Hot Features
Premium
Trade like a pro: Leverage real-time discussions and market-moving ideas to outperform.
Government approval for acquisition of Mothae
Paragon Diamonds Limited, the AIM quoted diamond development company, has announced that further to the announcement of 14 July 2015, the Company has now obtained the necessary formal approval from the Government of Lesotho to complete the acquisition of a 75% interest in, and operatorship of, the defined Mothae Kimberlite Resource from Lucara Diamond Corporation, a TSX quoted mining company.
Mothae is only 5 km from the world class Letseng diamond mine in Lesotho which is located within a cluster of kimberlites, including Paragon’s Lemphane Kimberlite Pipe Project.
Mothae represents a low cost opportunity to fast track Paragon’s strategy to build a leading vertically integrated diamond house and to generate significant value for shareholders through the recovery of large high value diamonds. With Government approval received, the Company will now proceed with the finalisation and subsequent completion of the Acquisition. Once completed, the Company will develop and commence production at both Mothae and Lemphane simultaneously to take advantage of economies of scale, thereby minimising costs. In the first full year of production, Paragon is targeting combined revenues of approximately US$36 million from both Mothae and Lemphane.
Paragon’s Executive Chairman, Philip Falzon Sant Manduca said “The process to obtain formal approval to acquire Mothae took longer than all parties anticipated, having received verbal approval from the Minister at my meeting with him on the 22 June 2015. In any event, with the approval now to hand, we can now progress the acquisition and development of Mothae.
“We have to conclude the funding for both mines promptly, which indeed, is one of the conditions for the Ministry’s approval. We have several serious level discussions occurring simultaneously, in addition to the original MOU signed with ITGT in Dubai. We will be updating shareholders as soon as we conclude one of these funding discussions as soon as practicable as we look to secure the optimal investment partner for Paragon, not just over the next 18-24 months, but also thereafter as we transition into full production at both assets.
“There is clear and present evidence to hand that our strategy of focusing on the investment grade diamond sector as an alternative to paper money is correct. I am so bullish about our prospects as a company and I look forward to updating shareholders in due course.
“I believe that analysts are focusing more and more on our vertically integrated strategy for the diamond industry, as the wholesale market gets squeezed into having to occupy a smaller role, allowing producers such as Paragon to capture the additional profit margin by transacting directly with investors and consumers. Indeed, I think a valid analogy is that Paragon could be viewed, by those seeking to invest in the currency of diamonds, like a central bank, producing a financial currency, whilst our distribution approach downstream is akin to a commercial banking system through which real wealth can be acquired and stored in that currency. Investment grade diamonds are a better, more mobile currency and store of wealth than financial paper, real estate, art, cars or gold. Paragon is in the right place at the right time and remains deeply undervalued to its asset base.”
