UK Pathfinder wins legal spat to get permission to mine in Mozambique

heavy sands

It’s a dispute over a beauty spot beside the Indian Ocean which has dragged in a former Government minister and seen accusations of foul play levied at a retired African general.

Yesterday, British firm Pathfinder Minerals won the latest stage in a titanic legal battle to get permission to mine in Mozambique.

Pathfinder, which is based in London and is listed on the AIM, was allowed to sell 8million shares held by former Mozambique senior minister General Jacinto Soares Veloso and lawyer Diogo Jose Henriques Cavaco in a court case which has cost more than £1.1million.

Since August it has been allowed to sell 19million shares held by the pair. Today it announced it has actually sold 8million held by Cavaco. It reserves the right to sell a further 11m held by Veloso.

It is the latest stage in a row over the right to mine in heavy sands on the Mozambique coast that began in 2011, when Veloso and Cavaco alleged that Pathfinder didn’t have the proper permission to mine in the region.

Pathfinder had acquired a local firm which had held licences to mine there. But Veloso and Cavaco claimed that this did not mean Pathfinder now had permission.

So the pair transferred the licences to a different company of a very similar name, claiming they were entitled to do so as Pathfinder had never validly acquired its subsidiary.

In 2012 Pathfinder won a case at the High Court against Veloso and Cavaco over the rights to mine in heavy mineral sands on the country’s Indian Ocean coast.

But both fought on – even claiming that the court case in London should never have been heard, and neither have paid the £1.1million costs owed.

Then in 2014 Pathfinder appointed former Parliamentary Under-Secretary in the Foreign Office, Sir Henry Bellingham as non executive chairman, a barrister, to help them fight the claim.

Tory MP Bellingham was engulfed in scandal immediately on being appointed after it emerged he had sent letters supporting Pathfinder before being appointed to his position.

The North West Norfolk MP earns £4,000 a month for four to seven hours work advising on strategy and corporate governance for Pathfinder.

Yesterday the firm sold 8m shares to four buyers for £73,360 having won a High Court ruling to force Veloso and Cavaco to abide by the original 2012 court decision.

Pathfinder is also allowed to sell just over 11million shares held by Veloso’s company, JV Consultores Internacionais Limitada.

Pathfinder said yesterday it hoped some of the proceeds from the sale of shares could help in its fight to recover its mining licences and get to work.

It has lodged a new case with Mozambique’s supreme court asking it to recognise the 2012 High Court judgment, and is also trying to influence politicians.

There is little indication of how long the legal and political processes might take, but Pathfinder said it ‘hopes to return to developing a mine in Mozambique’s Zambezia Province soon, creating hundreds of jobs in a region where employment and infrastructure are sorely needed’.

A company spokesman said: ‘The board is optimistic that the Mozambique Supreme Court will recognise the English High Court judgment because there is precedent there for recognising a foreign judgment.

‘There are many foreign companies interested in doing business in Mozambique, given the country’s vast natural resources, so it is natural that foreign investors will want to have comfort that the jurisdiction of their country’s courts will be recognised there,’ the spokesman said.

Bellingham is understood not to be leading negotiations with the Mozambique government.

‘Sir Henry Bellingham is a non-executive director of Pathfinder and provides valuable strategic counsel to the board and an appropriate level of governance oversight,’ the spokesman said.

‘His interest in developing business opportunities for British companies in Africa and his deep knowledge of the region make him ideally suited to helping steer Pathfinder.’

Bellingham declined to comment.

Source: This is Money