The 1995 Mining Act requires minimum annual expenditures for community development programs of 1% of direct mining and (where applicable) milling costs. Our yearly expenditures normally exceed this minimum requirement. In late 2010 the MGB issued an Administrative Order raising the minimum requirement to 1.5% of total operating costs, which Order is currently under review. In 2010, the combined social expenditures of our four operating mines amounted to P109.9 million.

Our operations manage their social expenditures through their respective Social Development Management Plans (SDMPs). These are five-year programs containing a list of priority projects identified and approved for implementation in consultation with the host communities. The work involved in identifying and implementing the SDMPs, as well as the overall responsibility for maintaining strong relationships with our host communities, lies with Community Relations teams at each of our mine sites.

RIO TUBA NICKEL MINING CORPORATION
RTN's SDMP expenditures are coursed through the RTN Foundation, Inc. and are combined with the SDMP expenditures of the adjacent Coral Bay processing plant for proper coordination. The RTN Foundation funds numerous social development projects. Chief among these are a kindergarten, elementary and high school largely for free (token payments are required per student) with an enrollment of 1,237 students, almost half from the adjoining communities; and a fully staffed hospital available to employees, dependents and indigenous tribes for free while residents of the adjoining communities are charged on a cost basis, which accepted 2,700 in-patients and considerably more as out-patients in 2010. Numerous livelihood, infrastructure projects and scholarships are also being funded by the Foundation.

With respect to the indigenous tribes in the area of the operations, the Foundation continues to construct housing in coordination with the Gawad Kalinga Foundation, with 208 units built to-date in six sites. The Foundation also funds an Indigenous Learning System accredited by the Department of Education in conjunction with the St. Jude Catholic school, with 667 students enrolled in 2010 in three different levels. RTN as well pays the equivalent of a 1% royalty to the tribes in the form of specific projects, although at this time an ancestral land or domain title has not yet been obtained. This expenditure is considered as part of RTN's overall social expenditures.

TAGANITO MINING CORPORATION
During the year in review, construction of 120 housing units for the indigenous tribal communities of Taganito and Urbiztondo, in coordination with Gawad Kalinga Foundation and as a joint undertaking with Taganito HPAL Nickel Corp, was started. Funding for this project is over and above the company's commitment under its SDMP. Assistance was also provided to our host tribal communities in terms of formulating their 2010 community plan, financial literacy, the planning and implementation of a Mamanwa store and cafe' adjacent to the new housing area, and other initiatives, including the continuing provision of Indigenous Learning teachers.

The majority of the SDMP-funded projects were in the area of infrastructure, with emphasis on projects associated with the Taganito and Urbiztondo elementary schools and the donation of information technology equipment to the Taganito high school. In line with the company's continuing goal of encouraging entrepreneurship in the host barangays, financial and technical assistance was provided for the establishment of the Hayanggabon and Cagdianao public markets, the organization of three livelihood and enterprise groups and training programs in masonry, agricultural development, and other entrepreneurship initiatives in coordination with the East-West Seed Company, TESDA, and the Stu Clark Centre for Entrepreneurship in coordination with the Canadian Embassy.

CAGDIANAO MINING CORPORATION
Cooperative development and training programs on aquaculture and agricultural development were given priority during the year, with special attention to the Valencia Women's Multi-Purpose Cooperative. As part of this effort, families in the host barangay were encouraged to produce vegetables in their backyards for their own needs and as an enterprise. With respect to SDMP funded projects, infrastructure projects were prominent, such as the provision of electrical connection for Sitio Baliwan, and repair and maintenance of the Boa-Valencia road, the Valencia water system, street lighting and school library; The operation continued its commitment to prioritize education by giving financial assistance to deserving college students and by providing honoraria to volunteer teachers at the Valencia schools and daycare center, as well as donations of instructional materials and equipment. Medical missions were also conducted during the year, a continuing effort of the operation.

HINATUAN MINING CORPORATION
In line with the thrust of its SDMP, the operation implemented projects in the areas of education, health, infrastructure and livelihood for the adjoining communities. Assistance was provided for the construction of a school canteen and supplies store as well as to the operation of the school itself in Barangay Talavera. Financial assistance was also provided to a number of deserving students in college while part-time summer jobs have been made available to them and to other students from the host communities to ease the tuition burden on the families. Medical missions were also conducted during the year, a continuing effort of the operation, while medical equipment were provided to health centers in the adjoining communities.