LONDON (Alliance News) - Paragon Diamonds Ltd Tuesday said the deal which will lead to the company acquiring a 75% interest in the Mothae kimberlite resource near the company's existing Lemphane project in Lesotho is now legally binding.
In May, Paragon struck a deal with Lucara Diamond Corp, an Australian Securities Exchange listed mining company, to acquire the stake for a total cash consideration of USD8.5 million. Paragon will also operate the project.
However, the acquisition remains subject to approval from the government of Lesotho and completion of funding.
"Paragon's Managing Director Dr Stephen Grimmer, who is based in Lesotho, has provided extensive details of the company's ability to fund the long term development of the Mothae mine to the minister and the company is now awaiting formal government approval for the acquisition," said Paragon.
Subject to government approval, Paragon said it will construct both Mothae and Lemphane simultaneously to lower costs and benefit from economies of scale.
In March, Executive Chairman Philip Manduca told Alliance News he was "confident" of acquiring an asset near the Lemphane project which would at least "double" the company's expected production level from Lemphane of 2,500 carats a quarter or possibly even treble it.
Mothae adds an indicated and inferred resource of 39 million tonnes at 2.7 carats per hundred tonnes at USD1,060 per carat to Lemphane's 48 million tonne resource. Paragon has already recovered 14 diamonds from Mothae varying between 10.6 carats and 56.5 carats with an average value of USD5,482 to USD41,869 per carat.
Paragon shares were up 0.9% to 5.19 pence per share on Tuesday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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