Requisitioned General Meeting-Posting of Circular

RNS Number : 8525L

Pathfinder Minerals Plc

24 April 2018

 

24 April 2018

Pathfinder Minerals plc

("Pathfinder" or the "Company")

Requisitioned General Meeting - Posting of Circular

&

Notice of General Meeting

Further to the announcement of 4 April 2018, the Company announces that a circular containing a notice convening the requisitioned general meeting (the "Circular") has been posted to all shareholders. The Circular, together with related materials, is available to be viewed on the Company's website at www.pathfinderminerals.com.

Shareholders are urged NOT to support the requisitioners and to vote AGAINST the proposed resolutions.

The General Meeting is to be held at 10.00 a.m. on 15 May 2018 at Becket House, 36 Old Jewry, London, EC2R 8DD.

Enquiries:                                                                                                        

Pathfinder Minerals Plc

Nick Trew, Chief Executive

Tel. [phone]

WH Ireland Limited (Nomad and Corporate Broker)

James Joyce or Jessica Cave

Tel. [phone]

Vigo Communications (Public Relations)

Ben Simons or Kate Rogucheva

Tel. [phone]

Email. [e-mail]

The following text is extracted from the Circular:

LETTER FROM THE BOARD OF DIRECTORS

Dear fellow Shareholder

Requisitioned General Meeting: Vote AGAINST the resolutions

Introduction

On 4 April 2018, the Company received a requisition for a general meeting from Edward Walsh, Richard Jennings, Catherine Jennings and Align Research Limited, a company controlled by Richard Jennings (the "Requisitioners"). The Requisitioners have proposed that Sir Henry Bellingham and Nicholas Trew be removed as Directors of the Company and that James Normand and James Lumley (the "Requisitioners' Proposed Director") be appointed in their place (the "Proposals"). On 19 April 2018, the Company was informed by James Normand, one of the Requisitioners Proposed Directors, that he has withdrawn his candidacy for directorship of Pathfinder. Accordingly, given that James Normand does not consent to act as a Director, the proposed resolution to appoint him as a Director cannot be properly moved as it would, if passed, be ineffective and will therefore not be put to Shareholders at the General Meeting.

The Board believes that the Requisitioners may have been cooperating with Diogo Cavaco against whom, together with General Veloso (together, the "Defendants"), the Company has secured a High Court judgment and who participated in the appropriation of the Company's Licence, which currently resides under the Defendants' control.

The purpose of this letter is to set out the reasons why the Board considers that the Proposals are not in the best interests of Shareholders and are a veiled attempt by the Defendants, with possible cooperation from the Requisitioners, to remove the obstacles which have prevented the Defendants from monetising the appropriated Licence.

The Board unanimously recommends Shareholders to vote AGAINST the proposed Resolutions, as they intend to in respect of their own beneficial holdings, which amount in aggregate to 21,709,667 Shares (representing approximately 9.4 per cent. of the existing share capital of the Company) as at 20 April 2018, being the latest practicable date prior to the publication of this Document.

For the reasons mentioned below, the Board believes that a vote to elect the Requisitioners' Proposed Director and to remove Nicholas Trew and Sir Henry Bellingham from the Board would create an 'open goal' for the Defendants to monetise the Licence appropriated from the Company, leaving Pathfinder's existing Shareholders with no reasonable prospect to recover meaningful value from the Licence. Accordingly, you are strongly encouraged to vote AGAINST the Resolutions.

The notice of the General Meeting is set out at Part Three of this Document and statements by the Requisitioners are set out in Part Four of this Document.

Background

As Shareholders will be aware, on 11 November 2011, the Company announced that it had received notification from General Veloso of his resignation as a Director of Pathfinder. General Veloso made a number of allegations including that the Company's principal assets to mine heavy mineral sands, Mining Concession nos. 760C and 4623C, issued to Pathfinder's 99.99 per cent. owned subsidiary, CMDN, were no longer owned by CMDN.

The Company subsequently uncovered the existence of Pathfinder Moçambique S.A., a Mozambique- incorporated company, established on 27 September 2011, with which, despite its name, neither Pathfinder nor its subsidiaries are affiliated. In fact, Pathfinder Moçambique S.A. is partly owned by Diogo Cavaco and the Board believes that the Requisitioners may be cooperating with him.

On 6 September 2012, the Ministry of Mineral Resources of Mozambique confirmed to Pathfinder that CMDN had, through its agent, General Veloso, requested on 4 November 2011 the consolidation of Mining Concession nos. 760C and 4623C; and confirmed that the concession resulting from the consolidation of the two licences, Mining Concession no. 4623C, had been transferred to Pathfinder Moçambique S.A. It should be noted that this correspondence confirms the Ministry of Mineral Resources' view that there was a transfer of the Licence and not, as the Defendants recently speculated, a cancellation of the Licence. In its letter, the Ministry of Mineral Resources stated that there was nothing in the documentation filed by CMDN to show that Pathfinder was a member of CMDN or that it is the owner of 99.99 per cent. of the issued shares; and that the Ministry of Mineral Resources had not been informed of this relationship. This notwithstanding the fact that the relevant share certificate issued on 2 December 2010 which evidences the ownership of the

99.99 per cent. interest was signed by both General Veloso and Diogo Cavaco.

The Defendants subsequently sought to justify their actions by claiming that Pathfinder had not validly acquired its 99.99 per cent. shareholding in CMDN, the entity from which the transfer took place. It became essential for Pathfinder to demonstrate legally that this claim was false and, on 19 October 2012, the English High Court ruled that Pathfinder had validly acquired its shareholding in CMDN and that all the agreements were governed by English law (the "English Judgment"). On 13 May 2013, the Court of Appeal dismissed the Defendants' permission to appeal the English Judgment. In dismissing this application together with Lord Justice Leveson and Lord Justice Beatson, Lady Justice Gloster held that the Defendants' grounds of appeal were "wholly devoid of merit".

On 2 August 2013, Pathfinder lodged an application with the Supreme Court in Mozambique for recognition of the English Judgment. While the timing of the ruling is unknown and there can be no certainty of a favourable decision, the Board believes a favourable decision would ultimately cause the Ministry of Mineral Resources of Mozambique to put Mining Concession no. 4623C back to CMDN, under Pathfinder's control, and enable the Company to resume development of the Project.

In parallel with the application for recognition of the English Judgment, Pathfinder, through its legal counsel and regional representative in Mozambique, has been - and remains - in dialogue with the Government of Mozambique, asking it to take steps to increase the prospect of an earlier resolution than that which may be achieved through the courts. In addition, in a bid to bring about a resolution without reliance on the courts, the Board, through its regional representative, held discussions with General Veloso with regards to a framework agreement for a settlement through which Pathfinder would regain control of Mining Concession no. 4623C on terms which represent meaningful value to Pathfinder's existing shareholders. Diogo Cavaco was not a party to these discussions.

On 26 February 2018, the Company announced that it had received a communication from Diogo Cavaco informing the Company that there was currently no ongoing settlement negotiation. On the same day, Align Research Limited published statements, based on "dialogue with General Veloso's partners", asserting that Pathfinder's Directors appeared to have misled Shareholders regarding those settlement discussions with General Veloso. On the contrary, the Board believes that Align Research Limited may have been misled by Diogo Cavaco. As set out in further detail below, there had been ongoing discussions between General Veloso (and his daughter Miriam Veloso on his behalf) and the Company's regional representative in Mozambique, for almost a year.

Pathfinder has been notified of attempts by the Defendants between 2013-2018 to monetise the Licence appropriated from the Company. Most recently, in December 2017, Pathfinder became aware that the Defendants were likely conducting negotiations with a large Chinese mining corporation for the sale of Mining Concession no. 4623C and that representatives of the Chinese organisation had recently visited Mozambique to inspect the mining site. On 15 December 2017, Pathfinder's solicitors put the prospective buyer on notice of the ongoing dispute as to the lawful ownership of the Licence.

The Directors believe that the only material obstacle to the Defendants' monetisation of the Licence unlawfully appropriated from Pathfinder is Pathfinder and its current Board; and in particular Nicholas Trew and Sir Henry Bellingham's determination to ensure that value for the Licence in question is ultimately reflected in Pathfinder, to the benefit of its existing Shareholders, and not in Pathfinder Moçambique S.A.

For the reasons explained below, the Requisitioners' purported assurances that the Defendants will negotiate terms which offer meaningful value for Pathfinder's existing Shareholders with a Board that does not include Sir Henry Bellingham or Nicholas Trew are naïve and have not been substantiated.

Reasons to vote AGAINST the resolutions

The Directors are involved in political and legal initiatives to recover control of the Company's Licence. Among the Directors' reasons for recommending that you vote against the Resolutions are the following:

The Proposals are a veiled attempt by the Defendants, with possible cooperation from the Requisitioners, to remove the obstacles which have prevented them from monetising the Licence.

The only material obstacle to the Defendants' monetisation of the Licence appropriated from Pathfinder by way of a sale to a third party is Pathfinder and its current Board. To date, every known attempt by the Defendants to sell or market the Licence to third parties before the Supreme Court in Mozambique has ruled in respect of the Company's application for recognition of the English Judgment has been prevented by the very Directors (most recently, with the assistance of the UK's Foreign & Commonwealth Office) whom the Requisitioners are seeking, with possible cooperation by the Defendants, to remove. A Board comprising the Requisitioners' Proposed Director could result in an unchallenged sale by the Defendants of the Licence to a third party, or a deal with Pathfinder on terms which do not offer any meaningful value to Pathfinder's existing Shareholders.

The Requisitioners' purported assurances that the Defendants will negotiate with a Board that does not include Nicholas Trew or Sir Henry Bellingham, towards a conclusion that is "in all parties' interests," are naïve and have not been substantiated.

The Requisitioners have not provided any information from Align Research Limited's "extensive" communications with the Defendants on the actual financial or other commercial terms on which the Defendants would seek to negotiate "in good faith" with the Requisitioners' Proposed Director for the return of the appropriated Licence to Pathfinder. The Board believes that the Defendants' sole motivation is to remove the obstacles which prevent them from monetising the Licence with a third party or via Pathfinder on terms which would represent no meaningful value for Pathfinder's existing Shareholders. The Requisitioners appear to have been duped by the very people who forced your Company into litigation through their unlawful appropriation of its Licence and/or ownership rights. The Board believes that the Requisitioners are naïve in their failure to identify the extent to which the Defendants - the individuals who procured the appropriation of the Licence - would benefit from the Proposals to the detriment of the Shareholders.

The Defendants are reported to be in talks to monetise the Licence and that Pathfinder (presumably under the leadership of the Requisitioners' Proposed Director) could expect to be treated like any other prospective new partner, negotiating to acquire an interest in the Licence.

On 10 April 2018, Mozambique's Zitamar News wrote: "[Diogo] Cavaco told Zitamar that he and [General] Veloso are still looking for a partner who can help them develop the mining project, and that they have "two or three very serious proposals on the table at the moment." Under new leadership, Pathfinder Minerals could also be a potential partner, he said."

The removal of Nicholas Trew and Sir Henry Bellingham would create an 'open goal' for the Defendants to achieve their intention of monetising the Licence (or an interest in the Licence) appropriated from Pathfinder to a third party. Furthermore, it is apparent from Diogo Cavaco's comments to Zitamar News that the Defendants would treat Pathfinder (presumably under the leadership of the Requisitioners' Proposed Director) only as it would any other prospective new partner in negotiations. The Directors believe that such a transaction could not reasonably be expected to deliver any meaningful value to Pathfinder's existing Shareholders and the Directors do not believe that the Requisitioners' Proposed Director would be in a better position to negotiate a return of the Licence on terms which represent meaningful value to existing Shareholders. In contrast, the Board believes a successful resolution through the courts and the Ministry of Mineral Resources would represent the best outcome for existing Shareholders as it would not necessitate a payment to the Defendants to satisfy terms which could leave little value on the table for Pathfinder's existing Shareholders.

Shareholders should also be aware that an acceptance of the validity of the Defendants' claims of entitlement to the Licence or that the Licence has been cancelled and not transferred would also be an acceptance that the true value is in Pathfinder Moçambique S.A. and not in Pathfinder.

The Requisitioners' assertions that the Directors made misleading statements regarding the status of discussions with General Veloso are rejected.

On the contrary, it is apparent to the Board that Align Research Limited has been misled by Diogo Cavaco. As set out below, there were discussions between General Veloso, the principal Defendant, (and his daughter Miriam Veloso on his behalf) and the Company's regional representative in Mozambique, for almost a year. Diogo Cavaco was not a party to these discussions.

Following a number of discussions during which the terms upon which General Veloso would be prepared to settle the ongoing dispute regarding Mining Concession no. 4623C were discussed, the Company sent a letter to General Veloso on 3 March 2017 confirming its agreement in principle to the resolution of the dispute and providing an outline proposal with respect to the same. Miriam Veloso responded via email letter on 30 March 2017 confirming the discussions with the Company's regional representative.

On 23 September 2017, the Company sent a proposed framework for an agreement to resolve the dispute to Miriam Veloso. During October 2017, the Company's regional representative and Miriam Veloso exchanged communications regarding the framework agreement. Following further exchanges in October 2017 in which General Veloso and Miriam Veloso requested that an acceptable proposal should be tabled, a meeting took place in November 2017 in Maputo between the Company's regional representative, General Veloso and Miriam Veloso.

A further meeting with General Veloso took place in January 2018, at which the Company was represented by Professor Waty (an eminent expert on Mozambican law). Following that meeting, a request was made that the framework agreement should be broken down into a "road map" to enable General Veloso and Miriam Veloso to identify the stages required towards closure and this was duly provided on 25 January 2018, receipt of which was acknowledged by Miriam Veloso.

The Company accordingly rejects the assertions made by the Requisitioners that there have never been any discussions between the parties or that the Company made misleading statements regarding the status of discussions.

While the Board remains open to resuming a dialogue on a reasonable basis, it is focused on enforcing the Company's rights through the judicial process.

The Directors share the frustration felt by Shareholders with the length of time it is taking to achieve a resolution (and for the Supreme Court in Mozambique to rule on the application to recognise the English Judgment). However, expressing that frustration by voting in favour of the Proposals would not be in the best interests of the existing Shareholders.

Pathfinder's litigation has been brought about by the actions of the Defendants. The length of time it is taking for the Supreme Court to opine on the application for recognition is as frustrating for the Directors as it is for all Shareholders. However, the Directors believe that, absent a speedier resolution via Mozambique's Ministry of Mineral Resources, pursuing the judicial process (and in particular on the English Judgment in respect of Pathfinder's ownership of 99.99 per cent. of CMDN), is the main avenue available to Pathfinder to recover meaningful value for Pathfinder's existing Shareholders.

The Requisitioners' challenge to the merits of Pathfinder's legal strategy demonstrates a lack of informed understanding.

In order to satisfy the Ministry of Mineral Resources of Pathfinder's ownership interest in CMDN, it was essential to seek declarations from the English High Court as to the validity of the agreements by which Pathfinder acquired 99.99 per cent. of the shares of CMDN and to seek recognition of those English High Court rulings in Mozambique. Judgment by the Supreme Court in Mozambique in respect of the recognition of these rulings remains pending.

The substantial costs associated with the litigation have already been expended. The value of the investment is the English High Court's ruling in the Company's favour.

The cost of the UK litigation was substantial but necessary. Should Pathfinder need to rely on the judicial process to bring about a restoration of the Licence to Pathfinder's control, notwithstanding working capital requirements including for the prospective identification of other opportunities for value creation within the heavy mineral sands sector, the Directors believe the associated ongoing legal costs will be relatively small. The Board believes that a successful resolution through the courts would represent the best outcome for Pathfinder's existing Shareholders as it would not necessitate a payment to the Defendants to satisfy terms which could leave little value on the table for Pathfinder's existing Shareholders.

Nicholas Trew's and Sir Henry Bellingham's continuing directorships are intrinsically linked with the prospects for existing Shareholders to ever recover meaningful value for the Licence.

As Pathfinder's largest Shareholder, Nicholas Trew is wholly aligned with existing Shareholders and is highly motivated to achieve the best outcome.

So far as the Board is aware, the Requisitioners' Proposed Director has no material disclosed interest in the Company's shares. In contrast, Nicholas Trew owns 9.3 per cent. of the Shares and is highly motivated to restore value to Pathfinder's existing Shareholders. A vote to remove Nicholas Trew as a Director would be a vote to remove the very person most incentivised to restore value to Pathfinder's existing Shareholders on meaningful terms; and prevent the Defendants from monetising the asset either by way of a sale to a third party or by way of a deal with Pathfinder Moçambique S.A. that offers no meaningful value for existing Shareholders.

Sir Henry Bellingham is eminently qualified to steer Pathfinder towards a resolution.

Sir Henry Bellingham was between May 2010 and September 2012 Under Secretary of State at the Foreign and Commonwealth Office with ministerial responsibility for Africa. He is the chairman of the Westminster Foundation for Democracy, the UK's leading democracy-building foundation which promotes parliament- to-parliament links and capacity-building in emerging democracies. Since 2013, Henry has chaired the All Party Parliamentary Group on the Commonwealth, of which Mozambique is a member. Sir Henry Bellingham first entered Parliament in 1983 as the member for North West Norfolk. Following multiple elections over three decades, Sir Henry Bellingham has served as the member for his constituency for an aggregate 30 years. In opposition, Sir Henry Bellingham served successively as a Shadow Minister for Small Business and Enterprise, Opposition Whip and Shadow Minister for Legal Services. Prior to entering Parliament, Sir Henry Bellingham practised as a barrister for eight years.

Richard Jennings' motivations for the requisition are believed to be personal.

On 20 February 2018, Richard Jennings wrote to Sir Henry Bellingham, who was in 2016 awarded a Knighthood in the New Year's Honours List for Parliamentary and Public Service, stating, "the sheer ignorance and arrogance of people like u [sic] makes me sick to the pit of my stomach." On 6 December 2017, Richard Jennings warned Nicholas Trew that he should not make an enemy of him. The Board believes that it is evident from Richard Jennings' correspondence that the requisition is part of his personal agenda. A vote in favour of the Resolutions could put at risk existing Shareholders' prospects to recover value for the Licence on meaningful terms.

A change of management could materially prejudice Pathfinder's relationship with the Mozambique Government and other diplomatic stakeholders.

The Ministry of Mineral Resources of Mozambique, with whom the Company has an established channel of communication, is intrinsic to any future resolution. The Requisitioners appear to be unaware of the critical role of the Ministry of Mineral Resources in achieving a resolution for Pathfinder, further demonstrating their lack of informed understanding of Pathfinder's situation. The Directors continue to seek to increase the prospect of an earlier resolution than that which may be achieved through the courts through communication between the Ministry of Minerals Resources of Mozambique, the UK's Foreign & Commonwealth Office, the Directors and Pathfinder's legal and regional representatives in Mozambique. A change of leadership could put this process at risk.

Contrary to the Requisitioners' assertions, the Directors want to avoid unnecessary dilution.

As the largest Shareholder, Nicholas Trew is aligned with all Shareholders in wanting to avoid any more dilution than that which is necessary. With the substantial costs associated with the litigation having already been expended, the Directors will seek only the funding required to ensure the Company has sufficient funds to continue its strategy to recover the Licence and for working capital, including for the prospective identification of other opportunities for value creation within the heavy mineral sands sector, while the Company sees out the judicial process in Mozambique for the benefit of the existing Shareholders.

The Requisitioners' statements regarding Directors' compensation are misleading.

Nicholas Trew's salary entitlement is £150,000 per annum and Sir Henry Bellingham's is £48,000 per annum. However, neither Director has drawn his full salary entitlement or any pension contribution since 2014. Both Nicholas Trew and Sir Henry Bellingham have agreed a reduced fixed salary with the Company equivalent to 50 per cent. of their current legal entitlement being £75,000 per annum and £24,000 per annum (with no pension contribution) effective from 1 April 2018, until such time as the Licences have been recovered. The actual compensation drawn by the Directors and the willingness of Nicholas Trew and      Sir Henry Bellingham to agree to a reduced fixed salary is markedly different from the picture of greed depicted by the Requisitioners.

James Normand, one of the Requisitioners Proposed Directors, has withdrawn his candidacy for directorship of Pathfinder.

The Requisitioners suggest that Pathfinder Moçambique S.A. has agreed to engage with a new Board which does not include either Nicholas Trew or Sir Henry Bellingham and which comprises James Lumley and James Normand with a view to a resolution of the current situation. On 19 April 2018 the Company was informed by James Normand that he has withdrawn his candidacy for directorship of Pathfinder. It would therefore appear that the requirements, as stipulated by the Requisitioners, for Pathfinder Moçambique S.A's apparent willingness to engage will not be capable of being achieving as a result of James Normand's withdrawal.

The Board has not had previous dealings with James Lumley, the Requisitioners' Proposed Director, however for the reasons given above, the Board does not feel that he is better placed than the current Board to deliver value to the Shareholders. In order to conduct due diligence, in accordance with stock exchange requirements, the Company has requested documents and information from the Requisitioners Proposed Director. Any appointment to the Board is subject to satisfactory completion of due diligence.

Your Board's primary focus is to recover meaningful value for Pathfinder's existing Shareholders.

As referred to above, the Board's primary focus is to recover meaningful value for Pathfinder's existing Shareholders by pursuing the reinstatement of its appropriated Licence. However, the Board also receives other approaches from time to time for broader opportunities in mineral sands projects. Any meaningful acquisition of a new project would likely be considered a reverse takeover under the AIM rules for companies and your Board would of course come back to Shareholders for approval on any significant investment, consistent with our AIM rule obligations. For reasons stated above, we believe that the Proposals would both destroy the prospect of success in Mozambique and cut off any such other valuable prospect to be put before our Shareholders.

The Board is considering further board appointments that it believes would strengthen the Company's ability to source sufficient investment capital which would support the recovery of the Licence and, thereafter, to complete the definitive feasibility studies to validate the underlying resources in relation to the Project.

For the reasons mentioned above, we urge Shareholders to vote AGAINST the Requisitioners' resolutions. We believe a vote to elect the Requisitioners' Proposed Director and to remove Nicholas Trew and Sir Henry Bellingham would create an 'open goal' for the Defendants to monetise the Licence appropriated from the Company, leaving Pathfinder's existing Shareholders with no reasonable prospect to recover meaningful value from the Licence.

Recommendation

The Directors believe that the Resolutions are against the best interests of the Company and its Shareholders as a whole. Accordingly, the Board unanimously recommends that Shareholders vote AGAINST all of the Resolutions, as they have irrevocably agreed to do in respect of their beneficial holdings, which amount in aggregate to 21,709,667 Shares (representing approximately 9.4 per cent. of the existing share capital of the Company) as at 20 April 2018, being the latest practicable date prior to the publication of this Document.

Yours faithfully

Sir Henry Bellingham

Mr Nicholas Trew

Mr Robert Easby

STATEMENTS BY THE REQUISITIONERS

Statement dated 16 April 2018

"We have called a General Meeting ('GM') because we believe that the continuing presence on the Board of Henry Bellingham and Nick Trew is a hindrance to resolution of the impasse that has prevailed for the past seven and a half years. The resolutions that we are putting at the GM propose their removal from the Board and their replacement by James Normand and James Lumley as Chairman and CEO respectively. We believe that this is in the best interests of the shareholders as a whole.

Since November 2011 the current CEO, Nick Trew, has presided over unsuccessful efforts to have the disputed licences in Mozambique (4623C Moebase and 760C Naburi) restored to the Company's control. In recent years the Company's announcements have increasingly referred to the faith that it has been putting in the efforts of the go-between whom it engaged to mediate between the Company, its former Mozambique partners and the Mozambique government. As recently as 21st February 2018 the Company reported that in the previous four months its 'representatives' had had held 'multiple meetings' with General Veloso to progress a 'framework agreement'. But only 5 days later, it was impelled, by a letter from General Veloso prompted by our own enquiries, to admit that no such negotiations were in progress. We are of the opinion thata there has therefore been a false market in the shares for at least the last eight months.

We have written confirmation from Pathfinder Mozambique SA that, subject to the removal of Nick Trew and Henry Bellingham from the Board and from any other role with your company and their replacement by James Lumley and James Normand, it would engage with the new Board with a view to establishing a speedy and equitable resolution to the current stalemate and one that does not rely on the Courts and the uncertainties and timescales that such legal action involves.

A majority of the capital raised in recent years has been expended on the remuneration of the directors. The last published financial statements (for 2016) state Nick Trew's remuneration at £170,000 and Henry Bellingham's at £48,000. The proposed directors have agreed to remuneration of a fixed salary of £40,000 and a contingent reward from the exercise of options over shares (granted at a premium to the current stock price) thus aligning their interests with those of the shareholders.

Lastly, we and the new proposed directors are very confident that they can facilitate the subscription of new capital in the company at a premium to the present stock price, thus avoiding unnecessary dilution. This is in direct contrast to the history of dilutive and heavily discounted placings that have taken place under the stewardship of Nick Trew and Henry Bellingham, largely to enable the payment of their salaries and which, to date, have been wholly ineffectual, given that the Company still has not received back the disputed licences nor achieved an alternative resolution to the current impasse.

Mr Normand is a former director of the company and is extremely familiar with the affairs of Pathfinder and Mr Lumley is a seasoned mining executive with extensive experience of dealing in Africa. He is currently in office at Anglo African Minerals Plc which focuses on bauxite mining in the Republic of Guinea. Mr Lumley has taken that company through the exploration phases to the development phase, with the current expectation of production from one of its assets in Q3 2019.

To conclude, we believe that our plans give the company the best possible chance of (a) restoration of the licences in Mozambique through our good faith relations with the current holders of the      licence;

(b) complete alignment of management with shareholders (as evidenced by the proposed remuneration arrangements); and (c) de minimis dilution in the near term, given that we believe the current equity value woefully undervalues the company's prospects and true worth.

Richard Jennings, Catherine Jennings, Align Research Limited and Edward Walsh (the Requisitioners)"

Statement dated 20 April 2018

"We have called a General Meeting ('GM') because we believe that the continuing presence on the Board of Henry Bellingham and Nick Trew is a hindrance to a resolution of the impasse that has prevailed for the past seven and a half years. The resolutions that we are putting at the GM propose their removal from the Board and their replacement with James Lumley as CEO. We believe that this is in the best interests of the shareholders as a whole.

Since November 2011 the current CEO, Nick Trew, has presided over unsuccessful efforts to have the disputed licences in Mozambique (4623C Moebase and 760C Naburi) restored to the Company's control. In recent years the Company's announcements have increasingly referred to the faith that it has been putting in the efforts of the go-between whom it engaged to mediate between the Company, its former Mozambique partners and the Mozambique government. As recently as 21st February 2018, the Company reported that in the previous four months its 'representatives' had had held 'multiple meetings' with General Veloso to progress a 'framework agreement'. But only 5 days later it was revealed, by a letter from Pathfinder Mozambique SA (where the licences are currently held), prompted by our own enquiries, to admit that no such negotiations were in progress. We are of the opinion that a there has therefore been a false market in the shares for at least the last eight months.

We have written confirmation from Pathfinder Mozambique SA that, subject to the removal of Nick Trew and Henry Bellingham from the Board and from any other role with your company and their replacement with a new Board, that it would engage with a view to establishing a speedy and equitable resolution to the current stalemate and one that does not rely on the Courts and the uncertainties and timescales that such legal action involves. In the event that we do have to pursue the legal process we will undertake a thorough review of the current situation as we also have concerns here regarding the costs incurred and direction that the current Board have and are taking.

A majority of the capital raised in recent years has been expended on the remuneration of the directors. The last published financial statements (for 2016) state Nick Trew's remuneration at £170,000 and Henry Bellingham's at £48,000. The proposed director has agreed to remuneration of a fixed salary of £40,000 and a contingent reward from the exercise of options over shares (granted at a premium to the current stock price) thus aligning his interests with those of the shareholders.

Lastly, we and the new proposed directors are very confident that they can facilitate the subscription of new capital in the company at a premium to the present stock price, thus avoiding unnecessary dilution. This is in direct contrast to the history of dilutive and heavily discounted placings that have taken place under the stewardship of Nick Trew and Henry Bellingham, largely to enable the payment of their salaries and which, to date, have been wholly ineffectual, given that the Company still has not received back the disputed licences nor achieved an alternative resolution to the current impasse.

Mr Lumley is a seasoned mining executive with extensive experience of dealing in Africa. He is currently in office at Anglo African Minerals Plc which focuses on bauxite mining in the Republic of Guinea. Mr Lumley has taken that company through the exploration phases to the development phase, with the current expectation of production from one of its assets in Q3 2019.

To conclude, we believe that our plans give the company the best possible chance of (a) restoration of the licences in Mozambique through our good faith relations with the current holders of the     licence;

(b) complete alignment of management with shareholders (as evidenced by the proposed remuneration arrangement); and (c) de minimis dilution in the near term, given that we believe the current equity value woefully undervalues the company's prospects and true worth.

Richard Jennings, Catherine Jennings, Align Research Limited and Edward Walsh (the requisitioners)"

 

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