TIDMPFP
RNS Number : 0814B
Pathfinder Minerals Plc
29 September 2022
29 September 2022
Pathfinder Minerals Plc
("Pathfinder" the "Company")
Update Re Bilateral Investment Treaty Claim:
Option Agreement for the Sale of IM Minerals and the Claim
Pathfinder announces that it has entered into an option
agreement with Acumen Advisory Group LLC ("AAG"), an asset recovery
specialist incorporated in Delaware, USA, with a track record of
international claim enforcement, under which Pathfinder has granted
AAG an exclusive option to acquire IM Minerals Limited ("IMM"), a
wholly owned subsidiary of Pathfinder, and the rights to bring a
claim against the Government of Mozambique (the "Claim") under the
Mozambique-United Kingdom Bilateral Investment Treaty (2004) (the
"Option Agreement"), for the expropriation of Mining Concession
4623C (the "Licence").
Summary:
-- Exclusive option granted to AAG for a period of three months
to 27 December 2022 (unless extended) to enable AAG to complete due
diligence and enter into binding definitive documentation in
respect of the acquisition of IMM and the rights to the Claim (the
"Acquisition Agreement")
If rights under the Option Agreement are exercised and the
Acquisition Agreement is entered into, it would, subject to
fulfilling certain conditions precedent, result in:
-- Payment of GBP2 million in cash to Pathfinder by AAG for the
acquisition of 100% of IMM on signature of the Acquisition
Agreement
-- Binding commitment by AAG to commence legal proceedings
against the Government of Mozambique in respect of the Claim within
three months of completion of the Acquisition Agreement with AAG
confirming that it has secured at least US$15 million and will use
its best endeavours to pursue the Claim to a satisfactory
conclusion within five years
-- Contingent payment by AAG to Pathfinder of US$24 million or
20% of net recoveries (whichever is greater) from any award or
settlement of the Claim
While the Board is confident in the strength of the Claim and
therefore the attractiveness of IMM as a vehicle, shareholders
should be aware that there is no guarantee that the Option
Agreement will be exercised and therefore that the Acquisition
Agreement will be entered into on the terms agreed. Accordingly,
there is no guarantee that any amounts will be recovered by
Pathfinder pursuant to this transaction. Entering into the
Acquisition Agreement will be conditional upon shareholder approval
pursuant to AIM Rule 15, which, in turn, may lead to the Company
being classified as an AIM Rule 15 cash shell.
Peter Taylor, Chief Executive Officer of Pathfinder,
commented:
"This transaction, if completed, will ensure that the full force
of a timely and well-funded Claim is brought against the Government
of Mozambique and that Pathfinder could participate very
considerably in any financial upside which has been independently
evaluated to be worth in a range of US$110 million to US$1.5
billion.
A great deal of work has gone into preparing to bring a Claim
and this now paves the way for AAG to apply its financial firepower
to launch it and see it through to conclusion. The biggest hurdle
has never been the strength of the Claim - which is assessed by
Counsel to be in Pathfinder's favour - but having the funding to
bring it. A successful transaction with AAG would remove that
hurdle.
In the meantime, the GBP2 million proceeds from the disposal of
IMM, if completed, would enable Pathfinder to pursue from a robust
financial position other opportunities for value creation within
the minerals sector, a number of which are under review."
James R Stothard, Chairman of AAG, commented:
"I am proud to announce our Option Agreement with Pathfinder to
acquire 100 percent of the share capital of IMM in order to
vigorously pursue the Claim against the Government of Mozambique.
AAG has a proven track record of international claim enforcement.
Working with our international legal team at DLA Piper, which also
has considerable experience in these types of disputes, we are
confident of a successful outcome which will benefit Pathfinder and
its shareholders."
Background to the Claim
In 2011, Pathfinder, via its wholly owned UK subsidiary IMM, was
subjected to the unlawful transfer by the Government of Mozambique
of the Licence to an unconnected company controlled by the
Pathfinder's former local partners without the Company's knowledge
or consent. The Licence was until then held by the Company's
99.99%-owned subsidiary Companhia Mineira de Naburi ("CMdN"). The
Licence was later sold by the former local partners to a Chinese
state-owned company, TZM Resources S.A.
Pathfinder has since pursued a multichannel strategy to attempt
to recover the Licence, including a successful action through the
English High Court to confirm the validity of IMM's ownership of
CMdN and through attempts to negotiate settlements with the new
Licence holders.
In 2020, the Mozambique Supreme Court rejected the Company's
application to recognise the English High Court judgment. Having
exhausted all other avenues, Pathfinder has since been preparing to
bring a claim against the Government of Mozambique, under the
Mozambique-United Kingdom Bilateral Investment Treaty (2004) (the
"Treaty"), for facilitating the expropriation of the Licence.
In December 2020, Pathfinder received a legal opinion that,
subject to the interpretation of the facts and applicable laws as
they were known to the Board and Counsel, there is a 55-60 percent
prospect of establishing liability on the part of the Government of
Mozambique in a Claim under the Treaty.
As part of the Company's preparatory procedures, Pathfinder
commissioned Versant Partners LLC ("Versant") to undertake an
analysis of the valuation of Pathfinder's potential Claim. The
Versant analysis assessed a range of successful scenarios with
valuation ranges from a minimum of US$110m for an ex-ante damages
award through to US$1.5Bn for an ex-post damages award.
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 / Abigail Wellington
Tel. +44 (0)20 7409 3494
Vigo Consulting (Public Relations)
Ben Simons / Kate Kilgallen
Tel. +44 (0)20 7390 0234
Email pathfinderminerals@vigoconsulting.com
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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END
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