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

KI, 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 ofthe State;

WHEREAS, the constitution further provides that the state may directly undertake such

activities, or it may enter into a co-Productioq Joint venture, or Mineral production

Sharing Agreement with Filipino citizens, or cooperatives, partnerships, corporations or

associations at least sixty percentum ofwhose capitalization is owned by such titizens;

WHEREAS, pursuant to Repubric Act No. 7942, otherwise known as ,.The philippine

of 1995", which took effect on 09 April 1995, the Secretary oi the

Department of Environment and Natural Resources is authorized

to enter into Minerat

Production Sharing Agreements in furtherance of the objectives

of the Government and

the Constitution to bolster the. national economy through sustainable

-d ,t;i;;;;

development and utilization of mineral lands;

Mining Act

WHEREAS' the Government desires to avail itserf

of the financiar resources, technical

appllng to the ,ild;;;;t"^

competence and skill which the Contractor is

capable of

of the project contemplated herern,

WHEREAS, the contractor desires to join and

assist the Govemment in the sustainable

development and utilization for commerciar

purposes of gord, coppcr, sirver and


related minerals existing h the Contract



i"r.*; .


to all the financing,

technical competence,

technology and environmental management skills required to promptly and effectively

carry out the objectives ofthis Agreement;

WHEREAS, the Contractor has access

NOW, TIIEREFORE, for and in consideration of the foregoing premises, the mutual

covenants, terms and conditions hereinafter set forth, it is hereby stipulated and agreed as




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 gold' copper, silver and other related mineral

deposits existing within the Contract Area, with all necessary services, technology

and financing to be fumished 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/IVlining Area without prejudice to

the acquisition by the Contractor of the land/surface rights through any mode of

acquisition provided for by law.

The Contractor shall undertake and execute, for and on behalf ofthe Government,

sustainable mining operations in accordance with the provisions of this Agreement,

and is hereby constituted and appointed, for the purpose of this Agreement, as the

exclusive entity to conduct mining operations in the Contract Area.


The Contractor shall assume all the exploration risk such that if no minerals in

commercial quantrty are developed and produced, it will not be entitled to



During the term of this Agreement, the total value of production and sale of

minerals derived from the mining operations contemplated herein shall be

accounted for and divided between the Government and the Contractor in

accordance with Section VIII hereof




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

shall have the following respective meaning :

2.1 "Act" refers to Republic Act No. 7942, otherwise known as the '?hilippine

Mining Act of 1995"


Agreement means this Mineral Production Sharing Agreement.


Associated Minerals mean other oreVminerals which occur together with the

principal ore./mineral.



Bangko Sentral means Bangko Sentral ng Pilipinas.



of expenditures to be made by Contractor in mining

operations contemplated hereunder to accomplish the Work Program for each

means an estimate

particular period.


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

starting with the first day of January and ending on December 3 I , while 'Calendar

Quarter" means a period of three consecutive months with the first calendar

quarter starting with the fust day of January.


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.


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.


Contract Area means the area onshore delineated under the Mneral Production

Sharing Agreement subject to the relinquishment obligations ofthe Contractor and

properly defined by latitude and longitude or bearing and distance


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

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



Contractor means Itogon - Suyoc Mincs, Inc. or its assignee or assignees of

interest under this Agreement: Provided, That the assignment of any of such

interest is accomplished pursuant to the pertinent provisions of the implementing

rules and regulations of the Act.


Declaration of Mining Feasibility means a document proclaiming the presence of

minerals in

specific site that are recoverable by socially acceptable,

environmentally safe and economically sound methods specified in the Mine

Development Plan.





means the Department


Environment and Natural


2.14 Director

means the Director of Mines and Geosciences Bureau.


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

and by the Secretary on behalf of the Government. In case an Exploration

Permit/Temporary Exploration Permit had been availed of by the Contractor, the

Effective Date of this Agreement shall be the date of issuance of said Exploration

Permit/Temporary Exploration Permit.


Environment means all facets


man's surroundings: physical, ecological,

aesthetic, cultural, economic, historic, institutional and social.


Exoloration 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, exent, quality, and quantity of mineral resources and the feasibility

of mining them for profit.


Exoloration Period shall mean the time period from the Effective Date of this

Agreement which shall be for two (2) years, renewable for like periods but not to

exceed a total term of eight (8) years subject to the pertinent provisions of the

implementing rules and regulations of the Act.


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, fue, adverse action by the

Government or by any of its instnrmentality or subdMsion thereof, act of God or

any public enemy and any cause as herein described over which the affected party

has no reasonable control.


Foreign Exchange means any currency other than the currency ofthe Republic

the Philippines acceptable to the Govemment and the Contractor'


Government means the Govemment of the Republic of the Philippines or any of


its agencies and instrumentalities.


Gross Outout means the actual market value of the minerals or mineral products

from each mine or mineral land operated as a separate entity, without any

deduction for mining, processing, refining, transporting, handling, marketing, or

any other expenses: Provided, That if the minerals or mineral products are sold or

consigned abroad by the Contractor under C.LF. 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 zuch 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


refers to work undertaken to prepare an ore body or a

mineral deposit for mining, including the construction of necessary infrastructure

and related facilities.

2.23 Mine Development


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.


Mineral Products mean materials derived from mineral ores/rocks and prepared

into marketable state by metallurgical processes which include beneficiatiorl

cyanidatiorl leaching, smelting, calcination and other similar processes.


Mining fuea means that portion of the Contract Area identified by the Contractor

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

Director/concerned Regional Director for purposes of development and/or

utilization and sites for support facilities E1E..t



Minin&Ooerations means mining activities involving exploratioq feasibility study,

environmental impact assessment, development, utilizatio4 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 16.2 of this


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

unneoessary 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 afflect their

utilization for domestic, comrnercial, industrial, agricultural, recreational or other

legitimate purposes.


Secretary means the Secretary of the Department of Environment and Natural


2.32 State

means the Republic of the Philippines.

2.33 Work Program

means a document which presents the plan of major mining

operations and the corresponding expenditures of the Contractor in its Contract

Area during a given period of timg including the plan and expenditures for

development of host and neighboring communities and of local geoscience and

mining technology, as submitted and approved

accordance with the

implementing rules and regulations of the Act.





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.




Size, Shape, and Location of Contract Area. This Age€ment covers a total area

ofone thousand seven hundred twenty eight and 8535/10000 hectares (1,728.8535

has.), situated at Mankayan, Benguet and bounded by the following technical

description (please refer to ANNEX'ts" - l:50,000 scale Location Map/Sketch


Tie Point: S 48'23' W, 640.39 meters to Comer No.

Mankayan, Benguet


from BLBM No.





The Contractor shall commence Exploration

Timetable for 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 eight

(8) years, subject to annual review and approval by the Director to evaluate

compliance with the terms and conditions of this Agreement: Provided, That

further renewal may be granted by the Secretary under circumstances as defined in

the implementing rules and regulations of the Act.


case where

a Temporary Exploration Permit was issued, the Period of

Temporary Exploration Permit shall be included as part


of the Exploration Period

of this Agreement.


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 Cootractor in conducting exploration activities

under the terms of this Agreement during the Exploration Period shall be in the

aggreBate of not less than that specified for each ofthe Contract Years, as follows:

For the Exploration Work Program:

In the event of edension ofthe Exploration Period, the amount to be spent every

year shall first be agreed upon by the parties.

In the event of termination ofthis Agreement, the Contractor shall only be obliged

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

termination, If during any Contract Year, the Contractor should expend more than

the amount to be expended as provided above, the excess may be subtracted from

the amount required to be expended by the Contractor during the succeeding

Contract Years, and should the Contractor, due to unforeseen circumstances or

with the consent ofthe Government, expend less during a year, then the deficiency

shall be applied to the amount to be expended during the succeeding Contract


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

Period, the Contractor may relinquish totally or partially the original Contract

Area. After the Exploration Period and prior to or upon approval of the

Declaration of Mining Project Feasibility, the Contractor shall finally relinquish any

portion ofthe Contract Area not necessary for mining operations and not covered

by any Declaration of Mning Project Feasibility.


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

perimeter of the Contract Area through an application for survey, complete with

requirements, filed with the concerned Regional Office simultaneous with the

submission of the Declaration of Mining Pdect Feasibility. Survey retums shall

be submitted to the concerned Regional Director for approval within one (l) year

from receipt of the Order of Survey complete with the mandatory requirements

stated in the implementing rules and regulations of the Act.

Declaration of Mining Project Feasibility - During the Exploration Period, the

Contractor shall submit to the Director through the concerned Regional Director, a

Declaration of Mining Project Feasibility together with a Mning Project Feasibility

Study, a Three (3)-Year Development and Construction or Commercial Operation

Work Progranr, a complete geologic report of the area and an Environmental

Compliance Certificate. The Mining Project Feasibility Study and Work Program

are subject to approval by the Director.

Failure of the Contractor to submit a Declaration of Mining Project Feasibility

during the Exploration Period shall be considered a substantial breach of this




Periodic Reports - During the Exploration Period, the Contractor shall

submit to the Director tkough the concerned Regional Drector, quarterly

and annual accomplishment reports under oath on all activities conducted in

the Contract Area from the Efiective Date of this Agreement. The quarterly

report shall be submitted not later than fifteen (15) days at the end of each

Calendar Quarter while the annual accomplishment report shall be submined

not later than thirty (30) days from the end of each Calendar Year. Such

information shall include detailed financial expenditures, raw and processed

geological, geochemical, geophysical and radiometric data plotted on a tnap

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

samples, field dat4 copies of originals from drilling reports, maps,

environmental work program implementation and detailed expenditures

showing discrepancieVdeviations 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 ofthis Agreement.


Final Report

- The Contractor

shall submit to the Director through the

concemed Regional Director, a final report under oath upon the expiration of

the Exploration Period which shall be in the form and substance comparable

to published professional reports of respectable international institutions and

shall incorporate all the findings in the Contract Area including location of

samples, assays, chemical analysis, and assessment of mineral potentials

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

rezults ofthe 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/concemed Regional Director,

submit to the Regional Office a quarter of the core samples which shall be

deposited in the Regional Office Core Library for safekeeping and reference.




The Contractor shall submit a separate

Relinquishment Report

relinquishment report with a detailed geologic report ofthe relinquished area

accompanied by maps at a scale of l:50,000 and results of analyses and

detailed expenditures, among others.




Timetable - The Contractor shall complete the development of the mine including

the construction of production facilities within thkty six (36) months from the

submission of the Declaration of Mining Project Feasibilrty, subject to such

extension based on justifiable reasons as the Director may approve, upon

recommendation of the Regional Director.



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

3l of each year, to the Director through th€ concerned Regional Director, an

armual report which states the major activities, achievements and detailed

expenditures during the year covered including rnaps, assays, rock and

mineral analyses and geological and environmental reports progress during

the Development and Construction Period.


Final Report - Within six (6) months from the completion of the development

and construction activities, the Contractor shall submit a final report to the

Director through the concerned Regional Director. Such report shall

integrate all information in maps of appropriate scale and quality as well as in

monographs or reports in accordance with intemational standards.

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.



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 Drector

through the concemed Regional Director, a Quarterly Report stating the

production in terms


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.




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 concerned Regional Director, indicating in sufficient detail:


The total tonnage of ore reserves, whether proven, probable, or

inferrd 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

known to the Contractor,

tofitages refined" processed or manufactured in the Philippines with full

specifications as to the intermediate products, by-products or final

products and ofthe 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 prograrn, including the investment actually made or


of work force,

including management and stafr stating

particularly their nationalities, and for Filipinos, their place of origin

(i.e., barangay, towr; province, region); and

b.3) Profile

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

The Contractor shall also comply with other reporting requirements provided

under Section 270 of the implementing rules and regulations of the Act.





General Principle - The fiscal regime of this Agreement shall be govemed 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 ofthe Contractor.

Registration Fees

- Within fifteen ( 15) days upon receipt of the notice of approval

ofthe MPSA from the concerned Regional Office, 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 ofthe same.

Occupation Fees - Prior to registration of this Agreement and at the same date

every year thereafter, the Contractor shall pay to the concemed MunicipaVCity

Treasurer an occupation fee over the Contract Area at the annual rate provided in

the existing rules and regulations. Ifthe fee is not paid on the date specified, the

Contractor shall pay a surcharge of twenty five percentum (25%) of the amount

due in addition to the occupation fees.

Share of the Govemment - The Govemment 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) ofthe National Internal Revenue Code, as

amended, as well as other taxes, duties, and fees levied by existing laws.

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

Contractor shall strictly comply with the auditing and accounting requirernents

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


Pricing of Sales - The Contractor shall endeavor to obtain the best achievable price

for its production and pay the lowest achievable marketing commissions and

related fees. The Contractor shall seek to strike a balance between long-term sales

comparable to policies followed by independent producers in the international

mining industry.

The Contractor shall likewise seek a balanced distribution among consumers.

Insofar as sales to Contractor's affiliates are concerned, prices shall be at arm's

length standard and competing offers for large scale and long-term contracts shall

be procured. The Bureau shall be fumished a copy of the said Sales Agreernent

subject to confidentiality between the Bureau and the Contractor.


Associated Minerals

If minerals other than gold copper, silver are discovered in

commercial quantities in the Contract Area, the value thereof shall be added to the

value of the principal mineral in computing the share of the Govemment.




Submission to Government - Within the periods stated herei& the Contractor shall

prepare and submit to the Director through the concemed Regional Drector, a

Work Program and corresponding Budget for the Contract Area stating the

Mining Operarions 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.

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

Govemment wish to propose a revision to a certain specific feature in the Work

Program or Budget, it shall, within thirty (30) days after receipt thereo{, provide a

Notice to the Contractor speciling h reasonable detail its reasons therefor.

Promptly thereafteq the Government and Contractor will meet and endeavor to

agree on the revision proposed by the Govemment. In any event, the revision of

any portion of said Work Program or Budget in which the Government shall fail to

notiry the Contractor ofthe proposed revision shall, insofar as possible, be carried

out as prescribed herein. If the Govemment should fail within sixty (60) days from

receipt thereof to notiry Contractor of the proposed revisions, the Work Program

and Budget proposed by the Contractor shall be deemed to be approved.

Contractor's Changes to Work Program - It is recognized by the Government and

the Contractor that the details of any Work Program may require changes in the

light of changing circumstances. The Contractor may make such changes:

Provided, That it shall not change the general objective of the Work Program:

Provided further, That changes which entail a variance of at least twenty

percentum (200lo) shall be subject to the approval ofthe Director.


The Government's approval of a proposed Work Program and Budget will not be

unreasonably withheld.







The Contractor shall manage its Mining Operations in a technically, n r-"i"ffy, \

socially, culturally and environmentally responsible manner to achieve the

sustainable development objectives and responsibilities as provided for under the

implementing nrles and regulations of the Act;

10.2 The Contractor shall prepare a plan of

mining so that its damage to the

environment will be minimal. To the extent possible, control of pollution and the

transformation ofthe mined-out areas or materials into economically and socially

productive forms must be done simultaneously with mining;

10.3 The Contractor shall submit an Environmental Work Program during the

Exploration Period as prescribed in the implemorting rules and regulations of the


10.4 An

Environmental Compliance Certificate (ECC) shall be secured first by the

Contractor prior to the conduct of any development works, construction of

production facilities and/or mine production activities in the Contract Area;


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 environmentaVgeological conditioq nature and scale of

operations and technology to be employed in the Contract Area;




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


direct mining and milling coss depending on the

environmentaVgeologic condition, nature and scale of operations and technology

employed in the Contract Area;

of its


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

financial requirements of the approved EPEP as a reasonable environmental

deposit to ensure satisfactory compliance with the commitments/strategies of the

EPEP/AEPEP and availability of funds for the performance of the EPEP/AEPEP

during the specific project phase. The MRF shall be deposited as Trust Fund in a

govemment depository bank and shall be used for physical and social rehabilitation

of areas afiected by mining activities and for research on the social, technical and

preventive aspects of rehabilitation;


The Contractor shall set up mitigating measures such as mine waste and mill

tailings disposal systenr, mine rehabilitation or plaq water quality monitoring, etc.

to minimize land degradation, air and water pollutioq acid rock drainage and

changes in hydrogeology;


The Contractor shall set up an Environmental and Safety Office at its minesite

manned by qualified personnel to plan, implement and monitor its approved EPEP;

10.10 The Contractor shall be responsible in the monitoring of environmental safety and

health conditions in the Contract Area and shall strictly comply with all the rules

and regulations embodied under Mines Administrative Order No. MRD-51, Series

of 1991, otherwise known as the "Revised Mine Safety Rules and Regulations";

10. I


The Contractor shall be responsible for the submission of a final mine rehabilitation

financial requirements and

incorporating the details and particulars set forth in the implementing rules and

regulations ofthe Act.

and/or decommissioning plans including






Obligations of the Contractor:


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

or approved Work Program;


To determine the exploratio4 mining and treatment process to be utilized in

the Mining Operations;


To extract, remove, use and dispose

approved Work Program;


of any tailings as authorized by



secure all permits necessary


or desirable for the purpose of Mining

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


To furnish the Bureau all the data and information gathered from


Contract Area and that all the books of accounts and records shall be open

for inspection;

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;

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 indemnifr the Govemment for any expenses or costs incurred

by the Govemment by reason of any such claims, accounts, demands or


In the development of the community:

j.1) To r*ognize and respect the rights, customs and traditions


to \

value \

indigenous cultural communities over their ancestral lands and

allocate royalty payment of not less than one percent (I%) ofthe

ofthe gross output of minerals sold,


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,

educatior\ 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,


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 (l%) ofthe gross output intended for

the concerned indigenous cultural community;


j. )

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.tre curently not available,

the Contractor must immediately prepare and undertake a training and

recrultment program at lts expense;




To incorporate in the Mining Project Feasibility Study the planned

(. I ) to (.3) of this Section;

expenditures necessary to implement

In the development

of Mining Technology

and Geosciences:

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


geochemical and other types of maps and reports that are appropriate in

scale and in format and substance which are consistent with the

intemationally 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 tkee (3) years;

k.2) To

systematically keep the data generated from the Contract/Mining

Area such as cores, assays and other related informatiorl including

economic and financial data and make them a@essible to students,

researchers and other persons responsible for developing mining,

geoscience and processing technology subject to the condition that the

Contractor may delay release of data to the science and technology

community within a reasonable period of time which shall not exceed

three (3) years;


3) To transfer to the Govemment or local mining company the

appropriate technology it may adapt in the exploration, development

and commercial utilization of the minerals in the Contract


k.4) To allocate

research and development budget for the advancement of

mining technology and geosciences in coordination with the Bureau,

research institutions, acaderne, etc. ;

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, howevel that the release

of dat4 maps and the like shall be similarly constrained in accordance

with (k. I ) and (k.2) above;

incorporate in the Mning Project Feasibility Study the planned

expenditures necessary to implement all the plans and programs set forth in

this Agreement; and



To pay all other taxes and fees mandated by existing laws, nrles




Rights ofthe Contractor

The Contractor shall have the right:


To conduct Mining Operations within the confines of its Contract/Mining

Area in accordance with the terms and conditions hereof and that it shall not

interfere with the rights ofother ContractorylesseeVOp eratorcl



ofthe Contract Are4 with full right of ingress and egress and

the right to occupy the same, subject to surface and easement rights;


To use and have access to all declassified geological, geophysical, drilling,

production and other data relevant to the mining operations;

To sell, assigrr, transfer, convey or otherwise dispose of all its rights, interests

and obligations under the Agreement subject to the approval of the


To employ or bring into the Philippines foreigrr 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. Everytime foreign technologies are utilized

and where alien executives are employeq 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;

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;

Of repatriation of capital and remittance of profits, dividends and interest on

loans, subject to existing laws and Bangko Sentral rules and regulations;



To import when necessary all equipment, spare parts and raw materials

required in the operations in accordance with existing laws and regulations.



Obligation of the Govemment

The Government shall:

Ensure that the Contractor has the Govemment's full cooperation in the

exercise ofthe rights granted to it under this Agreement;

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;


cooperate with the Contractor in its efforts to obtain financing

contemplated herein from banks or other financial institutions: Provided,

That such funncing arangements will in no event reduce the Contractor's


obligation on Govemment rights hereunder.

reasonably estimated to be required in carrying out such Mining Operations.

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

Contract Area ofa movable nature by the Contractor shall remain the properry 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 (l) year from the time of cessation within

which to remove its improvements; otherwise, all social infrastructures and

facilities shall be tumed over or donated tax {iee 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.


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

employees shall be included in the Operating Expenses.


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.




The Govemment and the Contractor shall consult with each other in good faith

and shall exhaust all available rernedies 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 14.2 below.


Any disagreernent or dispute which can not be settled amicably within a period of

one (1) year Aom the time the issue was 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 another to be appointed by the Secretary.

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 a$itration shall be conducted app$ing the substantive laws of the

Republic of the Philippines.


Each party shall pay fifty percentum (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.





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

with any provision or requirement of the Act and/or its implementing rules and

regulations; (b) to pay taxes, fees and/or other charges demandable and due the



This Agreement terminates or may be terminated for the following causes: (a)

expiration of its ternr, whether original or renewal; (b) withdrawal from the

by the Contractor; (c) violation by the Contractor of the Agreement's

terms and conditions; (d) failure to pay tixes, feeVor charges or financial

obligations for two (2) consecutive years; (e) false statement or omission of facts

by the Contractor; and (0 any other cause or reason provided under the Act and its

implementing nrles 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 hereoe 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.


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 minhg 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



No delay or omissions or course of dealing by the Government shall impair any of

its rights under this Agreement, except in the cas€ 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



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

accnrdance with good mining industry practice. __F\


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



The following acts or omission, inler alia shall constitute breach of contract upon

which the Govemment may exercise its right to terminate the Agreement:


Failure of the Contractor without valid reason

Production within the period prescribed; and


Failure ofthe Contractor to conduct mining operations and other activities in

accordance with the approved Work Programs and/or any modification

thereof as approved by the Director.

15.9 The Government


commence Commercial

may suspend and cancel tax incentives and credits



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



16.1 Any terms and conditions

resulting from repeal or amendment of any existing laws

or regulation or from the enactment of a law, regulation or administrative order

shall be considered a part ofthis Agreement.



A1l notices, demands and other communications required or permitted hereunder

shall be made in writing, telex or telecopy and shall be deemed to have been

given notice, in the case oftelex or telecopy, if answered back or

received, or if delivered by hand, upon receipt or ten days after being deposited

the mail, airmail postage prepaid and addressed as follows:


confirmation N


in \..

If to the Govemment:


Department of Environment and Natural Resources

DENR Building , Visayas Avenue

Dilimaq Quezon City

If to the Contractor



Itugon - Suyoc Mines, Inc.

7s Floor, Ortigas Building

Ortigas Avenue, Pasig City

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



Governing Law

This Agreement and the relation between the parties hereto shall be govemed 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 proisions of the

Act, its implementing rules and regulations and other relevant laws






of Obligation

Any failure or delay on the part of any party in the perlormance of its

obligation or duties hereunder shall be excused to the extent attributable to

Force Majeure.

b) If

Mining Operations are delayed, curtailed or prevented by such Force

Majeure causes, then the time for enjoyng 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




The Party, whose ability to perform its obligations is affected by stch 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 ef[ect and shall use its efforts to remedy zuch delay, except that

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


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

by mutual consent in writing ofthe herein parties.


day and

WEEREOF, the Parties hereto have executed this Agreement,

year first above written

of Environment and

atural Resources

as of the

Republic of the Philippines)


al 6a<,zn


Before me, a Notary Public for and in the City of Quezon, personally appeared HON.

ANTONIO H. CERILLES, with Community Tax Certificate No. 07460519 issued on

January 13, 2000 at Dumalinao, Zamboanga del Sur, in his capacity as Secretary of the

Department of Environment and Natural Resources, and ALBERTO M. IVIONTILLA,

me a.nd to me known to be the same persons who executed the foregoing instrument

consisting of twenty two (22) pages, including this acknowledgment page, and

acknowledged to me that the same is their voluntary acts and deeds.




No. d 4/L


of 19 l-oo<:


reYised (20-Mar".00)


have hereunto set my hand and affix my notarial seal, this

of l4a^,cL