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This MINERAL PRODUCTION SHARING AGREEMENT is made and entered into

in Quezon City, Philippines, this

day

JUN 0 tl Z0l0 by and

between;



of



_



THE REPUBLIC OF THE PHILIPPINES, herein referred to as the cOVERNMENT,

represented in this act by the Secretary of the Oepartment of Environment and

Natural Resources, with otlice at the Department of Environment and Natural

Resources Building, Visayas Avenue, Diliman, Quezon City



and



BO GO RESOURCES MINING CORPORATION herein referred to as the

CONTRACTOR, a corporation duly organized and existing under the laws of the

Republic of the Philippines, with offlce at 21D LpL Buitding, No. 17 Eisenhower

Street, Greenhills, San Juan, Metro Manila and represenied in this act by its

lr.9!,g.nt Hur Hyung as authorized by its Board of Directors lptease refer to



ANNEX'A)



WHEREAS, the '1987 Constitution of the Republic of the phitippines provides in

Article Xll, 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 und'er the full control and

supervision of the State;

WHEREAS, the Constitution further provides that the State may direcfly undertake

such activities, or it may enter into a Co-produclion, 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, otheMise known as,,The

Philippine Mining Act of '199S," whichtook effect on 09 Aprit 199S, the Secretary

of

the Department of Environment and Naturar 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 eco'nomy ttrrougn

sustainable and systematic development and utilization of mineral lands;

WHEREAS, the Government desires to avail itself of the financial

resources ,D

technical competence and skill. which the Contractor ir"rprUf"

oi

mining operations of the project contemplated herein,

"jpfy;-g-i;



il *



SECTION



I



SCOPE



This Agreement is a Mineral Production Sharing Agreement entered into

pur"urit to the provisions of the Act and its implementing rules and

iegulations. The primary purpose of this Agreement is to provide for the

iaionat erptoration, devilopment and commercial utilization of magnetite

ind other associated mineral deposits existing within the Contract Area' with

technology and financing to be furnished or arranged

uii n"""""rty

""ri"es,

in accordance with the provisions of this Agreement' The

uv tne Contiactor

Ctntractor shall not, by virtue of this Agreement, acquire any title over the

of

ContracUtr,tining nrea without prejudice to the acquisition by the Contraclor

provided

by

law'

for

the land/surfac; rights through any mode of acquisition



The Contractor shall undertake and execute, for and on behalf of the

Government, responsible mining operalions in accordance with the

jrovisions oi this Agreement, and is hereby constituted and appointed, for

ih" prrpo"e 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 quantity are developed and produced, it will not be entitled to

reimbursement.



1.4.



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

mineAls derived from the mining operations contemplated herein shall

accounted for and divided between the Government and the Contractor

accordance with Section Vlll hereof.



sEcTloN ll

DEFINITIONS



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

plural, shail have the following respective meaning:



2.1. Act



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

Mining Act of '1995."



2.2. Aoreement



means this Nlineral Production Sharing Agreement.



2.3.



Associated Minerals mean other ores/minerals, which occur together with

the principal ore/mineral.



2.4.



Banqko



Sentral



means Bangko Sentral ng Pilipinas.



2.5. Budoet



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 sufflcient 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 Octobe|ls, '1986 and ratified by the People of the Republic of the

Philippines on February 2, 1987.



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

Mineral Production Sharing Agreement subject to the relinquishment

obligations of the Contractor and properly defined by latitude and longitude

or bearing and distance.



2.'11. Contract Year means a period of twelve ('12) consecutive months counted

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

Effective Date.



2.12. Contaclot means Bo co Resources Mining Corporation or its assignee(s)



of interest under this Agreement: provided, That the assignment of any of

such anterest is accomplished pursuant to the pertinent provisions of the,p

implementing rules and regulations of the Act.



2.13. Declaration -of Mining proiect Feasibilitu means a document proclaiming the

presence of minerals in a specific site, which are recoverable

Oy soiiatty



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

Resources.

means the Director of Mines and Geosciences Bureau.



2.16. Effectave



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. 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, extent, quality and quantity of mineral

resources and the feasibility of mining them for profit.



2.19. Exploration



Period



shall mean the period from the Effeclive Date of this

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

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

(8) years for metallic minerals, sub.iect to the pertinent provisions of the

implementing rules and regulataons of the Act.



2.20. Force Maieure 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.



2.21. Foreign Exchanqe means any currency other than the currency of the

Republic of the Philippines acceptable to the Government and the

Conlractor.



2.22. Government means the Government of the Republic of the philippines or

any of its agencies and instrumentalities.



2.23. 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: provid6d, That iiihe minerals or

mineral products are sold or consigned abroad by the Contractor under

C.l.F. terms, the actual cost of oiean freight a;d insurance shall be

deducted: Provided further, That in the case oi mineral concenkates

which O

are not traded in commodity exchanges in the philippines or abroad

such as

copper concentrate, the actual markel value shill be the

world price

quotation of the refined mineral products contained

ttrerlot prevaiting in the

said commodity exchanges, after deducting the smeriing,

[rtiig, rreatrent,



insurance, transportation and other charges incurred in the process of

converting mineral concentrates into refined metal traded in those

commodity exchanges.



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

mineral deposit for mining, including the constructaon of necessary

infrastructure and related facilities.



2.25. Minerals mean all naturally occurring inorganic substances in solid, liquid,

gas or any intermediate state excluding energy materials such as coal,

petroleum, natural gas, radioactive materials and geothermal energy.



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

prepared into marketable state by metallurgical processes which include

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

processes.



2.27. Minino 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 suppo( facilities.



2.28. Minino Operations means mining activities involving exploration, feasibility

study, environmental impact assessment, development, utilization, mineral

processing and mine rehabilitation.



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

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

16.2 of this Agreement.



2.30.



Ore means naturally occurring substance or material from which a mineral

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



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

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

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

unnecessary noise or any emission of objectionable odor, as will or is likely

to create or render such water, air, and land resources harmful, detrimental

or injurious to public health, safely or welfare or which will adversely affect

their utilization for domestic, commercial, industrial, agricultural, recreational

or other legitimate purposes.



2.32. Secretarv means the Secretary of the Department of Environment and

Natural Resources.



Prooram 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 com-munities anO

oi

local geoscience. and mining technology, as-submitt'ed and approved

in

accordance with the imptementing rules ;nd regulations of

the Act



2.34. Work



e



SECTION III

TERM OF AGREEMENT



3.1.



This Agreement shatl have a term of twenty-five (25) years from Effeclive

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

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

the terms and conditions thereof, shall be upon mutual consent b, the

parties. ln lhe event the covernment decides to allow mining operitions

thereafter by other Contractor, this must be through competitive public

bidding. After due publication of notice, the Contractoi shall have the right to

equal the highest bid upon reimbursement of all reasonable expenses of the

haghest badder.



4.1.



""::::'""i;=^



-



Size, Shape, and Location of Contract Area

This Agreement covers a

Contract Area

approximately Fourteen Thousand Two Hundred Forty

(14,240.0000) hectares, situated in Sanchez Mira, pamplona, Abulug,

Ballesleros, Aparri, Buguey and Gonzaga, Cagayan and bounded by thL

following geographical coordinates (please refer to ANNEX .A. - j:SO,OOO

scale Location Map/Sketch Plan):



of



Corner



Longitude



The Contractor shall submit the proof of consuttation with the majority of the

Sanggunian concerned in the form of Resolution or Ce(ification prioi to the

implementation of the Exploration Work Program as prescribed under the

implementing rules and regulations of the Act.

The Contractor shall also submit a Community Development program to the

Regional Office concerned within six (6) months upon registraiion of this

Agreement as prescribed under the implementing rules and regulations of

the Act.

Renewal of Exploration Period - ln case the Conlractor opts for a renewal of

its Exploration Period, it shall file prior to the expiration thereof, a renewal

application

the Mines and Geosciences Bureau Central Office,

accompanied by the mandatory requirements stipulated in the implementing

rules and regulations of the Act. The Director may grant the renewal of th;

Exploration Period on condition that the Contractor has substantially

complied with the terms and conditions of the Agreement. provided, That

with or without the filing of the renewal application, the Exploration perjod

shall, upon its expiration, automatically shift to the next two (2) - year term,

and so on.



in



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

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

implemented the Exploration and Environmental Work Programs as verified

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

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

performance surety equivalent to the expenditure requirement of the

Exploration and Environmental Work Programs.



Work Programs and Budgets - The Contractor shall shicfly comply with the

approved Exploration and Environmental Work programs together with their

corresponding Budgets (please refer to ANNEXES "C" and "D").



The amount to be spent by the Contractor in conducting Exploration

activities under the terms of this Agreement during the Exploration period

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

Contract Years, as follows:

For the Exploration Work Program:

1st Contract

2nd Contract Year



Year



Total



For the Environmental Work



:



,



Program



:



PhP 1,140,000.00

PhP 4,000.000.00

PhP 5,140,000.00



PhP



650,000.00



ln the event of renewal of the Exploration period, the amount to be spent

every year shall first be agreed upon by the parties.

ln the event of termination of this Agreement, the Contractor shall onlv be

obliged to expend the pro-rata amount for the period of such Contra;t

Q

prior to terminatron. lf during any Contract Vear, the Contiactoi

snoufO

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



i;



Iililililltltrililll]illitflIilltililtiliifltilililu



Contractor during the succeeding Contract years, and should the Contractor,

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

expend less during a year, then the deficiency shall be applied to the amount

to be expended during the succeeding Contract years.

Relinquishment of Total/Portion of the Contracl 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 ipproval of a

Declaration of Mining Project Feasibility by the Director, the Coniractor shatl

Iinally relinquish any portion of the Contract Area not necessary for mining

operations and not covered by any Declaration of Mining project Feasibility.

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

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

implementing rules and regulations of the Act: provided that each final

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



Declaration of Mining Project Feasibility - Within the term of the Exploration

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

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

Area supported by Project Feasibility Study, Three (3)-year Development

and Construction or Commercial Operation Work program, complete

geologic report, an application for survey and the pertinent Environmental

Compliance Certificate, among other applicable requirements. Failure of the

Contractor to submit the Declaration of Mining project Feasibility during the

Exploration Period shall be considered a substantial breach of this

Agreement.

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

perimeter of the Contract Area/Iinal Mining Area through an application for

survey, complete with requirements, filed in the Regional Office concerned

simultaneous with the submission of the Declaration of Mining Feasibility.

Survey returns shall be submitted to the Regional Director concerned for

approval within one (1) year from receipt of the Order of Survey complete

with the mandatory requirements stated in the implementing rules and

regulations of the Act.

Reporting



a.



During the Exploration period, the Contractor shall submit to the

Director, through the Regional Director concerned, quarterly and

annual accomplishment reports under oath on all activities conducted

in the Contract Area from the Effective Date of this Agreement. The

quarterly report shall be submrtted not later than fifteen (.15) davs

at

the end of each Calendar euarler while the annual accomplishment

report shall be submitted not later than thirty (30) days from t'he end of

each Calendar Year. Such information shall include detailed financial



expenditures,



raw and



processed geological, geochemical,



geophysical and radiometric data plotted on a-map at- a minimum

1;50,000 scale, copies of origrnals of assaV results. duDlicated

samples. fleld data, copies of onginals from d'rilling reports. m-pi, Q

environmental work program implementation - and d"t"lt"O

expenditures showing discrepancies/ deviations witn aporoveO

exploration and envlronmental ptans and budgets as *"if

," iiiotn",



information of any kind collected during the exploration activities. All

information submitted to the Bureau shall be subject to the

confidentiality clause of this Agreement.

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

Regional Director concerned, a final report under oath upon the

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



to



published professional reports of

respectable international institutions and shall incorporate all the

subslance comparable



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

chemical analysis, and assessment of mineral potentials together with

a geologic map of 1:50,000 scale at the minimum showing the results



of the exploration. Such report shall also include detailed

Period. ln case of

diamond drilling, the Contractor shall, upon request of the

expenditures incurred during the Exploration



Director/Regional Director concerned, submit to the Regional Office

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

the Regional Offlce Core Library for safekeeping and reference.



Relinquishment Report - The Contractor shall submit a separate

relinquishment report with a detailed geologic report of the

relinquished area accompanied by maps at a scale of 1:50,000 and

results of analyses and detailed expenditures, among others.



SECTION VI



DEVELOPMENT AND CONSTRUCTION PERIOD



Timetable - The Contractor shall complete the development of the mine

including the construction of production facilities within thirty-six (36) months

from the submission and approval of the Declaration of Mining POect

Feasibility, subject to such extension based on justifiable reasons as the

Director may approve, upon recommendation of the Regional Director

concerned.

Reporting



a.



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

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

Director concerned, an annual report, which states the major

activities, achievements and detajled expenditures during the year

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

geological and environmental progress reports during the

Development and Construction Period.



b.



Final Report



-



Within six (6) months from the completion of the



development and construction activities, the Contractor shall submit a

final report to the Director, through the Regional Director concerned.

Such report shall integrate all information in maps of appropriate O

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

with international standards.



SECTION VII



OPEMTING PERIOD

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

completion of mine development and construction of production f;cilities, to

the Director, through the Regional Director concerned, a Three_year

Commercial Operation Work Program. The Contractor shall commence

commercial utilization immediately upon approval of the aforesaid Work

Program. Failure of the Contractor to commence Commercial production

within the period shall be considered a substantial breach of the Agreement.

Commercial Operation Work Program and Budget - During the Operating

Period, the Contractor shall submit lo the Director, through the Regiona-l

Director concerned, Work Programs and Budgets covering a period oithree

(3) years each, which shall be submitted not tater than thirty (30) days before

the expiration of lhe period covered by the previous Work program.



The Contractor shall conduct Mining Operations and other activities for the

duration of the Operating Period in accordance with the duly approved Work

Programs and corresponding Budgets.

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 considei

necessary for the operations: Provided, That such plans shall be embodied

in an appropriate Work Program approved by the Director.

Reporting



a.



Quarterly Reports - Beginning with the first Calendar euarter following

lhe commencement of the Operating period, the Contractor shail

submit, within thirty (30) days after the end of each Calendar euarter.

to the Director, through the Regional Director concerned, a euarterly



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 sufflcient 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 acfually

'.

shipped from the philippines or not), tonnages actually shipped e

from the phitippines (with full detaits as to plrchaser,

destination and terms of sale), and if known to the Contractor,

tonnages refined, processed or manufactured in the



Philippines with futl specifications as to the intermediate

products, by-products or final products and of the terms at



which they were disposed;



b.2.



Work accomplished and work in progress at the end of the

year in question with respect to all the installations and facilities

related to the utilization program, including the investment

actually made or committed; and



b.3.



Profile of work force, including management and staff, stating

particularly their nationalities, and for Filipinos, their place oi

oragin (i.e., barangay, town, province, region).



The Contractor shall also comply with other reporting requirements provided

for in the implementing rules and regulations of the Act.



sEcTtoN



v



t



FISCAL REGIME

General Principle - The fiscal regame 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



hagh risk of exploration, the terms and conditions prevaaling elsewhere in the



industry and any special efficiency

performance of the Contractor.



to be gained by a particulady good



- 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 Fees



registration of this Agreement within the prescribed period shall be sufficient

ground for cancellation of the same.



- Prior to registration of this Agreemenl and at the same

date every year thereafter, the Contractor snill pay to the Bureau an

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

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

the Contractor shall pay a surcharge of twenty five percent (25ol) of the

Occupation Fees



amount due in addition to the occupation fees.



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 .15.1 (a) of the National lnternal

Revenue Code, as amended, in addition to a Royalty of not less than five

percent (5%) of the gross output, as well as other tixes, duties and fees Q

^

levied by existing laws. The Excise Tax shall be timely and completely paid

to the nearest Bureau of lnternal Revenue Office in the province concLrned

while the Royalty shall be paid direcfly to the Bureau.



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

accounting

requirements prescribed under existing laws and regulations.



the Contractor shall strictly comply with the auditing and



The Government Share shall be allocated in accordance with Sections 2gO

and 292 ol Republic Act No. 7'160, otherwise known as ,,The Local

Government Code of 1991."



Pricing of Sales - The Contractor shall dispose of the minerals and byproducts produced at the highest market price prevailing in the locality. The

Contractor shall also pay the lowesl 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

policies followed by independent producers in the

comparable

international mining industry.



to



The Contractor shall likewise seek



a



balanced distribution among

consumers. lnsofar as sales to Contractols 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 additjons

in said contract(s)/agreement(s).



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

Sales and lnventory of Minerals, as well as in the lntegrated Annual Report,



the



corresponding registration numbe(s)



of the



marketing



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

Associated Minerals - lf minerals other than magnetite and other associated

mineral deposits are discovered in commercial quantities in the Contract

Area, the value thereof shall be added to the value of the principal mineral in

computing the Government share.



SECTION IX



WORK PROGRAMS



9.1.



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



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

^

concerned, a Work program and corresponding Budget for the Contract ?

Area stating the Mining Operations and expendiiures,irtricn tne Contractor

proposes to carry out during the period covered with the

details and

particulars set forth elsewhere in this Agreement or jn

the supporting

documents.



Government's Examination and Revision of Work program _ Should the

Govemment decide to propose a revision to a certain sp"eciRc teatuie in

tne

Work.Program or Budget, it shall, within thirty (30) days afte,,e""ipl m.r.of,

provide a Notice to the Contractor specifying in reasonable

detail ris reasons

therefore. Prompfly thereafter, the Goveriment anO Contr"ctof wiii'reet

and endeavor to agree on the revision proposed by the Government.

ln any

event, the revision of any portion of said Work program or Budoet in

which

the.Government sha fait to notify the Contractor ;f the

;evision

sna[, rnsoiar as possible, be carried out as prescribed herein. lf the

Government shoutd fail within sixty.(60) days from receipt tnereoi to notity

Contractor of the proposed revisions, the Work program and Budget

proposed by the Contractor shall be deemed to be

approv-ed.



p;;;;;;



Contractor's Changes to Work program - lt is recognized by the Government

and the Contractor that the details of any Woik progiam may require

changes in the light of changing circumstances. The Coitractor mav make

such changesi Provided, That it shall not change the qeneral obiective

of

the Work Program: provided further, That chang;s whi;h entarl

variance of at least twenty percent (2oolo) shall bl subject to the appro"val

"'n"o"tir.

of

the Director.



ln case of any positive variance, the Contractor shall submit to the Director,

through the Regional Director concerned, a copy each of tne Wort

Programs, for information.



The Government s approval of a proposed Work program and Budget will

not be unreasonably withheld.



sEcTloN x

ENVIRONMENTAL PROTECTION AND MINE SAFETY AND HEALTH



'10.1. The Contractor shall manage its Mining

Operations in a technically,

flnancially, socially, culturally and environmenially responsible manner to

achieve the sustainable development objectivej and responsibilities as

provided for under the implementing rules and regulations

of the Act.

'10.2. The Contractor shall ensure that

the standards of environmental protection

are met in the course of the Mining 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

srmultaneously with mining.



'10.3. 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 actjvities

in the ioniract Area.



10.4. The Contractor shall submit the following programs/plan as prescribed

in the

implementing

rules and regulations of tn-e ecti



a.

b.



Environmental Work program,

Community Developmenl program;



,{



c.



Environmental Protection and Enhancement program (EpEp) and



Final Mine Rehabilitation and/or Decommissioning plan;



d.



Annual Environmental protection and Enhancement



program



(AEPEP); and



e.



Social Development and Managemenl program (SDMP).



'10.5. The Contractor shall establish a Contingent Liability and Rehabilitation

Fund

(CLRF) which shall be in the form of the Mine Rehabititation Fund (MRF) and

the Mine Waste and Taitings Fee (MWTF).



The MRF shall be based on the financial requirements of the approved

EPEP as a reasonable environmental deposit to ensure satisiactory

compliance with the commitments/strategies of the EpEp/AEpEp and

availability of funds for lhe performance of the EpEp/AEpEp during the

specific pOect phase. The MRF shall be deposited as Trust Fund in a

government depository bank and shall be used for physical and social

rehabilitation of areas affected by mining activities and for research on the

social, technical and preventive aspects of rehabilitation.



The MWTF shall be collected based on the amounts of mine waste and mill

tailings generated during the conduct of Mining Operations. The MWTF

collected shall accrue to a Mine Waste and Tailings Reserve Fund and shall

be deposited in a government depository bank for payment of compensation

for damages caused by the Minang Operations.



'10.6. The Contractor shall set up mitigating measures such as

mine waste and

mill .tailings disposal system, mine rehabilitation or plan, water quality

monitoring, etc. to minimize land degradation, air and water pollution, acid

rock drainage and changes in hydrogeology.

'10.7. 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.



10.8. The Contractor shall be responsible in the monitoring of environmental,

safety and heatth conditions in the Contracl Area and ihall stricfly comply

with all the rules and regulations embodied under DENR Administrative

Order No. 2000-98, otheffvise known as the .,Mine Safety and Health

Standards."



SECTION XI

RIGHTS AND OBLIGATIONS OF THE PARTIES



11.1. Obligations of the Contractor:



a.



To exclusively conduct sustainable Mining Operations within the

Contract Area in accordance with the provisions of ths Act and its

implementing rules and regulations;



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To construct and operate any facilities specified under the Mineral

Agreement or approved Work Program;



To determine the exploration, mining and treatment process to be

utilized in the lV!ining Operations;



To extract, remove, use and dispose of any tailings as authorized by

an approved Work Program;

To secure all permits necessary or desirable for the purpose of Mining

Operations;



To keep accurate technical records about the Mining Operations, as

well as financial and marketing accounts, and make them availabb to

Government representatives authorized by the Director for the

purpose of assessing the performance and compliance of the



of



the terms

this Agreement. Authorized

representatives of other Government Agencies may also have access

to such accounts in accordance with existing laws, rules and

regulations;

Contractor with



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;

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 oul 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;



To allot annually a minimum of one and a half percent (1.5%) of the

operating costs necessary to implement activities for the development

of mining community, mining technology and geosciences, and

institutionalization of public awareness and education on mining and

geosciences;

ln the development of the community:



k.1.



To recognize and respect the righls, 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;



k.2.



To coordinate with proper authorities in the development ofthe

host and neighboring communities in accordance with the

SDMP and to promote the general welfare of the inhabitants

living therein. Where traditional self-sustaining income and the

community activities are identified to be presenl, the Contractor



P



shall assist in the preservation and/or enhancement of such

activities; and



k.3.



To give preference to Filipino citizens who have established

domicile in the neighboring communities, in the hjring of

personnel for its mining operations. lf necessary skills and

expertise are currently not available, the Contractor must

immediately prepare and undertake a training and recruitment

program at its expensei



ln the development of Mining Technology and Geosciences:



1.1. ln 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;



To systematically keep the data generated from the Contracu



as cores, assays and other related

information, including economic and financial data and make

them accessible to students, researchers and other persons

responsible for developing mining, geoscience and processing

technology subject to the condition that the Contractor may

delay release of data to the science and technology community

within a reasonable period of time which shall not exceed three

(3) years;

Mining Area such



t.3.



To transfer to the Government or local mining company the

appropriate technology it may adapt in the exploration,

development and commercial utilization of the minerals in the

Contract Area;



To develop a



for the advancement of mining

technology and geosciences to build up resources and mineral

discoveries, improve operational efficiency and resource

recovery, and enhance environmental protection and mine

safety;

program



To



allocate research and development budget for the

advancement of mining technology and geosciences in

coordination with the Bureau, research institutions, academe,

etc.i and

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



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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;



m. To develop and institutionalize an Information, Education and

Communication Program



for greater public



awareness and



understanding of responsible mining and geosciences;



n.



To incorporate in the Mining project Feasibility Study the planned



expenditures necessary to implement all the plans and programs sel

forth in thas Agreement; and



o.



To pay all other taxes and fees mandated by exasting laws, rules and

regulations.



1'1.2. Rights of the Contractor:



a. To



of



conduct Mining Operations within the confines

its

ContracuMining Area in accordance with the terms and conditions

hereof and without interfering with

rights

other

Contractors/Lessees/Operators/permittees/permit Holders;



the



of



b.



Possession of the Contract Area, with full right of ingress and egress

and the right to occupy the same, subject to surface and easemenl

rights;



c.



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

drilljng, production and other data relevant to lhe mining operations;



d.



To sell, assign, transfer, convey or olheMise dispose of all its rlghts,

interests and obligations under the Agreement subject to the approval

of the Government;



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, ruies

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;

s.



Repatriation of capital and remittance of profits, dividends and interest

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

rules and regulations; and



h.



To import when necessary all equipment, spare parts and raw

materials required in the operations in accordance with existing laws

and regulations.



1 1



.3.



Obligations of the covernment:



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 simalar authorizing documents for use of the surface of

the Contract Areat and



c.



To cooperate with the Contractor in its efforts to obtain financing

contemplated herein from banks or other financial institutions:

Provided, That such financing arrangements will in no event reduce

the Contractor's obligation on Government rights hereunder.



SECTION XII



ASSETS AND EQUIPMENT

12.'1. The Contractor shall acquire for the Mining Operations only such assets that

are reasonably estimated to be required in carrying out such Mining

Operations.



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

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. ln 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 improvementsi

otheMise, 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.



sEcTtoN x

EMPLOYMENT AND TRAINING OF PHILIPPINE PERSONNEL



13.1. The Contractor agrees to employ, to the e{ent 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:"



D



SECTION XIV



ARBITRATION



14.'1. The Government and the Contractor shall consult with each other in good

faith and shall exhaust all available remedies to settle any and all disputes or

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

enforceability, or performance of this Agreement before resorting to

arbitration as provided for in Section 14.2. below.



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



a



period of one (1) year from the time the issue 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, otheMise known

as the "Arbitration Act."

ln any evenl, the arbitration shall be conducted applying the substantive laws

of the Republic of the Philippines.



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

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

and attorney's fee.



15.2. This Agreement terminates or may be terminated for the following causes:



(a) expiration of its term, whether original or renewali (b) withdrawai from the

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

Agreemenl's terms and conditions; (d) failure to pay taxes, fees/or charges

or financial obligations for two (2) consecutive years; (e) false statemeni or

omission of facts by the Contractor; and (f) any other cause or reason

provided under the Act and its implementing rules and regulations, or any

other relevant laws and regulations.



15.3. All statements made in this Agreement shall be considered as conditions

and essenlial parts hereof, and any falsehood in said statements or

omission of facts which may alter, change or affect substantially the fact set

forth in said statements shall be a ground for its revocation and termination.



15.4. The Contractor may, by giving due notice at any time during the term of this



Agreement, apply for its cancellation due to causes which, in the opinion of

the Contractor, render continued mining operation no longer feasible or

viable. ln this case, the Secretary shall decide on the applicaiion within thirty

(30) days from notice: Provided, That the Contractor has met

the

financial, tiscal and legal obligations.



a



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

any of its rights under this Agreement, except in the case of a written waiver.

The Government's right to seek recourse and relief by all other means shall

not be construed as a waiver of any succeeding or other default unless the

contrary intention is reduced in writing and signed by the party authorized to

exercise the waiver.



15.6. ln case of termination, the Contractor shall pay all the fees and other

liabilities due up to the end of the year in which the termination becomes

effective. The Contractor shall immediately carry out the restoration of the

Contract Area in accordance with good mining industry practice.



15.7. The withdrawal by the Contractor from the Mineral Agreement shall not

release it from any and all financial, environmental, legal and fiscal

obligations under this Agreement.



'15.8. The following acts or omission, inter alia shall constitute

breach of contract,

upon which the Government may exercise its right to terminate the

Agreement:



a.



Failure of the Contractor without valid reason to commence

Commercial Production within the period prescribed; and/or



b.



Failure of the Contractor to conduct mining operations and other

activities in accordance with the approved Work programs and/or any

modification thereof as approved by the Director.



'15.9. The Government may suspend and cancel tax incentives and credits if the

6

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

credits.



sEcTloN xvl

OTHER PROVISIONS



16.1. Any terms and conditions resulling from repeal or amendmenl of any

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

administrative order shall be considered a part of this Agreement.



16.2. Notice



All notices, demands and other communications required or



permitted

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

have been duly given notice, in the case of telex or telecopy, if answered

back or confirmation received, or if delivered by hand, upon receipt or ten

days after being deposited in the mail, airmail postage prepaid and

addressed as follows:

lf to the Government:



THE SECRETARY

Department of Environment and Natural Resources

DENR Building, Visayas Avenue

Diliman, Quezon City

lf to the Contractor:



THE PRESIDENT

Bo Go Resources Mining Corporation

21O LPL Building, No. 17 Eisenhower Street

Greenhills, San Juan, Metro Manila

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

other party: Provided, That the Contractor shall, in case of any change of

address during the term of this Agreement, notify the Director in writing.

Failure to do such notification shall be deemed as waaver by the Contractor

to be informed about any communications as provided in Section 16.2

above.



'16.3. Governing Law



This Agreement and the relation between the parties hereto shall be

governed by and construed in accordance with the laws of the Republic of

the Philippines. The Contractor hereby agrees and obliges itself to comply

with the provisions of the Act, its implementing rules and regulations and

other relevant laws and regulations.



'16.4. Suspension of Obligation



a.



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

obligation or duties hereunder shall be excused to the extent attrabutable lo Force Majeure as defined in the Act: Provided, That Q

the suspension of Mining Operations due to Force Majeure causes

shall be subject to approval by the Director.



lf 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.



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

obiigation to settle a labor dispute: Provided, That the suspension of

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

Director.



Resources



President



re over Pri



(Signature over Printed Name)



Republic of the Philippines)

Quezon City



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

HORACIO C. RAMOS with Community Tax Certificate No. 18221963 issued on

January 06,2010 at Quezon City, in his capacity as Secretary of the Department

of Environment and Natural Resources, and HUR HYUNG, with Community Tax

Certillcate No. 31106513 issued on March '19, 2010 at Pasig City, in his capacity as

President of Bo Go Resources Nlining Corporation, both known to me and to me

known to be the same persons who executed the foregoing instrument consisting of

twenty-three (23) pages, including this acknowledgment page, and acknowledged

to me that the same is their volunlary acts and deeds.

lN WITNESS WHEREOF, I have hereunto set my hand and affix my notarial seal,

., 1{'l1tl

day



of lllli



ItR ilo.lzzg>lg



Doc. No.

Page No.

Book No.

Series of



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