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Paragon Diamonds Limited / Index: AIM / Epic: PRG / Sector: Resources 15 September 2014 Paragon Diamonds Limited (`Paragon Diamonds', `the `Company' or `the Group') Interim Results Paragon Diamonds Limited, the AIM quoted diamond development and productioncompany, is pleased to announce its audited final results for the six months tothe 30 June 2014. Overview * Substantial progress made towards building a cash generative diamond production company with a portfolio of multi-stage projects located in known diamondiferous regions of Africa * New strategy 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 * On course to commence Stage 1 (two year) production early 2015 and generating first revenues of US$9m per annum at the open pit Lemphane Kimberlite in Lesotho - 20,000 carats targeted with an estimated average value of US$930 - US$1,025 per carat * Positive independent modelling report for Lemphane issued June 2014 * + +100 carat diamond expected per million tonnes processed + 12% of carats exceeding 9 carats + Conservative grade of 2cpht used as modelling basis + Grade and value to rise as tonnages processed increased * Secured the award of a 10 year Mining Lease at Lemphane which is renewable for a further three consecutive 10 year periods * Pipeline of highly prospective projects representing future development potential: * + 85% owned high-grade Motete Kimberlite dyke in Lesotho which has a resource of 1.56Mt at 65cpht for 1M carats + Kaplamp project in Zambia which hosts 14 Lamproite pipes within a well-known diamondiferous region + Acquired 442 sq km licence in the prospective Tsabong Kimberlite field, Botswana * Strengthened the Board with the appointment of Philip Sant Falzon Manduca - pioneer in the European hedge fund industry to lead Paragon's development into a vertically integrated diamond company Paragon Diamonds CEO Stephen Grimmer said, "Having secured a mining leaseduring the period and with infrastructure already in place at the site, ourimmediate focus is to secure a processing plant so that we can commence Stage 1production at our flagship Lemphane pipe in Lesotho in the near term. Therecent independent size frequency and revenue modelling report provides a thirdparty assessment of what we can expect from Stage 1, which will involve 1million tonnes of ore mined. According to the report, Stage 1 is expected toresult in the recovery of over 100 diamonds larger than 9 carats, includingstones up to 100 carats in size. Over the entire resource of 48.6Mt ofkimberlite that has been delineated to date, the report indicates the recoveryof diamonds of over 300 carats in size, up to 50 diamonds in excess of 100carats and 175 diamonds in excess of 50 carats. These numbers are consistentwith those being achieved at the nearby deposit of Letseng, and if achievedwould see Lemphane added to the list of world class kimberlite pipes inLesotho." Chairman's Statement I have joined and invested in Paragon Diamonds at a significant juncture in theCompany's development, one which will see it shortly make the leap from asuccessful explorer with a portfolio of multi-stage projects in knowndiamondiferous regions of Africa, to a producer of large high value diamonds atits flagship open pit Lemphane Kimberlite Project in Lesotho (`Lemphane'). Inaddition Paragon has a highly prospective diamond project pipeline in Botswanaand Zambia from which to secure growth in the future. Becoming a producer is not the end game for Paragon. A key reason why I havejoined the Board and invested in Paragon, is that we intend to position thecompany as a top class diamond house as we build a vertically integrateddiamond business, retaining ownership of the journey of a stone from the minethrough the manufacturing phase all the way to the consumer and investmentmarkets to ensure as much value as possible is retained for our shareholders.The numbers speak for themselves. In 2012, diamond exploration and productiongenerated operating margins of between 16% and 20%. In aggregate another22%-37% (and possibly much higher) of operating margins remain on the tablethat can collectively be achieved by participating in downstream activitiessuch as polishing and cutting, jewellery manufacturing and retails sales. TheBoard of Paragon will look to secure as much of this additional margin for ourshareholders as possible through the use of vehicles such as JVs, SPVs andofftake agreements with suitable top class partners. In addition to integratingvertically, there also exist a number of potentially lucrative lateralopportunities for Paragon which we are keen to explore, such as theestablishment of diamond investment vehicles for investors specifically lookingfor exposure to hard assets and commodity currencies. As an incoming chairman,I believe Paragon Diamonds is a deep value investment and a marvelousopportunity to access the diamond sector without any negative legacy problemsto repair. The key to creating a vertically and horizontally integrated diamond company isownership of a source of large high value stones, and in Lemphane the Board ishighly confident that this is precisely what Paragon has got. Lemphane islocated in a cluster of five major kimberlite pipes in a region of Lesothowhich regularly produces large and exceptionally high value stones, asdemonstrated by the three 160+ carat diamonds recovered earlier this year fromthe nearby world class Letšeng mine. The first two diamonds recently sold forUS$68,867 and US$14,636 per carat. While at a much earlier stage ofdevelopment, a limited bulk sampling programme undertaken at Lemphane in 2013yielded highly encouraging results which importantly are consistent with thoseachieved by Letseng when the latter was at a similar stage of development.Within the 300 carats recovered via bulk sampling at Lemphane, one 9 caratstone was valued at US$2,400 per carat indicating the presence of large highvalue diamonds at the pipe. Furthermore the small parcel of diamonds also hasin common coarse diamond size frequency and Type IIa diamonds with not only Letšeng but another nearby kimberlite, Mothae. While the bulk sampling programme confirmed the presence of large high valuestones, a 1,373 metre deep drilling campaign, also in 2013, extended theresource at Lemphane. Four holes were drilled to a depth of 260m below surfaceand resulted in an 80% increase in the overall tonnage of kimberlite to 350m to48.8Mt. We will shortly be commissioning a second Scoping Study to determinethe economics of the project based on the latest data. An initial study wascompleted while the bulk sampling and drilling programmes were on-going, andwas based on mining 27Mt of ore to 280m below surface at a 1.3:1 waste to oreratio. Even at this early stage, all-in mining costs were estimated at lessthan US$20 per tonne, capital costs of less than US$5 per tonne, a notionalaverage annual operating profit of US$35m and a 22% IRR using base caseassumptions. The 80% increase in tonnage to 48.8Mt of kimberlite clearly hasthe potential to double the current volume of kimberlite used in the scopingstudy with obvious positive implications for the Project's economics. With the above results in mind we are keen to commence production as soon aspossible and during the period we were delighted to secure the award of a 10year Mining Lease which is renewable for a further three consecutive 10 yearperiods. Under the terms of the Lease, which were finalised in February 2014,the approved programme of mining is a two year, Stage 1 mine plan of 500,000tonnes per annum followed by an eight year Stage 2 mine plan of 3,000,000tonnes per annum for an initial open pit life of ten years. The Government ofLesotho holds a 20% interest in Lemphane and, following the acquisition duringthe period of an indirect 15% interest held by our local partner, Mr. Matekaneof Matekane Mining, Paragon holds the remaining 80% of the equity in theproject, a level currently not matched by any other comparable mining operationin the country. Furthermore our confidence in Lemphane received a further third partyendorsement following the release in June 2014 of an independent size frequencyand revenue modelling report which we commissioned to independently verify theCompany's in-house estimates. The report was based on the 2012/3 bulk samplingprogramme and with a +100 carat diamond expected at least per million tonnes ofkimberlite processed and anticipated diamond values projected between US$930/carat and US$1,025/carat, the results are highly encouraging. Size frequencyindicates 12% of carats as diamonds exceeding 9 carats and based on theseresults, Stage 1 production can be expected to recover in excess of 100diamonds larger than 9 carats, including stones up to 100 carats in size. Overthe entire 48.6Mt of kimberlite delineated by drilling to date, the expectationwould be for some 50 diamonds in excess of 100 carats and 175 diamonds inexcess of 50 carats (i.e. two to three a year and one a month respectively ifmined at 3Mt/yr), including diamonds of over 300 carats in size, beingrecovered. Using the above size frequency, the authors generated two valuation models: onebased on values modelled on diamonds up to 9 carats (the largest recovered inthe 2013 bulk sampling programme) which achieved values of US$505-US$625 percarat; the other on the anticipated production of diamonds during the planned1Mt of kimberlite from Stage 1 Mining, which as indicated in the size frequencymodel is expected to include larger diamonds of up to 100carats. By applyinglarge diamond values reported from the nearby Mothae Project to the +15caratdiamonds, average diamond values of between US$930 per carat and US$1,025 percarat were estimated, which compares favourably to Paragon's assumption ofUS$750 per carat. In Stage 2 Mining, with the expected increased recovery oflarger diamonds, potentially including +300ct stones, even higher values couldbe realised. Financial Results The Group generated a loss after tax of £0.5 million during the first half (H12013: loss of £0.5 million). In order to ensure as much funds as possible areinvested in the ground, administration costs continue to be tightly controlledand totalled £0.4 million during the six months under review (H1 2013: £0.4million). The Group held cash of £0.1 million as at 30 June 2014 (H1 2013: £1.1 million,including cash held in escrow which has been restated to the derivativefinancial instrument in the current period). The Group had net assets of £29.9 million as at 30 June 2014, (2013: £32.6million) and intangible exploration assets are carried at £39.6 million (2013:£43.7 million). Group borrowings totalled £2.1 million at 30 June 2014 (2013: £2.8 million). Outlook Having successfully de-risked Lemphane to the point of production and with aMining Lease secured, the last major piece of the jigsaw ahead of commencingStage 1 Mining remains funding the required US$6m capital cost. Discussions areongoing and I remain confident that these will be successfully concluded in thevery near term, at which point we will immediately advance Lemphane towardsproduction. My target is in the first quarter of 2015. In our view, this is ahighly opportune time to commence the recovery of large high value stones atLemphane thanks to favourable diamond market dynamics that are likely topersist for many years to come. High jewellery demand is expected to grow at acompound annual rate of 6% over the next ten years thanks to increased demandfrom 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. It isimportant to note that the value of the diamonds in the ground at Lemphane hasrisen by approximately 15% in the last 12 months, and continues to appreciatein value as I write this Statement. As outlined above, the Board is not just concerned with recovering stones fromthe ground, but is focused on building Paragon into a vertically integrateddiamond house. With production on course to commence in the short term at our80% owned Lemphane kimberlite mine, which is located close to the world classLetseng pipe in Lesotho, Paragon is well placed to become the go-to vehicle forinvestors looking for early stage entry into the long term growth story thatdiamonds offer. Finally I would like to thank the Board, management and staff, for their hardwork not just over the last six months but for successfully de-risking ourflagship Lemphane kimberlite project. I look forward to working with the teamduring what promises to be an exciting period for Paragon Diamonds, as we lookto deliver on our objectives and in the process generate value for all ourshareholders. Philip Falzon Sant Manduca Executive Chairman 12 September 2014 **ENDS** For further information please visit www.paragondiamonds.com or contact: Philip Falzon Sant Paragon Diamonds Limited +44 (0) 20 7099 1940Manduca Simon Retter Paragon Diamonds Limited +44 (0) 20 7099 1940 Lindsay Mair Sanlam Securities UK +44 (0) 20 7628 2200 John Howes/Alice Lane Northland Capital Partners +44 (0) 20 7382 1100 Limited Felicity Edwards St Brides Media and Finance Ltd +44 (0) 20 7236 1177 Frank Buhagiar St Brides Media and Finance Ltd +44 (0) 20 7236 1177 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the six months ended 30 June 2014 Six Months Six Months Year to 31 to to December 30 June 30 June Notes 2014 2013 2013 (Unaudited) (Unaudited) (Audited) Continuing operations £000 £000 £000 Administration costs (395) (388) (706) Fair value loss in remeasuring (108) (125) (558)derivative instrument Finance costs (30) (25) (57) LOSS BEFORE TAXATION (533) (538) (1,321) Taxation - - - LOSS FOR THE PERIOD (533) (538) (1,321) Attributable to: Owners of the parent (533) (538) (1,321) Non-controlling interest - - - (533) (538) (1,321) Other comprehensive income: Exchange differences on translation (1,107) 1,353 (1,555)of foreign operations TOTAL COMPREHENSIVE INCOME FOR THE (1,640) 815 (2,876)PERIOD Attributable to: Owners of the parent (1,864) 600 (2,918) Non-controlling interest 224 215 42 (1,640) 815 (2,876) LOSS PER SHARE From continuing operations Basic and diluted (pence) 4 (0.18) (0.27) (0.60) The loss in the current period arises from the Group's continuing operations. CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY As at 30 June 2014 Share Share Foreign Share Retained Total Non-controlling Total capital premium exchange based deficit Interests equity reserve payment reserve £000 £000 £000 £000 £000 £000 £000 £000 At 1 JANUARY 2013 1,951 44,882 (231) 484 (19,875) 27,211 3,177 30,388 Loss for the period - - - - (538) (538) - (538) Exchange differences on - - 1,138 - 1,138 215 1,353translation of foreignoperations Total comprehensive - - 1,138 (538) 600 215 815income for the period Issue of shares 282 1,128 - - - 1,410 - 1,410 Share based payment - - - 16 - 16 - 16 At 30 June 2013 2,233 46,010 907 500 (20,413) 29,237 3,392 32,629 Loss for the period - - - - (783) (783) - (783) Exchange differences on - - (2,735) - - (2,735) (173) (2,908)translation of foreignoperations Total comprehensive - - (2,735) - (783) (3,518) (173) (3,691)income for the period Issue of shares 653 1,158 - - - 1,811 - 1,811 Share based payment - - - 164 - 164 - 164 At 31 December 2013 2,886 47,168 (1,828) 664 (21,196) 27,694 3,219 30,913 Loss for the period - - - - (533) (533) - (533) Exchange differences on - - (1,331) - - (1,331) 224 (1,107)translation of foreignoperations Total comprehensive - - (1,331) - (533) (1,864) 224 (1,640)income for the period Issue of shares 425 925 - - - 1,350 - 1,350 Purchase of - - - - - - (773) (773)non-controllinginterest Share based payment - - - 77 - 77 77 At 30 June 2014 3,311 48,093 (3,159) 741 (21,729) 27,257 2,670 29,927 CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2014 30 June 30 June 31 December 2014 2013 2013 (Unaudited) (Unaudited) (Audited) Notes £000 £000 £000 ASSETS Non-current assets Intangible exploration and 5 39,546 43,681 40,635evaluation assets Derivative financial asset 8 260 - 607 Property, plant and equipment 6 307 669 422 Total non-current assets 40,113 44,350 41,664 Current assets Trade and other receivables 125 175 131 Inventory 37 - 38 Derivative financial asset 8 687 - 751 Cash and cash equivalents 64 1,150 226 Total current assets 913 1,325 1,146 TOTAL ASSETS 41,026 45,675 42,810 LIABILITIES Current liabilities Trade and other payables (248) (241) (230) Investment liabilities - (125) - TOTAL CURRENT LIABILITIES (248) (366) (230) NON-CURRENT LIABILITIES Site restoration provision (113) (135) (118) Loans 9 (2,082) (2,847) (2,600) Deferred tax liability (8,656) (9,698) (8,949) Total non-current liabilities (10,851) (12,680) (11,667) TOTAL LIABILITIES (11,099) (13,046) (11,897) NET ASSETS 29,927 32,629 30,913 EQUITY Share capital 10 3,311 2,233 2,886 Share premium 11 48,093 46,010 47,168 Foreign exchange reserve (3,159) 907 (1,828) Share based payment reserve 741 500 664 Retained deficit (21,729) (20,413) (21,196) Equity attributable to the 27,257 29,237 27,694owners of the parent Non-controlling interests 7 2,670 3,392 3,219 TOTAL EQUITY 29,927 32,629 30,913 Approved by the board and authorised for issue on 12 September 2014 Philip Falzon Saint Manduca Simon Retter Executive Chairman Finance Director CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS For the six months ended 30 June 2014 Six Six Year months to months to ended June 2014 June 2013 December 2013 Unaudited Unaudited £000 £000 £000 OPERATING ACTIVITIES Loss before taxation (533) (538) (1,321) Adjustment for: Interest expense 30 25 57 Foreign exchange losses (58) (102) 8 Share based payment charge 77 16 180 Decrease in trade and other receivables 6 2 46 Decrease in inventory 1 - (38) (Decrease)/Increase in trade and other 18 (69) (80)payables Fair value loss on remeasuring 108 125 558derivative asset NET CASH OUTFLOW FROM OPERATIONS (351) (541) (590) INVESTING ACTIVITIES Purchases of property, plant and - (101) (94)equipment Expenditure on mining licences (182) (382) (975) Net cash outflow from investing (182) (483) (1,069)activities FINANCING ACTIVITIES Proceeds from issue of share capital 50 1,410 1,150 Expenses of issue of share capital - - (66) Proceeds from derivative financial 327 - 221instrument Proceeds from/(repayment) of loan from (7) 274 88parent Net cash inflow from financing 370 1,684 1,393activities INCREASE/(DECREASE) IN CASH AND CASH (163) 660 (266)EQUIVALENTS Cash and cash equivalents at beginning 226 492 492of period Effects of foreign exchange 1 (2) - CASH AND CASH EQUIVALENTS AT end of 64 1,150 226period NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six month period ended 30 June 2014 1. BASIS OF PREPARATION The interim financial statements of Paragon Diamonds Limited are unauditedcondensed consolidated financial statements for the six months to 30 June 2014.These include unaudited comparatives for the six month period to 30 June 2013and those audited for the year ended 31 December 2013. 2. significant accounting policies The condensed consolidated financial statements have been prepared under thehistoric cost convention except for the revaluation of certain financialinvestments and financial assets and liabilities which are included at fairvalue. The accounting policies adopted are consistent with those found in thepreparation of the Group's annual financial statements for the year ended 31December 2013. The condensed consolidated financial statements do not constitute statutoryaccounts. The statutory accounts for the period to 31 December 2013 have beenreported on by the Company's auditors and included an emphasis of matterregarding going concern. 3. SEGMENTAL REPORTING The board of directors are the chief operating decision maker. The groupoperates within one segment with operations in south and East Africa. The costsof these operations are being capitalised to the intangible exploration andevaluation asset as all projects are at an early stage of development. Theadministration costs are incurred in Guernsey in relation to the Head officefunction and are expensed through the income statement. 4. LOSS PER SHARE Basic loss per share is based on the net loss for the period of £533,000 (2013:£538,000) attributable to equity holders of the parent divided by the weightedaverage number of ordinary shares in issue during the period of 298,793,068(2013: 199,192,006). 5. INTANGIBLE EXPLORATION AND EVALUATION ASSETS Exploration licences £000 Cost and book value at 31 DECEMBER 2013 41,151 Exploration costs capitalised 504 Foreign exchange differences 2,026 Cost and book value at 30 june 2013 43,681 Exploration costs capitalised (2,309) Foreign exchange differences 737 Cost and book value at 31 DeCEMBER 2013 40,635 Exploration costs capitalised 281 Foreign exchange differences (1,370) Cost and book value at 30 june 2014 39,546 The above value of intangible assets represents the cash and non-cashconsideration paid by the Group at the time of acquisition. Included in thecapitalised costs for the period is depreciation of £100,000 (2012: £122,000) Impairment The Directors have considered the following factors when undertaking theirimpairment review of the intangible assets: a. Geology and lithology on each licence as outlined in the most recent CPRs (independent Competent Person's Reports) b. The expected useful lives of the licenses and the ability to retain the license interests at renewal c. Comparable information for large mining and exploration companies in the vicinity of each of the licences d. History of exploration success in the regions being explored e. Local infrastructure f. Climatic and logistical issues g. Geopolitical environment After considering these factors, the Directors have not made any impairment forthe period to 30 June 2014. 6. PROPERTY, plant and equipment Camp Motor Mining Total buildings vehicles equipment Cost £000 £000 £000 £000 AT 1 January 2013 148 62 795 1,005 Additions in period 49 - 52 101 Foreign exchange differences (15) (5) (59) (79) AT 30 JUNE 2013 182 57 788 1,027 Foreign exchange differences (25) (8) (150) (183) AT 31 december 2013 157 49 638 844 Foreign exchange differences (3) (1) (11) (15) AT 30 JUNE 2014 154 48 627 829 Depreciation AT 1 january 2013 (73) (9) (154) (236) Charge for the period (36) (10) (76) (122) AT 30 JUNE 2013 (109) (19) (230) (358) Charge for the period (47) (9) (89) (145) Foreign exchange differences 25 4 52 81 AT 31 december 2013 (131) (24) (267) (422) Charge in period (14) (8) (78) (100) AT 30 JUNE 2014 (145) (32) (345) (522) Net book value At 1 JANUARY 2013 75 53 641 769 At 30 June 2013 73 38 558 669 at 31 december 2013 26 25 371 422 at 30 june 2014 10 16 282 307 Impairment The Directors have considered the following factors when undertaking theirimpairment review of the tangible mining assets: a. Geology and lithology on each licence as outlined in the most recent CPRs (independent Competent Person's Reports) b. The expected useful lives of the licenses and the ability to retain the license interests at renewal c. Comparable information for large mining and exploration companies in the vicinity of each of the licences d. History of exploration success in the regions being explored e. Local infrastructure f. Climatic and logistical issues g. Geopolitical environment After considering these factors, the Directors have not made any impairment forthe period to 30 June 2014. 7. Non-controlling interests £000 AT 1 JANUARY 2013 3,177 Non-controlling interest in share of losses - Non-controlling interest in foreign exchange 215differences AT 30 june 2013 3,392 Non-controlling interest in share of losses - Non-controlling interest in foreign exchange (1,83)differences AT 31 December 2013 3,219 Non-controlling interest in share of losses - Acquisition of non-controlling interests* (773) Non-controlling interest in foreign exchange 224differences AT 30 June 2014 2,670 * represents the purchase of 15% interest in Meso Diamonds, consideration wassatisfied by way of issuing 35,471,510 new Ordinary Shares in the company. 8. derivative financial asset The Group has two financing agreements with Lanstead Capital L.P ("Lanstead")which include an equity swap price mechanism in the region of 75% of the sharesissued. All of the voting rights are transferred on the date of the transaction withthe consideration received monthly over a 24 month period. The actualconsideration receivable will vary to the extent the actual share price isgreater or lower than the reference point of 6.67p. As the consideration isvariable depending upon the Company's share price, the agreement is treated asa derivative financial asset and revalued through the income statement withreference to the Group's share price. Lanstead Lanstead Total (June 2013) (November 2013) Number of unpaid shares - - -outstanding 31/12/12 Share price at date of inception 6.13p 4.17p Inception of new instruments 18,750,000 45,000,000 63,750,000 Number of shares paid up (4,687,500) (1,875,000) (6,562,500) Number of unpaid shares 14,062,500 43,125,000 57,187,500outstanding 31/12/13 Number of shares paid up (3,906,250) (9,375,000) 13,281,250 Number of unpaid shares 10,156,250 33,750,000 43,906,250outstanding 30/06/14 Lanstead Lanstead Total (June (November 2013) 2013) Value of derivative at 31/12/12 Inception of new instruments 887 1,250 2,137 Cash received during the year (185) (36) (221) Loss on fair value remeasured (370) (188) (558) Value of derivative at 31/12/13 332 1,026 1,358(based on year end share price of3.77p) Cash received during the year (96) (231) (327) Loss on fair value remeasured (19) (65) (84) Value of derivative at 30//06/14 217 730 947(based on period end share priceof 3.575p) 9. LOANS Under the terms of the shareholders agreement for the Group's two operatingsubsidiaries in Lesotho, the holder of the 15% non-controlling interest has tocontribute 15% of the running costs of the operation. This contribution hasbeen treated as a loan. On the 12 May 2014 the Group purchased thenon-controlling interest in one of its subsidiaries, Meso Diamonds and with itthe balance due under the loan. Consideration was satisfied by way of issuing35,471,510 new ordinary shares in the Company. 10. SHARE CAPITAL Number £000 Authorised: Ordinary shares of £0.01 each Unlimited Unlimited Allotted, issued and fullypaid ordinary shares of £0.01each: AT 1 JANUARY 2013 195,095,917 1,951 Issued in the period 28,200,000 282 AT 30 JUNE 2013 223,295,917 2,233 Issued in the period 65,300,000 653 AT 31 DECEMBER 2013 288,595,917 2,886 Issued in the period 42,471,510 425 AT 30 JUNE 2014 331,067,427 3,311 Fully paid ordinary shares carry one vote per share and carry rights todividends. On 10 January 2014 the Company issued 1,000,000 new Ordinary Shares in Companyto certain directors of the Company raising gross cash proceeds of £50,000. On 10 January 2014 the Company issued 6,000,000 new Ordinary Shares in theCompany to Lanstead Capital LP, a shareholder in the Company, in respect ofsettlement of a liability due of £400,000. On 12 June 2014 the Company issued 35,471,510 new Ordinary Shares in theCompany in consideration for the acquisition of a further 15% of a subsidiary,Meso Diamond's from a local partner. 11. SHARE PREMIUM ACCOUNT £000 AT 1 JANUARY 2013 44,882 Premium on issue of shares 1,128 Expenses on issue of shares - AT 30 June 2013 46,010 Premium on issue of shares 1,224 Expenses on issue of shares (66) AT 1 JANUARY 2014 47,168 Premium on issue of shares 925 Expenses on issue of shares - AT 30 June 2014 48,093