DRILLING OF AREAS BY THE BUREAU

General Provisions
1. MGB may conduct exploration in any areas other than Mineral Reservations
a. upon its own initiative or
b. upon request by claimant/contractor/permittee in areas covered by existing and valid
mining claims/contracts/permits
2. In line with the policy of the Government to hasten the exploration, development, and utilization of
the mineral resources of the country and to address the water crisis and other priority concerns of
the Government
3. The expenses that may be incurred shall be taken from the appropriation of MGB or from the
requesting party

Priority Areas
1. The Director shall determine whether the area is included in the priority list of areas and contains
critical minerals included in the mineral and water development programs of the Government
2. If it is ascertained that the area should be explored
a. A contract between the contractor/claimant/permittee and the Director shall be executed
i. Include a statement that MGB shall conduct the necessary geological studies on
the area and
ii. If warranted, undertake diamond drilling, test pitting, trenching or auger drilling
operations thereon
3. In case the drilling reveals substantial ore reserves to warrant commercial mining operations
a. the contractor/claimant/permittee and his successor/s or assignee/s shall then take all
steps required to secure any mode of mineral agreement

Reimbursement
1. Upon completion of exploration activities by MGB in open areas other than Mineral Reservations
2. Render a certified report on the total expenses incurred
3. Any interested party who wishes to apply for a mining right shall reimburse MGB the certified
amount plus an interest of 12% of the expenses.

Lease of Drilling Equipment

1. The Director may lease the drilling equipment of MGB to Permittees, Lessees, Contractors and
Permit Holders desiring to conduct exploration and development work on the area applied for
2. Drilling equipment may be leased upon application by any Qualified Person with the Director

Preferential Right to Lease

1. In case there are two or more applications
a. Director shall grant the Lease Agreement to the first applicant
b. Satisfactorily complied with all the requirements

Terms and Conditions of the Drilling Lease Agreement

1. The lessee shall have an approved Exploration Permit
2. The drilling equipment shall be used exclusively for exploration purposes in the areas specified in
the Agreement
3. The drilling equipment shall not be subleased to any person, partnership, or corporation
4. The lessee shall satisfactorily comply with all the requirements imposed by the Director
 5. The lease shall be for a minimum period of 3 months from the date specified in the Lease
Agreement
6. Lease Agreement may be renewed by the Director when the evaluation of the drilling results
justifies the continuation of the drilling program
a. The lessee has not violated any terms and conditions of the original Lease Agreement
7. The Director or his/her duly authorized representative shall see to it that the drill machine pump
and accessories are properly used and maintained
8. The Director or his/her duly authorized representative may conduct an inspection of the drilling
operation at any time during the term of the lease at the expense of the lessee
9. The lessee shall pay the daily rental plus a surcharge of 100% per day for failure to return the
leased equipment as stipulated in the Agreement
10. The lessee has not violated any terms and conditions of previous Lease Agreement; and
11. The violation of any terms and conditions of the Lease Agreement shall be a ground for
cancellation of the same

Rights and Obligations of the Lessee

1. The lessee shall maintain and keep the equipment in good working condition during the term of
the lease until it is returned to the Bureau
2. The lessee shall replace and/or repair all parts rendered unusable through breakage, loss, or
abnormal wear during the term of the lease
a. All parts missing at the time the equipment is returned shall be replaced within 1 month
from the time such equipment are returned
i. The lessee shall make the required cash deposit for this purpose
b. If the lessee returns the equipment in bad condition and fails to restore them into running
condition or fails to replace the missing parts or accessories within the allowable time
i. The lessor shall use the cash deposit and/or forfeit the bond without prior notice
to the lessee to put the equipment back into running condition or replace any
missing accessories
c. The lessee shall be required to deposit additional cash to defray the above-mentioned
expenses if the original cash deposit for the purpose is insufficient
3. Transportation of the drilling equipment and all its accessories from the Bureau and return shall
be for the lessee's account
4. The lessee shall submit monthly to the Director all the information, data and footage obtained
through drilling which shall be treated as confidential. Such information, however, shall be made
available to the public after a period of 2 years
5. The lessee shall pay the required monthly rental fee
6. To guarantee the faithful compliance with the terms and conditions of the Lease Agreement and
to answer for any loss and/or damage of the equipment during the term of the lease, the lessee
shall file with the Bureau the required surety bond issued by a company accredited by the
Insurance Commission, which may either be in cash or with a surety satisfactory to the Director
7. The lessee shall pay in advance an amount corresponding to 2 months rentals and per diems
including transportation expenses of 1 driller upon the signing of the contract of Lease Agreement
a. The rentals and per diems for succeeding months shall be due and payable at the
beginning or the first day of every month
8. Rentals not paid within 30 calendar days after they become due and payable shall bear a
surcharge of 5% per month until fully paid
a. Rentals shall continue to be charged for returned equipment not in running condition and
for accessories lost or missing until repaired and replaced respectively; and
 9. Balance of rentals and per diems paid and/or deposits made after termination of the lease shall
be applied to pending obligations of the lessee with the lessor
a. Excess rentals or deposits shall be refunded to the lessee.

Receipts from Rentals

1. All rental fees of drilling equipment shall accrue to the Drilling Fund which shall be used for the
purchase of (subject to the provisions of Commonwealth Act No. 246):
a. Purchase of supplies
b. materials an
c. spare parts needed in the repair of said drilling equipment,