COMPARISON BETWEEN FTAA AND MPSA basis: R.A 7942 , Philippine Mining Act & its IRR A .O.

No. 2010- 21 & A.O No. 96-40

FTAA
MEANING - a contract involving financial or technical assistance for large scale government and a contractor development, and utilization of mineral resources

MPSA
- agreement where the Government grants to the between the contractor the exclusive right to conduct mining operations within the contract area and shares in the gross output. The contractor shall provide the FINANCING, TECHNOLOGY, MANAGEMENT & PERSONNEL necessary for the implementation of this 1.INDIVIDUAL- Filipino, of legal age w/ capacity to contract

ELIGIBILITY OF APPLICANT

1.INDIVIDUAL- Filipino, of legal age w/ capacity to contract 2. a Filipino-owned Corporation, Partnership, Association or Cooperative, (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 3. 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. - Allows up to 100% foreign equity participation/ ownership Exploration- the searching or prospecting for mineral
resources by geological, geochemical or geophysical surveys, remote sensing, test pitting, trenching, drilling, shaft sinking, tunneling or any other means for the purpose of determining the existence, extent, quantity thereof and the feasibility of mining them for profit.

2.CORPORATION, PARTNERSHIP, ASSOCIATION OR COOPERATIVE- 60% Filipino ownership

RIGHTS GRANTED TO THE CONTRACTOR

to conduct mining operations and to extract all mineral resources in the contract area.

Development-

the work undertaken to explore and

prepare an ore body or a mineral deposit for mining, including the construction of necessary infrastructure and related facilities

Utilization of mineral resourcesdisposition of minerals

extraction or

MAXIMUM AREAS ALLOWED

Per qualified person in the entire Philippines a) 1,000 meridional blocks or 81,000 hectares onshore b) 4,000 meridional blocks or 324,000 hectares offshore c) combinations of 1,000 meridional blocks onshore & 4,000 meridional blocks offshore

a) Onshore, in any one province 1. INDIVIDUALS- 10 blocks or 810 hectares 2. CORPORATION, PARTNERSHIP, ASSOCIATION OR COOPERATIVE- 5,000 hectares for metallic minerals - 2,000 hectares for nonmetallic b)Onshore ,in the entire Philippines 1. INDIVIDUALS -20 blocks or 1,620 hectares 2. CORPORATION, PARTNERSHIP, ASSOCIATION OR COOPERATIVE- 5,000 hectares per final mining area c) offshore, in the entire Philippines beyond 500 meters from the mean low tide level 1. INDIVIDUALS -50 blocks or 4,050 hectares 2. CORPORATION, PARTNERSHIP, ASSOCIATION OR COOPERATIVE- 500 blocks or 40,500 hectares 3.for Exclusive Economic Zone- larger area to be determined by DENR Secretary

TERMS GOVERNMENT SHARE

25 years renewable for another 25 years

25 years renewable for another 25 years

income tax excise tax special allowance witholding tax duties & fees TAXES AND FEES and all such other tax,

a.Income tax(tax rates following the schedules under NIRC) b.Excise tax on mineral products (Sec. 151 of the NIRC) in accordance with the following: 1. On all metallic minerals, a tax based on the actual market value of the gross output thereof at the time of removal, in case of those locally extracted or produced; or value used by the Bureau of Customs in determining tariff and customs duties, net of the excise tax and value- added tax in the case of importation in accordance with the ff. schedules: i. For copper and other metallic minerals except gold and chromitePeriod of Production Excise tax rate

same

June 24,1994- June 23,1997 1.0% June 24,1997- June 23,1999 1.5% June 24,1999 and onwards 2.0%

ii.Gold and Chromite ---- 2%

2. On all non- metallic minerals and quarry resources, a tax of 2% based on the actual market value of the annual gross output thereof at the time of removal, in case of those locally extracted or produced; or the value used by the Bureau of Customs in determining tariff and customs duties, net of excise tax and value- added tax in the case of importation. OCCUPATION FEES a. For areas inside Mineral Reservation . Php100.00/hectare or a fraction thereof per annum b. For area outside Mineral Reservation ..Php50.00/hectare or a fraction thereof per annum -same -same

APPLICABLE LAW

RA NO. 7942 , Philippine Mining Act of 1995 President of the Philippines

RA NO. 7942 , Philippine Mining Act of 1995 DENR Secretary

APPROVAL

CAPITALIZATION

US$ 4,000,000.00 or its Peso equivalent

Php2,500,000.00

Administrative Order No. 2010- 21 providing for a Consolidated DENR Administrative Order for the Implementing Rules and Regulations of the R.A No. 7942 CHAPTER XXIX REPORTING REQUIREMENTS AND FINES Section 270. Reporting Requirements

Every Contractor/Permittee/Permit Holder or holder of an MPP or its operator is required to submit the following reports: a. Monthly Report On Production, Sales and Inventory of Metallic Minerals and Employment A Contractor or its operator or holder of MPP shall submit to theDirector a sworn Monthly Report on Production, Sales and Inventory of Metallic Minerals and Employment as prescribed inMGB Forms Nos. 29-1 to 29-9, whichever mineral is applicable,within fifteen (15) working days after the end of each calendar month. b. Monthly Report On Production, Sales and Inventory of Non-Metallic Minerals and Employment

In the case of Mineral Agreements, FTAAs or MPPs involving nonmetallic minerals, a Contractor or its operator or Permit Holder shall submit to the Regional Director concerned, copy furnished the Director, a sworn Monthly Report on Production, Sales and Inventory of Non-Metallic Minerals and Employment as prescribed in MGB Form No. 29-10 within fifteen (15) working days after the end of each calendar month. f. Quarterly Report on Production and Sales of Small-Scale Metallic Mines and Employment

The holder of a Small-Scale Metallic Mines Permit shall submit to the Provincial Governor/City Mayor, copy furnished the Director and Regional Director concerned, a sworn Quarterly Report on Production and Sales of Small-Scale Metallic Mines and Employment as prescribed in MGB Form No. 29-14 for metallic minerals other than gold or MGB Form No. 2915 for gold mineral only, within fifteen (15) working days after the end of each calendar quarter. h. Quarterly Energy Consumption Report

A Contractor or MPP Holder or its Operator shall submit to the Director, copy furnished the Regional Director concerned, a Quarterly Energy Consumption Report using prescribed MGB Form No. 29-18 within fifteen (15) working days after the end of each calendar quarter. A holder of a Quarry Permit or its Operator shall submit to the Provincial Governor/City Mayor concerned, copy furnished the Director and the Regional Director concerned, a Quarterly Energy Consumption Report using prescribed MGB Form No. 29-18 within fifteen (15) working days after the end of each calendar quarter. Quarterly Drilling Report A Contractor or Permittee conducting any drilling project or a lessee of a Bureau drill machine shall submit to the Director, a sworn Quarterly Drilling Report in its contract area/Permit Holder/project area within thirty (30) calendar days at the end of each calendar quarter. This drilling report shall include, among others, a description of the geology, a topographic-drill collar location map in 1:50,000 scale and corresponding drill section showing geology, structures and orebody, if applicable; and the core log which shall contain the coordinates of the collar elevation, drill inclination, direction and length and the physical/chemical analysis of the cores. j. Annual Mineral Reserve Inventory Report i.

A Contractor or its operator shall submit to the Director, copy furnished the Regional Director concerned, an Annual Mineral Reserve/Resources Inventory Report using the prescribed MGB Form No. 29-19, on or before the end of the first quarter of each calendar year. For areas outside Mineral Reservations, a holder of Quarry, Sand and Gravel and SmallScale Mining Permit or its operator shall likewise submit the same report (MGB Form No. 29-20) to the ProvincialGovernor/City Mayor concerned, copy furnished the Director and the Regional Director concerned, on or before the end of the first quarter of each calendar year. For areas within Mineral Reservations, the Permit Holder or its operator shall submit the same report to the Director. The Contractor/Permittee/operator may submit other types of mineral reserve report: Provided, That the required information data contained in the said form must be included in their report. m. Semiannual Report on Mine Waste and Tailings Generated Refer to relevant section in these implementing rules and regulations. n. Semiannual Status Report on the Environmental Work Program Refer to relevant section in these implementing rules and regulations. p. Annual and Quarterly Status Report based on Work Program of MPSA/FTAA Contractor Refer to relevant Sections of these implementing rules and regulations. q. Annual Land Use Report A Contractor or its operator shall submit to the Director a sworn annual land use report within sixty (60) calendar days after each calendar year. r. Marketing Contract(s)/Sales Agreement/s

The Contractor/Permit Holder shall submit to the Director, a copy of its existing and future marketing contract(s)/sales agreement(s) for registration, copy furnished the Regional Director concerned, before any sale and/or shipment of mineral product is made, subject to the confidentiality clause. At the same time, the Contractor/ Permit Holder shall regularly inform the Director in writing of any revisions, changes or additions in said contract(s)/agreement(s). The Contractor/Permit Holder shall reflect in its Monthly/Quarterly Report on Production, Sales and Inventory of Minerals, as well as in the Integrated Annual Report, the corresponding registration number(s) of the marketing contract(s)/sales agreements(s) governing the export or sale of minerals.

s.

Semiannual Status Report on the Exploration Work Program Refer to relevant section in these implementing rules and regulations.

t.

Other reports as may be required by the Director.

The Contractor of a Mineral Agreement or the holder of a Quarry Permit, any of the Sand and Gravel Permits, Guano Permit, Gemstone Gathering Permit or Small-Scale Mining Permit is also required to submit reports (a) to (h) mentioned in this Section, whichever is applicable to its operation, even when there is no production for a given period. The report, however, should indicate the causes or reasons why there was no production for the period. The Director, Regional Director concerned and in the case of quarry resources and Small-Scale Mining Permits, the Provincial Governor/City Mayor concerned shall be promptly notified in writing before implementation of any mine suspension or mine closure. Submission of the applicable report cited above shall be made part of the terms and conditions of Mineral Agreements, FTAA, Exploration Permit, Quarry Permit, Sand and Gravel Permit, Guano Permit and Gemstone Gathering Permit.

(DENR Administrative Order No. 2010- 09)