Celsius Resources disputes Kiri Industries’ takeover of loan rights and offtake negotiations at Makilala Mining, triggering emergency arbitration amid ongoing project financing tensions.
- Maharlika Investment assigns loan rights to Kiri subsidiary
- Kiri negotiating offtake agreement with Makilala Mining
- Celsius initiates emergency arbitration to block unauthorized deals
- MIC reports 25% annualized return on bridge loan exit
- Dispute centers on control of MCB Project offtake agreements
Loan Assignment Shifts Project Financing Landscape
Maharlika Investment Corporation (MIC) has completed the assignment of its rights under the Omnibus Loan and Security Agreement (OLSA) with Makilala Mining Company Inc. (MMCI) to Equinaire Holdings Limited, a subsidiary of India’s Kiri Industries Limited. This transaction marks Kiri’s formal entry into the financing structure of the MCB copper-gold project in the Philippines, a significant development given the project’s complex ownership and governance disputes.
MIC’s exit from the bridge loan investment generated a robust 25% annualized return in Philippine peso terms, underscoring the yield potential of the project’s financing arrangements. The sovereign wealth fund highlighted this divestment as an example of prudent capital management, freeing up resources for future strategic investments aligned with national economic goals.
Kiri Pursues Offtake Agreement Amid Arbitration Threats
Kiri’s Managing Director, Manish Kiri, confirmed during a recent earnings call that the company has taken over certain loans related to MMCI and is actively negotiating an offtake agreement. The offtake deal is critical for securing the project’s revenue stream through the sale of copper-gold concentrate.
However, Celsius Resources has reacted strongly, initiating an emergency arbitration process aimed at preventing any offtake agreements between Kiri and MMCI without Celsius’s written consent. Celsius argues that any such agreement must be approved by them as part of a broader arbitration involving key stakeholders Sodor and PMR. Celsius has also issued notices to rescind any unauthorized transactions with MMCI, emphasizing that the relevant offtake agreements should be with its wholly owned subsidiary, PDEP Inc., which operates the processing plant.
Celsius Asserts Control Over Offtake Rights
The dispute highlights a fundamental disagreement over who holds the legitimate rights to negotiate and execute offtake agreements for the MCB Project. Celsius points to expired binding deeds that involved PDEP Inc. as the designated operator and marketer of the project’s concentrate, suggesting that MMCI and its new financier Kiri may lack authority to finalize such deals independently.
This contention adds another layer to the ongoing governance and ownership challenges at Makilala Mining, where board reshuffles and legal actions have complicated progress. Celsius’s move to block Kiri’s offtake efforts reflects its broader strategy to maintain influence over project development and financing decisions amid a shifting stakeholder landscape.
Implications for Project Development and Investor Confidence
The assignment of MIC’s loan to Kiri and the ensuing offtake dispute underscore the fragile state of the MCB Project’s financing and governance. While MIC’s successful exit signals international investor appetite for Philippine mining assets, the dispute between Celsius and Kiri raises questions about the timing and certainty of project advancement.
With arbitration processes underway and key agreements contested, the path to finalising financing and securing offtake contracts remains uncertain. How these tensions resolve will be critical in determining the project’s ability to move towards production and deliver value to investors.
Bottom Line?
The clash over offtake rights and loan assignments at Makilala Mining intensifies, with arbitration outcomes set to shape the MCB Project’s financing and development trajectory.
Questions in the middle?
- Will Celsius and Kiri reach a negotiated resolution or prolong arbitration?
- How might the outcome affect the timing of the MCB Project’s final investment decision?
- What impact will this dispute have on attracting further foreign investment to the project?