The 40% stake of Australian-listed Celsius Resources Ltd. in the Maalinao-Caigutan-Biyog (MCB) copper-gold project in Kalinga is at the center of an escalating legal and corporate dispute after a Kiri Industries-linked company won the auction for the shares through foreclosure proceedings.
In a September 9 market announcement, Celsius disclosed that Equinaire Holdings Ltd., a wholly owned subsidiary of India-listed Kiri Industries Ltd., submitted a US$5.01-million credit bid during the September 8 auction of the 40% interest held by Celsius’ subsidiary, Makilala Holding Ltd. (MHL), in Makilala Mining Co. Inc. (MMCI).
With no competing bids, Equinaire was declared the winning bidder.
However, Celsius and MHL continue to contest Equinaire’s right to foreclose on the shares, arguing that the alleged loan default remains disputed and subject to arbitration.
MHL attended the auction and recorded its position that the outcome remains subject to pending legal proceedings.
The foreclosure is the latest development in overlapping disputes involving Celsius, MHL, Equinaire, Kiri Industries, Sodor Inc., PMR Holding Corp., lawyer Julito “Sarge” Sarmiento and Sarmiento Loriega Law Office (SL Law).
Dispute linked to Maharlika loan
The foreclosure proceedings stem from a US$10-million secured loan originally extended to MMCI by the Maharlika Investment Corporation (MIC), which later assigned the loan and its associated security rights to Equinaire.
These securities include MHL’s 40% interest in MMCI, which holds the MCB copper-gold project.
The dispute intensified after Equinaire cited MHL’s Notice of Relinquishment to Sodor as one of the alleged events of default under the loan agreement.
MHL had issued the notice after Sodor allegedly failed to pay for its 60% interest in MMCI. Celsius and MHL are contesting arrangements involving Sodor and PMR, including the return of MMCI shares and corporate actions affecting the mining company’s ownership and governance.
Sarmiento has been associated with Sodor and the contested corporate actions, while SL Law and lawyers connected with the firm have been involved in matters concerning the parties and MMCI’s governance.
The use of the disputed notice as a basis for foreclosure has linked the shareholder conflict to a separate financing dispute that could significantly alter the ownership and control of the mining project.
Celsius maintains that no valid and continuing event of default occurred and challenges Equinaire’s entitlement to enforce the loan securities.
Questions over foreign investment and corporate governance
Kiri has described the acquisition of the loan as a “precursor transaction” supporting a proposed preferential copper offtake arrangement, according to the information provided by Celsius.
The arrangement has raised questions about whether the transaction is limited to debt recovery or could also allow Equinaire to secure an ownership interest in MMCI and obtain copper supplies from the MCB project.
Meanwhile, Celsius shareholders have raised concerns over the possible loss of a substantial project interest following years of exploration, permitting and development work.
In a September 1 letter to a Celsius shareholder, the Securities and Exchange Commission (SEC) reportedly confirmed that allegations involving possible violations of Philippine law had been referred to the National Bureau of Investigation (NBI).
The referral includes an investigation into possible violations of the Anti-Dummy Law and other matters involving relevant transactions, corporate arrangements and the identities of the parties concerned.
The SEC also acknowledged concerns involving foreign-investment protection, corporate integrity and the rule of law.
The referral does not establish that any violation has occurred, with the allegations still subject to investigation and appropriate legal proceedings.
Implications for Philippine mining investment
The dispute comes as the government seeks to attract investment into the country's critical-minerals industry.
Executive Order No. 122, which establishes a unified national framework for developing the Philippines’ critical-minerals industry, aims to encourage responsible investment, strengthen competitiveness and expand value-added mineral processing.
The outcome of the MCB dispute could draw the attention of foreign investors evaluating the protections available to them in Philippine mining ventures, particularly in projects requiring substantial long-term capital.
The case raises questions about how shareholder rights, corporate governance and secured-loan enforcement will be handled when ownership arrangements and alleged defaults are being challenged simultaneously.
For Celsius, the central issue is whether Equinaire can enforce its security rights over MHL’s 40% stake while the underlying disputes remain unresolved.
Although Equinaire emerged as the winning bidder at the September 8 auction, the parties’ competing claims and pending legal proceedings leave the broader dispute over the MCB project’s ownership and control unresolved.
