Dear fellow shareholders

Last Tuesday you will have received a formal document from the Board of Pathfinder Minerals Plc (‘Pathfinder’) calling a General Meeting (‘EGM’) of shareholders in response to the requisition that we first delivered on 20^th March 2018.  That document included an eight-page letter from the current directors explaining why they thought that you should vote against our resolutions to remove Henry Bellingham and Nick Trew from the Board.

What those eight repetitive and self-serving pages had to say can be summarised as: ‘despite spending over £10 million of your money in the last seven and a half years attempting to recover the mining licences transferred out of Pathfinder’s control, we, Nick Trew and Henry Bellingham, are the only people in the world who can ever succeed in doing so; and therefore should be allowed to carry on spending your money in the [forlorn] hope that we shall eventually succeed.’

Their arrogance and disdain for you, the long-suffering shareholders, are breath-taking.

Let us set out Pathfinder’s current position.

1. On 23^rd February the Company announced that it had been told unequivocally by Mr Diogo Cavaco, the co-owner of Pathfinder Moçambique SA (‘PM SA’), that there were no negotiations between PM SA (or its shareholders, himself and General Jacinto Veloso) and Pathfinder or its representatives. Mr Cavaco’s letter indicated that this had been the positon for some time. We have seen sight of a letter sent to Trew on the 26^th October 2017 by PM SA in which it was made clear that PM SA was NOT in negotiations with the current BoD of PFP and further, they in fact made clear that they believed Trew and Bellingham were misleading the market. This letter was never disclosed to us as shareholders and indeed on the strength of the market’s expectations of an imminent settlement, monies in the sum of £462,500 was raised (and which now seems to have disappeared into Trew, Bellingham’s and the current legal advisers pockets). We continue to believe that the current BoD in fact created a false market in the stock during October 2017 through to 23 Feb 2018 and in this regard have made representations to the appropriate authorities.
2. On 13^th March, Mr Cavaco wrote to me stating categorically that PM SA will never negotiate a settlement with Pathfinder while the current Board is in place [see a copy of his letter attached to Align’s statement dated 20^th March per HERE].
3. Pathfinder’s efforts to enforce the London High Court judgment in Mozambique have consistently fallen on deaf ears in Maputo; and yet the Board’s only remaining tactic is more of the same.
4. In our estimation, given the historic rate at which Pathfinder has burned through cash, exacerbated by the fees payable by the Company to its lawyers, PR advisers, Nomad and printers in resisting our call for a General Meeting and composing such a lengthy and lacklustre circular, the Company has virtually exhausted its cash resources. This was evidenced by the RNS of 26^th March 2018 in which the BoD confirmed they were contemplating yet another placing, this time of upto 75m shares.
5. In the light of recent events and announcements, not least the impending GM, Trew and Bellingham are finding it impossible to raise additional capital.
6. With Trew and Bellingham in charge, Pathfinder is going nowhere and we are staring down further dilution on onerous terms.

Trew and Bellingham’s reaction to challenge

1. On 20 March 2018 we requisitioned a GM, using the provisions of company law designed to provide discontented minority shareholders with a forum to express that discontent and to propose remedies.
2. Instead of recognising the legitimate concerns of shareholders, Trew and Bellingham indulged in a campaign of delay and obfuscation in which they wasted yet more shareholders’ funds obtaining legal advice from the Company’s solicitors and from Counsel. To what end?  In order to spin out the process of convening a GM for as long as possible, while they tramped the streets of the City of London with third tier brokers trying to gull additional investors out of their money so that they could prolong their tenure and the attendant ability to continue to draw down outrageous salaries for themselves.
3. They also threatened legal action against James Normand, our second nominee for the Board, on the spurious grounds that allowing his name to be proposed as a director broke an undertaking he made when he resigned from the Board two years ago not to be involved in any action against the current directors. Where is the benefit to the Company in seeking to hamstring actions against the current directors?
4. Additionally, the requisitioners have received letters from Pathfinder’s solicitors threatening legal action over our suggestion that the Board may have withheld the full picture of the state of discussions with Veloso and Cavaco when raising additional capital in September and December last year.
5. Are these the actions of directors committed to fulfilling their fiduciary duty to represent the interests of all its shareholders; or are they the desperate measures of people intent on preserving the feather beds they have built for themselves which have cost your company at least £1 million in salaries and benefits in the past 5 years?

Our plans

1. We will continue the discussions that we have started with Diogo Cavaco. This route is one that does not involve the uncertainty, expense and open ended timescale of the courts. We believe, in good faith, that we can find common ground in a speedy manner with the current licence holders, PM SA, and that we can negotiate a settlement that satisfies all parties.
2. If a negotiated settlement is not achievable we will not abandon legal action, in complete contrast to the directors suggestion in their letter to shareholders of 23^rd April 2018.
3. Our commitment to directors’ remuneration of just £40,000 p.a., which is nominal by public markets standards, and to a reward based on the improvement in the share price is designed to demonstrate to shareholders that we have complete faith in our plans but that if we are not successful then the proposed director is not rewarded.
4. We believe that we are not being told the whole story in relation to the legal process and that the Mondlane Jnr contract that was signed may in fact have been ultra vires on the BoD’s part. We will investigate this thoroughly as a matter of urgency.
5. We have commitments of capital from investors, subject only to Board change, including a placing of up to £400,000 at a price of 1p per share that will put the Company on the front foot. This is in complete contrast to the current Board’s un-defined funding plans which will inevitably lead to more money being spent on their salaries.

Assertions in the directors’ letter

The directors have made a number of assertions in their 23^rd April letter to shareholders, a number of which we have already addressed above.  Let us deal with the remainder.

1. We are accused of being a Trojan horse to enable Veloso and Cavaco to ‘monetise’ the licences. This is completely absurd.  We hold as many shares in Pathfinder as the directors.  It is as much in our interests to achieve a settlement on terms which are equitable to all parties as it is the current board.
2. The directors quote a recent report in an obscure Mozambique newspaper as ‘evidence’ that Veloso and Cavaco are ready to sell the licences to third parties. This is hardly conclusive proof of underhand behaviour.
3. They also identify the issuing of a High Court judgment in the Company’s favour as Pathfinder’s principal asset. What good has this judgment been to the Company in the 6 years since it was issued?
4. Henry Bellingham was appointed to the Board four years ago on the strength of his having been Minister of State at the Foreign and Commonwealth Office. Since his appointment, he has not once visited Mozambique; and nor had any meetings with Veloso, Cavaco or any member of the Mozambique government. He has however drawn hefty fees and taken exception at my comment to him that those individuals tasked with being a director of a public company are duty bound to engage with those shareholders and that his ignorance towards me in this matter made me “sick to the pit of my stomach”. That same comment is made again here by me.
5. The directors accuse me of being motivated by personal antipathy to Trew and Bellingham. Any personal antipathy I hold has grown from the increasing realisation that for the past few years Pathfinder has been run for the benefit of the continuing remuneration of Bellingham and particularly of Trew.  If there is personal antipathy that is interfering with an objective view of this dispute it is Trew.  As he said to me in our first communication in October last year, “Veloso will not beat me… I will fight this to my dying day.”

Fellow shareholders, the time is NOW for a negotiated settlement. The price of ilmenite and the economics of the project are the most compelling that they have been since 2011, we have received bona fide funding expressions to help us progress this asset and the new Director will be totally aligned with us as shareholders as opposed to acting at cross purposes.

We urge all shareholders to vote IN FAVOUR of the proposed resolutions. If any party is unsure of this process please email us at richard.jennings@alignresearch.co.uk and we will direct you appropriately re this process.

R Jennings

• Pathfinder Minerals