Celsius Resources faces a lifted court protection on its 40% MMCI stake amid disputes over capital increases and a contested copper offtake deal with Kiri Industries, setting the stage for arbitration.
- Court lifts Temporary Order of Protection on Celsius’ MMCI stake
- Celsius disputes Event of Default claims and plans arbitration
- MMCI stockholders approve capital stock increase over Celsius objections
- Celsius seeks injunction to maintain MMCI ownership structure
- Kiri claims copper offtake agreement disputed by Celsius
Court Lifts Foreclosure Freeze on Celsius’ MMCI Stake
The Philippine Regional Trial Court in Makati City has lifted a Temporary Order of Protection (TOP) that had blocked Equinaire Holdings Limited, a Kiri Industries subsidiary, from foreclosing on Makilala Holding Limited’s (MHL) 40% interest in Makilala Mining Company Inc. (MMCI). The court’s decision came after Equinaire posted a counterbond of approximately A$4.6 million, significantly higher than the PHP10 million (~A$231,000) bond MHL had posted to secure the original TOP.
Celsius Resources (ASX:CLA, AIM:CLA), which controls MHL, has filed a Motion of Reconsideration opposing the lifting of the TOP, continuing its legal resistance against Equinaire’s enforcement actions. The dispute centers on Equinaire’s claim of an Event of Default under the Omnibus Loan and Security Agreement (OLSA), which Celsius strongly denies, asserting that no contractual conditions for enforcement have been met.
Arbitration to Resolve Ownership and Enforcement Disputes
In response to the ongoing conflict, Celsius is progressing arbitration proceedings to clarify the parties’ rights and obligations under the OLSA. The company aims to halt contested enforcement steps initiated by Equinaire, seeking relief from the disruption caused by the foreclosure threat and to stabilise the ownership and operational status of the MCB Project.
This arbitration is a critical step for Celsius to protect its interest in MMCI and the broader copper-gold project, which remains mired in legal uncertainty. The company’s stance is that the alleged default is unfounded, and the enforcement actions are premature and unsupported by the contractual framework.
MMCI Capital Stock Increase Approved Despite Celsius Objections
Last week’s Special Stockholders Meeting of MMCI, chaired by Attorney Julito “Sarge” Sarmiento, approved a resolution to increase the company’s authorised capital stock by approximately A$138.5 million (PHP6 billion). Celsius opposed the participation of Equinaire’s representatives in the meeting and objected to the capital increase, but these objections were overruled.
Attorney Sarmiento ruled that MHL was unable to vote its 40% shareholding, citing Equinaire’s power of attorney over those shares based on the presumed Event of Default. Celsius disputes this interpretation and has since obtained an interim arbitration order preventing any changes to MMCI’s capital stock or ownership structure pending further arbitration outcomes.
Contentious Copper Offtake Agreement Claims
Kiri Industries’ Chairman and Managing Director, Manish Kiri, indicated during an investor call that Kiri and MMCI have executed a copper offtake agreement covering 70% of production from the MCB Project. However, Celsius has not been provided any documentation or details of such an agreement and disputes its validity.
Celsius highlights that the relevant entity for offtake agreements is PDEP Inc., a wholly owned subsidiary of Celsius, rather than MMCI. The company has issued written notice to Kiri indicating its intent to rescind any unapproved transactions between Kiri and MMCI and is seeking to injunct any offtake agreements executed without Celsius’ written consent as part of the arbitration process.
Despite ongoing shareholder disputes and litigation, Kiri remains optimistic about the project’s development, urging focus on progress rather than legal distractions. Celsius, meanwhile, continues to seek engagement with Kiri to resolve these issues but reports no response to its requests for meetings.
Legal and Corporate Uncertainty Clouds MCB Project Progress
The lifting of the TOP and the contested capital stock increase mark significant developments in a protracted legal battle over control and commercial rights at MMCI. Celsius’ arbitration efforts and court filings underscore the complexity and high stakes involved in securing the future of the MCB copper-gold project.
The outcome of the arbitration and any further court rulings will be pivotal in determining the ownership structure, capital arrangements, and commercial agreements that underpin the project’s development. Investors should watch closely for updates on these proceedings and any resolutions that may impact the project’s viability and value.
Bottom Line?
Celsius’ legal and arbitration strategies will be decisive in resolving ownership and commercial disputes that currently cloud the MCB Project’s development.
Questions in the middle?
- Will arbitration confirm or overturn the alleged Event of Default under the OLSA?
- How will the interim injunction on MMCI’s capital stock affect project financing and development?
- What are the implications if Kiri’s claimed offtake agreement is invalidated or rescinded?