
Pilipinas.




2.5. Budget means an estimate of expenditures to
be made by Contractor in


mining operations contemplated hereunder to accomplish the Work Program
for each particular period.




2.6. Bureau means Mines and
Geosciences Bureau.




2.7. Calendar Year or Year means a period
of twelve (12) consecutive


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


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


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




2.8. Commercial Production means the
production of sufficient quantity of


minerals to sustain economic viability of mining
operations reckoned from


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


stated in the feasibility study, whichever comes
first.




2.9. Constitution or Philippine
Constitution
 means the 1987 Constitution of


the Republic of the Philippines adopted by the
Constitutional Convention


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


the Philippines on February 2, 1987.



2.10. Contract Area means the area onshore or
offshore delineated under the


Mineral Production Sharing Agreement subject to
the relinquishment


obligations of the contractor and properly
defined by latitude and longitude or bearing and distance.




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


counted from the Effective Date of this Agreement
or from the anniversary


of such Effective Date.





2.12. Contractor means Eramen Minerals
Incorporated or its assignee or


its assignees of interest under this Agreement:
Provided, that the assignment of any of such interest is accomplished pursuant to
the pertinent provisions of the implementing rules and regulations of the Act.



3
2.13. Declaration of Mining Feasibility means a
document proclaiming


the presence of minerals in a specific
site, which are recoverable by socially


acceptable, environmentally safe and
economically sound methods


specified in the Mine Development Plan.



2.14. Department or DENR means the
Department of Environment and


Natural Resources



2.15. Director means the Director of
Mines and Geosciences Bureau




2.16. Effective Date means the date of
execution of this Agreement by the


Contractor and by the Secretary on behalf of the
Government




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




2.18. Exploration means searching or prospecting
for mineral resources by


geological, geophysical and geochemical surveys,
remote sensing, test


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


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


mineral resources and the feasibility of mining
them for profit




2.19. Exploration Period sha
ll mean the period from the Effective Date of this

Agreement, which sha
ll be for two (2) years, renewable for like
periods but


not to exceed a total term of six(6) years
 for nonmetallic minerals and


eight (8) years for metallic minerals, subject
to the pertinent provisions of


the implementing rules and regulations of the
Act.




2.20 Force Majeure means acts or
circumstances beyond the reasonable


control of the Contractor including, but not
limited to war, rebellion, insurrection, riots, civil disturbances,
blockade, sabotage, embargo, strike, lock out, any dispute with surface owners
and other labor disputes, epidemics, earthquake, storm, flood or other
adverse weather conditions, explosion, fire, adverse action by the
Government or by any of its instrumentality or subdivision thereof, act of
God or any public enemy and any cause as herein described over which the
affected party has no
reasonable control



2.21 Foreign Exchange means any currency
other than the currency of the


Republic of the Philippines acceptable to the
Government and the


Contractor



2.22 Government means the Government
of the Republic of the Philippines


or any of its agencies and instrumentalities



2.23 Gross Output means the actual market value
of the minerals or mineral


products from each mine or mineral land operated
as a separate entity,


without 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



4

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


are not traded in commodity exchanges in the
Philippines or abroad such


as copper concentrate, the actual market value
shall be the world price


quotation of the refined mineral products
contained thereof prevailing in


the said commodity exchanges, after deducting
the smelting, refining,


treatment, insurance, transportation and other
charges incurred in the


process of converting mineral concentrates into
refined metal traded in


those commodity exchanges.



2.24. Mine Development refers to work undertaken
to prepare an ore body or


a mineral deposit for mining, including the
construction of necessary


infrastructure and related facilities.





2.25. Minerals mean all naturally occurring inorganic substances in

solid, liquid, gas or any intermediate state
excluding energy materials such as


coal, petroleum, natural gas, radioactive
materials and geothermal energy.




2.26. Mineral Products mean materials derived
from mineral ores/rocks


and prepared into marketable state by
metallurgical processes, which include


beneficiation, cyanidation, leaching, smelting,
calcination and other similar


processes.



2.27 Mining Area means that portion of
the Contract Area identified by the


Contractor as defined and delineated in a Survey
Plan duly approved by


the Director/Regional Director concerned for
purposes of development


and/or utilization and sites for support
facilities.




2.28. Mining Operations means mining activities
involving exploration,


feasibility study, environmental impact
assessment, development,


utilization, mineral processing and mine
rehabilitation.




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


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

Section 16.2 of this Agreement.



2.30. Ore means naturally occurring
substance or material from which a


mineral or element can be mined and/or processed
for profit.




2.31. Pollution means any alteration of the
physical, chemical and/or biological


properties of any water, air and/or land
resources of the Philippines, or


any discharge thereto of any liquid, gaseous or
solid wastes or any


production of unnecessary noise or any emission
of objectionable odor, as


will or is likely to create or render such
water, air, and land resources


harmful, detrimental or injurious to public
health, safety or welfare or which


will adversely affect their utilization for
domestic, commercial, industrial,


agricultural, recreational or other legitimate
purposes.




2.32. Secretary means the Secretary of the
Department of Environment


and Natural Resources.



2.33. State means the Republic of the
Philippines.



5
2.34. Work Program means a document which
presents the plan of major


mining operations and the corresponding expenditures
of the Contractor in


its Contract Area during a given period of time,
including the plan and


expenditures for development of host and
neighboring communities and of


local geoscience and mining technology, as
submitted and approved in


accordance with the implementing rules and
regulations of the Act.




<b>SECTION III



TERM OF AGREEMENT</b>



3.1.This Agreement shall have a term of twenty
five (25) years from Effective


Date, and may be renewed thereafter for another
term not exceeding


twenty five (25) years. The renewal of this
Agreement, as well as the


changes in the terms and conditions thereof,
shall be upon mutual consent


by the parties. In the event the Government
decides to allow mining


operations thereafter by other Contractor, this
must be through


competitive public bidding. After due
publication of notice, the Contractor


shall have the right to equal the highest bid
upon reimbursement of all


reasonable expenses of the highest bidder.

<b>

SECTION IV



CONTRACT AREA</b>



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


Contract Area of approximately Four Thousand Six
Hundred Nineteen and


6968/10,000 hectares (4,619 6869 has), Situated
in Sta. Cruz and Candelaria, Zambales and bounded by the following
geographical coordinates (please refer to ANNEX "B"
1:50,000 scale Location Map/Sketch Plan):



Block 1

Area=99 Has


Corner                       Latitude                    Longitude

1                                 15
° 48' 04.444"        119° 59' 19.606"

2                                 15
° 48' 04.444"        119° 59' 59.920"
3                                 15
° 47' 35.162"        119° 59' 59.920"

4                                 
15° 47' 35.162"        119° 59' 29.684"

5                                 
15° 47' 44.923"        119° 59' 29.684"

6                                 
15° 47' 44.923"        119° 59' 19.606"

<!--[if !supportLineBreakNewLine]-->

<!--[endif]-->

Block 2

Area = 9 Has.


Corner          Latitude                 Longitude

1                15° 47' 35.162"        120° 00' 30.156"

2                15° 47' 35.162"        120° 00' 40.235"

3                15° 47' 25.401"        120° 00' 40.235"

4                15° 47' 25.401"        120° 00' 30.156"


Block 3

Area=349.964 Has.

Corner         Latitude                Longitude
1                 15° 48' 09.202"        120° 01' 43.831"

2                15° 48' 09.202"        120° 02' 41.178"
3                15° 47' 54.683"        120° 02' 41.178"
4                15° 47' 54.683"        120° 02' 51.258"
5                15° 47' 44.923"        120° 02' 51.258"
6                15° 47' 44.923"        120° 03' 21.498"
7                15° 47' 54.863"        120° 03' 21.498"
8                15° 47' 54.863"        120° 03' 31.576"
9                15° 48' 04.444"        120° 03' 31.576"
10              15° 48' 04.444"        120° 03' 41.605"
11              15° 48' 14.105"        120° 03' 41.605"
12              15° 48' 14.105"        120° 03' 51.792"
13              15° 48' 04.444"        120° 03' 51.792"
14              15° 48' 04.444"        120° 04' 21.963"
15              15° 47' 54.863"        120° 04' 21.963"
16              15° 47' 54.863"        120° 04' 11.985"
17              15° 47' 45.103"        120° 04' 11.985"
18              15° 47' 45.103"        120° 04' 01.807"
19              15° 47' 35.501"        120° 04' 01.807"
20              15° 47' 35.501"        120° 03' 51.279"
21              15° 47' 25.302"        120° 03' 51.279"
22              15° 47' 25.302"        120° 03' 41.950"
23              15° 47' 23.452"        120° 03' 41.950"
24              15° 47' 23.452"        120° 02' 54.221"
25              15° 47' 33.185"        120° 02' 54.221"
26                15° 47' 33.185"        120° 02' 34.168"
27              15° 47' 42.954"        120° 02' 34.168"
28              15° 47' 42.954"        120° 02' 24.601"
29              15° 47' 52.505"        120° 02' 24.601"
30              15° 47' 52.505"        120° 01' 50.582"
31              15° 47' 52.505"        120° 01' 43.831"
<b>BIock 4</b>
Area=108.794 Has.


Corner          Latitude                Longitude
1              15° 47' 15.641"        120° 03' 44.717"
2              15° 47' 15.641"        120° 04' 01.807"
3              15° 47' 25.402"        120° 04' 01.807"
4              15° 47' 25.402"        120° 04' 11.885"
5              15° 47' 35.162"        120° 04' 11.885"
6              15° 47' 35.162"        120° 04' 21.963"
7              15° 46' 56.120"        120° 04' 21.963"
8              15° 46' 56.120"        120° 04' 01.807"
9              15° 46' 46.359"        120° 04' 01.807"
10            15° 46' 46.359"        120° 03' 44.717"

<b>BIock 5</b>
Area=108.794 Has.

Corner          Latitude                Longitude
1              15° 44' 25.317"        119° 58' 27.110"
2              15° 44' 25.317"        119° 58' 47.214"
3              15° 44' 29.790"        119° 58' 47.214"
4              15° 44' 29.790"        120° 00' 30.687"
5              15° 46' 29.790"        120° 00' 30.687"
6               15° 46' 29.790"        120° 00' 30.156"
7              15° 46' 36.799"        120° 00' 30.156"
8              15° 46' 36.799"        120° 00' 20.077"
9              15° 46' 56.120"        120° 00' 20.077"
10            15° 46' 56.120"        120° 00' 30.156"
11            15° 47' 05.981"        120° 00' 30.156"
12            15° 47' 05.981"        120° 00' 40.235"
13            15° 46' 56.126"        120° 00' 40.235"
14            15° 46' 56.126"        120° 00' 50.314"
15            15° 47' 03.903"        120° 00' 50.314"
16            15° 47' 03.903"        120° 01' 00.323"
17            15° 46' 56.120"        120° 01' 00.323"
18            15° 46' 56.120"        120° 01' 20.550"
19            15° 47' 03.903"        120° 01' 20.550"
20            15° 47' 03.903"        120° 01' 50.786"
21            15° 46' 57.863"        120° 01' 50.786"
22            15° 46' 57.863"        120° 01' 24.220"
23            15° 46' 47.010"        120° 01' 24.220"
24            15° 46' 47.010"        120° 01' 20.550"
25            15° 46' 17.083"        120° 01' 20.550"
26            15° 46' 17.083"        120° 01' 24.220"
27            15° 45' 57.563"        120° 01' 24.220"
28            15° 45' 57.563"        120° 01' 40.710"
29            15° 45' 57.563"        120° 02' 00.867"
30            15° 45' 48.369"        120° 02' 00.867"

8
31              15° 45' 48.369"        120° 01' 53.540"
32              15° 45' 47.799"        120° 01' 53.540"
33              15° 45' 47.799"        120° 01' 50.788"
34              15° 45' 30.000"        120° 01' 50.788"
35              15° 45' 30.000"        120° 01' 30.000"
36              15° 43' 50.672"        120° 01' 30.000"
37              15° 43' 50.672"        120° 01' 18.448"
38              15° 43' 46.277"        120° 01' 18.448"
39              15° 43' 46.277"        120° 00' 58.291"
40              15° 43' 26.756"        120° 00' 58.291"
41              15° 43' 26.756"        120° 00' 38.134"
42              15° 43' 46.277"        120° 00' 38.134"
43              15° 43' 46.277"        119° 59' 27.584"
44              15° 43' 36.516"        119° 59' 27.584"
45              15° 43' 36.516"        119° 59' 17.505"
46              15° 43' 46.277"        119° 59' 17.505"
47              15° 43' 46.277"        119° 59' 57.348"
48              15° 43' 36.516"        119° 59' 57.348"
49              15° 43' 36.516"        119° 58' 47.269"
50              15° 43' 46.277"        119° 58' 47.269"
51              15° 43' 46.277"        119° 58' 37.190"
52              15° 44' 15.559"        119° 58' 37.190"
53              15° 44' 15.559"        119° 58' 27.110"

Block 6
Area = 162.053 Has.

Corner                Latitude           Longitude
1                15° 46' 02.192"        119° 57' 56.874"
2                15° 46' 02.192"        119° 58' 17.032"
3                15° 45' 33.641"        119° 58' 17.032"
4                15° 45' 33.641"        119° 58' 27.110"
5                15° 44' 35.078"        119° 58' 27.110"
6                15° 44' 35.078"        119° 58' 17.032"
7                15° 44' 54.599"        119° 58' 17.032"
8                15° 44' 54.599"        119° 58' 06.954"
9                15° 45' 14.120"        119° 58' 06.954"
10              15° 45' 14.120"        119° 57' 56.874"

Block 7
Area = 2,240.042 Has.

Corner                Latitude           Longitude
1                15° 42' 33.402"        119° 58' 43.586"
2                15° 42' 33.402"        119° 59' 03.743"
3                15° 42' 23.642"        119° 59' 03.743"
4                15° 42' 23.642"        119° 59' 13.822"
5                15° 42' 13.881"        119° 59' 13.822"
6                15° 42' 13.881"        119° 59' 23.900"
7                15° 42' 04.121"        119° 59' 23.900"

8                15° 42' 04.121"        119° 59' 33.979"

9                15° 41' 54.200"        119° 59' 33.979"
10              15° 41' 54.200"        119° 59' 44.057"
11              15° 42' 04.121"        119° 59' 44.057"
12              15° 42' 04.121"        119° 59' 54.136"
13              15° 42' 13.881"        119° 59' 54.136"
14              15° 42' 13.881"        119° 59' 44.057"
15              15° 42' 23.642"        119° 59' 44.057"
16              15° 42' 23.642"        119° 59' 33.979"
17              15° 42' 33.402"        119° 59' 33.979"
18              15° 42' 33.402"        119° 59' 23.900"
19              15° 43' 31.966"        119° 59' 23.900"
20              15° 43' 31.966"        120° 00' 34.350"
21              15° 43' 22.205"        120° 00' 34.350"
22              15° 43' 22.205"        120° 01' 04.686"
23              15° 43' 46.275"        120° 01' 04.686"
24              15° 43' 46.275"        120° 01' 18.447"
25              15° 43' 50.670"        120° 01' 18.447"
26              15° 43' 50.670"        120° 01' 34.922"
27              15° 43' 41.726"        120° 01' 34.922"
28              15° 43' 41.726"        120° 01' 55.079"
29              15° 43' 12.445"        120° 01' 55.079"
30              15° 43' 12.445"        120° 02' 05.158"
31              15° 43' 02.684"        120° 02' 05.158"
32              15° 43' 02.684"        120° 01' 55.079"
33              15° 42' 43.163"        120° 01' 55.079"
34              15° 42' 43.163"        120° 01' 45.001"
35              15° 41' 54.360"        120° 01' 45.001"
36              15° 41' 54.360"        120° 01' 34.922"
37              15° 41' 25.079"        120° 01' 34.922"
38              15° 41' 25.079"        120° 01' 45.001"
39              15° 41' 44.600"        120° 01' 45.001"
40              15° 41' 44.600"        120° 01' 55.079"
41              15° 41' 25.079"        120° 01' 55.079"
42              15° 41' 25.079"        120° 02' 15.237"
43              15° 41' 44.600"        120° 02' 15.237"
44              15° 41' 44.600"        120° 02' 25.315"
45              15° 41' 54.360"        120° 02' 25.315"
46              15° 41' 54.360"        120° 02' 05.158"
47              15° 42' 04.121"        120° 02' 05.158"
48              15° 42' 04.121"        120° 02' 15.237"
49              15° 42' 23.642"        120° 02' 15.237"
50              15° 42' 23.642"        120° 02' 45.470"
51              15° 42' 43.163"        120° 02' 45.470"
52              15° 42' 43.163"        120° 02' 55.548"
53              15° 42' 04.121"        120° 02' 55.548"
54              15° 42' 04.121"        120° 02' 45.470"
55              15° 41' 44.600"        120° 02' 45.470"

10
56              15° 41' 44.600"        120° 02' 35.394"

57              15° 41' 25.079"        120° 02' 35.394"
58              15° 41' 25.079"        120° 02' 25.601"
59              15° 41' 05.557"        120° 02' 25.601"
60              15° 41' 05.557"        120° 02' 05.158"
61              15° 40' 55.797"        120° 02' 05.158"
62              15° 40' 55.797"        120° 01' 24.844"
63              15° 40' 46.036"        120° 01' 24.844"
64              15° 40' 46.036"        120° 00' 24.372"
65              15° 41' 05.557"        120° 00' 24.372"
66              15° 41' 05.557"        120° 00' 34.350"
67              15° 41' 15.318"        120° 00' 34.350"
68              15° 41' 15.318"        120° 00' 24.372"
69              15° 41' 25.079"        120° 00' 24.372"
70              15° 41' 25.079"        120° 00' 04.215"
71              15° 41' 15.318"        120° 00' 04.215"
72              15° 41' 15.318"        120° 00' 00.000"
73              15° 41' 30.000"        120° 00' 00.000"
74              15° 41' 30.000"        119° 59' 30.000"
75              15° 42' 00.000"        119° 59' 30.000"
76              15° 42' 00.000"        119° 59' 13.822"
77              15° 42' 04.121"        119° 59' 13.822"
78              15° 42' 04.121"        119° 59' 03.743"
79              15° 42' 13.881"        119° 59' 03.743"
80              15° 42' 13.881"        119° 58' 43.586"

Block 8

Area = 36.7102 Has.

Corner             Latitude                 Longitude
1                15° 45' 38.037"        120° 01' 50.786"
2                15° 45' 47.804"        120° 01' 50.786"
3                15° 45' 47.804"        120° 01' 53.540"
4                15° 45' 38.606"        120° 01' 53.540"
5                15° 45' 38.606"        120° 02' 03.761"
6                15° 45' 47.799"        120° 02' 03.761"
7                15° 45' 47.799"        120° 02' 10.944"
8                15° 45' 57.563"        120° 02' 10.944"
9                15° 45' 57.563"        120° 02' 13.841"
10              15° 45' 48.369"        120° 02' 13.841"
11               15° 45' 48.369"        120° 02' 23.921"
12               15° 45' 57.563"        120° 02' 23.921"
13               15° 45' 57.563"        120° 02' 30.970"
14               15° 45' 38.563"        120° 02' 30.970"

11
BIock 9



Area = 7.9248 Has


Corner          Latitude                  Longitude
              15° 46' 47.010"        120° 01' 24.220"
              15° 46' 47.010"        120° 01' 20.550"
              15° 46' 17.083"        120° 01' 20.550"              
              15° 46' 17.083"        120° 01' 24.220"
              

The Contractor is not allowed to undertake any mining activities within the

portion of the Contract Area covered by any DENR Project Areas, without

the prior consent of the contractor(s)/concessionaire(s) concerned.



Any portion(s) of the Contract Area that may be found and verified as old

growth and/or mossy forests shall be automatically excised from said

Contract Area.



SECTION V



EXPLORATION PERIOD


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 for nonmetallic minerals
and eight (8) years for


metallic minerals, subject to annual review and
approval by the Director in


accordance with the implementing rules and
regulations of the Act.






5.2 Renewal of Exploration Period - In case
the Contractor opts for a renewal


of its Exploration Period, it shall file prior
to the expiration thereof, a renewal application in the Regional Office
concerned, accompanied by the mandatory requirements stipulated in the
implementing rules and regulations of the Act. The Director may grant the
renewal of the Exploration Period on condition that the Contractor has
substantially complied with the terms and conditions of the Agreement.






In cases where further exploration is warranted
beyond the six (6)- or eight


(8)-year period and on condition that the
Contractor has substantially


implemented the Exploration and Environmental
Work Programs as


verified by the Bureau, the Director may further
grant renewal of the


Exploration Period: Provided, That the
Contractor shall be required to set


up a performance surety equivalent to the
expenditure requirement of the


Exploration and Environmental Work Programs.



5.3 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 "D").


The amount to be spent by the Contractor in
conducting Exploration


activities under the terms of this Agreement
during the Exploration Period

12



shall be in the
aggregate of not less than that specified for each of the


Contract Years, as follows:



For the Exploration Work Program:



1st Contract Year         :
    PhP 8,765,000.00


2nd Contract Year       :  
  PhP 7,200,000.00


Total            
                 :  PhP
15,965,000.00




For the Environmental Work Program
: PhP 1,600,000.00




In the event of renewal of the Exploration
Period, the amount to be spent


every year shall first be agreed upon by the
parties.




In the event of termination of this Agreement,
the Contractor shall only be


obliged to expend the pro-rata amount for the
period of such Contract


Year prior to termination. If during any
Contract Year, the Contractor


should expend more than the amount to be
expended as provided above,


the excess may be subtracted from the amount
required to be expended


by the Contractor during the succeeding Contract
Years, and should the


Contractor, due to unforeseen circumstances or
with the consent of the


Government, expend less during a year, then the
deficiency shall be


applied to the amount to be expended during the
succeeding Contract


Years.



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


Exploration Period, the Contractor may
relinquish totally or partially the


original Contract Area. After the Exploration
Period and prior to or upon


approval of a Declaration of Mining Feasibility
by the Director, the


Contractor shall finally relinquish any portion
of the Contract Area not


necessary for mining operations and not covered
by any Declaration of


Mining Feasibility.



5.5.Final Mining Area - The Director may allow
the Contractor to hold more


than one (1) final Mining Area subject to the
maximum limits set under the


implementing rules and regulations of the Act:
Provided, That each final


Mining Area shall be covered by a Declaration of
Mining Feasibility.




5.6. Declaration of Mining Feasibility -
Within the term of the Exploration


Period, the Contractor shall file in the
Regional Office concerned, the


Declaration of Mining Feasibility of the
Contract Area/final Mining Area


supported by Mining Feasibility Study, Three
(3)-Year Development and


Construction or Commercial Operation Work
Program, complete geologic


report, an application for survey and the
pertinent Environmental


Compliance Certificate, among other applicable
requirements. Failure of


the Contractor to submit the Declaration of
Mining Feasibility during the


Exploration Period shall be considered a
substantial breach of this


Agreement.


13


5.7 Survey of the Contract Area― The
Contractor shall cause the survey of


the perimeter Of the Contract Area/final Mining
Area through an


application for survey, complete with
requirements, filed in the Regional


Office concerned simultaneous with the
submission of the Declaration of


Mining Feasibility Survey returns shall be
submitted to the Regional


Director concerned for approval within one(1)year
from receipt of the


Order of Survey complete with the mandatory
requirements stated in the


implementing rules and regulations of the Act



5.8 Reporting



a. During the Exploration Period, the
Contractor shall submit to the


Director, through the Regional Director
concerned, quarterly and


annual accomplishment reports under oath on a
 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 sha
ll be
submitted not later than thirty (30)days from the end of each Calendar
Year. Such information shall include detailed financial expenditures, raw
and processed geological, geochemical, geophysical and
radiometric data plotted on a map at a minimum 1:50,000 scale, copies of
originals of assay results, duplicated samples, field data, copies
of originals from drilling reports, maps, environmental work program implementation and detailed expenditures showing
discrepancies/deviations with approved exploration and environmental plans
and budgets as we
as
a
other information of any kind collected during the exploration activities A information submitted to the Bureau shall be subject to the confidentiality clause of
this Agreement




b. Final Report―
The
Contractor shall submit to the Director, through


the Regional Director concerned, a final report
under oath upon the


expiration of the Exploration Period which shall
be in the form and


substance comparable to published professional
reports of


respectable international institutions and shall
incorporate a

the


findings in the Contract Area including location
of samples, assays,


chemical analysis, and assessment of mineral
potentials together


with a geologic map of l:50,000 scale at the
minimum showing the


results of the exploration Such report sha
ll also include detailed expenditures
incurred during the Exploration Period in case of diamond drilling, the
Contractor shall, upon request of the Director/Regional Director
concerned, submit to the Regional Office a quarter of the core samples,
which shall be deposited in the Regional Office Core Library for
safekeeping and reference




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 analyses and detailed expenditures,
among others.

14




SECTION
VI




DEVELOPMENT AND CONSTRUCTION PERIOD



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 Feasibility,


subject to such extension based on justifiable
reasons as the Director


may approve, upon recommendation of the Regional
Director concerned.




6.2.Reporting



a. Annual - The Contractor shall submit,
within sixty (60) days after


December 31 of each year, to the Director,
through the Regional


Director concerned, an annual report, which
states the major


activities, achievements and detailed
expenditures during the year


covered, including maps, assays, rock and
mineral analyses and


geological and environmental progress reports
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 Director, through the
Regional Director


concerned. Such report shall integrate all
information in maps of


appropriate scale and quality, as well as in
monographs or reports


in accordance with international standards.



SECTION VII



OPERATING PERIOD



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


completion of mine development and construction
of production facilities,


to the Director, through the Regional Director
concerned, a Three-Year


Commercial Operation Work Program. The
Contractor shall commence


commercial utilization immediately upon approval
of the aforesaid Work


Program. Failure of the Contractor to commence
Commercial Production


within the period shall be considered a
substantial breach of the


Agreement.



7.2. Commercial Operation Work Program and
Budget - During the Operating


Period, the Contractor shall submit to the
Director, through the Regional


Director concerned, Work Programs and Budgets
covering a period of


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


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


Program.



The Contractor shall conduct Mining Operations
and other activities for the


duration of the Operating Period in accordance
with the duly approved

15




Work Programs and corresponding Budgets.



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, That
such plans shall be


embodied in an appropriate Work Program approved
by the Director.




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 Director, through the
Regional Director


concerned, a Quarterly Report stating the
tonnage of production in


terms of ores, concentrates, and their
corresponding grades and


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


to whom sold; terms of sales and expenditures.



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


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


to the Director, through the Regional Director
concerned, an Annual


Report indicating in sufficient detail:





b.1. The total tonnage of ore reserves, whether proven,
probable,


or inferred, the total tonnage of ores, kind by
kind, broken


down between tonnage mined, tonnages transported
from


the minesite and their corresponding
destination, tonnages


stockpiled in the mine and elsewhere in the
Philippines,


tonnages sold or committed for export (whether
actually


shipped from the Philippines or not), tonnages
actually


shipped from the Philippines (with full details
as to


purchaser, destination and terms of sale), and
if known to


the Contractor, tonnages refined, processed or

manufactured in the Philippines with full
specifications as to


the intermediate products, by-products or final
products and


of the terms at which they were disposed;



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


year in question with respect to all the
installations and


facilities related to the utilization program,
including the


investment actually made or committed; and



b.3. Profile
of work force, including management and staff,


stating particularly their nationalities, and
for Filipinos, their


place of origin (i.e., barangay, town, province,
region).




The Contractor shall also comply with other
reporting
requirements

provided for in the implementing rules and
regulations of the Act.




16


SECTION VIII



FISCAL REGIME





8.1. General Principle― The fiscal regime of this Agreement
shall be governed


by the principle according to which the
Government expects a reasonable


return in economic value for the ut
ilization of non―
renewable mineral


resources under its national sovereignty wh
ile 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 preva
iling elsewhere

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


good performance of the Contractor





8.2. Registration Fees― Within fifteen (15) days upon
receipt of the notice of


approval of the Agreement from the Regional office concerned, the

Contractor shall cause the registration of this
Agreement with the said              


Regional Office and pay the registration fee at
the rate provided in the


existing rules and regulations. Failure of the Contractor to cause the

registration of this Agreement within the
prescribed period sha
ll be

sufficient ground for cance
llation of the same same.



8.3. Occupation
Fees― Prior to registration of this Agreement and at the same 
date every year thereafter, the Contractor sha
ll pay to
the Municipal/City 
Treasurer concerned an occupation fee over the
Contract Area at the 
annual rate provided in the existing rules and
regulations 
if the fee is 
not paid on the date specified,
the Contractor shall
pay a surcharge of twenty five percent (25%) of the amount due in
addition to the occupation 
fees.




8.4. Share
of the Government― The Government Share shall be the excise tax


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


Republi
c Act No. 7729 amending Section 151 (a) of the
National Internal


Revenue Code, as amended as we
as other taxes,duties
and fees levied


by existing laws.



For purposes of determining the amount of the
herein Government Share,


the Contractor shall strictly comply with the
auditing and accounting


requirements prescribed under existing laws and
regulations.




The Government Share shall be allocated in
accordance with Sections


290 and 292 of Republic Act 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 i sha
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 aff
iliates are concerned,



17


prices shall be at arm's length standard and competing offers for large

scale and long-term contracts shall be procured.
Before any sale and/or


shipment of mineral product is made, existing
and future marketing


contract(s)/sales agreement(s) shall be
submitted to the Director, copy


furnished the Regional Director concerned, for
registration. At the same


time, the Contractor shall regularly inform in
writing of any revisions,


changes or additions in said
contract(s)/agreement(s).


The Contractor shall reflect in its
Monthly/Quarterly Report on Production,


Sales and Inventory of Minerals, as well as in
the Integrated Annual


Report, the corresponding registration number(s)
of the marketing


contract(s)/agreement(s) governing the export or
sale of minerals.




8.6. Associated Minerals - If minerals
other than nickel, cobalt, chromite are


discovered in commercial quantities in the
Contract Area, the value


thereof shall be added to the value of the
principal mineral in computing


the Government share.



SECTION IX



WORK PROGRAMS



9.1 Submission to Government - Within the
periods stated herein, the


Contractor shall prepare and submit to the
Director, through the Regional


Director concerned, a Work Program and
corresponding Budget for the


Contract Area stating the Mining Operations and
expenditures which the


Contractor proposes to carry out during the
period covered with the details


and particulars set forth elsewhere in this
Agreement or in the supporting


documents.



9.2. Government's Examination and Revision
of Work Program - Should the


Government decide to propose a revision to a
certain specific feature in


the Work Program or Budget, it shall, within
thirty (30) days after receipt


thereof, provide a Notice to the Contractor
specifying in reasonable detail


its reasons therefore. Promptly thereafter, the
Government and


Contractor will meet and endeavor to agree on
the revision proposed by


the Government. In any event, the revision of
any portion of said Work


Program or Budget in which the Government shall
fail to notify the


Contractor of the proposed revision shall,
insofar as possible, be carried


out as prescribed herein. 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, that it shall
not change the general


objective of the Work Program: Provided further,
that changes which


entail a variance of at least twenty percent
(20%) shall be subject to the




18


approval of the Director.



9.4. The Government's approval of a proposed
Work Program and Budget will


not be unreasonably withheld.



SECTION X

 

ENVIRONMENTAL PROTECTION AND MINE SAFETY AND
HEALTH




10.1. The Contractor shall manage its Mining
Operations in a technically,


financially, socially, culturally and
environmentally responsible manner to


achieve the sustainable development objectives
and responsibilities as


provided for under the implementing rules and
regulations of the Act.




10.2. The Contractor shall ensure that the
standards of environmental protection are met in the course of the Mining
Operation. To the extent possible, control of pollution and the
transformation of the mined-out areas or


materials into economically and socially
productive forms must be done


simultaneously with mining.



10.3. The Contractor shall submit an
Environmental Work Program during the


Exploration Period as prescribed in the
implementing rules and regulations


of the Act.



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


the Contractor prior to the conduct of any
development works,


construction of production facilities and/or
mine production activities in the


Contract Area.



10.5. The Contractor shall submit within thirty
(30) calendar days after the


issuance and receipt of the ECC, an
Environmental Protection and


Enhancement Program (EPEP) using MGB Form No.
16-2 covering all


areas to be affected by development, utilization
and processing activities


under this Agreement. The Contractor shall
allocate for its initial


environment-related capital expenditures
approximately ten percent


of the total project
cost (10%) or in such amount depending on the


environmental/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 costs depending on the
environmental/geologic


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


Contract Area.




19
10.7 The Contractor shall establish a Contingent Liability and Rehabilitation
Fund (CLRF) which shall be in the form of the Mine Rehabilitation Fund
(MRF) and the Mine Waste and Tailings Fee (MWTF).

The MRF shall be based on the financial requirements of the approved
EPEP as a reasonable environmental deposit to ensure satisfactory
compliance with the commitments/strategies of the EPEP/AEPEP during the
specific project phase. The MRF shall be deposited as Trust Fund in a 
government depository bank and shall be used for physical and social 
rehabilitation of areas affected by mining activities and for research on the
social, technical and preventive aspects of rehabilitation.

The MWTF shall be collected based on the amounts of mine waste and
mill tailings generated during the conduct of Mining Operations. The
MWTF collected shall accrue to a Mine Waste and Tailings Reserve Fund
and shall be deposited in a government depository bank for payment of
compensation for damages caused by the Mining Operations.

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

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

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 DAO No. 2000-98,
otherwise known as the "Mine Safety and Health Standards."

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
implementing rules and regulations of the Act.

SECTION XI

RIGHTS AND OBLIGATIONS OF THE PARTIES

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
implementing rules and regulations;

20
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;

f. To keep accurate technical records about the Mining Operations,
as well as financial and marketing accounts, and make them
available to Government representatives authorized by the Director
for the purpose of assessing the performance and compliance of
the Contractor with the terms of this Agreement. Authorized
representatives of other Government Agencies may also have
access to such accounts in accordance with existing laws, rules and regulations.

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

h. To allow access to Government during reasonable hours in
inspecting the Contract Area and examining pertinent records for
purposes of monitoring compliance with terms of this
Agreement;

i. To hold the Government free and harmless from all claims and
accounts of all kinds, as well as demands and actions arising out of 
the accidents or injuries to persons or properties caused by Mining
Operations of the Contractor and indemnify the Government for any
expenses or costs incurred by the Government by reason of any 
such claims, accounts, demands or actions;

J. In the development of the community:

j.1. To recognize and respect the rights, customs and traditions 
of indigenous cultural communities over their ancestral lands
and to allocate royalty payments of not less than on percent
(1%) of the value of the gross output of minerals sold;

j.2 To coordinate with proper authorities in the development of 
the mining community and for those living in the host and 
neighboring communities through social infrastructure,
livelihood programs, education, water, electricity and medical
services. Where traditional self-sustaining income and the 
community activities are identified to be present, the
Contractor shall assist in the preservation and/or
enhancement of such activities:

21
j.3 To allot annually a minimum of one percent
(1%) of the


direct mining and milling costs necessary to
implement the


activities undertaken in the development of the
host and


neighboring communities. Expenses for community

development may be charged against the royalty
payment of


at least one percent (1%) of the gross output
intended for the


concerned indigenous cultural community;



j.4 To give preference to Filipino citizens who
have established


domicile in the neighboring communities, in the
hiring of


personnel for its mining operations. lf
necessary skills and


expertise are currently not available, the
Contractor must immediately prepare


and undertake a training and recruitment
program at its expense; and






j.5 To incorporate in the Mining
Feasibility Study the planned


expenditures necessary to implement (j.1)
to (j.3) of this Section;




k. In the development of Mining Technology and
Geosciences:






k.1. In the course of its operations, to produce
geological,


geophysical, geochemical and other types of maps
and


reports that are appropriate in scale and in
format and


substance which are consistent with the
internationally


accepted standards and practices. Such maps
shall be


made available to the scientific community in
the most


convenient and cost effective forms, subject to
the condition


that the Contractor may delay release of said
information for


a reasonable period of time which shall not
exceed three (3)


years;



k.2. To systematically keep the data
generated from the


Contract Mining Area such as cores, assays and
other


related information, including economic and
financial data


and make them accessible to students,
researchers and


other persons responsible for developing mining,
geoscience


and processing technology subject to the
condition that the


Contractor may delay release of data to the
science and


technology community within a reasonable period
of time


which shall not exceed three (3) years;



k.3.To transfer to the Government or local mining
company the


appropriate technology it may adapt in the
exploration,


development and commercial utilization of the
minerals in


the Contract Area;




22
k.4 To
allocate research and development budget for the


advancement of mining technology and geosciences
in


coordination with the Bureau, research
institutions, academe, etc.; and




k.5.To replicate data, maps and reports cited in
(k.1) and (k.2)


and furnish the Bureau for archiving and
systematic


safekeeping which shall be made available to the
science


and technology community for conducting research
and


undertaking other activities which contribute to
the


development of mining, geoscience and processing

technology and the corresponding national pool
of


manpower talents: Provided, however, that the
release of


data, maps and the like shall be similarly
constrained in


accordance with (k.1 ) and (k.2) above;


l. To incorporate in the Mining Feasibility
Study the planned


expenditures necessary to implement all the
plans and programs


set forth in this Agreement; and



m. To pay all other taxes and fees mandated by
existing laws, rules


and regulations.



11.2. Rights of the Contractor:



a. To conduct Mining Operations
within the confines of its Contract Mining Area in accordance with
the terms and conditions hereof and without interfering with


the rights
of other Contractors/Lessees/Operators/ Permittees/Permit Holders;




b. 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




e. To employ or bring into the Philippines
foreign technical and


its rights, interests and obligations under the
Agreement subject to the


approval of the Government; specialized
personnel, including the immediate members of their families as may be
required in the operations of the Contractor, subject to applicable laws
and regulations: Provided, That if the


employment connection of such foreign persons
with the Contractor


ceases, the applicable laws and regulations on
immigration shall


apply to them. Every time foreign technologies
are utilized and


where alien executives are employed, an
effective program of





23
training
understudies shall be undertaken. The alien employment


shall be limited to technologies requiring
highly specialized training


and experience subject to the required approval
under existing


laws, rules and regulations:



f. To enjoy easement rights and use of
timber, water and other


natural resources in the Contract Area subject
to pertinent laws,


rules and regulations and the rights of third
parties;




g. Repatriation of capital and remittance
of profits, dividends and


interest on loans, subject to existing laws and
Bangko Sentral ng


Pilipinas rules and regulations; and



h. To import when necessary all equipment,
spare parts and raw


materials required in the operations in
accordance with existing


laws and regulations.



11.3. Obligations of the Government:



a. To ensure that the Contractor has
the Government's full cooperation in the exercise of the rights granted to
it under this Agreement;




b. To use its best efforts to ensure the
timely issuance of necessary


permits and similar authorizing documents for
use of the surface of


the Contract Area; and



c. To cooperate with the Contractor in its
efforts to obtain financing


contemplated herein from banks or other
financial institutions:


Provided, That such financing arrangements will
in no event reduce


the Contractor's obligation on Government rights
hereunder.




SECTION XII



ASSETS AND EQUIPMENT



12.1. The Contractor shall acquire for the
Mining Operations only such assets


that are reasonably estimated to be required in
carrying out such Mining


Operations.



12.2. All materials, equipment, plant and other
installations of a movable nature


erected or placed on the Contract Area by the
Contractor shall remain the


property of the Contractor. The Contractor shall
have the right to remove


and re-export such materials and equipment,
plant and other installations


from the Philippines, subject to existing rules
and regulations. 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)





24

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.




SECTION XIII



EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL



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


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


and after Commercial Production commences shall,
in consultation and


with consent of the 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 timetable set forth below the following
targets of "Filipinization:"




                  Unskllled    Skilled 
Clerical Professional  Management

                   (%)                (%)         (%)         (%)                   (%)




Year 1       100%          100%     100%      70%                 70%



Year 3       100%          100%     100%      90%                 80%



Year 5       100%          100%     100%      100%              90%



Year 7       100%          100%     100%      100%              95%



Year 10     100%          100%     100%      100%              95%



Year 15     100%          100%     100%      100%              95%





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.




SECTION  XIV



ARBITRATION



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

faith and sha
ll exhaust a available remedies to settle any and a disputes

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


enforceability, or performance of this Agreement
before resorting to


arbitration as provided for in Section 14.2
below.


25


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


a period of one (1) year from the time the
issue is raised by a Party shall be


settled by a tribunal of three (3) arbitrators.
This tribunal shall be


constituted as follows: one to be appointed by
the Contractor and the


other to be appointed by the Secretary. The
first two appointed arbitrators


shall consider names of qualified persons until
agreement on a mutually


acceptable Chairman of the tribunal is selected.
Such arbitration shall be


initiated and conducted pursuant to Republic Act
No. 876, otherwise


known as the "Arbitration Act."


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


laws of the Republic of the Philippines.



14.3. Each party shall pay fifty percent (50%)
of the fees and expenses of the


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


and attorney's fee.



SECTION XV



SUSPENSION OR TERMINATION OF CONTRACT, TAX
INCENTIVES AND CREDITS




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


comply with any provision or requirement of the
Act and/or its


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.



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.


26


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 Agreement:



a. Failure of the Contractor without valid
reason to commence


Commercial Production within the period
prescribed; and/or




b. Failure of the Contractor to conduct
mining operations and other


activities in accordance with the approved Work
Programs and/or


any modification thereof as approved by the
Director.




15.9. The Government may suspend and cancel tax
incentives and credits if the Contractor fails to abide by the terms and
conditions of said incentives and


credits.



SECTION XVI



OTHER PROVISIONS



16.1. Any terms and conditions resulting from
repeal or amendment of any


existing laws or regulation or from the
enactment of a law, regulation or


administrative order shall be considered a part
of this Agreement.


16.2.
Notice


All notices, demands and other communications
required or


permitted hereunder shall be made in
writing, telex or telecopy and shall be deemed to have been duly given
notice, in the case of telex or telecopy, if


answered back or confirmation received, or if
delivered by hand, upon


receipt or ten days after being deposited in the
mail, airmail postage


prepaid and addressed as follows:


27
If to the Government:



The Secretary

Department of Environment and Natural Resources

DENR Building, Visayas Avenue

Diliman, Quezon City


If to the Contractor:



The President

Eramen Minerals, Inc.

3'd Floor, ALPAP I Building

No. 140 Leviste Street

Salcedo Village, 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 as defined in the
Act: Provided, That


the suspension of Mining Operations due to Force
Majeure causes


shall be subject to approval by the Director.



b. Mining Operations are delayed, curtailed
or prevented by such


Force Majeure causes, then the time for enjoying
the rights and


carrying out the obligations thereby affected,
the term of this


Agreement and all rights and obligations
hereunder shall be


extended for a period equal to the period
involved.




c. The Party, whose ability to perform its
obligations is affected by


such Force Majeure causes, shall promptly give
Notice to the other


in writing of any such delay or failure of
performance, the expected


duration thereof and its anticipated effect and
shall use its efforts to


remedy such delay, except that neither Party
shall be under any


obligation to settle a labor dispute: Provided,
That the suspension


of obligation by the Contractor shall be subject
to prior approval by


the Director




28
16.5. Amendments



This Agreement sha
ll not be annulled, amended or modified in any
respect


except by mutual consent in writing of the
herein parties.




IN WITNESS WHEREOF, the Parties hereto have
executed this Agreement, as


of the day and year first above written



THE REPUBLIC OF THE PHILIPPINES



BY:

 

MICHAEL T. DEFENSOR

Secretary

Department of Environment and Natural Resources



ERAMEN MINERALS, INC.

TIN: _219-856-656_______



SIGNED IN THE PRESENCE OF:



(Signature over Printed Name)



(Signature over Printed Name)




29
ACKNOWLEDGEMENT



Republic of the 
Philippines )
 
Quezon City                          ) ss

Before me, a Notary Public for and in the City of Quezon personally
appeared MICHAEL T. DEFENSOR, with Community Tax Certificate No.
15653147 issued
on January 5, 2005 at 
Quezon City in his
capacity as Secretary of
Department of 
Environment and Natural Resources,
and ENRIQUE C.
FERNANDEZ
, with Community Tax 
Certificate No.
13980829 issued on January 26,
2005 at Manila, in


their capacity as President of Eramen Minerals
Incorporated both known to me
and to be the same persons who executed the
foregoing instrument consisting of

thirty (30) pages, including this acknowledgment page, and acknowledged to me
that the same is their voluntary acts and deeds.


IN WITNESS THEREOF, I have herunto set my hand and affix my notarial
seal, this ______________________________ day of _____________.


Notary Public



 



Doc. No. 213

Page No. 44

Book No.1



Series of 2005

C3/Company Eramen/proforma/mpaa/Feb 4, 2005




30