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LONDON (Alliance News) - Pathfinder Minerals PLC Friday said a court in Mozambique has made a ruling against the company in its lengthy litigation process, stating it has informed its lawyers to appeal the decision as it continues to try to reclaim numerous licenses.
Pathfinder shares were down 23% to 0.825 pence per share on Friday morning.
In a case that has been ongoing for years, Pathfinder has been fighting its corner over the ownership of a company that holds the licenses in question, Companhia Mineira de Naburi SARL.
Pathfinder has claimed the rights to the licences in Mozambique were illegally seized by General Jacinto Veloso and Diogo Cavaco and was hoping the Mozambique court would rule that Pathfinder validly acquired a 99.99% stake in Companhia Mineira.
Veloso and Cavaco, however, claimed Pathfinder failed to pay the USD10.0 million required under the option agreement in place to acquire the shares in Companhia Mineira, meaning these licences could not have been seized as Pathfinder never owned them.
According to Pathfinder, the licenses were taken under an agreement that was apparently signed between Companhia Mineira and Veloso and Cavaco back in 2006, with Pathfinder claiming it was not told about the agreement until 2012, way after it acquired its stake in the company.
Pathfinder said one of the terms of the 2006 agreement, the authenticity of which it "strongly disputes", was that the deal had to be kept a secret by Veloso and Cavaco from the Companhia Mineira board.
Pathfinder said that under the terms, Companhia Mineira was expected to transfer the licenses in question to Veloso and Cavaco if it failed to pay them USD2.0 million or failed to progress the project, with a further clause stating Companhia Mineira would have to pay the two individuals USD100.0 million when the project does reach a certain milestone.
The individuals' defence is that Pathfinder was not a shareholder of Companhia Mineira when shareholders voted on the proposed deal, meaning it has no say in the matter.
"The Maputo judgement determines, in summary, that [Pathfinder's subsidiary] was not a shareholder in Companhia Mineira in May 2009 and does not therefore have legal standing to bring an action for the annulment of the May 2009 resolution," said Pathfinder.
Pathfinder said that the unfavourable judgement was delivered despite another court in Mozambique and an English court ruling in its favour.
"The company has binding judgements in its favour from both the English and Mozambique courts that it validly acquired 99.99% of the shares in Companhia Mineira and that it was at all material times a shareholder of Companhia Mineira," said Pathfinder Chief Executive Nick Trew.
"We will appeal this latest judgement and continue to take all active steps in the courts and through other channels to seek recovery of the licences for the benefit of Pathfinder and its shareholders and I remain very grateful to the company's shareholders for their continued support," he added.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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