LONDON, UK: Pathfinder Minerals has entered into a conditional binding sale and purchase agreement (SPA) with Acumen Advisory Group (AAG) with respect to the disposal of IM Minerals Limited (IMM), a wholly owned subsidiary of Pathfinder, and, with it, the rights to bring a claim against the Government of Mozambique under the Mozambique-United Kingdom Bilateral Investment Treaty (2004), for the expropriation of Mining Concession 4623C.

Completion of the SPA is conditional upon shareholder approval being received at a general meeting of the Company for the disposal of IM Minerals Limited, to be held on or before 26 April 2023.

The consideration payable by AAG to the Company is £2 million on Completion and the greater of US$24 million or 20% of the aggregate amount (including all deferred or conditional payments) payable on settlement or determination of the Claim less all reasonable costs and expenses properly incurred in respect of the Claim.

Under the SPA, AAG confirms that it has secured funding for at least US$15 million to fund the Claim and undertakes to the Company that it will:

a) instruct lawyers to commence legal proceedings and issue a claim in respect of the Claim within three months of Completion;

b) use its best endeavours to settle and/or finalise the Claim within five years of Completion; and

c) keep the Company informed of material developments in respect of the Claim.

Under the SPA, the Company agrees that, if requested by Acumen Advisory Group, it will use reasonable endeavours insofar as it is reasonably able, to assist AAG with a divestment to a third party of any licences which are returned or awarded to it in respect of the Claim.

The Company has provided Acumen Advisory Group with certain warranties under the SPA with its aggregate liability capped at £2 million. Any individual claim for breach of these warranties must exceed £20,000 and all such claims together must exceed £200,000 before a claim for breach of warranty can be brought (when the whole amount can be claimed) and any such claim for breach of warranty must be notified by AAG to the Company within 12 months of Completion.

On Completion, the Company will cease to own, control, or conduct all or substantially all of its existing trading business, activities or assets and will become an AIM Rule 15 cash shell. As such, the Company will be required to make an acquisition or acquisitions which constitute a reverse takeover under AIM Rule 14 (including seeking a re-admission as an investing company (as defined under the AIM Rules)) on or before the date falling six months from Completion and be re-admitted to trading on AIM as an investing company under the AIM Rules (which requires the raising of at least £6 million), failing which the Company’s ordinary shares would then be suspended from trading on AIM pursuant to AIM Rule 40.

Accordingly, should the Disposal complete, the Company will become an AIM Rule 15 cash shell and will evaluate opportunities in the sectors the directors consider appropriate, seeking to identify one or more projects or assets which the Company can acquire, which would constitute a reverse takeover under AIM Rule 14. The directors are confident that the initial consideration payable in respect of the Disposal of £2 million will be sufficient to cover the costs of a reverse takeover under AIM Rule 14 and provide initial working capital for the then enlarged group.

Any reverse takeover transaction will require the publication of an AIM Rules compliant admission document and will be subject to shareholder approval at a further general meeting of the Company to be convened at the appropriate time.