TIDMPFP
RNS Number : 5374A
Pathfinder Minerals PLC
30 March 2012
For immediate release: 30 March 2012
Pathfinder Minerals Plc
Letter to Shareholders
Pathfinder Minerals Plc is today posting a letter to all its
shareholders, the full text of which appears below.
Dear Shareholder
General Meeting of Pathfinder Minerals Plc ("Pathfinder" or "the
Company"); and Letter from General Veloso and Mr Cavaco
As you will know, the Company convened and duly held on
Wednesday a general meeting, following a requisition letter from
General Veloso's company, JV Consultores Internacionais Limitada
("JVC"), and Mr Diogo Cavaco (the "Requisitioners"). That meeting
was called to consider and vote on the resolution that there be an
external investigation into the Company's affairs. For the reasons
we set out in the circular, the Board recommended that you should
vote against the resolution, principally because it was an attempt
to distract your Board from dealing with the actions taken by the
Requisitioners themselves. The Requisitioners (of course) voted in
favour of the resolution proposed, but did not attend in person. I
was delighted to receive the overwhelming support of our
shareholders (other than the Requisitioners). Not only was the
resolution defeated unanimously on a show of hands by those of you
who were present, but also the proxy vote was comprehensive: 393 of
you voted against the resolution, with only 7 shareholders
(including the two Requisitioners) voting for it. I and the rest of
the Board are very grateful for your continued support.
The requisition letter from the Requisitioners did not meet the
statutory requirements that would have compelled us to call a
meeting. Nevertheless the Board felt it important to give you the
opportunity, as a part owner of the Company, to vote on their
suggestion that an external investigation be carried out. As I said
at the meeting, if the resolution were to have been passed, the
Board would have included in the scope of any review a report on
the Company's solvency (given the breadth of the investigation
requested). The Board has no concerns in this regard. It is hoped
that the Requisitioners now appreciate how little they are
supported by other shareholders and will not seek to distract the
Board further from the goal of preserving the assets of the
Company: this is and remains my sole focus.
As a fellow shareholder in the Company, I received in the post
on the morning of the general meeting a letter dated 24 March 2012
which I assume was sent to all shareholders. Whilst the Board
welcomes open debate amongst shareholders, the Board is concerned
to note that what has been presented in the letter as "facts" is
only a partial account. The letter contains a number of statements
which are so materially false and seriously defamatory that I have
felt it necessary to write to you in order to dispel a number of
these falsehoods.
Ownership of Companhia Mineira de Naburi SARL ("CMDN")
At the heart of the "concerns" expressed by the Requisitioners
is their denial of the Group's ownership of the shares in CMDN from
which the Requisitioners (and General Veloso) have diverted the
Company's sole assets, namely the mining licences over the Moebase
and Naburi sites ("the Licences"). Having diverted the Licences,
they are now engaged upon a course of conduct designed to enable
them to take control of CMDN so as to prevent the Group from
recovering its diverted assets and/or compensation for its
loss.
As to the ownership of CMDN, the Group's wholly-owned subsidiary
IM Minerals Limited ("IMM") acquired 99.99% of the issued share
capital of CMDN pursuant to valid and binding agreements (the
"Agreements") signed by or on behalf of the Requisitioners. Despite
this, and the fact that, in December 2010, General Veloso and Mr
Cavaco themselves issued and signed a share certificate evidencing
that ownership, the Requisitioners and those representing them now
seek to deny that IMM owns any shares in CMDN. This is wholly
inconsistent with the Agreements and bears no relationship to the
prior conduct of the Requisitioners and General Veloso. This is
evidenced, for example, by:
(i) Express representations made by General Veloso and Mr Cavaco
to the Mozambique Ministry of Mineral Resources in 2009 that IMM
was the owner of 75% (as it then was) of the shares in CMDN. In a
letter dated 1 October 2009 to the National Director of Mines and
signed by General Veloso, General Veloso stated: "Companhia Mineira
de Naburi assigned 75% of its share capital to IM Minerals Ltd"
(translation from Portuguese). On 1 October 2009 in an e-mail to me
Mr Cavaco wrote: "I Informed officially the Mining Ministry and the
Nacional Mining Director that IMMinerals as 75% of Companhia
Mineira de Naburi". In describing the Minister of Mineral
Resources' understanding of the position, Mr Cavaco wrote to me: "I
can repeat, she is complete aware of the situation and she knows
that IM Minerals already as 75% of the capital of Companhia Mineira
de Naburi".
(ii) Mr Cavaco's signature (in his capacity as a director of
CMDN) on 22 October 2010 of the financial statements of CMDN for
the six month period ended 31 December 2009, which showed IMM as
owner of 75% of the shares in CMDN.
(iii) Mr Cavaco's representations to Pathfinder as to IMM's
ownership of all but two of the 400,000 shares (representing
99.99%) in CMDN as part of the due diligence exercise conducted
during 2010 in connection with Pathfinder's proposed reverse
takeover of IMM.
(iv) General Veloso and Mr Cavaco's signatures on a Nominative
Share Certificate in the name of
IMM confirming its holding of 399,998 shares in CMDN.
(v) IMM's ownership of first 300,000 shares in 2009 and then
399,998 shares in 2010 were registered in the Share Registry Book
of CMDN and stamp duty was paid on the transfers to IMM.
(vi) The fact that the transfer to IMM of 300,000 shares in CMDN
representing 75% of its share capital and (in 2010) the transfer to
IMM of all but two of the shares in CMDN not already owned by IMM,
were formally confirmed by CMDN in a general meeting.
(vii) General Veloso's approval of a regulatory announcement
concerning his appointment to the Board which stated that
Pathfinder, through a "wholly owned subsidiary", held licences over
the Naburi and Moebase sites.
The Requisitioners' letter is notable in its omissions. Whilst
numerous references are made to the agreement entered into in 2006
(as subsequently varied and novated) by which IMM ultimately
acquired 70% of the shares in CMDN (the "2006 Agreement"), it is
telling that the Requisitioners have not seen fit to mention the
other agreements by which IMM acquired the remainder of the shares
in CMDN, namely an agreement in 2009 by which Mr Cavaco sold 5% of
the shares in CMDN to IMM (the "2009 Agreement") and an agreement
in 2010 (the "2010 Agreement") by which the Requisitioners sold the
remaining 24.99% of the shares to IMM. In the case of both the 2009
and 2010 Agreements, the consideration for the transfer of CMDN
shares to IMM was the transfer to the Requisitioners of shares in
IMM. The Requisitioners subsequently exchanged those IMM shares
(less some shares which had been previously sold by Mr Cavaco for
GBP50,000) for shares in Pathfinder by an agreement dated 30
December 2010. It is the rights in respect of these Pathfinder
shares which the Requisitioners used in calling the General
Meeting. Their position seems to be that they are entitled to
ownership of 100% of CMDN and of 19% of Pathfinder Minerals Plc and
of the Licences themselves.
Not only did the Requisitioners agree in the Agreements to
transfer ownership in the relevant shares to IMM, but in the 2010
Agreement in which they agreed to sell 24.99% of the shares in
CMDN, they also contractually warranted that IMM was the holder of
the other 75% of the shares in CMDN. Similarly, when they agreed in
December 2010 to exchange their shares in IMM for shares in
Pathfinder they (as well as General Veloso himself) warranted to
Pathfinder that CMDN was the sole legal and beneficial owner of all
but two of the shares in CMDN. Inexplicably, they now seek to deny
this.
Amounts owed to the Requisitioners
As to the amounts still payable in respect of the initial 70% of
the CMDN shares, it has never been denied that IMM is liable to pay
$9.9 million to the Requisitioners (less GBP209,000 already paid to
Mr Cavaco at his request). However, on the express terms of the
2006 Agreement, that amount is not payable until six months after
(and therefore is conditional upon) signature of a construction
agreement in respect of the Naburi site. That liability has been
recorded in IMM's audited accounts in accordance with applicable
accounting rules.
Assertion of SFO action
In addition to the key issue of the ownership of the CMDN
shares, the Board is very concerned to note the allegation of
bribery contained in the Requisitioners' letter and the claim that
this allegation is being investigated by the Serious Fraud Office.
The Requisitioners know that this is untrue. As the Requisitioners
well know, the Serious Fraud Office having been alerted by the
Requisitioners themselves, has completed its investigation into the
allegations, found no evidence of bribery and has decided to take
no further action.
Protective Legal Proceedings
Given that IMM has entered into valid and binding agreements to
acquire 399,998 shares in CMDN and that the conduct of the
Requisitioners and General Veloso has, until the diversion of the
Licences, been entirely consistent with IMM's ownership of those
shares, the Directors have quite properly sought declarations from
the English High Court (the forum in which the Requisitioners
agreed that any disputes should be determined) as to the position.
In their letter, the Requisitioners assert that they have
particularised the matters of which they seek to complain in
documents submitted to the English Court. These matters will now be
considered by the English High Court at a trial scheduled to start
on 29 October 2012 and a determination of the position made. Your
Board has nothing to hide. On the contrary, it looks forward to a
resolution of the issues by the English High Court.
The Board is also concerned to note the Requisitioners'
description of the recent hearing in the English Court on 19 March
2012. Whilst the letter states that the injunction was discharged,
as the Requisitioners well know, and as referred to in the
Company's announcement dated 20 March 2012, the injunction was
discharged only on the basis that they (and General Veloso) gave
undertakings to the Court in lieu of (but on substantially similar
terms to) the injunction. For all intents and purposes, those
undertakings have the same effect as an injunction. The
Requisitioners also fail to mention that they had sought to
challenge the jurisdiction of the English Court to determine the
dispute but that, very shortly before the hearing, they conceded
this and agreed to accept the English Court's jurisdiction. Of
course, had the Requisitioners (and General Veloso) offered the
undertakings and accepted the jurisdiction of the English Court in
the first instance, rather than shortly before the hearing was due
to open, the Board would not have had to incur legal costs in
preparing for the hearing on 19 March 2012.
Outlook
I appreciate that the actions taken by the Requisitioners are
unsettling and have impacted on your investment (and suspended
trading in the stock). We, as a Board, continue to pursue the legal
remedies we firmly believe are available to Pathfinder and to
strive for an earlier resolution through pursuit of high level
political avenues in the UK and Mozambique. Our prime objective is
to restore control and resume project development as quickly as
possible.
Yours sincerely
Nick Trew
Chief Executive
Enquiries:
Pathfinder Minerals Plc
Nick Trew, Chief Executive
Tel. +44 (0)20 7399 4371
Daniel Stewart & Company Plc
David Hart or James Thomas
Tel: +44 (0)20 7776 6550
M: Communications
Ben Simons or Maria Souvorov
Tel: +44 (0)20 7920 2340 /2327
Notes to Editors
Companhia Mineira de Naburi S.A.R.L ("CMDN"), a subsidiary of
Pathfinder Minerals, was issued mining concession licences 760C and
4623C on 13 September 2004 and 13 July 2011 respectively, each for
a period of twenty-five years. Taken together, these mining
concessions cover approximately 32,000 hectares of land on the
Indian Ocean coast of the Zambezia province of Mozambique, known to
contain the heavy minerals, ilmenite, rutile and zircon.
Pathfinder Minerals Plc is admitted to trading on the AIM market
of the London Stock Exchange. At the Company's request trading in
its shares was suspended on 11 November 2011 following notification
from General Veloso of his resignation as a director and assertions
by him that CMDN was no longer the licence holder. The Company's
ownership rights over CMDN itself are also in dispute and are the
subject of legal action in Mozambique and in the UK.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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