TIDMPFP
RNS Number : 8395D
Pathfinder Minerals Plc
02 November 2020
2 November 2020
Pathfinder Minerals Plc
("Pathfinder" or the "Company")
Company Strategy Update
Highlights
-- Pathfinder asserts that the Government of Mozambique has
acted improperly in allowing the Licences to be taken away from the
Company in 2011, without the Company's knowledge or consent,
through a transfer which had no legal validity
-- Pathfinder will seek to engage further with the Government of
Mozambique and attempt to recover the Licences and advance their
development alongside a strategic partner
-- Should the Company be unable to resolve the matter amicably
with the Government of Mozambique, the Board intends to seek
recourse to the Mozambique - United Kingdom Bilateral Investment
Treaty (2004) with the support of litigation funders
-- Pathfinder was advised by independent legal counsel in 2014
that the likely remedy from successful treaty litigation would be
not less than the return of the Licences to the Company's
control
Background
In 2011, Pathfinder was subjected to the unlawful transfer of
areas previously licensed to the Company in Mozambique under mining
concessions 760C and 4623C (the "Licences") to an unconnected
company, Pathfinder Moçambique S.A., without the Company's
knowledge or consent. The Licences were held by the Company's
99.99%-owned subsidiary Companhia Mineira de Naburi ("CMdN").
Pathfinder has since pursued a multichannel strategy to attempt to
recover the Licences, including a successful action through the
English High Court to confirm the validity of the Company's
ownership of CMdN and through attempts to negotiate a settlement
with the shareholders of Pathfinder Moçambique S.A., who were
Pathfinder's former local partners ("Former Local Partners"). In
2020, the Mozambique Supreme Court rejected the Company's
application to recognise the English High Court judgment and the
Company has to date been unable to conclude a negotiated settlement
with the Former Local Partners.
Strategic update - Bilateral Investment Treaty claim against the
Government of Mozambique
Following a strategic review of options available to the Company
with respect to regaining an interest in the Licences, the Board
has concluded that the prospects of a negotiated settlement with
the Former Local Partners have diminished and that the Company
should seek recourse against the Government of Mozambique.
Pathfinder asserts that the Government of Mozambique has acted
improperly in allowing the Licences to be taken away from the
Company in 2011 through a transfer which had no legal validity.
The Company was advised in 2014 that it has a valid claim under
the terms of the Mozambique - United Kingdom Bilateral Investment
Treaty (2004) (the "BIT") that would most likely succeed; and that
the most likely remedy from successful treaty litigation would be
not less than the return of the Licences to the Company's control
and a cost award in its favour.
In 2015, Pathfinder served a Notice of Dispute under the BIT on
the Government of Mozambique. The Company is required to
demonstrate that all legal avenues in the UK and Mozambique have
been exhausted prior to initiating proceedings. Following the
Mozambique Supreme Court's rejection of the Company's application
to recognise the English High Court judgment (which remains in
force) earlier this year, the Board now considers that all such
avenues have been exhausted.
The Board is currently in the process of getting the 2014 legal
advice in respect of the BIT updated and an analysis undertaken to
estimate the chance of success.
The Board has commenced discussions with prospective litigation
funders for cost-effective funding and is considering a range of
valuation benchmarks for the purposes of a claim. These benchmarks
include the revised Scoping Study report on the Licences prepared
by independent technical consultants in 2019, as announced, which
resulted in an estimated pre-tax net present value at a 10 per cent
discount rate of US$1.05 billion; with projected annual revenues of
US$323 million over a mine life of 30 years; and a project internal
rate of return of approximately 25 per cent.
Diplomatic resolution with the Government of Mozambique -
development of the Licences
The BIT advocates that parties attempt to resolve disputes
through diplomatic channels in advance of formal proceedings.
Accordingly, Pathfinder will seek further engagement with the
Government of Mozambique in an attempt to secure a return of the
Licences without recourse to the BIT and advance their development
alongside a strategic partner.
Members of the Board have met with the UK Government to inform
it of the Company's intended course of action and to solicit its
support in attempting to reach a diplomatic resolution with the
Government of Mozambique.
In anticipation of a return of the Licences to Pathfinder's
control, the Board continues to engage with several prospective
strategic partners which operate existing mining assets within and
outside of Africa and which have the financial and technical
capabilities to accelerate the development of the Licences.
Peter Taylor, Chief Executive Officer of Pathfinder,
commented:
"Having satisfied all conditions prior to initiation of BIT
proceedings, and exhausted attempts to negotiate an amicable
resolution with the Former Local Partners, Pathfinder has no option
but to look to the Government of Mozambique to put right the
transfer of the Licences which we believe was unlawful.
It remains our preference to avoid treaty litigation by
resolving the dispute through constructive dialogue with the
Government of Mozambique and to conclude such resolution swiftly.
Such a timely resolution would allow us to resume development of
the Licences which, in turn, is expected to deliver substantial
associated social and economic benefits to the region through
employment, infrastructure, royalties and taxation."
Enquiries:
Pathfinder Minerals Plc
Peter Taylor, Chief Executive Officer
Tel. +44 +44 (0)20 3143 6748
Strand Hanson Limited (Nominated & Financial Adviser and
Broker)
James Spinney / Ritchie Balmer / Jack Botros
Tel. +44 (0)20 7409 3494
Vigo Communications (Public Relations)
Ben Simons / Simon Woods
Tel. +44 (0)20 7390 0234
Email. pathfinderminerals@vigocomms.com
Novum Securities Limited (Broker)
Colin Rowbury / Jon Belliss
Tel. +44 (0)20 7399 9400
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
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