Legal disputes converge around Kalinga copper-gold project

Legal, shareholder and financing disputes surrounding the MCB Copper-Gold Project in Kalinga continue as questions over the ownership and control of the project remain unresolved.

The Securities and Exchange Commission confirmed in a 1 September letter that possible legal violations, including those involving provisions of the Anti-Dummy Law, had been referred to the National Bureau of Investigation.

The referral does not constitute a finding that an offense occurred.

The dispute is unfolding against the backdrop of Executive Order No. 122, which seeks to attract responsible investment and develop the Philippines’ critical minerals industry.

The handling of the MCB Copper-Gold Project could test the policy, with its outcome potentially affecting the project, its shareholders and perceptions of investment protection in the Philippine mining sector.

The dispute intensified after Equinaire Holdings Limited moved to foreclose on Makilala Holding Limited’s 40 percent interest in Makilala Mining Company Inc. (MMCI).

Equinaire, a wholly owned subsidiary of India-listed Kiri Industries Limited, submitted a $5.01 million credit bid at an 8 September auction. With no competing bids, it was declared the winning bidder, according to a 9 September announcement by Celsius Resources Limited.

The foreclosure is the latest development in overlapping disputes involving Celsius, Makilala Holding Limited (MHL), Sodor Inc., PMR Holding Corp., Kiri, lawyer Julito “Sarge” Sarmiento and lawyers associated with Sarmiento Loriega Law.

At the center of the dispute are questions involving MMCI’s shareholding, governance and control, including MHL’s Notice of Relinquishment requiring Sodor to return its MMCI shares after it allegedly failed to make the required payment.

Equinaire became involved after acquiring the rights to a $10 million secured loan originally extended to MMCI by the Maharlika Investment Corporation.

The disputes converged when Equinaire relied on MHL’s Notice of Relinquishment to Sodor as an alleged Event of Default supporting the foreclosure of MHL’s shares.

MHL issued the Notice of Relinquishment after Sodor allegedly failed to pay for its 60 percent interest in MMCI before an agreed deadline.

Kiri has described the loan acquisition as a “precursor transaction” expected to support preferential access to MMCI’s future copper production.

Equinaire’s involvement could therefore extend beyond debt recovery to potentially securing an ownership interest and access to copper production from the MCB project.

Celsius disputes that a valid and continuing default occurred and has challenged Equinaire’s entitlement to foreclose.

Although Equinaire won the auction, its legal entitlement to the shares remains subject to arbitration.

The overlapping roles of parties involved have also drawn scrutiny. Celsius has identified Sarmiento as its former executive chairman and as an adviser to Sodor, PMR and Kiri.

Celsius has also announced an Anti-Dummy Law complaint against Sarmiento involving alleged corporate arrangements with Kiri executives.

A separate disciplinary complaint has been filed against Sarmiento and other lawyers associated with Sarmiento Loriega Law.

The allegations have not been established by final judgment, and the available public record does not establish that the various transactions were part of a single scheme. Any legal connection among them remains subject to determination in the appropriate proceedings.

Celsius shareholders could also be affected by the dispute after financing work that contributed to the development of the project while now facing the possible loss of a substantial interest through enforcement action based partly on disputed events.

Shareholders have raised their concerns with Philippine authorities.