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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
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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
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Page No.
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