PSE Circular for Brokers No. 1404-98

June 24, 1998 PSE CIRCULAR FOR BROKERS NO. 1404-98 June 23, 1998 PHILIPPINE STOCK EXCHANGE PSE Center, Exchange Road Ortigas Center, Pasig City Attention: Ms . Luisa W . Buenaventura Analyst, Disclosure Department Thru: Ms . Janet J . Alcala Assistant, Disclosure Department Madame : In response to your fax message of June 22, 1998 to our Atty. G. S. Imperial, Jr. which he received today June 23, 1998 and which was immediately passed on to the undersigned, firstly, please be. informed that the subject news article captioned "Philex Mining Supervisors ratify amendment to CBA published in the June 19, 1998 issue of the Business World" was neither issued by Philex Mining Corporation itself nor authorized by it to be a subject of a news item in the Business World. The news item pertains to the re-opening of the wage provision of our CBA with our Padcal Supervisors Union and which we treated as a highly confidential negotiation with the officers of said Union who represented the supervisors. I am a member of the negotiating panel on behalf of the Company as Vice President for Legal and Personnel and I have never authorized or allowed any press release with respect to said wage re-opening of our CBA. In fact, when the negotiation was finally concluded between the Company and the Union panels last May 28, 1998 we never allowed any picture taking or press release covering such event as is usually done by others to keep its confidentiality. cdll Turning to the press release itself, we do not know where the figure P42.4M in benefits come from as this is not provided by us. We are presently evaluating the cost impact of the renegotiated wages of our Padcal Supervisors for 1998-1999. We did not make any proposal double that of the proposal of the Union. In fact, the Management proposal and which was accepted by the Union was 11% for 1998 as against the original 30% increase proposed by the Union. And definitely the 10.5 increase for 1999 is only one-third of such 30% increase proposed by the Union. In addition, our supervisors are subjected to a yearly performance appraisal (PA) and as part of our negotiation they shall be given at least a 1% increase on their wages based on work performance. In other words, nobody gets a zero PA. We do not know where the writer got the P400 additional cash bonus which allegedly raises their non-wage benefits package to P2.0M. However, it is correct that an early completion bonus of P1,528 will be given to each supervisor and that the COLA issued by the Wage Board of CAR covering the period December 18, 1997 to April 30, 1998 will be paid by the Company. The integration or non-integration of said COLA has been a contentious issue between Management and Union and we have agreed to refer it to Voluntary Arbitration. Finally, we do not know where the writer got his figure for 1997 stating that Padcal mines accounted for two-thirds of the country's total copper output. May we reiterate that the aforesaid press release was not our own doing and could have been obtained from sources outside the knowledge of the Company as the negotiations also involved the Union and the Department of Labor NCMB of the Cordillera Autonomous. Region and of Manila. Very truly yours, (SGD.) ATTY. DEOGRACIAS G. CONTRERAS, JR. VP Legal & HRD Philex Mining Supervisors Ratify Amendment to CBA A total of 694 mine supervisors from two Philex Mining Corp. operations in Northern Luzon are set to receive P42.4 million in benefits under an improved collective bargaining agreement (CBA). Majority of the Philex Mining and Supervisory Employees Union (PMSEU) have ratified a new CBA package said to be more than double the original proposal which was not ratified by the union membership. Under the new agreement, the supervisors will get an additional 1% wage increase aside from 11% and 10.5% annual salary increases effective 1998 and 1999, respectively. The annual wage hikes are set to take effect in May while the additional 1% will be given every July on top of the supervisors' performance appraisal increases. The supervisors are also set to receive an additional cash bonus of P400 each which raises their non-wage benefit package to P2.08 million from the original P1.8 million. There will also be an early completion bonus of P1,528 each and partial payment of cost of living allowances (COLA) which covers the period December 18, 1997 to April 30, 1998. cdt However, like in the original proposal, the remaining coverage of the supervisors' COLA is still an issue to be submitted for voluntary arbitration. The supervisors covered in the improved CBA come from the Philex copper and gold mine in Padcal, Benguet and the mining firm's pier in Poro Point, La Union. In 1997, the Padcal mines accounted for two-thirds of the country's total copper output with a production of 25,105 metric tons. The Philex pier in La Union serves as the mining giant's shipment point for copper concentrates from the Padcal mines which are sent to smelting companies in Japan.