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Contract for Operating Mines in Non-reservation Areas

MPSA No. 114-98-IV
This MINERAL PRODUCTION SHARING AGREEMENT (this "Agreement") is made and entered into in Quezon City, Philippines, this ______ day of June 04 1998 by and between:
THE REPUBLTC OF THB PHILIPPINES, hereinafter referred to as the
GOVERNMENT, represented in this act by the Secretary of the Department of
Environment and Natural Resources, with offices at the Department
Natural Resources Building, Visayas Avenue, Diliman, Quezon City, Metro Manila
RIO TUBA NICKEL MINING CORPORATION, a corporation duly organized
and existing under the laws of the Republic of the Philippines, hereinafter referred to as
the CONTRACTOR, with offices at the 2nd Floor, Solid Mills Building, Dela Rosa St. Legazpi Village, Makait City and represented in this act by its President MANUEL B. ZAMORA, JR., as authorized by its Board under Annex "A" which forms an integral part hereof.
WHEREAS, the 1987 Constitution of the Republic of the Philippines provides in Article
XII, Section 2 thereof that all lands of the public domain, waters, minerals, coal,
petroleum, and other natural resources are owned by the State and that their exploration,
development and utilization shall be under the full control and supervision of the State;
WHEREAS, the Constitution further provides that the State may directly undertake such
activities, or it may enter into a Co-Production, Joint Venture, or Mineral Production
Sharing Agreement with Filipino citizens, or cooperatives, partnerships, corporations or
associations at least sixty per centum of whose capitalization is owned by such citizens;
WHEREAS, pursuant to Republic Act No. 7942, otherwise known as "The Philippine
Mining Act of 1995, which took effect on 09 April 1995, the Secretary of the
Department of Environment and Natural Resources is autltorized to enter into Mineral
Production Sharing Agreements in furtherance of the objectives of the Government and
the Constitution to bolster the national economy through sustainable and systematic
development and utilization of mineral lands;
WHEREAS, the Government desires to avail itself of the financial resources, technical
competence and skill which the Contractor is capable of applying to the mining operations
of the project contemplated herein;
WHEREAS, the Contractor has been conducting commercial quarry operation in the Contract Area since July 1975 by virtue of a mining lease contract granted under the previous
mining laws and intends to continue under the purview of the act and its implementing rules and regulations;
Contract for Operating Mines in Non-reservation Areas

 WHEREAS, the Contractor has access to all the financing, technical competence,
technology and environmental management skills required to promptly and effectively carry out the objectives of this Agreement.
NOW, THEREFORE, for and in consideration of the foregoing premises, the mutual
covenants, terms and conditions hereinafter set forth, it is hereby stipulated and agreed as follows:



1.1 This Agreement is a Mineral Production Sharing Agreement entered into pursuant to the provisions of the Act and its implementing rules and regulations. The primary purpose of this Agreement is to provide for the sustainable development and commercial utilization of gold and other mineral deposits existing within the Contract Area, with all necessary services, technology and financing to be
furnished or arranged by the Contractor in accordance with the provisions of this
Agreement. The Contractor shall not, by virtue of this Agreement, acquire any
title over the Contract/Mining Area without prejudice to the acquisition by the
Contractor of the land/surface rights through any mode of acquisition provided for
by law.
1.2 The Contractor shall undertake and execute, for and on behalf of the Government, sustainable mining operations in accordance with the provisions of this Agreement, and is hereby constituted and appointed, for the purpose of this Agreement, as the exclusive entity to conduct mining operations in the Contract Area.
1.3 During the term of this Agreement, the total value of production and sale of
minerals derived from the mining operations contemplated herein shall be
accounted for and divided between the Government and the Contractor in
accordance with Section VI hereof.
As used in this Agreement,the following words and terms,whether singular or plural,
shall have the following respective meaning:
2.1 ``Act'' refers to Republic Act No 7942, otherwise known as the ``Philippine
 Mining Act of 1995"
2.2 Agreement means this Mineral Production Sharing Agreement
2.3 Associated Minerals mean other ores/minerals which occur together with the
 principal ore/mineral
2.4 Bangko Sentral means Bangko Sentral ng Pilipinas.

2.5 Budget means an estimate of expenditures to be made by Contractor in mining operations contemplated hereunder to accomplish the Work Program for each particular period.

Contract for Operating Mines in Non-reservation Areas

2.6 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.
2.7 Commercial Production means the production of sufficient quantity of minerals to means an estimate of expenditures to be made by Contractor in mining
operations contemplated hereunder to accomplish the Work Program for each
particular period 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.
2.8 Constitution or Philippine Constitution means the 1987 Constitution of the
Republic of the Philippines adopted by the Constitutional Convention of 1986 on
October 15, 1986 and ratified by the People of the Republic of the Philippines on
February 2,1987.
2.9 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.
2.10 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
2.11 Contractor means RIO TUBA NICKER MINING CORP or its assignee
or assignees of interest under this Agreement: Provided, That the assignment of
any of such interest is accomplished pursuant to the provisions of the
Revised Implementing Rules and Regulations (DAO No. 96-40)
2.12 Declaration of Mining Feasibility means a document proclaiming the presence of minerals in specific site that are recoverable by socially acceptable,
environmentally safe and economically sound methods specified in the Mine
Development Plan.
2.13 Department or DENR means the Department of Environment and Natural Resources.
2.14 Director means the Director of the Mines and Geosciences Bureau.
2.15 Effective Date means the date of execution of this Agreement by and between the Contractor and the DENR Secretary on behalf of the Government. In case a
Special Mines Permit had been availed of by the Contractor, the effective date o
this Agreement shall be the date of issuance of said Special Mines Permit.
2.16 Environment means all facets of man's surroundings. physical, ecological,
aesthetic, cultural, economic, historic, institutional, and social.
2.17 Exploration means searching or prospecting for mineral resources by geological, geophysical, 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

2.18 Exploration Period shall mean the time period from the Effective Date of this
Agreement which shall be for two (2) years, renewable for like
Contract for Operating Mines in Non-Reservation Areas

periods but not to exceed a total term of six (6) years: Provided, That the Contractor has complied with all the requirements of the implementing rules and regulations of the Act.
2.19 Force Majeure means acts or circumstances beyond the reasonable control of the Contractor including but not limited to, war, rebellion, insurrection, riots, civil
disturbances, blockade, sabotage, embargo, strike, lockout, any dispute with
surface owners and other labor disputes, epidemics, earthquake, storm, flood, or
other adverse weather conditions, explosion, fire, adverse action by the
Government or by any of its instrumentality or subdivision thereof, Act of God or
any public enemy and any cause as herein described over which the affected party
has no reasonable control.
2.20 Foreign Exchange means any currency other than the currency of the Republic of the Philippines acceptable to the Government and the Contractor.
2.21 Government means the Government of the Republic of the Philippines or any of its agencies and instrumentalities.
2.22 Gross Output means the actual market value of the minerals or mineral products from each mine or mineral land operated as a separate entity, without
deduction for mining, processing, refining, transporting, handling, marketing,
any other expenses: Provided, That if the minerals or mineral products are sold or
consigned abroad by the Contractor under C.I.F. terms, the actual cost of ocean
freight and insurance shall be deducted: Provided further, That in the case of..
mineral concentrates which are not traded in commodity exchanges in
Philippines or abroad such as copper concentrate, the actual market value shall
the world price quotation of the refined mineral products contained thereof
prevailing in the said commodity exchanges, after deducting the smelting ,refining,
treatment, insurance, transportation and other charges incurred in the process of
converting mineral concentrates into refined metal traded in those commodity
of exchanges.
2.23 Mine Development refers to work undertaken to prepare an ore body or a
mineral deposit for mining, including the construction of necessary infrastructure
and related facilities.
2,24 Minerals mean all naturally occurring inorganic substances in solid, liquid, gas or any intermediate state excluding energy materials such as coal, petroleum, natural gas, radioactive materials and geothermal energy.
2.25 Mineral Products mean materials derived from mineral ores/rocks and prepared into marketable state by metallurgical processes which include beneficiation, cyanidation, leaching, smelting, calcination and other similar processes.
2.26 Mining Area means that portion of the Contract Area identified by the Contractor Survey Plan duly approved by the as defined and delineated
Director/concerned Regional Office for purposes of development and/or utilization
and sites for support facilities.
2.27  Mining Operations me&ns mining activities involving exploration, feasibility study, environmental impact assessment, development, utilization, mineral processing, and mine rehabilitation.
Contract for Operating Mines in Non-Reservation Areas

 answer back or confirmation received) addressed or sent as provided in Section
16.2 of this Agreement
2.29 Ore means naturally occurring substance or material from which a mineral or
element can be mined and/or processed for profit.
2.30 Pollution means any alteration of the physical, chemical and/or biological
properties of any water, air and/or land resources of the Philippines, ot any
discharge thereto of any liquid, gaseous or solid wastes or any production of
unnecessary noise or any emission of objectionable odor, as will or is likely to
create or render such water, air, and land resources harmful, detrimental or
injurious to public health, safety or welfare or which will adversely affect their
utilization for domestic, commercial, industrial, agricultural, recreational or other
legitimate purposes.
2.31 Secretary means the Secretary of the Department of Environment and Natural
2.32 State means the Republic of the Philippines
2.33 Work Program means a document which presents the plan of major mining
operations and the corresponding expenditures of the Contractor in its Contract
Area during a given period ol time, including the plan and expenditures for
development of host and neighboring communities and of local geoscience and
mineral technology, as submitted and approved in accordance with Revised Implementing Rules and Regulations
3.1 This Agreement shall have a term of twenty-five (25) years from Effective Date,
and may be renewed thereafter for another term not exceeding twenty-five (25)
years. The renewal of this Agreement, as well as the changes in the terms and
conditions thereot shall be upon mutual consent by the parties. In the event the
Govemment decides to allow mining operations thereafter by other Contractor,
this must be through competitive public bidding. After due publication of notice,
the Contractor shall have the right to equal the highest bid upon reimbursement of
all reasonable expenses of the highest bidder.
4.1 Size, Shape, and Location of Contract Area. This Agreement covers a total area of Nine Hundred Ninety Hectares (990 has), situated at Barangay Rio Tuba, Bataraza, Palawan and bounded by the following geographical coordinates (ANNEX "B" - 1:50,000 Location Map/Sketch Plab):

Point Latitude Longitude
1 8 33'14.640" 117 24'59.550"
2 8 33'24.446" 117 24'59.550"
Contract for Operating Mines in Non-Reservation Area

34567891 0H
833'24446'' 833'43977'' ´ 833'43977'' ´ 834'03508'' -834'03508" 834'13274" 834'13274'' 834'42571" ´ 834'42571" 834'52337" 834'52337'' _835'02102'' 835'02102'' 834'52337'' 834'52337'' _835'02102" 835'02102'' 835'31399'' 835'31399'' 835'50930'' 835'50930'' 836'10461'' 836'10461" 836'20227'' 836'20227'' 836'29993" 836'29993'' 836'39759'' 836'39759'' 836'29993'' 836'29993'' 835'41165'' 835'41 165'' 835'31399'' 835'21633'' 835'21633'' 835'02102'' 835'02102'' 834'52337'' 834'52337'' 834'42571'' 834'42571'' 834'23040" 834'23040'' 833'53743" 833'53743'' 833'43977'' 833'43977'' 833'24446" 833'24446" 833'14680"
11724'49741" 11724'49741'' 11724'39932'' 11724'39932'' 11724'30123" 11724'30123'' 11724'39932'' 11724'39932'' 11724'49741" 11724'49741' 11724'59550'' 11724'59550'' 11724'20319'' 11724'20319'' 11723'50880'' 11723'50880" 11723'41067'' 11723'41067'' 11723'01015'' 11723'01815" 11723'21441'' 11723'21441" 11723'11628'' 11723'11628'' 11723'01815'' 11723'01815'' 11722'52002'' 11722'52002'' 11723'21441'' 11723'21441'' 11723'31254" 11723'31 254'' 11723'41067'' 11724'39932'' 11724'39932'' 11725'19184" 11725'19184 11725'28997'' 11725'28997'' 11725'38810'' 11725'38810'' 11725'48623" 11725'48623'' 11725'58436'' 11725'58436'' 11725'48623'' 11725'48623'' 11725'28997'' 11725'28997'' 11725'19184" 11725'19、 184''
12 13 14 15 16 17 18 19
2 。
2 2
2 3
2 4
2 5
2 6
2 7
2 8 9 0 1 2 3 4 5 6
3 7
3 8
3 9
4 0
4 2
4 3
4 4
4 5
4 6
4 7
4 8
4 9
5 。
5 2
5 3
Contract for Operating Mines in Non-Reservation Areas



5.1 Timetable - The Contractor shall continue development and commercial utilization immediately upon approval and registration of this Agreement' The Contractor shall conduct mining operations and other activities for the duration of the Operating Period in accordance with the duly approved Work Program and Budget (Annex "C") and Environmental Compliance Certificate (Annex 'D") and any modifications thereof shall be approved by the Secretary. Failure by the Contractor to start production within the period shall be considered a substantial breach of the Agreement'

5.2 Final Contract/Mining Area - The final Contract/Mining Area shall not be more than five thousand hectares (5,000 has.) for metallic minerals and two thousand hectares (2,000 has ) for non-metallic minerals The Director, with the approval of the Secretary, may allow a Contractor to hold a larger mining area depending upon the nature of the deposit subject to technical verification and evaluation by the Bureau .

5.3 Commercial Operation Work Program and Budget - During the Operating Period, the Contractor shall submit to the Secretary through the Regional Director, copy furnished the Director, Work Programs and Budgets covering a period of three (3) years each which shall be submitted not later than thirty (30) days before the expiration of the period covered by the previous Work Programs.
The amount to be spent by the Contractor during the Operating Period under the term of this Agreement shall be in the aggregate of not less than that hereinafter specified for each of the Contract Years, as follows:

First Contract Year P 254 Million
Second Contact Year P 257 Million
Third Contract Year P 281 Million

5.4 Expansion and Modification of Facilities - The Contractor may make expansions, modifications, improvements, and replacements of the mining facilities and may add new facilities as the Contractor may consider necessary for the operations, provided such plans shall be embodied in an appropriate Work Program approved by the Secretary'

5.5 Reporting

a) Quarterly Reports - Beginning with the first Calendar Quarter following the approval of this Agreement, the Contractor shall submit within thirty (30) days after the end of each Calendar Quarter, to the Secretary through the Regional Director, copy furnished the Director' a Quarterly Report stating the tonnage of production in terms of ores, concentrates, and their corresponding grades and other types of products; value,
destination of sales or exports and to whom sold; terms of sales and
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 concemed Regional Director, an Annual
Report indicating in sufficient detail:
Contract for Operating Mines in Non-reservation Areas

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
or committed for export (whether actually shipped from the Philippines or not), tonnages actually shipped from the Philippines (with full details as to
purchaser, destination and terms of sale), and if known to the
Contractor, tonnages refined, processed or manufactured in the
Philippines with full specifications as to the intermediate products,
by-products or final products and of the terms at which they were
elsewhere in the Philippines, tonnages sold 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
b.3) Profile of work force, including management and staff, stating
particularly their nationalities, and for Filipinos, their place of origin
(i.e., barangay, town, province, region ); and
b.4) Ownership of the Contractor, particularly with respect to nationality.

6.1 General Principle - The fiscal regime of this Agreement shall be governed by the principle according to which the Government expects a reasonable return in
economic value for the utilization of non-renewable mineral resources under its
national sovereignty while the Contractor expects a reasonable return on its
investment with special account to be taken for the high risk of exploration , the
terms and conditions prevailing elsewhere in the industry and any special efficiency
to be gained by a particularly good performance ofthe Contractor.

6.2 Registration Fees - Within fifteen (15) days upon receipt of notice of approval of
this Agreement from the concerned Regional Office, the Contractor shall cause its
registration with the said Regional Office and pay the registration fee at the rate
provided in the existing rules and regulations. Failure ofthe Contractor to cause
the registration of this Agreement within the prescribed period shall be sufficient
ground for cancellation ofthe same.

6.3 Occupation Fees - Prior to registration of this Agreement and on the same date
every year thereafter, the Contractor shall pay to the concerned Municipal/City
Treasurer an Occupation Fee over the Contract Area at the annual rate as
provided by the existing rules and regulations. lf the fee is not paid on the date
specified, the Contractor shall pay a surcharge of twenty five percentum (25%) of
the amount due in addition to the occupation fees.
6.4 Share of the Government - The Government Share shall be the excise tax on
mineral products at the time of removal and at the rate provided for in Republic
Act No. 7729 amending Section 151 (a) of the National Internal Revenue Code, as
amended, as well as other taxes, duties, and fees levied by existing laws.

Contract for Operating Mines in Non-Reservation Areas

For purposes of determining the amount of the herein Government Share, the
Contractor shall strictly comply with the auditing and accounting requirements
prescribed under existing laws and regulations. The Government Share shall be allocated in accordance with Sections 290 and 292 of Republic. Act No. 7160, otherwise known as "The Local Government Code of 1991".
6.5 Pricing of Sales - The Contractor shall endeavor to obtain the best achievable price for its production and pay the lowest achievable marketing commissions and
related fees. The Contractor shall seek to strike a balance between long-term sales
comparable to policies followed by independent producers in the international
mining industry.
The Contractor shall likewise seek a balanced distribution among consumers.
Insofar as sales to Contractor's affiliates are concerned, prices shall be at arm's
length standard and competing oflers for large scale and long{erm contracts shall
be procured. The Bureau shall be furnished a copy o[ the said Sales Agreetnent
subject to confidentiality between the Bureau and the Contractor.

6.6 Associated Minerals - If Minerals other than gold are discovered in commercial
quantities in the Contract area, the value thereof shall be added to the value of the
principal mineral in computing the share ofthe government.

7.1 Submission to Government― Within the periods stated herein,the Contractor shall
 prepare and submit to the Director through the concerned Regional Director, a Work Program and corresponding Budget for the Contract Area stating the Mining Operations and expenditure which the Contractor proposes to carry out during the period covered with the details and particulars set forth elsewhere in
this Agreement or in the supporting documents.

7.2 Government's Examination and Revision in the Work Program
Should the Government wish to propose a revision
to a certain specific feature in the Work Program or Budget, it shall, within thirty (30) days after receipt thereof, provide a Notice to the Contractor specifying in reasonable detail its reasons therefor.
Promptly thereafter, the Government and Contractor will meet and endeavor to
agree on the revision proposed by the Government. In any event, any portion of
said Work Program or Budget as to which the Government shall fail to notify the
Contractor of the proposed revision shall, insofar as possible, be carried out as
prescribed herein, If the Government should fail within sixty (60) days from
receipt thereof to notify Contractor of the proposed revisions, the Work Program
and Budget proposed by the Contractor shall be deemed to be approved.
7.3 Contractor's Changes n the Work Program It is recognized by the
Government and the Contractor that the details of any Work Program may require
changes in the light of changing circumstances. The Contractor may make such
changes: Provided, That it shall not change the general objective of the Work
Program: Provided further, That changes which entail a
Contract for Operating Mines in Non-Reservation Areas

variance of at least twenty percentum (20%) shall be subject to the approval of the Director.
7.4 The Government's approval of a proposed Work Program and Budget will not be unreasonably withheld.

8.1 The Contractor shall manage its Mining Operations in a technically, financially,
socially, culturally and environmentally responsible manner to achieve the
sustainable development objectives and responsibilities as provided for under the
implementing rules and regulations of the Act.
8.2 The Contractor shall prepare a plan of mining so that its damage to the
environment will be minimal. To the extent possible, control of pollution and the
transformation of the mined-out areas or materials into economically and socially
productive forms must be done simultaneously with mining.
8.3 An Environmental Compliance Certificate (ECC) shall be secured first by the
Contractor prior to the conduct of any mine development works, construction of
production facilities and/or mine production activities in the Contract Area.
8.4 The Contractor shall submit within thirty (30) Calendar days after the issuance and receipt of the ECC, an Environmental Protection and Enhancement Program
(EPEP) using MGB Form No. 16-2 covering all areas to be affected by mining
development, utilization and processing under this Agreement. The Contractor
shall allocate for its initial environment-related capital expenditures approximately
ten percent (10%) of the total project cost or in such amount depending on the
environmental/geological condition, nature and scale of operations and technology
to be employed in the Contract fuea.
8.5 The Contractor shall submit within thirty (30) days prior to the beginning of every calendar year an Annual Environmental Protection Enhancement Program (AEPEP) using MGB Form l6-3, which shall be based on the approved EPEP
The AEPEP shall be implernented during the year lor which it was submitted. To
implement its AEPEP, the Contractor shall allocate annually three to five percent
(3%-5%) of its direct mining and milling costs depending on the
environmental/geologic condition, nature and scale of operations and technology
employed in the Contract Area.
8.6 The Contractor shall establish a Mine Rehabilitation Fund (MRF) based on the
financial requirements of the approved EPEP as a reasonable environmental
deposit to ensure satisfactory compliance with the commitments/strategies of the
EPEP/AEPEP and availability ol funds for the performance of the EPEP/AEPEP
during the specific project phase. The MRF shall be deposited as Trust Fund in a
government depository bank and shall be used for physical and social
rehabilitation of areas aflected by mining activities and for research on the social,
technical and preventive aspects of rehabilitation.
Contract for Operating Mines in Non-Reservation Areas

The Contractor shall set up mitigating measures such as mine waste alrd rnill
tailings disposat system, mine rehabilitation or plan, water quality monitoring, etc.
to minimize land degradation, air and water pollution, acid rock drainage and
changes in hydrogeology.
The Contractor shall set up an Environmental and Safety Office at its minesite
manned by qualified personnel to plan, implement and monitor its approved EPEP.
The Contractor sha[[ be responsible in the monitoring of environmental safety and
health conditions in the Contract Area and shall strictly comply with all the
and regulations embodied under Mines Administrative Order No MRD-51 , Series
of 1991, otherwise known as the "Revised Mine Safety Rules and Regulations".
The Contractor shall be responsible for the submission o fa final mine rehabilitation
financial requirements and/or decommissioning plans including
incorporating the details and particulars set forth in the implementing rules and its regulations of the Act.
Obligations of the Contractor:
a) To exclusively conduct sustainable mining operations within the Contract Area in accordance with the provisions of the Act and its revised implementing rules and regulations.
b) To construct and operate any facilities specified under the Mineral Agreement or approved Work Program;
c) To determine the mining and treatment process to be utilized in the
Mining Operations;
d.) To extract, remove, use and dispose of any tailings as authorized by
and approved Work Program;

e) To secure all permits necessary or desirable for the purpose of
Mining Operations;
f.) To keep accurate technical records about the Mining Operations as
well as financial and marketing accounts and make them availabte to
Government representatives authorized by the Director for the
purpose of assessing the performance and compliance of the
Contractor with the terms of this Agreement. Authorized
representatives of other Government Agencies may also have access
to such accounts in accordance with existing laws, rules and regulations;
g) To furnish the Bureau all the data and information gathered from the
Contract Area and that all the books of accounts and records shall be
open for inspection;
h) To allow access to Government during reasonable hours in inspecting
the Contract Area and examining pertinent records for purposes of
monitoring compliance with the terms of this Agreement;

Contract for Operating Mines in Non-Reservation Areas

i.) To hold the Government free and harmless from all claims and
accounts of all kinds, as well as demands and actions arising out of
the accidents or injuries to persons or properties caused by Mining
Operations ofthe Contractor and indemnily the Covernment for any
expenses or costs incurred by the Government by reason ofany such
claims accounts, demands or actions.
j) In the development of the community,
j 1) To recognize and respect the rights, customs and traditions of
indigenous cultural communities over their ancestral lands and to
allocate royalty payment of not less than one percent (l%) of the
value ofthe gross output ofthe mineral(s) sold;
j.2) To coordinate with proper authorities in the development of the
mining community and for those living in the host and neighboring
communities through social infrastructure, livelihood programs,
education, water, electricity and medical services Where traditional
self-sustaining income and the community activities are identified to
be present, the Contractor shall assist in the preservation and/or
enhancement of such activil ies;
j3) To allot annually a minimum of one percent (1%) of the direct
mining and milling costs necessary to implement the activities to be
undertaken f,or the development of technology and the host and
neighboring communities. Expenses for community development
may be charged against the royalty payment of at least one percent
(1%) of the gross output allocated to the concerned indigenous
cultural community;
j.4) To give preference to Filipino citizens, who have established domicile
in the neighboring communities, in the hiring of personnel for its
Mining Operations. If necessary skills and expertise are currently not
available, the Contractor must immediately prepare and undertake a
training and recruitment program at its expense. 

j 5) To incorporate in the mine feasibility study the planned expenditures
necessary to implement (1.1) to (.3 ) of this Section;
k.) ln the development of Mining Technology and Geosciences:
k.1) To produce, in the course of its operations, geological, geophysical,
geochemical and other types of maps and reports that are appropriate
in scale and in format and substance which ale 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 ol- time
which shall not exceed three (3) years;.
k.2) To systematically keep the data generated from the Contract/Mining
Area such as cores, assays and other related information, including
economic and financial data and make these accessible to students,
researchers and other persons responsible for developing mining
geoscience and processing technology subject to the conditions that
the Contractor may delay release of data to the science and

k.3) To transfer to the Government or local mining company
the appropriate technology it may adapt in the exploration, development
and commercial utilization of the minerals in the Contract Area;
k.4) To allocate research and development budget for the advancement of
mining technology and geosciences in coordination with the local,
research institutions, academe, etc ;
k.5) To replicate data, maps and reports cited in (k. l) and (k.2) and
furnish the Bureau for archiving and systematical safekeeping which
shall be made available to the science and technology community for
conducting research and undertaking other activities which contribute
to the development of mining, geoscience and processing technology
and the corresponding national pool of manpower talents: Provided,
however, that the release of data, maps and the like shall be similarly
constrained in accordance with (k. l) and (k 2) above;
l) To incorporate in the mine project feasibility study the planned
expenditures necessary to implement all the plans put forth in this Agreement.
m) To pay all other taxes and lees mandated by existing laws, rules and

9.2 Rights of the Contractor

The Contractor shall have the right:

a) To conduct mining operations within the confines of the Contract Area in accordance with the terms and conditions hereof and that it shall not interfere with the rights of other Contractors/Lessees/ OperatorslPermittees;

b) Of possession of the Contract Area, with full right of ingress and egress and the right to occupy the same, subject to surface and easement rights;

c) To use and have access to all declassified geological, geophysical, drilling, production and other data relevant to the mining operations;

d) To sell, assign, transfer, convey or otherwise dispose of all its rights, interests and obligations under the Agreement subject to the approval of the Government;

e) To employ or bring into the Philippines foreign and technical and specialized personnel, including the immediate member of their families as maybe required in the operation of the Contractor, subject to applicable laws and regulations, provided that if the employment connection of such foreign persons with the Contractor ceases, the applicable laws and regulations on immigration shall apply to them. Everytime foreign technologies are utilized and where alien executives are employed, an effective program of training.

understudies shall be undertaken. The alien employment shall be limited to technologies requiring highly specialized training and experience subject to the required approval under existing laws, rules and regulations;

f.) To enjoy easement rights and use of timber, water and other natural resources in the Contract Area subject to pertinent laws, rules and regulations and the rights of third parties;

g) Of repatriation of capital and remittance of profits, dividends and interest on loans, subject to existing laws and Bangko Sentral 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;

9.3 Obligation of the Government

The Government shall:
a) Ensure that the Contractor has the Government full cooperation in the exercise of the rights granted to it under this Agreement;

b) Use its best efforts to ensure the timely issuance of necessary permits and similar authorizing documents for use of surface of the Contract Area; and

c) To cooperate if Contractor seeks to obtain financing contemplated herein from banks or other financial institutions, provided, that such financing arrangements will in no event reduce Contractor's obligation on Government rights hereunder.



10.1 Contractor shall acquire for the Mining Operations only such assets that are reasonably estimated to be required in carrying out such Mining Operations.

10.2 All materials, equipment, plant and other installatiorrs erected or placed on the
Contract Area of a movable nature by the Contractor shall remain the property of
the Contractor and shall have the right to rernove and re-export such nlaterials atld
equiprnent, 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 improvements; otherwise, all social infrastructures and facilities shall be turned
over or donated tax free to the proper government authorities, national or local, to
ensure that said infrastructures and facilities are continuously rnailltained andfl
utilized by the host and neighboring communities'

11.1 The contractor agrees to employ, to the extent possible, qualified Filipino
personnel in all types of mining operations or 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.
shall be to reach within the time table set forth below the following targets of
Unskllled Skilled Clerical Professional Management
Year 1 100% 100% 100% 100% 100%
Year 3 100% 100% 100% 100% 100%
Year 5 100% 100% 100% 100% 100%
Year 7 100% 100% 100% 100% 100%
Year 10 100% 100% 100% 100% 100%
Year 15 100% 100% 100% 100% 100%
11.2 Cost and expenses of training such Filipino personnel and the contractor's
employees shall be included in the Operating Expenses
11.3 The Contractor shall not discriminate on the basis of gender and shall
respect the right of women workers to participate in policy and decision-making processes affecting their rights and benefits

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 resulting to arbitration as
provided for in Section 12 2 below.
Any disagreement or dispute which can not be settled arnicably within a period of
one (1) year, from the time the issue was raised by a Party shall be settled by a
tribunal of three (3) arbitrators, one to be appointed by the contractor and another
to be appointed by the Secretary. The first two (2) appointed arbitrators shall
continue to consider names of qualified persons until agreement on a mutually
acceptable Chairman of the tribunal is selected. Such arbitration shall be initiated
and conducted pursuant to Republic Act No. 876, otherwise known as the
"Arbitration Law".
ln any event, the arbitration shall be conducted applying the substantive laws of the
Republic of the Philippines.
12 3 Each party shall pay fifty per centum (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.
13.1 This Agreement may be suspended for failure of the Contractor, (a) to comply
with any provision or requirement of the Philippine Mining Act of 1995 and/or its implementing rules and
regulations; (b) to pay taxes, fees and/or other charges demandable and due
the Government.


13.2 This Agreement terminates or may be terminated for the following causes:
(a) expiration of its term whether original or renewal; (b) withdrawal from
the agreement by the Contractor; (c) violation by the Contractor of the
Agreement's terms and conditions; (d) failure to pay taxes, fees/or charges
or financial obligations for two(2) consecutive years; (e) false statement or
omission of facts by the Contraclor; and (f) any other cause or reason
provided under the Act and its Implementing Rules and Regulations, or
any other relevant laws and regulations.

13.3 All statements made in this Agreement shall be considered as conditions
and essential parts hereof, and any falsehood in said statements or
omission of facts which may alter, change or affect substantially the fact
set forth in said statements shall be a ground for its revocation and

13.4 The Contractor may, by giving due notice at any time during the term of
this agreement, apply for its cancellation due to causes which, in the
opinion of the Contractor, render continued mining operation no longer
feasible or viable. In this case, the Secretary shall decide on the
application within thirty (30) days from notice, provided that the
Contractor has met all the financial, fiscal and legal obligations.
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.

 13.5 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 o[ any succeeding or other default unless the contrary
intention is reduced in writing and signed by the party authorized to exercise the
13.6 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.
13.7 The withdrawal of the Contractor from the Mineral Agreement shall not release it from any and all financial, environmental, legal and fiscal obligations under this
13.8 The following acts of 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
b) Failure of the Contractor to conduct mining/quarrying operations and
other activities in accordance with the approved Work Programs
and/or any modification thereof as approved by the Director.
13.9 The Government may suspend and cancel tax incentives and credits the contractor fails to abide by the terms and conditions of said incentives and credits.
Any terms and conditions resulting from repeal or amendment of any existing laws
or regulation or from the enactment of a law, regulation or administrative order
shall be considered a part of this Agreement
14.2 Notice
AII 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 in the case of telex or telecopy notice 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.

Department of Environment and Natural Resources
DENR Building, Visayas Avenue
Diliman, Quezon City
lf to the Contractor
Rio Tuba NIckel Mining Corp
Solid Mills Bldg.
De la Rosa, cor. Adelantado Sts.
Legazpi Village, Makati City
Either party may substitute or change such address on notice thereof to the other
14.3 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.
14.4 Suspension of Obligation

a) Any failure or delay on the part of any party in the performance of its obligation or duties hereunder shall be excused to the extent attributable to Force Majeure.
b) lf Mining operations are delayed, curtailed or prevented
and rights the Force Majeure causes, then the time for enjoying the rights and carrying out the obligations thereby affected, the term of this Agreement and all rights and obligations hereunder shall be extended for a period equal to the period involved.
c) The Party, whose ability to perform its obligation is affected by such force majeure causes, shall promptly give Notice to the other in writing of any such delay or failure of performance,

expected to perform and shall use its efforts to remedy such delay, expect that neither Party shall be under any obligation to settle a labor dispute.
 14.5 Amendments
This Agreement shall not be annulled, amended or modified in any respect except
by mutual consent in writing of the herein parties

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



Department of Environment and Natural Resources




___________________________ ____________________________

Republic of the Philippines
Quezon City
Before me, a Notary Public for and in the City of Quezon personally appeared HON.
VICTOR O. RAMOS, with Community Tax Certificate No. 01403812 issued on
1-7-98 at QC in his capacity as Secretary
of Department of Environment and Natural Resources and MANUEL B. ZAMORA, Jr.,
with Cornmunity Tax Certificate No. 07763228 issued on 2-16-98 at Makati City, in his capacity as President of Rio Tuba Nickel Mining Corporation both
known to me and to me known to be the same persons who executed the foregoing
instrument consisting of nineteen (19) pages, including this acknowledgment page, and acknowledged to me that the same is their voluntary acts and deeds.
IN WITNESS THEREOF, I have herunto set my hand and affix my notarial seal, this 4th day of June 1998
Notary Public
Doc. No. 157
Page No. 31
Book No.
Series of 1998