MINERAL RESERVATIONS AND GOVERNMENT RESERVATIONS

Establishment, Disestablishment or Modification of Boundary of a Mineral Reservation

 Mineral Reservations
o areas established and proclaimed as mineral reservations by the President upon the
recommendation of the MGB Director through the Secretary
o includes all submerged lands within the contiguous zone and EEZ

 Government Reservations
o all proclaimed reserved lands for specific purposes other than mineral reservations.

Requirements:
1. Publication of Notice of Public Hearing
a. at least 30 days before conduct of public hearing
b. Published once in
i. Local newspaper
c. Posted on bulletin boards of
i. all affected municipalities and barangays
2. Conduct of public hearings by MGB
a. Invite all concerned sectors and communities (e.g., NGOs, People’s Organizations,
LGUs)
3. Recommendation Letter of MGB RD to the DENR Sec. stating the grounds for the establishment,
disestablishment, or modification of Mineral Reservation
4. Publication of the recommendation letter
5. DENR Secretary shall cause periodic review of existing Mineral Reservations
a. detailed geological, mineral, and ecological evaluation
b. to determine whether their continued existence is consistent with
i. National interest
ii. Need to preserve strategic raw materials for industries critical to national
development
iii. Need to preserve certain minerals for scientific, cultural, or ecological value
6. Recommendation of Secretary to President
7. President issues Proclamation to
a. alter or modify the boundaries, or
b. revert the boundaries to the public domain, without prejudice to prior existing rights
8. Effect: all valid and existing mining rights shall be respected

Government Reservations
1. Government may directly undertake exploration, development, and utilization of mineral
resources, or if it cannot,
2. Through qualified persons

Requirements if undertaken by qualified persons:

1. Awarded by the President under terms and conditions recommended by MGB Director and
approved by the Secretary
2. The right shall be granted only after exploration reveals the presence of economically potential
deposits

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 3. That the Permittee who undertook the exploration of said Reservation shall be given priority
Mining Operations within Mineral and Government Reservations

Mineral Reservations Government Reservations

Types of mining operations (DENR or Types of mining operations:

Qualified Person):

1. Exploration Permit (EP) 1. First undertaken as Exploration Permit,

2. Mineral Agreement (MA) subject to limitations prescribed
3. Financial or Technical Assistance Agreement 2. Then it can be opened for MA, FTAA
(FTAA) application or other mining applications
4. Small-Scale Mining Permit; and
5. Quarry Permit

Requirements for mining operations by DENR:

1. MOA between DENR and a qualified government corporation/ entity authorizing the latter to explore,
develop and/or utilize the mineral resources

Where to file applications for EP, MA, FTAA:

1. DENR Regional Office for initial evaluation and
2. Endorsement to MGB for final evaluation

If applied area covers Mineral and Non-Mineral Reservation

1. File a separate application for mineral reservation area and non-mineral reservation area, or
2. File a single application covering the whole area

Small-Scale Mining Operations within Mineral Reservations

1. Governed by Mineral Reservations Development Board (MRDB) Administrative Order No. 3, Series of
1984
2. MRDB Administrative Order No. 3-A, Series of 1987, as amended
3. Small-scale mining cooperatives covered by R.A. No. 7076
a. Given preferential right to apply for a small-scale mining contract
b. Maximum aggregate area of 25%, subject to valid and existing mining rights

Payment of Royalty

Mineral Reservation - not less than 5% of the market value of the gross output of the
minerals/mineral products extracted or produced, exclusive of all other taxes

10% share of royalty, and 10% of other revenues (administrative, clearance, exploration, and other
related fees)
1. accrue to MGB as a Trust Fund
2. deposited in Government depository bank to be allotted for
a. special projects
b. other administrative expenses related to the exploration, development, and environmental
management of minerals in Government Reservations.

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3
 SCOPE OF MINING APPLICATIONS

Areas Open to Mining Applications

1. Public or private lands not covered by valid and existing mining rights and mining applications
2. Lands covered by expired/abandoned/canceled mining/quarrying rights
3. Mineral Reservations
4. Timber or forest lands

Areas Open to Mining Applications, subject to approval

Approving Agency
1. Military and other Government Reservations  Upon prior written clearance by the
Government agency having jurisdiction over
such reservations

2. Areas near or under public or private
buildings, cemeteries, archaeological and
historic sites, bridges, highways, waterways,
railroads, reservoirs, dams, or other
infrastructure projects, public or private works,
including plantations or valuable crops
 Upon written consent of the concerned
Government agency or private entity subject
to technical evaluation and validation by the
MGB

3. Areas covered by FTAA applications which
shall be opened for quarry resources mining
applications
 Upon the written consent of the FTAA
applicants, except:
1. Sand and gravel permit applications
shall not require consent from the
FTAA, EP or MA applicant, except for
MA or EP applications covering sand,
gravel and/or alluvial gold

4. Areas covered by small-scale mining
 Upon prior consent of the small-scale miners
1. royalty payment, upon the utilization of
minerals
2. form a Trust Fund for the
socioeconomic development of the
concerned community

5. DENR Project Areas  Upon prior consent from the concerned

agency

6. Ancestral Lands  Upon prior consent of ICCs concerned

Areas Closed to Mining Applications

1. Areas covered by valid and existing mining rights and mining applications
2. Old growth or virgin forests, proclaimed watershed forest reserves, wilderness areas, mangrove
forests, mossy forests, national parks, provincial/municipal forests, tree parks, greenbelts, game
refuge, bird sanctuaries and areas proclaimed as marine reserves/marine parks and tourist zones as
defined by law and identified initial components of NIPAS

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3. Areas which the Secretary may exclude based on proper assessment of their environmental impacts
and implications on sustainable land uses, such as built-up areas and critical watersheds with
appropriate barangay/municipal/city/ provincial Sanggunian ordinance specifying therein the location
and specific boundary of the concerned area
4. Offshore areas within five hundred (500) meters from the mean low tide level and onshore areas
within two hundred (200) meters from the mean low tide level along the coast
5. In case of seabed/marine aggregate quarrying, offshore areas less than 1,500 meters from the mean
low tide level of land or island(s) and where the seabed depth is less than 30 meters measured at
mean sea level
6. Protected areas categorized and established under the National Integrated Protected Areas System
(NIPAS) under RA No. 7586 (EO 79 s. 2012)
7. Prime agricultural lands, in addition to lands covered by RA No. 6657, or the Comprehensive Agrarian
Reform Law of 1988, as amended, including plantations and areas devoted to valuable crops, and
strategic agriculture and fisheries development zones and fish refuge and sanctuaries declared as
such by the Secretary of the Department of Agriculture (DA) (EO 79 s. 2012)
8. Tourism development areas, as identified in the National Tourism Development Plan (NTDP); (EO 79
s. 2012)
9. Other critical areas, island ecosystems, and impact areas of mining as determined by current and
existing mapping technologies, that the DENR may hereafter identify pursuant to existing laws, rules,
and regulations, such as, but not limited to, the NIPAS Act (EO 79 s. 2012)
10. Areas expressly prohibited by law

Role of MGB on areas closed for mining applications:

Periodic review to determining whether their continued closure is consistent with the national interest and
render its recommendations to the Secretary for appropriate action.

Ancestral Lands
Requirement:

1. Certificates of Ancestral Domains/Ancestral FPIC obtained in accordance with the

Land Claims (CADC/CALC) customary laws of the ICC concerned

2. Verified by the DENR and/or other office or FPIC obtained in accordance with the
government agency as actually occupied by customary laws of the ICC concerned
ICCs under a claim of time immemorial
possession

Requirements for FPIC:

1. Notice of publication (newspaper, radio or television advertisements)
2. Fully disclosing the activity to be undertaken
3. Sector consultation wherein the Contractor/Permit Holder/Permittee should arrange for a community
assembly
4. Announced or posted in a conspicuous place in the area for at least a month before the assembly
5. Process should be free from fraud, external influence, and manipulations

Royalty once FPIC is secured:

1. not less than 1% of the gross output
2. Expenses for community development may be credited to or charged against the royalty

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3. Negotiation for Royalty: Request to act as mediators - representatives from the Bureau/Regional
Office(s) concerned, Department offices concerned, LGUs concerned, relevant NGOs/POs and the
Office of the Northern/Southern Cultural Communities
4. In case of disagreement, DENR shall resolve within 3 months
5. Royalty shall form part of a Trust Fund for the socioeconomic well-being of the ICCs in accordance
with the management plan formulated in the ancestral land or domain area
6. That the royalty payment shall be managed and utilized by the ICCs concerned

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 COMMON PROVISIONS FOR EP, MA AND FTAA

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

1. Directly undertaken by DENR or,

2. If the DENR cannot undertake, by a qualified person
a. in specified areas as determined by the Secretary
b. conduct of mineral exploration shall be initially undertaken through an Exploration Permit,
3. In case of immediate technical study, the DENR or any of its authorized
agencies/instrumentalities and the Exploration Permit applicant may enter into a MOA for joint
undertaking

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 bound
by the 60%-40% constitutional limitation on foreign ownership and are classified into:

1. Mineral Production Sharing Agreement (MPSA) - a mineral agreement wherein government

receives a share in the output or revenue 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.

An Financial or Technical Assistance Agreement (FTAA) may be entered into 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.

Terms of Permit:
Exploration Permit
2 yrs. from issuance
Financial or Technical
Mineral Agreements
Assistance Agreement
 25 yrs. from execution  25 yrs. from execution

Renewable: 2 yrs. but not to
exceed:
 4 yrs. for nonmetallic
mineral exploration or
 6 yrs. for metallic
mineral exploration
 Renewable: 25 yrs. under
same terms and conditions,
without prejudice to changes
mutually agreed upon by the
government and the
contractor
 Renewable: 25 yrs. under
terms and conditions as may
be provided for by law and
mutually agreed upon by the
parties

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Maximum Area Qualified Person may hold at one time

Exploration Permit Mineral Agreements FTAA

* maximum area does not include * combination of contract
mining/quarry areas under operating area shall not exceed the
agreements between the contractor and a maximum limits for
claim owner/ lessee/ permittee/ licensee
onshore/offshore area
entered into under PD 463
Qualified Individuals Corporations, Individuals Corporations, Individuals/Corporations,
partnerships, partnerships, partnerships,
Person
associations, or associations, or associations, or
cooperatives cooperatives cooperatives
Onshore 20 blocks or 200 blocks or 10 blocks or 5,000 ha for
(in any one 1,620 ha. 16,200 ha. 810 ha. metallic
province)
minerals,
2,000 ha for
non-metallic
minerals per
final mining area
subject to Sec.
69
Onshore 40 blocks or 400 blocks or 20 blocks or 5,000 ha per 1,000 meridional
(in the entire 3,240 ha 32,400 ha 1,620 ha. final mining area blocks or 81,000 ha
Philippines)
subject to Sec. (or combination
69 onshore/offshore)
Offshore 100 blocks 1,000 blocks 50 blocks or 500 blocks or 4,000 meridional
(in the entire or 8,100 ha or 81,000 ha 4,050 ha 40,500 ha blocks or 324,000
Philippines,
ha (or combination
beyond 500m
from the mean onshore/offshore)
low tide level)
EEZ - - - larger area to be
determined by
the Secretary
upon the
recommendatio
n of the Director

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Qualified Persons
Exploration Permit
1. Any Filipino citizen of legal
age and with capacity to
contract;
Mineral Agreements
1. Any Filipino citizen of legal
age and with capacity to
contract
Financial or Technical
Assistance Agreement
1. Any Filipino citizen of legal
age and with capacity to
contract

2. Filipino-owned Corporation, 2. Filipino-owned Corporation, 2. Filipino-owned Corporation,

Partnership, Association or
Cooperative, at least 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
Partnership, Association or
Cooperative - organized or
authorized for the purpose
of engaging in mining, duly
registered in accordance
with law, at least 60% of the
capital of which is owned by
Filipino citizens.
Partnership, Association or
Cooperative, at least 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. Foreign-owned Corporation, 3. Foreign-owned Corporation,

Partnership, Association or Partnership, Association or
Cooperative duly registered Cooperative duly registered
in accordance with law and in accordance with law and
in which less than 50% of in which less than 50% of
the capital is owned by the capital is owned by
Filipino citizens Filipino citizens

Juridical Persons as Qualified Person (DMO 1999-10)

1. If more than 70% of ACS is owned by the same stockholder of a juridical person duly registered
in the Philippines,
a. Applicant/Contractor/Permittee shall be deemed as one and the same
b. Applicant/Contractor/Permittee shall be limited to maximum area applied or granted for
an EP, MA or FTAA
2. Submit an Affidavit of Undertaking, indicating
a. The list of all mining applications he/she/it has filed
b. Mining permit/contract granted, including the corresponding hectarage and location of the
areas, disaggregated on a per province basis; and
c. 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 and location of the area disaggregated on a per province
basis

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Mandatory Requirements for Application of EP/MA/FTAA
EP MA FTAA
1. Application Form ✓ ✓ ✓
2. For corporation/ partnership/ association/ cooperative: ✓ ✓ ✓
SEC/CDA-certified true copies of Certificate of Registration, *min ACS 2B
Articles of Incorporation/ Partnership/Association and By- PUC 500M
upon grant of
Laws (minimum ACS 100M and PUC 6.25M DMO 2013-01) FTAA
3. Location Map/Sketch Plan (1:50,000 NAMRIA topographic ✓ ✓ ✓
map) showing coordinates/boundaries (in tabulated form)
with major environmental features/other projects (prepared,
sealed and signed by a deputized Geodetic Engineer)

4. Work Program (prepared, sealed and signed by a licensed 2 yrs. 3 yrs. 2 yrs.
Mining Engineer or Geologist)
5. Proof of technical competence in the form of: ✓ ✓ ✓
a. CV and track records in exploration/ environmental
management.
b. Sworn statement of the technical person(s) who will
undertake the implementation of the Work Programs or
employment contract/proof of availed service(s)
6. Proof of financial capability: ✓ ✓ ✓
a. For an individual:
i. Latest ITR
ii. Credit lines/bank guarantees/deposits of at least
P2.5M
b. For corporation/ partnership/ association/ cooperative:
i. Latest audited Financial Statements
ii. Annual Report for the preceding year
iii. Credit lines/bank guarantees/deposits
7. Affidavit of Undertaking (using MGB form) ✓ ✓ ✓
a. The list of all mining applications he/she/it has filed
b. Mining permit/contract granted, including the
corresponding hectarage and location of the areas,
disaggregated on a per province basis; and
c. 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 and location of the
area disaggregated on a per province basis.
8. FTAA Proposal ✓
9. Proof of payment of Filing Fee ✓ ✓ ✓
10.Mining Project Feasibility Study - ✓ -

11.Complete and final exploration report pertaining to the area - ✓ -

Additional Requirements after Acceptance of Application

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 EP MA FTAA
1. Environmental Compliance Certificate - ✓ ✓
2. Environmental Protection and Enhancement Program - ✓ ✓
3. Social Development and Management Program - ✓ ✓
4. Certificate of Environmental Management and Community ✓ ✓ ✓
Relations (CEMCRR) or Certificate of Exemption
5. National Commission on Indigenous Peoples (NCIP) ✓ ✓ ✓
Certification
a. For non-ICC/IP area: Certificate of Non-Overlap or
Report on the Field Based Investigation
b. For ICC/IP area: Certification Precondition or
Memorandum of Agreement by and among the
applicant, ICC/IP concerned and the NCIP – shall be
submitted within 90 days from issuance of EP
6. Approved Survey Plan/Application for Order of Survey ✓ ✓
7. Area Status and Clearance from the One Stop-Shop ✓ ✓ ✓
Committee
8. Proof of payment of clearance fee ✓ ✓ ✓
9. Proof(s) that the Notice of Application was: ✓ ✓ ✓
a. Published once in -
i. Local newspaper
ii. National newspaper
b. Posted for 1 week on the bulletin boards of -
i. MGB Regional Office(s)
ii. Province(s) and/or
iii. Municipality(s)/City(s)
c. Radio announced daily for 1 week in a local radio
program
10. Posting of financial guarantees from bonding - - ✓
companies/financial institutions
a. Financial guarantees/performance bond, letter of
credit, or other forms of deposits
b. From Government-accredited bonding company or
financial institution
c. Issued in favor of the Government upon notification by
the Secretary
d. In a currency equivalent to the expenditure
obligations of the applicant for any year;
i. foreign currency negotiable with the BSP or
ii. Philippine Peso
11. Certification from the Panel of Arbitrators concerned as to any ✓ ✓ ✓
adverse claims/ protest/ opposition

Filing of EP/Mineral Agreement/FTAA Applications

1. By the applicant personally or
2. Through its duly authorized representative

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 Venue of Application:
1. Regional Office where the areas of interest are located
2. MGB for mineral reservations
3. If application transcends 2 or more regions: apply with region with largest area covered, cc: other
Regional Office by applicant within 3 working days from date of filing

Task of Regional Office: Submit EP/MA/FTAA filed in its jurisdiction:

1. List
2. Consolidated Map
3. Status Report

Area Status and Clearance for EP, MA and FTAA

1. Within 15 working days from receipt of the EP application, the MGB shall check in the control maps if
the area is free/open for mining applications
2. MGB shall transmit a copy of the location map/sketch plan of the applied area to the pertinent
Department sector(s) affected by the EP application for area status, copy furnished:
a. LGU concerned
b. Other relevant offices or agencies of government for information
3. Upon notification of the applicant by MGB as to the transmittal of documents to the agencies,
concerned, EP applicant shall secure the necessary area status/consent/clearance from said
agencies
4. The Department sector(s) concerned must submit the area status/consent/clearance on the proposed
permit area within thirty (30) working days from receipt of the notice
a. That the Department sector(s) concerned cannot unreasonably deny area clearance/consent
without legal and/or technical basis
b. If the area applied for falls within the administration of two (2) or more Regional Offices, the
Regional Office(s) concerned which has/have jurisdiction over the lesser area(s) of the
application shall follow the same procedure.

Permit Area is Open for Mining Applications

MGB shall give written notice to applicant to

pay the clearance fee Consent/Clearance is denied

MGB within 15 working days from

receipt of written notice shall exclude Remedy: Appeal to Sec.
Only a portion of the area applied is open
the area from the coverage of EP
Application

In cases of overlapping claims, conflicts,

MGB shall exert all efforts to resolve complaints (from landowners, NGOs, LGUs, and
other concerned stakeholders)

Publication Requirements of EP/MA/FTAA Application

Cost of publication and radio announcements: at the expense of the applicant

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Requirements for Approval of application
1. Publication
2. Resolution of adverse claim, protest, opposition,

Issuance of Notice of Application

Within five (5) working days from receipt of necessary area clearances, the MGB shall issue the Notice of
Application for Exploration Permit to the applicant, containing:
1. Name and complete address of the applicant
2. Duration of the permit applied for
3. Extent of exploration activities to be undertaken
4. Area location
5. Geographical coordinates/meridional block(s) of the proposed permit area
6. Location map/sketch plan with index map relative to major environmental features and projects and to
the nearest municipalities

Newspaper Publication
Within 5 working days from receipt of the Notice, the EP applicant shall cause the publication
1. Once in two (2) newspapers
a. one of general circulation published in Metro Manila
b. circulation in the municipality or province where the proposed permit area is located, if there
be such newspapers; otherwise, in the newspaper published in the nearest municipality or
province.
2. Affidavits of publication shall be submitted by the EP applicant to the MGB within five (5) days from
the date of publication of the notice

Posting of Notice
The MGB shall cause the posting of the notice for one week, in a language generally understood in the
concerned locality where it is posted
1. MGB bulletin board
2. Provincial/Municipal/City LGU
3. Copy furnished the barangay(s) where the proposed permit area is located

Radio Announcements
Made daily for one (1) week in a local radio program:
1. Name of applicant
2. Complete address of the applicant
3. Area Location
4. Duration of the permit applied for
5. Instructions that information regarding EP application may be obtained at the MG

Certification of Compliance
1. Issued by authorized officer/s within 5 working days from the last date of posting and radio
announcement
2. Stating that the posting/radio announcement have been complied with

Filing of Adverse Claim, Protest or Opposition

1. Within 10 days from date of publication or from the last date of posting/radio announcement, file with
a. Directly with POA

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 b. MGB Regional Office for endorsement and transmittal to POA
c. Through P/CENRO for referral to MGB RO for endorsement and transmittal to appropriate
POA

Filing of Adverse Claim, Protest or Opposition

If no adverse claim, protest, or If with adverse claim, protest, or

opposition opposition

POA will resolve

Within 5 working days from Within 5 working days from date

receipt of request of finality of resolution

POA issues certification POA issues certification

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Transfer or Assignment of EP, MA or FTAA Application
1. Subject to approval of the Regional Director
2. Taking account the national interest and public welfare
3. Transfer or assignment shall be subject to eligibility requirements
4. Transfer or assignment shall not be allowed in cases involving speculation
Registration of EP, MA, FTAA
EP MA
1. Upon approval of MA by
Secretary
2. MA shall be forwarded to
MGB for numbering
1. Upon payment of required 3. Upon payment of required
fees fees
2. Within 15 working days from 4. MGB shall notify contractor
receipt of written notice of to register MA within 15
approval days from receipt of written
notice of approval
a. With MGB for areas
inside mineral
reservations, or
b. With regional office
for areas outside
mineral reservations
3. Permittee shall register EP 5. MGB/Regional Office shall
in the regional office release MA to contractor
after registration
4. Prior to implementation of 6. Prior to the commencement
EWP: of the development and/or
a. permittee shall comply utilization activities:
with consultation of a. contractor shall comply
Sanggunian with the required
endorsement of the
project by at least the
majority of the
Sanggunian
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FTAA
1. Upon approval of FTAA by
President
2. FTAA shall be forwarded to
MGB for numbering
3. Upon payment of required
fees
4. MGB shall notify contractor
to register FTAA within 15
days from receipt of written
notice of approval
5. MGB shall release the FTAA
to the Contractor after
registration
6. Prior to the commencement
of the development and/or
utilization activities:
a. contractor shall
comply with the
required
consultation/with
project presentation to
the Sanggunian
b. secure endorsement
of the project by the
Sanggunian
Conversion of Permits
EP to MA or FTAA MA to MA or FTAA FTAA to EP
Optional Optional Optional
Totally or partially Totally or partially Totally or partially

Purpose: to undertake Purpose: to undertake detailed

detailed exploration if the
exploration activities
indicate a resource
discovery
Requirements: Requirements:
1. Letter of Intent 1. Letter of Intent addressed
addressed to MGB prior
to expiration of EP
a. Provide its intention
over the area that
may not be covered
by the conversion
to MA or FTAA
2. All revisions required by
2. File Declaration of
Mining Project
Feasibility and Work
Program for
Development
3. File MA or FTAA
application within 30
days after the filing of
the Letter of Intent
a. Failure to file
within 30 days
shall be
construed that
the Permittee
elects to
continue
operation until
the expiration of
the EP
exploration if the exploration activities
indicate a resource discovery
Requirements
1. Letter of Request for Conversion
to MGB cc: Regional addressed to DENR cc: MGB prior
Office to expiration of EP
a. Provide its intention a. Within 6 months from the date
over the area that may of filing the Letter of Intent, all
not be covered by the revisions to the FTAA required
conversion to EP by its conversion into a MA
shall be submitted to the
Secretary
the conversion shall be b. For foreign contractors, within
submitted within 60 1 year from the date of filing
calendar days form the the Letter of Intent to
date of filing of Letter of i. satisfy the sixty percent
Intent (60%) Filipino equity
requirement
ii. subject to an extension of
another one (1) year as
may be approved by the
Secretary taking into
consideration
1. the economic and
2. other relevant
factors
c. Failure of the Contractor to
meet the 60% equity
requirement within the
prescribed period shall cause
the forfeiture of the
Contractor's right to such
conversion

4. Field validation report 2. Field Verification and validation by

by the Regional Office the Bureau
confirming the resource 3. The economic viability of the ores
discovery in the contract area is found to be
inadequate to justify large-scale
mining operations
3. Compliance with 4. Final approval of the Secretary

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5. Payment of required
conversion fee
Term of EP shall be
deducted from the terms of
the Exploration/Pre-
Feasibility Study/Feasibility
Study Period of the Mineral
Agreement or FTAA
mandatory requirements
4. Payment of required
conversion fee
Term of new MA or FTAA shall
be equivalent to the remaining
period of the original
agreement
5. Compliance with all requirements
6. Evaluate and approve conversion
7. Payment of required conversion
fee
8. A copy of the Mineral Agreement
shall be submitted to the President
Term of MA shall be equivalent to the
remaining period of the FTAA

Conversion of Applications (MA/FTAA Application to EP Application)

Optional
Totally or partially

Condition: without losing its priority rights over the area

Requirements:
1. Letter of Intent addressed to MGB
a. Provide its intention over the area that may not be covered by the conversion to EP
2. Compliance with mandatory requirements
3. Payment of required conversion fee
4. Date of filing of EP shall be reckoned from the date when the MA/FTAA was filed

Transfer or Assignment of EP/MA/FTAA

Transfer or
Assignment of EP
To Qualified Person/s
Subject to the approval
of MGB
Transfer or Assignment of MA Transfer or Assignment of FTAA
Total or Partial Total or Partial
To Qualified Person/s To Qualified Person/s
Requirements:
1. File Application
2. Payment of Application Fee
3. Transferor/assignor or contractor has complied with all the terms and
conditions of the Agreement, Law, and IRR at the time of
transfer/assignment
4. Deed of Assignment containing, among others:
a. the transferee/assignee assumes all obligations of the
transferor/assignor under the Agreement
5. For MA: Subject to approval of Secretary, upon recommendation of
MGB / For FTAA: Upon endorsement by MGB, the Secretary may
recommend to President the transfer or assignment of an FTAA
a. If not acted upon by the Secretary/President within 30 calendar
days from official receipt – deemed automatically approved
i. Unless patently unconstitutional, illegal or
ii. where such transfer or assignment is violative of
pertinent rules and regulations

17
 6. If circumstances warrant and upon the recommendation of the Director,
the Secretary may impose additional conditions for the approval of
transfer/assignment

Cancellation/Termination
Cancellation of EP Cancellation/Revocation/Termination of an FTAA
Request for cancellation addressed to Due process
Secretary/Director/Regional Director concerned

Grounds: Grounds:
1. violation(s) by the Permittee of the terms and provided in Chapter 24
conditions of EP
2. Failure to secure the required proof of
consultation with/project presentation to the
Sanggunian pursuant to RA 7160 within 1
year from issuance of EP

Effect: Effect
1. Upon issuance of the Order declaring with 1. Not release the Contractor from all obligations
finality the cancellation of the Permit covering it may have, particularly regarding ecological
areas within Government Reservations management, at the time of cancellation/
2. Affected areas shall automatically be reverted revocation/termination
to its original status
3. Not release the Permittee from all obligations
it may have, particularly regarding ecological
management, at the time of relinquishment or
cancellation.

Withdrawal
Withdrawal From MA Withdrawal From FTAA
Request for Withdrawal in writing addressed to Request for Withdrawal in writing to the Secretary
the Director cc: Regional Office cc: MGB

Reason/s: mining project is no longer Reason/s: mining project is no longer

economically feasible, even after it has exerted economically feasible, even after it has exerted
reasonable diligence to remedy the cause(s) or reasonable diligence to remedy the cause(s) or
situation(s) situation(s)
Process:
1. Verification and validation MGB
2. Compliance or satisfaction of all the Contractor's financial, fiscal, environmental, and legal
obligations at the time of withdrawal
3. Within 30 calendar days, Director/Secretary shall:
a. Send an acceptance notice of withdrawal to the Contractor
b. cause the opening of the subject area to mining applications and release the contractor's
financial guaranty/performance bond

Rights and Obligations of the Contractor

1. Contractor
2. Its heirs

18
3. Successors-in-interest

Rights:
1. Exclusively conduct mining operations within the contract area with full rights of ingress and egress
2. Right to enter and occupy the contract area
a. If private or other parties are affected - permittee shall first discuss with the said parties the
extent, necessity and manner of entry, occupation and exploration
b. In case of disagreement: POA shall resolve the conflict
3. All other rights provided for in Mining Laws and IRR

Obligations:
1. Fully comply with the terms and conditions of the EP/MA/FTAA

19
 EXPLORATION PERMITS

Requirements for Renewal of EP:

1. Permittee has complied with all the terms and conditions of EP
2. Has not been found guilty of violation of any provision of RA 7942 and IRR

Conduct of FS & Filing of Declaration of Mining Project Feasibility (DMPF)

1. Undertaken during the term of the Exploration Permit

Declaration of Mining Project Feasibility (DMPF)

1. Filed when the Permittee determines the commercial viability of the contract area
2. Accompanied with 3-year Work Program for Development and Budget
3. Entitles the Permit Holder to an exclusive right to a mineral production sharing agreement or other
mineral agreements or FTAA

Relinquishment of Permit Area in EP

LESS THAN 5,000 HA
First 2 Years of Exploration Not required
Extended Exploration Period Not required
MORE THAN 5,000 HA
Annual: at least 20% of the permit
area
Annual: at least 10% of the remaining
permit area

Additional Requirements for Offshore EP Applications

1. Name of vessel
2. Port of registry of vessel
a. Foreign vessels:
i. Expected date of first entry or appearance
ii. Date of final departure
iii. Necessary clearances
3. Tonnage, type, and class of survey vessel(s)/platform(s)
4. Certification from the Coast and Geodetic Survey Department of the NAMRIA that the proposed EWP
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
5. An agreement to:
a. Properly identify all installations, vessels, and other crafts involved in exploration
recognizable to all vessels within reasonable distance
b. Notify MGB thirty (30) calendar days prior to the intention to remove all scientific installations
or equipment and apparatus; and
c. Allow the MGB’s authorized personnel, Philippine Coast Guard, and other authorized persons
during reasonable hours to board the vessel(s) while within the EEZ

Relinquishment of Areas Covered by Exploration Permit

1. File a Notice of Relinquishment with MGB
a. At any time
b. whole or any portion of the total permit area

Effect of Relinquishment of Exploration Permit

20
1. Not release the Permittee from all obligations it may have, particularly with regard to ecological
management, at the time of relinquishment or cancellation.

Renewal of Exploration Permit

1. Prior to Expiration of EP
2. Submit Application to Renew EP

Mandatory Requirements for Renewal of EP (5 sets):

1. Audited FS covering the term of the Exploration Permit; and
2. 2-year Exploration Work Program duly prepared, signed and sealed by a licensed Mining Engineer or
Geologist
3. Field verification by MGB at the expense of Permittee
4. Compliance with pertinent requirements
5. Payment of required fees
6. Approval will be by Secretary through MGB Director

Deemed Approved:
1. If requirements have been complied
2. EP Application for renewal is still awaiting approval 1 month after date of filing
3. Affidavit by the applicant attesting to the full compliance with all the pertinent requirements
4. MGB Director shall issue Renewed EP within 5 working days from receipt of affidavit, for registration
and release
5. Without prejudice to undertake the necessary investigation to determine any liability as to the non-
issuance of the renewed EP within the prescribed period
6. The renewal of EP for the purpose of filing of the declaration of mining project feasibility shall require
approval of the Secretary

Additional Requirements after Acceptance of Application (prior to issuance of renewed EP)

1. Environmental Work Program
2. Certification by the Regional Office concerned as to the compliance with the terms and conditions of
the EP
a. level of implementation of the Work Programs
b. compliance with the fiscal and reporting obligations

Declaration of Mining Project Feasibility (MPF)

- If results of exploration reveal the presence of mineral deposits economically and technically feasible
for mining operations

1. Filed within the term of the EP

2. Posting of Order of Approval for at least 1 week at the bulletin boards of:
a. MGB, and
b. Regional Office concerned
3. Failure of the Permittee to apply for MA or FTAA within a period of 1 year from the date of approval of
the declaration of mining project feasibility shall mean automatic cancellation of the said declaration
a. Effect of failure to file MPF during the 4-year term of EP for non-metallic minerals or 6-year
term of EP for metallic minerals:
i. Permittee may apply for further renewal of the Exploration Permit
ii. May be granted by the Secretary for another term of 2 years for the very purpose of
1. preparing or completing the feasibility studies, and

21
 2. filing of the declaration of mining project feasibility and the pertinent MA or
FTAA
4. Complete and final exploration report shall be required in the renewal of EP
5. In case the EP expires prior to approval of declaration of mining project feasibility and/or filing of the
MA or FTAA application
a. EP shall be deemed automatically extended until such time that the MA or FTAA application
is approved

Effect of approval by MGB Director - grant the Permittee the exclusive right to a Mineral Agreement or
FTAA over the permit area

TERMS AND CONDITIONS OF EP

Right to Explore Subject to valid, prior, and existing rights of any party/ies within the
subject area
Use and Benefit of Permit Exclusive to Permittee or its duly authorized representative and, shall
under no circumstances
Purpose Only for Exploration
Term of Permit 2 years from date of issuance, renewable for 2 years but not to exceed a
total of 4 years for nonmetallic mineral exploration or 6 years for metallic
mineral exploration
Requirements For Renewal 1. Complied with the terms and conditions of the Permit
2. Not been found guilty of violation of any provision of the Act and IRR

Failure to file the Declaration of Mining FS during the extension (4yrs,

6yrs):
1. Permittee may apply for further renewal of EP, which may be
granted by the Secretary for another term of 2 years for
a. Preparing/completing the FS, and
b. Filing of the declaration of mining project feasibility, and MA
or FTAA application
2. Complete and final exploration report
3. If EP expires prior to the approval of the declaration of mining project
feasibility and/or filing of the Mineral Agreement or FTAA application,
the said EP shall be deemed automatically extended until such time
that the Mineral Agreement or FTAA application is approved
Submission of Status 1. Within 30 calendar days after the end of each semester, report
Report on EWP under oath of:
Compliance a. EWP implementation
b. Expenditures showing discrepancies/deviations including
i. results of the survey
ii. laboratory reports
iii. geological reports/maps
c. Expenditures in excess of yearly budget of the approved
EWP - carried forward and credited to the succeeding years
covering the duration of the Permit

2. After the approval of EWP, submit Status Report within 30 calendar

days from the end of 6 months and every 6 months thereafter on its
compliance with EWP
Annual Relinquishment of Less than 5,000 ha: not required

22
Permit Area
Annual Review of
Performance of Permittee
Submission of Final Report
In Case of Diamond Drilling
Offshore Exploration
Activities
Onshore Exploration
Activities
If EP Permittee Applies for
MA or FTAA Over Permit
Area
Compliance
Surrender of Permit or the
Exercise of Priority Right to
Apply for MA or FTAA over
Permit Area
Exclusion
Beneficial Ownership of
Minerals
Cancellation of EP
Assumption of Exploration
Risks
23
More than 5,000 ha:
First 2 years: at least 20% of the permit area
Extended exploration period: at least 10% of the remaining permit area
Reportorial Requirements – submit to MGB/Regional Office
1. Report of Relinquishment
2. Detailed geologic report of the relinquished area
3. Maps at a scale of 1:50,000
4. Results of analyses
5. Result of exploration expenditures
a. For remaining area after relinquishment - based on the
approved Exploration Work Program
Secretary or duly authorized representative
Upon the expiration or relinquishment of permit, or conversion into MA or
FTAA:
1. Final Report form and substance comparable to published reports of
respected international organizations
2. Incorporate all the findings in the permit area
a. Locations of samples
b. Assays
c. Chemical analyses
d. Assessment of the mineral potential
3. Complete detailed expenditures incurred during the exploration
Upon request of MGB Director:
1. Quarter of the core samples which shall be deposited in the
Bureau/Regional Office Core Library concerned for reference and
safekeeping
Carried out in accordance with UNCLOS and in a manner that will not
adversely affect the safety of navigation at sea and will ensure
accommodation with other marine activities such as fishing, aquaculture,
transportation, etc.
Carried out in a manner that will safeguard the environment at all times
The exploration period covered by the EP shall be considered as the
exploration period of the MA or FTAA
Permittee shall comply with RA 7942 and IRR
Granted if the Permittee meets the necessary qualifications and the
terms and conditions
Commercial extraction and/or construction of infrastructures designed for
mining development or mining production
Not granted to permittee
Failure of Permittee to comply with terms and conditions of permit
Assumed by permittee and not entitled to reimbursement of expenses
Minimum Ground Year Pesos/Hectare
Expenditures 1 100
2 100
3 400
4 400
5 900
6 1,150
7 and 1,150
onwards

If minimum ground expenditure for a given year is not met for justifiable
reasons - unexpended amount may be spent on the following year of the
Permit.

If the minimum ground expenditures for the entire term are not met -
unexpended amount shall be paid by the Permittee and shall accrue to
MGB to be used for mining operations in Mineral Reservations or to
other purposes as may be determined by the Bureau

Failure of Permittee to pay unexpended amount within the prescribed

period - ground for the denial of mining application for renewal of the
Permit or other related application(s).
Juridical Entities As Submit a copy of its SEC-received General Information Sheet
Permittee

24
 PROCESS FLOWCHART FOR EP
Filing at MGB Regional Office
(Submission of MGB Form No. 05-1 and 5 sets
of mandatory requirements and payment fee)

Preliminary Evaluation

Plotting Document Evaluation

Area Status and Clearance

NCIP
Certification
Publication, Posting, Radio Announcement
and Securing of Certifications

Initial Evaluation

Final Evaluation and Approval

Numbering, Registration and Releasing by

MGB Regional Office

25
 MINERAL AGREEMENTS

Term of a Mineral Agreement after Renewal Period

1. Operation may be undertaken by

a. Government, or
b. Through a Contractor
i. The operation shall be awarded to the highest bidder in a public bidding
ii. After due publication of the notice
iii. The original Contractor shall have the right to equal the highest bid upon
reimbursement of all reasonable expenses of the highest bidder

Additional Mandatory Acceptance Requirements for Holders of Valid and Existing or Expired Mining
Lease Contracts, Operating Agreements, Quarry Permits/Licenses or Unperfected Mining/Quarry Claims
(Whenever Applicable):
1. 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.
2. Certification from the Regional Office (RO) concerned that the mining/quarry claims are valid and
subsisting or Report by RO concerned re: compliance with the terms and conditions of the
contract/agreement/permit.
3. 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) or Project Description & Detailed FS
incorporating the social and environmental expenditures, taxes and fees paid for MA applicant with
existing mining operation
5. Approved survey plan of the mining area.

Evaluation of Mineral Agreement Application

1. Within fifteen (15) working days from receipt of Certification from the Panel of Arbitrators concerned
as to any adverse claims/ protest/ opposition
2. MGB CO shall evaluate the Mineral Agreement
3. Further endorse his/her findings to the Bureau for further evaluation within fifteen (15) working days
from receipt of forwarded documents.
4. MGBO CO shall endorse to the Secretary for consideration/approval within fifteen (15) working days
from receipt of such endorsement
a. If not acted upon by the Secretary within 30 calendar days from official receipt – deemed
approved
b. Secretary shall, within 5 days thereafter, sign all the pertinent documents for the approval of
the application

Issuance of Special Mines Permit

Application of Special Mines Permit (SMP)

1. Valid and Existing MA
2. Area Status and Clearance
3. National Commission on Indigenous Peoples (NCIP) Certification
a. For non-ICC/IP area: Certificate of Non-Overlap or Report on the Field Based Investigation
b. For ICC/IP area: Certification Precondition or Memorandum of Agreement by and among the
applicant, ICC/IP concerned and the NCIP – shall be submitted within 90 days from issuance
of MA

26
4. Endorsement from Sanggunian concerned
5. Certification from the Panel of Arbitrators of no pending mining dispute/conflict

Who issues: Director upon clearance by the Secretary

Term: 1 year, renewable once

May be further renewed, depending upon:
1. nature of the deposit
2. propriety of the mining operation
3. environmental and community relations track record of the applicant
4. faithful compliance with the terms and conditions of the SMP
5. diligence of the applicant in pursuing the Mineral Agreement application, subject to the approval of
the Secretary.

Other Forms of SMP:

 Where public welfare requires
 Secretary after verification and evaluation of MGB

Conditions and Requirements of SMP:

1. The applicant is already operating or has completed the development/ construction stage and is
ready to begin operations or has a readily available ore for mining subject to verification by MGB
2. The applicant has already submitted a proposed Mineral Agreement
3. The applicant has submitted a 1-year Work Program duly prepared, signed and sealed by a licensed
Mining Engineer, Geologist or Metallurgical Engineer
4. Submission of ECC, including proof of compliance therewith, if applicable
5. Submission of EPEP
6. Submission of proof of satisfactory Environmental Management Record and Community Relations
Record, if applicable
7. Posting of Surety Bond prior to registration of the SMP; and
8. Such other conditions and requirements consistent with the Mining Laws and IRR, and those which
the Secretary may deem to be for the national interest and public welfare

Reportorial Requirements of SMP Holder:

1. Quarterly Progress Production Reports
a. Subject areas
b. Purpose: computing share of government from production

27
TERMS & CONDITIONS OF MA
Title A stipulation that the Contractor shall not, by virtue of the Mineral
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;
Representation and 1. The Contractor has, or has access to, all the financing and
Warranties technical capability and technology required
2. Provide an exploration period up to 2 years from date of issuance,
renewable for 2 years but not to exceed a total term of 6 years for
nonmetallic minerals exploration or 8 years for metallic minerals
exploration, subject to annual review and approval by the MGB
a. In cases where further exploration is warranted beyond the
6- or 8-year period and on condition that the Contractor has
substantially implemented the Exploration and
Environmental Work Programs as verified by the Bureau,
the Director may further grant renewal of the Exploration
Period
b. The Contractor shall be required to set up a performance
surety equivalent to the expenditure requirement of the
Exploration and Environmental Work Programs.
c. The conduct of feasibility studies shall be included during
the term of the Exploration Period.
d. The Contractor shall file in the Regional Office concerned
the Declaration of Mining Project Feasibility within the term
of the Exploration Period.
3. The applicant has all the qualifications and none of the
disqualifications for entering into the Agreement
Requirements for Renewal Submit application to MGB CO, copy furnished region.

1. Justification of renewal
2. Comprehensive technical reports on the outcome of the 2-year
Exploration and Environmental Work Programs, signed by a
licensed Mining Engineer or Geologist and an Environmental
Officer
3. Audited FS covering the term of the Exploration Period
4. 2-year Exploration Work Program duly prepared, signed and sealed
by a licensed Mining Engineer or Geologist
5. Environmental Work Program
6. Certification by the Regional Office concerned as to the compliance
of the Contractor with the terms and conditions of the MA during the
Exploration Period; and
7. Other supporting papers as the Bureau may require
Stipulation on 1. Contractor may relinquish totally or partially the original contract
Relinquishment area during the exploration period
2. After exploration period and prior to or upon approval of Declaration
of Mining Project Feasibility by the Director, the Contractor shall
finally relinquish to the Government any portion of the contract area
which
a. shall not be necessary for mining operations and

28

Provision Guaranteeing the
Percent of Government
Share
Stipulation on Total Mining
Area after Final
Relinquishment
Stipulation on Compliance
With Mining Laws and IRR
Stipulation on Preference to
Filipino Services and Goods
Stipulation on Non-
Discrimination/Gender Bias
Stipulation on Environment
Protection
29
b. not covered by any declaration of mining feasibility
3. Submission of geologic report and pertinent maps in the scale of
1:50,000
4. Considerations in the evaluation of the Mining Project Feasibility
Study (MPFS)
a. Expected life of mine
b. Grade management
c. Mining sequence
d. Conservation measures and
e. Capability of the project to pay the Government Share and
f. Capability to absorb the environmental and social costs
1. Guarantee the payment of government share notwithstanding the
grant of any incentives by other government agency/ies
2. Number of operating years without tax holidays should be more
than the number of operating years with tax holidays
3. Minimum exploration expenditures for the remaining area after
relinquishment shall be based on the approved EWP
1. Each mining area after final relinquishment shall not be more than
5,000 ha for metallic minerals and 2,000 ha for nonmetallic
minerals
2. The Director, with the approval of the Secretary, may allow a
Contractor to hold a larger mining area depending upon the nature
of the deposit subject to technical verification and evaluation by the
Bureau as to the technical/financial capability of the Contractor
The mining operations shall be conducted in accordance with the
provisions of the Mining Laws and IRR
1. That the Contractor shall give preference to goods and services
produced and offered in the Philippines of comparative quality and
cost
2. The Contractor shall give preference to qualified Filipino
construction enterprises, construction materials and skills available
in the Philippines, Filipino sub-contractors for road construction and
transportation, and Philippine household equipment, furniture, and
food
3. The Contractor is obliged to give preference to Filipinos in all types
of mining employment for which they are qualified, and that the
technology shall be transferred to the same
1. The Contractor shall not discriminate based on gender
2. The Contractor shall respect the rights of women workers to
participate in policy and decision-making processes affecting their
rights and benefits
1. The Contractor to effectively use the best available appropriate
anti-pollution technology and facilities to protect the environment
2. Restore or rehabilitate mined-out areas and other areas affected by
mine waste/mill tailings and other forms of pollution or destruction
in compliance with the requirements of the ECC
3. This should be undertaken in coordination with the
EMB/Department Regional Office
4. The Contractor shall comply with its obligations under its EPEP and

Stipulation on Reporting
Stipulation on Disposition
Stipulation on Consultation
and Arbitration
Stipulation on Monetary
Obligations
Stipulations on Alien
Employment and Use of
Foreign Technologies
30
its AEPEP, including the allocation of the prescribed annual
environmental expense pursuant to Sec. 171
5. The Contractor shall utilize the best available appropriate and
efficient mining and processing technologies
6. The Contractor shall undertake exploration work on the area as
specified in its Agreement based on an approved Work Program:
Provided, That a negative variance of at least 20% in the Work
Program and corresponding expenditures shall be subject to
approval of the Director
1. The Contractor shall furnish the Government an annual report of its
mining operations and records of geologic, accounting, and other
relevant data
2. The book of accounts and records shall be open for inspection by
the Government
3. The Contractor shall submit annually starting from the date of
approval of the Agreement, progress reports of the exploration
activities
4. The progress reports shall be accompanied by raw geologic,
geophysical, and geochemical data plotted in a 1:50,000 scale
map, at a minimum
5. A quarterly report containing activities and accomplishments for
each quarter shall also be submitted
6. At the end of the exploration term, the Contractor shall submit the
final report with the detailed list of activities with the corresponding
expenditures. The final report shall be accompanied by a 1:50,000
geologic map of the contract area acceptable by international
standards
7. All reports referred to herein shall be submitted to the
Bureau/Regional Office concerned
8. That the Contractor in the case of a juridical entity shall annually
submit a copy of its SEC-received GIS
1. The Contractor shall dispose of the minerals and by-products
produced at the highest market price
2. Negotiate for more advantageous terms and conditions subject to
the right to enter long-term sales or marketing contracts or foreign
exchange and commodity hedging contracts which the Government
acknowledges to be acceptable notwithstanding that the sale price
of the minerals may from time to time be lower, or the terms and
conditions of sales are less favorable, than that available elsewhere
3. The MGB is furnished a copy of the said Sales Agreement subject
to confidentiality between the Bureau and the Contractor;
A stipulation providing for consultation and arbitration with respect to
the interpretation and implementation of the terms and conditions of the
Agreement
The Contractor shall pay fees, taxes, royalties, and other obligations in
accordance with existing laws, rules, and regulations
1. That alien employment shall be limited to technologies requiring
highly specialized training and experience subject to the required
approval under existing laws, rules, and regulations

Stipulation on Compliance
with Labor Laws
Stipulation on Confining
Mining Operations within the
Permit Area
Stipulation on Protection of
Locals/ICCs
Stipulation on Cancellation
of MA
Stipulation on Non-
Extinguishment of
Obligations
Stipulation on Designation of
Assignees for Loan
Obligations
Stipulation on
Commencement of Mining
Activities vis-à-vis
Endorsement of Sanggunian
Stipulation on Assumption of
Risks
Stipulation on Inspection of
Financial Records
Stipulation on Denying
Beneficial Ownership of
Minerals
Stipulation On Minimum
Ground Expenditures
31
2. That in every case where foreign technology are utilized and where
alien executives are employed, an effective program of training
understudies shall be undertaken
The Contractor shall conform with laws, rules and regulations
regarding, among others, labor, safety, and health standards
The Contractor shall confine its mining operations to its contract/mining
area and that it shall not interfere with the rights of other
Contractors/Lessees/operators/Permittees/Permit Holders
1. The Contractor shall recognize and respect the rights, customs,
and traditions of local communities, particularly ICCs
2. The Contractor shall contribute to the development of the host and
neighboring communities of the mining area, local geoscience and
mining technology
The MA shall be canceled, revoked, or terminated for failure of the
Contractor to comply with the terms and conditions thereof or for other
grounds as provided for in Sec. 230
The withdrawal by the Contractor from the MA shall not release it from
all financial, environmental, legal and fiscal obligations under the
Agreement
That a financing institution that has granted a loan to the Contractor for
the mining project shall have the authority to:
1. designate its assignee of the Mineral Agreement in case of the
Contractor’s default from such loan
2. That the assignee is a Qualified Person
3. The assignment shall be subject to approval by the Secretary
That the Contractor shall commence development, construction and/or
utilization activities after the required endorsement of the project by the
Sanggunian concerned is secured pursuant to RA 7160
The Contractor shall assume all the risks which are inherent and
incidental to the mining operations such that it will not be entitled for
reimbursement of expenses even if no minerals in commercial quantity
are developed and produced
1. The financial records of the Contractor related to the mining
operations shall be open to Government inspection of all
reasonable times upon prior written notice
2. The Government or its representative shall be part of the committee
or group that shall audit the financial records of the Contractor
That the MA does not grant beneficial ownership of the minerals to the
Contractor
That the Contractor shall execute a Sworn Statement during the
existence of the Agreement that:
1. It shall comply with the minimum ground expenditures during the
exploration and prefeasibility periods:
Year Pesos/Hectare
1 100
2 100
3 400
4 400
5 900
 6 1,150
7 and onwards 1,150

2. In case the minimum ground expenditure for a given year is not met
a. For justifiable reasons – the unexpended amount may be
spent on the following year of the given exploration period
of the Agreement
b. Unjustified – the unexpended amount shall be paid by the
Contractor and shall accrue to the Bureau to be used for
mining operations in Mineral Reservations or to other
purposes as may be determined by the Bureau
c. The failure of the Contractor to pay the said amount within
the prescribed period shall be a ground for the cancellation
of its Agreement

32
 MINERAL AGREEMENT PROCESS FLOWCHART

Filing at MGB Regional Office

(Submission of MGB Form No. 05-1 and 5 sets of
mandatary requirements and payment fee

Preliminary Evaluation

Plotting Document Evaluation

Area Status and Clearance

NCIP
Certification
Publication, Posting, Radio Announcement and
Securing of Certifications

Final Evaluation at MGB Regional Office

Initial Review at MGB Central Office

Final Review and Approval at the Office of the

DENR Secretary

Numbering by MGB Central Office

Registration and Releasing by MGB Regional

Office

33
 FINANCIAL OR TECHNICAL ASSISTANCE AGREEMENTS (FTAA)

Minerals Subject of FTAA

1. Gold
2. Copper
3. Nickel
4. Chromite
5. Lea
6. Zinc and
7. Other minerals, except for cement raw materials, marble, granite, sand and gravel and construction
aggregates

Activities to be completed
1. Exploration – up to 2 years from date of FTAA execution, extendible for another 2 years
2. Pre-Feasibility Study, if warranted – up to 2 years from expiration of the exploration period
3. Feasibility study – up to 2 years from the expiration of the exploration/pre-feasibility study period
4. Development, construction and utilization - upon approval of the declaration of mining project
feasibility up to the remaining years of the FTAA
* Any 2 or more of the above periods may be simultaneously undertaken in one approved contract area, as the need of the Contractor may
arise, subject to the pertinent provisions of Sec. 56

Requirements for Renewal/Extension of Exploration Activities:

1. Renewal application cc: MGB Region
2. Justification of renewal
3. Comprehensive technical reports on the outcome of the 2-year Exploration and EWP signed by a
licensed Mining Engineer or Geologist and an Environmental Officer
4. Audited FS covering the term of the exploration period
5. 2-year EWP duly prepared, signed and sealed by a licensed Mining Engineer or Geologist
6. Environmental Work Program
7. Relinquishment report
8. Certification by the Regional Office as to the compliance with the terms and conditions of the FTAA,
particularly the level of implementation of the Work Programs and compliance with the fiscal and
reporting obligations

Evaluation of Mining Project Feasibility Study

The following shall be strictly considered in evaluating MPFS
1. The expected life of mine
2. Grade management
3. Mining sequence
4. Conservation measures
5. The capability of the project to pay the government share
6. Capability to absorb the environmental and social costs shall be strictly taken into consideration

Contract Stipulation on guarantee of payment of government share

1. Provision guaranteeing the payment of the Government Share notwithstanding the grant of any
incentives by other Government agency/ies.
2. The mine should have a profitable operating life of more than ten (10) years, to ensure the collection
of the Government Share, given the cost recovery period.
3. Collection of government share shall commence after the FTAA contractor has fully recovered its

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pre-operating expenses, exploration, and development expenditures, inclusive.

Additional Requirements after Approval before Registration

1. ACS US $4M or its Philippine Peso equivalent

Additional Requirements for Approval of Declaration of Mining Project Feasibility

1. Mining Project Feasibility Study

2. Three (3)-Year Development/Utilization Work Program
3. Proof of technical competence in the form of:
a. CV and track records in mining operations/ environmental management
b. Sworn statement of the technical person(s) who will undertake the implementation of the
Work Programs or employment contract/proof of availed service(s)
4. Proof of financial capability:
a. For corporation/partnership/association/cooperative:
i. Latest audited Financial Statements
ii. Annual Report for the preceding year
iii. Credit lines/bank guarantees/deposits

Effect of filing of application:

1. Proposed contract area shall be closed to other mining applications for FTAA minerals mentioned, but
shall be open for quarry resources mining applications upon
a. Written consent of the FTAA applicant and
i. sand and gravel applications require no consent
ii. If unreasonably withheld, the case shall be resolved by the POA
b. Verification by the Regional Office concerned

The Negotiating Panel

An FTAA shall be negotiated by the Department through a Negotiating Panel composed of the following:

1. DENR Secretary – Chair

2. MGB Director - Vice-Chair
3. Members:
a. Representative from the Board of Investments or Department of Trade and Industry (DTI)
b. Representative from the National Economic and Development Authority
c. Representative from the Department of Finance
d. Representative from the Department's Field Operations Office
e. Representative from the Department's Legal and Legislative Affairs Office
f. Representative(s) from the Regional Office(s) concerned

Evaluation of FTAA Application

1. Within fifteen (15) working days from receipt of Certification from the Panel of Arbitrators concerned
as to any adverse claims/ protest/ opposition
2. MGB CO shall evaluate the FTAA application
3. Further endorse his/her findings to the Bureau for further evaluation within fifteen (15) working days
from receipt of forwarded documents
4. The MGB shall endorse the same to the Negotiating Panel for final evaluation
5. The Negotiating Panel shall evaluate the FTAA applications within 30 calendar days from receipt
thereof

35
The following shall be strictly considered in evaluating FTAA Proposals
1. Contributions to the economic growth
2. Contribution to general welfare of the country
3. The development of local scientific and technical resources,
4. Contribution to community and Local Government development programs

Negotiation of FTAA
1. Negotiating Panel shall recommend execution of FTAA and approval to President
a. Upon being satisfied with the terms & conditions of the proposed FTAA
b. With the applicant's compliance with all the requirements
2. Negotiating Panel shall calendar the proposed FTAA for negotiation
3. Negotiating Panel shall make the corresponding notification to the applicant
4. If after the negotiation, the terms and conditions acceptable to the Negotiating Panel have been
incorporated in the proposed FTAA
a. a Resolution to that effect shall be made within fifteen (15) working days and signed, at least,
by the majority of the Negotiating Panel
b. Based on the Resolution, the Secretary shall forthwith recommend the negotiated FTAA
application to the President for consideration/approval
c. The President shall notify Congress of the approved FTAA within thirty (30) calendar days
from the date of its approval.

Temporary Exploration Permit

One-time nonrenewable Temporary Exploration Permit (TEP)
Term: not exceeding one (1) year
Purpose: to undertake exploration

1. While awaiting for the approval of the FTAA application by the President
2. The Secretary may, upon the request of the FTAA applicant,
3. The term of the TEP shall be deducted from the exploration period of the FTAA
4. In the event that the FTAA application is disapproved by the President, the TEP is deemed
automatically canceled

TERMS & CONDITIONS OF FTAA

Stipulation on Minimum That the Contractor shall execute a Sworn Statement during the
Ground Expenditures existence of the Agreement that:
1. It shall comply with the minimum ground expenditures during the
exploration and prefeasibility periods:
Year US
$/Hectare
1 2
2 2
3 8
4 8
5 18
6 23

2. And a minimum investment in case of Filipino Contractor for

36
 infrastructure and development in the contract area
a. Fifty Million US Dollars ($50,000,000.00) or its Philippine
Peso equivalent

3. If a Temporary/Special Exploration Permit has been issued prior to

the approval of an FTAA
a. the exploration expenditures incurred shall form part of the
expenditures during the first year of the exploration period
of the FTAA.

4. In the event the contractor exceeds the minimum expenditure

requirement in any 1 year
a. the amount in excess may be carried forward and deducted
from the minimum expenditure required in the subsequent
year

5. In case the minimum ground expenditure for a given year is not met
a. For justifiable reasons – the unexpended amount may be
spent on the following year of the given exploration period
of the Agreement

Title A stipulation that the Contractor shall not, by virtue of the FTAA,
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
Representation and 1. The Contractor has, or has access to, all the financing and
Warranties technical capability and technology required
2. Provide an exploration period up to 2 years from date of issuance,
renewable for 2 years, subject to annual review by the Secretary
3. The applicant has all the qualifications and none of the
disqualifications for entering into the Agreement
4. That the Contractor shall not raise any form of financing from
domestic sources of funds, whether in Philippine or foreign
currency, for conducting its mining operations for and in the
contract/mining area except for payments for dispositions for
a. its equity
b. foreign investments in local enterprises which are qualified
for repatriation and
c. local supplier's credits and
d. such other generally accepted and permissible financial
schemes for raising funds for valid business purposes
Stipulation on First 2 years: at least 25% of the original contract area
Relinquishment Extended exploration period and Pre-Feasibility Study Period: at least
10% of the remaining contract area

1. During the exploration or pre-feasibility study period

a. Contractor shall finally relinquish to the Government any
portion of the contract area which shall
i. not be necessary for mining operations and

37
 ii. not covered by any declaration of mining feasibility
with corresponding
b. Submission of geologic report and pertinent maps in the
scale 1:50,000
c. Each mining area after final relinquishment shall not be
more than 5,000 ha
i. The Director, with the approval of the Secretary,
may allow a Contractor to hold a larger mining area
depending upon
1. the nature of the mineral deposit and
2. technical verification by the Bureau

2. Prior to lapse of exploration or prefeasibility period, Contractor may

submit to the MGB a Declaration of Mining Project Feasibility by the
Director
a. the Contractor shall have the right to continue its mineral
exploration or feasibility studies in respect to the remaining
contract area.
b. Any mining area declared out of such remaining contract
area
i. may be covered by the original Agreement or
ii. as a separate FTAA subject to #1

3. Submit separate report of relinquishment to MGB

a. Detailed geologic report of the relinquished area
accompanied by maps at a scale of 1:50,000
b. results of analyses
c. corresponding expenditures
i. Minimum exploration expenditures for the
remaining area after relinquishment shall be based
on the approved EWP

4. When the contractor originally derived its rights to the contract

area from then claim owners or mining right owners
a. such part of the contract area relinquished pursuant to the
shall be reverted back to the Government
b. Claim owners or mining right owners shall have preferential
rights over the area
i. Within thirty (30) calendar days from notification of
relinquishment by the Contractor
1. the claim owners or mining right owners
shall signify its intention to enter into a
Mineral Agreement with the Secretary
2. That all documents necessary for Mineral
Agreement application shall be submitted
within sixty (60) calendar days from receipt
of such intention.
Stipulation on Compliance The mining operations shall be conducted in accordance with the
with Mining Laws and IRR provisions of the Mining Laws and IRR

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Stipulation on Performance
of Activities within the Period
in FTAA
Stipulation on Preference to
Filipino Services and Goods
Stipulation on Non-
Discrimination/Gender Bias
Stipulation on Environment
Protection
Stipulation on Reporting
39
That the Contractor shall perform its activities within the periods
expressed in the FTAA plans and work programs, save as may be
excused by force majeure
1. That the Contractor shall give preference to goods and services
produced and offered in the Philippines of comparative quality and
cost
2. The Contractor shall give preference to qualified Filipino
construction enterprises, construction materials and skills available
in the Philippines, Filipino sub-contractors for road construction and
transportation, and Philippine household equipment, furniture, and
food
3. The Contractor is obliged to give preference to Filipinos in all types
of mining employment for which they are qualified, and that the
technology shall be transferred to the same
1. The Contractor shall not discriminate based on gender
2. The Contractor shall respect the rights of women workers to
participate in policy and decision-making processes affecting their
rights and benefits
1. The Contractor to effectively use the best available appropriate
anti-pollution technology and facilities to protect the environment
2. Restore or rehabilitate mined-out areas and other areas affected by
mine waste/mill tailings and other forms of pollution or destruction
in compliance with the requirements of the ECC and PD 984
3. This should be undertaken in coordination with the
EMB/Department Regional Office
4. The Contractor shall comply with its obligations under its EPEP and
its AEPEP, including the allocation of the prescribed annual
environmental expense pursuant to Sec. 171
5. The Contractor shall utilize the best available appropriate and
efficient mining and processing technologies
6. The Contractor shall undertake exploration work on the area as
specified in its Agreement based on an approved Work Program:
Provided, That a negative variance of at least 20% in the Work
Program and corresponding expenditures shall be subject to
approval of the Director
1. The Contractor shall furnish the Government an annual report of its
mining operations and records of geologic, accounting, and other
relevant data
2. The book of accounts and records shall be open for inspection by
the Government
3. The Contractor shall submit annually starting from the date of
approval of the Agreement, progress reports of the exploration
activities
4. The progress reports shall be accompanied by raw geologic,
geophysical, and geochemical data plotted in a 1:50,000 scale
map, at a minimum
5. A quarterly report containing activities and accomplishments for
each quarter shall also be submitted
6. At the end of the exploration term, the Contractor shall submit the

Stipulation on Non-
Extinguishment of
Obligations
Stipulation on Cancellation
Of FTAA for Failure to
Comply with Terms and
Conditions
Stipulation on Disposition
Stipulation on Consultation
and Arbitration
Stipulation on Monetary
Obligations
Stipulations on Alien
Employment and Use of
Foreign Technologies
Stipulation on Designation of
Assignees for Loan
Obligations
Stipulation on Confining
Mining Operations within the
40
final report with the detailed list of activities with the corresponding
expenditures. The final report shall be accompanied by a 1:50,000
geologic map of the contract area acceptable by international
standards
7. All reports referred to herein shall be submitted to the
Bureau/Regional Office concerned
8. The Contractor in the case of a juridical entity shall annually submit
a copy of its SEC-received GIS
The withdrawal by the Contractor from the FTAA shall release it from
any and all financial, environmental, legal and/or fiscal obligations
including settlement of all obligations that should have accrued to the
Government during the term of the FTAA
1. A stipulation that the FTAA shall be canceled, revoked or
terminated for failure of the Contractor to comply with the terms and
conditions
2. In case of cancellation
a. contractor shall no longer be required to meet the minimum
expenditure requirement for the remaining period
b. such cancellation/revocation/termination shall not release
the Contractor from any and all obligations it may have,
particularly with regard to ecological management, at the
time of cancellation/ revocation/termination
1. The Contractor shall dispose of the minerals and by-products
produced at the highest market price
2. Negotiate for more advantageous terms and conditions subject to
the right to enter long-term sales or marketing contracts or foreign
exchange and commodity hedging contracts which the Government
acknowledges to be acceptable notwithstanding that the sale price
of the minerals may from time to time be lower, or the terms and
conditions of sales are less favorable, than that available elsewhere
3. The MGB is furnished a copy of the said Sales Agreement subject
to confidentiality between the Bureau and the Contractor;
A stipulation providing for consultation and arbitration with respect
to the interpretation and implementation of the terms and
conditions of the Agreement
The Contractor shall pay fees, taxes, royalties, and other
obligations in accordance with existing laws, rules, and regulations
1. That alien employment shall be limited to technologies requiring
highly specialized training and experience subject to the required
approval under existing laws, rules, and regulations
2. That in every case where foreign technology are utilized and where
alien executives are employed, an effective program of training
understudies shall be undertaken
That the Contractor shall conform with laws and rules to:
1. Designate its assignee of the FTAA in case of the Contractor’s
default from such loan
2. That the assignee is a Qualified Person
3. The assignment shall be subject to approval by the President
The Contractor shall confine its mining operations to its contract/mining
area and that it shall not interfere with the rights of other
Permit Area
Stipulation on Protection of
Locals/ICCs
Stipulation on
Commencement of Mining
Activities vis-à-vis
Endorsement of Sanggunian
Provision Guaranteeing the
Percent of Government
Share
41
Contractors/Lessees/operators/Permittees/Permit Holders
1. The Contractor shall recognize and respect the rights, customs,
and traditions of local communities, particularly ICCs
2. The Contractor shall contribute to the development of the host and
neighboring communities of the mining area, local geoscience and
mining technology
That prior to the commencement of the development and/or utilization
activities, the Contractor shall:
1. comply with the required consultation/with project presentation to
the Sanggunian concerned prior to the implementation of the EWP
2. secure endorsement of the project by the Sanggunian
1. Provision guaranteeing the payment of the Government Share
notwithstanding the grant of any incentives by other Government
agency/ies.
2. The mine should have a profitable operating life of more than ten
(10) years, to ensure the collection of the Government Share, given
the cost recovery period.
 FTAA PROCESS FLOWCHART

Filing at MGB Regional Office

(Submission of MGB Form No. 07-1 and 8 sets of
the FTAA Proposal and 5 sets mandatory
requirements and payment fee

Preliminary Evaluation

Plotting Document Evaluation

Area Status and Clearance

NCIP
Certification
Publication, Posting, Radio Announcement and
Securing of Certifications

Initial Evaluation at MGB Regional Office

Final Evaluation at MGB Central Office

Final Review and Approval at the Office of the

DENR Secretary

Negotiation by Negotiating Panel (OSEC, MGB,

BOI, NEDA, DOF) & Applicant

Indorsement to the President by Negotiating

Panel

Approval by the President

Numbering by MGB Central Office

Registration and Releasing by MGB Regional

Office

42