Paragon Vying to Acquire African Diamond Resource

Paragon Diamonds Ltd. (LSE:PRG) released an update on its Lesotho-based Lemphane kimberlite pipe project, as well as on its proposed acquisition of a diamond resource in Africa. Other companies are competing to acquire the resource, and Paragon has said there is no guarantee that it will be successful.

That said, the company believes the acquisition would “significantly re-rate the company, significantly escalate production and revenue numbers and of course one would hope be reflected in a higher share price.”

Highlights of the release include:

• Stage I production at Lemphane remains on track to commence in Q2 2015
  • Lemphane is located among a cluster of kimberlites known for producing exceptionally large, high value diamonds
  • Extraction of approximately 1 million tonnes of kimberlite over an 18 month to two year period
  • Targeting recovery of over 100 diamonds larger than 9 carats, including stones over 100 carats in size
• Potential to significantly reduce future operating costs at Lemphane – discussions remain on-going with contractors with regards to the electrification of the mining operations
• £130,000 raised in new equity to fund critical due diligence on a prospective diamond mine acquisition with validated resource in Africa, supported by International Triangle General Trading LLC (“ITGT”) financing the acquisition as opposed to equity dilution

Philip Falzon Sant Manduca, chairman of Paragon, commented:

We continue to work aggressively to add value for shareholders. Discussions to reduce our energy costs at Lemphane by tapping in to the electrification which is now being established will be a significant contributor to added net revenues. In addition, we are 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. We can achieve significant economies of scale by combining management teams at both Lemphane and the potential acquisition mine and through the ordering of relevant plant equipment and use of sub-contractors should our 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 the Company will be successful. If we do not make an immediate acquisition, nothing changes and we remain on schedule for Q2 2015 production at Lemphane.

Click here to read the full Paragon Diamonds Ltd. (LSE:PRG) press release.