TIDMPFP
RNS Number : 9478A
Pathfinder Minerals Plc
07 June 2021
7 June 2021
Pathfinder Minerals Plc
("Pathfinder" the "Company")
Final Results for the Year Ended 31 December 2020
Pathfinder reports its audited financial results for the year
ended 31 December 2020. The full annual report including all notes
to the accounts has been posted to shareholders and is available on
the Company's website at www.pathfinderminerals.com.
Dennis Edmonds, Chairman, commented:
"With a new Chief Executive Officer appointed during 2020 and
fundraises during the first half of 2021, Pathfinder is in the
strongest position it has been in for several years to recover
value through a substantial claim against the government of
Mozambique under the Mozambique-United Kingdom Bilateral Investment
Treaty. With estimated losses in connection with the diversion of
its Licence, including lost profits, exceeding US$621 million, a
legal opinion from Counsel in the Company's favour, and the means
to progress a claim to the point of securing third-party litigation
funding, the opportunity for Pathfinder is clear. Pathfinder has
also broadened its horizon to actively consider exploring
additional opportunities in advance of, in parallel with, or
subsequent to, a resolution of the expropriation."
Enquiries:
Pathfinder Minerals Plc
Peter Taylor, Chief Executive Officer
Tel. +44 (0)20 3143 6748
Strand Hanson Limited (Nominated & Financial Adviser and
Broker)
James Spinney / Ritchie Balmer / Rob Patrick
Tel. +44 (0)20 7409 3494
Vigo Consulting (Public Relations)
Ben Simons / Kate Kilgallen
Tel. +44 (0)20 7390 0234
Email. pathfinderminerals@vigoconsulting.com
Novum Securities Limited (Corporate 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").
CHAIRMAN'S STATEMENT
INTRODUCTION
The Board continues to pursue a resolution to the dispute over
Mining Concession 4623C (the "Licence") which was expropriated from
the Company in 2011 through a transfer which the Company believes
was unlawful. During 2020, the Board's focus transitioned from the
negotiation of a commercial settlement with Pathfinder's former
local partner (a beneficiary of the Licence transfer) to
positioning the Company to bring a substantial claim against the
government of Mozambique, under the Mozambique-United Kingdom
Bilateral Investment Treaty (2004) (the "Treaty"), for its role in
facilitating the transfer.
Simultaneously with progressing its claim against the Government
of Mozambique, the Board is also actively investigating new
opportunities in the mining sector.
STRATEGY
Negotiations continued in the early part of 2020 towards a
commercial settlement with General Jacinto Veloso, a 50 per cent.
shareholder in Pathfinder Moçambique to which the Licence was
transferred in 2011, and an entity which has nothing to do with the
Pathfinder Minerals group. Pathfinder has also since validated
evidence that the remaining 50 percent shareholding in the
Licence-holding entity had been transferred to Sociedade Hong Kong
Nonferrous Metal Mining Company Limitada.
Despite considerable efforts to engage all parties in commercial
settlement negotiations, after the Mozambique Supreme Court ruled
in May 2020 that it would not recognise an English High Court
Judgment in Pathfinder's favour, the Board concluded that the
prospects of a commercial settlement had materially diminished and
that the Company should seek recourse against the government of
Mozambique. Pathfinder asserts that the government of Mozambique
acted improperly in allowing the Licences to be expropriated from
the Company through a transfer which had no legal validity.
The strategic decision to prepare for a possible Treaty claim
was compounded by the discovery in December 2020 that the
titleholder of the Licence as specified on the Mozambique Mining
Cadastre Portal had changed to TZM Resources S.A. It appears that
the government of Mozambique not only failed to limit the risk of a
disposal of the Licence but positively facilitated it, thereby
increasing Pathfinder's exposure to losses.
In the event that Pathfinder refers the matter to the
International Centre for Settlement of Investment Disputes
("ICSID") under the Treaty, the ICSID tribunal would have the power
to order the return of the Licence to Pathfinder's control or to
order payment of damages by the Government of Mozambique to
compensate Pathfinder for its loss. Pathfinder estimates its losses
in connection with the diversion of the Licence, including lost
profits, to be more than US$621.3 million.
The Board received in December 2020 an updated legal opinion
from Samuel Wordsworth QC of Essex Court Chambers on the prospects
of successfully establishing liability against the government of
Mozambique. The legal opinion is consistent with the Board's
expectation that, subject to the interpretation of the facts and
applicable laws as they are currently known to the Board and
Counsel, there is a 55-60 per cent. prospect of establishing
liability on the part of the government of Mozambique. The Board
has commenced discussions with prospective litigation funders for
cost-effective funding of a claim. The Company has also held
discussions with established heavy mineral operators regarding
development of the licences in the event of their successful return
to Pathfinder.
Due to the recent progress made on the claim, the Board is now
also actively exploring other opportunities within the mining
sector. Through its own contacts and those of its investors, the
Board is exposed to a number of potential projects, and is now
actively investigating these with a view to moving one or more of
them forward, subject to shareholder and regulatory approvals as
required.
MANAGEMENT CHANGES
On 3 July 2020, Peter Taylor was appointed as Chief Executive
Officer, enabling me to step into the role of Chairman, as a result
of Lord Bellingham resignation as Chairman at the same time. Peter
has over thirty years' experience in leading strategic operations
in Africa, Southeast Asia and Europe combined with transactional
expertise in the mining and exploration sector.
Further changes to the composition of the Board occurred after
year-end, on 17 March 2021, with the resignation of John Taylor as
Non-Executive Director and the appointment of Jonathan Summers as a
further Independent Non-Executive Director. Jonathan brings over 25
years of international business experience to the Board including
as a former Managing Director at Goldman Sachs. On 25 May 2021,
Mark Gasson was appointed as Independent Non-Executive Director.
Mark is an accomplished geologist with 35 years' experience in gold
and base metals exploration and development across Africa and South
America.
NEW FUNDS FOR WORKING CAPITAL
During 2020, the Company completed two new financings. The first
was a convertible loan note for GBP175,000 (announced on 3 April
2020) ("CLN") and which was fully converted during 2020; the
second, was an equity fundraising to issue 38,461,538 new shares
for gross proceeds of GBP250,000 (announced on 28 May 2020), which
completed on 3 June 2020.
After the year-end, a further GBP720k before expenses was raised
through the private placing of an aggregate of 130,000,000 new
shares between February and May 2021, as announced on 19 February
2021 and 4 May 2021.
FINANCIAL RESULTS AND CURRENT FINANCIAL POSITION
The financial statements of the Pathfinder Group for the year
ended 31 December 2020 follow later in this report. The Income
Statement shows a loss of GBP668k (2019 restated: GBP874k). The
Group's Statement of Financial Position shows total assets at 31
December 2020 of GBP224k (31 December 2019 restated: GBP261k). The
assets were held largely in the form of cash deposits of GBP191k
(as at 31 December 2020). The cash position has since strengthened
during 2021 following the issue of shares, resulting in the raising
of a further GBP720k before expenses.
In November 2020, Pathfinder appointed Hausfeld, an
international law firm, to identify and source an asset recovery
specialist with a view to potentially monetising the outstanding
costs awards which exist against the Company's former local
partners in Mozambique following English court proceedings. Any
monetisation of these costs awards would result in a further
strengthening of the Company's cash position.
The accounts for the year ended 31 December 2020 include a
restatement for 2019 to reflect an increase to share-based expenses
of GBP279k. This increase is in accordance with the required
accounting treatment for share options and warrants, and does not
impact the Company's cash flow. In addition, the Company has
increased the level of prudence in respect of the Company's legacy
PAYE liability by including an additional provision of GBP119k.
OUTLOOK
With a new Chief Executive Officer appointed during 2020 and
fundraises during the first half of 2021, Pathfinder is in the
strongest position it has been in for several years to recover
value through a substantial claim against the government of
Mozambique under the Treaty. With estimated losses in connection
with the diversion of the Licence, including lost profits,
exceeding US$621 million, a legal opinion from Counsel in the
Company's favour, and the means to progress a claim to the point of
securing third-party litigation funding, Pathfinder's opportunity
becomes quite compelling. Pathfinder has also now gone from being a
company solely focussed on one asset to one which is actively
exploring additional opportunities.
Dennis Edmonds
Chairman
3 June 2021
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income for the Year
Ended 31 December 2020
Year ended
Year ended 31 December 2019
31 December 2020 As Restated
GBP'000 GBP'000
CONTINUI NG OP ERATIONS
Re v e nue - -
Ad ministrati ve exp e ns es (668) (874)
OPE R ATING LOSS (668) (874)
LOSS B EFORE INCOME TAX (668) (874)
Income tax - -
LOSS FOR THE Y EAR (668) (874)
Total comprehensive lo ss for the year attributable to equity holders of the
parent (668) (874)
Loss p e r s hare from continuing operations in p e nce p er s hare:
Basic and diluted (0.19) ( 0.29)
Consolidated Statement of Financial Position for the Year Ended
31 December 2020
Year ended As at
Year ended 31 December 2019 1 January 2019
31 December 2020 As Restated As Restated
GBP'000 GBP'000 GBP'000
NON-CURRENT ASSETS
Investments - - -
CURRENT ASSETS
Trade and other receivables 33 103 192
Cash and cash equivalents 191 158 52
TOTAL ASSETS 224 261 244
EQUITY AND LIABILITIES
Capital and reserves attributable to equity holders of the
Company:
Share capital 18,584 18,504 18,458
Share premium 13,685 13,307 12,431
Other reserves 437 324 202
Accumulated deficit (32,831) (32,163) (31,289)
TOTAL EQUITY (125) (28) (198)
CURRENT LIABILITIES
Trade and other payables 349 289 442
TOTAL LIABILITIES 349 289 442
TOTAL EQUITY AND LIABILITIES 224 261 244
Consolidated Statement of Changes in Equity for the Year Ended
31 December 2020
Called up share Share based Accumulated Total
capital Share premium payment reserve Warrant reserve deficit equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Restated as at
31 December
2017 and 1
January 2018 18,416 11,997 8 - (30,474) (53)
Loss for the
year (815) (815)
Total
comprehensive
loss for the
year (as
restated) (815) (815)
Issue of share
capital 42 434 476
Restatement of
share based
payments 122 72 194
Restated as at
31 December
2018 and 1
January 2019 18,458 12,431 130 72 (31,289) (198)
Balance at 1
January 2019 18,458 12,431 130 72 (31,289) (198)
----------------- ----------------- -------------- ----------------- ---------------- ----------------- --------
Loss for the
year (as
restated) (874) (874)
Total
comprehensive
loss for the
year (as
restated ) (874) (874)
----------------- ----------------- -------------- ----------------- ---------------- ----------------- --------
Issue of share
capital 46 876 922
Restatement of
share based
payments 58 64 122
Balance at 31
December 2019
as restated 18,504 13,307 188 136 (32,163) (28)
----------------- ----------------- -------------- ----------------- ---------------- ----------------- --------
Loss for the
year (668) (668)
Total
comprehensive
loss for the
year (668) (668)
----------------- ----------------- -------------- ----------------- ---------------- ----------------- --------
Issue of share
capital 80 395 475
Cost of share
issue (17) (17)
Share based
payments (4) 117 113
Balance at 31
December 2020 18,584 13,685 184 253 (32,831) (125)
----------------- ----------------- -------------- ----------------- ---------------- ----------------- --------
Consolidated Statement of Cash Flows for the Year Ended 31
December 2020
Year ended
Year ended 31 December
31 December 2019
2020 As restated
GBP'000 GBP'000
Cash flows from operating activities
Operating loss (668) (874)
Adjustments for:
Share-based payments 113 122
Services settled in shares 50 52
Foreign exchange movement - 3
Net cash flow from operating activities
before changes in working capital (505) (697)
Changes in working capital:
Decrease in trade and other receivables 70 90
Increase in trade and other payables 60 139
Net cash flow used in operating
activities (375) (468)
Cash flow from financing activities
Proceeds arising as a result of
the issue of ordinary shares 430 574
Costs related to issue of ordinary (17) -
share capital
Interest paid (5) -
Net cash flow from financing activities 408 574
Net increase in cash and cash equivalents
in the year 33 106
Cash and cash equivalents at beginning
of the year 158 52
------------- -------------
Cash and cash equivalents at end
of the year 191 158
------------- -------------
T he financial statem e nts we re appro ved for issue by the
Board of Directors on 3 June 2021 and w ere signed on its b e half
by:
Dennis Edmonds
Director
EXTRACTS FROM THE NOTES TO THE ACCOUNTS
NOTE 1. ACCOUNTING POLICIES
Going concern
The directors maintain cash flow forecasts looking ahead for
periods not less than 12 months. As at the date of approval of the
financial statements, the cash flow forecast indicated that the
Company has sufficient cash resources for at least the next 12
months. The cash flow forecast could be impacted by any significant
changes to the Company's planned activities, and this could have a
material impact on whether the Company remains a going concern.
Although the Company has been successful in securing the support of
legal representatives in order that it can pursue its claim against
the government of Mozambique, there is no guarantee that additional
fees will not be incurred, which have not yet been forecast.
The Board and the Company have a successful track record in
having raised finance in the past, but no assurance can be given
that any additional funding will be available should it become
required, or if such funding was available, that it would be
offered on reasonable terms.
After the balance sheet date, the Company raised GBP720k, in
aggregate, before expenses, via new share issues.
NOTE 9. TRADE AND OTHER RECEIVABLES
Group Parent Company
2019 2019
2020 As restated 2020 As restated
GBP'000 GBP'000 GBP'000 GBP'000
Other debtors 8 46 8 46
VAT 13 4 13 4
Prepayments and accrued income 12 53 12 53
-------- ------------- -------- -------------
33 103 33 103
-------- ------------- -------- -------------
The Group and Company has restated 'other debtors' for 2019,
reducing the amount stated, by GBP120k.
NOTE 12. TRADE AND OTHER PAYABLES
Group Parent Company
2019 2019
2020 As restated 2020 As restated
GBP'000 GBP'000 GBP'000 GBP'000
Trade creditors 58 33 58 33
Social security and other taxes 227 196 227 196
Other creditors 47 47 47 47
Accruals and deferred income 17 13 17 13
-------- ------------- -------- -------------
349 289 349 289
-------- ------------- -------- -------------
NOTE 17. EVENTS AFTER THE REPORTING PERIOD
On 19 February 2021, the Company announced it had entered into
an agreement to conditionally raise GBP300k before expenses by way
of a placing of 60,000,000 new Ordinary Shares of 0.10p ("Ordinary
Shares") each at a price of 0.50p per share (the "Placing Shares").
This transaction triggered the repricing of 12,833,334 warrants
from 0.6p per share to 0.5p per share; these warrants are
exercisable until 11 May 2022.
On 1 April 2021, commission of GBP11k of the proceeds from the
issue of the Placing Shares was settled with Align Research Ltd
through the issuance of 2,294,336 Ordinary Shares at a price of
0.50p per share.
On 17 March 2021, options over 6,000,000 Ordinary Shares were
granted to Mr J. Summers (a director of the Company), exercisable
within 2 years at a price of 0.55p per share.
On 1 April 2021, options over 6,000,000 Ordinary Shares were
granted to Mr J. Summers, exercisable within two years of the date
of grant at a price of 1.25p per share.
On 4 May 2021, the Company announced it had entered into an
agreement to raise GBP420,000 before expenses by way of a placing
of 70,000,000 new Ordinary Shares of 0.10p each at a price of 0.60p
per share (the "Placing Shares").
On 8 May 2021, warrants over 11,227,110 Ordinary shares of 0.10p
each expired unexercised.
NOTE 18. PRIOR YEAR ADJUSTMENTS
The impact of the 2019 prior year restatement in respect of the
legacy PAYE balances to be agreed with HMRC, and recognition of the
share-based payment charges are as follows:
2019 2019
as previously reported Restatement as restated
GBP'000 GBP'000 GBP'000
Administrative expenses (652) (222) (874)
Operating loss (652) (222) (874)
Loss for the year (652) (222) (874)
Loss per share (basic and diluted) (0.22p) (0.07p) (0.29)
Trade and other receivables 222 (119) 103
Total assets 380 (119) 261
Other reserves 45 279 324
Accumulated deficit (31,762) (401) (32,163)
Total equity 94 (122) (28)
Trade and other payables 286 3 289
Total equity and liabilities 380 (119) 261
The impact of the restatement for the years prior to 2019 is
reflected as at 1 January 2019, as follows:
1 January 2019 (as previously reported) Restatement 1 January 2019 as restated
GBP'000 (GBP'000) (GBP'000)
Other reserves(1) 25 177 202
---------------------------------------- ------------ ---------------------------
Accumulated deficit (31,110) (179) (31,289)
---------------------------------------- ------------ ---------------------------
(1) comprising share based payments reserve and share based
warrants reserve.
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END
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June 07, 2021 02:00 ET (06:00 GMT)
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