Celsius Resources initiates emergency arbitration to halt Kiri’s offtake deals with Makilala Mining, while grappling with governance upheaval and stalled financing at its Philippine copper project.
- Emergency arbitration to injunct Kiri’s offtake agreements
- Governance turmoil following MMCI board reshuffle
- Dispute over loan assignment from MIC to Kiri
- Key MMCI executives terminated amid tensions
- Opuwo Project sale progressing to fund MCB
Legal Firestorm Over Loan Assignment and Offtake Rights
Celsius Resources (ASX:CLA) has escalated its battle over control of the Makilala Mining Company Inc. (MMCI) with an emergency arbitration application aimed at blocking any offtake agreements between MMCI and Kiri Industries Limited. This move follows the contentious assignment of a loan from the Philippine sovereign wealth fund Maharlika Investment Corporation (MIC) to Kiri without Celsius’ knowledge or approval, raising governance and contractual alarms.
The loan, originally part of an Omnibus Loan and Security Agreement (OLSA) with MMCI, was assigned to Equinaire Holdings Limited, a Kiri subsidiary, after the 15-business day prepayment window expired. Celsius describes Kiri as a non-financial institution intending to leverage the loan to secure preferential copper supply, a strategy Celsius views as undermining the arms-length commercial negotiations critical to the MCB Copper-Gold Project’s financing.
This dispute dovetails with ongoing arbitration between Celsius and local partners Sodor Inc. and PMR Holding Corp., who together were to acquire a 30% economic interest in the project. Celsius is seeking to enforce the relinquishment of Sodor and PMR’s shares in MMCI, aiming to replace them with an independent Philippine partner. The arbitration has already seen interim orders denying Sodor and PMR’s attempt to block share transfers, but the status quo remains with Sodor holding 60% ownership pending final resolution.
Governance tensions intensified after Sodor requisitioned a shareholder meeting that resulted in a board overhaul, including the reappointment of Julito “Sarge” Sarmiento as MMCI Chair and President. Sarmiento, a former Celsius Executive Chair and adviser to Kiri, has become a controversial figure due to his multiple overlapping roles and alleged conflicts of interest involving his law firm SL Law, which has close ties to Kiri and Sodor-related entities. Celsius is actively pursuing legal advice on potential breaches of fiduciary duties and conflicts of interest linked to Sarmiento and SL Law.
Executive Departures and Community Concerns
Amid the turmoil, Sarmiento terminated the employment of key MMCI executives Peter Hume (Technical Director) and Dr Attilenore “Nene” Manero (Chief Sustainability Officer), both of whom had raised concerns about Sarmiento’s conduct. Their departures have sparked unease among the local Balatoc Community, who have called for reconciliation and board stability to ensure ongoing community obligations are met.
Celsius’ efforts to resolve the impasse have included proposing to reinstate the original transaction with Sodor and PMR, adding protections such as suspending arbitration and structuring staged payments for share subscriptions. However, Celsius reports a lack of response from Sodor, PMR, and Sarmiento, complicating its willingness to provide further financial support to MMCI without board representation and oversight, especially given its outstanding loan of approximately US$10.1 million to MMCI.
Financing Efforts and Opuwo Project Sale
Despite the disputes, Celsius continues to advance the financing of the MCB Project, having engaged Grant Samuel Capital Advisory to manage a three-stream funding process targeting offtake-linked financiers, banks, and strategic investors. The first phase of the offtake-linked financing has yielded multiple non-binding indicative offers, with shortlisted parties progressing to the next stage.
Meanwhile, Celsius is progressing the sale of its Opuwo Cobalt-Copper Project in Namibia, expecting to sign a binding sale and purchase agreement by the end of June 2026. The company intends to deploy the proceeds from this sale to support the MCB Project’s development, contingent on resolving the ongoing arbitration or reaching an agreement with Sodor and PMR.
The complex web of legal battles, governance upheavals, and financing challenges at MMCI underscores the fragile state of Celsius’ Philippine operations. The company’s pursuit of arbitration to block Kiri’s offtake arrangements highlights the high stakes involved in securing control and commercial terms for the MCB Copper-Gold Project, a key asset in Celsius’ portfolio. The unfolding situation will be critical to watch as it shapes the project’s funding and operational trajectory in the months ahead.
These developments build on Celsius’ recent halted March share placement and the unauthorized share transfer notice that led to executive departures, illustrating the ongoing governance struggles that have dogged the company’s efforts to stabilise MMCI ownership and management.
Bottom Line?
Celsius’ legal and governance battles at MMCI risk delaying project financing and development, making arbitration outcomes pivotal for its Philippine copper ambitions.
Questions in the middle?
- Will Celsius secure an independent Philippine partner to replace Sodor and PMR?
- How will arbitration rulings impact Kiri’s offtake ambitions and MMCI’s operational control?
- Can proceeds from the Opuwo sale meaningfully advance the MCB Project amid governance uncertainty?