Court of Appeal publishes judgment

RNS Number : 6173E

Pathfinder Minerals Plc

14 May 2013

 

Embargoed: 0700hrs, 14 May 2013

Pathfinder Minerals Plc
("Pathfinder" or the "Company")

Update on English appeal process:
Court of Appeal publishes judgment dismissing permission to appeal application

On 22 April 2013 Pathfinder announced that the English Court of Appeal had that day dismissed the application of General Veloso, his company, JV Consultores Internacionais, Limitada, and Diogo Cavaco (the "Defendants") for permission to appeal against the judgment of the English High Court given on 19 October 2012 in the Company's favour (the "Application").  The Court of Appeal published its approved judgment on the Application (the "Judgment") yesterday, a copy of which is available for viewing within the Investor Relations/Presentations section of the Company's website www.pathfinderminerals.com.

The judgment

Giving the leading judgment in the Court of Appeal, with which Lord Justices Leveson and Beatson agreed, Lady Justice Gloster said that "there is no doubt that the [Application] should be dismissed".  She referred to the Defendants' failure to comply with the order for security for costs made on 25 March 2013 and their deliberate breaches of previous orders of the English court,  finding that the Defendants'conduct amounted to "a cynical abuse of [the] court's process". Amongst other reasons given for dismissing the application, Lady Justice Gloster also referred to the matter being "a clear case where the relevant agreements relating to the sale of shares are governed by English law and are subject to an English jurisdiction clause or clauses" and noted that the Defendants "have persistently disregarded their contractual obligations in this regard."

Lady Justice Gloster also stated that she had "seen nothing in the Defendants' grounds of appeal, or in the written arguments, that provide[d] any basis whatsoever for disturbing the conclusions reached by [the High Court]" and considered the Defendants' grounds of appeal to be "wholly devoid of merit".

Lady Justice Gloster added that "if the application...had been allowed to proceed it would have brought the administration of justice into disrepute." At the hearing itself Lord Justice Leveson had also expressed concern "that [the Defendants' Application had] all been a game for the purposes of the litigation being undertaken in Mozambique."

The dismissal of the Application concludes the English proceedings in Pathfinder's favour. There can be no further appeal against the English court judgment as to the validity and effect of the agreements through which the Company's wholly-owned subsidiary, IM Minerals Limited ("IMM"), acquired 99.99% of the licence-holding company, Companhia Mineira de Naburi S.A. ("CMDN").

Enforcement and costs awards

The Company is now able to focus wholly on the enforcement of its rights in Mozambique. The Company has been advised that English court judgments and costs orders are recognisable and enforceable in Mozambique. Accordingly, the Company is taking the necessary steps to have the various judgments and orders it has obtained from the English court formally recognised by the Mozambique Supreme Court; and will seek enforcement of the costs orders in its favour (none of which have been paid), totalling £1,106,000, against the Defendants' assets, including in Mozambique. The Company is advised that the process for recognition and enforcement of judgments in Mozambique is a lengthy one, during which the Defendants will have an opportunity to object.

Mozambique proceedings

As indicated in Pathfinder's announcement of 19 October 2012 (following the ruling from the English High Court in the Company's favour), there remain several legal proceedings under way in Mozambique. These include a number of actions in which the key issue of the ownership of CMDN by IMM arises. As previously announced, these actions include:

·     challenges by IMM to resolutions purportedly passed by the Defendants at EGMs of CMDN in May 2009 (the "May 2009 Resolution") and December 2011 (the "December Resolutions");

·     a rival challenge by the Defendants to the resolutions passed by IMM at an EGM of CMDN in January 2012; and

·     the claim issued by the Defendants against Pathfinder and IMM, as announced on 21 December 2012. 

In each of these proceedings the Defendants allege, amongst other things, that IMM was/is not a shareholder in CMDN on the basis, broadly, that (contrary to the findings of the English court) the underlying agreements between the parties by which the shares in CMDN were acquired are not valid or binding and/or did not confer a right to acquire the shares in CMDN.

As announced on 26 October 2012, the Company was notified on 25 October 2012 that its application for an interdict suspending the effect of the December Resolutions had been successful. The Maputo Court's judgment included a provisional finding that the nominative share certificate issued to IMM by CMDN (and signed by General Veloso and Diogo Cavaco), showing IMM as the holder of 399,998 of the 400,000 issued shares in CMDN, is valid and permissible under the constitution of CMDN, confirming therefore that, as a matter of Mozambique law, IMM is the holder of 99.99% of CMDN. As previously announced, the issue of IMM's status as a shareholder of CMDN was further considered at a hearing in Maputo on 6 December 2012. A decision following that hearing is still awaited.

There is a further hearing scheduled to take place in the Maputo Court on 15 May 2013 in relation to IMM's substantive challenge to the May 2009 Resolution, at which the Court will again consider as a preliminary issue, amongst other things, the question of IMM's status as a shareholder of CMDN. The Company will provide a further update on any findings in this regard, although the Company is advised that it may be some months before it is notified of any decision following the hearing.

Parallel political process

Pathfinder believes there is evidence of a strong political will in Mozambique to see the issue resolved and work resume on the project. To that end the Company continues to strive for an earlier resolution than that which it believes will be achieved in the courts, through the pursuit of a parallel political strategy involving members of both the British and Mozambican Governments.

Commenting on the judgment Nick Trew, Pathfinder's CEO, said,

"The Defendants acceded to the jurisdiction of the English court and then consciously and deliberately breached each order given by its judges.

The Defendants cannot escape the consequences of their actions forever through their obvious attempts to delay restoration of the licences. Not only are the Defendants depriving Pathfinder's shareholders of the assets they invested in, they are also depriving Mozambique, in particular the Zambezia Province, of the many social and economic benefits associated with the project. Were it not for the actions of the Defendants, the Definitive Feasibility Study would by now have been completed and, assuming this had proven the economic viability of the deposits, the construction of a processing plant and all the associated neighbouring infrastructure would have been underway, thus providing employment for many of the local populace. It is deplorable that the conduct of a few individuals should place at risk the prosperity of the region for the misguided prospect of greater financial benefit for themselves.

With the dismissal of the Defendants' application to appeal the English High Court judgment now marking the conclusion of the English proceedings, Pathfinder is focusing wholly on pursuing its remedies in Mozambique. I continue, however, to urge General Veloso to recognise that a co-operative resolution with Pathfinder, by which the project is returned to development, is undoubtedly in both his interests and the interests of the citizens of Mozambique."

Enquiries:

Pathfinder Minerals Plc

Nick Trew, Chief Executive

Tel. [phone]

Daniel Stewart & Company Plc

David Hart or James Thomas

Tel: [phone]

M: Communications

Ben Simons

Tel: [phone]

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. 

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.

As announced on 3 February 2012, ownership of these licences is being disputed.

 

END

 

 

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