PART III:

Community
Developme
Stakeholder Organizatio Huma Labor Environme Fair Consum
nt
s nal n Practic nt Operating er Issues
Governanc Right es Practices and
e s Involvemen
t

1.
Shareholders/
Investors

2. Suppliers

3.
Government

4. Community

5. Employees
Customers

Shareholders

Organizational Governance

Upholding of Rights

The rights of all stockholders, in accordance with the Corporation Code, Articles of
Incorporation, By-Laws, and all resolutions adopted by the Board establishing and
designating classes or series of shares of stock of Philex Mining Corp.

These rights are as follows:

1. Right to vote on the matters that require their approval pursuant to the relevant
provisions of the Corporation Code and the Constitutive Documents. At every
meeting of the stockholders for the election of Directors, owners of shares of
common stock of the Company are entitled to cumulative voting in accordance
with the By-Laws.

2. Pre-emptive right or the right to subscribe to or purchase any unissued shares

of stock of the Company offered for subscription or purchase, except as
provided in Section 39 of the Corporation Code which states that pre-emptive
right shall not extend to shares to be issued in compliance with laws requiring
stock offerings or minimum stock ownership by the public, or to shares to be
issued in good faith with the approval of the stockholders representing two
thirds (2/3) of the outstanding capital stock, in exchange for property needed
for corporate purposes or in payment of a previously contracted debt.

3. Right to inspect corporate books and records including minutes of Board

meetings and stock registries; provided that, such right may be denied by the
Board if the requesting stockholder improperly used information secured from
 prior examination, or is not acting in good faith, o does not have a legitimate
purpose for inspecting the records, or if the Board determines it necessary to
safeguard the rights and legitimate interest of the Company such as when the
records to be inspected contain sensitive or confidential information or are
covered by confidentiality or non-disclosure obligation which will be breached
by the Company if such records were made available for inspection.

4. Right to receive information that is required to be disclosed by the Company

pursuant to the Corporation Code or Securities Regulation Code.

5. Right to dividends subject to the provisions of the Corporation Code, the

Companys Articles and By-Laws, and the resolutions duly adopted by the
Board.

6. Appraisal right or the right to dissent and demand payment of the fair value
of their shares in the instances provided for under the Corporation Code.

Creation of the Investor Relations Program

The Company maintains an Investor Relations Desk, which interacts with analysts and
investors and the investment community in general. Another unit, the Public and
Regulatory Affairs Department, handles media and maintains relationships with the
public and regulatory authorities. Both these units prepare, review and disclose major
Company announcements.

Shareholder matters are handled by the Corporate Secretary. The actions done
through this medium are:

1. Maintains an updated website relevant and material information about the

Company (http://www.philexmining.com.ph)
2. Manages a Stockholder Relations Desk to assist stockholders and addresses
their concerns in a timely manner.
3. Provides the contact details for the Investor/Stockholder Relations Desk and
stock transfer agent in the Company website.
 4. Acknowledges and addresses queries and concerns from stockholders and
investors immediately.
5. Entertains visits to the office.

Human Rights

Right to information

1. Disclosure of Material Information

The company commits to cause the timely disclosure of material information and/or
transactions that could potentially affect the market price of the Companys shares
and such other information which are required to be disclosed pursuant to the
Securities Regulation Code and its Implementing Rules and Regulations including,
without limitation, earnings result, acquisition or disposal of significant assets, off-
balance-sheet transactions, related party transactions, Board membership
changes, shareholding of Directors and Officers and any changes thereto, and
remuneration of Directors and Officers. Other

The company also provides the stock market, through the PSE and the SEC, with
essential, accurate, sufficient and timely information about the Company. It holds
investor and media briefings as regularly as practicable to update the public and
the investment community on the affairs and business of the Company.

2. Filing of Reports

The Board shall cause the filing with the Commission and the Exchange of all
written disclosures or reports on material information and/or transactions in
accordance with the Securities Regulation Code and its Implementing Rules and
Regulations and the established procedures of the Commission and the Exchange
regarding such matter.

Right against unjust discrimination

 Stockholder who have matters for discussion or concerns directly relating to the
business of the Company may initially elevate such matters or concerns to: (a) the
Corporate Secretary; (b) the Investor Relations Officer; (c) Management; or (d) the
Board.
Although all stockholders should be treated equally or without discrimination,
where feasible or practicable the Board should give minority stockholders holding
at least ten percent of the Companys shares, the right to propose the holding of
meetings and the items for discussion in the agenda that relate directly to the
business of the Company.

Supplier

Organizational Governance

Creation of Vendors Relations Policy

The Company has Vendor Relations Policy and Policy on Gifts, Entertainment and
Sponsored Travel guided by these principles:

1. Supply Chain Management Conduct - Supply Chain professionals shall

maintain a reputation that is beyond reproach and in accordance with the
Institute of Supply Management (ISM) and Philippine Institute for Supply
Management (PISM) Standards of Conduct aligned with Industry Best
Practices.
The Company focuses on avoiding impropriety in the conduct of the
profession pertaining to relationships, actions and communications and
conflict of interest where an employee (of Philex) has an interest in another
company dealing with Philex, among others.

2. Supplier Relations - Procurement Department is the primary source of

contact and channel of communications with all vendors. It is therefore the
Companys policy to maintain and practice the highest possible standard of
business ethics, professional courtesy and competence in all dealings with
existing and potential vendors.
 The Supplier Relations Policy puts emphasis on the decorum required when
dealing with suppliers.

3. Acceptance of Gifts & Gratuities - No company employee shall accept

gifts, personal loans, entertainment or other special considerations from an
individual, supplier or organization, doing business with the Company.
The Policy on Gift & Gratuities is specific on tokens, particularly during the
Christmas Season, where suppliers are discouraged to give lavish gifts and
tokens. This is relayed to suppliers every November through an official letter
from the Company.

Supplier Information Policy

The Company maintains a Supplier Information policy an orderly, complete, updated

and secured electronic record of all supplier information in the PCS or ERP System.
The data integrity and confidentiality of this information must be maintained.

Risk Indicator Monitoring

A Risk Indicator Monitoring policy is likewise in place to monitor risk indicators that may
impact its Supply Chain Operations to avoid disruption of supply, ensure availability of
materials, and avoid delays in the provision of services or the stoppage of operations.

Fair Operating Practices

Vendor Accreditation Process

The Company endeavors to promote and implement standards of relationships with

suppliers that embody the principles of the Companys Code of Business Conduct and
Ethics and core values as defined in the Code. Directors, Employees and Consultants
shall maintain the Companys reputation for equal opportunity and honest treatment of
Suppliers in all business transactions.

The Purchasing Manual contains the policies for ensuring integrity of the procurement
process. The Company has adopted a vendor accreditation policy with the objective
 of ensuring that all suppliers or contractors are responsible entities, technically
competent and financially able to comply with their contractual commitments.

For vendor accreditation, the following criteria must be met:

a. A prospective vendor must accomplish a new vendor form and existing

vendors must update their information periodically through the submission of
Vendor Information Update Form (VIUF). These are detailed forms that
require information regarding the Vendors financial condition, ownership,
product lines, agreements with respective principals/OEM, experience and
expertise;
b. Financial Ratios of vendors vying for accreditation must be reviewed to
ensure soundness and stability of operations; and
c. Vendor must submit a statement that:
i. the information provided in the NVAAF or the EVIUF regarding
financial condition, ownership, product lines; agreements with
respective principals/OEM are true and correct;
ii. Vendor will comply with its commitments in terms of product and
service quality, competitive cost, timely delivery of service;
iii. Vendor will avoid any potential and actual conflict of interest, observe
ethical and fair practices to ensure fair and transparent dealings with
the Company; and
iv. Vendor will cooperate with and welcome evaluation of its
performance as a tool for compliance

Government

Organizational Governance

Coordination with LGUs

PMC is closely coordinating with the indigenous communities, LGUs, National
Commission on Indigenous People (NCIP) and other stakeholders in the conduct of a
Free and Prior Informed Consent (FPIC). The Company respects the rights of the IPs
in all areas and, as such, exploration will only commence as soon as all stakeholders
are in agreement on how to proceed, with the necessary permits approved.
 Environment
Philexs created an inter-departmental coordinating division called the
Environment and Community Relations Division (ECRD) to handle the
environmental and community relations of the company and its relation with the
government units.

It has worked with the following groups:

Municipal Government of Tuba and Itogon
Village Council of Camp 3 and neighboring villages
TESDA
DECS
DOH
The company is coordinating closely with government agencies and other
organizations to ensure the safe handling and proper disposal of all materials, for
the protection and enhancement of the environment.

Community Involvement and Development

Improvement of Public Infrastructures in partnership with DPWH
Improvement of Building and Facilities
The company initiated the construction of loading platform to benefit 3018
pupils residing in Calew, Dalupirip Community

Improvement of Barangay Hall

Philex provided financial support towards the improvement of Barangay
halls of each community involved in its mining operaions that benefited
almost 6685 residents residing in Ampucao Proper.

Farm to Market Road

Philex also concreted a total of 1400 meters road; concreted 345135 ml
road pavement; 12787 ML pathway concreting construction of 75.53 cubic
meters of wall; 79.92 cubic meters of slope protection for road and building
protection and flood control. These projects addressed the problem on
transportation during rainy season.
Community

Organizational Governance
Coordination with civil groups in decision making
Following the creation of ERCD, the company pursued a tri-sector approach for
community and stakeholder engagement. It has worked with the following groups:
1. Integrated Sewers Association
2. Loom Weavers Association
3. Credit Cooperative
4. Community Consumers Cooperative
5. Pellmell Irrigators Association
6. Informal groups and community leaders

The objectives of the engagement were to:

Address public perceptions regarding the supposed environmental
damage of the mine;
Educate the stakeholders regarding mine operation in order for them to
arrive at informed decisions;
Uplift the socio-economic conditions in the host and adjoining communities;
Provide stable employment for the mines over 2,500 full-time employees,
the sub-contractors, and their dependents;
Train the residents in various skills and aspects of mineral resource
development and safety;
For the dependents, training in alternative livelihood to uplift their economic
well-being; and
For their children, elementary education free of charge and highly
subsidized secondary education.

Community Involvement and Development

Following the engagement, projects and programs that were successfully

implemented include:
 1. Construction of school buildings within the mine site which has an average
enrollment of 5,000 and an operating subsidy from the company amounting
to Ph 25 million annually; Provision of skills program on cottage industries
such as loom weaving, dressmaking, stuff toy making, jewelry making, food
processing, cosmetology, baking, hand-made paper making and bag
making;
2. Training for out of school youth on basic industrial skills such as auto-
mechanic, welding, machine shop, carpentry and operation of heavy
equipment;
3. Upgrading of agricultural and resource-based industries such as livestock,
cut flower production, seedling propagation, tiger grass production, and
honey bee production;
4. Construction of an irrigation system for the vegetable and fruit farmers of
Ligay, Camp 1, Tuba, Benguet;
5. Construction of feeder roads to facilitate the transport of goods, commerce,
and services in Alang/Torree, Ligay, Bas-eg/Pimmingan, Ansagan, and
Tapsan;
6. Free medical and dental services in the companys hospital for the host and
outlying communities, including medical and dental missions in the
neighboring areas;
7. Establishment of livelihood associations for the outlying communities with
company assistance in terms of organization, fund sourcing, and technical
and management training;
8. Information, education and communication programs that inform
communities and residents about mine exploration and development;

Environment
Environmental Work Program
At every stage of every project, PMC inititated Environmental Work program to
devise a blueprint for solutions to potential environmental issues and for
progressive rehabilitation of affected parcels of land. During the operation phase,
projects include Environmental Impact Assessment Program as a key activity in
implementing the program.
Reforestation
Reforestation project that has reforested more than 1,500 hectares of denuded
lands with an annual survival rate of trees planted at 86%. Under the Nursery sa
Bawat Bakuran Program, ECRD has distributed 500,000 seedlings to host and
neighboring communities for propagation. ECRD provides training and technical
assistance and buy-back the seedlings on a later date to help residents and
communities generate additional income;

Effluents and Waste Management Program

Ecological waste management program that involves the sorting out of household
wastes within the mine camp. In 1998, PMC invested in a Materials Recovery
Center (MRC) whereby biodegradable wastes undergo composting process to
produce organic fertilizers. An estimated 500 to 700 kilos of high quality fertilizer
or compost is produced monthly and being sold to organic farmers. The non-
biodegradable wastes, on the other hand, are further segregated into recyclable
and disposable materials. The recyclable materials are sold to numerous recycling
centers while the disposable wastes are brought to a controlled waste dump; and

ISO 14001 Environment Management System Certified

PMC achieved its Environmental Management System (EMS) ISO 14001 re-
certification in 2015 by TUV Rheinland.

The companys ISO 14001 Certification for EMS strengthens strategies in

environmental management through the following:

1. Communication to all stakeholders of PMCs environmental management

commitment through its Environmental Policy and Environmental
Objectives. The company commits to meet environmental targets on year
while ensuring that the communication of environmental performance to all
stakeholders is done through the Annual Sustainability Report.
2. Documentation and Monitoring of the standard procedures and
guidelines on environmental management. PMS has a monitoring
procedure in place to ensure strict adherence and easy access by all
employees.

3. Emergency Preparedness and Response to natural disasters and

emergencies. This helps Philex to identify, prevent, and respond to any
situation by formulating and implementing effective proactive measures.
 Source: 2015 Philex Sustainability Report

PMC put in place water management systems implemented according to

regulatory requirements and with due consideration to the aquatic environment
and downstream users.

1. Water monitoring systems. PMC constantly ensures that offsite

discharges will not adversely affect the environment through its water
monitoring systems and allocated P199.0M on waste management
initiatives in 2015 for this purpose.

2. Storage facility. In its effort to ensure that water flowing through the rivers
is clear of sediments, the companys storage facility is designed with a
catch basin that serves as a reservoir. PMC also operates a decantation
process to filter out undesired particles from its discharged waste water.
The effluents flow through the spillway and down to the Maligaboy and
Baloy Creeks, and eventually to the Agno River in Benguet Province.

3. Monitoring. PMC acquires samples of its upstream and downstream

discharges in parts of the spillway every week to monitor water quality. The
samples are regularly checked to see if the quantity of the effluents meets
the standards set by the Mines and Geosciences Bureau and the
Environmental Management Bureau.

Employees

Organizational Governance
Compensation and Benefits
The Companys Compensation Philosophy/Principles are as follows:
1. Pay-for-Performance
Performance is defined as achievement of results aligned to business
objectives and behaviors, consistent with Philex Values;
Performance given more weight and importance than other pay
components;
 Variable compensation tied to individual and company performance;
and
Reward those who consistently exceed performance objectives.
2. Pay for competencies and skills that are valuable to Philex;
3. Pay competitively versus local industry players and other companies; and
4. Provide a total rewards package that includes pay, benefits, employee
recognition, employee development and a work environment conducive to
high performance.

The Companys Stock Option Plan covers managers in accordance with the above
philosophies and principles. On April 27, 2011, the Companys Board approved
the 2011 Stock Option Plan (the 2011 SOP). The objectives of the 2011 SOP are
to:
i. enable qualified participants, who are largely responsible for the further
growth and development of the Philex Group of Companies to obtain an
ownership interest in the Company;
ii. to encourage long-term commitment to the Group;
iii. to motivate them to continue their efforts in contributing to the long-term
financial success of the Group; and
iv. to encourage other talents needed for the business to join the Group.

Human Rights
Right to organization
Guided by the Universal Declaration of Human Rights and International Labor
Organization (ILO) Declaration on
Fundamental Principles and Rights at
Work, PMC allows its employess to
exercise their rights to freedom of
association and collaborative bargaining.

Three labor unions listed below represent

approximately 91% of the total employees
during the Collective Bargaining
agreement (CBA) negotiations.
1. Philex Rank-and-File
Employees Union-Association
of Labor Unions, for rank-and-file employees of Padcal Mine, comprising
nearly 70% of its workforce;
2. Philex Mines Supervisory Employees Union-Association of
Professional Supervisory Office Technical Employees Union, for
supervisors; and
3. PMC Pasig Employees Union for the Pasig rank-and-file employees.

Labor Practices
Training Skills and Development
Recognizing the importance of human capital to achieve its short and long-term
goals, the Company continues to invest in its people through various programs
and initiatives.
1. Formal Performance Review Process that discusses each employees
development plan. These plans include participation in additional training
sessions and career development programs.

2. Various Training and development sessions. Each employee received,

on average, 16 hours of various training and development sessions, which
 were designed and implemented at the operations level to support local
requirements.

3. Training Orientation Program. All newly hired employees are also

required to complete a 40-hour training orientation program that is focused
on safety, productivity, and policies.

Compensation package

Philex offers a compensation

package that includes a base
salary with comprehensive
benefits, reviewed and adjusted
regularly, and appropriately. In
fact, PMC offers above-industry
daily wage rates for regular and full-time employees in the Cordillera Autonomous
Region (CAR). In addition, job levels and position are identified after a careful
assessment of the applicants qualifications and experience.

Health and Safety

Among the efforts to improve the existing Padcal Mines health and safety
management system is the education of and training for its employees,
accompanied by an internal review of the companys policies and procedures to
promote safety.

1. PMCs Occupational Health and Safety Management System

certification. This guides the company in actively promoting
consciousness and awareness on health and safety among employees.

2. Warning System. The company has a warning system installed to signal

workers in cases of landslides, major earthquakes, and potential cave-ins.
 To prevent the latter, underground blasting activities and drilling activities
are carefully planned to ensure employee safety.
3. Programs and Perks. The Companys programs for the health, safety and
welfare of its employees include
retirement program;
edicine allowance and assistance;
free hospital services
free housing;
educational assistance for employees dependents;
rice subsidy and meal allowance;
life and accident insurance;
recreation, sports & entertainment;
gasoline and transportation allowance; and
bereavement assistance.
Fair Operating Practices
Whistleblowing
The Company has in place the Whistle-Blowing Policy approved on 26 February
2014. Under the policy, procedures for handling of complaints concerning illegal
and/or unethical behavior and resolution and docketing of the case, are
summarized as follows:

1. Submission/Receipt of Complaints. Any (Whistleblower) Complaint

must be made to or filed with the Corporate Governance Office (CGO)
through the appropriate reporting channels. It may also be filed through
any responsible officer of the Company who, in turn, shall refer it to the
CGO for appropriate handling. The Whistleblower may elect to identify
himself or remain anonymous.

2. Preliminary Evaluation. The CGCO shall conduct a review of the

(Whistleblower) Complaint to determine (1) its sufficiency; (2) whether it
pertains to a matter within the scope of this Policy; and (3) the AIU to
which it will be referred for more detailed handling. In the event that the
CGCO finds that the (Whistleblower) Complaint pertains to a matter
outside the scope of this Policy, it should endorse the matter to the
appropriate unit and advise the Whistleblower accordingly.

3. Fact-finding Investigation, Conclusion and Reporting.

 4. Case Monitoring. All (Whistleblower) Complaints received by the CGO
shall have an assigned corresponding case number for monitoring
purposes.

Community Involvement and Development

Retirement and pension plans
PMC has a retirement benefit plan in place, wherein retired employees are
afforded with financial security, even after their serviceable term with the company
ends. This plan is defined with a specific amount of retirement benefits based on
several factors, such as age, years of services, and compensation.

Customers

Organizational Governance
Fair and transparent dealings with customers. It ships all production to
two smelters (offtakers) located outside the Philippines and its relationship
with them is governed by long and short-term contracts. Representatives
of the Company and the customer meet annually to review the preceding
years activities. There are also discussions whenever a shipment is made.

Consumer Issues

Customer health and safety is important for all businesses and remains an utmost
priority for Philex Mining Corp. (PMC or the Company). In line with PMCs Code of
Business Conduct and Ethics, the Company upholds fair and transparent dealings with
its customers. All the transactions and business relationships with customers are
covered by contracts and comply with existing laws and regulations in the country. The
following are the activities conducted to ensure the health and safety of the Companys
customers.

Product Safety. Prior to shipment, the concentrates (the product) undergo

a thorough chemical analysis required by the customer (Pan Pacific
Smelting Co., Inc.) to ensure that these are free from foreign materials that
may be deleterious to the customers health and operations.
The Company insures the product with an internationally-recognized
insurance company, in favor of the customer, and shall provide the
 customer with a certificate signed by the insurance company indicating the
details of the policy.
The Company ensures that the quality of concentrates for shipment to the
customer is suitable for ocean transportation in bulk and meets the
requirements of the International Maritime Organization Code of Safe
Practice for Solid Balk Cargoes.

Safety of Travel. The company assumes the obligation of providing the

vessels, suitable for the shipment of the concentrates, with the following
specifications and conditions:
1. a single deck bulk, seaworthy in all respects
2. with clear holds and hatchway suitable for normal grab discharge
3. classed as 100A at Lloyds or equivalent
4. compliant with the ISM code
5. be no more than twenty (20) years of age; and
6. able to meet berth accommodation restrictions

The Company shall notify the buyer of the date of sailing confirming the
name of the vessel, weight of concentrates loaded, stowage plan and
estimated time of arrival at port of unloading with due consideration to the
suitability of weather conditions for a safe travel.

Customer Safety. To cover for any harm or damage that the shipment may
cause to the customer, an insurance policy, with an agreed upon coverage
and in favor of the customer, is secured from an internationally-recognized
insurance organization.