Report of the Directors and
Audited Financial Statements for the Year Ended 31 December 2012
for
Pathfinder Minerals PLC
Contents of the Financial Statements
for the Year Ended 31 December 2012
Company Information
Chairman’s Statement
Report of the Directors
Report of the Independent Auditors
Statement of Consolidated Comprehensive Income
Statement of Consolidated Financial Position
Statement of Financial Position – Company
Statement of Changes in Equity
Statement of Cash Flows – Group
Statement of Cash Flows – Company
Notes to the Financial Statements
Page
3
4
8
11
13
14
15
16
17
18
19
2
Company Information
for the Year Ended 31 December 2012
DIRECTORS:
SECRETARY
REGISTERED OFFICE:
Nicholas Trew
James Normand
John McKeon
James Normand
60 Lombard Street
London
EC3V 9EA
REGISTERED NUMBER:
02578942 (England and Wales)
AUDITORS:
SOLICITORS:
NOMINATED ADVISER:
REGISTRARS:
BANKERS:
Chapman Davis LLP
2 Chapel Court
London
SE1 1HH
Travers Smith LLP
10 Snow Hill
London
EC1A 2AL
Daniel Stewart and Company
Becket House
36 Old Jewry
London
EC2R 8DD
Capita Registrars Limited
34 Beckenham Road
Beckenham
Kent
BR3 4TU
Royal Bank of Scotland
1 Dale Street
Liverpool
L2 2PP
3
Chairman’s Statement
for the Year Ended 31 December 2012
Introduction
Since I last wrote to you (in September 2012 with the publication of the half yearly results), Pathfinder has
made significant progress towards the recovery of its expropriated assets. The legal proceedings which
dominated 2012, the year under review, were those of the English High Court, which ruled that Pathfinder
is the rightful owner of its shares in its Mozambique subsidiary; and the Court of Appeal has unequivocally
rejected an application to appeal against that ruling. Pathfinder is now able to concentrate its efforts on action
in Mozambique; and the legal rulings in England in the Company’s favour have given the Company further
credibility, not only with the Mozambican courts, but also in its dealings with politicians and diplomats in
the UK and in the Republic of Mozambique.
Shareholders will have seen the announcements of activity that the Board has issued during the year, but let
me recap on the events of 2012 and 2013 to date.
In February 2012, Pathfinder received confirmation from the Republic of Mozambique’s Ministry of Mineral
Resources that the mining registry of Mozambique no longer showed licences 4623C and 760C as being
registered to Pathfinder’s subsidiary, Companhia Mineira de Naburi S.A.R.L. (“CMDN”). The Company had
been informed that a licence over the same areas covered by 4623C and 760C had been issued to a company
called Pathfinder Moçambique S.A (an entity which is wholly unconnected with Pathfinder Minerals, but
which is owned by General Jacinto Veloso, a retired government minister in Mozambique and a former
director of Pathfinder Minerals Plc and of CMDN, together with his daughter and his business partner, Diogo
Cavaco).
To date no satisfactory explanation has been provided as to the reasons for or basis of this register change,
which the Company is advised was carried out through a process which was defective under the mining law
of Mozambique. The Company had no involvement in the transfer and understands that the Ministry of
Mineral Resources believed it was executing the transfer on the proper authority of General Veloso as the
named representative on the face of the licences. The choice of name for the entity to which General Veloso
applied to transfer the licences (i.e. Pathfinder Moçambique S.A.) strongly suggests it was his or
Mr Cavaco’s intention to mislead the Ministry of Mineral Resources into believing it to be an intra-group
transfer within the Pathfinder Group.
In addition to the expropriation of the mining licences and as a means of restricting the action which
Pathfinder can take to recover them, General Veloso, J.V. Consultores, Limitada (a company controlled by
General Veloso) and Mr Cavaco (the “Defendants”, as to which see further below) have asserted that the
agreements (the “Acquisition Agreements”) by which the shares in CMDN, as the licence holder, were
acquired by IM Minerals Limited (“IM Minerals”) (a wholly owned UK subsidiary of the Company) were
null and void and, consequently, that IM Minerals had never been the owner of any shares in CMDN.
Steps towards recovery of the licences
The Company’s sole focus, since the discovery of this outrageous conduct on the part of the Defendants, has
been to restore ownership and control of CMDN and, thereafter, to recover the mining licences previously
registered to it in order to resume project development.
English legal proceedings
As I note in my introduction, the period under review was dominated by the substantive legal proceedings
commenced by the Company in the English High Court. The Company sought, among other things,
declarations from the English court as to the validity and effect of the Acquisition Agreements, all of which
are governed by English law (the “Contract Claims”). The Defendants accepted the jurisdiction of the
English High Court to determine the Contract Claims but later, having already breached numerous orders of
the English court, withdrew their participation in the proceedings.
Following a hearing on 18 September 2012 in the English High Court and full consideration of all the
extensive evidence before the court, the judge ruled that Pathfinder (through IM Minerals) did validly acquire
its 99.99 per cent. interest in CMDN. In so ruling, the judge expressly rejected any allegations of fraud which
4
Chairman’s Statement – continued
for the Year Ended 31 December 2012
had been made by the Defendants against the Company, IM Minerals and their directors. The judge also
granted a permanent injunction restraining General Veloso and his associates from taking any steps to
interfere with IM Minerals’ rights of ownership of shares in CMDN. The judge subsequently ruled that
Pathfinder is entitled to recover 90 per cent. of its costs of the High Court proceedings from the Defendants.
In February 2013, the Company received notice of an order from the Court of Appeal in England that the
Defendants had applied for permission to appeal the October 2012 judgment. The Company believed the
appeal to have no merits and therefore had no choice but to contest the grounds of appeal. In April 2013
Pathfinder announced that the English Court of Appeal, through the unanimous judgments of Lady Justice
Gloster, Lord Justice Leveson and Lord Justice Beatson, had duly dismissed the application of the
Defendants for permission to appeal.
Giving the leading judgment, Lady Justice Gloster said that “there is no doubt that the [Application] should
be dismissed”. She referred to the Defendants’ failure to comply with the order for security for costs and
their deliberate breaches of previous orders of the English court, finding that the Defendants’ conduct
amounted to “a cynical abuse of [the] court’s process”. Amongst other reasons given for dismissing the
application, Lady Justice Gloster also referred to the matter being “a clear case where the relevant
agreements relating to the sale of shares [in CMDN] are governed by English law and are subject to an
English jurisdiction clause or clauses” and noted that the Defendants “have persistently disregarded their
contractual obligations in this regard.”
Lady Justice Gloster added that she had “seen nothing in the Defendants’ grounds of appeal, or in the written
arguments, that provide[d] any basis whatsoever for disturbing the conclusions reached by [the High Court
in October 2012]” and considered the Defendants’ grounds of appeal to be “wholly devoid of merit”.
At the hearing itself, Lord Justice Leveson had also expressed concern “that [the Defendants’ Application
had] all been a game.”
As a consequence of their failed application, the Defendants cannot further appeal against the English court
judgment as to the validity and effect of the Acquisition Agreements, through which IM Minerals acquired
99.99 per cent. of the licence-holding company, CMDN.
Mozambique legal proceedings
With the dismissal of the application to appeal marking the conclusion of the English proceedings in the
Company’s favour, the Company is now able to focus wholly on the enforcement of its rights and costs
orders in Mozambique. The Company has been advised that English court judgments and costs orders are
recognisable and enforceable in Mozambique. Accordingly, the Company is taking the necessary steps to
have the various judgments and orders it has obtained from the English court formally recognised by the
Mozambique Supreme Court; and will seek enforcement of the costs orders in its favour (none of which have
been paid), totalling £1,106,000, against the Defendants’ assets, including in Mozambique. The Company is
advised that the process for recognition and enforcement of judgments in Mozambique is a lengthy one,
during which the Defendants will have an opportunity to object.
There remain several legal proceedings under way in Mozambique. These include a number of actions in
which the same key issue of the ownership of CMDN, on which the English court has already ruled in
relation to the Acquisition Agreements, arises. As previously announced, these actions include:
• challenges by IM Minerals to resolutions purportedly passed by the Defendants at shareholder
meetings of CMDN in May 2009 (the “May 2009 Resolution”) and December 2011 (the “December
Resolutions”);
• a rival challenge by the Defendants to the resolutions passed by IM Minerals at a shareholder meeting
of CMDN in January 2012; and
• a claim made by the Defendants against Pathfinder and IM Minerals (as announced on 21 December
2012).
5
Chairman’s Statement – continued
for the Year Ended 31 December 2012
In each of these proceedings the Defendants allege, amongst other things, that IM Minerals was/is not a
shareholder in CMDN on the basis, broadly, that (contrary to the findings of the English courts) the
underlying agreements between the parties by which the shares in CMDN were acquired are not valid or
binding and/or did not confer a right to acquire the shares in CMDN.
In October 2012 Pathfinder learned that it had been successful in an application for an interdict suspending
the effect of the December Resolutions. The Maputo Court’s judgment included a provisional finding that
the share certificate issued to IM Minerals by CMDN (and signed by General Veloso and Mr Cavaco),
showing IM Minerals as the holder of 399,998 of the 400,000 issued shares in CMDN, is valid and
permissible under the constitution of CMDN, confirming therefore that, as a matter of Mozambique law, IM
Minerals is the holder of 99.99 per cent. of CMDN. The issue of IM Minerals’ status as a shareholder of
CMDN was further considered at hearings in Maputo on 6 December 2012 and 15 May 2013. Decisions
following each of those hearings are still awaited.
Financial results and current financial position
The financial statements of the Pathfinder Group for the year ended 31 December 2012 follow later in this
report. The Income Statement shows a loss of £4.3 million (2011 – £37.6 million). 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 of £3.9 million. The assets are held largely in
the form of cash deposits (totalling £3.8 million at the year-end).
Since the end of the year the Board has continued its attempts to recover the Group’s assets expropriated by
General Veloso and Mr Cavaco. The conclusion of legal action in London brings a material reduction in the
rate of expenditure and the Company estimates that it has sufficient resources to see through its strategy for
the recovery of its assets.
Outlook
The Company originally acquired assets in Mozambique with a view to the responsible development of a
mineral sands mine in Zambezia Province. In so doing the Company would create value both for its
shareholders and for the Republic of Mozambique and, in particular the people of Zambezia Province, not
only through the provision of employment on the construction of the mine, but also by virtue of the
associated economic benefits which would flow from the major infrastructural improvements that
accompany the development of the mine. That Pathfinder’s shareholders and the people of Mozambique
should have had, since November 2011, to endure such loss of opportunity because of the actions of General
Veloso and Mr Cavaco is unconscionable.
I am so grateful for the support which our shareholders continue to show for the Company as we seek to
recover our assets. As the Company’s largest shareholder I share your desire to return to the development of
the Moebase and Naburi mineral sands deposits as soon as possible. There is no doubt that these assets are
extremely valuable and indeed worth our efforts to recover them. In 2011 the Moebase and Naburi deposits
were independently estimated to be worth $529 million and the prices of the products have, since that study,
risen significantly – driven by demand from developing economies.
The successful English legal proceedings were costly but central to the Company’s ability to secure control
of CMDN and to restore the licences to it. With the English litigation now concluded in the Company’s
favour, the Company’s legal expenditure has been significantly reduced and we are confident of our strategic
and financial ability to see the Mozambique proceedings through to a successful conclusion.
The Company, however, is not relying solely on the legal strategy to bring about a successful restoration of
the Company’s assets. During the process towards recovery it has become apparent, particularly in recent
months, that there is a strong political will among senior political and diplomatic figures in the Republic of
Mozambique and the UK to see this issue resolved. Indeed, they consider the matter demands a resolution
6
Chairman’s Statement – continued
for the Year Ended 31 December 2012
in the interests of all stakeholders, particularly the Republic of Mozambique. The Board is in regular
communication with such individuals with a view to bringing about an earlier resolution than that which we
believe will be achieved through the courts.
On behalf of the board I should like to thank shareholders sincerely for their continued support. We are
wholly focused on returning to the development of the Moebase and Naburi deposits; and we will continue
to update you with material developments as they occur.
John McKeon
Chairman
26 June 2013
7
Report of the Directors
for the Year Ended 31 December 2012
The directors present their report with the consolidated financial statements of the Company for the year
ended 31 December 2012.
PRINCIPAL ACTIVITY
The principal activity of the Group is mining.
REVIEW OF BUSINESS
The review of the business, its operations and finances is contained in the Chairman’s Statement.
DIVIDENDS
The directors do not recommend the payment of a dividend.
EVENTS SINCE THE END OF THE YEAR
Information relating to events since the end of the year is contained in the Chairman’s statement.
DIRECTORS
The directors shown below have held office during the whole of the period from 1 January 2012 to the date
of this report.
John McKeon
Nicholas Trew
James Normand
COMPANY’S POLICY ON PAYMENT OF CREDITORS
It is the Company’s policy to pay suppliers in accordance with the payment terms negotiated with them. The
Company’s average creditor days during the year were 20 days (2011: 44 days).
FINANCIAL INSTRUMENTS
The Company’s financial instruments comprise borrowings and cash that arise directly from its operations.
The main purpose of these financial instruments is to fund the company’s operations as well as to manage
working capital, liquidity and invest surplus funds. It is, and has been throughout the period under review,
the Company’s policy not to enter into derivative transactions and no trading in financial instruments has
been undertaken.
POLITICAL AND CHARITABLE CONTRIBUTIONS
No charitable or political contributions were made during the current or previous year.
8
Report of the Directors – continued
for the Year Ended 31 December 2012
SUBSTANTIAL SHAREHOLDINGS
As at 26 June 2013, the following shareholders had notified the company of an interest of 3 per cent. or more
of the Company’s ordinary share capital:
Number of 1p Shareholding
Shareholder name ordinary shares percentage
John McKeon 128,209,700 12.4%
J V Consultores Internacionais Limitada
(a company controlled by Jacinto Veloso) 110,120,680 10.6%
Timothy Baldwin 106,428,316 10.3%
JP Morgan Funds 100,020,000 9.6%
Nicholas Trew 93,925,753 9.1%
Diogo Cavaco 88,129,280 8.5%
Genesis Emerging Market Opportunities Fund 86,000,000 8.3%
Gordon Dickie 54,752,586 5.3%
YF Finance Limited 45,610,000 4.4%
RISK EXPOSURE
The Companies Act 2006 requires the directors to set out in this report how the Group manages its exposure
to risk.
The directors consider that the Company has sufficient cash and cash equivalents to meet its foreseeable
operational requirements.
CORPORATE GOVERNANCE
The Board is responsible for establishing the strategic direction of the Company, monitoring the Group’s
trading performance and appraising and executing development and acquisition opportunities. The Company
holds regular Board meetings, at which financial and other reports, including working capital reports and
acquisition opportunities, are considered and, where appropriate, voted on.
The directors support high standards of corporate governance and the Board complies with the QCA
Corporate Governance Code so far as reasonably practicable and appropriate taking into account the
Company’s size. The Company’s current situation does not allow for separate audit and remuneration
committees and is not conducive to the appointment of non-executive directors, all of which the Board is
keen to do as soon as circumstances allow.
The Board supports the principle of clear reporting of financial performance to shareholders. Each year,
shareholders receive a full annual report and interim report. The Board regards the Annual General Meeting
as an opportunity to communicate directly with private investors. Directors attend the Annual General
Meeting and are available to answer questions from shareholders present. The Board actively encourages
feedback and shareholder dialogue, whether oral or written.
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Report of the Directors and the financial statements in
accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law
the directors have elected to prepare the financial statements in accordance with International Financial
Reporting Standards as adopted by the European Union. Under company law the directors must not approve
the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of
the Company and of the profit or loss of the Company for that period. In preparing these financial statements,
the directors are required to:
9
Report of the Directors – continued
for the Year Ended 31 December 2012
– select suitable accounting policies and then apply them consistently;
– make judgements and accounting estimates that are reasonable and prudent;
– state that the financial statements comply with IFRS;
– prepare the financial statements on the going concern basis unless it is inappropriate to presume that
the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the
Company and enable them to ensure that the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps
for the prevention and detection of fraud and other irregularities.
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the
Companies Act 2006) of which the Company’s auditors are unaware, and each director has taken all the steps
that he ought to have taken as a director in order to make himself aware of any relevant audit information
and to establish that the Company’s auditors are aware of that information.
AUDITORS
The auditors, Chapman Davis LLP, will be proposed for re-appointment at the forthcoming Annual General
Meeting.
ON BEHALF OF THE BOARD:
James Normand
Director and Company Secretary
26 June 2013
10
Report of the Independent Auditors to the Members of
Pathfinder Minerals PLC
We have audited the financial statements of Pathfinder Minerals PLC for the year ended 31 December 2012
which comprises the Statement of Consolidated Comprehensive Income, the consolidated and parent
company statements of financial position, the consolidated and parent company statements of changes in
equity, the consolidated and parent company statements of cash flow and the related notes. The financial
reporting framework that has been applied in their preparation is applicable law and International Financial
Reporting Standards (IFRSs) as adopted by the European Union.
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in a Report of the Auditors and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of directors and auditors
As explained more fully in the Directors’ Report, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit
and express an opinion on the financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices
Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the Company’s members as a body
in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in
giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom
this report is shown or into whose hands it may come save where expressly agreed by our prior consent in
writing.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient
to give reasonable assurance that the financial statements are free from material misstatement, whether
caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to
the Company’s circumstances and have been consistently applied and adequately disclosed; the
reasonableness of significant accounting estimates made by the directors; and the overall presentation of the
financial statements. In addition, we read all the financial and non-financial information in the Report of the
Directors to identify material inconsistencies with the audited financial statements. If we become aware of
any apparent material misstatements or inconsistencies we consider the implications for our report.
Opinion on financial statements
In our opinion the financial statements:
– give a true and fair view of the state of the Group’s and of the parent company’s affairs as at
31 December 2012 and of the Group’s loss for the year then ended;
– have been properly prepared in accordance with IFRSs as adopted by the European Union; and
– have been prepared in accordance with the requirements of the Companies Act 2006.
Opinion on other matter prescribed by the Companies Act 2006
In our opinion the information given in the Report of the Directors for the financial year for which the
financial statements are prepared is consistent with the financial statements.
11
Report of the Independent Auditors to the Members of
Pathfinder Minerals PLC – continued
Matters on which we are required to report by exception
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to
report to you if, in our opinion:
– adequate accounting records have not been kept, or returns adequate for our audit have not been
received from branches not visited by us; or
– the financial statements are not in agreement with the accounting records and returns; or
– certain disclosures of directors’ remuneration specified by law are not made; or
– we have not received all the information and explanations we require for our audit.
Rowan J Palmer (Senior Statutory Auditor),
for and on behalf of Chapman Davis LLP, Statutory Auditor
Chartered Accountants
2 Chapel Court
London
SE1 1HH
26 June 2013
12
Statement of Consolidated Comprehensive Income
for the Year Ended 31 December 2012
Year ended 31 December
2012 2011
Notes £’000 £’000
CONTINUING OPERATIONS
Revenue – –
Administrative expenses (4,424) (2,533)
––––––––– –––––––––
OPERATING LOSS BEFORE EXCEPTIONAL ITEMS 5 (4,424) (2,533)
Exceptional items 6 – (34,830)
––––––––– –––––––––
OPERATING LOSS (4,424) (37,363)
Finance income 7 106 19
––––––––– –––––––––
LOSS BEFORE INCOME TAX (4,318) (37,344)
Income tax 8 – –
––––––––– –––––––––
LOSS FOR THE YEAR (4,318) (37,344)
OTHER COMPREHENSIVE INCOME – –
––––––––– –––––––––
TOTAL COMPREHENSIVE LOSS FOR THE YEAR (4,318) (37,344)
––––––––– –––––––––
Loss per share (expressed in pence per share) 9
Basic (0.4) (4.5)
Diluted (0.4) (4.5)
––––––––– –––––––––
The notes form part of these financial statements
13
Statement of Consolidated Financial Position
31 December 2012
2012 2011
Notes £’000 £’000
ASSETS
CURRENT ASSETS
Trade and other receivables 11 163 34
Cash and cash equivalents 12 3,767 8,471
––––––––– –––––––––
3,930 8,505
––––––––– –––––––––
TOTAL ASSETS 3,930 8,505
––––––––– –––––––––
EQUITY
SHAREHOLDERS’ EQUITY
Called up share capital 13 18,289 18,289
Share premium 11,022 11,022
Retained earnings (25,661) (21,343)
––––––––– –––––––––
TOTAL EQUITY 3,650 7,968
––––––––– –––––––––
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 14 280 537
––––––––– –––––––––
TOTAL LIABILITIES 280 537
––––––––– –––––––––
TOTAL EQUITY AND LIABILITIES 3,930 8,505
––––––––– –––––––––
The financial statements were approved by the Board of Directors on 26 June 2013 and were signed on its
behalf by:
James Normand
Finance Director
The notes form part of these financial statements
14
Statement of the Company’s Financial Position
31 December 2012
2012 2011
Notes £’000 £’000
ASSETS
NON-CURRENT ASSETS
Investments 10 – –
––––––––– –––––––––
– –
––––––––– –––––––––
CURRENT ASSETS
Trade and other receivables 11 163 33
Cash and cash equivalents 12 3,767 8,471
––––––––– –––––––––
3,930 8,504
––––––––– –––––––––
TOTAL ASSETS 3,930 8,504
––––––––– –––––––––
EQUITY
SHAREHOLDERS’ EQUITY
Called up share capital 13 18,289 18,289
Share premium 11,022 11,022
Retained earnings (deficit) (25,792) (21,474)
––––––––– –––––––––
TOTAL EQUITY 3,519 7,837
––––––––– –––––––––
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 14 411 667
––––––––– –––––––––
TOTAL LIABILITIES 411 667
––––––––– –––––––––
TOTAL EQUITY AND LIABILITIES 3,930 8,504
––––––––– –––––––––
The financial statements were approved by the Board of Directors on 26 June 2013 and were signed on its
behalf by:
James Normand
Finance Director
The notes form part of these financial statements
15
Statement of Changes in Equity – Group
for the Year Ended 31 December 2012
Called up Profit
share and loss Share Other Merger Total
capital account premium reserves reserve equity
£’000 £’000 £’000 £’000 £’000 £’000
Group
Balance at 1 January 2011 8,412 (11,337) 2,171 17 – (737)
Changes in equity
Issue of shares for cash 2,591 – 9,597 – – 11,442
Less: commissions payable – – (746) – – (746)
Issue of shares for assets 7,286 – – – 27,321 35,353
Transfers between reserves – 27,338 – (17) (27,321) –
Total comprehensive loss – (37,344) – – – (37,344)
———— ———— ———— ———— ———— ————
Balance at 31 December 2011 18,289 (21,343) 11,022 – – 7,968
Changes in equity
Total comprehensive loss – (4,318) – – – (4,318)
———— ———— ———— ———— ———— ————
Balance at 31 December 2012 18,289 (25,661) 11,022 – – 3,650
———— ———— ———— ———— ———— ————
Company
Balance at 1 January 2011 8,412 (11,337) 2,171 17 – (737)
Changes in equity
Issue of shares for cash 2,591 – 9,597 – – 11,442
Less: commissions payable – – (746) – – (746)
Issue of shares for assets 7,286 – – – 27,321 34,607
Transfers between reserves – 27,338 – (17) (27,321) –
Total comprehensive loss – (37,375) – – – (37,475)
———— ———— ———— ———— ———— ————
Balance at 31 December 2011 18,289 (21,474) 11,022 – – 7,837
Changes in equity
Total comprehensive loss – (4,318) – – – (4,318)
———— ———— ———— ———— ———— ————
Balance at 31 December 2012 18,289 (25,792) 11,022 – – 3,519
———— ———— ———— ———— ———— ————
The notes form part of these financial statements
16
Statement of Cash Flows – Group
for the Year Ended 31 December 2012
2012 2011
£’000 £’000
Cash flows from operating activities
Loss before income tax (4,318) (37,344)
Provision against diminution in value – 34,830
Finance income (106) (19)
––––––––– –––––––––
(4,424) (2,533)
Increase in trade and other receivables (129) (34)
Decrease in trade and other payables (257) (444)
––––––––– –––––––––
Net cash from operating activities (4,810) (3,011)
––––––––– –––––––––
Cash flows from investing activities
Interest received 106 19
––––––––– –––––––––
Net cash from investing activities 106 19
––––––––– –––––––––
Cash flows from financing activities
Shares issued for cash – 11,442
––––––––– –––––––––
Net cash from financing activities – 11,442
––––––––– –––––––––
(Decrease) increase in cash and cash equivalents (4,704) 8,450
Cash and cash equivalents at beginning of the year 8,471 21
––––––––– –––––––––
Cash and cash equivalents at end of the year 3,767 8,471
––––––––– –––––––––
The notes form part of these financial statements
17
Statement of Cash Flows – Company
for the Year Ended 31 December 2012
2012 2011
£’000 £’000
Cash flows from operating activities
Loss before income tax (4,318) (37,475)
Provision against diminution in value – 34,852
Finance income (106) (19)
––––––––– –––––––––
(4,424) (2,686)
Increase in trade and other receivables (130) (33)
Decrease in trade and other payables (256) (292)
––––––––– –––––––––
Net cash from operating activities (4,810) (3,011)
––––––––– –––––––––
Cash flows from investing activities
Interest received 106 19
––––––––– –––––––––
Net cash from investing activities 106 19
––––––––– –––––––––
Cash flows from financing activities
Shares issued for cash – 11,442
––––––––– –––––––––
Net cash from financing activities – 11,442
––––––––– –––––––––
(Decrease) increase in cash and cash equivalents (4,704) 8,450
Cash and cash equivalents at beginning of year 8,471 21
––––––––– –––––––––
Cash and cash equivalents at end of year 3,767 8,471
––––––––– –––––––––
The notes form part of these financial statements
18
Notes to the Financial Statements
for the Year Ended 31 December 2012
1. GENERAL INFORMATION
The Company is a public limited company listed on the AIM market of the London Stock Exchange and is
incorporated and domiciled in the UK. The address of its registered office is 60 Lombard Street, London
EC3V 9EA.
The financial statements of Pathfinder Minerals PLC for the year ended 31 December 2012 were authorised
for issue by the Board on 26 June 2013 and the statements of financial position signed on the Board’s behalf
by James Normand.
2. ACCOUNTING POLICIES
Basis of preparation
These financial statements have been prepared in accordance with International Financial Reporting
Standards and IFRIC interpretations and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The financial statements have been prepared under the historical cost
convention and are presented in the functional currency in £’000.
Although the Company’s direct subsidiary, IM Minerals Limited, itself holds the whole of the issued share
capital of Companhia Mineira de Naburi SARL, which in turn holds the whole of the issued share capital of
Sociedade Geral de Mineracao de Moçambique SARL, events last year indicated that the Company does not
control either of these sub-subsidiaries. Neither has it been possible to obtain audited accounts for them.
Accordingly these financial statements consolidate the financial statements of IM Minerals Limited only. IM
Minerals Limited is a dormant intermediate holding company.
Cash and cash equivalents
Cash and cash equivalents comprise cash at bank and in hand and other short term highly liquid deposits with
original maturities of three months or less.
Share capital
Ordinary shares of the company are classified as equity.
New standards and interpretations not yet adopted
The adoption of new standards, where relevant, has had no impact on the reported results nor the financial
position of the company.
Critical accounting estimates and judgements
The preparation of financial information in accordance with generally accepted accounting practice, in the
case of the Group using International Financial Reporting Standards as adopted by the European Union,
requires the directors to make estimates and judgements that affect the reported amount of assets, liabilities,
income and expenditure and the disclosures made in the financial statements. Such estimates and judgements
must be continually evaluated based on historical experience and other factors, including expectations of
future events.
Details of accounting estimates and judgements that have the most significant effect on the amounts
recognised in the financial statements have been disclosed under the relevant note or accounting policy for
each area where disclosure is required.
19
Notes to the Financial Statements – continued
for the Year Ended 31 December 2012
3. SEGMENTAL REPORTING
The Group has one activity only. Of the Group’s administrative expenses, £395,000 (2011 – £963,000) was
spent in Mozambique. The whole of the exceptional charge in 2011 related to the Group’s investment in
Mozambique. The whole of the value of the Group’s and the Company’s net assets in their respective
financial statements at 31 December 2012 and 2011 was attributable to UK assets and liabilities.
4. EMPLOYEES AND DIRECTORS
There were no employees, other than the directors.
The following table sets out and analyses the remuneration of directors for the years ended 31 December
2012 and 2011 in £s.
Contributions
Benefits Total to pension Total emoluments
Fees Salaries in kind emoluments schemes 2012 2011
£ £ £ £ £ £ £
John McKeon 48,000 – – 48,000 – 48,000 71,500
Nicholas Trew – 150,000 5,863 155,863 15,000 170,863 152,750
James Normand – 120,000 4,497 124,497 12,000 136,497 110,500
Timothy Baldwin – – – – – – 7,500
Gordon Dickie – – – – – – 16,000
Mark Edmonds – – – – – – 10,000
Jacinto Veloso – – – – – 10,000
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
48,000 270,000 10,360 328,360 27,000 355,360 378,250
––––––– ––––––– ––––––– ––––––– ––––––– ––––––– –––––––
5. OPERATING LOSS BEFORE EXCEPTIONAL ITEMS
2012 2011
£’000 £’000
The loss before income tax is stated after charging:
Auditors’ remuneration 12 12
Directors’ remuneration 355 378
Litigation costs 3,203 551
––––––––– –––––––––
Any recovery of litigation expenditure resulting from the Court costs awards in the Company’s favour will
be recognised in the accounts when received.
6. EXCEPTIONAL ITEM (2011)
In November 2011 the original vendors of IM Minerals’ subsidiary, Companhia Mineira de Naburi SARL
(“CMdN”), advised the Company that they had procured the cancellation of IM Minerals’ shares in CMdN
and the transfer of its assets (the mining licences) to another company controlled by them. Whilst the
Company is taking legal and other action in order to recover the shares and the licences, the Company, in the
interest of accounting prudence, made full provision in the 2011 financial statements against the cost of its
investment in IM Minerals and against the value of advances made by the Company to CMdN and its
vendors; in aggregate £34,830,000.
7. FINANCE INCOME
2012 2011
£’000 £’000
Interest on bank and other deposits 106 19
––––––––– –––––––––
20
Notes to the Financial Statements – continued
for the Year Ended 31 December 2012
8. INCOME TAX
Analysis of tax expense
No liability to UK corporation tax arose on ordinary activities for the year ended 31 December 2012 nor for
the year ended 31 December 2011.
Factors affecting the tax expense
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is
explained below:
2012 2011
£’000 £’000
Loss on ordinary activities before income tax (4,318) (37,344)
––––––––– –––––––––
Loss on ordinary activities multiplied by the standard rate of corporation tax
in the UK of 24.5% (2011 – 26.5%) (1,058) (9,896)
Effects of:
Unrelieved tax losses carried forward 1,058 9,896
——–—— —–———
Tax expense – –
––––––––– –––––––––
9. LOSS PER SHARE
Basic loss per share is calculated, as set out in the tables below, by dividing the earnings attributable to
ordinary shareholders by the weighted average number of ordinary shares outstanding during the period.
A diluted loss per share has not been calculated as the effect of the exercise of outstanding warrants and
options would be anti-dilutive.
Weighted
average Per share
Earnings number amount
£’000 of shares – pence
2012
Basic earnings per share
Earnings attributable to ordinary shareholders (4,318) 1,037,167,230 (0.4)
———— ——–––—— ————
2011
Basic earnings per share
Earnings attributable to ordinary shareholders (37,344) 828,274,942 (4.5)
———— ——–––—— ————
21
Notes to the Financial Statements – continued
for the Year Ended 31 December 2012
10. SUBSIDIARIES
Shares in
group
undertakings
£’000
COST
At 1 January 2012 and 31 December 2012 34,806
———–—
PROVISIONS
At 1 January 2012 and 31 December 2012 34,806
——–——
NET BOOK VALUE
At 1 January 2012 and 31 December 2012 –
–––––––––
The Company’s subsidiaries, each of which is wholly-owned, are: Incorporated in:
IM Minerals Limited England and Wales
Companhia Mineira de Naburi SARL Mozambique
Sociedade Geral de Mineracao de Moçambique SARL Mozambique
IM Minerals Limited held the shares in Companhia Mineira de Naburi SARL which held heavy minerals
sands mining concessions in the Republic of Mozambique. As noted in Note 6 above, in November 2011 the
original vendors of CMdN, advised the Company that they had procured the cancellation of IM Minerals’
shares in CMdN and the transfer of its assets (the mining licences) to another company controlled by them.
Whilst the Company is taking legal and other action in order to recover the shares and the licences, the
Company, in the interest of accounting prudence, made full provision in the 2011 financial statements against
the cost of its investment in IM Minerals.
11. TRADE AND OTHER RECEIVABLES
Group Company Group Company
£’000 £’000 £’000 £’000
Other debtors and prepaid expenses 163 163 34 33
––––––––– ––––––––– ––––––––– –––––––––
2012
2011
12. CASH AND CASH EQUIVALENTS
Bank accounts 3,767 3,767 8,471 8,471
––––––––– ––––––––– ––––––––– –––––––––
13. CALLED UP SHARE CAPITAL
Allotted, issued and fully paid: 2012 2011
Number Class £’000 £’000
1,037,167,230 Ordinary shares of 1 penny each 10,372 10,372
79,971,393 Deferred shares of 9.9 pence each 7,917 7,917
––––––––– –––––––––
18,289 18,289
––––––––– –––––––––
22
Notes to the Financial Statements – continued
for the Year Ended 31 December 2012
14. TRADE AND OTHER PAYABLES
2012
2011
Group Company Group Company
£’000 £’000 £’000 £’000
Trade creditors 233 233 417 417
Amount owing to subsidiary – 131 – 134
Other creditors 19 19 73 73
Accrued expenditure 28 28 47 43
——–—— ——–—— ——–—— ——–——
280 411 537 667
––––––––– ––––––––– ––––––––– –––––––––
15. SHARE OPTIONS AND WARRANTS
No share options or warrants have been awarded or exercised, nor have any expired, during the year.
Unexercised share options and warrants at the beginning and end of the year, all of which are currently
capable of being exercised, were held as follows:
Share options and warrants
Number of shares
the subject of Exercise price Latest
options and warrants per share exercise price
Directors
John McKeon 36,000,000 10p 26 July 2016
Nicholas Trew 36,000,000 10p 26 July 2016
James Normand
Former directors and others
–––––––––
–––––––––
Total 122,000,000
16,000,000 4.75p 9 February 2021
{ 3,600,000 10p 26 July 2016
{ 6,000,000 4.75p 8 February 2016
24,400,000 10p 26 July 2016
At 26 June 2013 (the latest date before publication of these financial statements), the mid-market price of
the Company’s shares was 0.9 pence.
There have been no changes to the numbers of unexercised warrants and share options since 31 December
2012.
16. RELATED PARTY DISCLOSURES
Directors were reimbursed sums totalling £4,342 (2011 – £18,725) for personal expenditure incurred on
Company business.
Details of directors’ remuneration are given in note 4 above.
17. CONTINGENT LIABILITIES
As part of the agreement for the purchase of the shares in its subsidiary, CMdN, the Company’s subsidiary,
IM Minerals Limited, agreed to pay the vendors a further sum of $9,900,000 if, following further exploration
and appraisal, an agreement is reached for the construction of a facility for the processing of ore extracted
from the Naburi mineral sands deposit. This sum has since been reduced by advances of £90,083, made by
IM Minerals Limited, and £75,933, made by the Company, to one of the vendors, Mr Diogo Cavaco.
Similarly, as part of its agreement for the purchase of the whole of the issued share capital of Sociedade
Geral de Mineracao de Moçambique SARL, CMdN has agreed to pay the vendors, BHP Billiton, a further
sum of $9,500,000 if, following further exploration and appraisal, an agreement is reached for the
23
Notes to the Financial Statements – continued
for the Year Ended 31 December 2012
construction of a facility for the processing of ore extracted from the Moebase mineral sands deposit. This
obligation is guaranteed by IM Minerals Limited.
18. EVENTS AFTER THE REPORTING DATE
Since the year-end, and as noted in the Chairman’s Statement, the Board has continued to concentrate its
energies on attempting to recover the Group’s assets expropriated by General Veloso and Mr Cavaco. As a
direct result of these efforts, considerable legal and related costs continue to be incurred which have
contributed materially to the reduction in the Group’s cash reserves to approximately £2.1 million (at the date
of this report).
24
sterling 161478