Photo by: Bloomberg
JOHANNESBURG (miningweekly.com) – To fund Stage 1 of its Lemphane Kimberlite pipe project, Aim-listed Paragon Diamonds has signed a memorandum of understanding (MoU) for a $12-million equity and debt financing package with investment group International Triangle General Trading (ITGT).
The project, which is located in Lesotho among a cluster of kimberlites known for producing large, high-value diamonds, is expected to start production in the second quarter of this year.
Paragon chairperson Philip Falzon Sant Manduca said on Wednesday that the finance package demonstrated the company’s ability to meet its goals. "Paragon is now well placed to take advantage of the expected growth in market share and [global] concomitant diamond distribution activity.
"This finance package is a strong vote of confidence in the high quality of our diamond assets, particularly our flagship Lemphane project. These are great times for shareholders in Paragon, which I believe is still significantly undervalued by the market,” he noted.
Stage 1 production is expected to extract almost one-million tonnes of kimberlite over two years and, according to an independent report, is expected to lead to the recovery of over 100 diamonds larger than 9 ct, including some over 100 ct in size.
As part of the MoU, ITGT would subscribe for 98-million new ordinary shares of 1p each in Paragon, at 5.5p a share, raising $8.09-million.
The MoU would also see the issuing of a $4-million three-year secured loan note guaranteed by Paragon and its 100%-owned subsidiary Meso Diamonds, with a 10% a year coupon payable in arrears.
ITGT would also support Paragon with an additional loan should any suitable opportunities to acquire a proven diamond resource arise.
PLANT PROGRESS
Design work has been concluded on the planned 75 t/h, or 0.5-million tons a year, process plant for Stage 1, while metallurgical testwork was being concluded and long-lead-time item procurement undertaken ahead of fabrication of the main plant components.
Long-lead-time items included scrubbers, crushers, X-ray transmission recovery machines and water recovery thickeners. Paragon also finalised provisional tailings-storage facilities designs with its civil engineers and the terms for contract mining for Stage 1.
Site clearance for the new plant had been undertaken and civil construction activities were planned to start in the coming weeks. Discussions were also well advanced with the national power company's main contractor for access to the privately funded open-access power line – which was presently nearing completion – for electricity supply to the mine.