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 Pathfinder 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 findings 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 £335,000 was raised during the period through cash subscriptions for 14,909,091 shares in aggregate. A further £239,000 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 £175,000 (announced on 3 April 2020); and the second, an equity fundraising to issue 38,461,538 new shares for gross proceeds of £250,000 (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 £309,000 of accrued cash liabilities. The Company has made a submission to HMRC for the calculated PAYE on these settlements amounting to £139,000 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 - £645,000). The board reorganisation during the year has resulted in a reduction in remuneration from £195,000 (2018) to £121,000 this reporting period.
The Group's Statement of Financial Position shows net assets at 31 December 2019 of £381,000 (31 December 2018 - £244,000). 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 £283,000, 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 £'000 |
2018 £'000 |
||
|
CONTINUINGOPERATIONS |
|||
|
Revenue |
- |
- |
|
|
Administrativeexpenses |
(652) |
(645) |
|
|
OPERATINGLOSS |
(652) |
(645) |
|
|
Financeincome |
- |
- |
|
|
LOSSBEFOREINCOMETAX |
(652) |
(645) |
|
|
Incometax |
- |
- |
|
|
LOSSFORTHEYEAR |
(652) |
(645) |
|
|
Total comprehensive loss for the year attributable to: |
|||
|
Equity holdersoftheparent |
(652) |
(645) |
|
|
Loss p e rshare from continuing operations |
|||
|
inpencepershare: Basic |
( 0.22) |
( 0.26) |
|
|
Diluted |
( 0.22) |
( 0.26) |
Consolidated Statement of Financial Position for the Year Ended 31 December 2019
|
Year ended |
Year ended |
||
|
£'000 |
£'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 up share capital |
Share premium |
Other reserves |
Accumulated deficit |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'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 Ended 31 December 2019
|
Year ended £'000 |
Year ended £'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 statements were approved by the Board of Directors on 29 June 2020 and were signed on its behalf by:
Dennis Edmonds - Director
NOTES
1. TRADE AND OTHER RECEIVABLES
|
Group |
Parent Company |
||||
|
2019 |
2018 |
2019 |
2018 |
||
|
£'000 |
£'000 |
£'000 |
£'000 |
||
|
Current: |
|||||
|
Other debtors |
165 |
109 |
165 |
109 |
|
|
VAT |
4 |
4 |
4 |
4 |
|
|
Prepayments and accrued income |
53 |
79 |
53 |
79 |
|
|
222 222 |
192 |
222 222 |
192 |
||
2. TRADE AND OTHER PAYABLES
|
Group |
Parent Company |
||||
|
2019 |
2018 |
2019 |
2018 |
||
|
£'000 |
£'000 |
£'000 |
£'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").
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