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RAPAPORT... Paragon Diamonds Ltd. agreed to purchase, conditional on shareholder approval, 63 million ordinary shares, representing 18.9 percent of share capital, from Lanstead Capital L.P. at 3 pence each in an off market purchase. Paragon will then cancel the shares, a move that is in line with management’s focus on generating significant value for shareholders. Paragon Diamonds is preparing for its first stage of production at the Lemphane kimberlite diamond project in Lesotho.
Paragon Diamonds has also agreed to settle outstanding equity swaps held with Lanstead, a measure that is anticipated to total approximately $880,000 (GBP 553,000), which will be offset against the purchase price for the purchase shares. Once the deal is closed, Lanstead will no longer hold an interest in Paragon.
Titanium Capital Investments Ltd., a private equity investment company managed by Paragon’s chairman, Philip Falzon Sant Manduca, is providing a loan of approximately $2.1 million (GBP 1.3million) to complete the proposed transactions. The loan is repayable on demand, it carries no interest and is convertible into shares at a price of 3 pence each.
A notice of a general meeting is being prepared by Paragon Diamonds and will be circulated to shareholders shortly, requesting the authority to execute the transactions.
Manduca said, “The acquisition of Lanstead’s interest highlights management’s commitment to building a vertically integrated diamond company, while ensuring the issued share capital is kept to a minimum so that shareholders capture as much of the value generated via positive share price performance. Since becoming executive chairman of Paragon, my conviction in the wider management team, the quality of Lemphane’s diamond resource, and in Lesotho itself, have all increased from already elevated levels and this lies behind the financing provided by Titanium Capital. The on going support of Titanium increases Paragon’s options with regards to funding stage one production, which will help ensure existing shareholders’ exposure to the considerable upside on offer is maximized."
He added that stage one production should begin in the first quarter of 2015 and involve 1 million tonnes of ore mined, which is expected to result in recovering over 100 diamonds that are larger than 9 carats each, including stones of up to 100 carats.
The company also announced that Buddy Doyle, a non-executive director, is stepping down from the board to pursue other business interests. Manduca said that the company is looking to strengthen its board with individuals who are experienced in the European and Asian diamond markets to build a diamond firm with material interests in upstream and downstream activities.
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