The owners of CMdN, General Veloso and Diogo Cavaco (“Owners”) note the
updated “Tearsheet” issued by Pathfinder. This so-called Tearsheet is nothing more than a bizarre and misleading
concoction of half-truths and calumnies presenting a wholly inaccurate picture
of the state of affairs of the dispute between the Owners and Pathfinder.
The
Owners are issuing this response so that investors in Pathfinder can have an
informed view of whether they should continue to back this totally discredited
management team.
Shareholders should ask themselves why Pathfinder continues to issue
supposedly material and price sensitive information through a so-called
Tearsheet rather than the RNS system as it is obliged to do so by AIM rules.
For
example, Pathfinder keeps claiming that the Mozambique Court “has also determined on two
occasions that IMM is the legal owner of the shares in CMDN” – this statement
is completely misleading – the only ruling made by the Mozambique Commercial
Court is that IM Minerals does not own any shares of CMdN. The Owners have challenged Nick Trew to
publish the ruling he claims to have on the RNS system – he has not done so
because it does not exist.
The real facts of the
Pathfinder Minerals dispute
1.
In 2005 Nick Trew and Gordon Dickie signed an Option
Agreement giving them rights to acquire 70% of the shares of CMdN for
$10m. They said they were “highly
confident” of raising $100m “within 9 months” for the project.
2.
The Option Purchase price was $100,000 – Trew and
Dickie paid up $10,000 (£5,741) each and never paid the remainder of the Option
Purchase Price that they owed.
3.
To date Nick Trew has paid only $10,000 for shares
in Pathfinder yet owns 9.1% of the shares – an interesting outcome for him. Gordon Dickie has sold all his shares in
Pathfinder – investors can draw their own conclusions from that.
4.
In May 2008, with no finance whatsoever having been
raised for the project, Tim Baldwin and John McKeon appeared on the scene
sensing an opportunity. They paid up the
remaining $80,000 of the Option Purchase Price.
5.
At the same time the Promoters (Trew, Dickie, McKeon
and Baldwin) improperly expropriated the bearer shares of CMdN owned by
General Veloso and Diogo Cavaco, claiming they needed them for a Board meeting,
and put them in their safe. As Tim
Baldwin later told one of the IM Minerals shareholders – “possession is 9/10th
of the law”!
6.
During 2009/10 these Promoters raised $558,000 from
third party investors. They did
not disclose to these investors that IM Minerals did not own any shares
of CMdN nor that they owed the Owners $10m.
7.
In January 2011 they reversed IM Minerals into the
AIM “shell” Pathfinder Properties plc and renamed themselves Pathfinder
Minerals plc.
8.
In the Prospectus they tried to claim that
Pathfinder owned the shares of CMdN and that the Purchase Price for the shares
was a ”deferred consideration”.
9.
In the same Prospectus they also said payment of the
Purchase price owed to General Veloso and Diogo Cavaco was so “uncertain and
unpredictable” that it had not been provided for in the accounts of the
company!
10.
In July 2011 they raised £11m from third party
investors, diluting the equity percentages of all shareholders. The Promoters promptly issued share options
to themselves thereby “reupping” their equity percentages so that they did not
suffer the 21% dilution suffered by all other investors and thereby further
diluting all other investors.
11.
In December 2011, having secretly offered to pay
General Veloso the $10m they owed him and to transfer shares from themselves to
him and Diogo Cavaco, they launched a legal action against the Owners.
12.
In their legal claim the Promoters tried to present
the “Option Agreement” as a “Sale and Purchase Agreement” – this argument was
expressly rejected by Mr Justice Field who pointed out that the purchase price
for the shares of CMdN had never been paid.
“..the language used [in the Option Agreement]
compels the conclusion that the scheme of the agreement was the grant of an
option in consideration of the Option Purchase Price with title in the shares
only passing on when the option was exercised by paying the balance of
US$9,900,000.”
13.
To date these Promoters have wasted over £13m ($20m) – yes £13m – of
shareholders money trying to obtain through the UK courts what they were
obliged to, and previously refused to, pay for under contracts they drafted and
willingly entered into.
14.
Shareholders should ask for a full detailed audit of
where this £13m has gone.
15.
What has Pathfinder achieved? – nothing.
The situation today
1.
Pathfinder has no licences to mine any assets
anywhere.
2.
Pathfinder’s so-called First Claim has been rejected
by the Mozambique Supreme Court for breach of the Mozambique Code of Civil
Procedure.
3.
Pathfinder’s so-called Second Claim will also be
rejected, as it must be, on the same grounds.
4.
The Mozambique Commercial Court has ruled that that
IM Minerals does not own any shares of CMdN.
5.
General Veloso and Diogo Cavaco have filed a case in
the Mozambique Courts confirming the cancellation of the contracts with
Pathfinder for breach of contract.
6.
Pathfinder has today an estimated £800,000 of cash
reserves – the monthly cash burn reported in its last financial statements was
£100,000 per month. Assuming the same
rate of cash burn, Pathfinder runs out of cash in October this year.
7.
Pathfinder is in any case technically balance sheet insolvent
as it owes BHP Billiton plc $10m under guarantees signed by the Promoters.
8.
Nick Trew keeps repeating that the “Mozambique
Courts have now twice determined that IMM is the lawful owner of the shares in
CMdN”. In fact the Mozambique courts
have never made such a ruling and the Owners challenge Mr Trew to publish this
ruling, if it exists as he is claiming.
9.
Shareholders might ask themselves why Nick
Trew has received over £1m of their cash as compensation for this
fiasco he has created.
************************
Notes for 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$10m, 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 a total of US$100,000 between them to purchase an Option (the
“Option Purchase Price”) over shares of CMdN. They never exercised the Option or paid for
the shares.
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.
