AIM-listed diamond developer Paragon Diamonds has been granted a time extension by Lucara Diamonds to complete raising the necessary funding (US$15 million) to acquire the Mothae kimberlite project in Lesotho.
Paragon’s funding package is with Acrux Resources Proprietary.
Lucara does however reserves its rights to terminate exclusivity based upon any deviation from this schedule. Upon completion of the financing Paragon will pay Lucara an initial $2 million of the $6.5 million due.
In addition the company has agreed an extension to the short term £500 000 loan facility to 18 November 2015 in order for the proposed Acrux funding package to be executed. If Paragon repays the loan after the 14 October 2015 then it will issue the provider a further 3,571,428 detachable call warrants with a strike price of £0.7/share.
These extensions place Paragon in a good position to execute its strategy and complete the acquisition of Mothae on the terms previously announced.
“Both Acrux and Paragon are committed to concluding the funding arrangements which we announced on 2 October 2015, subject to the conditions of the term sheet, as soon as practicable,” says Paragon Diamonds Finance Director Simon Retter.
“The company is progressing activity at both Lemphane and Mothae and there should be no delays in bringing plant and other equipment, including the use of two technologically advanced XRT machines to site. We currently have no plans to procure additional funding in order to commence production nor to cover existing overheads.”
“We have secured a letter of commitment for funding for the majority of stage two financing for both projects. So, the board believes that Paragon is now in an exceptionally strong position, looking forward to production in 2016 at both assets. I believe we have made a large amount of progress over the last 12 months and that significant value has been added to the company over this time.”
The Mothae resource is only 5 km from the world class Letšeng le Terai diamond mine in Lesotho, as well as Paragon’s nearby Lemphane kimberlite pipe project.
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