ROME RESOURCES PLC — Audit Report / Information 2014

Jun 30, 2015

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RNS Number : 5852R

Pathfinder Minerals Plc

30 June 2015

30 June 2015

Pathfinder Minerals Plc

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

Final results for the year ended 31 December 2014

Chairman's Statement

Introduction

Over the past year as your chairman, I have developed a comprehensive understanding both of the circumstances in which Pathfinder was deprived of its principal assets in late 2011; and of the potential remedies available to the Company. I was keen to make shareholders aware in my June and September 2014 statements that the process to recover Pathfinder's assets may be a lengthy one. It should come as no surprise therefore that it is proving to be so. The process is, however, advancing.

Steps to recover the Company's assets

There are a number of routes via which the Company may in due course restore control of its assets or gain compensation for their loss.

Absent a more immediate diplomatic resolution which compels the Government of Mozambique to restore control to Pathfinder of the areas previously licensed to it, it is hoped that Mozambique's judicial system will ultimately find, as the English courts have done, that Pathfinder (through its wholly-owned subsidiary, IM Minerals Limited) did validly acquire its shareholding in Companhia Mineira de Naburi S.A.R.L ("CMDN"). This, in turn, would allow Pathfinder to demonstrate to the Government of Mozambique that, as a matter of Mozambique, as well as English, law, General Veloso and Diogo Cavaco (the "Defendants") were not entitled to divert the mining licences away from CMDN for their personal gain. I am confident that in such a scenario the Government of Mozambique would take steps akin to reversing the licence transfer.

Following a resounding judgment from the English High Court in the Company's favour, Pathfinder is continuing to pursue its legal rights in Mozambique vigorously-and intends to do so until it is successful in restoring to shareholders the assets of which they have been deprived. This will not, however, be a short process. Notwithstanding the multiple proceedings ongoing in Mozambique it is likely that, whatever their outcome, appeals will follow. For this reason, the Company has continuously kept an open mind with regards to the merits of a mediated settlement with the Defendants.  However, the willingness to date of the Defendants to entertain reasonable terms for Pathfinder's shareholders makes this an unlikely scenario.

A further legal route, by which the Company may recover its assets or seek compensation for its loss from the Government of Mozambique, remains under advanced consideration.

Legal proceedings in Mozambique

There remain several legal proceedings ongoing in the Mozambican courts, each of which raises the issue of the jurisdiction of the English court and/or Pathfinder's status as a shareholder of CMDN. Shortly before the year-end two significant judgments were handed down.

On 15 December 2014 Pathfinder announced that the Maputo Commercial Court had confirmed the validity of the Company's shareholding in CMDN following a hearing which took place on 6 December 2012. In those proceedings Pathfinder had sought the annulment of certain resolutions purportedly passed at an extraordinary general meeting of CMDN on 9 December 2011. The purpose of these resolutions was to dismiss Pathfinder's representatives on CMDN's Board and to cancel Pathfinder's shares in CMDN and reissue them to the Defendants. It was therefore wholly appropriate that the Maputo Commercial Court granted the annulment sought. Importantly, in its judgment the Maputo Commercial Court held that Pathfinder did validly acquire its shareholding in CMDN.

It came as little surprise that, upon notification of this judgment, the Defendants applied to the Maputo Commercial Court to appeal the decision.  A decision on the appeal is awaited.  Pathfinder will continue to announce any material developments as and when it is notified of them. 

On 31 December 2014 Pathfinder announced a decision from the Mozambique Supreme Court in respect of the Company's application for recognition of orders by the English court for costs aggregating £106,000 to be paid by the Defendants. In its judgment, the Mozambique Supreme Court rejected the Company's claim for recognition while upholding, with one exception, all of the Company's arguments.

The basis upon which the Mozambique Supreme Court rejected Pathfinder's claim appears to be absurd. The court determined that the jurisdiction clauses contained in the agreements which were the subject of the dispute were not valid as a matter of Mozambique law because they conferred jurisdiction on the courts of England and Wales without specifying which court in England and Wales was to have jurisdiction (or providing the criteria for selecting the competent court). Such a ruling has serious implications for other investors in Mozambique whose jurisdiction clauses would typically be no different to the standard formulation contained in Pathfinder's contracts. Pathfinder has asked the Supreme Court for permission to appeal against its decision.

In the meantime, a further application for recognition - which includes Pathfinder's application for recognition of the English High Court's declarations in respect of the Company's acquisition of shares in CMDN - is still pending. It is not known when judgment on this further claim might be delivered. It may still be a considerable time.

Financial results and current financial position

The financial results of Pathfinder are, as for any pre-revenue company which does not currently have operations, very straightforward. The most important financial measurement continues to be whether Pathfinder has sufficient cash to see through its strategy to recover its assets. The Board continues to exercise prudence with expenditure and believes the Company does have sufficient reserves for the foreseeable future.

Nevertheless, the Company wishes to maintain the ability to raise equity finance in the future should it be required. In that context, although there are no immediate plans to seek such funding, in order that the Company might promptly take advantage of any offer of additional finance, the Board is seeking from shareholders at the forthcoming Annual General Meeting the powers required by company law to achieve this. In the light of the current share price, it is likely that the subscription price for any further issue of ordinary shares, should such an issue occur, would be less than their nominal value. Consequently, a share capital reorganisation will also be necessary in order to effect such allotment. This is explained more fully in the Notice of Annual General Meeting which is being sent to shareholders simultaneously with this report.

The financial statements of the Pathfinder Group for the year ended 31 December 2014 follow later in this report. The Income Statement shows a loss of £1.1 million (2013 - £1.5 million). The conclusion of the legal action in England during 2013 brought about a reduction in the rate of expenditure. Since the Company has been prevented from conducting any activity relating to mining, the whole of this loss can be attributed to the Company's attempts to recover its expropriated licences.

The Group's Statement of Financial Position shows net assets at 31 December 2014 of £1.1 million (2013 - £2.2 million). The assets are held largely in the form of cash deposits (totalling £1.2 million at the year-end).

Outlook

Pathfinder is advancing the legal proceedings in Mozambique as efficiently and as expeditiously as the judicial infrastructure allows. It is a slow process and judgments have been shown to take up to two years to be handed down. While the Company is prepared to enforce its rights through the courts, we continue to pursue in the background other possible routes to achieve a faster resolution; while at the same time considering other ways to add value to the Company. Above all the Board's objective is to seek the best possible outcome for shareholders from the appalling actions which have afflicted the Company. I believe that a positive outcome is achievable.

Henry Bellingham

Chairman

29 June 2015

Statement of Consolidated Comprehensive Income

For the Year Ended 31 December 2014

Year ended 31 December	2014		2013
	£'000		£'000
CONTINUING OPERATIONS
Revenue	-		-
Administrative expenses	(1,070)		(1,480)
OPERATING LOSS	(1,070)		(1,480)
Finance income	14		21
LOSS BEFORE INCOME TAX	(1,056)		(1,459)
Income tax	-		-
LOSS FOR THE YEAR	(1,056)		(1,459)
OTHER COMPREHENSIVE INCOME	-		-
TOTAL COMPREHENSIVE LOSS FOR THE YEAR	(1,056)		(1,459)
Loss per share (expressed in pence per share)
Basic	(0.1)		(0.1)
Diluted	(0.1)		(0.1)

Statement of Consolidated Financial Position

31 December 2014

	2014		2013
	£'000		£'000
ASSETS
CURRENT ASSETS
Trade and other receivables	61		185
Cash and cash equivalents	1,172		2,134
	1,233		2,319
TOTAL ASSETS	1,233		2,319
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital	18,289		18,289
Share premium	11,022		11,022
Retained earnings	(28,176)		(27,120)
TOTAL EQUITY	1,135		2,191
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	98		128
TOTAL LIABILITIES	98		128
TOTAL EQUITY AND LIABILITIES	1,233		2,319

Statement of the Company's Financial Position

31 December 2014

	2014		2013
	£'000		£'000
ASSETS
NON-CURRENT ASSETS
Investments	-		-
	-		-
CURRENT ASSETS
Trade and other receivables	61		185
Cash and cash equivalents	1,172		2,134
	1,233		2,319
TOTAL ASSETS	1,233		2,319
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital	18,289		18,289
Share premium	11,022		11,022
Retained earnings (deficit)	(28,307)		(27,251)
TOTAL EQUITY	1,004		2,060
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	229		259
TOTAL LIABILITIES	229		259
TOTAL EQUITY AND LIABILITIES	1,233		2,319

Statement of Changes in Equity

For the Year Ended 31 December 2014

	Called up share capital		Profit and loss account		Share premium		Total equity
	£'000		£'000		£'000		£'000
Group
Balance at 1 January 2013	18,289		(25,661)		11,022		3,650
Changes in equity
Total comprehensive loss	-		(1,459)		-		(1,459)
Balance at 31 December 2013	18,289		(27,120)		11,022		2,191
Changes in equity
Total comprehensive loss	-		(1,056)		-		(1,056)
Balance at 31 December 2014	18,289		(28,176)		11,022		1,135
Company
Balance at 1 January 2013	18,289		(25,792)		11,022		3,519
Changes in equity
Total comprehensive loss	-		(1,459)		-		(1,459)
Balance at 31 December 2013	18,289		(27,251)		11,022		2,060
Changes in equity
Total comprehensive loss	-		(1,056)		-		(1,056)
Balance at 31 December 2014	18,289		(28,307)		11,022		1,004

Statement of Cash Flows - Group and Company

For the Year Ended 31 December 2014

	2014		2013
	£'000		£'000
Cash flows from operating activities
Loss before income tax	(1,056)		(1,459)
Finance income	(14)		(21)
	(1,070)		(1,480)
Decrease (increase) in trade and other receivables	124		(22)
Decrease in trade and other payables	(30)		(152)
Net cash from operating activities	(976)		(1,654)
Cash flows from investing activities
Interest received	14		21
Net cash from investing activities	14		21
Decrease in cash and cash equivalents	(962)		(1,633)
Cash and cash equivalents at beginning of the year	2,134		3,767
Cash and cash equivalents at end of the year	1,172		2,134

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 are available within the Investor Relations section of the Company's website www.pathfinderminerals.com.

Annual General Meeting

The annual general meeting of the Company will be held at Becket House, 36 Old Jewry, London, EC2R 8DD on 7 September 2015 at 11 a.m.

Enquiries:

Pathfinder Minerals Plc

Nick Trew, Chief Executive

Tel.: +44 (0)20 3440 7775

WH Ireland Limited (Nomad and Broker)

Paul Shackleton

Tel.: +44 (0)20 7220 1756

Vigo Communications

Ben Simons or Ali Roper

Tel.: +44 (0)20 7016 9595

Email: [email protected]

This information is provided by RNS

The company news service from the London Stock Exchange

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