NOTICE: The text below was created automatically and may contain errors and differences from the contract's original PDF file. Learn more hereMINERAL PRODUCTION SHARING AGREEMENT
No. 291‐ 2009‐ XIII ‐SMR
This MINERAL PRODUCTION SHARING AGREEMENT is made and entered into
in Quezon City, Philippines, this ____ day of SEP 28 2009 by and
THE REPUBLIC OF THE PHILIPPINES, herein referred to as the GOVERNMENT,
represented in this act by the Secretary of the Department of Environment and
Natural Resources, with offices at the Department of Environment and Natural
Resources Building, Visayas Avenue, Diliman, Quezon City
KROMINCO, lNC., a corporation duly organized and existing under the laws of the
Republic of the Philippines, herein referred to as the CONTRACTOR, with office at
2232 Pasong Tamo Avenue, Makati City, and represented in this act by its
President, Atty. Romeo S. Perez, as authorized by its Board of Directors (please
refer to ANNEX "A")
WHEREAS, the 1987 Constitution of the Republic of the Philippines provides in
Article XII, Section 2 thereof that all lands of the public domain, waters, minerals,
coal, petroleum and other natural resources are owned by the State and that their
exploration, development and utilization shall be under the full control and
supervision of the State;
WHEREAS, the Constitution further provides that the State may directly undertake
such activities, or it may enter into a Co-Production, Joint Venture, or Mineral
Production Sharing Agreement with Filipino citizens, or cooperatives, partnerships,
corporations or associations at least sixty per centum of whose capitalization is
owned by such citizens;
WHEREAS, pursuant to Republic Act No. 7942, otherwise known as "The Philippine
Mining Act of 1995," which took effect on 09 April 1995, the Secretary of the
Department of Environment and Natural Resources is authorized to enter into
Mineral Production Sharing Agreements in furtherance of the objectives of the
Government and the Constitution to bolster the national economy through
sustainable and systematic development and utilization of mineral lands;
WHEREAS, the Government desires to avail itself of the financial resources,
technical competence and skill, which the Contractor is capable of applying to the
mining operations of the project contemplated herein;
WHEREAS, the Contractor desires to join and assist the Government
development and utilization for commercial purposes of chromite and
associated mineral deposits existing in the Contract Area (as herein defined);
WHEREAS, the Contractor has access to all the financing, technical competence,
technology and environmental management skills required to promptly and
effectively carry out the objectives of this Agreement;
NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual
covenants, terms and conditions hereinafter set forth, it is hereby stipulated and
agreed as follows:
1.1 This Agreement is a Mineral Production Sharing Agreement entered into
pursuant to the provisions of the Act and its implementing rules and
regulations. The primary purpose of this Agreement is to provide for the
sustainable development and commercial utilization of chromite and other
associated mineral 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 over the
Contract/Mining Area without prejudice to the acquisition by the Contractor of
the land/surface rights through any mode of acquisition provided for by law.
1.2. The Contractor shall undertake and execute, for and on behalf of the
Government, responsible mining operations in accordance with the provisions
of this Agreement, and is hereby constituted and appointed, for the purpose
of this Agreement, as the exclusive entity to conduct mining operations in the
1.3. During the term of this Agreement, the total value of production and sale of
minerals derived from the mining operations contemplated herein shall be
accounted for and divided between the Government and the Contractor in
accordance with Section VI hereof.
As used in this Agreement, the following words and terms, whether singular or
plural, shall have the following respective meaning:
2.1. Act refers to Republic Act No. 7942, otherwise known as the "Philippine
Mining Act of 1995."
2.2. Agreement means this Mineral Production Sharing Agreement.
2.3. Associated Minerals mean other ores/minerals, which occur together with
the principal ore/mineral.
2.4. Bangko Sentral means Bangko Sentral ng Pilipinas.
2.5. Budget means an estimate of expenditures to be made by Contractor in
mining operations contemplated hereunder to accomplish the Work Program
for each particular period.
2.6. Bureau means Mines and Geosciences Bureau.
2.7. Calendar Year or Year means a period of twelve 12) consecutive months
starting with the first day of January and ending on December 31, while
"Calendar Quarter" means a period of three consecutive months with the first
calendar quarter starting with the first day of January.
2.8. Commercial Production means the production of sufficient quantity of
minerals to sustain economic viability of mining operations reckoned from the
date of commercial operation as declared by the Contractor or as stated in
the feasibility study, whichever comes first.
2.9. Constitution or Philippine constitution means the 1987 Constitution of the
Republic of the Philippines adopted by the Constitutional Convention of 1986
on October 15, 1986 and ratified by the People of the Republic of the
Philippines on February 2, 1987.
2.10. Contract Area means the area onshore or offshore delineated under the
Mineral Production Sharing Agreement subject to the relinquishment
obligations of the Contractor and properly defined by latitude and longitude or
bearing and distance.
2.11. Contract Year means a period of twelve (12) consecutive months counted
from the Effective Date of this Agreement or from the anniversary of such
2.12. Contractor means Krominco, lnc. or its assignee(s) of interest under this
Agreement: Provided, That the assignment of any of such interest is
accomplished pursuant to the pertinent provisions of the implementing rules
and regulations of the Act.
2.13. Declaration of Mining Project Feasibility means a document proclaiming the
presence of minerals in a specific site, which are recoverable by socially
acceptable, environmentally safe and economically sound methods specified
in the Project Feasibility Study.
2.14. Department or DENR means the Department of Environment and Natural
2.15. Director means the Director of Mines and Geosciences Bureau
2.16. Effective Date means the date of execution of this Agreement by the
Contractor and by the Secretary on behalf of the Government.
2.17. Environment means all facets of man's surroundings: physical, ecological,
aesthetic, cultural, economic, historic, institutional and social.
2.18. Exploration means searching or prospecting for mineral resources by
geological, geophysical and geochemical surveys, remote sensing, test
pitting, trenching, drilling, shaft sinking, tunneling or any other means for the
purpose of determining the existence, extent, quality and quantity of mineral
resources and the feasibility of mining them for profit.
2.19. Force Majeure means acts or circumstances beyond the reasonable control
of the Contractor including, but not limited to war, rebellion, insurrection, riots,
civil disturbances, blockade, sabotage, embargo, strike, lockout, any dispute
with surface owners and other labor disputes, epidemics, earthquake, storm,
flood or other adverse weather conditions, explosion, fire, adverse action by
the Government or by any of its instrumentality or subdivision thereof, act of
God or any public enemy and any cause as herein described over which the
affected party has no reasonable control.
2.20. Foreign Exchange means any currency other than the currency of the
Republic of the Philippines acceptable to the Government and the Contractor.
2.21. Government means the Government of the Republic of the Philippines or
any of its agencies and instrumentalities.
2.22 Gross Output means the actual market value of the minerals or mineral
products from each mine or mineral land operated as a separate entity,
without any deduction for mining, processing, relining, transporting, handling,
marketing or any other expenses: Provided, That if the minerals or mineral
products are sold or consigned abroad by the Contractor under C.l.F. terms,
the actual cost of ocean freight and insurance shall be deducted: Provided
further, That in the case of mineral concentrates which are not traded in
commodity exchanges in the Philippines or abroad such as copper
concentrate, the actual market value shall be the world price quotation of the
refined mineral products contained thereof prevailing in the said commodity
exchanges, after deducting the smelting, refining, treatment, insurance,
transportation and other charges incurred in the process of converting
mineral concentrates into refined metal traded in those commodity
2.23. Mine Development refers to work undertaken to prepare an ore body or a
mineral deposit for mining, including the construction of necessary
infrastructure and related facilities.
2.24. Minerals mean all naturally occurring inorganic substances in solid, liquid,
gas or any intermediate state excluding energy materials such as coal,
petroleum, natural gas, radioactive materials and geothermal energy.
2.25. Mineral Products mean materials derived from mineral ores/rocks and
prepared into marketable state by metallurgical processes which include
beneficiation, cyanidation, leaching, smelting, calcination and other similar
2.26. Mining Area means that portion of the Contract Area identified by the
Contractor as defined and delineated in a Survey Plan duly approved by the
Director/Regional Director concerned for purposes of development and/or
utilization and sites for support facilities.
2.27. Mining Operations means mining activities involving exploration, feasibility
study, environmental impact assessment, development, utilization, mineral
processing and mine rehabilitation.
2.28. Notice means notice in writing, telex or telecopy (authenticated by answer
back or confirmation received) addressed or sent as provided in Section 13.2
of this Agreement.
2.29. Ore means naturally occurring substance or material from which a mineral
or element can be mined and/or processed for profit.
2.30. Pollution means any alteration of the physical, chemical and/or biological
properties of any water, air and/or land resources of the Philippines, or any
discharge thereto of any liquid, gaseous or solid wastes or any production of
unnecessary noise or any emission of objectionable odor, as will or is likely to
create or render such water, air, and land resources harmful, detrimental or
injurious to public health, safety or welfare or which will adversely affect their
utilization for domestic, commercial, industrial, agricultural, recreational or
other legitimate purposes.
2.31. Secretary means the Secretary of the Department of Environment and
2.32. State means the Republic of the Philippines.
2.33. Work Program means a document which presents the plan of major mining
operations and the corresponding expenditures of the Contractor in its
Contract Area during a given period of time, including the plan and
expenditures for development of host and neighboring communities and of
local geoscience and mining technology, as submitted and approved in
accordance with the implementing rules and regulations of the Act.
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.
4.1. Size, Shape, and Location of Contract Area - This Agreement covers a total
area of Seven Hundred Fifty Seven and 118/1000 hectares (757.118
hectares), situated in the Municipality of Loreto, Province of Dinagat lslands,
within Parcel III of the Surigao Mineral Reservation, and bounded by the
following technical description (please refer to ANNEX "B")
Corner Latitude Longitude
1 10° 19' 30" 125° 37' 30"
2 10° 20' 00" 125° 37' 30"
3 10° 20' 30" 125° 37' 00"
4 10° 21' 00" 125° 37' 00"
5 10° 21' 00" 125° 37' 30"
6 10° 21' 30 125° 37' 30"
7 10° 21' 30" 125° 38' 30"
8 10° 21' 00" 125° 38' 30"
9 10° 21' 00" 125° 39' 00"
10 10° 20' 30" 125° 39' 00"
11 10° 20' 30" 125° 38' 30"
12 10° 20' 00" 125° 38' 00"
13 10° 19' 30" 125° 38' 00"
4.2 Survey Plan of the Contract Area - The Contractor shall submit to the
Regional Director concerned for approval within one (1) year from receipt of
the Order of Survey, the survey returns accompanied with the complete
mandatory requirements stated in the implementing rules and regulations of
5.1. Timetable - The Contractor shall continue commercial utilization activity
immediately upon approval and registration of this Agreement. The
Contractor shall conduct mining operations and other activities for the
duration of the Operating Period in accordance with the duly approved Work
Program and Budget and Certificate of Non-Coverage (please refer to
ANNEXES "C" and "D"). Failure by the Contractor to undertake commercial
utilization within the period in accordance with the said Work Program shall
be considered a substantial breach of the Agreement.
5.2. Commercial Operation Work Program and Budget - During the Operating
Period, the Contractor shall submit to the Director, through the Regional
Director concerned, Work Programs and Budgets covering a period of three
(3) years each, which shall be submitted not later than thirty (30) days before
the expiration of the period covered by the previous Work Program.
The amount to be spent by the Contractor during the Operating Period under
the term of this Agreement shall not be less than that specified in the
approved Work Programs, such that during the first three (3) years of the
Operating Period, this amount shall be as follows:
First Contract Year PhP 44,876,300.00
Second Contact Year PhP 44,876,300.00
Third Contract Year PhP 44,876,300.00
Should the Government wish to propose a revision to a certain specific
feature in the Work Program or Budget, it shall, within thirty (30) days after
receipt thereof, provide a Notice to the Contractor specifying in reasonable
detail its reasons therefore. Promptly thereafter, the Government and
Contractor will meet and endeavor to agree on the revision proposed by the
Government. In any event, any portion of said Work Program or Budget as to
which the Government shall fail to notify the Contractor of proposed revision
shall, in so far as possible, be carried out as prescribed herein. If the
Government should fail within sixty (60) days from receipt thereof to notify
Contractor of the proposed revisions, the Work Program and Budget
proposed by the Contractor shall be deemed to be approved.
It is recognized by the Government and the Contractor that the details of any
Work Program may require changes in the light of changing circumstances.
The Contractor may make such changes: Provided, That it shall not change
the general objective of the Work Program: Provided further, That changes
which entail a negative variance of at least twenty percent (20%) shall be
subject to the approval of the Director.
In case of any positive variance in the future, the Contractor shall submit to
the Bureau and Regional Office concerned a copy each of the revised Work
Programs, for information.
The Government's approval of a proposed Work Program and Budget will not
be unreasonably withheld.
5.3. Expansion and Modification of Facilities - The Contractor may make
expansions, modifications, improvements, and replacements of the mining
facilities and may add new facilities as the Contractor may consider
necessary for the operations: Provided, That such plans shall be embodied in
an appropriate Work Program approved by the Director.
a. Quarterly Reports - Beginning with the first Calendar Quarter following
the approval of this Agreement, the Contractor shall submit, within
thirty (30) days after the end of each Calendar Quarter, to the Director,
through the Regional Director concerned, a Quarterly Report stating
the tonnage of production in terms of ores, concentrates, and their
corresponding grades and other types of products; value, destination
of sales or exports and to whom sold; terms of sales and expenditures.
b. Annual Reports - During the Operating Period, the Contractor shall
submit, within sixty (60) days from the end of each Calendar Year, to
the Director through the Regional Director concerned, an Annual
Report indicating in sufficient detail:
b.1. The total tonnage of ore reserves whether proven, probable, or
inferred, the total tonnage of ores, kind by kind, broken down
between tonnage mined, tonnages transported from the
minesite and their corresponding destination, tonnages
stockpiled in the mine and elsewhere in the Philippines,
tonnages sold or committed for export (whether actually shipped
from the Philippines or not), tonnages actually shipped from the
Philippines (with full details as to purchaser, destination and
terms of sale), and if known to the Contractor, tonnages refined,
processed or manufactured in the Philippines with full
specifications as to the intermediate products, by-products or
final products and of the terms at which they were disposed;
b.2. Work accomplished and work in progress at the end of the year
under consideration in relation to the Work Program, including
the investment actually made or committed; and
b.3. Profile of work force, including management and staff, stating
particularly their nationalities, and for Filipinos, their place of
origin (i.e., barangay, town, province, region).
The Contractor shall also comply with other reporting requirements as
provided in the implementing rules and regulations of the Act.
6.1. General Principle - The fiscal regime of this Agreement shall be governed by
the principle according to which the Government expects a reasonable return
in economic value for the utilization of non-renewable mineral resources
under its national sovereignty while the Contractor expects a reasonable
return on its investment with special account to be taken for the high risk of
exploration, the terms and conditions prevailing elsewhere in the industry and
any special efficiency to be gained by a particularly good performance of the
6.2. Registration Fees - Within fifteen (15) days upon receipt of the notice of
approval of the Agreement from the Regional Office concerned, the
Contractor shall cause the registration of this Agreement with the said
Regional Office and pay the registration fee at the rate provided in the
existing rules and regulations. Failure of the Contractor to cause the
registration of this Agreement within the prescribed period shall be sufficient
ground for cancellation of the same.
6.3. Occupation Fees - Prior to registration of this Agreement and at the same
date every year thereafter, the Contractor shall pay to the Municipal/City
Treasurer concerned an occupation fee over the Contract Area at the annual
rate provided in the existing rules and regulations. If the fee is not paid on
the date specified, the Contractor shall pay a surcharge of twenty five percent
(25%) of the amount due in addition to the occupation fees.
6.4. Share of the Government - The Government Share shall be the excise tax on
mineral products at the time of removal and at the rate provided for in
Republic Act No. 7729 amending Section 151 (a) of the National Internal
Revenue Code, as amended, in addition to a Royalty of not less than five
percent (5%) of the gross output, as well as other taxes, duties and fees
levied by existing laws. The Excise Tax shall be timely and completely paid
to the nearest Bureau of Internal Revenue Office in the province concerned
while the Royalty shall be paid directly to the Bureau.
For purposes of determining the amount of the herein Government Share, the
Contractor shall strictly comply with the auditing and accounting requirements
prescribed under existing laws and regulations.
The Government Share shall be allocated in accordance with Sections 290
and 292 of Republic Act No. 7160, otherwise known as "The Local
Government Code of 1991."
6.5. Pricing of Sales - The Contractor shall dispose of the minerals and by-
products produced at the highest market price prevailing in the locality: The
Contractor shall also pay the lowest achievable marketing commissions and
related fees and shall negotiate for more advantageous terms and conditions
subject to the right to enter into long-term sales or marketing contracts or
foreign exchange and commodity hedging contracts, which the Government
acknowledges to be acceptable notwithstanding that the sale price of the
minerals and by-products may from time to time be lower, or the terms and
conditions of sales are less favorable, than that available elsewhere. The
Contractor shall seek to strike a balance between long-term sales or
marketing contracts or foreign exchange and commodity hedging contracts
comparable to policies followed by independent producers in the international
The Contractor shall likewise seek a balanced distribution among consumers.
Insofar as sales to Contractor's affiliate(s) are concerned, prices shall be at
arm's length standard, and competing offers for large scale and long-term
contracts shall be procured. Before any sale and/or shipment of mineral
product is made, existing and future marketing contract(s)/sales agreement(s)
shall be submitted to the Director, copy furnished the Regional Director
concerned, for registration. At the same time, the Contractor shall regularly
inform the Director in writing of any revisions, changes or additions in said
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.
96.6. 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.
ENVIRONMENTAL PROTECTION AND MINE SAFETY AND HEALTH
7.1. The Contractor shall manage its Mining Operations in a technically,
financially, socially, culturally and environmentally responsible manner to
achieve the sustainable development objectives and responsibilities as
provided for under the implementing rules and regulations of the Act.
7.2. The Contractor shall ensure that the standards of environmental protection
are met in the course of the Mining Operations. To the extent possible,
control of pollution and the transformation of the mined-out areas or materials
into economically and socially productive forms must be done simultaneously
7.3. An Environmental Compliance Certificate (ECC) shall be secured first by the
Contractor prior to the conduct of any development works, construction of
production facilities and/or mine production activities in the Contract Area.
7.4. The Contractor shall submit within thirty (30) Calendar days after the
issuance and receipt of the ECC, an Environmental Protection and
Enhancement Program (EPEP) using MGB Form No. 16-2 covering all areas
to be affected by development, utilization and processing activities under this
Agreement. The Contractor shall allocate for its initial environment-related
capital expenditures approximately ten percent (10%) of the total project cost
or in such amount depending on the environmental/geological condition,
nature and scale of operations and technology to be employed in the
7.5. The Contractor shall submit, within thirty (30) days prior to the beginning of
every calendar year, an Annual Environmental Protection and Enhancement
Program (AEPEP), using MGB Form 16-3, which shall be based on the
approved EPEP. The AEPEP shall be 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.
7.6 The Contractor shall establish a Contingent Liability and Rehabilitation Fund
(CLRF) which shall be in the form of the Mine Rehabilitation Fund (MRF) and
the Mine Waste and Tailings Fee (MWTF).
The MRF shall be based on the financial requirements of the approved EPEP
as a reasonable environmental deposit to ensure satisfactory compliance with
the commitments/strategies of the EPEP/AEPEP and availability of funds for
the performance of the EPEP/AEPEP during the specific project phase. The
MRF shall be deposited as Trust Fund in a government depository bank and
shall be used for physical and social rehabilitation of areas affected by mining
activities and for research on the social, technical and preventive aspects of
The MWTF shall be collected based on the amounts of mine waste and mill
tailings generated during the conduct of Mining Operations. The MWTF
collected shall accrue to a Mine Waste and Tailings Reserve Fund and shall
be deposited in a government depository bank for payment of compensation
for damages caused by the Mining Operations.
7.7. The Contractor shall set up mitigating measures such as mine waste and mill
tailings disposal system, mine rehabilitation or plan, water quality monitoring,
etc. to minimize land degradation, air and water pollution, acid rock drainage
and changes in hydrogeology.
7.8. The Contractor shall set up an Environmental and Safety Office at its
minesite manned by qualified personnel to plan, implement and monitor its
7.9. The Contractor shall be responsible in the monitoring of environmental, safety
and health conditions in the Contract Area and shall strictly comply with all
the rules and regulations embodied under DENR Administrative Order No.
2000-98, otherwise known as the "Mine Safety and Health Standards."
7.10. The Contractor shall be responsible for the submission of a final mine
rehabilitation and/or decommissioning plans, including its financial
requirements and incorporating the details and particulars set forth in the
implementing rules and regulations of the Act.
RIGHTS AND OBLIGATIONS OF THE PARTIES
8.1. Obligations of the Contractor:
a. To exclusively conduct sustainable Mining Operations within the
Contract Area in accordance with the provisions of the Act and its
implementing rules and regulations;
b. To construct and operate any facilities specified under the Mineral
Agreement or approved Work Program;
c. To determine the exploration, mining and treatment process to be
utilized in the Mining Operations;
d. To extract, remove, use and dispose of any tailings as authorized by
an approved Work Program;
e. To secure all permits necessary or desirable for the purpose of Mining
11f. 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 the 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 payment of not less than one percent (1%) of
the value of the gross output of minerals sold;
j.2. To coordinate with proper authorities in the development of the
mining community and for those living in the host and
neighboring communities through social infrastructure,
livelihood programs, education, water, electricity and medical
services. Where traditional self-sustaining income and the
community activities are identified to be present, the Contractor
shall assist in the preservation and/or enhancement of such
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
j.4. To give preference to Filipino citizens who have established
domicile in the neighboring communities, in the hiring of
personnel for its mining operations. If necessary skills and
expertise are currently not available, the Contractor must
immediately prepare and undertake a training and recruitment
program at its expense; and
j.5. To incorporate in the Mining Project Feasibility Study the
planned expenditures necessary to implement (j.1) to (j.3) of
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
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
k.4. To allocate research and development budget for the
advancement of mining technology and geosciences in
coordination with the Bureau, research institutions, academe,
k.5. To replicate data, maps and reports cited in (k.1) and (k.2) and
furnish the Bureau for archiving and systematic safekeeping
which shall be made available to the science and technology
community for conducting research and undertaking other
activities which contribute to the development of mining,
geoscience and processing technology and the corresponding
national pool of manpower talents: Provided, however, that the
release of data, maps and the like shall be similarly constrained
in accordance with (k.1) and (k.2) above;
l. To incorporate in the Mining Project Feasibility Study the planned
expenditures necessary to implement all the plans and programs set
forth in this Agreement; and
m. To pay all other taxes and fees mandated by existing laws, rules and
8.2. Rights of the Contractor:
a. To conduct Mining Operations within the confines of its
Contract/Mining Area in accordance with the terms and conditions
hereof and without interfering with the rights of other
Contractors/Lessees/Operators/ Permittees / Permit Holders;
b. Of possession of the Contract Area, with full right of ingress and
subject to surface and egress and the right to occupy the same,
c. To use and have access to all declassified geological, geophysical,
drilling, production and other data relevant to the mining operations;
d. To sell, assign, transfer, convey or otherwise dispose of all its rights,
interests and obligations under the Agreement subject to the approval
of the Government;
e. To employ or bring into the Philippines foreign technical and
specialized personnel, including the immediate members of their
families as may be required in the operations of the Contractor, subject
to applicable laws and regulations: Provided, That if the employment
connection of such foreign persons with the Contractor ceases, the
applicable laws and regulations on immigration shall apply to them.
Every time foreign technologies are utilized and where alien executives
are employed, an effective program of training understudies shall be
undertaken. The alien employment shall be limited to technologies
requiring highly specialized training and experience subject to the
required approval under existing laws, rules and regulations;
f. To enjoy easement rights and use of timber, water and other natural
resources in the Contract Area subject to pertinent laws, rules and
regulations and the rights of third parties.
g. Of repatriation of capital and remittance of profits, dividends and
interest on loans, subject to existing laws and Bangko Sentral ng
Pilipinas rules and regulations; and
h. To import when necessary all equipment, spare parts and raw
materials required in the operations in accordance with existing laws
8.3. Obligations of the Government:
a. To ensure that the Contractor has the Government's full cooperation in
the exercise of the rights granted to it under this 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.
ASSETS AND EQUIPMENT
9.1. The Contractor shall acquire for the Mining Operations only such assets that
are reasonably estimated to be required in carrying out such Mining
9.2. All materials, equipment, plant and other installations of a movable nature
erected or placed on the Contract Area by the Contractor shall remain the
property of the Contractor. The Contractor shall have the right to remove and
re-export such materials and equipment, plant and other installations from the
Philippines, subject to existing rules and regulations. In case of cessation of
Mining Operations on public lands occasioned by its voluntary abandonment
or withdrawal, the Contractor shall have a period of one (1) year from the time
of cessation within which to remove its improvements; otherwise, all social
infrastructures and facilities shall be turned over or donated tax free to the
proper government authorities, national or local, to ensure that said
infrastructures and facilities are continuously maintained and utilized by the
host and neighboring communities.
EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL
10.1. The Contractor agrees to employ, to the extent possible, qualified Filipino
personnel in all types of mining operations for which they are qualified; and
after Commercial Production commences shall, in consultation and with
consent of the Government, prepare and undertake an extensive training
programme suitable to Filipino nationals in all levels of employment. The
objective of said programme is to reach within the timetable set forth below
the following targets of "Filipinization:"
Unskilled Skilled Clerical Professional Management
(%) (%) (%) (%) (%)
Year 1 100 100 100 100 75
Year 3 100 100 100 100 80
Year 5 100 100 100 100 85
Year 7 100 100 100 100 90
Year 10 100 100 100 100 95
10.2 Cost and expenses of training such Filipino personnel and the Contractor's
own employees shall be included in the Operating Expenses.
10.3. The Contractor shall not discriminate on the basis of gender and shall respect
the right of women workers to participate in policy and decision-making
processes affecting their rights and benefits.
11.1. The Government and the Contractor shall consult with each other in good
faith and shall exhaust all available remedies to settle any and all disputes or
disagreements arising out of or relating to the validity, interpretations,
enforceability, or performance of this Agreement before resorting to
arbitration as provided for in Section 11.2. below.
11.2. Any disagreement or dispute which can not be settled amicably within a
period of one (1) year from the time the issue is raised by a Party shall be
settled by a tribunal of three (3) arbitrators. This tribunal shall be constituted
as follows: one to be appointed by the Contractor and the other to be
appointed by the Secretary The first two appointed arbitrators shall consider
names of qualified persons until agreement on a mutually acceptable
Chairman of the tribunal is selected. Such arbitration shall be initiated and
conducted pursuant to Republic Act No. 876, otherwise known as the
In any event, the arbitration shall be conducted applying the substantive laws
of the Republic of the Philippines.
11.3. Each party shall pay fifty percent (50%) of the fees and expenses of the
Arbitrators and the costs of arbitration. Each party shall pay its own costs
and attorney's fee.
SUSPENSION OR TERMINATION OF CONTRACT,
TAX INCENTIVES AND CREDITS
12.1. This Agreement may be suspended for failure of the Contractor: (a) to comply
with any provision or requirement of the Act and/or its implementing rules and
regulations; (b) to pay on time the complete taxes, fees and/or other charges
demandable and due the Government.
12.2. This Agreement terminates or may be terminated for the following causes: (a)
expiration of its term, whether original or renewal; (b) withdrawal from the
Agreement by the Contractor; (c) violation by the Contractor of the
Agreement's terms and conditions; (d) failure to pay taxes, fees/or charges or
financial obligations for two (2) consecutive years; (e) false statement or
omission of facts by the Contractor; and (f) any other cause or reason
provided under the Act and its implementing rules and regulations, or any
other relevant laws and regulations.
12.3. All statements made in this Agreement shall be considered as conditions and
essential parts hereof, and any falsehood in said statements or omission of
facts which may alter, change or affect substantially the fact set forth in said
statements shall be a ground for its revocation and termination.
12.4. The Contractor may, by giving due notice at any time during the term of this
Agreement, apply for its cancellation due to causes which, in the opinion of
the Contractor, render continued mining operation no longer feasible or
viable. In this case, the Secretary shall decide on the application within thirty
(30) days from notice: Provided, That the Contractor has met all the financial,
fiscal and legal obligations.
12.5. No delay or omissions or course of dealing by the Government shall impair
any of its rights under this Agreement, except in the case of a written waiver.
The Government's right to seek recourse and relief by all other means shall
not be construed as a waiver of any succeeding or other default unless the
contrary intention is reduced in writing and signed by the party authorized to
exercise the waiver.
12.6. In case of termination, the Contractor shall pay all the fees and other
liabilities due up to the end of the year in which the termination becomes
effective. The Contractor shall immediately carry out the restoration of the
Contract Area in accordance with good mining industry practice.
12.7. The withdrawal by the Contractor from the Mineral Agreement shall not
release it from any and all financial, environmental, legal and fiscal
obligations under this Agreement.
12.8. The following acts or omission, inter alia shall constitute breach of contract,
upon which the Government may exercise its right to terminate the
a. Failure of the Contractor without valid reason to commence
Commercial Production within the period prescribed; and/or
b. Failure of the Contractor to conduct mining operations and other
activities in accordance with the approved Work Programs and/or any
modification thereof as approved by the Director.
12.9. The Government may suspend and cancel tax incentives and credits if the
Contractor fails to abide by the terms and conditions of said incentives and
13.1 Any terms and conditions resulting from repeal or amendment of any existing
laws or regulation or from the enactment of a law,regulation or administrative
order shall be considered a part of this Agreement.
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:
Department of Environment and Natural Resources
DENR Building, Visayas Avenue
Diliman, Quezon City
If to the Contractor:
2232 Pasong Tamo Avenue
Either party may substitute or change such address on notice thereof to the
13.3. Governing Law
This Agreement and the relation between the parties hereto shall be
governed by and construed in accordance with the laws of the Republic of the
Philippines. The Contractor hereby agrees and obliges itself to comply with
the provisions of the Act, its implementing rules and regulations and other
relevant laws and regulations.
13.4. Suspension of Obligation
a. Any failure or delay on the part of any party in the performance of its
obligation or duties hereunder shall be excused to the extent
attributable to Force Majeure as defined in the Act: Provided, That the
suspension of Mining Operations due to Force Majeure causes shall
be subject to approval by the Director.
b. If Mining Operations are delayed, curtailed or prevented by such Force
Majeure causes, then the time for enjoying the rights and carrying out
the obligations thereby affected, the term of this Agreement and all
rights and obligations hereunder shall be extended for a period equal
to the period involved.
c. The Party, whose ability to perform its obligations is affected by such
Force Majeure causes, shall promptly give Notice to the other in writing
of any such delay or failure of performance, the expected duration
thereof and its anticipated effect and shall use its efforts to remedy
such delay, except that neither Party shall be under any obligation to
settle a labor dispute: Provided, That the suspension of obligation by
the Contractor shall be subject to prior approval by the Director.
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
JOSE L. ATIENZA, JR.
Department of Environment and Natural Resources
ROMEO S. PEREZ
SIGNED IN THE PRESENCE OF:
(Signature over Printed Name)
(Signature over Printed Name)
Republic of the Philippines)
Quezon City )SS
Before me, a Notary Public for and in the City of Quezon, personally appeared
JOSE L. ATIENZA, JR., with Community Tax Certificate No. 11263944
issued on January 22, 2009 at Quezon City, in his capacity as Secretary of
the Department of Environment and Natural Resources, and ROMEO S. PEREZ,
with Community Tax Certificate No. 26583766 issued on
January 22, 2009 at CAINTA, RIZAL, in his capacity as President of Krominco,
Inc., both known to me and to me known to be the same persons who executed the
foregoing instrument consisting of twenty (20) pages, including this acknowledgment
page, and acknowledged to me that the same is their voluntary acts and deeds.
IN WITNESS WHEREOF, I have hereunto set my hand and affix my notarial seal,
this 2nd day of October 2009.
Anselmo C. Abungan
Until December 31, 2010
PTR No. 119444 1-05-09 Q.C.
IBP No. 740965 1-05-09 Mla. IV
MCLF Compliance no. IV - 0006247
Roll of Attorney's No. 35343
Page No. 21
Book No. IX
Series of 2009
CERTIFICATE OF REGISTRATION
Mines and Geosciences Bureau
North Ave., Diliman, Quezon City
The registration fee therefor having been paid, the
foregoing instrument consisting of 20 pages was registered
with this Office on October 05, 2009 and recorded in
Book No. 3 of the Mineral Reservation MPSA
as Document No. 4
Registration fee paid under Official Receipt No.
4397951N dated October 05, 2009 in the amount of
Horacio C. Ramos