JOHANNESBURG (miningweekly.com) – As production at Aim-listed Paragon Diamonds’ Lemphane kimberlite pipe project, in Lesotho, remained on track to start in the second quarter of this year, the company has raised about £130 000 in new equity to fund a “critical” due diligence on a prospective diamond mine acquisition with validated resources in Africa.
The funding was raised through the placement of more than 2.3-million new ordinary shares of 1p each in the company with existing shareholders at a placing price of 5.5p a share.
In anticipation of the funding package from privately owned international investment group International Triangle General Trading (ITGT), Paragon would use these proceeds to advance due diligence on a potential acquisition.
ITGT would partner with London-based asset management business Titanium Capital Investments to additionally finance any acquisition should it be successful.
Paragon chairperson Philip Falzon Sant Manduca said the company continued to work aggressively to add value for shareholders.
“Discussions to reduce our energy costs at Lemphane by tapping into the electrification, which is now being established, will be a significant contributor to added net revenues. We are also seeking a new acquisition target, which has a kimberlite diamond resource in Africa, and have been performing due diligence to validate our strategy for development,” he added.
He further stated that Paragon could achieve significant economies of scale by combining management teams at both Lemphane and the mine it was planning to buy and through the ordering of relevant plant equipment, as well as the use of subcontractors, should the company’s efforts at an acquisition be successful.
“We would look to develop both mines simultaneously. At this stage, Paragon is one of a number of potential acquirers and there is no guarantee that we will be successful.
“If we do not make an immediate acquisition, nothing changes and we remain on schedule to start production at Lemphane during the second quarter of this year,” Manduca explained.
Further, he stated that Paragon had completed the “small fund raise” to isolate and segregate the costs associated with a potential acquisition of a resource, rather than use development capital to acquire other assets.
“If an acquisition is successful, it should significantly re-rate the company, significantly escalate production and revenue numbers and, of course, one would hope, be reflected in a higher share price.
“As a consequence, I supported this fundraise from existing shareholders to finance the rigorous due diligence involved to support an acquisition, which is not inconsistent with my stated ambition to keep share dilution to a minimum.”
Manduca pointed out that, should the acquisition be successful, ITGT would finance it on agreeable terms and at a lower rate of interest, rather than through further share issuance.
“Paragon is a company in the right place at the right time and I firmly believe with the right strategy to develop itself into a holistic diamond company controlling the sourcing and supply of investment grade diamonds,” he added.