TIDMPFP
RNS Number : 6128K
Pathfinder Minerals Plc
23 September 2016
Embargoed: 0700hrs 23 September 2016
Pathfinder Minerals Plc
("Pathfinder," the "Company" or the "Group")
Interim Financial Statements for the Six Months Ended 30 June
2016
Chairman's statement
Introduction
It has been approximately three months since I last updated
shareholders, in my statement accompanying the 2015 annual report,
on the steps being taken to recover Pathfinder's assets and address
Company's financial situation. Pathfinder made progress in both of
these areas during the six month period ended 30 June 2016.
Steps to recover the Company's assets
On 6 May 2016, Pathfinder announced the appointment of Eduardo
C. Mondlane Jr as its regional representative in Mozambique. Mr
Mondlane Jr is a highly respected Mozambican who has been providing
strategic advisory services in Africa for thirty years across
industries including aerospace, infrastructure, energy, power and
financial services. He has advised companies including Boeing
Commercial Airplanes, United Technologies, Siemens and GE Capital
Aviation. He has also served on the boards of Absa Group and Bank
(Barclays Africa) and other Barclays African subsidiary banks.
Mr Mondlane Jr and members of Pathfinder's legal counsel in
Mozambique have in recent months been actively engaged in
discussions with relevant departments within the Mozambique
Government with the ultimate aim of restoring control of the areas
previously licensed to the Company under mining concessions 760C
and 4623C (the "Licences"). Shareholders will recall that the
Company was deprived of the Licences in late 2011 as a result of
their transfer to an unaffiliated entity via a process which the
Company believes was defective. Pathfinder is doing all it can to
advance such discussions but I am unable to provide any visibility
over either the outcome of the dialogue or the time it may take to
achieve a resolution. We are however encouraged by the much
improved level of engagement with the Mozambique Government.
Pathfinder continues to pursue its legal strategy in parallel
with the Company's dialogue with the Mozambique Government. The
most significant element remains the decisions awaited from the
Mozambique Supreme Court (the "Supreme Court") in respect of the
Company's application to appeal, on the basis of a previous
conflicting decision, the Supreme Court's decision to refuse to
recognise certain costs orders made by the English courts; and in
respect of the Company's application to the Supreme Court to
recognise the substantive judgment by the English court regarding
Pathfinder's ownership of Companhia Mineira de Naburi SARL
("CMDN"), the subsidiary company to which the Licences were
registered prior to their expropriation.
It remains impossible to predict what the outcome will be from
the Supreme Court. Indeed, the Company is advised by its Mozambique
counsel that a positive outcome from the Supreme Court would likely
have the effect of bringing to a successful conclusion the various
proceedings in the commercial court in Maputo surrounding the same
issue on which the English court has already ruled. Whatever the
outcome, the Company may still seek to recover its assets or seek
compensation for its loss through other judicial processes.
The only update to have been received this year in respect of
the legal proceedings ongoing in the commercial court in Maputo
(the "Maputo Court") was announced on 8 April 2016. This
announcement recorded the Maputo Court's refusal to hear a
challenge brought by Pathfinder's subsidiary, IM Minerals Limited,
to the validity of a shareholder resolution of CMDN, purportedly
passed in May 2009. Pathfinder applied to the Maputo Court on 13
April 2016 to appeal this defective decision, which is inconsistent
with previous judgments in each of the Supreme Court, the English
High Court and the Maputo Court. Permission to appeal was granted
on 13 June 2016 and a decision is awaited.
Corporate events
On 10 March 2016, James Normand resigned from the Board as
Finance Director and, on 29 March 2016, we welcomed Robert Easby as
his replacement. Robert qualified as a Chartered Accountant in 2000
and spent his early career in audit compliance and as a Company Law
specialist within a large regional Chartered Certified Accountancy
practice.
Concurrent with the appointment of Mr Mondlane Jr, and as
announced on 6 May 2016, the Company has agreed that, in the event
that Pathfinder is successful in regaining control of the Licences,
it will issue ordinary shares to Mr Mondlane Jr equivalent to up to
25 per cent of the enlarged issued share capital of Pathfinder. In
such circumstances, it is envisaged that the Mr Mondlane Jr will
assist with the ongoing administration of Pathfinder's local
operating subsidiaries and with the Company's relationships with
regional and national authorities and with local communities.
On 22 June 2016, Pathfinder announced that it had been
successful in obtaining final charging orders from the English High
Court against the aggregate 19,824,000 shares held in Pathfinder by
Jacinto Veloso's company and Diogo Cavaco (the "Defendants"). The
English High Court has previously ordered the Defendants to pay
GBP1.1 million worth of costs to Pathfinder in respect of the 2012
English proceedings but the Defendants have not complied with any
of the costs orders. The effect of the charging orders was to
charge their shares in the Company with payment of the amount of
the costs orders plus interest, currently totalling in excess of
GBP1.4 million. On 24 August 2016, Pathfinder announced that it has
successfully achieved the next objective in this process and
obtained a sale order in respect of those shares. The effect is
that, unless the Defendants pay Pathfinder the amounts described
above, the Company may sell sufficient of their shares to discharge
the debt. The directors intend to maximise the value which will be
obtained from the sale of the shares at some point in the future by
way of an orderly placing.
Financial results and current financial position
The Board has taken a number of definitive actions to reduce the
central overhead of the Company to enhance its ability to continue
pursuing it asset recovery strategy - which, among other things,
necessitates the ongoing payment of legal fees. The Company has
foregone a physical head office; the overall cost of directors'
fees has reduced and was approximately 10% less than the cost of
directors' fees in the equivalent period in 2015; and payment of an
aggregate 25% of the directors' fees incurred in the period under
review has been deferred until such time as the Company is in
materially better financial health. We expect the cost of
directors' fees, and the amounts of which are being deferred, to
reduce further still in the second half of the year as the full
benefit of the reconfigured Board takes effect.
A number of share subscriptions occurred during the period under
review which have the effect of moderately strengthening the
Company's cash position while the directors seek more substantial
sources of funding required to shore up the Company's balance
sheet. Accordingly, the Company's cash resources were bolstered by
the receipt of GBP295,500 in net proceeds received from two share
subscriptions in March 2016 - one-third of which was invested by
the Company's chief executive officer.
The financial statements of the Pathfinder Group for the six
months ended 30 June 2016 follow later in this report. The Income
Statement shows a reduced loss of GBP404,000 (H1 2015 - GBP695,000)
of which GBP113,000 relates to directors' fees that are recorded as
a liability in Trade and other payables but actual payment of which
have been deferred as described above and in Note 2 to these
accounts.
The Group's Statement of Financial Position shows net assets
(excluding the GBP113,000 of deferred fees described above) at 30
June 2016 of GBP51,000 (31 December 2015 - GBP42,000). The assets
are held largely in the form of cash deposits (totalling GBP135,000
at the end of the period). Two further subscriptions by private
investors occurred after the period under review, in August 2016,
producing a further GBP45,000 in net proceeds.
Outlook
The Board is encouraged by the ongoing dialogue with the
Mozambique Government which reflects a level of engagement that the
Company has not hitherto been afforded. We are at the same time
continuing to pursue our legal strategy vigorously in the event
that we should need to rely upon it to resolve the matters or
provide compensation for the Company's loss. The directors are
continuing to address the financial position of the Company with
the aim of sourcing sufficient capital to bring its strategy to
recover the Licences to a successful conclusion. On behalf of the
Board, I should like to thank our investors once again for their
unwavering support as we seek to recover the valuable assets of
which the Company has been unlawfully deprived.
Sir Henry Bellingham
Chairman
22 September 2016
Consolidated statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 31 December
2016 June 2015
2015
---------- ---------- -------------
GBP '000 GBP GBP '000
'000
Revenue - - -
Other operating income - - 3
Administrative expenses (404) (699) (1,104)
---------- ---------- -------------
Operating loss (404) (699) (1,101)
Finance income - 4 8
---------- ---------- -------------
Loss on ordinary activities
before taxation (404) (695) (1,093)
Taxation - - -
Comprehensive loss for the
period (404) (695) (1,093)
========== ========== =============
Loss per share
(2015 figures based on 103,716,723
shares in issue throughout
the period) (0.34p) (0.67p) (1.05p)
Statement of financial position
Unaudited Unaudited Audited
30 June 30 31 December
2016 June 2015
2015
---------- ---------- -------------
GBP '000 GBP GBP '000
'000
Assets
Current assets
Trade and other receivables 23 123 94
Cash and cash equivalents 135 592 80
----------
158 715 174
---------- ---------- -------------
Total assets 158 715 174
---------- ---------- -------------
Equity
Share capital - issued and
fully paid 18,322 18,289 18,289
Share premium 11,289 11,022 11,022
Retained loss (29,673) (28,871) (29,269)
Total equity (62) 440 42
========== ========== =============
Liabilities
Current liabilities
Trade and other payables 220 275 132
Total liabilities 220 275 132
---------- ---------- -------------
Total equity and liabilities 158 715 174
========== ========== =============
Consolidated statement of changes in shareholders' equity
Share Share Retained Total
Capital Premium Earnings
--------- --------- ---------- --------
GBP'000 GBP'000 GBP'000 GBP'000
1 January 2015 18,289 11,022 (28,176) 1,135
Loss for the period - - (695) (695)
30 June 2015 18,289 11,022 (28,871) 440
--------- --------- ---------- --------
1 January 2015 18,289 11,022 (28,176) 1,135
Loss for the year - - (1,093) (1,093)
31 December 2015 18,289 11,022 (29,269) 42
--------- --------- ---------- --------
1 January 2016 18,289 11,022 (29,269) 42
Loss for the period - - (404) (404)
Share issue 33 267 - 300
--------- --------- ---------- --------
30 June 2016 18,322 11,289 (29,673) (62)
========= ========= ========== ========
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months Year
ended ended ended
30 June 30 31 December
2016 June 2015
2015
---------- ---------- -------------
GBP '000 GBP GBP '000
'000
Cash flows from operating
activities
Operating loss (404) (695) (1,093)
Finance income - (4) (8)
(Increase) decrease in trade
and other receivables 71 (62) (33)
Increase (decrease) in trade
and other payables 88 177 34
---------- ---------- -------------
Cash absorbed by operations (245) (584) (1,100)
Cash flows from investing
activities
Finance income - 4 8
Share issue 300 - -
Net movement in cash 55 (580) (1,092)
Cash at the beginning of
the period 80 1,172 1,172
Cash at the end of the period 135 592 80
========== ========== =============
NOTES
1. BASIS OF PREPARATION
These financial statements have been prepared under the
historical cost convention and on a going concern basis (see note 2
below); and in accordance with International Financial Reporting
Standards and IFRIC interpretations adopted for use in the European
Union.
The financial information for the period ended 30 June 2016 has
not been audited or reviewed in accordance with the International
Standard on Review Engagements 2410 issued by the Auditing
Practices Board. The figures were prepared using applicable
accounting policies and practices consistent with those adopted in
the statutory financial statements for the year ended 31 December
2015. The figures for the year ended 31 December 2015 have been
extracted from these financial statements, which have been
delivered to the Registrar of Companies and which contain an
unqualified audit report.
The financial information contained in this document does not
constitute statutory financial statements as defined by Section 435
of the Companies Act 2006. In the opinion of the directors, the
financial information for this period fairly presents the financial
position, result of operations and cash flows for the period.
This Interim Financial Report was approved by the Board of
Directors on 22 September 2016.
2. GOING CONCERN
As explained in the 2015 annual report, the availability of
funds to continue to finance the Company's activities has a direct
impact on the ability of the Company to continue to trade as a
going concern. The Board has concluded, as set out in the
Chairman's Statement, that it currently believes that it has
sufficient resources to see through its strategy to recover the
assets improperly expropriated from it.
The Board has therefore continued to adopt a going concern basis
for the preparation of these financial statements.
Included within the figure for Trade and other payables are
amounts due to the directors in respect of deferred salaries and
related benefits, totalling GBP113,000. The directors have agreed
defer these amounts until such time as the company can reasonably
afford to make these payments without materially adversely
effecting its cash position.
3. SEGMENTAL ANALYSIS
The development of the Group's mining interest in Mozambique
comprises the whole of the Group's activity. The Group has one
activity only. Of the Group's administrative expenses, GBP28,000
(2015 - GBP148,000) was spent in Mozambique. Since, in the interest
of accounting prudence, full provision has been made against cost
of its Mozambique assets, the whole of the value of the Group's net
assets is attributable to its UK assets and liabilities (also the
case at 30 June 2015).
4. CONTINGENT LIABILITIES
As part of the agreement for the purchase of the shares in its
subsidiary, Companhia Mineira de Naburi SARL, the Company has
agreed to pay the vendors a further sum of $9,900,000 if, following
further exploration and appraisal, an agreement is reached for the
construction of a facility for the processing of ore extracted from
the Naburi mineral sands deposit. Similarly, as part of its
agreement for the purchase of the whole of the issued share capital
of Sociedade Geral de Mineracao de Moçambique SARL, Companhia
Mineira de Naburi SARL has agreed to pay the vendors, BHP Billiton,
a further sum of $9,500,000 if, following further exploration and
appraisal, an agreement is reached for the construction of a
facility for the processing of ore extracted from the Moebase
mineral sands deposit.
Enquiries:
Pathfinder Minerals Plc
Nick Trew, Chief Executive
Tel. +44 (0)20 3440 7775
WH Ireland Limited (Nomad and Broker)
Paul Shackleton or James Bavister
Tel. +44 (0)20 7220 1666
Vigo Communications (Public Relations)
Ben Simons or Ali Roper
Tel. +44 (0)20 7830 9700
Email. pathfinderminerals@vigocomms.com
Notes to Editors:
Pathfinder Minerals Plc is incorporated in England & Wales
and is admitted to trading on the AIM market of the London Stock
Exchange.
CMdN, a subsidiary of Pathfinder, 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.
As announced on 3 February 2012, ownership of these licences is
being disputed.
END
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