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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.
I mentioned this company on twitter a few days ago at 0.45p as the share price showed some technical signs of life. That is welcome as this has been a bit of a stockmarket pup for two years.
Between Christmas and New Year the share price popped its head above the parapet and the 50 day SMA. Couple this with the Rsi moving remotely towards the bullish side of 50 and that prompted me to look at what's been happening since an acrimonious fall out in Mozambique.
In 2011 the assets were ready and the Company was preparing to accelerate work on a project worth $500 million or more. At that point director General Veloso set up a new company (September), quit the board (November) and appeared to expropriate the asset. The board has fought for shareholders to stop this.
By May 2013 Pathfinder (PFP) had made steady progress by wining costs of £1.1 million from the General who looked to be playing the militant or attempting to buy time. Incidentally his business partner in his efforts is Timmy Horlick, the ex-husband of ghastly City “superwoman” Nicola see HERE and HERE and HERE.
In the most critical UK case to date, Lady Justice Gloster stated 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]" and considered the Defendants' grounds of appeal to be "wholly devoid of merit".
The defendants refers to the team Veloso …
Lady Justice Gloster added that "if the application...had been allowed to proceed it would have brought the administration of justice into disrepute." At the hearing itself Lord Justice Leveson (yes that Leveson) expressed concern "that [the Defendants' Application had] all been a game for the purposes of the litigation being undertaken in Mozambique."
The full judgement can be found here Pathfinder v Veloso
Just like clockwork investors on a daily basis buy up shares in small cap companies based on hope for that stock and hope that all is well in the markets - Pathfinder is no exception. But investors have been dealt a body blow by this dispute and as a consequence have left in a mass exodus.
Incidentally while most investors left AFTER the General’s actions became public, some were more fortuitous in their timing – step forward Tim Horlick and his cousin. Obviously nothing is wrong here I am just saying how lucky they were to sell before the share price tanked. Well done them.
In 2011 the shares traded between 7p and 3p (high and low) with the company carrying out a detailed feasibility study. Today they sit at over a 90% discount to the 2011 average.
Apart from the promising TA signs, the company also has roughly £2 million in cash and just shy of £1 million set to be returned by way of VAT registration (back dated to Feb 2011).
With a market cap of £4 million and with over £3 million in cash regardless or not if they get the £1.1m the General has been ordered to pay over (but has not as yet) the cold hard facts stand that once upon a time the company traded at excess of £50 million market cap and with potentially higher value commercial assets.
I don't see the team giving the assets in Mozambique up easily and in fact I think they are far closer to success than many may give merit to however with a decent cash position the risk of entry at this point is low compared to the effect of a complete reversal.
Coin flip stocks come in all forms but to me the cash makes the pain of failure far less of a concern than the fruits of your labour should this get back on track.
'' A man's worth has its season, like fruit.''
(Francois de la Rochefoucauld)
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