More misguided research

Once again, the financial website Proactiveinvestors has published misguided "research" about Pathfinder Minerals and the on-going dispute with General Veloso and Diogo Cavaco.

This time the "research" has been produced by Beaufort Securities, the new name (since 1^st May 2013) for HB Markets, which in turn was a name change from Hoodless Brennan, a stockbroking firm fined by the FSA on more than one occasion for its aggressive selling techniques.

Beaufort says in the "research" that it is “optimistic” that Pathfinder Minerals will be successful in court in Maputo. It is very hard to see where they find justification for this optimism, given a) the injunction in Mozambique preventing recognition of the English judgement and b) the case filed against them in Maputo which will be the real contested hearing of their claims.

Given that the UK court confirmed Pathfinder never paid for the shares of CMdN, the company is likely to lose, at more cost to its hapless shareholders.

Beaufort reckons on the basis of this “research” that Pathfinder shares are a speculative buy. Let’s hope they’re not aggressively punting them to customers.

Response to High Court judgement

Companhia Mineira de Naburi (“CMdN”)

Pathfinder Minerals’ Statement re UK Court of Appeal

UK Court Appeal

The owners of CMdN, General Veloso and Diogo Cavaco, note today’s announcement by Pathfinder Minerals re their appeal to the UK High Court.  As they have already made clear, they withdrew their appeal after Pathfinder Minerals filed an application to the UK High Court demanding that General Veloso and Diogo Cavaco:

1.                   agree to provide over £1m of security for costs; and

2.                   drop their legal proceedings in Mozambique

 if they wished to proceed with their appeal. 

This was a clear attempt to stifle the appeal and deny them justice. 

Mozambique legal proceedings

Pathfinder Minerals’ has to date obtained an UNCONTESTED judgement in the UK.

General Veloso and Diogo Cavaco withdrew from the UK legal proceedings as they were advised:

1.                   that jurisdiction for the hearing of the case brought by Pathfinder Minerals must be in Mozambique

2.                   under the Mozambique Civil Code, Pathfinder Minerals’ claim to own the shares of CMdN will fail.

The UK court explicitly recognized that Pathfinder Minerals has never exercised its option to acquire shares of CMdN and HAS NEVER PAID FOR THE SHARES. 

General Veloso and Diogo Cavaco are confident that when the claims brought by Pathfinder Minerals are properly heard on a contested basis in the Mozambique Court that it will be found that Pathfinder Minerals never paid for the shares of CMdN, is in breach of all its contractual obligations to the owners of CMdN and that it does not own any shares of CMdN.

Political process

General Veloso and Diogo Cavaco have kept both the British Government and the Mozambique Government fully informed of the situation and they are confident that both Governments fully understand the details of the dispute and that Pathfinder Minerals has breached its contractual obligations to General Veloso and Diogo Cavaco.

The Project

Despite the spoiling tactics being deployed by Pathfinder Minerals in the courts, General Veloso’s company continues to develop the mineral sands project in Zambezia with the full support of international investors and the Mozambique Government under the terms of the licence owned by him. 

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Notes for Editors:

In the High Court judgement obtained by Pathfinder Minerals in October 2012, the judge correctly found that the Share Option Agreement by which Pathfinder Minerals claimed to own shares of CMdN was indeed an option agreement, under which the option could only be exercised upon payment of the purchase price of $9.9m, which has not been paid. Accordingly, under Mozambique law ownership of CMdN shares never passed to Pathfinder Minerals.

To this day, the promoters of Pathfinder Minerals, Nick Trew, Gordon Dickie, John McKeon and Tim Baldwin have only ever paid $100,000 in respect of the Option Agreement entered into in good faith by General Veloso and Diogo Cavaco in 2005.

The owners remain highly confident however that while it is likely to take several years for this case to be finally resolved, they will be successful in defending their rights of ownership under Mozambique law.

Withdrawal of UK Court Appeal

Companhia Mineira de Naburi (“CMdN”)

• Withdrawal of UK Court Appeal after Pathfinder Minerals demands more than £1m in security for costs in order to stifle the Appeal 
• Mozambique Injunction continues with suspensive effect 
• Derisory $1m offer recently sent by Nick Trew to General Veloso

UK Court Appeal

In response to the Appeal of the UK Court judgement by the owners of CMdN, General Veloso and Diogo Cavaco,  Pathfinder Minerals filed an application to the UK High Court demanding that General Veloso and Diogo Cavaco:

1.                   agree to provide over £1m of security for costs; and

2.                   drop their legal proceedings in Mozambique

 if they wished to proceed with their appeal. 

This is a clear attempt to stifle the appeal and deny them justice.  Clearly General Veloso and Diogo Cavaco cannot provide such an extraordinary amount of costs nor will they or should they be obliged to give up their defence of their legal rights in the Mozambique courts.  They have therefore decided to withdraw their appeal in the UK Court.

Mozambique Injunction and Mozambique legal proceedings

In May 2012, General Veloso and Diogo Cavaco obtained an Injunction in Mozambique preventing Pathfinder Minerals continuing or taking any further legal action in UK until a final judgement on the dispute had been reached by the Mozambique Courts.

This Injunction was confirmed by the Mozambique court with suspensive effect on 27 March 2013 meaning:

1.                   Pathfinder Minerals’ UK court judgement is unenforceable

2.                   It was obtained in criminal breach of a Mozambique Injunction

General Veloso and Diogo Cavaco intend to pursue vigorously in the Mozambique courts the substantive claims served on Pathfinder Minerals to confirm that General Veloso and  Diogo Cavaco are the owners of CMdN.

Derisory offer from Nick Trew and the Board of Pathfinder Minerals sent to General Veloso

During the week of 18 March 2013 General Veloso was sent an offer by Nick Trew, through an intermediary, to settle the dispute.  This offer purported to be from the Board of Pathfinder Minerals although it was not on their letterhead or signed by them.

This offer proposed that General Veloso should accept $1m as an immediate payment in respect of the $9.9m that has never been paid for the shares of CMdN.  Nick Trew claimed that the reason for this derisory offer was that “because of the expenditure on the legal and related costs….Pathfinder is not able to offer any greater advance..”

In any case, General Veloso and Diogo Cavaco have legally cancelled in November 2011 the contracts entered into in 2005 under which Pathfinder Minerals acquired an option to purchase the shares of CMdN, for non-performance and breach of contract.  They expect this to be confirmed by the Mozambique court in due course.

  

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Notes for Editors:

In the High Court judgement obtained by Pathfinder Minerals in October 2012, the judge correctly found that the Share Option Agreement by which Pathfinder Minerals claimed to own shares of CMdN was indeed an option agreement, under which the option could only be exercised upon payment of the purchase price of $9.9m, which has not been paid. Accordingly, under Mozambique law ownership of CMdN shares never passed to Pathfinder Minerals.

To this day, the promoters of Pathfinder Minerals, Nick Trew, Gordon Dickie, John McKeon and Tim Baldwin have only ever paid $100,000 in respect of the Option Agreement entered into in good faith by General Veloso and Diogo Cavaco in 2005.

The owners remain highly confident however that while it is likely to take several years for this case to be finally resolved, they will be successful in defending their rights of ownership under Mozambique law.

Appendix – Grounds of the UK Court Appeal 

The owners of CMdN, General Veloso and Diogo Cavaco, applied to appeal the UK court judgement obtained by Pathfinder Minerals on the grounds primarily that:

(1) The UK Court failed to take any or any sufficient notice of the fact that the proceedings in England were being conducted by the Claimants in breach of the clear terms of a subsisting anti-suit injunction issued by the Maputo Court in Mozambique so that according to the provisions of the Mozambique Code of Civil Procedure, the English judgment could not and would not be recognized by the Mozambique Court.

(2) The judge also failed to give any or any due consideration or weight to the following:

(a)         that the dispute concerned shares of a Mozambique company, claims regarding a Mozambique asset, ownership by Mozambique nationals and a company Companhia Mineira de Naburi (“CMdN”) all of which is governed by the Mozambique Civil Code;

(b)        that the outcome would and could ultimately only be subject to decisions made in the Mozambique court, and that only the decision of the Mozambique Court could have any practical effect, so that the English proceedings served no useful purpose; and

(c)         the proceedings in England involved an unnecessary and wasteful duplication of costs which it was unreasonable to expect foreign litigants to incur in addition to the costs they were obliged to incur in the litigation in Mozambique where matters ultimately fell to be decided and any legal decision implemented.

(3) In summary, by proceeding with the trial and making the orders he did, despite his finding that the option requiring Pathfinder Minerals to pay $9.9m to the owners of CMdN had not been exercised under the Share Option agreement and that there was an anti-suit injunction and continuing proceedings in Maputo, the judge failed to deal with the case justly and fairly.

Misinformation in the market

The confused nonsense below was published on April 3^rd 2013 by Proactive Investors – “one of the leading free sources of breaking news, in-depth comment and analysis”, according to its own website. The content, though, was supplied by HB Markets, the little stockbroker until recently known as Hoodless Brennan.

When contacted and offered General Veloso’s and Diogo Cavaco’s version of the latest court developments, HB Markets’ research desk said: “We have absolutely no interest in your version of events. Goodbye.” In fairness, nowhere on the HB website does the firm claim to produce independent or unbiased research. 

“Pathfinder Minerals (LON:PFP)

On 27th March 2013, Pathfinder received a notification that General Veloso, his company JV Consultores Internacionais Limitada and Mr. Diogo Cavaco (“defendants”) had appealed against the Maputo Judgment, revoking an interdict previously secured by the defendants against Pathfinder’s wholly owned subsidiary IM Minerals Ltd (IMM). The Notification indicated that the purpose of the defendants’ appeal was to suspend the effect of the Maputo Judgment pending the outcome of the appeal or further order. The decision to suspend the effect of the Maputo Judgment was made following an application by the defendants without notice to or hearing from IMM. IMM will challenge the validity on an urgent basis and will also contest the defendants’ appeal. The appeal is due to be heard before the judges of the Court of Appeal in England on 22nd or 23rd April 2013. Earlier, the defendants had alleged that IMM never acquired any shares in its Mozambique subsidiary, Companhia Mineira de Naburi (CMDN), and sought to argue that the agreements by which IMM acquired the shares in CMDN were validly terminated and/or invalid. Damages amounting to US$1m were also sought. The stock advanced 3% yesterday.

Our view: As previously announced on 1st February 2013, General Veloso, his company JV Consultores Internacionais Limitada and Diogo Cavaco sought permission to appeal against the English High Court judgment passed on 19th October 2012, which stated that Pathfinder’s wholly-owned subsidiary IMM had validly acquired 99.99% of the Mozambique subsidiary, CMDN, pursuant to the English law agreements entered into between IMM and General Veloso and his associates. The Court had subsequently ordered that Pathfinder receive 90% of the total costs incurred during the High Court proceedings, and ordered the defendants to make an interim payment of £850,000. Pathfinder will now contest the appeal vigorously, as it considers the basis for appeal to be without justification – both as to the defendants’ legal arguments and also in light of the defendants’ persistent breaches of orders made by the English High Court and their decision prior to trial to take no further part in the proceedings. We are optimistic that Pathfinder will regain ownership and control over the Moebase and Naburi assets of CMDN and subsequently commence the project development of the heavy mineral sand deposits housed in the prospect. In light of the high demand for heavy minerals of ilmenite, rutile and zircon in the manufacture of products in the industrial sectors, the Company’s Moebase and Naburi licences, if and when restored, would have a significant material value to Pathfinder. We assign a Speculative Buy rating on the stock.”

By HB Markets, published by Proactive Investors

For a clearer account of what happened in court, see the post after this one.

Companhia Mineira de Naburi (“CMdN”)

Mozambique Injunction previously obtained by General Veloso Reinstated

with Suspensive Effect

The owners of CMdN, General Veloso and Diogo Cavaco, note the statement from Pathfinder Minerals on 2 April 2013, in which Pathfinder Minerals acknowledges that its attempt to interfere with General Veloso and Diogo Cavaco’s legal action against Pathfinder Minerals currently underway in Mozambique has failed.

On 13 April 2012, General Veloso and Diogo Cavaco obtained an Injunction preventing IM Minerals Limited (“IMM”), the subsidiary of Pathfinder Minerals, from pursuing legal action in the UK until the Mozambique legal case filed by General Veloso and Diogo Cavaco was resolved. Under the terms of this Injunction any attempt to use foreign courts to interfere with the Mozambique legal process would be a criminal breach.

On 27 November 2012 Pathfinder Minerals persuaded the Maputo court to revoke that Injunction – however, on 27 March 2013 the court in Maputo confirmed and reinstated the Injunction “with suspensive effect”, meaning that all legal actions taken by the company in the UK, including during the period when the Injunction was revoked, are regarded by the Maputo court as a criminal breach of its initial ruling.

Pathfinder Minerals now says it “believes there are good grounds for challenging the validity of the order suspending the effect of the Maputo Judgment. It will do so on an urgent basis and will also contest the Defendants' appeal.”

However, the following facts are unassailable:

·       The shares of CMdN are shares of a Mozambican company, are subject to the jurisdiction of the Mozambique court and are owned by General Veloso and Diogo Cavaco, prominent and highly-respected Mozambique nationals.

·       In the High Court judgement obtained by Pathfinder Minerals in October 2012, the English judge correctly found that the Share Option Agreement by which Pathfinder Minerals claimed to own shares of CMdN was indeed an option agreement, under which the option could only be exercised upon payment of the purchase price of $9.9m.

·       This $9.9m has never been paid.

·       Accordingly, under Mozambique law, ownership of CMdN shares never passed to Pathfinder Minerals

.         Pathfinder Minerals has never denied that it has not paid for the shares, nor explained the failure to pay.

General Veloso and Diogo Cavaco remain highly confident that while it is likely to take several years for this case to be finally resolved, they will be successful in defending their rights of ownership under Mozambique law.

Companhia Mineira de Naburi (“CMdN”)

Appeal of UK Court judgment

Pathfinder Minerals announcement of 27 March 2013 re Appeal by CMdN of UK Court judgment

The owners of CMdN, General Veloso and Diogo Cavaco note the announcement by Pathfinder Minerals dated 27 March 2013 regarding CMdN’s appeal against the UK court judgment obtained by Pathfinder Minerals.

As with previous announcements by Pathfinder Minerals this announcement is more interesting for what it does not say and is confusing for investors.

In fact, in response to CMdN’s appeal, Pathfinder Minerals applied to the UK High Court demanding that General Veloso and Diogo Cavaco:

1. provide over £1m of security for costs; and

2. drop their legal proceedings in Mozambique

if they wished to proceed with their appeal.  This is a clear attempt to stifle the appeal and deny them justice. 

The judge stated that the demand for over £1m of costs was grossly excessive and he was not prepared to make it a condition of the appeal that General Veloso and Diogo Cavaco withdraw their Mozambique legal proceedings.  General Veloso and Diogo Cavaco continue to pursue vigorously the Mozambique legal proceedings.

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Note to Editors:

In the UK judgement obtained by Pathfinder Minerals in October 2012, the judge correctly found that the Share Option Agreement entered into by Pathfinder Minerals and CMdN was indeed an option agreement, under which the option could only be exercised upon payment of the agreed purchase price of $9.9m, which has not been paid.  Accordingly, property in the CMdN shares has not passed to Pathfinder Minerals’ subsidiary, IM Minerals Limited.

To this day, the promoters of Pathfinder Minerals, Nick Trew, Gordon Dickie, John McKeon and Tim Baldwin have only ever paid $100,000 in respect of the Option Agreement entered into in good faith by General Veloso and Diogo Cavaco in 2005.

The owners of CMdN, General Veloso and Diogo Cavaco, remain highly confident that while it is likely to take several years for this case to be finally resolved, they will be successful in defending their rights of ownership of CMdN under Mozambique law.

Companhia Mineira de Naburi (“CMdN”)

Pathfinder Minerals Cash Burn – Daily Telegraph 14 March 2013

The owners of CMdN, General Veloso and Diogo Cavaco have noted the recent article in the Daily Telegraph in UK that Pathfinder Minerals has been spending cash at a rate of £463,000 per month and had only £5.1m left at June 2012 of the £11m raised by them in June 2011.

At that level of monthly spending, Pathfinder Minerals would be out of cash by the end of May 2013.

According to the Daily Telegraph, Pathfinder Minerals claims “significant funds” went on “the feasibility study for the disputed Mozambique projects”.  In fact this is not the case as Pathfinder Minerals has no mining licence and no assets in Mozambique.

In an email from James Normand, the Finance Director of Pathfinder Minerals, to General Veloso dated 11 November 2011, Mr Normand said:

“Suffice it to say that the figure of £4 million in Nick Trew’s e-mail came from me, so I can confirm that it has indeed been spent.”

However, in a spreadsheet attached to the same email Mr Normand identified that only £489,298 was categorized as “Payments made to date” to potential contractors.

If it is the case that Pathfinder Minerals has spent the majority of the £11m raised in June 2011, where has the money gone and why has the Stock Market not been informed?

  

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NB. In the High Court judgement obtained by Pathfinder Minerals in October 2012, the judge correctly found that the Share Option Agreement by which Pathfinder Minerals claimed to own shares of CMdN was indeed an option agreement, under which the option could only be exercised upon payment of the purchase price of $9.9m, which has not been paid. Accordingly, under Mozambique law ownership of CMdN shares never passed to Pathfinder Minerals.

The owners remain highly confident that while it is likely to take several years for this case to be finally resolved, they will be successful in defending their rights of ownership under Mozambique law.