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MINERAL PRODUCTION SHARING AGREEMENT
No.002-90-X

This MINERAL PRODUCTION SHARING AGREEMENT is made and entered into in Quezon City, Metro Manila, Philippines this 15th day of May 1990 by
and between:

THE REPUBLIC OF THE PHILIPPINES, represented by Secretary Fulgencio S. Factoran, Jr. of the Department of Environment and Natural Resources,with office at the Department of Environment and Natural Resources Building, Visayas Avenue, Diliman, Quezon City, Metro Manila (the Government)

and

J.L. B. Enterprises Inc, a corporation duly organized and existing under
the laws of the Republic of the Philippines, with office at office at JLB Building, Ronquillo St. cor. P. Gomez Streets, Quiapo, Metro Manila being represented in this act by its President, Jose L. Bautista (the Contractor)

WITNESSETH:

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; and

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
capital is owned by such citizens; and

WHEREAS, by Executive ORder No. 279 issued on July 25, 1987, 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 exploitation of
mineral lands;



WHEREAS, the Govemment desires to avail itself of the financial resources,
technical competence and skill, which the Contractor is capable of applying to the mining operations of the project contemplated herein;

WHEREAS, the Contractor desires to join and assist the Government in the initial rational exploration and possible development and utilization for commercial purposes of certain chromite deposits existing in the
Contract Area (as herein defined); and any other minerals which may be discovered in the such Contract Area

WHEREAS, the Contractor has access to all the financing, technical competence, technology and environmental management skills necessary to carry out the Mining Operations herein descibed


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

SECTION I

SCOPE

1.1. This Agreement is a Mineral Production Sharing Agreement entered into
pursuant to the provisions of the Act and its implementing rules and
regulations. The primary purpose of this Agreement is to provide for the
rational exploration, development and commercial utilization of certain chromite deposits existing within the Contract Area, with all necessary services, technology and financing to be furnished or arranged by the Contractor in accordance with the provisions of this Agreement. The Contractor shall not, by virtue of this Agreement, acquire any title to land encompassed within the Contract Area

1.2. The Contractor shall undertake and execute, for and on behalf of the
Government, responsible mining operations in accordance with the
provisions of this Agreement, and is hereby constituted and appointed, for
the purpose of this Agreement, as the exclusive entity to conduct mining
operations in the Contract Area.

1.3. The Contractor shall assume all the exploration risk such that if no minerals in commercial quantity are developed and produced, it will not be entitled to reimbursement.

1.4 During the term of the this Agreement the total value of production and sale of Minerals derived from the Mining Operations contemplated here in shall be accounted for and divided between the Government and Contractor in accordance with Section VIII hereof.

SECTION II

DEFINITIONS

As used in this Agreement, the following words and terms, whether singular or
plural, shall have the following respective meaning: 


2.1. Agreement means this Mineral Production Sharing Agreement.


2.2. Associated Minerals mean other ores/minerals, which occur together with
the principal ore/mineral.

2.3. 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.

2.4. 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.

2.5 Central Bank means the Central Bank of the Republic of the Philippines

2.6. Commercial Production means the production of sufficient quantity of minerals to sustain economic viability of mining operations as specified in the approved Work Progress Production of Chromite Ore required to develpp a plant processing system or supply a pilot plant used for with testing shall not be considered in the determination of the Commercial Production.


2.7. 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.

2.8. Contract Area means the area within the jurisdiction of the Republic of the Philippines which is the subjects of this Contract, as diminished pursuant to the relinquishment obligations of the Contractor as herein set forth. Initially, the Contract Area is outlined and more particularly described in Annex "A" attached hereto. 

2.9 Contract Year means a period of twelve (12) consecutive months counted from the Effective Date of the this Agreement or from the anniversary of such Effective Date.

2.10 Contractor means JLB Enterprises Inc., and assignee or assignees or any interest of JLB Enterprises Inc under this Agreement provided such assignment or any such interest is accomplished pursuant to the provisions hereof.

2.11 Declaration of Mining Project Feasibility means a document proclaiming the presence of minerals in a specific site, which are recoverable by socially
acceptable, environmentally safe and economically sound methods included in the Mine Development Plan for a period of three (3) years in the case of Integrated Agreement.

2.12. Effective Date means the date of this Agreement first set forth above

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

2.14. Executive Order means that certain order of the President of the Philippines issued on July 25, 1987 and known as Executive Order 279

2.15 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.

2.16. Exploration Period shall mean the time period from the Effective Date of this Agreement, and actual activities in the Contract Area shall commence not later that three (3) months after signing the Contract. The Exploration Period shall be from at most two (2) years from the Effective Date, as may be extended with the consent of the Government by not more than two (2) years or a maximum total of four (4) years from the Effectivity Date of this Agreement.

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





The force majeure mentioned in this section except those of general knowledge, shall be reported to DENR REgional Office concerned withing fifteen (15) calendar days from occurrence.





 





2.18 Foreign Exchange means any currency other than the currency of the
Republic of the Philippines acceptable to the Government and the 




Contractor.

2.19 Government means the Government of the Republic of the Philippines 

2.20 Gross Output means the actual market value of the minerals or mineral products  derived from mining operations defined under the National Internal Revenue Code (Presidential Decree No. 1158, as amended)

2.21. 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.

2.22. Minerals mean all naturally occurring inorganic substances in solid,
liquid, gas or any intermediate state 





2.23. Mineral Products mean things produced and prepared in a marketable state by simple treatment processes such as washing or drying, but without undergoing any chemical change or processes or manufacturing.





2.24. Mining Area means that portion of the Contract Area delineated for mine development and production, as specified in the Declaration of Mining Feasibility.





2.25. Mining Operations means mining activities involving exploration, feasibility study, environmental impact assessment,
development, utilization, mineral processing and mine rehabilitation.

2.26. Notice means notice in writing, telex or telecopy (authenticated by answer back or confirmation received) addressed or sent as provided in Section 14.1 of this Agreement.

2.27. Ore means naturally occurring substance or material from which a mineral or element can be mined and/or processed for profit.

2.28. Ore mineral means a mineral that can be extracted from ore and contributes tot eh value of the ore.
 
2.29. Pollution means any direct or indirect alteration of the physical, thermal, chemical, biological or radioactive properties of any part of the Environment by discharging, emitting or depositing wastes so as to materially affect any beneficial use adversely, or to cause a condition which is hazardous or potentially hazardous to public health, safety or welfare or to animals, birds, wildlife, fish or aquatic life, or to plants and "pollute" has a corresponding meaning.

 2.30 Secretary means the Secretary of the Department of Environment and Natural Resources. 





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.



 



SECTION III



 



TERM OF AGREEMENT



 



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.



 



SECTION IV



 



CONTRACT AREA



 



4.1. Size, Shape, and Location of Contract Area - This

Agreement covers a



Contract Area of approximately NINE HUNDRED SEVENTY TWO HECTARES (972) inclusive if the areas covered by small scalle mining permits issued as defined under Section 1.2 bounded with the follwoing geographical coordinates


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.

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



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 : ONE MILLION SIX HUNDRED THOUSAND PESOS (P 1,600,000.00) Phil Currency



2nd Contract Year : TWO MILLION PESOS (P2,000,000.00) Phil. Currency








 



In the event of termination of this Agreement, the

Contractor shall only beobliged to expend the pro-rata amount for the period of such

Contract Year







prior to

termination. 
If during any Contract Year, the Contractor shouldexpend more than the amount to be expended as provided

above, theexcess may be subtracted from the amount required to be

expended by theContractor during the succeeding Contract Years, and should

theContractor, due to unforeseen circumstances or with the

consent of theGovernment, expend less during a year, then the deficiency

shall beapplied to the amount to be expended during the succeeding

Contract



























Years.To ensure faithful compliance by the Contractor of this provision, the latter shall put up a Performance Bond in an amount, equivalent to fifteen (15) percent of the exploration cost committed to be spent for each year of exploration.

5.3 Regulatory Fees - There shall be due the Government for regulatory purposes the following fees in addition to any existing administrative fees during the exploration period:

First Year - Ten pesos (P10.00) per hectare per year

Second and years - the amount per hectare for the initial year plus a yearly increment of Five Pesos (P5.00)

5.4 Reporting



 



a. Annual Report - During the Exploration Period, the Contractor shall

submit to the Director, through the Regional Director concerned, quarterly

andannual accomplishment reports under oath on all activitiesconducted in the Contract Area from the Effective Date of

thisAgreement. The quarterly report shall be submitted not later

thanfifteen (15) days at the end of each Calendar Quarter while

theannual accomplishment report shall be submitted not later

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

informationshall 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

well



as all other information of any kind collected during the

exploration



activities. All information submitted to the Bureau shall be

subject to



the confidentiality clause of this Agreement.



 

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

the 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
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/Regional Director concerned, submit to the Regional
Office

concerned a quarter of the core samples, which shall be
deposited

in the Regional Office Core Library for safekeeping and
reference.5.5 Mining Project Feasibility - Within the term of the

Exploration Period, the Contractor shall file in the
Regional Office

concerned, the Declaration of Mining Project Feasibility of
the Contract

Area/final Mining Area supported by Project 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 Project Feasibility during the Exploration Period
shall be considered

a substantial breach of this Agreement.


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 and approval of the Declaration
of Mining

Project 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 (5) 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



Work Programs and corresponding Budgets.








7.3.

Reportinga. 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.



 



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 utilization of

non-renewable mineral



resources under its national sovereignty while the

Contractor expects a



reasonable return on its investment with special account to

be taken for the



high risk of exploration, the terms and conditions

prevailing elsewhere in



the industry and any special efficiency to be gained by a

particularly good



performance of the Contractor.



 



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

shall be



sufficient ground for cancellation of the same.



 



8.3. Occupation Fees - Prior to registration of this

Agreement and at the same



date every year thereafter, the Contractor shall pay to the

Municipal/City



Treasurer concerned an occupation fee over the Contract Area

at the



annual rate provided in the existing rules and regulations.

If the fee is not



paid on the date specified, the Contractor shall pay a

surcharge of twenty



five percent (25%) of the amount due in addition to the

occupation fees.
8.4. Share of the Government - There shall be a basic share due the Government at the rate of five per centm (5%) of the Gross Output payable every quarter, in addition to existing taxes such as - Occupation Fees/Rentals, excise tax as provided for in the National Internal Revenue Code.


8.4 Pricing of Sales - . The Contractor shall seek to strike a balance

between long-term sales or marketing contracts or foreign exchange and

commodityhedging contracts comparable to policies followed by

independent



















































producers in the international mining industry.8.5 Associated Minerals - If minerals other than 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 Govemment

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 negative variance of at least twenty percent (20%) shall

be subject to the



approval of the Director.



 



In case of any positive variance, the Contractor shall

submit to the Director,



through the Regional Director concerned, a copy each of the

Work



Programs, for information.



 



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

and Budget will



not be unreasonably withheld.

SECTION X



 



RIGHTS AND OBLIGATIONS OF THE PARTIES



 



10.1. Obligations of the Contractor:



 The contractor shall:




a. To exclusively conduct sustainable Mining Operations

within the



Contract Area in accordance with the provisions of the Act

and its



implementing rules and regulations;



 



b. To construct and operate any facilities specified under

the Mineral



Agreement or approved Work Program;



 



c. To determine the exploration, mining and treatment

process to be



utilized in the Mining Operations;



 



d. To extract, remove, use and dispose of any tailings as

authorized by



an approved Work Program;



 



e. To secure 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;



 

h. Pay taxes or obligations in accordance with existing laws, rules and regulations.



 



i. Conform to laws and regulations regarding among others, labor, safety, demarcation of the Contract Area and maintenance with the rights of the other mining operators;



 



j. allow access to exploration and production sites and operations by inspectors authorized by the Government.



 



k. To recognize and respect the rights, customs and

traditions of



indigenous cultural communities over their ancestral lands 



and to allocate royalty payment of not less than one percent



(1%) of the value of the gross output of minerals sold;



 l. Contribute to the national development by helping develop the host and neighboring communities of the COntract Area, local geo-science and mining technology, and mitigating Environmental effects of Mining Operations:Developing of Host and Neighboring Community




i. 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;



 



ii. 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;



 



iii. To give preference to Filipino citizens who have

established



domicile in the neighboring communities, in the hiring of



personnel for its mining operations. If necessary skills and



expertise are currently not available, the Contractor must



immediately prepare and undertake a training and recruitment



program at its expense; and




Development of Geo-Science and Mineral Technologyi. The Contractor, in the course of its operations, shall 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;



 



iii. 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



 and to allocate royalty payment of not less than one percent



(1%) of the value of the gross output of minerals sold;



 



Environmental Protection and Industrial Safetyi. The Contractor shall prepare a plan of Mining so that its damage to the environment will be minimal. To the extend possible, control of pollution and the transformation of the mined-out areas or materials into economicall and socially productive forms must be done simultaneously with mining. An Initial Environmental Examination (IEE) shall be required as part of the Exploration Program.

m. The Contractor shall cause registration of this Agreement to the DENR Regional Office concerned within thirty (30) days of its approval.

10.2 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;



. To sell, assign, transfer, convey or otherwise dispose of

all its rights,



interests and obligations under the Agreement subject to the



approval of the Government;



 



e. To employ or bring into the Philippines foreign technical

and



specialized personnel, including the immediate members of

their



 



families as may be required in the operations of the

Contractor,



subject to applicable laws and regulations: Provided, That

if the



employment connection of such foreign persons with the

Contractor



ceases, the applicable laws and regulations on immigration

shall



apply to them. Every time foreign technologies are utilized

and



where alien executives are employed, an effective program of



training understudies shall be undertaken. The alien

employment



shall be limited to technologies requiring highly

specialized training



and experience subject to the required approval under

existing laws,



rules and regulations;



 



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

other natural



resources in the Contract Area subject to pertinent laws,

rules and



regulations and the rights of third parties;



 



g. 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.



 



10.3. 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 XI



 



ASSETS AND EQUIPMENT



 



11.1. 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.Further, 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 XII



 EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL



 12.1. 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



programmme suitable to Filipino nationals in all levels of

employment. The



objective of said programme is to reach within the timetable

set forth below



the following targets of "Filipinization:"



 



Unskilled Skilled Clerical Professional Management



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








Year 3 100 100 100 20



Year 5 100 100 100 40 20



Year 7 100 100 100 70 40



Year 10 100 100 100 80 75



Year 15 100 100 100 95 95



 



 



12.2. Cost and expenses of training such Filipino personnel

and the Contractor's own employees shall be included in the Operating Expenses.








 



SECTION XIII



 



ARBITRATION



 



13.1. The Government and the Contractor shall consult with

each other in good faith and shall exhaust all available remedies to settle any

and all disputes or disagreements arising out of or relating to the validity,

interpretations, enforceability, or performance of this Agreement before

resorting to arbitration 
13.2 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.



 



13.3. 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 XIV



 



SUSPENSION OR TERMINATION OF CONTRACT,



TAX INCENTIVES AND CREDITS



 



14.1. This Agreement may be suspended for failure of the

Contractor: (a) to



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

its implementing



rules and regulations; (b) to pay on time the complete

taxes, fees and/or



other charges demandable and due the Government.



 



14.2. 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.



 



14.3. 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.




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 on time the complete

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.



 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. 
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.



 

SECTION XV



 



OTHER PROVISIONS



 



15.1 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:



 



If to the Government:



 



 THE SECRETARY



Department of Environment and Natural Resources



DENR Building, Visayas Avenue



Diliman, Quezon City



 



If to the Contractor:



JLB Enterprises, INc. Mining Division
JLB Bldg. Ronquillo Cor. P. Gomez Sts. Qu
Quiapo, Manila 



Either party may substitute or change such address on notice

thereof to the



other party:  



15.2. 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.



 



15.3. Suspension of Obligation



 



a. Any failure or delay on the part of any party in the

performance of its



obligation or duties hereunder shall be excused to the

extent



attributable to Force Majeure as defined in the Act

Provided, That



the suspension of Mining Operations due to Force Majeure

causes



shall be subject to approval by the Director.



 



b. If Mining Operations are delayed, curtailed or prevented

by



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


15.4. Amendments



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




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




THE REPUBLIC OF THE PHILIPPINES





By:

FULGENCIO S. FACTORAN, JR
Secretary
Department of Environment and Natural Resources




 







JLB Enterprises, Inc.



By: ______________
Jose L. Bautista
 President

SIGNED IN THE PRESENCE OF:

___________________________     _________________________

ACKNOWLEDGMENT



 



 



Republic of the Philippines)



Quezon City )SS



 



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

personally appeared



FULGENCIO S. FACTORAN., with Community Tax certificate No.

2525858



issued on January 11, 1990at Quezon City, in his capacity

as



Secretary of the Department of Environment and Natural

Resources, and



JOSE L. BAUTISTA, with Community Tax Certificate No. 3701751-16 issued on



February 16, 1990 at Valenzuela, Metro Manila, in his capacity as President of



JLB Enterprises, both known to me and to me

known to be the



same persons who executed the foregoing instrument

consisting of twenty five



(25) pages, including this acknowledgment page, and

acknowledged to me that



the same is their voluntary acts and deeds.



 



lN WTNESS WHEREOF, I have hereunto set my hand and affix my

notarial seal,



this 15th day of May 1990



 



Anselmo C. Abungan



Notary Public



 



Until December 31, 1990



PTR No.810160



Issued on April 3, 1990




Issued at Quezon City 



Doc. No. 265



Page No. 52



Book No. I



Series of 1990