The RNS out this morning from Pathfinder Minerals per HERE should provide material comfort to patient shareholders that the end is now finally in sight with regards to the tortuous licence resolution issue.
The key takeaways are as follows:
1. A negotiated settlement is in ALL parties interests – Pathfinder Mozambique, PFP & Mozambique as a country. There seems to be now a universal acceptance with these key interests that this is the only end possible result.
2. The company is now negotiating with 100% owners of the asset in Mozambique as opposed to purely General Veloso. This is extremely important and positive.
3. The company has, via AFG found a partner that is (a) well resourced ref financial funds and (b) experienced in the mining sphere – this should give added credibility to a global settlement, in particular with the Ministry of Mineral Resources.
4. The extension is relatively short – less than 10 weeks and should give an indication to the market as to timescales that events are expected to play out.
5. End result in a successful resolution is that PFP would be a significant minority shareholder. We take this to be anywhere from 20% to 49.99% although I make clear that I would not vote in favour of a deal where PFP ends up with less than 30%.
6. We have mentioned this previously and the market seems to be intent on ignoring the important point that AFG have capitalised the company at £11.11m (the most they can get for the fee is 9% of PFP) which equates to 3.17p per share (on an enlarged basis) ref their fee of £1m being converted into shares and that is at PFP’s option.
7. The findings of the Scoping Study earlier this year which at a 10% discount rate placed an NPV of over $1bn on the project highlights the upside to PFP shareholders should this deal conclude. The market cap today of less than £5m ascribes from what we can see a less than 5% chance of success in concluding this deal.
To conclude, there has been negative sentiment around the stock in recent months following the perceived delays in progressing matters and some scurrillous comments on other forums by disenfranchised and bitter parties but as this morning’s RNS relays, there has been very real progress and we are, I believe, as close as ever to unlocking the value that we believe runs to many, many multiples of the current stock price.
We remain long, the largest shareholders and give the BoD our full backing to finally bring the bacon home in the near future.
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