The first legal bid by Australian miner Celsius Resources Ltd. to stop the foreclosure sale of its 40% stake in the Maalinao-Caigutan-Biyog (MCB) Copper-Gold Project in Pasil, Kalinga, hung in the balance after a court denied its petition.

The setback aggravates a dispute that traces back to a decision by the Maharlika Investment Corporation (MIC) four months ago to hand its US$10-million bridge loan over to Makilala Mining Co. Inc. (MMCI) to Equinaire Holdings Ltd., a company with no disclosed track record in Philippine mining or finance.

In a corporate update, Celsius disclosed that the Regional Trial Court of Makati City has denied its petition for interim protection, which had sought to stop any foreclosure or sale of its shares in MMCI until arbitration between Celsius and Equinaire happens.

The court found that Celsius's subsidiary, Makilala Holding Limited (MHL), had not shown the kind of "irreparable injury" needed to justify an injunction, reasoning that any losses from a foreclosure would be primarily financial and could still be addressed through arbitration.

Concerns raised by MHL in relation to the enforceability of unwinding a future sale of its MMCI shares and the financial capacity of Equinaire (which is essentially a shell company) were dismissed by the court.

On the other hand, the court did not rule on the merits of the underlying dispute and it was explicit that the denial of the petition was not a finding that a default had occurred, that any default was incurable, or that Equinaire actually has the right to foreclose.

Those questions remain with the arbitral tribunal to decide and the tribunal also has its own power to grant interim relief once proceedings begin.

This essentially enables Equinaire to proceed with the foreclosure loan and the sale of MHL's interest in MMCI before the matter can be decided through arbitration.

A Temporary Order of Protection had blocked Equinaire from foreclosing on or auctioning MHL's

stake.

That order was lifted on 27 August after Equinaire posted a ₱201 million counterbond with the court.

Then it issued a Notice of Resumption of Foreclosure and a Notice of disposition.

Both notices set 8 September as the auction date for MHL's 40% interest in MMCI.

Under the bidding rules established by Equinaire, the minimum bid value is US$5 million and Equianire will have the right to match the highest offer.

This will provide Equinaire with the potential to acquire 40% of MHL interest in the MCB Project for US$5 million, notwithstanding that the recently completed Definitive Feasibility Study vauled 100% of the project at approximately US$770 million.

Equinaire has also widened its grounds for default. Its original claim was that a Notice of Relinquishment triggered an Event of Default. MHL had issued that notice to an unrelated party, Sodor Inc. after it had failed to pay for its 60% interest in MMCI.

Equinaire cites two more alleged breaches pointing to unspecified information-security incidents involving MMCI and MHL's move to seek court protection was itself a violation of the loan agreement.

However, Celsius rejects all of these claims, saying no Event of Default has occurred or persists. It says the alleged breaches don't hold up and that Equinaire has not met the contractual conditions needed to enforce its security rights at all.