Mothae plans16 Dec 2015 14:04
Paragon Diamonds to press on with Mothae plans despite Lucara knock-back
Share
15 Dec 2015
The deal is such a logical one that Paragon is pressing on with it, despite the seller getting cold feet
Paragon Diamonds to press on with Mothae plans despite Lucara knock-back
Mothae is only 5 km from the world class Letšeng le Terai Diamond Mine
Paragon Diamonds (LON:PRG) is to negotiate directly with the Government of Lesotho to keep its proposed acquisition of the Mothae kimberlite resource alive.
The company said Mothae's owner, Lucara Diamond (TSE:LUC), had decided to call off the proposed sale, having previously granted Paragon an extension to the timetable for the deal.
Paragon admitted that finalising funding for the deal had taken longer than expected, but maintains the view that the development of Mothae is highly synergistic with its Lemphane kimberlite pipe project, hence its decision to negotiate directly with the Government of Lesotho, which controls the definitive approval on any transaction in respect of developing Mothae.
The sticking point in the financing discussions appears to be the board's reluctance to materially discount the potential value of the company and dilute existing shareholders, on top of which there have been administrative delays of the sort that seem inevitable in these sorts of situations.
“It is the board’s belief that the termination of the agreement with Lucara will not have material impact on the terms of any such funding obtained from the afore-referenced investor.,” Paragon said.