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An Open letter to shareholders in Pathfinder Minerals

By Tom Winnifrith | Monday 2 April 2018

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.

As you know I disagree strongly on a number of matters with Richard Jennings of Align Research but on the matter of Pathfinder Minerals (PFP) he is 100% right to want to oust the current management who are overpaid, inept and now acting in a way that puts their own interests ahead of those of the company. They are frequently accused of misleading investors. So we back Jennings in this case. He has written an open letter to his fellow shareholders which is hard hitting and raises very valid points. Over to Jennings.

Dear fellow shareholder

I write to you to put on record the many observations I have regarding the current and recent stewardship of our company by the current incumbent directors Messrs Bellingham and Trew.

I and other fellow shareholders have attempted to requisition an EGM to replace management with a new team that we believe, in good faith, can bring to a close the seeming never ending litigation surrounding the company’s former licences in Mozambique and which would, if we are successful be in all shareholders interests.

As you will know, the company refused to action our requisition in the RNS of 26th March 2018 and on the same date, to rub salt into the wounds of their long suffering shareholders, stated in a separate RNS that they were mooting a placing of upto 75m shares. We believe the only purpose of such a placing would be an attempt to dilute the interests of many presently, and quite appropriately, disgruntled shareholders. In this regard we have made representations to the authorities and their NOMAD of the implications of this should they attempt to action this. A derivative action would be mounted against the directors on the grounds of a breach of fiduciary duty and we have also put on record our preparedness to put funds into the company at 1p per share if the company requires funds. Any raising at a lower sum we understand would give grounds to sue them for the difference in the raising.

On the requirement for new capital front, we actually question just why the company would need additional capital at this point as during the months of Sep and Dec last year a total of circa £450k was raised. Even considering Trew’s totally unjustifiable salary of £170,000 per annum and accruing a modest sum for his sidekick Bellingham and the broker/nomad, we cannot have spent anywhere near this sum – the company does not even have a physical office. Even the legal costs must be pared back dramatically given that it appears there has been next to no movement on the court procedure in Mozambique as the company freely admits to.

I believe that the vehicle of PFP is currently existing to keep Trew in a lifestyle that he has no doubt now become accustomed to, to maintain a steady flow of funds to Travers Smith (where we also have very real concerns as to the direction of the current legal proceedings), to attempt to frustrate/silence bona fide criticism from their own shareholders (legal missives sent to me personally) and put commission in broker’s pockets. It is telling that Trew has not responded in any form to the questions raised here –  It seems to me that Trew believes himself to be unaccountable to his shareholders. The same shareholder that have put seven figures into his pocket over the last several years whilst they themselves have been almost wiped out.

Our plans are simple – replace management with focused and new directors who are aligned with us with regards to their remuneration (salaries being a fraction of Trew’s), build upon dialogue we have with Pathfinder Mozambique in regards to finding an alternate resolution to the courts (a process that is open ended and involves more costs) – in this regard we are extremely positive that we can do a deal when new managements are in situ in bringing this long running process to a close and further, actually raise funds at a premium to the current stock price (minimising dilution for all).

Rest assured that I and the requisitioners are not going away on this issue and if the company refuses to call the second EGM (where we served the request on the company again last week) we will, as we are allowed to do in accordance with the Companies Act, convene the EGM ourselves. Should you wish to support us in, finally, hopefully accreting serious value to PFP shareholders please ensure you use your vote at the forthcoming EGM.

Yours faithfully



R Jennings

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