Pathfinder provides an update regarding the dispute concerning mining concession 4623C (the “Licence”) in Mozambique and potential routes to monetise the Company’s claim and pursue additional opportunities.
As previously announced, the Board is discussing strategic options with institutional litigation funders and other parties, which now range from conventional litigation funding arrangements, whereby the legal costs of the claim would be borne by the funder on a contingency basis, through to a full acquisition of the claim via a disposal, subject to regulatory and shareholder approvals as needed, of the Company’s wholly owned subsidiary, IM Minerals Limited (“IMM”), enabling Pathfinder to return, well-funded, to its core objectives of exploration and mining.
In this regard, Pathfinder is at the early stage of investigating a range of opportunities within the minerals sector including a graphite project in Madagascar, a lithium project in Zimbabwe, and a battery metals project in Malawi.
Given the potential value of the claim, and favourable prospect of success attributed by legal counsel (as announced by the Company on 16 December 2020), the Board believes an acquisition of IMM would be attractive to third parties. Such parties range from litigation funders who would pursue the claim, through to the current Licence-holder, TZM Resources SA (“TZM”), to protect its ownership of the Licence which the Board believes it could lose in the event of a successful claim.
Bilateral Investment Treaty
Pathfinder has recently notified the Minister of Mineral Resources and Energy of Mozambique of the Mozambique Government’s failure to resolve the dispute and of the steps Pathfinder is taking in preparation for the claim to be referred to the International Centre for Settlement of Investment Disputes (“ICSID”) under the Bilateral Investment Treaty (the “Treaty”).
Despite the inclusion of TZM in efforts to seek alternative solutions , no offer has been put forward to Pathfinder by TZM. It appears TZM is proceeding with project development, leaving the Government of Mozambique exposed to a potential claim.
As announced on 10 December 2021, the Company’s preparatory work includes the development of a detailed budget and timeline for claimant costs, the identification of a litigation team, and independent professional analysis of valuations for differing successful outcomes at an ICSID tribunal, ranging from a minimum of US$110m for an ex-ante damages award through to US$1,500m for an ex-post damages award.
The claim is being further developed to include asset tracing reports and enforcement strategies. This includes the Republic of Mozambique’s foreign and domestic assets, which may include, inter alia, exported hydrocarbons such as those produced from the Rovuma LNG project.
Peter Taylor, Chief Executive Officer of Pathfinder, commented:
“Having done the considerable groundwork to prepare to launch a claim against Mozambique, we are now able to consider options to pursue or monetise the claim.
Given the areas now referred to as the Licence were independently assessed in 2010 to have a market value of between US$107.6m and US$179.3m – prior to the Moebase portion of the Licence being upgraded to Mining Concession status – we believe the current Licence-holder, TZM, has a significant vested interest in protecting its investment in the Licence. The window of opportunity for TZM to act is closing as the Company may dispose of IMM to a third party whose sole objective is to pursue the valuable claim under the Treaty.
Whether the Company pursues a claim itself or disposes of IMM, the Board intends to pursue other opportunities within the minerals sector which are under detailed review.”
Pathfinder Minerals Plc
Peter Taylor, Chief Executive Officer
Tel. +44 +44 (0)20 3143 6748
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