LONDON (Alliance News) - Paragon Diamonds Ltd Monday said it is focusing on securing funding to bring its Lemphane mine in Lesotho, southern Africa, into production next year, as it reported low cash reserves.
The diamond development and production company reported a pretax loss of GBP533,000 in the six months ended June 30, marginally narrowed from a GBP538,000 loss in the first-half of 2013. The company said it is hoping to bring in its first revenue early next year.
"Having successfully de-risked Lemphane to the point of production and with a mining lease secured, the last major piece of the jigsaw ahead of commencing stage 1 mining remains funding the required USD6 million capital cost," said Chief Executive Stephen Grimmer.
The company held cash of GBP100,000 at June 30, and Paragon remains confident that Lemphane will be in production in the first quarter of 2015.
"Discussions are ongoing (regarding funding) and I remain confident that these will be successfully concluded in the very near term, at which point we will immediately advance Lemphane towards production," said Executive Chairman Philip Manduca.
Revenue from the open pit Lemphane kimberlite is expected to be USD9 million per annum, calculated as 20,000 carats at an estimated average value of USD930 to USD1,025 per carat, Paragon said.
"High jewellery demand is expected to grow at a compound annual rate of 6% over the next ten years thanks to increased demand from China and India. With new supplies unlikely to keep up with demand, coupled with diamonds' growing appeal as an investment and store of wealth, diamond prices would appear to be well underpinned going forward," Chairman Manduca said in a statement.
Paragon's "new strategy is focused on building a leading vertically integrated diamond production and investment company - retaining ownership of the journey of a stone from the ground to the high street to ensure value is retained for our shareholders," added Manduca.
Paragon Diamond's shares were down 0.1% to 3.89 pence per share Monday morning, having recovered from an intraday low of 3.67p.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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