LONDON (Alliance News) - Paragon Diamonds Ltd Monday said it is moving towards the stage 1 mining development phase at the Lemphane project as it went ahead with a conditional deal that will result in it retaining an 80% stake in its Lesotho subsidiary, Meso Diamonds, with the government of Lesotho holding the remainder.
In a statement, Paragon also said it has conditionally increased its interest in Meso Diamonds to 100%, acquiring the minority 15% stake held by local partner Martin Matekane of Matekane Mining. Paragon Diamonds will acquire the stake by issuing about 35.5 million new shares to Martin Matekane, equivalent to 12% of its shares currently in issue.
The acquisition is conditional on admission of the new shares to AIM, which is expected on or around May 19, according to Paragon Diamonds.
Following admission, the company will have just shy of 331.1 million shares in issue.
Meso Diamonds was recently granted Mining Lease 009/2013 over the Lemphane Kimberlite Project in the Kingdom of Lesotho.
The sale of the 15% interest to Paragon Diamonds was approved by Meso Diamonds, in line with the terms of the mining lease agreement.
Under the same agreement, the government of Lesotho is entitled to be granted a 20% interest in Meso Diamonds. The interest is expected to be granted "shortly," said Paragon Diamonds, which means its interest in Meso Diamonds, and, therefore, the Lemphane Project, will fall to 80%.
Paragon Diamonds has also agreed with the government of Lesotho to sell up to 15% from its 80% interest in Meso Diamonds to accredited Basotho investors at fair commercial value if any such potential investors express an interest.
"We welcome the Matekane family, who have partnered with us for the last three years, as shareholders of Paragon Diamonds. We now move to the critical stage 1 mining development phase. It should be noted that Paragon Diamonds will now hold 80% of the equity in the project, together with the government of Lesotho holding 20%, terms not matched by any other comparable mining operation in the country at this time," Paragon Managing Director Stephen Grimmer said in a statement.
In February, Paragon Diamonds said Meso Diamonds finalised the terms and conditions of the mining lease agreement with the government of Lesotho for the mining of the Lemphane Kimberlite Pipe, which it said at the time would allow it to initiate preparations for, and commence, stage 1 production at Lemphane.
Paragon Diamonds shares were Monday quoted at 3.50 pence, down 2.1%.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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