TIDMPFP

RNS Number : 4484R

Pathfinder Minerals Plc

30 June 2020

30 June 2020

Pathfinder Minerals Plc

("Pathfinder" the "Company" or the "Group")

Final Results for the Year Ended 31 December 2019

CHAIRMAN'S STATEMENT

INTRODUCTION

Considerable progress was made during 2019 across several areas which significantly enhanced Pathfinder's ability and positioning to regain an interest in Mining Concession no. 4623C in Mozambique (the "Licence").

The Company engaged new consultants to provide assistance in pursuing completion of a transaction in respect of the Licence; agreement on a proposed transaction was reached between Pathfinder and General Jacinto Veloso who, with his family interests, owns 50 per cent of the entity to which the Licence is currently registered (the balance being owned by a Hong Kong registered entity); a revised independent Scoping Study was published resulting in a near doubling of the Net Present Value attributable to the Licence; non-binding financing proposals to facilitate a deal and fund subsequent development of the Licence were received; additional working capital was brought into the Company; and a leadership change was implemented.

Subsequent to the period end, Pathfinder was notified that the Mozambique Supreme Court had rejected the Company's application for recognition of a judgment by the English High Court (the "English Judgment") which gave certain declarations to the effect that Pathfinder's subsidiary, IM Minerals Limited, validly acquired its shareholding in Companhia Mineira de Naburi S.A.R.L., which previously held the Licence. This outcome has no bearing on the English Judgment, which remains in force. While disappointing in the context of a legal strategy to regain an interest in the Licence, a negotiated outcome was, and continues to be, the focus of all parties, including the Veloso family which appears to remain committed to working towards a commercial resolution that avoids further protracted delays from legal proceedings.

REVIEW OF ACTIVITY FOR THE PERIOD

Progress towards a potential transaction in respect of the Licence

On 11 February 2019, the Company announced that it had engaged Africa Focus Group Limited, a Hong Kong-based company with a Johannesburg consultancy office specialising in mergers and acquisitions in southern Africa, to provide assistance to the Company in pursuing completion of a transaction with the owners of Pathfinder Moçambique S.A (the current Licence holder) pursuant to which Pathfinder, or a wholly owned subsidiary of Pathfinder, would re-establish an interest in the Licence.

On 10 April 2019, the Company announced that it was evaluating multiple transaction structures, taking into account commercial and regulatory factors, through which the Company could hold its interest in the Licence and deliver value for shareholders and that the principle of a proposed transaction had been agreed between Path nder and General Jacinto Veloso.

In parallel, the Board commenced discussions with regards to potential funding strategies (including through partnerships or debt provision) to facilitate a transaction and finance further development of the Licence.

Revised independent Scoping Study on the Licence

On 10 April 2019, Pathfinder announced the results of a revised Scoping Study on the Licence prepared by independent technical consultant, 2M Mineral Services Limited, which included a revision of the capital and operating costs and pricing assumptions that were presented in the original URS/Scott Wilson 2011 scoping study report. This revision resulted in an estimated pre-tax net present value ("NPV") at a 10 per cent discount rate of US$1.05 billion; with projected annual revenues of US$323 million over a mine life of 30 years. The project internal rate of return ("IRR") is expected to be approximately 25 per cent. The revised ndings represented a near doubling of the previously reported equivalent NPV and an increase of 6.1 per cent in the project IRR.

Leadership changes

On 3 June 2019, the Company announced the appointment of John Taylor as CEO; on 23 July 2019, the Company announced the resignation of Simon Farrell as a non-executive director; and, on 2 August 2019, the Company announced the appointment of Dennis Edmonds as a non-executive director. The new appointments prompted a review of the Company's strategy and a renewed focus and effort on negotiations in Mozambique.

The review included a detailed analysis of the different routes available to Pathfinder to restore an interest in the Licence and to fund its further development within the context of the Company's access to capital. Throughout the year, and early into 2020, wide-ranging meetings were held in South Africa and Mozambique with representatives of Pathfinder Moçambique S.A., the Company's Mozambique legal advisers, representatives of the UK Government in Mozambique, and prospective funding partners.

New funds for working capital

A total of GBP335,000 was raised during the period through cash subscriptions for 14,909,091 shares in aggregate. A further GBP239,000 was taken in by the Company during the period as a result of the exercise of warrants to subscribe for, in aggregate, 15,624,792 shares. New funds provided necessary general working capital.

Subsequent to period end, the Company completed two new financings. The first was a convertible loan note for GBP175,000 (announced on 3 April 2020); and the second, an equity fundraising to issue 38,461,538 new shares for gross proceeds of GBP250,000 (announced on 28 May 2020), which completed on 3 June 2020. Please refer to both announcements for further details of the financings.

FINANCIAL RESULTS AND CURRENT FINANCIAL POSITION

In addition to the above-mentioned shares issued in respect of the cash subscriptions and warrant exercises, during the period the Company issued 13,293,927 shares to some former directors and a current director to settle in aggregate GBP309,000 of accrued cash liabilities. The Company has made a submission to HMRC for the calculated PAYE on these settlements amounting to GBP139,000 which was incorrectly not paid at the time. The Company will look to recover these amounts from the former directors in the coming period.

The financial statements of the Pathfinder Group for the twelve months ended 31 December 2019 follow later in this report. The Income Statement shows a loss of 652,000 (2018 - GBP645,000). The board reorganisation during the year has resulted in a reduction in remuneration from GBP195,000 (2018) to GBP121,000 this reporting period.

The Group's Statement of Financial Position shows net assets at 31 December 2019 of GBP381,000 (31 December 2018 - GBP244,000). The assets are held largely in the form of cash deposits and receivables. The Company's cash position as at 25 June 2020 stands at GBP283,000, which includes the first tranche of the convertible loan note.

OUTLOOK

The Company remains focused on a negotiated, commercial resolution to achieve a return of an interest in the Licence. The recent fundraisings have given the Board the flexibility to accelerate these efforts in the short term and it is the Board's intention to intensify negotiations in-person with all relevant parties in Mozambique as soon as COVID-19 restrictions permit them to safely do so.

The Board maintains its view that a positive outcome is both achievable and would be transformational for the Company in recovering value. We thank all shareholders for their continued support and look forward to updating them with developments in the future.

ON BEHALF OF THE BOARD:

Sir H C Bellingham - Chairman

29 June 2020

FINANCIAL STATEMENTS

Consolidated Statement of Comprehensive Income for the Year Ended 31 December 2019

 
                                          2019        2018 
                                       GBP'000     GBP'000 
 
  CONTINUI NG OP ERATIONS 
Re v e nue                                   -           - 
Ad ministrati ve exp e 
 ns es                                   (652)       (645) 
 
  OPE R ATING LOSS                       (652)       (645) 
 
  Finance income                             -           - 
 
  LOSS B EFORE INCOME TAX                (652)       (645) 
 
  Income tax                                 -           - 
 
  LOSS FOR THE Y EAR                     (652)       (645) 
 
  Total comprehensive lo 
  ss for the year attributable 
  to: 
Equity holders of the pare 
 nt                                      (652)       (645) 
 
 
  Loss p e r s hare from 
  continuing operations 
in p e nce p er s hare: 
 
 Basic                                 ( 0.22)     ( 0.26) 
Dilut ed                               ( 0.22)     ( 0.26) 
 

Consolidated Statement of Financial Position for the Year Ended 31 December 2019

 
                                        Year ended     Year ended 
                                       31 December    31 December 
                                              2019           2018 
                                           GBP'000        GBP'000 
 NON-CURRENT ASSETS 
 Property, plant and equipment                   -              - 
 Investments                                     -              - 
 
 CURRENT ASSETS 
 Trade and other receivables                   222            192 
 Cash and cash equivalents                     158             52 
 
 TOTAL ASSETS                                  380            244 
 
 EQUITY AND LIABILITIES 
 Capital and reserves attributable 
  to equity holders of the 
  Company: 
 Share capital                              18,504         18,458 
 Share premium                              13,307         12,431 
 Other reserves                                 45             25 
 Accumulated deficit                      (31,762)       (31,110) 
 
 TOTAL EQUITY                                   94          (196) 
 
 CURRENT LIABILITIES 
 Trade and other payables                      286            440 
 
 TOTAL LIABILITIES                             286            440 
 
 TOTAL EQUITY AND LIABILITIES                  380            244 
 

Consolidated Statement of Changes in Equity for the Year Ended 31 December 2019

 
                               Called      Share       Other   Accumulated     Total 
                             up share    premium    reserves       deficit    equity 
                              capital 
                              GBP'000    GBP'000     GBP'000       GBP'000   GBP'000 
 Balance at 1 January 
  2018                         18,416     11,997           -      (30,465)      (52) 
-------------------------  ----------  ---------  ----------  ------------  -------- 
 Changes in equity 
 Loss for the year                                                   (645)     (645) 
 Total comprehensive 
  loss for the year                                                  (645)     (645) 
-------------------------  ----------  ---------  ----------  ------------  -------- 
 Issue of share capital            42        439                                 481 
 Cost of share issue                         (5)                                 (5) 
 Share based payments                                     25                      25 
 Total transactions with 
  owners                           42        434          25             -       501 
-------------------------  ----------  ---------  ----------  ------------  -------- 
 Balance at 31 December 
  2018                         18,458     12,431          25      (31,110)     (196) 
-------------------------  ----------  ---------  ----------  ------------  -------- 
 Changes in equity 
 Loss for the year                                                   (652)     (652) 
 Total comprehensive 
  loss for the year                                                  (652)     (652) 
-------------------------  ----------  ---------  ----------  ------------  -------- 
 Issue of share capital            46        876                                 922 
 Cost of share issue                                                               - 
 Share based payments                                     20                      20 
 Total transactions with 
  owners                           46        876          20             -       942 
-------------------------  ----------  ---------  ----------  ------------  -------- 
 Balance at 31 December 
  2019                         18,504     13,307          45      (31,762)        94 
-------------------------  ----------  ---------  ----------  ------------  -------- 
 

Consolidated Statement of Cash Flows for the Year E nded 31 Decem ber 2019

 
                                      Year ended     Year ended 
                                     31 December    31 December 
                                            2019           2018 
                                         GBP'000        GBP'000 
 Cash flows from operating 
  activities 
 
 Operating loss                            (652)          (645) 
 
 Adjustments for: 
 Share-based payments                         20            106 
 Services settled in shares                   52 
 Foreign exchange movement                     3            (2) 
 Net cash flow from operating 
  activities before changes 
  in working capital                       (577)          (541) 
 
 Changes in working capital: 
 (Increase)/Decrease in 
  trade and other receivables               (30)          (136) 
 Increase/(Decrease) in 
  trade and other payables                   139             86 
 Net cash flow used in operating 
  activities                                 109           (50) 
 
 Cash flow from investing 
  activities 
 Interest received 
 Net cash flow from investing 
  activities 
 
 Cash flow from financing 
  activities 
 Proceeds arising as a result 
  of the issue of ordinary 
  shares                                     574            400 
 Costs related to issue 
  of ordinary share capital                                 (5) 
 Interest paid 
 Net cash flow from financing 
  activities                                 574            395 
 
 Net increase in cash and 
  cash equivalents in the 
  year                                       106          (196) 
 Cash and cash equivalents 
  at beginning of the year                    52            248 
                                   -------------  ------------- 
 Cash and cash equivalents 
  at end of the year                         158             52 
                                   -------------  ------------- 
 

T he financial statem e nts we re appro ved by the Board of Directors on 29 J une 2020 and w ere signed on its b e half by:

Dennis Edmonds - Director

NOTES

1. TRADE AND OTHER RECEIVABLES

 
                                        Group                 Parent Company 
                                            2019      2018      2019      2018 
                                         GBP'000   GBP'000   GBP'000   GBP'000 
 Current: 
 
   Other debtors                             165       109       165       109 
 VAT                                           4         4         4         4 
 Prepayments and accrued 
  income                                      53        79        53        79 
                           ---------------------  --------  --------  -------- 
                                                                 222 
                                         222 222       192       222       192 
                           ---------------------  --------  --------  -------- 
 

2. TRADE AND OTHER PAYABLES

 
                                       Group          Parent Company 
                                    2019      2018      2019      2018 
                                 GBP'000   GBP'000   GBP'000   GBP'000 
 Current: 
 Trade creditors                      34        29        34        29 
 Social security and other 
  taxes                              196         -       196         - 
 Other creditors                      43       401        43       401 
 Accruals and deferred income         13        10        13        10 
                                --------  --------  --------  -------- 
                                     286       440       286       440 
                                --------  --------  --------  -------- 
 
   3.   ANNUAL REPORT AND ACCOUNTS 

Copies of the Annual Report and Accounts, together with a notice convening an annual general meeting, are being posted to shareholders today and will be available within the Investor Relations section of the Company's website www.pathfinderminerals.com .

Enquiries:

Pathfinder Minerals Plc

Dennis Edmonds, Chief Executive Officer

Tel. +44 (0)20 7390 0234

Strand Hanson Limited (Nominated & Financial Adviser and Broker)

James Spinney / Ritchie Balmer / Jack Botros

Tel. +44 (0)20 7409 3494

Vigo Communications (Public Relations)

Ben Simons / Simon Woods

Tel. +44 (0)20 7390 0234

Email. pathfinderminerals@vigocomms.com

Novum Securities Limited (Corporate Broker)

Colin Rowbury / Jon Belliss

Tel. +44 (0)20 7399 9400

The information contained within this announcement is deemed by the Company to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014 ("MAR").

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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