Investor’s Guide to

the Philippine Minerals Industry

A joint project of the

Board of Investments (BOI)

and

the Minerals Development Council (MDC)

TABLE OF CONTENTS

INTRODUCTION………………………………………………………………………………………….. 4

CONSTITUTIONAL AND LEGAL FRAMEWORK…………………………………………………. 4

POLICY TO PROMOTE AND REVITALIZE MINING……………………………………………. 4

PHILIPPINE GEOLOGY AND MINERALIZATION ………………………………………………. 5

PRIORITY MINING PROJECTS………………………………………………………………………. 6

PRIORITY MINERAL EXPLORATION PROJECTS……………………………………………….. 9

MINING RIGHTS…………………………………………………….……………………………………. 12

A. Exploration Permit………………………………………………………………………….. 12

B. Mineral Agreement…………………………………………………………………………. 16

C. Financial or Technical Assistance Agreement (FTAA)…………………………. 21

INCENTIVES……………………………………………………………………………………………….. 27

DIRECTORY………………………………………………………………………………………………….31

2

APPENDICES

Flowchart of Processing of ApplicationA

MINERAL RIGHTS:

Exploration PermitApplication for Exploration PermitBExploration PermitCExploration Work ProgramD

Mineral AgreementApplication for MPSA EMPSA Contract Form F

Financial or Technical Assistance AgreementApplication for FTAAGFTAA Contract FormH

Other FormsEnvironmental Work Program IEnvironmental Work Program for Offshore Exploration

JEnvironmental Protection Enhancement Program (EPEP)K

Three-Year Development/Utilization Work ProgramLEnvironmental Compliance Certificate (ECC)MOutline for a Project Feasibility StudyNCertificate of Environmental Management and Community Relations

Record (CEMCRR) OCertificate of Exemption (from CEMCRR Requirements)PSmall Scale Mining Permit (for Mineral Reservations)QSample of Five-Year Social Development Management Program

(SDMP) R(Table of Contents and Regional Evaluation Results only)

INVESTMENT INCENTIVES: (to be supplied by BOI)

3

Registration Forms

ApplicationRegistration Certificate

4

I. INTRODUCTION

The primary purpose of this Manual is to provide the investor with basic information on Philippine mineral resources, the mining rights which may be acquired and the corresponding fiscal and non-fiscal incentives available to investors.

II. CONSTITUTIONAL AND LEGAL FRAMEWORK

The 1987 Philippine Constitution retained the Regalian Doctrine (the State being the owner of the minerals, mineral lands and mineral resources), the exploration, development, and utilization of the mineral resources, shall be under the full control and supervision of the State.

The Mining Act of 1995 states that the DENR is the primary government agency responsible for the conservation, management, development, and proper use of the State’s mineral resources, while the Mines and Geosciences Bureau (MGB) is directly in-charge in the administration and disposition of mineral lands and mineral resources.

The Mining Act also introduce a new system of mineral resources exploration, development, utilization and conservation while giving due respect/consideration to other laws, such as the Presidential Decree No. 1586 (establishing an Environmental Impact Statement, including other environmental management related measures), RA No. 8371 or the Indigenous Peoples Rights Act of 1997 (an act to recognize, protect and promote the rights of Indigenous Cultural Communities/Indigenous Peoples), RA No. 7586 or the National Integrated Protected Areas System Act (NIPAS) of 1992 (providing for the establishment and management of NIPAS), RA No. 7160 or the Local Government Code of the Philippines, RA No. 7916 or the Special Economic Zone Act of 1995 and other laws.

III. POLICY TO PROMOTE AND REVITALIZE MINING

On January 3, 2003, the DENR Secretary was instructed by the President to prepare, in coordination with the Department of Trade and Industry Secretary, a statement on the new policy that the government shall be pursuing, which is from “tolerance to promotion” of mining investments and mining operations and undertake extensive social preparation in support of this policy. The DENR/MGB then, undertook National Minerals Policy Regional Consultations, which lead to the issuance of the Executive Order (EO) No. 270 or the National Policy Agenda on Revitalizing Mining in the Philippines on January 16, 2004 (as amended on April 16, 2004).

The following guiding principles are highlighted in E.O. No. 270:

1. Recognition of critical role of investments in the minerals industry;

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2. Adoption of clear, stable and predictable policies;3. Value-adding of mineral and mineral products;4. Use of efficient technologies;5. Environmental protection on every stages of mining;6. Multiple land use and sustainable utilization of minerals;7. Equitable sharing of economic and social benefits;

IV. PHILIPPINE GEOLOGY AND MINERALIZATION

The Philippines may be viewed as a collage of metamorphic terranes, magmatic arcs, ophiolitic complexes, sedimentary basins and continental block of Eurasian affinity subjected to tectonic processes such as subduction, collision and major strike slip faulting. The subduction zones are represented on the east by the west dipping Philippine Trench traversing the eastern seaboard of the Philippines from Mindanao up to a point in Luzon and the East Luzon Trough. East dipping subduction zones include the Manila Trench, Negros Trench and Cotabato Trench. The southern termination of the Manila Trench is characterized by the transformation of the subduction of the South China Sea Plate into an arc-continent collisional deformation within Mindoro Island.

The continental block is represented by northern Palawan, southern Mindoro, the Romblon Island Group and Buruanga Peninsula in Panay Island, known collectively as the North Palawan Block. Rock suites in this block include schists that are characteristically rich in quartz and chert formations that have been dated Late Permian to Jurassic.

The rest of the archipelago is considered as the Philippine Mobile Belt. Approximately coaxial with the mobile belt is the Philippine Fault, a major strike slip fault that apparently developed partially in response to the kinematic forces from the subduction from the east and west of the mobile belt.

Many areas of this mobile belt are underlain by ophiolitic complexes. Usually occurring together with pre-Cenozoic schists and phyllites, the ophiolitic rocks represent basement on which magmatic arcs have developed. The ages of the ophiolitic complexes range from Jurassic to early Paleogene. One of the best studied complete ophiolite sequence is the Zambales Ophiolite where tectonized peridotites progress to layered and isotropic gabbro, sheeted dike complex, pillow basalts and finally pelagic sedimentary rocks. Other ophiolitic complexes include those in Isabela, Polillo Island, eastern Rizal, Camarines Norte, Caramoan Peninsula, Mindoro, southern Palawan, Panay Island, Bohol Island, Leyte Island, Samar Island, Dinagat Island Group, north-central Zamboanga, Mindanao Central Cordillera and Pujada Peninsula. Ultramafic rocks of these ophiolites are hosts to significant deposits of chromite and nickel. Laterites over these rocks also contain economic deposits of secondary nickel minerals. On the other hand,

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massive sulphide and manganese deposits are associated with the volcanic and sedimentary carapace of the ophiolite.

Ancient magmatic arcs in the mobile belt are characterized by thick volcanic flows intercalated with pyroclastic and sedimentary rocks and intrusions of diorite, quartz diorite and andesitic to dacitic rocks. Some intrusions, however, have a more alkalic character such as the syenites in Isabela and monzonites in Quirino and Nueva Vizcaya. The ages of the diorite intrusions vary, from late Early Cretaceous (Albian) in Cebu to Late Miocene-Pliocene (Black Mountain Quartz Diorite in the Baguio District). Younger volcanic rocks, occurring as flows, intrusions and volcanic edifices disposed in linear belts are associated with active subduction processes. These are best exemplified by the Bataan volcanic belt and Bicol volcanic chain.

Sedimentary basins located between arcs include the llocos-Central Valley Basin, Cagayan Valley Basin, southeast Luzon Basin, Visayan Sea Basin, Agusan-Davao Basin and Cotabato Basin.

Gold and copper deposits in the Philippines tend to be clustered in certain areas such as Luzon Central Cordillera, Camarines Norte, Surigao and Davao, although large deposits may also be found elsewhere, as in Zambales (Dizon mine), Cebu (Atlas mine) and South Cotabato (Tampakan project). Many copper-gold deposits are associated with intrusions (mostly diorite and quartz diorite, but also monzonites and syenites) as well as Pliocene -Pleistocene volcanism (Lepanto mine at Mankayan, Benguet). Iron deposits are also associated with Neogene intrusions of diorite and quartz diorite.

V. PRIORITY MINING PROJECTS

The DENR, thru the MGB, has identified the following Twenty Four (24) mining operations as Priority Mining Projects:

Project Location/Status

Tenement/(Commodity)

President/Chairman

Proponent/Address/Contact Number

1 Rapu-Rapu Polymetallic Project

Rapu-Rapu Island, Albay

Start Operation: June 2005

Minelife: 7 years;

Mineral Production

Sharing Agreement

(MPSA)(Gold, Copper,

Silver, and Zinc)

Mineral Processing

Permit (MPP)

4,663 hectares

Alfredo J. Non President

Andrew McllwainPresident

Carlos DominguezPresident

Rapu-Rapu Minerals, Inc.23 Floor Multinational Bancorporation Center 6805 Ayala Avenue, Makati City

Rapu-Rapu Processing Inc.Suite 21, Legaspi Suites, 178 Salcedo St. Legaspi Village, Makati City

Telefax No. 813-4131 / 893-9349

2 Palawan HPP Project

Bataraza, Palawan

Start Operation: April 13, 2005

MPP

(Mixed sulfide of nickel and cobalt)

Takanori FujimuraPresident

Coral Bay Mining Corporation 24th Flr. Pacific Star Building, Corner Gil Puyat and Makati Avenues, Makati City

Fax No. 750-1530

7

Mine life: 20 years

5, 157 hectares

3 Masbate Gold Project

Aroroy, Masbate

Final Feasibility

Mine life: 8 years

MPSA(Gold)

8, 336 hectares

Rolando AmoresPresident

Filminera Resources Corporation 3rd Flr. Corinthian Plaza Condominium Bldg.121 Paseo de Roxas, Legaspi Village, Makati City 1229

Tel No. 811-3451Fax No. 811-3463

4 Diwalwal Direct State Development Project

Monkayo, Compostela Valley

Exploration Stage

Memorandum of Agreement

(Gold, Silver)

8, 100 hectares

Artemio DisiniPresident

Natural Resources Mining Development Corporation DENR Compound, Visayas Avenue, Quezon City

Tel No. 928-6837Fax No. 928-6760

5 Adlay-Cagdianao-Tandawa (ACT) Nickel Project

Carrascal, Surigao Del Sur and Claver, Surigao del Norte

Construction and Development Stage

Mine Life: 17 years

MPSA(Nickel-bearing

laterite)

8, 261 hectares

Rolando de Guzman

Officer-in Charge

Surigao Integrated Resources CorporationUnit 1704, 17th Flr. Prestige Tower, Emerald Avenue, Ortigas Center, Pasig City

Tel No. 637-5771/637-3086Fax No. 637-5775

6 Nonoc Nickel Project

Nonoc Island, Surigao Del Norte

Financing Stage

MPSA(Nickel and

Cobalt )

25, 000 hectares

Evaristo Narvaez Jr.President

Pacific Nickel Philippines, Inc. and Philnico Processing Corp.11-2, 11th Floor, Manila Banking Corp., 6772 Ayala Ave., Makati City

Tel No. 817-9258Fax No. 816-7039

7 Didipio Copper-Gold Project

Kasibu, Nueva Vizcaya

Construction and Development Stage

Mine Life: 15 years

FTAA(Copper, Gold)

21, 465 hectares

Rob P. ThompsonPresident

Australasia Phils. Mining, Inc. No. 3 Tolentino St., San Lorenzo Village, Makati City

Tel No. 892-6643/(0917)836-4586Fax No. 892-8399

8 Teresa Gold Project

Mankayan, Benguet

Currently operating at 2,000 TPD

MPSA(Gold, Silver)

948.97 has.

Bryan YapPresident

Lepanto Consolidated Mining Company BA Lepanto Building8747 Paseo de Roxas 1226 Makati City

Tel No. 812-0451; (074)452-8082/Fax No. 812-0451/810-5583

9 Padcal Copper Expansion Project

Tuba, Benguet

Started operation in Nov 2005 at 300 TPD

Mining Lease Contract (MLC)(Copper, Gold)

508 hectares

Walter BrownPresident

Philex Mining Corporation Philex BuildingNo. 27 Brixton and Fairlane Sts.Pasig City, Metro Manila

Tel No. 631-1381 to 88Fax No. 631-9494

10 King-King Copper-Gold Project

Pantukan, Compostela Valley

Final Feasibility

MPSA(Copper, Gold,

Silver)

1, 656 hectares

Benjamin Philip RomualdezPresident

Benguet Corporation 3/F, Universal Re Building106 Paseo de Roxas, Makati City

Tel. no.: 812-1380 / 752-0715

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and Financing Stage

Mine Life: 13.83 years

Fax no.: 752-0716 / 813-6611

11 Tampakan Copper Project

Tampakan, South Cotabato

Pre-feasibility and Advanced Exploration Stage

FTAA(Copper, Gold,

Silver)

31, 599.64 hectares

Paul G. DominguezPresident

Sagittarius Mines, Inc./Indophil, Inc.3rd Flr. L & F Bldg. 107 Aguirre St., Legaspi Village, Makati City

Tel No. 752-1440/43Fax No. 752-1446

12 Itogon Gold Project

Mankayan, Benguet

Final Feasibility and Financing Stage

Mine Life: 10 years

MPSA(Gold, Silver)

1, 728.85 hectares

Ignacio R. OrtigasPresident

Itogon-Suyoc Mines, Inc.Creative Trade Center No. 6 Industria St., Bagumbayan, Quezon City

Tel No. 631-4330Fax No. 631-3203

13 Canatuan Silver-Gold Project

Siocon, Canatuan, Zamboanga Del Norte

Operating Stage

Mine Life: 5 years

MPSA(Gold, Silver)

508.34 hectares

Eugene T. MateoPresident

TVI Resource Development Phil., Inc.c/o TVI Pacific Group of CompaniesW1903-B West Tower, Phil. Stock Exchange Center, Exchange Road, Ortigas CenterPasig City

Tel No. 687-5028Fax No. 637-3066

14 Far Southeast Copper-Gold Project

Mankayan, Benguet

Final Feasibility and Financing

Mine life is still under evaluation

MPSA(Gold, Coper,

Silver)

948.97 has.

Bryan YapPresident

Lepanto Cons. Mining CompanyBA Lepanto Building8747 Paseo de Roxas, Makati City

Tel No. 812-0451 (074)452-8102Fax No. 812-0451/810-5583

15 Boyongan Copper Project

Boyongan, Surigao Del Norte and Agusan del Norte

Pre-feasibility and Advanced Exploration Stage

Mine Life: 10 years

MPSA(Copper, Gold)

2, 879.70 hectares

Dr. Walter W. Brown

President

Silangan Mindanao Mining Co., Inc.Philex Bldg., No. 27 Brixton and Fairlane Sts.Pasig City

Tel No. 631-1381 to 88Fax No. 631-9494

16 Hallmark (Pujada) Nickel Project

Mati, San Isidro and Gov. Generoso, Davao Oriental

Exploration Stage

To start operation in 2009

MPSA(Nickel)

11, 799 hectares

Albertus B. MostertPresident

Philip H. Hopkins President

Hallmark Mining Corp. and Austral-Asia Link Mining Corp.2255 Chino Roces Avenue, Makati City

Tel No. 892-6611Telefax No. 816-1346

17 Carmen Copper Project (Toledo)

Soriano, Toledo City, Cebu

Final Feasibility and Financing Stage

MLC, MPSA(Copper, Gold,

Silver)

234. 2875 hectares

Alfredo C. RamosPresident

Atlas Consolidated Mining and Development Corporation7th Flr. Quad Alpha Centrum Bldg.125 Pioneer St., Mandaluyong City

Tel No. (632)635-2387/635-4495

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Mine Life: 12 years

Fax No. (632)633-3759

19 Mindoro Nickel Project

Victoria, Mindoro Oriental

Mine Life : 25 years

MPSA(Nickel and

Cobalt)

9, 720 hectares

Henry E. FernandezPresident

Aglubang Mining CorporationUnit 20B, 20th Flr. Wynsum Corporate Plaza, F. Ortigas, Jr. Road, Ortigas Center, Pasig City

Tel No. 687-4161Fax No. 687-4299

19 Batong-Buhay Gold Project

Pasil, Kalinga-Apayao

For Bidding

MLC(Gold and Silver)

444 hectares

Artemio DisiniPresident

Natural Resources Mining Development Corporation DENR Compound, Visayas Avenue, Quezon City

Tel No. 928-6837Fax No. 928-6760

20 Amacan Copper Project/Hijo Gold Project

Mabini, Compostela Valley

For Bidding

FTAA(Copper and

Gold)

27, 058 hectares

Artemio DisiniPresident

Natural Resources Mining Development Corporation (formerly North Davao Mining Corporation) DENR Compound, Visayas Avenue, Quezon City

Tel No. 928-6837Fax No. 928-6760

21 Siana Gold Project

Mainit, Surigao Del Norte

Pre-feasibility and Advanced Exploration Stage

MPSA(Gold)

2, 023.74 hectares

Joel T. GoPresident

Lance GoveyPresident

JCG Resources Corporation 11th Flr. Gotesco Corporate CenterBilibid Viejo cor. Gil Puyat Sts.Quiapo, Manila

Greenstone Resources Corp.05986 Nonang St., Villa Curitos Subd., Surigao City, Surigao del NorteTel No. (086) 826-2510Fax No. (086) 826-1286

22 Akle Cement Project

San Ildefonso, Bulacan

Final Feasibility and Financing Stage

Start of commercial operations is 2nd quarter of 2009

MPSA(Limestone,

Shale and other raw materials for

cement production)

169.3725 hectares

Manny C. TengPresident

Eagle Cement CorporationSDK Center, 153 EDSA, Mandaluyong City

Tel No. 732-6076 / 725-9676 / 722-5024

23 Colet Copper-Gold Project

Sipalay City, Negros Occidental

Pre-feasibility and Advanced Exploration Stage

Mine Life: 15 years

MPSA - awaiting approval

(Gold, Copper, Molybdenum,

and Silver)

Joel D. MuycoPresident

Colet Mining and Development Corporation Suite 303 SOLMAC Bldg., No. 84 Dapitan Corner Banaue Sts., Quezon City

Tel No. 743-7671 / 740-1852Fax No. 743-7561

24 Berong Nickel Project

Berong, Quezon, Palawan

For Bidding

Mine Life: 11 years

MPSA(Direct Shipping Grade Limonite and Saprolite

Ores)

Berong Nickel Corporation (BNC)/TMM Management Inc.3rd Flr. Philam Building, 100 C Palanca St., cor. Dela Rosa St. Makati

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VI. PRIORITY MINERAL EXPLORATION PROJECTS

The DENR, thru the MGB, has also identified the following Forty (40) mining operations as Priority Mineral Exploration Projects:

Project Location Tenement/(Commodity)

Contractor/Permitee

1 Acoje PGE / Nickel Project

Santa Cruz, Candelaria, Zambales

MPSA(Nickel, PGE)

Crau Mineral Resources Corp. / Kinloch Resources Ltd. / Rusina Mining Ltd.Website: www.rusina.com.au

2 Agata Gold Project

Jabonga, Agusan del Norte

MPSA(Gold)

Minimax Mineral Exploration Corp. 4th Flr., J&T Bldg., Ramon Magsaysay Blvd., Manila, Philippines

3 Ampucao Copper Porphyry Prospect

Itogon, Benguet MLC, Mining

Patents

(Copper)

Benguet Corporation 3/F, Universal Re Building, 106 Paseo de Roxas, Makati CityTel. no.: 812-1380 / 752-0715Fax no.: 752-0716 / 813-6611MCPO box n. 3488Website: www.benguetcorp.com

4 Archangel Gold Project

Lobo, Batangas MPSA(Gold, Silver)

Egerton Gold Phils., Inc. 111D South Star Plaza, South SuperHi-way cor. Gen Estrella St., Bangkal, Makati City, Philippines

5 Alicia Gold Project

Alicia, Sibugay EP(Gold, copper)

Philippine National Oil Company PNOC Bldg. 6, Merrit Rd., Fort Bonifacio, Taguig City, PhilippinesTel. (632) 812-6209Website: www.pnoc.com.ph

6 Batoto Gold Project

New Bataan, Compostela Valley Province

APSA(Gold)

Philco Mining Corp. /Sur American23rd Flr., Multinational Bamcorporation Centre 6805 Ayala Ave., Makati City, Phil.

7 Berong Nickel Project

Quezon & Aborlan, Palawan

APSA(Nickel, Iron)

Atlas Consolidated MiningDevelopment/TMM Management Inc. 7/F, Quad Alpha Centrum125 Pioneer St., Mandaluyong CityTel. (632) 635-2387/4495E-mail: acmdcmla@info.com.ph

8 Camp 3 Gold Project

Tuba, Benguet EP(Gold)

Northern Luzon Explo. & Mining Co. (Anglo America / Philex) #27 Brixton St., Pasig City, PhilippinesTel. (632) 631-1381Website: www.philexmining.com.ph

9 Claveria Copper-Gold Project

Claveria, Cagayan Province

EP(Copper, Gold)

Royal Northern Mining Corporation (Climax-Arimco)Website: www.climaxmining.com

10 Conner Copper-Gold Project

Conner, Kalinga EP(Copper, Gold)

Cordillera Exploration Company (Newmont Phils.) PSE Center West Tower, Ortigas, Pasig, PhilippinesTel. (632) 637-2091

11 Cordon Gold Project

Cordon, Isabela EPA(Gold, Copper)

Vulcan Industrial and Mining Corp. 5 & 6th Flr, Quadalpha Centrum Bldg, Pioneer St., Mandaluyong City, Phil.Tel. (632) 634-5045

12 Del Gallego Gold Project

Tagkawayan, Quezon and Del Gallego, Camarines Sur

EP(Copper, Gold)

Kumakata Mining Co. Inc. (Phelps Dodge Explo. Corp.) 4th Flr. YL Holding Bldg. Legaspi Village, Makati, Philippines Tel. (632) 894-3562

13 Gambang Gold Project

Bakun, Benguet EP(Copper, Gold)

Oxiana Phils. Inc.. 27-A Southdrive, PO Box 298, BaguioPost Office, B.C., Philippines Tel. (63-74) 444-5576

14 Hinonangan Gold Project

St. Bernard, Southern Leyte

MPSA(Gold, Silver)

San Christo Mineral Exploration Corp. 3rd Flr., L & F Bldg., 107 Aguirre St Legaspi Vilalge, Makati City, Phil., 1200

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15 Hixbar Copper - Gold Project

Sta. Barbara Rapu – Rapu Island, Albay

MPSA(Copper, Gold,

Silver)

Rapu-Rapu Minerals Inc. Legaspi Suites, Salcedo St. Makati, Phil.Tel. (632) 813-4131

16 Kalaya-an (Makalaya) Gold Project

Placer, Surigao del Norte

EP(Copper, Gold)

Manila Mining Corp. 20/F Lepanto Bldg. Makati, Philippines Tel. (632) 815-9447

17 Kematu Gold Project

Tiboli, South Cotabato

MPSA(Gold, Silver)

Tribal Mining Corporation408 Surigao St., Insular Village, Phase I, Lanang, Davao City, Phil.Tel. (63-82) 234-1088E-mail: philco@skyinet.net

18 Kingking Epithermal Gold Project

Pantukan, Compostela Valley Province

MPSA(Copper, Gold)

Benguet Corporation 3/F, Universal Re Building, 106 Paseo de Roxas, Makati CityTel. no.: 812-1380 / 752-0715Fax no.: 752-0716 / 813-6611MCPO box n. 3488Website:Website: www.benguetcorp.com

19 Labo Gold Project

Labo, Camarines Norte

MPSA(Gold, Silver)

Indophil Resources Phils Inc.Level 3 L&F Building, 107 Aguirre Street, Legaspi Village, Makati City 1229, Phil.Tel. (632) 752 1440 to 43Website: www.indophil.com

20 Mabuhay Gold Project

Sison, Surigao del Norte

APSA(Gold, Silver)

All Acacia Resources Inc. (Pelican Resources Inc.) 2283 Pasong Tamo Extension Makati City, Philippines

21 Manat Copper-Gold Project

Nabunturan, Compostela Valley

MPSA(Copper, Gold)

Alsons Devt. & Investment Co.329 Bonifacio StreetDavao CityTel. (63-82) 227-252Fax. (63-82) 226-4715

22 Nalesbitan Gold Project

Labo, Camarines Norte

MLC(Gold)

El Dore Mining Corp./ Nalesbitan Mining Phil. Inc. 3F/ 111 Paseo de Roxas, Legaspi Vill

23 Paco Copper-Gold Project

Mainit & Sison, Surigao Del Norte

EP(Copper, Gold)

Coolabah Mining Corp. and Occidental Mining Corp. (Climax Mining NL)3rd Flr., Valero Tower, Salcedo Village Makati, Philippines Tel. (632) 892-3650

24 Panaon Gold Project

Panaoan Island, Southern Leyte

EP(Gold, Silver)

Buena Suerte Mining Corp. 27-A Southdrive PO Box 298, Baguio Post Office, B.C., Philippines Tel. (63-74) 444-5576

25 Pamplona Sulfur Project

Amlan, Tanjay & Pamplona, Negros Oriental

EP(Sulfur)

Altai Phils. Mining Corp.(Crew Minerals Phils, Inc) 3rd Flr., Legaspi Towers, Roxas Blvd. Phil Tel. (632) 525-7757Website: www.crewdev.com

26 Panag Gold Project

New Bataan, Compostela Valley Province

EP(Gold)

Philco Mining Corporation23rd Flr., Multinational Bamcorporation Centre 6805 Ayala Ave., Makati City, Phil.

27 Pantingan Gold Project

Bagac, Bataan MPSA(Gold, Silver,

Copper)

Bataan Minerals Corp./ Benguet Corp.One Corporate Plaza 845 Arnaiz Avenue, Makati City, PhilippinesTel. (632) 812-1380 or 819-0174Website: www.benguetcorp.com

28 Pantuyan Gold Project

Panaoan Is., Sourthern Leyte

EP(Gold)

Vulcan Industrial and Mining Corp. 5 & 6th Flr, Quadalpha Centrum Bldg, Pioneer St., Mandaluyong City, PhilTel. (632) 634-5045

29 Pao Gold Project

Kasibu, Nueva Vizcaya

EP(Gold, Copper)

Oxiana Phils. Inc.. 27-A Southdrive, PO Box 298, BaguioPost Office, B.C., Philippines Tel. (63-74) 444-5576Website: www.oxiana.com.au

30 Papaya Kasibu, Nueva EP Lasseter Mining Corporation

12

Copper-Gold Project

Vizcaya (Copper, Gold) (Climax Arimco)Website: www.climaxmining.com

31Road 5 M Gold Project

Boston, Davao Oriental

EP(Gold, Copper)

Boston Mineral Mining Corporation Road 5 Napo, Caatijan, Boston, Davao Oriental, Philippines

32 Samar Bauxite Project

San Jose, De Buan, Wright Western Samar

MPSA(Aluminum)

Alumina Mining Phil. Inc. Kennedy St., Greenhills, San Juan, Phil.Tel. (632) 241-0657

33 Sogod Copper-Gold Project

Sogod, Southern Leyte

EP(Copper, Gold)

UP Mines Incorporated IDC Bldg., E. Rodriguez Ave., Ugong Norte, Quezon City, PhilippinesTel. (632) 633-1256

34 Surigao Gold Project

Malimono, Surigao del Norte

EP(Gold, Silver)

Buena Suerte Mining Corp. 27-A Southdrive, PO Box 298, Baguio Post Office, B.C., Philippines Tel. (64-74) 444-5576

35 Southern Negros Gold Project

Amlan, Negros Occidental

EP(Gold, Copper)

Philippine National Oil Company PNOC Bldg. 6, Merrit Rd., Fort Bonifacio, Taguig City, PhilippinesTel. (632) 812-6209Website: www.pnoc.com.ph

36 Sta. Cruz Nickel Project

Sta. Cruz, Zambales

MPSA(Nickel,

Chromite, PGE)

Benguet Corporation 3/F, Universal Re BuildingNo. 106 Paseo de RoxasMakati CityTel. no.: 812-1380 / 752-0715Fax no.: 752-0716 / 813-6611MCPO box n. 3488Website:Website: www.benguetcorp.com

37 Tagpura Copper Project

New Bataan, Compostela Valley Province

EPA(Copper)

Philco Mining Corporation 23rd Flr., Multinational Bamcorporation Centre 6805 Ayala Ave., Makati City, Phil.

38 TMC Gold Project

Sara, Iloilo MPSA(Gold, Copper)

Teresa Marble Corporation117 Shaw Boulevard, Pasig City PhilsTel. (632) 631-9123Fax (632) 634-3342Email: sales@teresamarble.comWebsite: www.teresamarble.com

39 Tabuk Copper Project

Tabuk, Kalinga Province

EP(Copper, Lead,

Zinc)

Wolfland Resources, Inc.P.O. Box 1042 2600 Baguio City, Phil

40 Tongonan Gold Project

Ormoc Leyte EPA(Gold, Copper,

Silver)

Philippine National Oil Company PNOC Bldg. 6, Merrit Rd., Fort Bonifacio, Taguig City, PhilippinesTel. (632) 812-6209Website: www.pnoc.com.ph

VII. MINING RIGHTS

The Philippine Mining Act of 1995 (Republic Act [RA] No. 7942) provides for three (3) modes of acquiring mining rights:

1) Exploration Permit (EP); 2) Mineral agreements such as: Mineral Production Sharing Agreement (MPSA), Joint Venture Agreement (JVA), and Co- Production Agreement (CPA); and 3) Financial or Technical Assistance Agreement (FTAA).

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Department of Environment and Natural Resources [DENR] Administrative Order No. 2005-15 limits the mode of entry in the conduct of mineral exploration to EP and FTAA only. Where there is a Mining Project Feasibility Study, the proponent may apply for an MPSA.

A. EXPLORATION PERMIT

What is an Exploration Permit?

An Exploration Permit (EP) is an initial mode of entry in mineral exploration allowing a Qualified Person to undertake exploration activities for mineral resources in certain areas open to mining in the country. A holder of an Exploration Permit with a viable project may file a “Declaration of Mining Project Feasibility” and if approved, the holder acquires an exclusive right to a mineral agreements or financial or technical assistance agreement.

Who is a Qualified Person?

A Qualified Person is:

(a) any Filipino citizen of legal age and with capacity to contract;

(b) a Filipino-owned Corporation, Partnership, Association or Cooperative, at least sixty percent (60%) of the capital is owned by Filipino citizens, organized or authorized for the purpose of engaging in mining with technical and financial capability to undertake mineral resources development and duly registered in accordance with the law; or

(c) a foreign-owned Corporation, Partnership, Association or Cooperative duly registered in accordance with law and in which less than fifty percent (50%) of the capital is owned by Filipino citizens.

How much area is granted for an Exploration Permit?

Each Qualified Person is limited to the following maximum size of area to apply for or hold at any one time under an EP.

QUALIFIED PERSON

ONSHORE(in any one

Province)

ONSHORE(In the entire

Philippines)

OFFSHORE(In the entire

Philippines, beyond five hundred meters [500 m] from the mean Individual 20 meridional

blocks or 1,620

40 meridional blocks or 3,240

100 meridional blocks 01 8,100 hectares

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Corporation/ Partnership/ Association/

200 meridional blocks or 16,200 hectares

400 meridional blocks or 32,400 hectares

1,000 meridional blocks or 81,000 hectares

Note: One meridional block is equivalent to approximately 81 hectares.

What is the term of an Exploration Permit?

The term of an Exploration Permit is for a period of two (2) years from date of its issuance, renewable for like periods but not to exceed a total term of four (4) years for nonmetallic mineral exploration or six (6) years for metallic mineral exploration.

Renewal of the Permit is allowed if the Permittee has complied with all the terms and conditions of the Permit and he/she/it has not been found guilty of violation of any provision of Republic Act No. 7942 or the 'The Philippine Mining Act of 1995" and its implementing rules and regulations.

Likewise, the conduct of a feasibility study and filing of the declaration of mining project feasibility are undertaken during the term of the Permit.

What are the mandatory requirements in the acceptance of an EP application?

An EP application shall be filed in the Mines and Geosciences Bureau (MGB) Regional Office (RO) concerned, for mineral and non-mineral reservation areas, using the prescribed form (MGB Form No. 05-1) through payment of the filing fee and submission of five (5) sets of the following mandatory requirements:

1) Location map/sketch plan of the proposed permit area showing its geographic coordinates/ meridional block(s) and boundaries in relation to major environmental features and other projects using a National Mapping and Resource Information Authority (NAMRIA) topographic map in a scale of 1:50,000 duly prepared, signed and sealed by a deputized Geodetic Engineer;

2) Two-year Exploration Work Program (MGB Form No. 5-4) duly prepared, signed and sealed by a licensed Mining Engineer or Geologist;

3) Proof of technical competence, including, among others, curricula vitae and track records in exploration and environmental management of the technical personnel who shall undertake the activities in accordance with the submitted Exploration Work Program;

4) Proof of financial capability to undertake the Exploration Work Program, such as the following:

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a. For an individual - Copy of income tax return for the preceding year and proof of bank deposit or credit line in the amount of at least Two Million Five Hundred Thousand Pesos (PhP 2,500,000.00); or

b. For a corporation, partnership, association or cooperative - Latest audited financial statement and, where applicable, Annual Report for the preceding year, credit line(s), bank guarantee(s) and/or similar negotiable instruments;

5) Photocopy of Articles of Incorporation/ Partnership/ Association, By-Laws and Certificate of Registration, duly certified by the Securities and Exchange Commission or authorized Government agency(ies) concerned, for a corporation, partnership, association or cooperative, or Certification from the Bureau/Regional Office concerned that said documents are duly registered in that Office; and

6) Affidavit of Undertaking for corporation, partnership, association or cooperatives (Annex A of DENR Memorandum Order No. 99-10) declaring:

a. The list of applications filed and the Mining Permit(s)/Contract(s) granted to the applicants, including the corresponding hectarage and location of the areas, disaggregated on a per province basis; and

b. The list of other Applicant(s)/Contractor(s)/Permittee(s) in which more than seventy percent (70%) of the authorized capital stock is held by stockholders of the applicant, including the corresponding hectarage, disaggregated on a per province basis.

Please note that any application with incomplete mandatory requirements shall not be accepted.

What are the other additional requirements after an EP application is filed?

The following additional requirements shall be required from the applicant submitted after the acceptance of the application but prior to the issuance of the Exploration Permit:

1. Certificate of Environmental Management and Community Relations Record (CEMCRR)/Certificate of Exemption;

2. Environmental Work Program (MGB Form No. 16-1 or MGB Form No. 16-1 A). If the applicant is a member of the Chamber of Mines of the Philippines, Inc. (COMP), he/she/it must submit Certificate of Good Membership Standing, which is a necessary requirement before the EWP can be evaluated;

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3. Certification Precondition from the National Commission on Indigenous Peoples attesting that -

a. The proposed permit area does not overlap any ancestral land/domain claim in case of non-Indigenous People (IP) area; orb. The Free and Prior Informed Consent (FPIC) has been issued by me Indigenous Cultural Community (ICC)/IP concerned.

NOTE: For OFFSHORE applications, the following additional requirements shall be submitted:

Name, port of registry, tonnage, type and class of survey vessel(s) or platform(s). If a foreign vessel is to be used, the expected date of first entry or appearance and final departure of the survey vessel shall be provided and the necessary clearances obtained:

1. A certification from the Coast and Geodetic Survey Department of NAMRIA that the proposed Exploration Work Program was duly registered to provide update in the publication of "Notice to Mariners" together with a list of safety measures to be regularly undertaken to ensure the safety of navigation at sea and prevent accident

2. An agreement to:a. Properly identify all installations, vessels and other crafts involved in

exploration recognizable to all vessels within reasonable distance;b. Notify the Bureau 30 calendar days prior to the intention to remove

all scientific installations or equipment and apparatus; andc. Allow the Bureau's authorized personnel, the Philippine Coast Guard

and other authorized persons during reasonable hours to board the vessel(s) while within the Exclusive Economic Zone.

d. Other supporting documents that may required by the Mines and Geosciences Bureau.

B. MINERAL AGREEMENT

What is a Mineral Agreement?

A Mineral Agreement is an agreement between a Contractor and the Government wherein the Government grants to the Contractor the exclusive right to conduct mining operations within, but not title over, the contract area. Mining operations that are allowed under Mineral Agreements include development/construction and utilization of mineral resources including the continuance of exploration works during the conduct of development/construction/utilization activities. Mineral Agreements are classified into:

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(1) Mineral Production Sharing Agreement (MPSA) - a mineral agreement wherein Government shares in the production of the Contractor, whether in kind or in value, as owner of the minerals. In return, the Contractor shall provide the necessary financing, technology, management and personnel for the mining project(2) Co-Production Agreement (CA) - a mineral agreement wherein the Government provides inputs to the mining operations other than the mineral resources; and(3) Joint Venture Agreement (JVA) - a mineral agreement wherein the Government and the Contractor organize a joint venture company with both parties having equity shares. For its share, the Government is entitled to a share in the gross output of the mining project aside from its earnings in the equity of the company.

Who is qualified to apply for a Mineral Agreement?

The following Qualified Person may apply for a Mineral Agreement:

1) Individual - a Filipino citizen of legal age and with capacity to contract; or

2) Corporation, Partnership, Association or Cooperative - organized or authorized for the purpose of engaging in mining, duly registered in accordance with law, at least sixty percent (60%) of the capital of which is owned by Filipino citizens.

How much area is granted for a Mineral Agreement?

Each Qualified Person is limited to the following maximum size of area to apply for or hold at any one time under a Mineral Agreement:

I. Onshore

1. For metallic mineralsIndividual - Eight Hundred Ten (810) hectares

Corporation/ Partnership/

Association/Cooperative - Five Thousand (5,000) hectares

2. For non-metallic minerals except for those in item nos. 3,4, and 5

Individual - Eight Hundred Ten (810) hectaresCorporation/ Partnership/ - Two Thousand (2,000) hectares Association/Cooperative

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3. For sand and gravel

Individual - Twenty (20) hectaresCorporation/ Partnership/ - Fifty (50) hectares Association/Cooperative

4. For marble, granite and construction aggregates

Individual - Fifty (50) hectaresCorporation/ Partnership/ - One Hundred (100) hectares Association/Cooperative

5. For cement raw materials such as limestone, shale and limestone

Individual - Five Hundred (500) hectares

Corporation/ Partnership/ - One Thousand (1000) hectaresAssociation/Cooperative

II. Offshore

1. For metallic minerals - Five Thousand (5,000) hectares

2. For non-metallic minerals - Two Thousand (2,000) hectares

What is the term of a Mineral Agreement?

A Mineral Agreement shall have a term not exceeding twenty-five (25) years from the date of its execution, and renewable for another term not exceeding twenty-five (25) years under the same terms and conditions, without prejudice to changes mutually agreed upon by the Government and the Contractor.

After the 50 year term of the Mineral Agreement, the operation of the mine may be undertaken by the Government or through a Contractor. The contract for the operation of a mine will be awarded to the highest bidder in a public bidding after due publication of the notice thereof. However, the original Contractor shall have the right to equal the highest bid upon reimbursement of all reasonable expenses of the highest bidder.

What are the mandatory requirements in the acceptance of an MPSA application?

An MPSA application shall be filed in the Mines and Geosciences Bureau (MGB) Regional Office (RO) concerned, for mineral and non-mineral reservation areas, using the prescribed form (MGB Form No. 06-1) through payment of the filing fee and submission of five (5) sets of the following mandatory requirements:

For an individual -

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1) Location map/sketch plan of the proposed contract area showing its geographic coordinates/meridional block(s) and boundaries in relation to major environmental features and other projects using a NAMRIA topographic map in a scale of 1:50,000 duly prepared, signed and sealed by a deputized Geodetic Engineer;

2) Three-year Development/Utilization Work Program (MGB Form No. 6-2) duly prepared, signed and sealed by a licensed Mining Engineer or Geologist;

3) Proof of technical competence, including, among others, curricula vitae and track records in mining operations and environmental management of the technical personnel who shall undertake the activities in accordance with the submitted Development/Utilization Work Program;

4) Poof of financial capability to undertake the activities pursuant to the Development/Utilization Work Program, such as a copy of the income tax return for the preceding year and proof of bank deposit or credit line in the amount of at least Two Million Five Hundred Thousand Pesos (PhP 2,500,000.00);

5) Mining Project Feasibility Study (MGB Form No. 5-3); and

6) Complete and final exploration report pertaining to the area.

For a corporation, partnership, association or cooperative -

1) Duly certified Certificate of Registration, Articles of Incorporation/Partnership/Association and By-Laws issued by the Securities and Exchange Commission or authorized Government agency concerned, or Certification from the Bureau/Regional Office concerned that the said documents are duly registered in that Office;

2) Location map/sketch plan of the proposed contract area showing its geographic coordinates/meridional block(s) and boundaries in relation to major environmental features and other projects using a NAMRIA topographic map in a scale of 1:50,000 duly prepared, signed and sealed by a deputized Geodetic Engineer;

3) Three-year Development/Utilization Work Program (MGB Form No. 6-2) duly prepared, signed and sealed by a licensed Mining Engineer or Geologist;4) Proof of technical competence, including, among others, curricula vitae and track records in mining operations and environmental management of the technical personnel who shall undertake the activities in accordance with the submitted Development/Utilization Work Program;

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5) Proof of financial capability to undertake the activities pursuant to the Development/Utilization Work Program, such as latest audited financial statement and, where applicable, Annual Report for the preceding year, credit Iine(s), bank guarantee(s) and/or similar negotiable instruments;

6) Affidavit of Undertaking for corporation, partnership, association or cooperatives (Annex A of DENR Memorandum Order No. 99-10) declaring:

a. The list of applications filed and the Mining Permit(s)/Contract(s) granted to the applicants, including the corresponding hectarage and location of the areas, disaggregated on a per province basis; and

b. The list of other Applicant(s)/Contractor(s)/Permittee(s) in which more than seventy percent (70%) of the authorized capital stock is held by stockholders of the applicant, including the corresponding hectarage, disaggregated on a per province basis.

7) Mining Project Feasibility Study (MGB Form No. 5-3); and

8) Complete and final exploration report pertaining to the area. For holders of valid and existing mining lease contracts, operating agreements. Quarry Permits/licenses or unperfected mining/quarry claims, the following are additional requirements to the above requirements, whenever applicable:

1) Certification from the Regional Office concerned that the mining/quarry claims are valid and subsisting;

2) Appropriate environmental report on the rehabilitation of mined-out and/or mine waste/tailings-covered areas and anti-pollution measures undertaken during the mining operations;

3) Environmental Compliance Certificate (ECC) for any new phase outside of the originally approved operation under the mining project;

4) Mining Project Feasibility Study (MGB Form No. 5-3): Provided, That a Mineral Agreement applicant with existing mining operation may submit, in lieu of the Mining Project Feasibility Study, a Project Description and a detailed financial statement of its operations incorporating therein the social and environmental expenditures, taxes and fees paid (MGB Form No. 5-3A); and

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5) Approved survey plan of the mining area.Please note that any application with incomplete mandatory

requirements shall not be accepted.

What are the other additional requirements after an MPSA application is filed?

The following additional requirements shall be submitted after the acceptance of the application but prior to the issuance of the Mineral Agreement:

1) Environmental Compliance Certificate (ECC);

2) Environmental Protection and Enhancement Program(MGB Form No. 16-2);

3) Certificate of Environmental Management and Community Relations Record (CEMCRR)/Certificate of Exemption and

4) Approved survey plan;

5) Certification Precondition from the National Commission on Indigenous Peoples attesting that -

a. The proposed permit area does not overlap any ancestral land/domain claim in case of non-Indigenous People (IP) area; or b. The Free and Prior Informed Consent (FPIC) has been issued by

the Indigenous Cultural Community (ICC)/IP concerned.

NOTE: For OFFSHORE applications, the following additional requirements shall be submitted:

1) Name, port of registry, tonnage, type and class of survey vessel(s) or platform(s). If a foreign vessel is to be used, the expected date of first entry or appearance and final departure of the survey vessel shall be provided and the necessary clearances obtained;

2) A certification from the Coast and Geodetic Survey Department of NAMRIA that the proposed Exploration Work Program was duly registered to provide update in the publication of "Notice to Mariners" together with a list of safety measures to be regularly undertaken to ensure the safety of navigation at sea and prevent accident;

3) An agreement to:a. Properly identify all installations, vessels and other crafts involved in

exploration recognizable to all vessels within reasonable distance;b. Notify the Bureau 30 calendar days prior to the intention to remove

all scientific installations or equipment and apparatus;

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c. Allow the Bureau's authorized personnel, the Philippine Coast Guard and other authorized persons during reasonable hours to board the vessel(s) while within the Exclusive Economic Zone; and

d. Other supporting documents that may required by the Mines and Geosciences Bureau.

C. FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENT (FTAA)

What is a Financial or Technical Assistance Agreement (FTAA)?

A Financial or Technical Assistance Agreement is a contract between a Contractor and the Government for the large-scale exploration, development and utilization of gold, copper, nickel, chromite, lead, zinc and other minerals except for cement raw materials, marble, granite, sand and gravel and construction aggregates. An FTAA is signed by the President and this is reported to Congress within thirty (30) days from execution and approval thereof.

Who is qualified to apply for an FTAA?

The following Qualified Persons may apply for an FTAA:

a. any Filipino citizen of legal age and with capacity to contract;

b. a Filipino-owned Corporation, Partnership, Association or Cooperative, at least sixty percent (60%) of the capital is owned by Filipino citizens, organized or authorized for the purpose of engaging in mining with technical and financial capability to undertake mineral resources development and duly registered in accordance with the law; or

c. a Foreign-owned Corporation, Partnership, Association or Cooperative duly registered in accordance with law and in which less than fifty percent (50%) of the capital is owned by Filipino citizens.

How much area is granted for an FTAA?

The maximum FTAA contract area that may be applied for or granted per Qualified Person in the entire Philippines are the following:

a. One thousand (1,000) meridional blocks or approximately eighty-one thousand (81,000) hectares onshore;

b. Four thousand (4,000) meridional blocks or approximately three hundred twenty-four thousand (324,000) hectares offshore; or

c. A combination of one thousand (1,000) meridional blocks onshore and four thousand (4,000) meridional blocks offshore.

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What is the term of an FTAA?

An FTAA has a term of twenty-five (25) years from the date of its issuance, and renewable for another term not exceeding twenty-five (25) years. The following are the phase of mining operations of an FTAA:

a. Exploration - up to two (2) years from date of FTAA execution, extendible for another two (2) years;

b. Pre-feasibility study, if warranted - up to two (2) years from expiration of the exploration period;

c. Feasibility study - up to two (2) years from the expiration of the exploration/pre-feasibility study period or from declaration of mining project feasibility; and

d. Development, construction and utilization - remaining years of FTAA.

What are the mandatory requirements in the acceptance of an FTAA application?

An FTAA application shall be filed in the Mines and Geosciences Bureau (MGB) Regional Office (RO) concerned, for mineral and non-mineral reservation areas, using the prescribed form (MGB Form No. 07-1) through payment of the filing fee and submission of eight (8) sets of the FTAA proposal and five (5) sets of the following:

A. Upon filing of the application, the following mandatory requirements -1. Duly certified Certificate of Registration, Articles of

Incorporation and By-Laws issued by the Securities and Exchange Commission or authorized Government agency(ies) concerned, or Certification from the Bureau/Regional Office concerned that the said documents are duly registered in that Office;

2. Location map/sketch plan of the proposed contract area showing its geographic coordinates/meridional block(s) and boundaries in relation to major environmental features and other projects using a NAMRIA topographic map in a scale of 1:50,000 duly prepared, signed and sealed by a deputized Geodetic Engineer;

3. Two-year Exploration Work Program (MGB Form No. 5-4) duly prepared, signed and sealed by a licensed Mining Engineer or Geologist;

4. Proof of technical competence, including, among others, curricula vitae and track records in mining operations and environmental management of the technical personnel who shall undertake the

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activities in accordance with the submitted Exploration Work Program;5. Proof of financial capability to undertake the activities pursuant to

the Exploration Work Program, such as latest audited financial statement and, where applicable. Annual Report for the preceding year, credit line(s), bank guarantee(s) and/or similar negotiable instruments; and

6. Affidavit of Undertaking pursuant to DM0 No. 99-10, as amended, declaring:

a. The list of applications he/she/it has filed and the Mining Permit(s)/Contract(s) granted to him/her/it including the corresponding hectarage and location of the areas, disaggregated on a per province basis; andb. The list of other Applicant(s)/Contractor(s)/Permittee(s) in which more than seventy percent (70%) of the authorized capital stock is held by stockholders of the applicant, including the corresponding hectarage, disaggregated on a per province basis.

Note: Any application with incomplete mandatory requirements shall not be accepted.

B. After the acceptance of the application but prior to the approval of the FTAA:

1. Posting of financial guarantee/performance bond and letter of credit or other forms of negotiable instruments from any Government-accredited bonding company or financial institution, in favor of the Government upon notification by the Secretary, which shall be in any foreign currency negotiable with the Bangko Sentral ng Pilipinas or in Philippine Peso in such amount equivalent to the expenditure obligations of the applicant for any year;

2. Certificate of Environmental Management and Community Relations Record (CEMCRR)/Certificate of Exemption;

3. Environmental Work Program (MGB Form No. 16-1 or MGB Form No. 16-1A);

4. Approved survey plan;

5. Environmental Compliance Certificate (ECC);

6. Proof of technical competence, including, among others, curricula vitae and track records in mining operations and environmental management of the technical personnel who shall undertake the activities in accordance with the submitted Exploration Work Program;

7. Proof of financial capability to undertake the activities pursuant to the Exploration Work Program, such as latest audited financial

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statement and, where applicable. Annual Report for the preceding year, credit line(s), bank guarantee(s) and/or similar negotiable instruments; and

8. Affidavit of Undertaking pursuant to DM0 No. 99-10, as amended, declaring:a. The list of applications he/she/it has filed and the Mining Permit(s)/Contract(s) granted to him/her/it including the corresponding hectarage and location of the areas, disaggregated on a per province basis; andb. The list of other Applicant(s)/Contractor(s)/Permittee(s) in which more than seventy percent (70%) of the authorized capital stock is held by stockholders of the applicant, including the corresponding hectarage, disaggregated on a per province basis.

Note: Any application with incomplete mandatory requirements shall not be accepted.

C. After the approval of the FTAA but prior to registration - An authorized capital of at least Four Million U.S. Dollars (US$4,000,000.00) or its Philippine Peso equivalent; and

D. In support of the application for approval of the declaration of mining project feasibility -

1. Mining Project Feasibility Study;

2. Three (3)-Year Development/Utilization Work Program;

3. Proof of technical competence, including, among others, curricula vitae and track records in mining operations and environmental management of the technical personnel who shall undertake the activities in accordance with the submitted Development/Utilization Work Program; and

4. Proof of financial capability to undertake the activities pursuant to the Development/Utilization Work Program, such as latest audited financial statement and where applicable. Annual Report for the preceding year, credit line(s), bank guarantee(s) and/or similar negotiable instruments.

Is the FTAA holder allowed to recover pre-operating expenses?

Yes. Section 214, Paragraph 3 of (DENR Administrative Order No. 96-40 (The Mining Act’s Implementing Rules and Regulations) states that the collection of the Government’s share in the FTAA shall commence after the Contractor has fully recovered its pre-operating, exploration and development expenses, inclusive. The period of recovery which is reckoned from the date of commercial operation shall be for a period not exceeding five (5) years or until the date of actual recovery, whichever comes earlier.

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D. LOCAL GOVERNMENT UNIT CONSULTATION

Are there other major requirements common to all three (3) forms of mining tenements?

Yes, namely consultation with the concerned Local Government Units (LGUs) and , in certain cases, Free and Prior Informed Consent.

What is the proper proof of consultation with the concerned LGUs?

Section 27, in relation to Sections 2(c) and 26, of the Local Government Code of 1991 (Republic Act No. 7160) requires prior consultation and endorsement/ approval of the sanggunians concerned.

Section 5 of DENR Memorandum Order No. 04-09 states that all mining applicants shall consult with all the Sangguniang Panlalawigan/ Bayan/ Panglunsod/ Barangay concerned in support of mining applications and/or in the implementation of mining projects.

In mining applications intended for exploration thru an EP, MA or FTAA, the proof of consultation and/or project presentation shall be in the form of the following:

a. Copies of the pertinent Exploration and Environmental Work Programs duly received by the Secretary of all the Sanggunian concerned or Office of all the Vice-Mayor/ Vice-Governor concerned; or

b. A certification of project presentation by all the Provincial Governor, Vice-Governor, Municipal/ City Mayor or Vice-Mayor concerned, or the Secretary of all the Sanggunian concerned.

In mining applications for immediate development and/or utilization activities and of approval of Declaration of Mining Project Feasibility under the Development and Construction / Operating Periods of MAs and FTAAs, prior approval or endorsement in the form of a Resolution or certification by at least a majority of the Sanggunian concerned shall be required.

E. FREE AND PRIOR INFORMED CONSENT (FPIC)

In areas occupied by an indigenous people, Section 56 of the Indigenous Peoples Rights Act of 1997 (Republic Act No. 8371) requires the Free and Prior Informed Consent (FPIC) of the indigenous people in whose ancestral domain the mining area is located.

What is the procedure for acquiring Free and Prior Informed Consent (FPIC)?

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The current procedure is governed by NCIP AO No. 3 -2002 which gives the procedure as follows:

1. The project proponent files an application for an exploration permit/ mineral agreement with the appropriate government agency, which in our case would be the MGB1;

2. The DENR endorses the application to the NCIP for certification precondition2;

3. The project proponent pays the necessary fees under Section 13 of NCIP AO No. 3 -2002;

4. The NCIP conducts a Field Based Investigation (FBI) to check if the area covered is within the ancestral domain of an IP.3 This lasts for a total of fifty-two (52) working days.4;

5. Proponent is also required to submit operation plan for the project5 within fifteen (15) working days from receipt of the FBI recommendation. Proponent also pays FPIC fee if recommended by FBI team;

6. Posting and service of Notices of Preliminary Consultative Meeting6.

7. Validation of the List of Elders/ Leaders7;8. Preliminary Consultative Meeting between concerned IP/

ICC and the project proponent within fifteen (15) working days from submission of the proponent’s operation plan. 8

The AO gives no period within which this step must be terminated ;

9. A Consensus Building must be completed within a period of fifteen (15) days after the termination of the final Preliminary Consultative Meeting.9 This step is where the leaders talk to the members of their respective communities;

10. A Community Assembly shall be conducted within fifteen (15) days after the lapse of the period for community consensus building. This is where the community votes for or against the proposal10;

11. A Memorandum of Agreement (MOA) shall be executed (this is the FPIC itself)11;

12. The ADO Regional Director shall endorse the FPIC Certification to the ADO for proper evaluation12.;

1 NCIP AO No. 3 -2002, Section 7.2 Ibid. Section 8 also states that the endorsement letter should enclose the report on the nature and extent of the proposal and the indicative map of the applied site including the outlying impact of affected areas.3 NCIP AO No. 3 -2002, Section 9.4 Ibid.5 NCIP AO No. 3 -2002, , Section 12.6 NCIP AO No. 3 -2002, Section 14.a.7 NCIP AO No. 3 -2002, Section 14.b.8 NCIP AO No. 3 -2002, Section 14.c.9 NCIP AO No. 3 -2002, Section 14.d.10 NCIP AO No. 3 -2002, Section 14.e.11 NCIP AO No. 3 -2002, Section 15.12 NCIP AO No. 3 -2002, Section 18.

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13. Subsequent issuance of certification precondition within fifteen (15) working days from receipt of recommendation if so warranted13.

F. INCENTIVES

Are incentives available to investors in the mining industry?

Yes. The Mining Act gives an investor several incentives. Registration with the Board of Investments (BOI) will also entitle an investor to both fiscal and non-fiscal incentives.

What are the incentives are available under the Mining Act?

Section 90 of the Mining Act states that Contractors in mineral agreements and FTAAs are entitled to the applicable fiscal and non-fiscal incentives as provided for under Executive Order No. 226, otherwise known as the Omnibus Investments Code of 1987. The same Section states that holders of exploration permits may register with the Board of Investments and be entitled to the fiscal incentives granted under the said Code for the duration of the permits.

The Mining Act also gives the following incentives:

1. Pollution Control Devices14 - Pollution control devices are not subject to real property and other taxes or assessments except mine wastes and tailings fees.

2. Income Tax-Carry Forward of Losses15 - A net operating loss without the benefit of incentives incurred in any of the first ten (10) years of operations may be carried over as a deduction from taxable income for the next five (5) years immediately following the year of such loss. The entire amount of the loss shall be carried over to the first of the five (5) taxable years following the loss, and any portion of such loss which exceeds the taxable income of such first year shall be deducted in like manner from the taxable income of the next remaining four (4) years.

3. Income Tax-Accelerated Depreciation16 - Fixed assets may be depreciated as follows:

(a) To the extent of not more than twice as fast as the normal rate of depreciation or depreciated at normal rate of depreciation if the expected life is ten (10) years or less; or

(b) Depreciated over any number of years between five (5) years and the expected life if the latter is more than ten (10)

13 NCIP AO No. 3 -2002, Section 20.14 Section 91 of the Mining Act of 1995.15 Section 92 of the Mining Act of 1995.16 Section 93 of the Mining Act of 1995.

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years, and the depreciation thereon allowed as deduction from taxable income.

4. Investment Guarantees17 - A Contractor is also entitled to the following:

(a) Repatriation of investments - The right to repatriate the entire proceeds of the liquidation of the foreign investment in the currency in which the investment was originally made and at the exchange rate prevailing at the time of repatriation.

(b) Remittance of earnings - The right to remit earnings from the investment in the currency in which the foreign investment was originally made and at the exchange rate prevailing at the time of remittance.

(c) Foreign loans and contracts - The right to remit at the exchange rate prevailing at the time of remittance such sums as may be necessary to meet the payments of interest and principal on foreign loans and foreign obligations arising from financial or technical assistance contracts.

(d) Freedom from expropriation - The right to be free from expropriation by the Government of the property represented by investments or loans, or of the property of the enterprise except for public use or in the interest of national welfare or defense and upon payment of just compensation. In such cases, foreign investors or enterprises shall have the right to remit sums received as compensation for the expropriated property in the currency in which the investment was originally made and at the exchange rate prevailing at the time of remittance.

(e) Requisition of investment - The right to be free from requisition of the property represented by the investment or of the property of the enterprises except in case of war or national emergency and only for the duration thereof. Just compensation shall be determined and paid either at the time or immediately after cessation of the state of war or national emergency. Payments received as compensation for the requisitioned property may be remitted in the currency in which the investments were originally made and at the exchange rate prevailing at the time of remittance.

(f) Confidentiality - Any confidential information supplied by the contractor pursuant to the Mining Act shall be treated as such by the DENR and the Government, and during the term of the project to which it relates.

17 Section 94 of the Mining Act.

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What are the fiscal incentives available to investors in the mining industry upon registration with the Board of Investments?

Upon registration with the Board of Investments, available fiscal incentives include:

1.Tax Credits - Tax credit on raw materials and supplies A tax credit equivalent to the national internal revenue taxes and duties paid on raw materials and supplies shall be granted to a registered enterprise.

2.  Additional Deductions for Labor Expense (ADLE) - For the first five (5) years from registration,  a registered enterprise shall be allowed an additional deduction from taxable income equivalent to fifty percent (50%) of the wages of additional skilled and unskilled workers in the direct labor force. The incentive shall be granted only if the enterprise meets a prescribed capital to labor ratio.

What are the non-fiscal incentives available to investors in the mining industry upon registration with the Board of Investments?

Non-fiscal incentives include:

1. Employment Of Foreign Nationals - A registered enterprise may be allowed to employ foreign nationals in supervisory, technical or advisory positions for five (5) years from date of registration. The position of President, General Manager and Treasurer of foreign-owned registered enterprises or their equivalent shall however not be subject to the foregoing limitations.

2. Simplification of customs procedures - for the importation of equipment, spare parts, raw materials and supplies and exports of processed products.

3. Importation of consigned equipment - for a period of 10 years from date of registration, subject to posting of a re-export bond.

What requirements need to be submitted in order to register with the BOI?

An application is considered officially filed upon submission of two (2) copies of BOI Application Form No. 501, the complete set of documents (prescribed application form duly accomplished, project report and such other documents which may be required) and upon payment of the required filing fee.

The required documents include:

1. Copy of Applicant’s Articles of Incorporation/Partnership and By-Laws, SEC Certificate of Registration;

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2. Copy of company Audited Financial Statements (AFS) and Income Tax Return (ITR) for the past three (3) years or for the period the applicant has been in operation if less than three (3) years;

3. Copy of company’s Board Resolution authorizing officer to sign in behalf of applicant enterprise; and

4. Project Report: 4.1 For activities listed in the IPP (New) 4.2 For activities listed in the IPP (Expansion, Different Product Line) 4.3 For activities listed in the IPP (Expansion, same Product Line) 4.4 Existing Projects Projection required may vary from one industry to another. Please inquire with respective industry group.

NOTE: Proofs of financial capacity (Sworn Statement of Assets and Liabilities and latest Income Tax Return) of Principal stockholder may be required only for new projects and on a case-to-case basis.

What is the procedure for the issuance of a certificate of registration under E.O.226?

1. Official filing of a duly accomplished BOI Form No. 501 complete with supporting documents and payment of filing fee;

2. Evaluation of application and preparation of an evaluation report (including Publication of Notice of Filing of Application, referral to the private sector and plant visit, if necessary);

3. Presentation to the BOI Management Committee;

4. Confirmation by the BOI Executive Board;

5. Preparation of letter advising applicant of the Board Action:

5.1 If approved, the BOI prepares a letter of approval including pre-registration requirements;

5.2 If denied, the BOI sends denial letter;

6. If applicant requests for waiver on pre-registration requirements:

6.1 BOI MiningIndustry Group prepares memorandum to the Board;

6.2 Board Confirmation;

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6.2.1 If request is given due course, step no.8 takes place;

6.2.2 If request is denied, step no. 7 takes place;

7. Applicant complies with the pre-registration requirements;

8. Preparation and issuance of Certificate of Registration upon payment by applicant of Registration Fee;

9. Release of Certificate of Registration.

H. DIRECTORY

MINERALS DEVELOPMENT COUNCILRm. 305-307 Tahanan ng Masa Bldg.Malacanang ComplexSan Miguel, ManilaPhone Number : (632)7366918Fax Number : (632)7366918E-Mail: mdc_pilipinas@yahoo.com.ph

BOARD OF INVESTMENTSIndustry and Investments Bldg.385 Sen. Gil J. Puyat AvenueMakati CityPhone Numbers: (632) 890-9308/890-1332/895-3640895-3656/895-3641/895-3657Fax Number : (632) 8953980E-Mail: osac@boi.gov.ph

MINES AND GEOSCIENCES BUREAU Central Office2/F J. Fernandez Bldg., MGB Compound North Ave.Diliman Quezon CityPhone Numbers: (632) 9288642/9209120/9209130Fax Number : (632) 9201635e-mail: central@mgb.gov.ph

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