ROME RESOURCES PLC — Audit Report / Information 2018

Jun 28, 2019

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RNS Number : 8448D

Pathfinder Minerals Plc

28 June 2019

28 June 2019

Pathfinder Minerals Plc

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

Final Results for the Year Ended 31 December 2018

CHAIRMAN'S STATEMENT

INTRODUCTION

During 2018, the Board continued to pursue the reinstatement to the Company of the areas previously licensed to Pathfinder in Mozambique under Mining Concession nos. 760C and 4623C (now consolidated as Mining Concession no. 4623C (the "Licence")). I am very encouraged by the progress being made and optimistic about the range of options being proposed to us. As announced on 3 June 2019, the Board is focused on gaining further clarity from the various interested counterparties on their proposal structures.  I look forward to updating shareholders further if and when progress is made towards a resolution that is to the satisfaction of all parties. 

REVIEW OF ACTIVITY FOR THE PERIOD

In the early part of 2018, Pathfinder reported that it continued to pursue a dual-track strategy to recover control of the Licence either through the legal process or by way of a negotiated settlement. The Company subsequently reported that the prospects of a negotiated settlement had stalled.

A general meeting of the Company was requisitioned by certain shareholders on 4 April 2018 proposing changes to the composition of the Board.

On 9 May 2018, Pathfinder announced it had raised £250,000 in order to provide additional working capital; along with certain prospective management changes. The requirement for the Company to proceed with the abovementioned requisitioned general meeting was withdrawn on the same date.

On 22 May 2018, the Supreme Court in Mozambique notified the Company of its request for final written submissions in relation to Pathfinder's application for recognition of the 2012 English High Court ruling in its favour. The Company complied and lodged final written submissions. The Board has no visibility over the timing of judgment and has received no further communication since then from the Supreme Court in Mozambique.

On 10 August 2018, the Company appointed Strand Hanson Limited as its Nominated Adviser and Broker.

On 23 October 2018, Pathfinder announced it had raised a further £150,000 for working capital.

POST THE PERIOD END

Post the reporting period end, on 11 February 2019, the Company announced it had engaged Africa Focus Group Limited ("AFG"), 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.

This process has and continues to progress positively and, 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 who, with his family interests, is a 50 per cent shareholder in Pathfinder Moçambique, S.A..

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. Discussions are constructive and ongoing.

The Company has raised a further £335,000 via new share issues in April and June 2019.

VALUE

Shareholders should not lose sight of the value that lies within the opportunity they have waited so patiently to pursue.

Earlier this year, the Board commissioned an independent technical consultant, 2M Mineral Services Limited, to prepare a revised Scoping Study on the Licence (the "2019 Report"), 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 (the "2011 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 represent a near doubling of the previously reported equivalent NPV and an increase of 6.1 per cent in the project IRR.

A summary of the key differences in scoping study outcomes between the 2011 Report and the 2019 Report is set out below.

Key Differences in Scoping Study Outcomes between 2011 and 2019 Scoping Study Reports:
		2011	2019	Change %
Estimated Run of Mine production	Mtpa	47.7	47.7	0%
Estimated Life of Mine	Years	30	30	0%
Estimated Mineral Content Split of Final Product	Ilmenite	93.4%	93.4%	0%
	Rutile	1.8%	1.8%	0%
	Zircon	4.8%	4.8%	0%
Estimated Annual Production ('000 tonnes)	Ilmenite	1,245	1,245	0%
	Rutile	24	24	0%
	Zircon	65	65	0%
Projected Annual Revenues	US$ m	247	323	+19.4%
Initial Capital Cost	US$ m	686	742	+7.5%
Estimated Pre-tax IRR	%	18.8%	24.9%	+6.1%*
Estimated Pre-tax NPV @ 10% discount rate	US$ m	529	1,046	+97.7%
Pricing Assumptions (USD/tonne)	Ilmenite	125	173	+38.4%
	Rutile	677	908	+34.1%
	Zircon	1,148	1,320	+15.0%

* On an absolute basis

LEADERSHIP CHANGES

During 2018, new leadership was appointed with a view to optimising the prospect of a successful recovery of the Licence. In August 2018, Nick Trew stepped down from the Board and Simon Farrell and Scott Richardson-Brown joined the Board in the roles of Non-executive Co-Chairman and Executive Director, respectively. Scott Richardson-Brown was later appointed to the role of Chief Executive Officer.  Throughout the year considerable progress has been made in driving the Company's strategy to a successful conclusion and a huge amount of effort has been devoted to preserving the financial health of a non-revenue-generating, listed company working to resolve a complex situation.

Scott Richardson-Brown left the Company on 3 June 2019 to pursue other business interests, and the Board wishes him well with his future endeavours. John Taylor was appointed as the Company's new Chief Executive Officer on the same date and I am happy to report there has been no let-up in the pace of operations and activity since then.  John is focused on assisting Pathfinder in delivering a timely and positive solution to shareholders in what the Board views as a highly opportunistic period to reach a final settlement.

FINANCIAL RESULTS AND CURRENT FINANCIAL POSITION

During the period the Company issued 42,111,106 new ordinary shares to raise £400,000 in cash and settle £81,000 in corporate fees.

The financial statements of the Pathfinder Group for the year ended 31 December 2018 follow later in this report. The Income Statement shows a loss of £645,000 (2017 - £615,000) of which £61,000 relates to directors' fees and pension contributions that are recorded as a liability in 'Trade and other payables' but actual payment of which had been deferred as described in 'Note 18' to the accounts in order to conserve the Company's cash resources during this period. £24,478 was also expensed relating to the issue of 15,250,000 options to Directors during the period. Since the period end, the accrued unpaid directors' fees and pension liabilities up to 31 May 2019 have been settled in full through the issue of new ordinary shares in the Company.

The Group's Statement of Financial Position shows net assets (excluding £337,000 of deferred fees and pension contributions described in 'Note 18') at 31 December 2018 of £139,000 (31 December 2017 - £224,000). The assets are held largely in the form of cash deposits and receivables. Following the Company's share issues in April and June 2019, and the receipt of cash proceeds from the exercise of warrants, the Company's cash position as at 27 June 2019 stands at £520,000.

OUTLOOK

Discussions are continuing to progress in a positive way both with regards to a transaction in respect of the Licence and with prospective funders who are conducting their own asset-level due diligence. Should a transaction be concluded, the Board anticipates that the effect on the business would likely be transformational.

On behalf of the Board, I should like to thank all shareholders for their patience and support while the Board is continuing to do everything within in its power to recover the Licence on terms which deliver value for Pathfinder's existing shareholders. I look forward to updating the market on progress in the near future.

ON BEHALF OF THE BOARD:

Sir H C Bellingham

Director

27 June 2019

Financial Statements

Consolidated Income Statement

for the Year Ended 31 December 2018

	2018 £'000		2017 £'000
CONTINUING OPERATIONS
Revenue	-		-
Other operating income	-		-
Administrative expenses	(645)		(615)
OPERATING LOSS	(645)		(615)
Finance income	-		-
LOSS BEFORE INCOME TAX	(645)		(615)
Income tax	-		-
LOSS FOR THE YEAR	(645)		(615)
Loss attributable to:
Owners of the parent	(645)		(615)
Earnings/(loss) per share expressed
in pence per share:
Basic	(0.26)		(0.33)
Diluted	(0.26)		(0.33)

Consolidated Statement of Comprehensive Income

for the Year Ended 31 December 2018

	2018 £'000		2017 £'000
LOSS FOR THE YEAR	(645)		(615)
OTHER COMPREHENSIVE INCOME	-		-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	(645)		(615)
Total comprehensive income attributable to:
Owners of the parent	(645)		(615)

Consolidated Statement of Financial Position

31 December 2018

	Notes	2018 £'000		2017 £'000
ASSETS
NON-CURRENT ASSETS
Property, plant and equipment		-		-
Investments		-		-
		-		-
CURRENT ASSETS
Trade and other receivables	2	192		56
Cash and cash equivalents		52		248
		244		304
TOTAL ASSETS		244		304
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital		18,458		18,416
Share premium		12,431		11,997
Share based payments reserve		25		-
Retained earnings		(31,110)		(30,465)
TOTAL EQUITY		(196)		(52)
LIABILITIES
CURRENT LIABILITIES
Trade and other payables	3	440		356
TOTAL LIABILITIES		440		356
TOTAL EQUITY AND LIABILITIES		244		304

The financial statements were approved by the Board of Directors on 27 June 2019 and were signed on its behalf by:

John Taylor - Director

Consolidated Statement of Changes in Equity

for the Year Ended 31 December 2018

	Called up share capital		Retained earnings		Share Based Payments		Share premium		Total equity
	£'000		£'000		£'000		£'000		£'000
Balance at 1 January 2017	18,345		(29,850)		-		11,445		(60)
Changes in equity
Issue of share capital	71		-		-		552		623
Total comprehensive income	-		(615)		-		-		(615)
Balance at 31 December 2017	18,416		(30,465)		-		11,997		(52)
Changes in equity
Issue of share capital	42		-		-		439		481
Share based payment charge	-		-		25		-		25
Cost of share issue	-		-		-		(5)		(5)
Total comprehensive income	-		(645)		-		-		(645)
Balance at 31 December 2018	18,458		(31,110)		25		12,431		(196)

Consolidated Statement of Cash Flows

For the Year Ended 31 December 2018

	2018 £'000		2017 £'000
Cash flows from operating activities
Operating loss	(645)		(615)
Adjustments for:
Share-based payments	106		-
(Increase)/decrease in receivables	(136)		10
Increase/decrease  in payables	86		96
Foreign exchange loss	(2)		-
Net cash from operating activities	(591)		(509)
Cash flows from investing activities
Purchase of tangible fixed assets	-		-
Interest received	-		-
Net cash from investing activities-	-		-
Cash flows from financing activities
Proceeds on issuing ordinary shares	400		664
Share issue expenses	(5)		(41)
Net cash from financing activities	395		623
Increase/(decrease) in cash and cash equivalents	(196)		114
Cash and cash equivalents at beginning of year	248		134
Cash and cash equivalents at end of year	52		248

Notes

1. Publication of non-statutory accounts

The financial information set out in this report does not constitute the Company's statutory accounts for the years ended 31 December 2018 or 2017 but is derived from the 2018 accounts.

This information has been extracted from the Group's financial statements to that date upon which the auditors' opinion is unmodified.

2. Note on trade and other receivables

TRADE AND OTHER RECEIVABLES		Group				Company
	2018 £'000		2017 £'000		2018 £'000		2017 £'000
Current:
Other debtors	109		35		109		35
VAT	4		7		4		7
Prepayments and accrued income	79		14		79		14
	192		56		192		56

3. Note on trade and other payables

TRADE AND OTHER PAYABLES		Group				Company
	2018 £'000		2017 £'000		2018 £'000		2017 £'000
Current:
Trade creditors	29		12		29		12
Social security and other taxes	-		11		-		11
Other creditors	401		324		403		324
Accruals and deferred income	10		10		10		10
	440		356		442		356

4. 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.

5. Annual General Meeting

The annual general meeting of the Company will be held at 11.00 a.m. on 23 July 2019 at Becket House, 36 Old Jewry, London, EC2R 8DD.

Enquiries:

Pathfinder Minerals Plc

John Taylor, Chief Executive Officer

Tel. +44 (0)20 3440 7775

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. [email protected]

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").

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact [email protected] or visit www.rns.com.

END

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