LONDON (Alliance News) - Paragon Diamonds Ltd on Friday said it has signed a non-binding term sheet to raise USD15.0 million with South Africa-based Acrux Resources Pty Ltd.
The funding will take the form of a combined convertible debt and revenue-sharing facility. Paragon will get a USD8.0 million payment in return for giving Acrux a 7.0% revenue-sharing stake for Mothae and Lemphane, Paragon's diamond projects, for the first three years, falling to 4.0% for Mothae and no share for Lemphane thereafter.
In addition, Acrux will provide Paragon with a USD7.0 million loan convertible into Paragon shares at 5.5 pence per share. Paragon shares were up 3.6% to 4.89 pence per share on Friday morning.
The funding will be used to acquire and bring the Mothae project in Lesotho and the company's nearby Lemphane kimberlite pipe project into first production of potentially large high value diamonds. Paragon is targeting combined revenue from the projects of around USD36 million in the first full year of production at both mines.
By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance
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