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.
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.
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.
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
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.
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