PAN AFRICAN RESOURCES PLC - Proposed Capital Reduction and Notice of General Meeting

Evidence from the filing

• The Capital Reduction is crucial for enabling the Company to continue its existing progressive dividend policy and to pay future dividends, directly benefiting shareholders and supporting long-term returns.

  “The Capital Reduction, if approved, will provide the Company with the flexibility to continue with its existing progressive dividend policy and will allow the rectification of the Relevant Distributions which have been paid otherwise than in accordance with the Act as described in paragraph 2 above.”

• The rectification of past distributions through the Capital Reduction and associated deeds of release removes significant potential claims against recipient shareholders and directors, thereby eliminating a legal and financial overhang for key stakeholders.

  “The consequence of the entry into these deeds by the Company is that the Company will be unable to make any claims against: (a) the Recipient Shareholders; and (b) the Directors, in each case in respect of the Relevant Distributions.”

• The proposed cancellation of the Share Premium Account (US$10,877,178) and formal extinction of 2,003,735 Ordinary Shares from past buybacks (£958,169) streamline the capital structure, which is generally accretive to EPS and shareholder value.

  “The Company intends to reduce the Share Premium Account in full.”

• The Board's unanimous recommendation to approve the resolutions, citing them as being in the best interests of all shareholders, coupled with the stock's strong momentum (+16.98% 30-day return, above 50-day and 200-day MAs, and near 52-week high), indicates robust internal conviction and positive market sentiment regarding these value-enhancing actions.

  “The Board considers the Resolutions (including the Capital Reduction Resolutions) to be in the best interests of the Company and its Shareholders as a whole and the Board unanimously recommend that you vote in favour of the Resolutions to be proposed at the General Meeting.”

• This procedural breach, stemming from the Registrar of Companies not receiving the 2024 Interim Accounts, has led to the company waiving potential claims of approximately US$28.249 million (2024 Dividend) and £958,169 (2025 Buybacks) against recipient shareholders and directors.

  “The fact that the Registrar of Companies did not receive the 2024 Interim Accounts constitutes a procedural breach of the Act. [...] The Company may have a claim against all shareholders (former or present) who received any such distribution (up to the maximum value of cumulative distributions received by each shareholder from the Relevant Distributions) as well as a claim against all Directors (individually or in aggregate) who approved the making of the Relevant Distributions, up to the total aggregate value of approximately US$28.249 million in respect of the 2024 Dividend and £958,169 in respect of the 2025 Buybacks.”

• This highlights a persistent weakness in the company's corporate governance and shareholder communication protocols, which required overriding "No indicator" requests this time.

  “Shareholders are referred to the announcement published on 22 December 2025, in terms of which the Company advised, inter alia, that the previously proposed share capital reduction [...] would not proceed, as a result of the Court not being satisfied that notice of the general meeting (at which resolutions were passed to approve and implement the Capital Reduction) had been appropriately given to all shareholders.”

• The waiver of claims against directors related to the non-compliant distributions is explicitly identified as a "related party transaction" under UKLR.

  “The entry by the Company on 16 February 2026 into the Directors' Deeds of Release and consequential waiver of any rights of the Company to make claims against directors in respect of the Relevant Distributions, constitutes a related party transaction pursuant to Rule 8 of the UKLR as each of the Directors is a related party for the purposes of the UKLR.”

• The Capital Reduction remains subject to Court approval, which "may require measures to be put in place for the protection of creditors."

  “In providing its approval of the Capital Reduction, the Court may require measures to be put in place for the protection of creditors (including contingent creditors) of the Company whose debts remain outstanding on the relevant date, except in the case of creditors who have consented to the Capital Reduction.”

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