NOTICE: The text below was created automatically and may contain errors and differences from the contract's original PDF file. Learn more here


No. 191 -2004-III

This MINERAL PRODUCTION SHARING AGREEMENT is made and entered into in Quezon City, Philippines, this ______ day of MAY 22 2004 by and between:

 THE REPUBLIC OF THE PHILIPPINES, herein referred to as the GOVERNMENT, represented in this act by the Secretary of the Department of
Environment and Natural Resources, with offices at the Department of Environment and Natural Resources Building, Visayas Avenue, Diliman, Quezon City


 CRAU MINERAL RESOURCES CORPORATION, a corporation duly organized and existing under the laws of the Republic of the Philippines, herein referred to as the CONTRACTOR, with office at 1-E Sra. Maria Street, Brgy. Kapitolyo, Pasig City, Metro Manila, and represented in this act by MODESTO B. BERMUDEZ, President, as authorized by its Board of Directors (please refer to ANNEX'A')


WHEREAS, the 1987 Constitution of the Republic of the Philippines provides in
Article 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 under the full control and supervision of the State; WHEREAS, the Constitution further provides that the State may directly undertake such activities, or it may enter into a Co-Production, Joint Venture, or Mineral Production Sharing Agreement with Filipino citizens, or cooperatives, partnerships, corporations or associations at least sixty per centum of whose capitalization is owned by such citizens;

WHEREAS, pursuant to Republic Act No. 7942, otherwise known as "The Philippine Mining Act of '1995," which took effect on 09 April 1995, the Secretary of the Department of Environment and Natural Resources is authorized to enter into Mineral Production Sharing Agreements in furtherance of the objectives of the Government and the Constitution to bolster the national economy through sustainable and systematic development and utilization of mineral lands.

WHEREAS, the Government desires to avail itself of the financial resources,
technical competence and skill which the contractor is capable of applying to the mining operations of the project contemplated herein;

WHEREAS, the Contractor desires to join and assist the Government in the
sustainable development and utilization for commercial purposes of certain
chromite, nickel, platinum and other associated mineral deposits existing in the
Contract Area (as herein defined);

WHEREAS, the Contractor has access to all the financing, technical competence, technology and environmental management skills required to promptly and effeclively 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:



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
rational exploration, development and commercial utilization of certain
chromite, nickel, platinum and other associated mineral deposits existing
within the Contract Area, with all necessary services, technology and
financing to be furnished or arranged by the contractor in accordance with
the provisions of this Agreement. The contractor shall not, by virtue of this
Agreement, acquire any title over the Contract Mining Area without prejudice
to the acquisition by the Contractor of the land/surface rights through any
mode of acquisition provided for by law.

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

1.4 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 Vlll hereof.




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


 2.2 Agreement means this

Mineral Production Sharing Agreement

 2.3 Associated Minerals

mean other ores/minerals which occur together with the principal


 2.4 Bangko Sentral

means Bangko Sentral ng Pilipinas.

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

2.7 Calendar Year

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

starting with the

first day of January and ending on December 31, while "Calendar Quarter" means

a period of three consecutive months with the first calendar quarter starting

with the first day of January.

 2.8 Commercial

Production means the production of sufficient quantity of minerals to 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



2.9 Constitution or

Philippine Constitution means the 1987 Constitution of the Republic of the

Philippines adopted by the Constitutional Convention of 1986 on October 15, 1986

and ratified by the People of the Republic of the Philippines on February 2,1987.

 2.10 Contract Area

means the area onshore or offshore delineated under the Mineral Production Sharing

Agreement subject to the relinquishment obligations of the Contractor and

properly defined by latitude and longitude or bearing and distance.

 2.11 Contract Year

means a period of twelve (12) consecutive months counted from the Effective Date

of this Agreement or from the anniversary of such Effective Date


2.12 Contractor means CRAU MINERAL RESOUCES CORPORATION or its assignee or assignees of

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

interest is accomplished pursuant to the pertinent provisions of the implementing rules

and regulations of the Act.


2.13. Declaration of Mining Feasibilitv means a document proclaiming the
presence of minerals in a specific site, which are recoverable by socially
acceptable, environmentally safe and economically sound methods- specified
in the Mine Development Plan.

2.14. Department or DENR means the Department of Environment and
Natural Resources.

2.15. Director means the Director of Mines and Geosciences Bureau.

2.16. Effective Date means the date of execution of this Agreement by the
Contractor and by the Secretary on behalf of the Government. ln case an
Exploration Permit/Temporary Exploration permit had been availed of by the
contractor, the Effective Date of this Agreement shall be the date of issuance
of said Exploration Permit/Temporary Exploration permit.

2.17. Environment means all facets of man's surroundings: physical, ecological, aesthetic, cultural, economic, historic, institutional and social.

2.18. Exploration means searching or prospecting for mineral resources by geological, geophysical and geochemical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quality and quantity of mineral resources and the feasibility of mining them for profit.

2.19. Exploration Period shall mean the time period from the Effective Date of
this Agreement which shall be for two (2) years, renewable for like periods
but not to exceed a total term of six (6) years for nonmetallic minerals and
eight (8) years for metallic minerals, subject to the pertinent provisions of the
implementing rules and regulations of the Act.

2.20. 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, frood 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 Exchange

means any currency other than the currency of the Republic the Philippines

acceptable to the Government and the Contractor.


2.22 Government

means the Government of the Republic of the Philippines or any of its agencies and



2.23 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.l.F.
terms, the actual cost of ocean freight and insurance shall be deducted:
Provided further, That in the case of mineral concentrates which are not
traded in commodity exchanges in the Philippines or abroad such as copper
concentrate, the actual market value shall be the world price quotation of the
refined mineral products contained thereof prevailing in the said commodity
exchanges, after deducting the smelting, refining, treatment, insurance,
transportation and other charges incurred in the process of converting
mineral concentrates into refined metal traded in those commodity

2.24. 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.

2.25. 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

2.27 Mining Area means that portion of the contract Area identified by the
Contractor as defined and delineated in a Survey Plan duly approved by the
Director/concerned Regional Director for purposes of development and/or
utilization and sites for support facilities.

2.28.Mining 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, safety or welfare or which will adversely affect
their utilization for domestic, commercial, industrial, agricultural, recreational
or other legitimate purposes.

2 32 Secretary means the Secretary Of the Department of Environment and
Natural Resources

2.33. State means the Republic of the philippines.

2.34 Work Program means a document which presents the plan of major mining operations and the corresponding expenditures of the Contractor in ita
Contract Area during a given period of time, including the plan and
expenditures for development of host and neighboring communities and of
local geoscience and mining technology, as submitted and approved in
accordance with the implementing rules and regulations of the Act.



3.1. This Agreement shall have a term of twenty five (25) years from EffectiveDate, and may be renewed thereafter for another term not exceeding twentyfive (25) years. The renewal of this Agreement, as well as the changes in theterms and conditions thereof, shall be upon mutual consent by the plrties. lnthe event the Government decides to allow mining operations thereafter byother Contractor, this must be through competitive public bidding. After duepublication of notice, the Contractor shall have the right to equal the highestbid upon reimbursement of all reasonable expenses oi the highest bidder



4.1.Area - This Agreement covers a total are of three thousand seven hundred sixty five & 3853/10000 hectares (3,765.3853 has.), situated in Sta. Cruz and Candelaria, Zambales and bounded by the following geographical coordinates (please refer to ANNEX Size, Shape, and Location of Contract "B" - 1:50,000 scale Location Map/Sketch plan):




120° 03'00.00"


120° 03'15.00'

120° 03'15,00"

15° 44'15.00'

15° 44'15.00"

120・ 03'45.00'

120° 03'00.00"

15° 44'30.00"

15・ 44'30.00'

15° 44'00.00"

15° 44'30.00''

120° 03'45.00"

15° 44:30.00'

120° 04'00.00'

15° 42'45.00"

120° 04'00.00"

15° 42'45.00"

120° 04'15.00"

15° 43'00.00"

120・ 04'15.00"

15・ 43'00.00'

120° 04'30.00"

15° 41'30.00"

120° 04'30.00"

15° 41'30.00"

15° 38'30.00'

120° 04'00.00"

120° 04'00.00"

15° 38'30.00"

120・ 03'30.00'

15° 39'30.00"

120° 03'30.00"

15° 39'30.00"

15° 39'38.00"




120° 03'0840"


120° 03'0840"

15° 39'4770"

15° 40'0000"

120・ 03'3000"

120° 03'3000"

15° 40'0000"

120° 03'0000"

15° 40'3000"

120° 03'0000'

15° 40'3000"

120° 02'3000"

15° 40'0000"

120° 02'3000"

15° 40'0000"

120° 02'4500"


15° 394500"

120° 03'0000'

15° 39'3800'

120° 03'0000"

15° 39'3800"

120° 03'0840"

120° 03'0840"


15° 39'0870"

15° 39'0870'

120・ 024500"

15° 39'0000"

120° 03'0000"

120° 03'0000"

15° 39'0000"

120° 024820"

15° 38'5730"

120° 02'4820"

15° 38'5730"

120° 03'0000"

15° 38'3000'

120° 030000"

15° 38'3000"

120° 02'0000"

15° 38'4070・

120・ 02'00.00"


120° 02'1000"

15° 39'0000"

15° 38'4070"

120° 02'1000'

120° 02'0000"

120° 02'0000"

15° 38'3000"

120° 02'0000"

15° 38'3000"

120° 01'3000"

15° 40'5580"

120° 01'3000"


15° 39'0000"

15° 40'5580"

120° 02'05,70"

15° 41'0600"

120・ 020570"

15° 41'0600"

120° 02'2560"


120° 02'2560"

15° 41曖

15° 41'25,50'

120° 02'3560"


120° 02'3560"

15° 41'4500"

120° 02'4560'


15° 42'0000・

120° 02'4560"

15° 42'0000"

120° 024500"

15° 42'0400"

15° 42'0400"

120° 024500・

120° 02'5700"

15° 43'0000"

120° 02'5700'

15° 43'0000"

15° 43'2120"

120° 024680・

120° 02● 680"

15° 43'2120"

120° 03'0000・

15° 43'4035"

120° 03'0000"



15° 43'3000"

120° 02'5700"

120° 02'5700"

15° 43'3000"

120° 02'3000'

15° 42'3000"

120° 02'3000"

15° 42'3000"

120° 02'0000"

15° 42'0000"

120° 02'0000"

15° 42'0000・

120° 02'0500"

15° 41'2500"

120° 02'0500"

15° 41'2500"

120° 01'5500"


15° 414465"


120° 01'5500"

15° 41'2500"

15° 41'2500"

120° 01■ 500"

120° 01'3500"

15° 41'54.40"

120° 01'35.00"

15° 41'5440'

120° 01'4500'



15° 42'4340"



120° 01'4500"

120° 01'4500"


120° 01'5510"




7 8








15° 39'3800'

2      15° 42'5290"       120° 02'0500"

15° 43'1250"

120° 02'0500"

120° 01'5500・

15° 43'3000・

120° 01'5500・

15° 43'1250"

Area of Lot l=3,681 7837 Hectares

Lot‐ 2




15° 37'2060"

120° 02'0000"

15° 37'2060"

15° 37'1080"

15° 37'1080'

15° 37'0000"

120° 02'3000"

15° 37'0000・

120° 02'3000"

120° 02'1100"

120° 02'1100'

120° 02'0000"

Area of Lot 2=37 8002 Hectares



15° 38'0000"

15° 38'1000・



15° 38'2000・

15° 38'2000''

15° 38'1000"

15° 38'1000・

15° 38'0000"


120° 02'5000"

120° 0215000"

120° 02'3000"

120° 02'3000"

120° 03'1000"

120° 03'1000"

120° 03'0000"

120° 03'0000"

Area of Lot 3 = 45.8014 Hectares



5.1 Timetable for Exploration - The Contractor shall commence Exploration
period activities not later than three (3) months after the Effective Date for a
of of two (2) years, renewable for like periods but not to exceed a total term
six(6)years for nonmetallic minerals and eight (8) years for metallic minerals, subject to annual review and approval by the Director to .evaluate compliance with the terms and condition of this Agreement. Provided, that further renewal may be granted by the Secretary under circumstances as defined in the implementing rules and regulations of the Act. 

The one (1) year term of the Temporary Exploration Permit (TEP) denominated as TEP No. III-004-2002 and issued on March 21, 2002 is counted as part of the Exploration Period (please refer to ANNEX "C")

5.2. Work Programs and Budgets - The Contractor shall strictly comply with the

approved Exploration and Environmental work Programs together with their
corresponding Budgets (please refer to ANNEXES "D" and "E")

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 Contracl Year                        : PhP 22,000,00000
2nd Contract Year                      : PhP 41,000,00000

Total                                              : PhP 63,000,00000

For the Environmental Work Program: PhP 5,000,00000

ln the event of renewal of the Exploration Period, the amount to be spent
every year shall first be agreed upon by the parties.

In the event of termination of this Agreement, the Contractor shall only be obliged to expend the pro-rata amount for the period of such Contract Year prior to termination. If during any Contract Year, the Contractor should expend  more than the amount to be expended as provided above, the excess may be subtracted from the amount required to be expended by the Contractor during the succeeding Contract Years, and should the Contractor, due to unforeseen circumstances or with the consent 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.

5.3 Relinquishment of Total/Portion of the Contract Area - During the Exploration Period, the Contractor may relinquish totally or partially the original Contract Area. After the Exploration Period and prior to or upon approval of a
Declaration of Mining Feasibility by the Director, the Contractor shall finally
relinquish any portion of the Contract Area not necessary for mining
operations and not covered by any Declaration of Mining Feasibility.

5.4 Final Mining Area - The Director may allow the Contractor to hold more than one (1) final Mining Area subject to the maximum limits set under the
implementing rules and regulations of the Act: Provided, That each final Mining Area shall be covered by a Declaration of Mining Feasibility.

5.5 Declaration of Mining Feasibility - During the Exploration period, the
Contractor shall submit to the Director, through the concerned Regional
Director, a Declaration of Mining Feasibility of the contract Area/final Mining
Area supported by a Mining Feasibility Study, a Three (3)-year Development
and Construction or Commercial Operation Work program, a complete
geologic report, an application for survey and the pertinent Environmental
Compliance Certificate, among other applicable requirements. Failure of the
Contractor to submit a Declaration of Mining Feasibility during the
Exploration Period shall be considered a substantial breach oi this

5.6 Survey of the Contract Area - The Contractir shall cause the survey of the perimeter of the Contract Area/final Mining Area through an application for

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

simultaneous with the submission of the Declaration of Mining Feasibility.

Survey returns shall be submitted to the concerned Regional Director 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.

5.7. Reporting


expenditures, raw and processed geological, geochemical,

geophysical and radiometric data plotted on a map at a minimum

1:50,000 scale, copies of originals of assay results, duplicated

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

environmental work program implementation and detailed

expenditures showing discrepancies/ deviations with approved


exploration and environmental plans and budgets as well as all other

information of any kind collected during the exploration activities. All

information submitted to the Bureau shall be subject to the

confidentiality clause of this Agreement.


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

concerned Regional Director, a final report under oath upon the

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

published professional repo(s of

substance comparable

respectable international institutions and shall incorporate all the

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

chemical analysis, and assessment of mineral pctentials 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 expenditures

incurred during the Exploration Period. ln case of diamond drilling, the

Contractor shall, upon request of the Director/concerned Regional

Director, submit to the Regional Office a quarter of the core samples

which shall be deposited in the Regional Office Core Library for

safekeeping and reference.



Relinquishment Report - The Contractor shall submit a separate

relinquishmeni 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-dK-'lures'






ヽ ハ

During the Exploration Period, the Contractor shall submit to the

Director, through the concerned Regional Director, 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 submitted not later than fifteen (15) days at

the end of each Calendar Quarter while the annual accomplishment

report shall be submitted not later than thlrty (30) days from the end of

each Calendar Year. Such information shall include detailed financial





- The contractor shall complete the development



thirty six (36) months

in"fuorg tn" construction of production iacilities within

Feasibility, subject to such

from the submission ot tne blcraration of Mining


O".ed on justifiable reasons as the Director may approve'





of the concerned Regional Director'



sixty (60) days after

the concerned

December 31 ot each year, to the Director' through

report which s'tates the major activities'

Regional Director,

"i'n'if expenditures during the year covered,


achievements ano"n

mineral analyses and geological and


including ,"p.,


during the Development and

progieis reports

environmental ".t"yt,


- The Contractor shall submit' within


Final Report


Within six (6) months lroq the completion of the

shall submit a

development anO construaion activities' the Contractor


tinri tdpott to tne Oirector, through the concerned Regional

of appropriate scale

Sucn rdport snarr iniei-te all infoimation in maps

qriitv, as weti-a'i in monographs or reports in accordance with


international standards.






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



ot mine development and construction of production



Regional Director' a Three-Year

through the concerned

Work Program The Contractor shall commence


aforesaid Work

commercial utilization irr"Airt"ti upon approval of the

commence Commercial Production

F;ilril Failure of the ContraCtoratosubstantial

breach of the Agreement'

*tf,], in" period shall be considered




the Operating

Commercial Operation Work Program and Budget - During

the concerned

i"rioJ, the Contractor shall subrn'it to the Director, through period



R;gil"i Director, Work Programs and Budgets covering (30) davsofbefore

each, which shall bi submitted not later than thirty


iheLxpiration of the period covered by the previous Work Program'


The Contractor shall conduct Mining operations and other activities for the


duration of the operating period in iccordance with the duly approved

Programs and conesponding Budgets'


Expansion and Modification of Facilities - The Contractor may make

expansions, modifications, improvements, and replacements of the mining,





ヽ 今

Construction Period.

facilities and may add new facilities as the Contractor may consider

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

an appropriate Work Program approved by the Director.




Quarterly Reports - Beginning with the first Calendar Quarter following


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

to the Director, through the concerned Regional Direc{or, a Quarterly

Report stating the tonnage of production

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.

. the commencement of the Operating Period, the Contractor




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

inferred, the total tonnage of ores, kind by kind, broken down

between tonnage mined, tonnages transported from the

minesite and their corresponding destination, tonnages

stockpiled in the mine and elsewhere in the philippines,

tonnages sold or committed for export (whether actually

shipped from the Philippines or not), tonnages actuaily 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, byproducts or final products and of the terms at which they weie



work accomplished and work in progress at the end of the year

in question with respect to all the instaflations and faciiities

related to the utilization program, including the investment


actually made or committed; and


Profile of work force, incruding management and staff, stating

particularly their nationalities, and for Filipinos, their place oi

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

The contractor shall also eomply with other reporting requiregnents provided

for in the implementing rules and regulations of the Ait.




ヽ ゆ


Annual Reports - During the Operating Period, the Contractor shall

submit within sixty (60) days from the end of each Calendar Year, to

the Director, through the concerned Regional Director, an Annual

Report indicating in sufficient detail:




General Principle - The fiscal regime of this Agreement shall be governed by

the principle according to which the Government expects a reasonable return

in economic value for the utilization of non-renewable mineral resources

under its national sovereignty while the Contractor expects a reasonable

return on its investment with special account to be taken for the high risk of

exploration, the terms and conditions prevailing elsewhere in the industry and

any special efficiency to be gained by a particularly good performance of the



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

approval of the Agreement from the concerned Regional Office, the

Contractor shall cause the registration of this Agreement with the said

Regional Office and pay the registration fee at the rate provided in the

existing rules and regulations. Failure of the Contractor to cause the

registration of this Agreement within the prescribed period shall be sufficient

ground for cancellation of the same.


Occupation Fees - Prior to registration of this Agreement and at 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 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 (25o/o) ot the 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 151 (a) of the National lntemal

Revenue Code, as amended, as well as other taxes, duties and fees levied

by existing laws.

For purposes of determining the amount of the herein 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 B.epublic Act No. 7160, othenrvise known as "The Local

Government Code of '1991 ."



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. lt shall seek to strike a balance between

long{erm sales comparable to policies followed by independent producers in

the international mining industry.

The contractor shall likewise seek a balanced distribution among consumers.

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

arm's length standard and competing offers for large scale and long{e






Registration Fees

contracts shall be procured. The Bureau shall be furnished a copy of the said

Sales Agreement subject to confidentiality between the Bureau and the



Associated Minerals - lf minerals other than chromite, nickel and platinum

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.

sEcTtoN tx


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 expenditures which the Contractor

proposes to carry out during the period covered with the details and

particulars set forth elsewhere in this Agreement or in the supporting



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

Government wishes to propose a revision to a certain specific feature in the

Work Program or Budget, it shall, within thirty (30) days after receipt thereof,

provide a Notice to the contractor specifying in reasonable detail its reasons

therefore. Promptly thereafter, the Government and Contractor will meet and

endeavor to agree on the revision proposed by the Government. ln any

event, the revision of any portion of said Work Program or Budget in which

the Government shall fail to notify the contractor of the proposed revision

shall, insofar as possible, be carried out as prescribed herein. lf 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.


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

and the Contractor that the details of any Work Program may require

changes in the light of changing circumstances. The Contractor may make

such changes: Provided, That it shall not change the general objective of the

Work Program: Provided further, That changes which entail a variance of at

least twenty percent (20%) shall be subject to the approval of the Director.


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

be unreasonably withheld.





10.1. The Contractor shall manage its Mining Operations, including the care and

mainlenance and/or rehabilitation of the old mining area(s) within the

Contract Area, in a technically, financially, socially, culturally agd






environmentally responsible manner to achieve the sustainable development

objectives and'responsibilities as provided for under the implementing rules

and regulations of the Act.

10.2. The Contractor shall prepare a plan of mining so that its damage to the

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

the transformation of the mined-out areas or materials into economically and

socially productive forms must be done simultaneously with mining'

10.3. The Contractor shall submit an Environmental work Program during the

Exploration Period as prescribed in the implementing rules and regulations of

the Act.

10.4. An Environmental compliance certificate (ECC) shall be secured first by the

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

10.5. 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 dlvelopment, utilization and processing activities under this

Agreement. The Contractor shall allocate for its initial environment-related

cipital expenditures approximately ten percent (1OYo) ot 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 Area.

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

every calendar year, an Annual Environmental Protection and Enhancement

Program (AEPEP), using MGB Form '16-3, which shall be based on the

approved EPEP. The AEPEP shall be implemented during the year for which

it was submitted. To implement its AEPEP, the Contractor shall allocate

annually three to five percent (3Yo-SYo) of its direct mining and milling costs

depending on the environmental/geologic condition, nature and scale of

operations and technology employed in the Contracl Area.

10.6. 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 of funds for the

performance of the EPEP/AEPEP during the specific project phase. The MRF

shall be deposited as Trust Fund in a government depository bank and shall

be used for physical and social rehabilitation of areas affected by mining

activities and for research on the social, technical and preventive aspects of


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

tailings disposal system, mine rehabilitation or plan, water quality monitoring,


管 品 糠





dЮ 泳

計 a孵


production iacilities and/or mine production activities in the Contract Area.

10.8. 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.

10.9. The contractor shall be responsible in the monitoring of environmental,

safety and health conditions in the contract Area and shall strictly comply

with all the rules and regulations embodied under DAO No. 2000-98'

otherwise known as the "Mine Safety and Health Standards."


O.1 O.

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

rehabilitation andlor decommissioning plans, including its financial

requirements and incorporating the details and particulars set forth in the

implementing rules and regulations of the Act.

sEcTloN xl





Obligations of the Contractor:


To exclusively conduct sustainable Mining Operations within


To construct and operate any facilities specified under the Mineral


Contract A.rea in accordance with the provisions of the Act and its

implementing rules and regulations;

Agreement or approved Work Program;


To determine the exploration, mining and treatment process to be

utilized in the Mining 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



To keep accurate technical records about the Mining Operations, as

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

Government representatives authorized by the Director for the

purpose of assessing the performance and compliance of the

Contractor with the terms of this Agreemant. Authorized

representatives of other Government Agencies may also have access

to such accounts in accordance with existing laws, rules and



To furnish the Bureau all the data and information gathered from 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 Govemment fr6e and harmless from all claims


accounts of all kinds, as well as demands and actions arising out of

the accidents or injuries to persons or properties caused by Mining

Operations of the Contractor and indemnify the Government for any

expenses or costs incurred by the Government by reason of any such

claims, accounts, demands or actions;

ln the development of the c,ommunity:



the value of the gross output of minerals sold;




To coordinate with proper authorities in the development of the

mining community and for those living in the host and

neighboring communities through social infrastructure,

livelihood programs, education, water, electricity and medical

services. Where traditional self-sustaining income and the

community aclivities are identified to be present, the Contrac'tor

shall assist in the preservation and/or enhancement of such


To allot annually a minimum of one percent (1olo) of the direct

mining and milling costs necessary to implement the activities

undertaken in the development of the host and neighboring

communities. Expenses for communily development may be

charged against the royalty payment of at least one percent

(1olo) of the gross output intended for the concerned indigenous

cultural community;

To give preference to Filipino citizens who have established

domicile in the neighboring communities, in the hiring of

personnel for its mining operations. lf necessary skills and

expertise are curently not available, the Contractor must

immediately prepare and undertake a training and recruitment

program at its expense;


To incorporate in the Mining Feasibility Study the

expenditures necessary





) to



of this

ln the development of Mining Technology and Geosciences:


. In the course of its operations, to

produce geological,

geophysical, geochemical and other types of maps and reports

that are appropriate in scale and in format and substance which

…… ………


沐 ネ

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 ('lo/o) ot


are consistent with the internationally accepted standards

shall be made available to the scientific

;;;"ti;;. Such maps

iommunity in the most convenient and cost effective forms'

.rbi""t toin" condition that the Contractor may delay release of

shall not

said information for a reasonable period of time which

exceed three (3) Years;

To systematically keep the data generated from the ContracU

tvtining Rrea such as cores, assays and other related

and make

intormiatlon, including economic and financial data


them accessible to students, researchers and other


i"tfon.iUf" for developing mining, geoscience and.


technology subject to the condition that the Contractor

oi d"t" to the science and technology community

reasonable period of time which shall not exceed three



(3) years;

company the

To transfer to the Government or locai mining


the. exploration'

appropriate technology it may adapt



Jlvelopment and commercial utilization of the minerals in

Contract Area;

allocate research and development budget for the


advancement of mining technology and geosciences


cooiOination with the Buieau, research institutions'





(k 2) and

To replicate data, maps and reports citecl in (k'1) and


turnlsn ine Bureau for archiving and systematic

wnicn snait be made available tb the science and technology

for conducting research and undertaking other



geoscience and processing technology and the corresponding

that the

national pool of manpoweitalents: Provided' however'


retea=e'olt oatr, maps and the like shall be similarly

in accordance with (k 1) and (k 2) above;


Mining Feasibility Study the




expendituies necessary to implement all the plans and

forth in this Agreement, and



in the



11.2. Rights of the Contractor:

confines of its

a. To conduct Mining Operations withinthethe

terms and conditions

contracuMining AreJ in accordance with

hereof and without interfering with the rights of other


C° nlractorsノ Lesseesノ Operatoli:』



ヽ い



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;




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


ceasei, the applicable laws and regulations on immigration shall apply


executives are employed, an effective program of kaining




and regulations;



regulations and the rights of third parties;



Of repatriation of capital and remittance of profits, dividends and

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

Pilipinas rules and regulations; and




equipment, spare parts and raw

materials required in the operations in accordance with existing laws

and regulations.

To import when necessary all

1.3. Obligations

of the Government:


To ensure that the Contractor has the Government's full cooperation in

the exercise of the rights granted to it under this Agreement;


To use its best efforts to ensure the timely issuance of necessary

permits and similar authorizing documents for use of the surface of the

Contract Area; and

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 ,pduce

rights hereund"tr$(

the Contractor's obligation



鼈 、


subject to appiicable laws and regulations: Provided, That if the

sEcTtoN xlr


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


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

sEcTroN xnl


13.1. The Contractor agrees to employ, to the extent possible, qualified Filipino

personnel in all types of mining operations for which they are qualified; and

after Commercial Production commences shall, in consultation and with

consent of the Govemment, 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 timetable set forth

below the following targets of "Filipinization:"




l° /o)

















Sk‖ ied







Unski‖ ed

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

own employees shall be included in the Operating Expenses.

13.3. The Contractor shall not discriminate on the basis of gender and shall

respect the right of women workers to participate in

and decision-


鼈 ゛

│ _

erected or placed on the Contract Area by the Contractor shall remain the

property of the Contractor. The Contractor shall have tho 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 ('l)

year from the time of cessation within which to remove its improvements,

otherwise, all social infrastructures and facilities shall be turned over or

donated tax free to the proper government authorities, national or local, to

ensure that said infrastructures and facilities are continuously maintained

and utilized by the host and neighborlng communities.



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

peiiod of one (1) year from the time the issue is raised by a Party shall be

ln any event, 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.






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

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

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

the Government.

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

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

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

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

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

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

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

other relevant laws and regulations.

15.3. 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 ano termination;'(




涅 う

setfled 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 arhitrators 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, othenvise known as the

'Arbitration Act."

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 application within thirty
(30) days from notice: Provided, That the Contractor has met all the financial,
fiscal and legal obligations.

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.

15.7. 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 a/,a shall constitute breach of contract, upon which the Government may exercise its right to terminate the

a. Failure of the Contractor without valid reason to commence Commercial Production within the period prescribed; and/or

b. Failure of the Contractor to conduct mining operations and other
activities in accordance with the approved Work Programs and/or any
modification thereof as approved by the Director.

15.9. The Government may suspend and cancel tax incentives and credits if the Contractor fails to abide by the terms and conditions of said incentives and



16.1. Any terms and conditions resulting from repeal or amendment of any existing laws or regulation or from the enactment of a law, regulation or administrative order shall be considered a part 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 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:


DENR Building , Visayas Avenue

Diliman, Quezon City

lf to the Contractor

1-E Sra. Maria Street, Brgy, Kapitolyo
Pasig City, Metro Manila

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
attributable lo Force Majeure as defined in the Act. Provided, That the
suspension of Mining Operations due to Force Majeure causes shall
be subject to approval by the DENR Secretary.

b.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.

c.The Party, whose ability to perform its obligations is affected by such
Force Majeure causes, shall promptly give Notice to the other in
writing of any such delay or failure of performance, the expected
duration thereof and its anticipated effect and shall use its efforts to
remedy such delay, except that neither party shall be under any
obligation to settle a labor dispute: provided, That the suspension of
obligation by the Contractor shall be subject to prior approval by the

16.5. Amendments

This Agreement shall not be annulled, amended or modified in any respect
except by mutual consent in writing of the herein parties.

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



Department of Environment and Natural Resoruces




TIN ____________________


(Signature over printed name)

__________________________________(Signature over printed name)


Republic of the


Quezon City


Before me, a Notary

Public for and in the City of Quezon personally appeared ELISEA G. GOZUN, with Community Tax Certificate No. 13762020 issued on January 12, 2004 at

Quezon City in her capacity as Secretary of Department of

Environment and Natural Resources and MODESTO B. BERMUDEZ, with Cornmunity Tax

Certificate No. 23306931 issued on March 3, 2004 at Baguio City, in his

capacity as President of CRAU MINERAL RESOURCES CORPORATION both known to me and to

me known to be the same persons who executed the foregoing instrument

consisting of twenty five (25)  pages, including this acknowledgment page, and acknowledged to me

that the sarne is their voluntary acts and deeds.



I have herunto set my hand and affix my notarial seal, this 9th day of June 2004







Doc. No. 103

Page No. 21

Book No.111

Series of 2004