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I.

INTRODUCTION
The natural resources play a vital role in a country's economic condition and development. It serves as the main sources of every days need of an individual to live, the business to earn profits, and of a government to run the country. But then again those resources just like any other things have also limitations. That is why citizen, business entities and the government have responsibility towards their environment. It was always been said that the Philippines is very rich in natural resources. Which is true, it has fertile, arable lands, diverse flora and fauna, extensive coastlines, and rich mineral deposits. And those things can easily be measured in terms of their monetary value. But the question is do we really get to measure their proper valuation, the effect of the environment on a company and as well as the influence a company has on environment? With the adaptation of environmental accounting in the Philippines, it helps the country in achieving sustainable development, while maintaining a favorable relationship with the community, and pursuing effective and efficient environmental conservation activities. Incorporating measures of natural wealth and depletion in the national accounts would enable not only the governments and businesses but as well as its citizens to better understand environmental risks and the economic condition of the nation.

A. Environmental Accounting in the Philippines


The Philippines is gifted with a wide area of dense forests, home to a wide variety of fauna and flora, providing for clean water and fresh air. Through the years, rapid economic development, industrialization, creeping urbanization and rising population gave rise to the demand for forest products. Areas classified as forest were quickly exploited and others were converted to other uses to support the demands of the economy and the population. What used to be clean environment became polluted. The unabated exploitation of earths natural resources and the resulting degradation of its environment created a heightened level of awareness and concern for the environment among many nations. Philippines: Adoptation of the United Nations system of environmental accounting Environmental accounting in the Philippines started within the year 19901991 with the implementation of the Philippine Environmental and Natural Resources Accounting Project (ENRAP) funded by the U.S. Agency for Environmental Accounting | 1

International Development (USAID) over a nine-year period. Within that period, a parallel effort on environmental accounting was implemented and funded by the United Nations Development Programme (UNDP). The first phase of the project developed the forest accounts; the second assessed the importance of households as a major source of air and water pollution, with implications on the investment required for managing solid waste disposal; the third revealed a higher degree of depreciation for renewable rather than non-renewable resources and the need for a concerted pollution management effort involving not only various sectors of society but several agencies as well; while the last phase concentrated on the institutionalization and policy use and application of environmental accounts. The National Statistical Coordination Board was a partner in the implementation of the project by providing technical support specifically on the SNA concepts and methods, doing some of the ENRAP estimates, attending the training and discussions on environmental account estimates conducted by the project, acting as resource persons on the UN System of Integrated Environmental and Economic Accounting (SEEA) framework and serving as consultant to the project. The NSCB expertise on environmental accounting was clearly enhanced by its participation in ENRAP. In that early years, Philippines and Namibia were the only two developing countries identified that have made an ongoing commitment to environmental accounting. But as the time goes by the need for environmental accounting plays an important role to attain a balance between economic progress and the preservation of the environment and our natural resources in every country and businesses.

B. What is environmental accounting?


Environmental Accounting is a field that identifies resource use, measures and communicates costs of a companys or national economic impact on the environment. Environmental Accounting is short for environmental and natural resource accounting (ENRA). It is also referred to as resource accounting, green accounting, and integrated environmental and economic accounting. It refers to the compilation of data relating to the environment and natural resources into an accounting framework organized in terms of stocks and flows, and the interpretation and reporting of these data. Through the use of assets or capital such as land, equipment, and etc., the production of goods and services is made possible. Environmental accounting is concept which aims to include in the traditional measurement of economic development the cost for using the environment as inputs to production and as a sink for wastes. From the point of view of environmental accounting, land, water, Environmental Accounting | 2

and other natural resources are treated as inputs and assets in the production of goods and services of a country. Environmental accounting therefore estimates the cost of the use of natural resources and its environmental functions and segregates the portion of total expenditures of the various economic sectors spent for protecting and preventing the decline in the quality of the environment. ENRA seeks to track changes in the quantity as well as in the quality of natural resources and the environment over a specified period of time. These changes may be estimated both in physical and monetary terms. Environmental Accounting is a subset of accounting proper, its target being to incorporate both economic and environmental information. It can be conducted at the corporate level or at the level of a national economy through the National Accounts of Countries.

Environmental Accounting Elements and its Benefits Environmental conservation cost (monetary value) Investments and expense related to the prevention, reduction, and/or avoidance of environmental impact, removal of such impact, restoration following the occurrence of a disaster, and other activities are measured in monetary value. Investment amounts are expenditures allocated during a target period for the purpose of environmental conservation. The benefits from these investments are seen over several periods and are recorded as expense during the depreciation period (the amount of depreciable assets recorded during the period). Expense amounts refer to the expense or losses recorded under financial accounting standards resulting from the consumption of goods or services for the purpose of environmental conservation.

Environmental conservation benefits (physical units) Benefits obtained from the prevention, reduction, and/or avoidance of environmental impact, removal of such impact, restoration following the occurrence of a disaster, and other activities are measured in physical units.

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Economic benefits of environmental conservation activities (monetary value) Benefits to a companys profit as a result of carrying forward with environmental conservation activities are measured in monetary value.

Environmental Accounting Disciplines (Scope)

Global environmental accounting (Geographic and Geophysical level) is an accounting methodology that deals areas includes energetics, ecology and economics at a worldwide level. National environmental accounting (Natural resources accounting) is an accounting approach that deals with economics on a country's level. Internationally environmental accounting has been formalized into the System of Integrated Environmental and Economic Accounting, known as SEEA. SEEA grows out of the System of National Accounts. The SEEA records the flows of raw materials (water, energy, minerals, wood, etc.) from the environment to the economy, the exchanges of these materials within the economy and the returns of wastes and pollutants to the environment. Also recorded are the prices or shadow prices for these materials as are environment protection expenditures. SEEA is used by 49 countries around the world including the Philippines.

Corporate environmental accounting (Organization level) focuses on the cost structure and environmental performance of a company. Corporate Environmental Accounting can be further sub-divided into Environmental Management Accounting and Environmental Financial Accounting. Environmental management accounting focuses on making internal business strategy decisions. It can be defined as the identification, collection, analysis, and use of two types of information for internal decision making: 1) Physical information on the use, flows and fates of energy, water and materials (including wastes) and 2) Monetary information on environmentally related costs, earnings and savings.

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Environmental financial accounting is used to provide information needed by external stakeholders on a companys financial performance. This type of accounting allows companies to prepare financial reports for investors, lenders and other interested parties.

C. Importance of Environmental Accounting


Incorporating measures of natural wealth and depletion in the national accounts would enable not only the governments and businesses but as well as its citizens to better understand environmental risks and the economic condition of the nation. With environmental accounting, the state of the environment can be assessed how much resources are available to us, how much renewable resources are being consumed, how fast nonrenewable resources are being depleted, the quality of the environment and the remaining resources, their economic importance/value and how much is spent by man for the protection of the environment. Through environmental accounting, it is possible to reveal economic distortions in the production and consumption activities resulting from subsidies granted to economic activities that are heavily dependent on the environment for waste absorption and natural resources for raw materials.

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II.

INDUSTRY BACKGROUND
A. Mining Industry Mining is a vital industry for techno-industrial societies. Throughout the centuries, people from different corners of the globe mined for different kinds of minerals which they used in their daily lives. However, the advent of neo-liberal capitalism has made the mining industry more powerful and tyrannical. In just a few hundred years, the industry has brought tragedy to various countries and regions. It has destroyed the planet's biosphere, including wildlife, affecting farmers, fishermen, indigenous people, and causing the degradation of the last remaining forests, rivers and oceans of the world, which have existed for millions of years. The mining industry locates valuable minerals in the earth and water and removes them in the most economical and efficient way. Mined materials include energy minerals, such as coal, petroleum, and uranium; nonmetallic minerals, such as limestone, salt, sandstone, and diamonds; and metallic minerals, such as iron ore, gold, and silver. Mining is the discovery, valuation, development, exploitation, processing, and marketing of useful minerals. B. History of Mining in the Philippines Mining in the Philippines started in the pre-colonial period. In a number of regions in the archipelago, indigenous communities mined for gold, copper and many other minerals. Natives from all over the Philippines used gold, pearls, agate, and so on, for body ornaments. Gold was also bartered, through the Arab world, with merchants all over Asia and Europe in the pre-Islamic and Islamic periods. It is noted that many merchants from Luzon (Northern Philippines), Brunei and Jolo traveled continually all throughout Mindanao in search of slaves and gold. The first commercial mine in the Philippines was in Benguet, in Central Luzon, established by the Benguet Mining Corporation. The Spanish colonisers took advantage of whatever mineral resources they could get. In fact, gold was the main reason why Spain colonized the Philippines, mainly for their so-called Royal Service. They even made a law, called Inspeccion de Minas, to inspect the existence of minerals in the archipelago. It was the Americans, however, who made strategic steps to exploit the minerals of the Philippines. They did a geological survey, which validated the Philippines as a mineral-rich country, and issued Act 468, a law that basically gave the government the right to reserve mineral lands for its own purposes. They claimed a number of areas as "reserved areas" for future mining, hence the commercialization of the Benguet gold mining. In the year 1914 in the south, Surigao and other parts of the Caraga region were declared as an "iron reserved" area for future mining. By then, the mining industry in the Philippines was on its way to boom and the Commonwealth US government took Environmental Accounting | 6

more hold of it, forming a Mining Bureau to regulate all potential operations in the future. Up till 1921, there was no large scale mining but many were making a living from small-scale gold mining. Between 1933 and 1941, gold was the dominant and most important mineral in the mining industry. Under the tyranny of the Japanese, Filipinos in many regions of the country were coerced into mining for metals to be used for war weapons in Japanese imperialism. This paved the way for further commercialization, exploitation and degeneration of the Philippines. Large-scale copper mining reached its peak in the 1960s and 1970s. By the late 80s, world demand for copper decreased in favor of gold. However, a number of gold mining companies closed down in that period because of law violations and so gold mining went into decline. With the help of the World Trade Organization, the International Monetary Fund and the World Bank, the neo-colonized Philippines was again coerced to adjust its economic policies to adhere to neo-liberal policies. By 1994, pro-development politicians, such as Gloria Macapagal Arroyo, lobbied for a Mining Bill which would later become the Republic Act 7942 or the Philippine Mining Act of 1995. This law basically gives power over land, resources and life to corporations; many areas became mining hot spots. By 1996, the Philippine mining industry got back on track, allowing offshore companies to operate fully in the 'reserved areas' - a disaster for a number of places in the Philippines. In March 1996, the Marcopper tunnel in Marinduque collapsed. In rough estimation, 1.6 million cubic meters of mine tailings flowed from the mine pit to the Makulapnit and Boac river, trapping 4,400 people in 20 villages. The government declared the Boac river officially dead. The disaster caused massive siltation in downstream communities and coastal areas. Among the tragedies that happened in 1998 is the Malangas Coal Corporation case in Zamboanga Del Sur, Mindanao, where an explosion occurred in the mine site, killing almost a hundred workers and injuring 35 people. In 2004, another disaster took place in Surigao Del Norte, Mindanao. This time it was caused by one of the largest and longest-standing mining corporations in the Philippines, the Manila Mining Corporation (MMC). Three disastrous incidents occurred, where approximately five million cubic meters of waste materials containing high levels of mercury were released, damaging local people's agricultural lands and temporarily poisoning the adjacent Placer Bay. Today, 20 large-scale mining operations, 10 medium-scale and more than 2,000 non-metallic small-scale mining operations exist in the Philippines. Yet, hundreds of mining applications are pending to prey on what's left of the country's resources.

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C. Regulatory Boards, Subordinate Bureaus Department of Environment and Natural resources (DENR) The Department of Environment and Natural Resources (DENR) is the main department of the Philippine government responsible for supervising and managing the different programs and implementing rules governing the use and development of the country's natural resources. Functions and Responsibilities

Formulation and Implementation of rules and policies that involve the management of the environment, and the prevention and control of pollution Supervision of policies and programs that concerns the conservation, use, and replenishment of the country's natural resource Establishment of rules concerning the Philippine forests, lands, mineral source, and wildlife

Subordinate Bureaus
The DENR is divided into a number of bureaus, each assigned to particular areas of the country's natural resources. These bureaus are: Ecosystems Research and Development Bureau (ERDB) was the result of the merger of the former Forest Research Institute (FORI created under P.D. 607) and the National Mangrove Committee of the then Natural Resources Management Center (NRMC) of the former Ministry of Natural Resources. The creation of ERDB is provided under Sec. 17 of Executive Order No. 192 "Providing for the Reorganization of the Department of Environment, Energy and Natural Resources, renaming it as the Department of Environment and Natural Resources and for other purposes. The ERDB is DENR's Research and Development (R&D) arm to assist interested parties who need technical or research-based information pertaining to the forest, grassland and degraded areas, upland farms, coastal zone and freshwater areas, and urban ecosystems. Functions of ERDB Staff Functions Formulates and recommends an integrated research program relating to Philippine ecosystems and natural resources; Assists the Secretary in determining a system of priorities for the allocation of resources to various technological research programs of DENR;

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Provides technical assistance in the implementation and monitoring of research programs; Coordinates all technological researches undertaken by all the regional research offices; and Assesses and translates all recommendable findings into understandable language and presentation and disseminates these findings to end users and clientele.

Research Functions is to generates technologies and provide technical assistance in research development of technologies relevant to the sustainable use of Philippine ecosystems and natural resources. Forest Management Bureau (FMB) integrated and absorbed the powers and functions of the Bureau of Forest Development (BFD) and the Wood Industry Development Authority (WIDA) except those line functions and powers which were transferred to the Regional Field Offices. On June 10, 1987, Executive Order No. 192 reorganized and created the Department of Environment and Natural Resources, and among others, the Forest Management Bureau. It is headed by a Director and assisted by an Assistant Director. It operates with five (5) technical divisions namely: Reforestation Division, Natural Forest Management Division, Community-based Forest Management Division, Forest Land Uses Division and Forest Economics Division. The Forest Management Bureau (FMB) building is located along Visayas Avenue, Diliman, Quezon City, PHILIPPINES.

Land Management Bureau LMB with the Department of Environment and Natural Resources Field Offices is mandated by DENR to administer, survey, manage, and dispose Alienable and Disposable (A&D) lands and other government lands not placed under the jurisdiction of other government agencies. LMB is also in charged with the management and administration of the country's natural resources including the protection of the people's rights over their lands. The LMB is headed by a Director and assisted by an Assistant Director. The director's support staff consists of a Special Assistant to the Director and the Planning and Management Staff (PMS). There are three (3) technical divisions namely: Geodetic Surveys Division, (GSD) Legal Division (LEGAL) and the Land Administration and Utilization Division (LAUD) while two (2) divisions project support services namely; Administrative Division (ADMIN) and Records Management Division (RMD). Functions of LMB One of the program priorities of the LMB is the fast tracking of the cadastral survey project in the country. The program is instrumental

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in efficient patent distribution and accelerating country side development. They also implementing the Oplan:Fake Titles project which primary aim is to curb the issuance of fraudulent and spurious patents/titles and institute legal proceedings for their cancellation. The LMB has also embarked on the creation of a computer-based inventory of land records otherwise known as the LRMIS. This project aims to improve the physical condition of our records and identification of missing records. The Land Management Bureau (LMB) of the Department of Environment and Natural Resources (DENR) and the Chamber of Real Estate and Builders Associations (CREBA) agreed to computerize the LMBs location monuments registry at no cost to the government, in an effort to ensure the safety of records vital to the countrys land titling administration.

Protected Areas and Wildlife Bureau

A Bureau of the Department of the Environment and Natural Resources of the Republic of the Philippines, is the conservation of the country's biological diversity through:

Establishment, management and development of the National Integrated Protected Areas System (NIPAS) Conservation of Wildlife Resources Information and Education for Nature Conservation PAWB envisions a perpetual existence of biological and physical diversities in a system of protected areas and such other important biological components of the environment managed by a well-informed and empowered citizenry for the sustainable use and enjoyment of present and future generations.
Environmental Management Bureau (EMB) is a line bureau of the Department of Environment and Natural Resources who is mainly responsible for the implementation and enforcement of RA 8749, otherwise known as the Philippine Clean Air Act of 1999. Its primary goal is to come out with a comprehensive national program to achieve and maintain air quality that meets the National Ambient Air Quality Guidelines for Criteria Pollutants and their emission standards, while minimizing the possible associated negative impacts on the countrys economy. Its implementing rules and regulations contain specific requirements that prohibit vehicular and industrial sources from emitting pollutants in amounts that cause significant deterioration of air quality.

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Mines and Geosciences Bureau (MGB) is the primary government agency under the Department of Environment and Natural Resources, pursuant to Executive Order No. 192 on June 1987. It is responsible for the conservation, management, development and proper use of the countrys mineral resources including those in reservations and lands of public domains. It took the functions of the Bureau of Mines and Geosciences but minus the line functions that were transferred mainly to the DENR regional offices. It also absorbed the functions of the abolished Mineral Resources Development Board (MRDB), and the Gold Mining Industry Assistance Board (GMIAB).

Other Offices and Agencies


The different offices and agencies that ensure the efficiency and effectiveness of DENR's projects include the following: National Mapping & Resource Information Authority Laguna Lake Management Authority Natural Resources Development Corp. Pasig River Rehabilitation Commissions Land Registration Authority National Commission on Indigenous People National Water Resource Board National Solid Waste Management Commission River Basin Control Office Philippine Forest Corporation Land Administration Management Project Environmental Law Enforcement Task Force

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III.

ENVIRONMENTAL NEWS AND CURRENT EVENTS


A. PHILEX MINING

Philexs SMMCI adopts Surigao river for environmental protection


Friday, August 23, 2013

'Silangan has been a blessing for us'

The Silangan Mindanao Mining Co., Inc. (SMMCI), a Philex Mining Corp. subsidiary, has adopted a portion of Timamana River in this province as part of the companys environmental -protection program. Alfa Moog, SMMCI environment manager, announced this following the cleanup drive conducted by the company on the two tributaries of the river, whose water ultimately flows to the south of Lake Mainit, the countrys fourth-largest lake in terms of surface area, and the deepest, reaching a maximum depth of 223 meters. She said that 40 SMMCI staff trooped June 29 to the tributaries and worked with residents of Purok 3, in Tubod towns Barangay Timamana, and Purok 1 of Barangay Boyongan, Placer, in cleaning up the river systems with trash and debris. Yulo Perez, SMMCI president and COO, said the company intends to play an active role in taking care of the environment not just in its host-community but also in the entire province of Surigao del Norte. As a matter of policy, environmental stewardship is an integral part of SMMCIs activities in Silangan, even if it is still in the exploration phase, he stressed. In fact, SMMCI spent about P33.47 million for various environmental programs last year. Our goal this year is not just to continue with these programs, but also to expand our involvement in protecting the environment.

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Members of Philex Minings environment team at SMMCI cleaning up a tributary of Timamana River, in Purok 1 of Barangay Boyongan, Placer, Surigao del Norte, June 29 | ALT

The cleanup of Timamana River near a cockfight arena and a recycling center in Tubod was part of and concluded SMMCIs activities carried out in June to celebrate the Environment Month. This has made residents realize the importance of keeping the river clean by disposing their garbage properly. This was a fitting culmination activity for the Environment Month, Ms. Moog said. The clean up was also SMMCIs way of supporting the Adopt-an-Estero program of the Environmental Management Bureau [EMB] under the Department of Environment and Natural Resources. On June 7, EMB Region 13 Director Metodio Turbella requested SMMCI to join the other supporters of EMBs Water Body Program in the orchestrated cleanup of adopted estero [drainage canal], creek, and river with schools and other sectors of the community. Sonieta Campos, chairperson of Brgy. Boyongan, said continuous downpour at the start of the rainy season had worsened the clogging of Timamana River last June, resulting in floods extending to the main road after three consecutive days of heavy rainfall. Its a good thing we are part of Silangans host-community because its people are on hand to help us carry out our environmental projects, such as the cleanup of Timamana River, she added. She also noted the various social projects that SMMCI has been implementing for its host- and neighboring communities. She said, Silangan has been a blessing for us. We have greatly benefited from its infrastructure projects, such as the construction of school buildings, a drainage system, and a health center.

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Philex to raise TSF3s tails beach to 608 ML for more stability


Saturday, November 9, 2013

Open spillway would be able to channel up to 1,500 mm of rain over 24 hours Philex Mining Corp. aims to raise to between 602 and 608 meters the tailings beach in a storage facility at Padcal Mines, as part of its move to further stabilize this for the continued production of gold and copper in Benguet. The beach at the Tailings Storage Facility No. 3 (TSF3), where Philex Mining has been dumping about 26,000 tons of tails daily from March 8, is currently at 597 meters above sea level (masl), according to Libby Ricafort, vice president at Philex Mining and resident manager of Padcal. We must continue with our operations at the current pace, in order to bring our TSF3 at its former condition before the Aug. 1, 2012 accident, he stressed. At 602 masl, little water will go into Penstock B while at 608 masl, the latter may be decommissioned. Building an open spillway at and creating a beach in TSF3 are part of the government-approved urgent remediation measures for the pond. The beach is done by filling up the void created by a sinkhole when TSF3 discharged nontoxic water and sediment onto Balog Creek after historically unprecedented rains brought about by two successive typhoons. Since August, water has been flowing onto the open spillway from TSF3, whose two chutes were done in June while the third and last one will be undertaken during the next dry season. Upon full completion, the spillway, whose each chute measures 12 meters wide and 300 meters long, will be able to channel up to 1,500 millimeters (mm) of rain over 24 hours or more than thrice the 455 mm of rain that Typhoon Ondoy dumped over a 24-hour period in 2009. According to government regulation, an open spillway must be designed in such a way that it could withstand a flood event having an unusual rainfall with a 1-percent chance of occurring at any given time. For TSF3 and its open spillway, this unusual rainfall would be equivalent to 1,000 mm in 24 hours. Padcals urgent remediation measures have progressed significantly since government regulators allowed Philex Mining to resume operations, Michael Toledo, SVP for Corporat e Affairs at Philex Mining, said. Mr. Ricafort said the 602 meter level (ML) of tails at TSF3 can be achieved in between nine and 12 months from July, while having the 608 ML may take another two years, emphasizing that the less than 100-hectare pond is cone-shaped and, therefore, becoming wider from bottom to top. He added that there is now a limited amount of water going into the ponds Penstock B, which may be decommissioned once the tails beach rises to between 602 ML and 608 ML while the offset dike, which is being reconstructed, reaches 615 ML from its current 611 ML. It may be recalled that Philex Mining had condemned TSF3s Penstock A and its connecting Tunnel A and sealed these off with concrete after the accident. Penstock B and Tunnel B, on the other hand, may still be used if needed. The quality of water at tributaries near the Padcal mine site, including Balog Creek and Agno River, and even downstream to the irrigation canal in Pangasinan, has passed regulatory limit and remained below the effluent standards set by government, while fish samples were within the criteria imposed by foreign environmental commissions.
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Philex considering programs


Monday,

vetiver
July

for

environment,
8,

livelihood
2013

The plant is effective for slope stabilization, erosion control, and rehab of contaminated areas . Philex Mining Corp. is considering growing and propagating vetiver grass for the livelihood of communities hosting its mine sites, besides using the plant to help control algal bloom to regulate oxygen for fish and other aquatic life in ponds. This developed following a proposal by Vetiver Farms to train Philex Mining personnel in the planting and propagation technique surrounding the plant, which is effective for slope stabilization, erosion control, and rehabilitation of contaminated areas. Despite the fact that the water coming from our tailings dam is nontoxic, we continue to look for ways to make our ponds more habitable to fish and other aquatic life, Michael Toledo, senior vice president for Corporate Affairs at Philex Mining, said. Already, a team from Vetiver Farms headed by Mary Noah Manarang has installed five pontoons of vetiver at three small fishponds created by Philex Mining at Balog Creek, and another 15 pontoons at Padcals Tailings Storage Facility No. 3 (TSF3). Measuring two meters by one meter and made of bamboo and meshing, each pontoon contains 240 vetiver-planting slips, which are divided into 24 balled-out groups each containing 10 plants. In two months, about 800 to 1,000 new slips may be harvested from these pontoons. Ms. Manarang, the first and only Filipino among the worlds 92 vetiver technicians certified by the Vetiver Network, said her Manila-based company is to conduct a study on the effects of vetiver plants on Balog Creek and TSF3. The network is a US-based NGO that supports the research on and development of vetiver and its applications. We are hoping that this will turn out fine, as we are considering propag ating vetiver for the long term to meet our various needs, Rudy Saguid, environment manager at Padcal, in Benguet, said of the plant whose deep, thick-root system spreads vertically.

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Philex

Mining

team

creating

pontoon

for

vetiver

to

be

floated

on

fishpond

at

Balog

Creek,

June

16

| BUTCH

FRANCO

TSF3s nontoxic water drains into Agno River through Balog Creek, which has been cleaned off of silt by Philex Mining following the tailings-leak accident last Aug. 1. Rehabilitation efforts have continued following the go-signal given by government regulators on July 5 to continue with the urgent remediation of TSF3 while they are reviewing technical details. Saying that vetiver helps eradicate the oversupply of nitrogen and phosphorus from the water due to topsoil erosion, Ms. Manarang calculated that the 90-hectare TSF3 would need at least 300 pontoons of vetivers from the start for the sustainable and cost -efficient propagation of the plant for all the needs of TSF3. She added that her team has also proposed to Philex Mining that vetiver grasses be planted near the silt traps installed at Balog Creek. She said vetiver, which grows in various types of soilfrom porous sand to dense clayand on water, could likewise be used for the livelihood of a community since there is high demand for its roots in Japan, where they stuffed these in pillows, and The Netherlands, among other countries. She revealed that a company in Tokyo, for instance, has asked Vetiver Farms for one ton of vetiver roots per monthsomething which her company cannot and will not provide all, stressing that their focus is the promotion of the plant for its bioengineering and environmental application. She also said that a Dutch company has been looking for sources for hats with vetiver roots, as these are good repellent against mosquitoes and other insects. She added that vetiver, which is also a good source for essential oil, is used by one of the worlds leading perfume manufacturers.

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B. OTHER NEWS INDUSTRY

AND CURRENT EVENTS

RELATING TO THE

Leyte coastal rehab to cost P350M


November 28, 2013

MANILA, PhilippinesThe Department of Environment and Natural Resources (DENR) has earmarked almost P350 million for the restoration of the green wall of mangrove and natural beach forests on the coasts of the Eastern Visayas that was the worst hit by Supertyphoon Yolanda. Environment Secretary Ramon Paje on Wednesday said the DENR would lead a massive coastal rehabilitation of the region, particularly Leyte and its capital city, Tacloban, and has set aside some P347 million for the program. Tacloban is a major concern given its being a major population center, but the undertaking will cover practically the entire eastern seaboard of Eastern Visayas, Paje said. The objective is to restore the regions degraded coastal forests and to make its coastline s less vulnerable to extreme weather events. It is clear in the law that we cannot allow people to build houses in areas for mangroves and beach forest, said Paje, referring to Presidential Decreee 1067, or the Philippine Water Code. Under Article 51 of that code, banks of rivers and streams and the shores of the seas and lakes throughout their entire length and within a zone of three meters in urban areas, 20 meters in agricultural areas and 40 meters in forest areas, along their margins are subject to the easement of public use in the interest of recreation, navigation, floatage, fishing and salvage. Paje said the situation in Eastern Visayas necessitates a display of political will from their local government officials to restore their mangrove areas and beach forests. He noted that the affected coastlines were once mangroves and beach forest areas but most had been converted into settlement areas by squatters or for development activities. Had the mangroves in Leyte and Eastern Samar not been decimated, the storm surge in those areas would have been dissipated by 70 to 80 percent of its strength, Paje said. He cited a study by the Department of Science and Technology indicating that the strength of an eight-meter storm surge is concentrated within the lower six meters with the upper two meters as only having tidal currents. The surge can only destroy the leaves, but it cannot uproot the mangroves because they are so deep rooted and strong that they will regrow in time, Paje said.

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Aquino urged to stop pushing coal power plants


Octeber 22, 2013 MANILA, Philippines A civil society network advocating for reforms to help the country adapt to climate change expressed dismay on Tuesday, over the Aquino administrations push for coal -fired power plants, and renewed its call on government to tap cleaner and less wasteful sources of energy. Aksyon Klima Pilipinas, in a statement, said it was disappointed with the apparent priority given to coal by government in supplying the countrys energy needs. We are dismayed to see the governments renewable energy plans go to waste i n favor of dirty and harmful energy. Our message is simple: Coal will cost us the climate, which in turn will cost all of us our lives and livelihoods, Voltaire Alferez, national coordinator of Aksyon Klima, said. It looks cheaper in the short term compared to renewable energy, but our lives and our environment are much more costly, he said. Aksyon Klima noted that the Renewable Energy Law was passed in 2008, and the government later on followed it up with the National Renewable Energy Plan in 2010 seeking to triple the renewable energy capacity of the country by 2030. Moreover, Aquino signed in 2011 the National Climate Change Action Plan, which identified sustainable energy as a priority, it said. However, Aquino has defended the building of more coal-fired power plants in his last State of the Nation Address by citing the limitations of renewable energy, the group said. In addition, the Philippine Development Plan prioritizes coal-fired power plants in the next several years of this administration, affirming the presidents SONA pronouncement, it added. Renewable energy technologies continue to improve while the costs continue to decrease, Alferez said. In the meantime, the sea continues to warm and rise, while typhoons are becoming more frequen t and intense because of the burning of coal and other fossil fuels. [Mr. Aquino] has more than enough reasons to invest in renewable energy, but has yet to step up his game, he said. Forty-three percent of carbon dioxide emissions from fuel combustion were produced from coal in 2010, compared to 36 percent from oil and 20 percent from gas, according to a 2012 publication of the International Energy Agency. On the other hand, a 2011 United States study estimated that the economic, health-related, environmental, and other impacts of coal cost the United States a third to over one-half a trillion dollars annually.

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Mining industry sees role in typhoon-hit areas' rehabilitation


November 20, 2013 BAGUIO CITY The Philippine mining industry sees its essential role in the massive reconstruction in areas severely devastated by super typhoon Yolanda (Haiyan). Mining industry leaders and stakeholders converging here for four days until Friday said their role in the rehabilitation and reconstruction of typhoon-devastated Leyte province and nearby areas in the Visayas will be very important. Engr. Louie Sarmiento, president of the Philippine Mine Safety Association (PMSEA) spearheading the Annual National Mine Safety and Environment Conference, said the industry sees the devastation as an opportunity to prove that it can play a vital role in national reconstruction and rehabilitation. Bohol for one is limestone rich, Sarmiento said, adding that that resource in the making of cement is important in the physical reconstruction of the area and the rest of the Yolanda-damaged areas in the Visayas. "It is the mining industry that has the technical capability to extract that mineral richness. It is the time when the industry should shine and show its imporantance," Sarmiento said. Samuel Paragas, director of the Mines and Geosciences Bureau Region 4-A, dispelled the mindset that the mining industry is the reason behind various problems in the communities. He said that instead, the industry is the backbone of every nation.

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IV.

ENVIRONMENTAL POLICIES AND ISSUES

P.D. 984 Pollution Control Law


aims to prevent, abate and control pollution of water, air and land for the more effective utilization of the resources of this country.

P.D. 1151 Philippine Environmental Policy


- defines the general policies on he pursuit of a better quality of life for the present and future generations and mandates the undertaking the environmental impact assessments for all projects, which may significantly affect the environment.

P.D. 1152 Philippine Environmental Policy


- defines the policy objectives and the strategies for the various aspects of environmental management, such as air and water quality management, natural source development, land management, and waste management. It launches a comprehensive national program of environmental protection and management, with reference to policies and standards of noise, air quality, water quality, classification of water and waste management.

P.D. 1586 defines the framework for the implementation of the environmental impact
assessment as the mechanism to reconcile the impacts of development projects on society and the physical environment.

P.D. 1219 providing for the protection of coral ecosystems. P.D. 1067 Water Code of the Philippines
- adopts adequate measures to conserve and regulate the use of water in commercial, industrial and residential areas. It also provides other policy guidelines in water quality and management of water resources.

P.D. 463 amended the Mining Act of 1936, requires all mining leaseholders to comply
with Pollution Control Laws and regulations and provide for penalties for noncompliance.

P.D. 1198 reinforces this provision for restoration of mined-out areas to this original
condition to the extent possible.

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P.D. 1251 imposes fines on tailings and mine wastes and the fund generated is used
to pay for the damages to land, agricultural crops, forests products, aquatic resources and infrastructures caused by pollution for mining operations.

P.D. 600 ( amended by P.D. 979) Water Pollution Control


- prohibits the discharge of oil, noxious liquid substances, and other harmful substances into the countrys inland and territorial waters.

R.A. 9003 The Solid Waste Management Act of 2001


- An act providing for an ecological solid waste management program, creating the necessary institutional mechanisms and incentives, declaring certain acts prohibited and providing penalties, appropriating funds therefor, and for other purposes.

R.A. 9275- also known as the Philippine Clean Water Act of 2004 an act
providing a comprehensive water quality management and for other purposes.

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V.

ENVIRONMENTAL ACCOUNTING
A. PFRS 6 - EXPLORATION RESOURCES AND EVALUATION OF MINERAL

Exploration for and evaluation of mineral resources mean the search for mineral resources, including minerals, oil, natural gas and similar non-regenerative resources after the entity has obtained legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource. Exploration and evaluation expenditures are expenditures incurred in connection with the exploration and evaluation of mineral resources before the technical feasibility and commercial viability of extracting a mineral resource is demonstrable. Exploration and evaluation expenditures include the following: 1. 2. 3. 4. 5. a. Acquisition of rights to explore Topographical, geological, geochemical and geophysical studies Exploratory drilling Trenching Sampling Activities in relation to evaluating the technical feasibility and commercial viability of extracting a mineral resource. b. General and administrative costs directly attributable to exploration and evaluation activities. Expenditures related to development of mineral resources, for example, preparation for commercial production, such as building roads and tunnels, cannot be recognized as exploration and evaluation expenditures. Exploration and evaluation asset The exploration and evaluation expenditures may qualify as exploration and evaluation asset. However, the standard does not provide a clearcut guidance for the recognition of exploration and evaluation asset. Measurement and classification If an entitys accounting policy results in the recognition of an exploration and evaluation asset, such asset shall be measured initially at cost. After initial recognition, an entity shall apply either the cost model or the revaluation model. Exploration and evaluation asset is classified either as tangible asset or an intangible asset. For example, vehicles and drilling rigs would be classified as tangible assets and drilling rights would be classified as intangible assets. Environmental Accounting | 22

Impairment PFRS 6 provides that exploration and evaluation asset shall be assessed for impairment when facts and circumstances suggest that the carrying amount may exceed recoverable amount. Facts and circumstances that may indicate impairment include: a. The period for which the entity has the right to explore in a specific area has expired and is not expected to be renewed. b. Substantive expenditure for exploration and evaluation is neither budgeted nor planned. c. The exploration and evaluation activities have not led to the discovery of commercially viable quantity of mineral resource and the entity has decided to discontinue such activities. d. Sufficient data indicate that the carrying amount of the exploration and evaluation asset is unlikely to be recovered in full from successful development by sale.

Wasting assets Wasting assets are material objects of economic value and utility to man produced by nature. Actually, wasting assets are natural resources. Natural resources usually include coal, oil, ore, and precious metals like gold, silver and timber. Wasting assets are so called because these are physically consumed and once consumed, the assets cannot be replaced anymore. If ever, the wasting assets can be replaced only by the process of nature. Natural resources cannot be produced by man. Thus, wasting assets are characterized by two main features: 1. The wasting assets are physically consumed. 2. The wasting assets are irreplaceable. 3. Cost of wasting asset Entities follow a wide variety of practices in accounting for an extractive industry. At present, IFRS does not address wasting assets. There is no comprehensive standard that is applicable to the extractive or mining industry. In general, the cost of wasting assets can be divided into four categories, namely: a. b. c. d. Acquisition cost Exploration cost Development cost Estimated restoration cost

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Acquisition cost Acquisition cost is the price paid to obtain the property containing natural resource. Unquestionably, this is the initial cost of the wasting asset. Generally, the acquisition cost is charged to any descriptive natural resource account. If there is a residual land value after the extraction of the natural resource, the portion of the acquisition cost applicable to the land may be included in the natural resource account or may be set up in a separate account and the remaining cost should be charged to the natural resources account. Actually, the land value is the residual value of a wasting asset for purposes of computing depletion. Thus, this should be deducted from the total acquisition cost to get the depletable amount. Exploration cost The exploration cost is the cost incurred in an attempt to locate the natural resource that can economically be extracted or exploited. The exploration may result in either success or failure. Accordingly, the exploration cost may be accounted for following two methods, namely successful effort method and full cost method. Under the successful effort method, only the exploration cost directly related to the discovery of commercially producible natural resource is capitalized as cost of the resource property. The exploration cost related to dry wells or unsuccessful discovery is expensed in the period incurred. Under, the full cost method, all exploration costs, whether successful or unsuccessful, are capitalized as cost of the successful resource discovery. Development cost Development cost is the cost incurred to exploit or extract the natural resource that has been located through successful exploration. Development cost may be in the form of tangible equipment and intangible development cost. Tangible equipment includes transportation equipment, heavy machinery, tunnels, bunker and mine shaft. The cost of tangible equipment is not capitalized as cost of natural resource but set up in a separate amount and depreciated in accordance with normal depreciation policies. Intangible development cost is capitalized as cost of the natural resource. Such cost includes drilling, sinking mine shaft and construction of wells. Restoration cost

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The resource property may be sold after extraction activities are complete. The amount expected to be derived from such sale represents the residual value of the resource property. To prepare the property for sale, however, restoration cost may be necessary to bring the property to its original condition. Such restoration cost may be added to the cost of resource property or netted against the expected residual value of the resource property. Under paragraph 16 of PAS 16, the estimated cost of restoring the property to its original condition is capitalized only when the entity incurs the obligation when the asset is acquired. In other words, the restoration cost must be an existing present obligation although the amount and timing are uncertain.

DEPLETION The removal, extraction or exhaustion of a natural resource is called depletion. Depletion is the systematic allocation of the depletable amount of a wasting asset over the period the natural resource is extracted or produced. In essence, however, depletion is recognized as the cost of the material used in production and thus becomes the finished product of the extractive entity since the wasting asset is conceived as the total cost of the materials available for production. Depletion Method Normally, depletion is computed using the output or production method. Following the output method, depletion is computed as follows: The depletable amount of the wasting asset is divided by the units estimated to be extracted to obtain a depletion rate per unit. The depletion rate per unit is then multiplied by the units extracted during the year to arrive at the depletion for the period. Example: A wasting asset entity has acquired the right to use a property to explore a natural resource. The acquisition cost is P5, 500,000, the related exploration costs amount to P3,500,000, and development costs incurred in erecting wells and drilling the deposit are P6,000,000. Total costs of the wasting asset therefore amount to P15,000,000. It is estimated that the resource deposit is approximately 1,000,000 units. The depletion rate per unit is computed as follows:

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Depletion rate per unit =

P15,000,000 1,000,000units = P15

If 350,000 units are extracted in the first year of operations, then the depletion for the year is P5,250,000, computed by multiplying the production of 350,000 units by the rate of P15. The entry to record depletion is: Depletion Accumulated Depletion P5,250,000 P5,250,000

In the income statement, the depletion is classified as part of the cost of production or cost of sales. If a statement of financial position is prepared at the end of the first year, the wasting asset would be shown as a separate line item as follows: Resource deposit, at cost Accumulated depletion Carrying Amount Revision of depletion rate Not frequently, the original estimate of the resource deposit has to be changed either because new information is available ir because production processes have become more sophisticated. Accordingly, the procedure is to revise the depletion rate on a prospective basis, that is, by dividing the remaining depletable cost of wasting asset by the revised estimate of the productive output. For instance, assume that, in the preceding example, additional development costs of 3,750,000 are incurred in the second year, and recoverable deposits are estimated to be 1,350,000 at the beginning of second year. The depletion rate per unit for the second year is computed as follows: Original cost of wasting asset: Original cost of wasting asset P15,000,000 Additional development costs in second year 3,750,000 Total P18,750,000 Accumulated depletion (5,250,000) Remaining depletable amount P13,500,000 Depletion rate per unit (13,500,000/1,350,000 units) = P10 Environmental Accounting | 26 P15,000,000 (5,250,000) P9,750,000

If 300,000 units are extracted in the second year, the entry to record the depletion for the period is: Depletion Accumulated Depletion Depreciation of Mining Property The depreciation of equipment used in mining operations is based on the life of the equipment or the life of the wasting asset, whichever is shorter. If the life of the equipment is shorter the straight line method of depreciation is normally used. But if the life of the wasting asset is shorter, the output method of depreciation is frequently used. However, if the mining equipment is movable and can be used in future extractive project, the equipment is depreciated over its useful life using the straight line method. Example: A natural resource deposit is estimated to contain 450,000 units. Heavy equipment necessary to extract the deposits is acquired at a cost of P9,000,000. The life of the equipment is 10 years. If it is estimated that 30,000 units will be extracted each year, then the deposit will be exhausted in approximately 15 years (450,000 units divided by 30,000 units), which is longer than the 10-year life of the equipment. Accordingly, the equipment should be depreciated over 10 years following the straight line method giving an annual depreciation of P900,000. (P9,000,000 divided by 10 years). However, if it is estimated that 50,000 units would be extracted each year, then the deposit would be exhausted in approximately 9 years, which is shorter than the 10-year life of equipment. Thus, depreciation on the equipment should be based on the life of the deposit following the output method of depreciation. The depreciation for the first year is computed as follows: Depreciation per unit (9,000,000 / 450,000 units) = P20 Depreciation (50,000 units extracted x P20) = P1,000,000 P3,000,000 P3,000,000

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Shutdown In the year of the shutdown, the remaining carrying amount of the equipment is divided by the remaining life of the equipment to arrive at the depreciation. Thus, in the preceding example, if there is a shutdown in the second year, the depreciation is determined as follows: Equipment, at cost Accumulated depreciation Carrying Amount (beginning of 2nd year) P 9,000,000 (1,000,000) P8,000,000

Depreciation for second year (8,000,000/9 years) = P888,888 When operations are resumed, the depreciation is again computed following the output method. But in such case, a new depreciation rate per unit is computed by dividing the remaining carrying amount of the equipment by the remaining or revised estimate of the deposit. Thus, if in the third year, operations are resumed and 60,000 units are extracted, the depreciation on the equipment is computed as follows: Equipment, at cost Accumulated depreciation (1,000,000 +888,888) Carrying Amount (beg of third year) Original estimate of deposit Less: Extracted in first year Remaining estimate if deposit P9,000,000 (1,888,888) P7,111,112 450,000 units 50,000 units 400,000 units P 17.78 P1,066,800

Depreciation rate per unit (7,111,112/400,000 Depreciation for the third year (60,000 units x 17.78 Wasting asset doctrine

Under this doctrine, a wasting asset corporation or an entity engaged in the extraction of a natural resource can legally return capital to shareholders during the lifetime of the corporation. Accordingly, a wasting asset corporation can pay dividend not only to the extent of retained earnings but also to the extent of accumulated depletion.

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VI.

THE COMPANY

A. CORPORATE PROFILE

Philex Mining Corporation and its subsidiaries have two kinds of business: the metals business under Philex mining and the energy and hydrocarbon business under Philex Petroleum Corporation.

Philex Mining was incorporated in the Philippines in 1955 and was listed on the Philippine Stock Exchange on Nov. 23, 1956. Philex Mining, Philex Gold Philippines, Inc. (PGPI), Silangan Mindanao Exploration Co., Inc. (SMECI), and Silangan Mindanao Mining Co., Inc. (SMMCI) are primarily engaged in large-scale exploration, development, and utilization of mineral resources. PGPI and SMECI are both wholly owned subsidiaries of Philex Mining through a holding company and incorporated in the Philippines. The Padcal Mines in Benguet are operated by Philex Mining while the Bulawan Mine in Negros Occidental are operated by PGPI between January 1996 and June 2002.

Philex Petroleum and its subsidiaries Forum Energy plc (FEP) and FEC Resources, Inc. (FEC) are primarily engaged in oil and gas operation and exploration, holding participating interest in serveral oil and gas production and exploration activities through their investee companies.

Philex Mining's exploration strategy in the late 1980s was focused on gold exploration, resulting in the acquisition and staking of a number of primarily gold claimholdings throughout the Philippines. In July 1996, these gold assets, including the Bulawan Project, were spun off to PGPI. Situated in Negros Occidental, the Bulawan mines commenced commercial production in January 1996 and continued until June 2002, when it was decommissioned due to unfavorable metal prices. It has since been placed on a care-andmaintenance phase.

Currently, SMECI, through its subsidiary, SMMCI covers the Boyongan and Bayugo deposits under the Silangan Project which is under prefeasibility stage. As of December 31, 2011, Philex Mining has 45,085 stockholders, with 38.71 percent of its outstanding shares owned by foreign nationals and institutions.

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B. MISSION-VISION

Vision Our vision is to be a highly respected, world-class natural resource company committed to deliver excellent value to its investors, employees, and other stakeholders.

Mission We are a responsible mining corporation that discovers and processes minerals and energy resources for the use of society.

C. ORGANIZATIONAL CHART

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D. CORPORATE STRUCTURE

E. FACTS

First mining company in the Philippines to have earned the International Standard Organization (ISO) 14001 certification since 2002. Largest mining company in the Philippines Made the first underground block cave mine in the Far East Has produced 5.3 million ounces of gold and 2.0 billion pounds of copper to-date from Padcal mine. Padcal Mines (Benguet), which Philex has been operating since 1958, is the first underground block cave operation in the Far East. Silangan Project (Surigao del Norte) combines the Boyongan and Bayugo deposits, which are comprised of gold, copper, and silver.

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Philex is exploring the possibility of re-opening the Bulawan Project (Negros Occidental), which is now on care-and-maintenance phase

F. ACCOUNTING PECULIARITIES

Exploration and Evaluation of Mineral Resources (IFRS 6) Exploration for and evaluation of mineral resources mean the search for mineral resources, including minerals, oil, natural gas and similar non-regenerative resources after the entity has obtained legal rights to explore in a specific area, as well as the determination of the technical feasibility and commercial viability of extracting the mineral resource. Exploration costs These are assets to which an expenditure can be associated with finding specific mineral resources. The entity must develop its own accounting policy for the recognition of this asset. Classification: can either be tangible or inatngible asset. Initial Measurement: shall be measured at cost Measurement after recognition: the entity shall apply either the cost model or the revaluation model. If the revaluation model is applied it shall be with the classification of assets Impairment Recognition and Measurement: shall be assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. If it exceeds the recoverable amount, the entity shall be measure, present and disclose the resulting impairment loss in accordance to IAS 36 Exception: An entity shall determine an accounting policy for allocating exploration and evaluation assets to cash- generating units or groups of cash-generating units for the purpose of assessing such assets for impairment. Each cash-generating unit or group of units to which an exploration and evaluation asset is allocated shall not be larger than an operating segment determined in accordance with IAS 14.

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Royalty fees These are payments to the indigenous cultural community as part of a trust fund for their socio-economic well being, upon utilization of the minerals by the entity. Valuation: At least 1% of gross revenue if ancestral land is developed for mining from the Social Development Provisions Of The Mining Act of 1995 of the Philippines.

Provision for mine rehabilitation fund Fund to rehabilitate an excavated mined-out, tailings covered and disturbed areas to the condition of environmental safety. The fund shall be deposited as a trust fund in a government depository bank and used for physical and social rehabilitation of areas and communities affected by mining activities and for research on the social, technical and preventive aspects of rehabilitation. Valuation: Variable Penalty: Failure to fulfill the above obligation shall mean immediate suspension or closure of the mining activities of the contractor/permittee concerned.

Environmental Protection Fund To finance this fund : a) A national environment protection fee in an amount equivalent to ten percent (10%) of the total fees charged, but not more than One hundred pesos (P100.00) for every business or non-business permit or license issued by the government. b) An allocation equivalent to ten percent (10%) of the total unclaimed bank balances escheated in favor of the State under Republic Act No. 3936

IFRIC 5 - Decommissioning restoration & environmental rehabilitation funds Decommissioning restoration and environmental rehabilitation fund - purpose is to segregate assets to fund some or all of the costs of decommissioning plant (such as a nuclear plant) or certain equipment (such as motor cars). or in undertaking environmental rehabilitation (such as rectifying pollution of water or restoring mined land) The contribution in the above funds may be through voluntary or regulatory obligations. The funds may have any of the following structures. Environmental Accounting | 33

(a) Funds that are established by a single contributor to fund its own decommissioning obligations whether for a particular site or for a number of geographically dispersed sites. (b) Funds that are established with multiple contributors to fund their individual or joint decommissioning obligations when contributors are entitled to reimbursement for decommissioning expenses to the extent of their contributions plus any actual earnings on those contributions less their share of the costs of administering the fund. Contributors may have an obligation to make additional contributions for example in the event of the bankruptcy of another contributor. (c) Funds that are established with multiple contributors to fund their individual or joint decommissioning obligations when the required level of contributions is based on the current activity of a contributor and the benefit obtained by that contributor is based on its past activity. In such cases there is a potential mismatch in the amount of contributions made by a contributor (based on current activity) and the value realizable from the fund (based on past activity). Recognition: The contributor shall recognize its obligation to pay decommissioning costs as a liability and recognize its interest in the fund separately unless the contributor is not liable to pay decommissioning costs even if the fund fails to pay When a contributor has an obligation to make potential additional contributions, for example in the event of the bankruptcy of another contributor or if the value of the investment assets held by the fund decreases to an extent that they are insufficient to fulfill the funds reimbursement obligations. this obligation is a contingent liability that is within the scope of IAS 37. The contributor shall recognize a liability only if it is probable that additional contributions will be made.

IFRIC 20 Stripping Costs in the Production Phase of a Surface This interpretation applies to waste removal costs (stripping costs) that are incurred in surface mining activity during the production phase of the mine (production stripping costs). If the benefit from the stripping activity will be realized in the current period, an entity is required to account for the stripping activity costs as part of the cost of inventory. When the benefit is the improved access to ore, the entity should recognize these costs as a non-current asset, only if certain criteria are met (stripping activity asset). The stripping activity asset is accounted for as an addition to, or as an enhancement of, an existing asset. After initial recognition, the stripping activity asset is carried at its cost or revalued amount less depreciation or amortization and less impairment losses, in the same way as the existing asse of which it is a part. Environmental Accounting | 34

Mine Wastes and Tailings Fees A semi-annual fee imposed on all operating mining companies. The mine wastes and tailings fee shall accrue to a reserve fund to be used exclusively for payment for damages to: (a) Lives and personal safety; (b) Lands, agricultural crops and forest products, marine life and aquatic resources, cultural resources; and (c) Infrastructure and the revegetation and rehabilitation of silted farm lands and other areas devoted to agriculture and fishing caused by mining pollution.

Occupation Fees Collected from any holder of a mineral agreement, financial or technical assistance agreement or exploration permit on public or private lands, an annual occupation fee (a) For exploration permit - Five pesos (P5.00) per hectare or fraction thereof per annum; (b) For mineral agreements and financial or technical assistance agreements - Fifty pesos (P50.00) per hectare or fraction thereof per annum; and (c) For mineral reservation - One hundred pesos (P100.00) per hectare or fraction thereof per annum.

Solid Waste Management Fund Treated as a special account in the National Treasury, to finance this fund: Purpose: to finance products, facilities, technologies and processes to enhance proper solid waste management. a) Fines and penalties imposed, proceeds of permits and licenses issued by the Department of Environment and Natural Resources and donations, endowments, grants and contributions from domestic and foreign sources b) Amounts specifically appropriated for the Fund under the annual General Appropriations Act Environmental Accounting | 35

Air Quality Management Fund Treated as a special account in the National Treasury Purpose: is for the containment, removal, and clean-up operations of the Government in air pollution cases, guarantee restoration of ecosystems and rehabilitate areas affected. Sources of Fund: a) Fines imposed and damages awarded to the Republic of the Philippines by the Pollution Adjudication Board (PAB), proceeds of licenses and permits issued by the Department of Environment and Natural Resources, emission fees and from donations, endowments and grants in the forms of contributions. Exemption: Contributions to the Fund shall be exempted from donor taxes and all other taxes, charges or fees imposed by the Government.

National Water Quality Management Fund Treated as a special account in the National Treasury Purpose: Finance containment and clean-up operations of the government in water pollution cases Sources of Fund: The fines imposed and damages awarded to the government by the Pollution Adjudication Board (PAB), proceeds of permits issued by the Department of Environment and Natural Resources donations, endowments and grants in the form of contributions to the national government. Exemption: Such donations, endowments and grants shall be exempt from donor's taxes and all other taxes, charges or fees imposed by the government and shall be deductible from the gross income of the donor for income tax purposes.

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The Area Water Quality Management Fund Purpose: Utilized for the grant of rewards and incentives for entities whose effluent discharges are better than the water quality criteria of the target classification of the receiving body of water, loans for acquisitions and repairs of facilities to reduce quantity and improve quality of waste water discharges, and regular maintenance of the water bodies within the management area. Allocation: An amount of not more than ten percent (10%) of the total amount accruing to the funds annually shall be allocated for the operational expenses of the governing board,its secretariat and multi-sectoral water quality surveillance and monitoring network. Source of Fund: This fund shall initially be sourced from the fines incurred by the establishments located in rural areas. Thereafter, the fees collected under the waste water charge system, donations, endowments and grants for water quality management of the area shall accrue to the fund.

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