17 Dec 2013 07:27
PARAGON DIAMONDS LTD - Acquisition(s)PARAGON DIAMONDS LTD - Acquisition(s)
PR Newswire
London, December 17
17 December 2013 Paragon Diamonds Limited ("Paragon Diamonds" or "the Company") * MOUto acquire the Mothae processing plant from Lucara Diamond Corp. for Stage I production at Lemphane Kimberlite * Complete plant to be acquired with capacity of 75tonne per hour to significantly increase the production capacity at Lemphane * Consideration of $1.15 million to satisfied by issue of 9,977,825 new ordinary shares in the Company at a price of 5.5p per share and $250,000 in cash * Targeted mining of 500,000 tonnes per annum to producecirca 10,000 carats per year * Plant relocation expected to commence Q1 2014, with mining and plant operations contracts under negotiation * Stage I mining and production processing anticipated to commence by Q3 2014 Paragon Diamonds is pleased to announce the signing of a memorandum ofunderstanding(MOU)between Meso Diamonds, the Company's 85% owned Lesothosubsidiary, and Lucara Diamond Corp's Mothae Diamonds Lesothosubsidiarytoacquire the kimberlite processing plant and diamond recovery located at theMothae Kimberlite in Lesotho. The plant islocated60 kilometersawayfrom Lemphane with good connecting roads(52 km of which is on the main public road supplying the Kao and Liqhobongmines). Relocation of the plant is expected to commence in Q1 2014 afterminimal site preparations at Lemphane. Under the terms of the MOU, Meso Diamonds will pay to Lucara Diamond Corp. aconsideration of $1.15million,comprising $50,000 cash and $400,000 in newParagon Diamondsshares at a price of 5.5p per share on signing of the assetpurchase agreement, followed by $200,000 cash and $500,000 in new ParagonDiamondsshares at a price of 5.5p per share on commencement of relocation fromthe Mothae site. The signing of the asset purchase agreement is anticipated bythe end of January 2014. The Company plans to initiate Stage I production by Q32014, with StageIcovering a two year period during which time it is intended that 1 Mt ofkimberlite will be minedand processed for the expected recovery of at least20,000 carats at an estimated average value of $750 per carat at a provisional2 mm production cut-off. The plant being acquired has the processing capacity to treat 500,000 tonnesper annum and has been demonstrated to be highly effective in the recovery oflarge diamonds using coarse-x-ray sorting technology with minimal diamondbreakage despite a large diamond size being processed. The plant flow-sheet will be amended as required and appropriate to thecharacteristics of the Lemphane Kimberlite. Aproposed plant flow-sheetdetailing the recovery process can be viewed on the Company website:www.paragondiamonds.com Plants operations will be managed by Paradigm Project Management (Pty) Ltd.Meso Diamond's 15% shareholder, the Matekane Group, will undertake mining. Bothcompanieshave extensive experience of kimberlite mining in Lesotho. The Company expects to produce some 800-1,000 carats per month during Stage Iproduction. Based on preliminary size frequency distributions, comparable tothe Mothae Kimberlite, the recovery of up to 2,000 carats of "special" stones(i.e. 9.8+ carats)is anticipated, including diamonds of up to 100 carats insize. Paragon Diamond's Managing Director Dr.Stephen Grimmer, said: "We are delighted to be acquiring Mothae Diamonds' processing plant fromLucara.Not only is it perfect for our needs but it is also in close proximityleading to much reduced costs for the Company, with further cost savings andsupport coming through the acquisition being mostly satisfied in ParagonDiamondsshares. "Together with the existing infrastructure at Lemphane and a very experiencedteam of contractors with whom we have long-term working relationships, thisshould allow us to deliver a robust and low-cost mining program in the shortestpossible time." In accordance with the AIM Rules for Companies, the information inthisannouncement has been reviewed by Stephen Grimmer PhD., MSc., aqualifiedgeologist with over 25 years diamond exploration experience. For further information: Paragon Diamonds Limited +44 (0) 20 7099 1940Martin Doyle - ChairmanSimon Retter - Finance Director Sanlam Securities UK (Nominated Adviser & Broker) +44 (0) 20 7628 2200Lindsay MairCatherine Miles