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Paragon Diamonds has conditionally increased its interest in its Lesotho subsidiary, Meso Diamonds Ltd, from 85 per cent. to 100 per cent. by acquiring the 15 per cent. interest held by its local partner, Martin Matekane of Matekane Mining.
Meso Diamonds was recently granted Mining Lease 009/2013 over the Lemphane Kimberlite Project in the Kingdom of Lesotho.
The sale of the 15% interest to Paragon Diamonds was subject to the approval of the Board of Meso Diamonds as required under the terms of the Mining Lease Agreement (“MLA”) Paragraph 4 Section (h), and this approval has been duly granted.
The consideration for the 15 per cent. interest in Meso Diamonds is the issue of 35,471,510 new ordinary shares in the Company to Mr. Matekane, which is equivalent to 12 per cent. of the Company’s current issued ordinary share capital. The acquisition is conditional on admission of the new ordinary shares to AIM and application will be made to the London Stock Exchange for the Consideration Shares to be admitted with admission expected to become effective on or around 19 May 2014. Following admission of the Consideration Shares, the issued ordinary share capital of the Company will be 331,067,427.
The terms of the MLA were duly registered under registration number 32922 with the Deeds Registry of Maseru under the Deeds Registry Act of 1967 on 19 March 2014. Under the terms of the MLA, the Government of Lesotho is entitled to be granted a 20 per cent. interest in Meso Diamonds. Following the grant of this interest, which is expected shortly, the Company’s interest in Meso Diamonds and, hence, the Lemphane Project will reduce to 80 per cent.
Also as specified in the MLA, Paragon Diamonds has agreed with the Government of Lesotho to sell up to 15 per cent. from its 80 per cent. interest in Meso Diamonds to accredited Basotho investors at fair commercial values if any such potential investors express an interest. Provision for the definition of accredited investors and the mechanism for determining fair commercial value is outlined in Paragraphs 3 and 4 of the MLA, and any such sale would be subject to approval by Paragon Diamonds and according to criteria defined in the Meso Diamonds’ shareholders agreement.
Dr. Stephen Grimmer, Managing Director of Paragon commented: “We welcome the Matekane family, who have partnered with us for the last three years, as shareholders of Paragon Diamonds. We now move to the critical Stage 1 mining development phase. It should be noted that Paragon Diamonds will now hold 80% of the equity in the project, together with the Government of Lesotho holding 20%, terms not matched by any other comparable mining operation in the country at this time.”
