Pathfinder Minerals Regulatory News (PFP)

29 September 2022

Pathfinder Minerals Plc

("Pathfinder" the "Company")

Update Re Bilateral Investment Treaty Claim:

Option Agreement for the Sale of IM Minerals and the Claim

Pathfinder announces that it has entered into an option agreement with Acumen Advisory Group LLC ("AAG"), an asset recovery specialist incorporated in Delaware, USA, with a track record of international claim enforcement, under which Pathfinder has granted AAG an exclusive option to acquire IM Minerals Limited ("IMM"), a wholly owned subsidiary of Pathfinder, and the rights to bring a claim against the Government of Mozambique (the "Claim") under the Mozambique-United Kingdom Bilateral Investment Treaty (2004) (the "Option Agreement"), for the expropriation of Mining Concession 4623C (the "Licence").

Summary:

· Exclusive option granted to AAG for a period of three months to 27 December 2022 (unless extended) to enable AAG to complete due diligence and enter into binding definitive documentation in respect of the acquisition of IMM and the rights to the Claim (the "Acquisition Agreement")

If rights under the Option Agreement are exercised and the Acquisition Agreement is entered into, it would, subject to fulfilling certain conditions precedent, result in:

· Payment of £2 million in cash to Pathfinder by AAG for the acquisition of 100% of IMM on signature of the Acquisition Agreement

· Binding commitment by AAG to commence legal proceedings against the Government of Mozambique in respect of the Claim within three months of completion of the Acquisition Agreement with AAG confirming that it has secured at least US$15 million and will use its best endeavours to pursue the Claim to a satisfactory conclusion within five years

· Contingent payment by AAG to Pathfinder of US$24 million or 20% of net recoveries (whichever is greater) from any award or settlement of the Claim

While the Board is confident in the strength of the Claim and therefore the attractiveness of IMM as a vehicle, shareholders should be aware that there is no guarantee that the Option Agreement will be exercised and therefore that the Acquisition Agreement will be entered into on the terms agreed. Accordingly, there is no guarantee that any amounts will be recovered by Pathfinder pursuant to this transaction. Entering into the Acquisition Agreement will be conditional upon shareholder approval pursuant to AIM Rule 15, which, in turn, may lead to the Company being classified as an AIM Rule 15 cash shell.

Peter Taylor, Chief Executive Officer of Pathfinder, commented:

"This transaction, if completed, will ensure that the full force of a timely and well-funded Claim is brought against the Government of Mozambique and that Pathfinder could participate very considerably in any financial upside which has been independently evaluated to be worth in a range of US$110 million to US$1.5 billion.

A great deal of work has gone into preparing to bring a Claim and this now paves the way for AAG to apply its financial firepower to launch it and see it through to conclusion. The biggest hurdle has never been the strength of the Claim - which is assessed by Counsel to be in Pathfinder's favour - but having the funding to bring it. A successful transaction with AAG would remove that hurdle.

In the meantime, the £2 million proceeds from the disposal of IMM, if completed, would enable Pathfinder to pursue from a robust financial position other opportunities for value creation within the minerals sector, a number of which are under review."

James R Stothard, Chairman of AAG, commented:

"I am proud to announce our Option Agreement with Pathfinder to acquire 100 percent of the share capital of IMM in order to vigorously pursue the Claim against the Government of Mozambique. AAG has a proven track record of international claim enforcement. Working with our international legal team at DLA Piper, which also has considerable experience in these types of disputes, we are confident of a successful outcome which will benefit Pathfinder and its shareholders."

Background to the Claim

In 2011, Pathfinder, via its wholly owned UK subsidiary IMM, was subjected to the unlawful transfer by the Government of Mozambique of the Licence to an unconnected company controlled by the Pathfinder's former local partners without the Company's knowledge or consent. The Licence was until then held by the Company's 99.99%-owned subsidiary Companhia Mineira de Naburi ("CMdN"). The Licence was later sold by the former local partners to a Chinese state-owned company, TZM Resources S.A.

Pathfinder has since pursued a multichannel strategy to attempt to recover the Licence, including a successful action through the English High Court to confirm the validity of IMM's ownership of CMdN and through attempts to negotiate settlements with the new Licence holders.

In 2020, the Mozambique Supreme Court rejected the Company's application to recognise the English High Court judgment. Having exhausted all other avenues, Pathfinder has since been preparing to bring a claim against the Government of Mozambique, under the Mozambique-United Kingdom Bilateral Investment Treaty (2004) (the "Treaty"), for facilitating the expropriation of the Licence.

In December 2020, Pathfinder received a legal opinion that, subject to the interpretation of the facts and applicable laws as they were known to the Board and Counsel, there is a 55-60 percent prospect of establishing liability on the part of the Government of Mozambique in a Claim under the Treaty.

As part of the Company's preparatory procedures, Pathfinder commissioned Versant Partners LLC ("Versant") to undertake an analysis of the valuation of Pathfinder's potential Claim. The Versant analysis assessed a range of successful scenarios with valuation ranges from a minimum of US$110m for an ex-ante damages award through to US$1.5Bn for an ex-post damages award.

Enquiries:

Pathfinder Minerals Plc

Peter Taylor, Chief Executive Officer

Tel. +44 +44 (0)20 3143 6748

Strand Hanson Limited (Nominated & Financial Adviser and Broker)

James Spinney / Ritchie Balmer / Abigail Wellington

Tel. +44 (0)20 7409 3494

Vigo Consulting (Public Relations)

Ben Simons / Kate Kilgallen

Tel. +44 (0)20 7390 0234

Email pathfinderminerals@vigoconsulting.com

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").