REG - Pathfinder Minerals - Amendment to the revised IM Minerals SPA

Pathfinder MineralsAnnouncement

29/01/2024 10:30

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RNS Number : 2257B  Pathfinder Minerals Plc  29 January 2024

29(th) January 2024

 

Pathfinder Minerals plc

("Pathfinder" or the "Company")

 

Agreed amendment to the revised SPA concerning the sale of IM Minerals

 

Pathfinder Minerals PLC (AIM: PFP), an AIM Rule 15 cash shell, announces that
it has been informed by Acumen Advisory Group LLC ("AAG") that AAG
contemplated not complying with the deferred consideration payment terms of
the revised sale and purchase agreement in respect of the disposal of IM
Minerals Limited ("IMM") (the "Disposal"), and with it, the rights to bring a
claim against the Government of Mozambique for the expropriation of Mining
Concession 4623C (the "Claim") (together the "Revised SPA"). Details of the
Revised SPA was announced by the Company on 28 July 2023, and in this respect,
the Disposal completed on 18 August 2023.

 

In light of the above developments, the directors of the Company (the
"Directors") believe that there was a high probability of AAG defaulting on
the current terms and conditions of the Revised SPA. Accordingly, to avoid any
such default from occurring, and following pre-emptive discussion between
Pathfinder and AAG it is now agreed between the parties that certain terms and
conditions of the Revised SPA are amended (the "Agreed Amendments").

 

AAG have confirmed they have submitted the Claim by way of a Request for
Arbitration to the International Centre for Settlement of Investment
Disputes.

 

Background to and details of the Agreed Amendments

 

Pursuant to the Revised SPA it was agreed between Pathfinder and AAG that,
inter alia, a contingent payment would be made by AAG to Pathfinder of the
greater sum of US$30 million or 25% of the aggregate amount (including all
deferred or conditional payments) payable on Claim, less all reasonable costs
and expenses properly incurred in respect of the Claim (the "Original Deferred
Consideration Clause").

 

It is now agreed that the Deferred Consideration will be based solely a
sliding recovery scale, as outlined below (the "New Deferred Consideration
Clause"):

 

 Amount for which Rights Claim Finalised (US$m)  Percentage of Net Recoveries to be paid to Pathfinder
 0 - 10m                                         40.0%
 10m - 20m                                       37.5%
 20m - 30m                                       35.0%
 30m - 40m                                       32.5%
 40m - 50m                                       30.0%
 50m - 70m                                       27.5%
 70m - 120m                                      25.0%
 >120m                                           22.5%

 

In addition, and separate to the above agreed amendment, the Revised SPA
prohibits AAG from assigning/transferring any of its rights under the Revised
SPA. In this respect, Pathfinder and AAG now agree to amend this clause as
such to allow for AAG to assign/transfer all of their interest in IM Minerals
to a new third party entity, Luangwa Resources LLC ("Luangwa") and to allow
for Luangwa to perform all of AAG's obligations under the Revised SPA (the
"New Assignment Clause"). Notwithstanding this amendment, AAG will continue to
guarantee to Pathfinder all of the future obligations of Luangwa under the
Revised SPA if and when they become performable in accordance with the Revised
SPA.

 

Reasons in favour of the Agreed Amendments

 

The Directors recognise that the Original Deferred Consideration Clause
provides limited economic exposure to AAG in the event that the Claim results
in an award lower than US$30 million. As a result, the Directors believe that
the agreed New Deferred Consideration Clause will offer AAG economic exposure
to the Claim in all situations, provided that a successful monetary award is
made pursuant to the Claim.

 

Without such economic exposure, the Directors believe that AAG had limited
incentive to pursue the Claim and would have likely defaulted on the Revised
SPA. Defaulting on the Revised SPA would mean that Pathfinder would likely
fail to benefit from any future potential successful Claim. With this in mind,
the Directors believe that it was not in the best interest of the Company's
shareholders to pursue any legal claim against AAG and in this respect,
believe that the Agreed Amendments are the most pragmatic way forward to
resolve any risk of AAG default. Similarly, agreeing to the New Assignment
Clause will result in the introduction of Luangwa. Luangwa are a
Delaware-registered entity, independent of AAG. The Directors believe that
with Luangwa performing all of AAG's obligations under the Revised SPA, there
will now be an amicable way forward towards pursuing the Claim.

 

Paul Barrett, Executive Director of Pathfinder, said 'I am pleased that the
claim has been submitted and the process is now fully underway.  There were
commercial wrinkles in the original agreement with AAG which have now been
ironed out and we look forward to the claim progressing though the system and
rewarding shareholders for their patience in this matter.'

 

Enquiries:

Pathfinder Minerals Plc

Paul Barrett, Executive Director

Tel. +44 (0)20 3143 6748

 

Allenby Capital Limited (Nominated Adviser and Broker)

John Depasquale / Vivek Bhardwaj (Corporate Finance)

Stefano Aquilino / Joscelin Pinnington (Sales & Corporate Broking)

Tel. +44 (0)20 3328 5656

 

 

 

 

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