JOHANNESBURG (miningweekly.com) – Aim-listed Paragon Diamonds has obtained the necessary formal approval from the Lesotho government to complete the $8.5-million acquisition of a 75% interest in, and operatorship of, the Mothae kimberlite resource from TSX-listed Lucara Diamond Corporation.
Once the deal was concluded, Paragon would simultaneously develop and start production at Mothae and its 80%-owned Lemphane project, to take advantage of economies of scale, thereby reducing costs.
Paragon was targeting combined revenue of about $36-million in the first year.
"The process to obtain formal approval to acquire Mothae took longer than all parties anticipated, having received verbal approval from the [Mining] Minister on June 22. We have to conclude the funding for both mines promptly, which is one of the conditions for the Ministry's approval.
“We have several serious level discussions occurring simultaneously, in addition to the original memorandum of understanding (MoU) signed with International Triangle General Trading (ITGT), in Dubai,” Paragon executive chairperson Philip Falzon Sant Manduca said.
Under the terms of the MoU, ITGT would advance Paragon a $12-million equity and debt financing package to fund Stage 1 production at the Lemphane project.
Mothae, which was 5 km from London-listed Gem Diamonds’ Letšeng mine, represented a low-cost opportunity to fast-track Paragon's strategy to build a vertically integrated diamond house.