15 January 2014
Companhia
Mineira de Naburi (“CMdN”)
The Owners of CMdN, General Veloso and Diogo Cavaco, have noted the
appearance of a so-called “Tearsheet” on the website of Pathfinder Minerals plc
(“Pathfinder Minerals”) following the judgement in favour of the Owners in the
Mozambique courts on 21 October 2013 by Judge Arnaldo Rui Siquela. This Tearsheet claims to set out the
“background to the dispute” from the perspective of the Directors and Promoters
of Pathfinder Minerals (John McKeon, Nick Trew, Gordon Dickie, Tim Baldwin and
James Normand).
It
is unclear why this Tearsheet was not made public by way of a formal RNS
announcement. In any case, this
Tearsheet is inaccurate, misleading and defamatory.
Set out below is a detailed
response to the points raised by the Promoters.
The Owners have followed the
headings used by the Promoters.
Background Summary
The Promoters claim:
1) that the licences
owned by CMdN were “unlawfully transferred” to Pathfinder Mocambique
2) that Pathfinder
Minerals owns 99.9% of CMdN
3) that General
Veloso has “unlawfully sought to remove Pathfinder Minerals’ ownership… of
CMdN”.
These
statements are untrue and defamatory.
As the Promoters are fully
aware, the truth is very different.
The licences were not
unlawfully transferred – in fact they were lawfully returned to General
Veloso’s company JV Consultores, the original owner of the licence, for breach
of contract. General Veloso’s company
then applied for a new licence which has been lawfully granted in accordance
with Mozambique law. This is confirmed on the Mozambique Government’s register
of mining licences (see http://portals.flexicadastre.com/Mozambique/EN/).
The UK court has in fact confirmed
that the Share Option Agreement by which Pathfinder Minerals claimed to own
shares of CMdN was indeed an option agreement, under which the option could
only be exercised upon payment of the purchase price of US$9.9m; the option was
never exercised nor has the purchase price ever been paid. This
has now been confirmed by the court in Mozambique and Nick Trew, the CEO of
Pathfinder Minerals, has been forced to admit to the court in Mozambique that
Pathfinder Minerals never paid for the shares.
The Owners expect their ownership of CMdN to be upheld in due course in the
definitive proceedings they have put before the court in Mozambique.
Far from General Veloso
unlawfully removing Pathfinder Minerals’ purported ownership of CMdN, the
reverse is true.
In May 2008 the Promoters
asked General Veloso to release his bearer shares from legal safe custody (where
they were being held pending exercise of the option and payment of the purchase
price of US$9.9m), for the purposes of a “Board meeting”. The Promoters undertook in writing to return these
shares to their lawyers for safe keeping after the Board meeting. The General’s
bearer shares were never returned. The Promoters have signally failed to
provide any credible explanation of why these shares were not returned to
safekeeping. In their various High Court
witness statements the Promoters now risibly claim that they “cannot recall”
why they needed the bearer shares released from safe custody! It is
now clear that in fact the Promoters expropriated General Veloso’s bearer
shares at that time and have never paid for them or returned them.
This is surely why the
Promoters felt so confident issuing a Prospectus to the public markets claiming
to own the shares of CMdN when they knew that in fact they had not fulfilled
the contract to purchase the shares or ever paid for them. As Tim Baldwin, one of the Promoters said at
the time, “possession is 9/10ths of the law”. This is a strange statement for a
Director of a public company to be making.
On 25 November 2011 General
Veloso wrote to the Directors of IM Minerals requesting the return of his bearer
shares and stating that if they were not returned, new bearer shares would be
issued in replacement, in full accordance with Mozambique law. Travers Smith, a large and extremely
expensive UK legal and litigation practice hired by the Promoters, wrote back
on behalf of Pathfinder Minerals refusing to return General Veloso’s shares.
Furthermore, the Promoters
misled investors during their pre-IPO fundraising when they failed to disclose
to investors that the shares of CMdN they claimed were owned by IM Minerals
were actually under option to another company, International Mercantile Group
(owned by Trew and Dickie), that there was a US$9.9m outstanding obligation to
pay for the shares and that they did not actually own any shares of CMdN.
Detailed Background – Development of the licences
The Owners note that the
Promoters say in this section that Pathfinder Minerals “controlled” CMdN
through IMM. Perhaps by saying
“controlled” rather than “owned” they are finally admitting that they knew they
did not own the shares of CMdN and that they have not paid for them – but they also
know they had General Veloso’s bearer shares in their safe – in breach of their
legal obligations to have the bearer shares held in independent legal safe
keeping.
Pathfinder Minerals also
claims to have “invested significant funds in detailed analysis and development
of the project…”. This is also a strange
claim to make as virtually nothing has been invested by Pathfinder Minerals in
Mozambique.
In fact, when the original
Option Agreement signed in 2005 was superseded by the Novation Agreement in
September 2010, the Promoters insisted that the small amount of funds they had
advanced to CMdN of US$175,425 should be offset against the potential
acquisition price of the CMdN shares. Clearly Pathfinder Minerals was not
acting as an owner of CMdN, otherwise it would have funded the working capital
of the business. Subsequently all the
costs of maintenance of the mine and the project have been borne entirely by
General Veloso and Diogo Cavaco.
The Owners have asked the
Promoters on several occasions to provide shareholders of Pathfinder Minerals
with a detailed account of what they have done with the £11 million raised from
JP Morgan and Genesis Investments in July 2011.
According to the Owners’ analysis, something in the region of £3m of the
£11m seems to be unaccounted for – it seems strange that so much money should
have been spent without any development activities having taken place on the ground
in Mozambique.
The Promoters should provide
their shareholders with a detailed breakdown of how the £11m has been spent and
confirm that none of this money has been paid to companies in which the
Promoters have any economic interest.
The Promoters should also provide an analysis of the funds distributed
in Mozambique since this dispute arose and to whom these distributions have
been made.
Mining licences
As noted above, General
Veloso lawfully owns the licence to the Naburi and Moebase mineral sands
deposits.
Legal Action
Pathfinder Minerals states
that General Veloso resigned his directorship of Pathfinder Minerals in
November 2011. This is simply untrue –
General Veloso resigned from the Board in writing on 21 October 2011.
As noted above, on 25
November 2011 General Veloso wrote to the Board of IM Minerals requesting the
return of his bearer shares and stating that otherwise new bearer shares would
be issued in replacement, in accordance with Mozambique law. Pathfinder Minerals refused to do so. New bearer shares were subsequently issued to
General Veloso and Diogo Cavaco in replacement and this was confirmed at an EGM
of CMdN held on 9 December 2011. The competing EGM of CMdN called by
Pathfinder Minerals has been ruled invalid by the Mozambique court.
Despite this the Promoters
went to the UK court on 19 December 2011 to obtain an ex-parte injunction to
prevent General Veloso interfering with their purported rights of ownership of
CMdN. It is a fundamental principle of UK law that persons seeking an
Injunction should go to the Court with “clean hands” i.e. they should fully
disclose everything that they know. It
would appear that the Promoters failed to disclose to the Court that the shares
of CMdN they claimed were owned by Pathfinder Minerals were actually subject to
an Option Agreement, that they had never exercised the option, they had never
paid for the shares and indeed replacement bearer shares had already been
lawfully issued to General Veloso.
Clearly the ex-parte Injunction should never have been granted by the
English court as it served no useful purpose.
In any case, on 17 April
2012, General Veloso obtained his own Injunction in the Mozambique court
preventing Pathfinder Minerals bringing any action in the UK until the case had
been heard in Mozambique. Having
obtained this Injunction, General Veloso naturally walked away from the UK
proceedings. The Mozambique Injunction
remains in place and the uncontested UK judgement has been obtained in criminal
breach of the Mozambique Injunction.
Pathfinder Minerals also
claims it is “taking the necessary steps to have the various orders and
judgements it has obtained” enforced.
This is also untrue. To date the
Owners have been notified that Pathfinder Minerals has only sought to have one
order – for costs of £106,000 - enforced.
Is this because the Promoters
know that their UK judgement has no merit, has been obtained illegally and is
unenforceable as there is already a case before the Mozambique court?
Parallel political process
The Owners note that the
Promoters continue to try to subvert the legal process through their so-called
“parallel political process”.
Throughout this dispute the
Promoters have spent huge sums of shareholders money on lawyers, lobbyists and
PR firms to try to portray themselves as the innocent victims of fraud and
corrupt African politicians.
Nothing could be further
from the truth.
The Promoters have run a
scurrilous and defamatory campaign of misinformation and half truths through a
public company website and using the full weight of their massively superior
financial resources (provided by third party investors) to try to parlay their
way into ownership of a valuable asset without ever paying for it.
Unlike the UK and Irish
Promoters, General Veloso has an unimpeachable record of probity and
outstanding service to his country at the very highest level throughout the
Cold War, a devastating civil war of national liberation and subsequently. Contrary to the assertions of the Promoters,
the Owners have been assured by the British Government that they are content to
leave this matter to the due processes of the courts.
Conclusion
- The real facts
On 21 October 2013 Judge
Arnaldo Rui Siquela of the Ist Commercial Section of the Judicial Court of
Maputo City declared the nominative share certificate of CMdN presented by IM
Minerals at an EGM null and void and confirmed that IM Minerals is not a
shareholder of CMdN and did not pay the US$9.9m that would have entitled them
to become owners of CMdN.
The
Owners naturally feel vindicated that their ownership of CMdN has been
confirmed by the Mozambique Court as they were always confident it would be.
This
judgement also effectively confirms that:
1)
the ex-parte
injunction obtained in the UK by Pathfinder Minerals on 19 December 2011 was
obtained after the contracts, specifically the option agreement, between the
owners of CMdN and IM Minerals were legally terminated and therefore the
injunction should never have been granted
2)
the judgement
obtained by Pathfinder Minerals in the UK should never have been made
3)
the Board of
Pathfinder Minerals has wasted millions of pounds of shareholders funds
pursuing a case, knowing that it had not exercised its option over the shares
of CMdN and had never paid for them
The
Owners urge the UK authorities and Pathfinder Minerals’ large institutional
shareholders, JP Morgan Asset Management and Paul Ballantyne of Genesis
Investments, to institute a full independent investigation into the actions of
the Directors and Promoters of Pathfinder Minerals and the statements that have
been made by Pathfinder Minerals on the Regulatory News Service and its
corporate website.
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Notes to editors:
In the High Court judgement
obtained by Pathfinder Minerals in October 2012, the judge correctly found that
the Share Option Agreement by which Pathfinder Minerals claimed to own shares
of CMdN was indeed an option agreement, under which the option could only be
exercised upon payment of the purchase price of US$9.9m, which has not been
paid. Accordingly, under Mozambique law ownership of CMdN shares never passed
to Pathfinder Minerals.
To this day, the Promoters
of Pathfinder Minerals, Nick Trew, Gordon Dickie, John McKeon and Tim Baldwin
have only ever paid US$100,000 in respect of the Option Agreement over shares
of CMdN entered into in good faith by General Veloso and Diogo Cavaco in 2006.
The
owners remain highly confident however that while it is likely to take several
years for this case to be finally resolved, they will be successful in
defending their rights of ownership under Mozambique law.
