LONDON (Alliance News) - Paragon Diamonds Ltd Monday said it remains focused on securing funding to bring its Lemphane mine in Lesotho, Africa, into production next year, as it reported low cash reserves.
The company reported a pretax loss of GBP533,000 for the six months ended June 30, compared with a GBP538,000 loss in the first-half of 2013. The company 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 mine is expected to be USD9 million a year through 20,000 carats with an estimated average value of USD930 - USD1,025 per carat, said the company.
"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," said Manduca 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.
The demand from countries such as China and India has given Paragon the opportunity to create investment vehicles to take advantage of diamonds as an investment and store of wealth, but Paragon admitted that the key to capturing as much value as possible is down to having a steady source of large stone diamonds.
Whilst the current focus is securing funding and getting Lemphane to production, Paragon want to move vertically through "relevant and appropriate" joint ventures and partnerships to "fit the jigsaw" to make Paragon a diamond company rather than a diamond miner, Paragon told Alliance News.
Paragon Diamond's shares were down 5.8% to 3.67 pence per share Monday morning.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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