Paragon Diamonds recently announced that it had conditionally increased its interest in its Lesotho subsidiary, Meso Diamonds (Pty) 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.  Its net assets at 31 December 2013 were £15.7m, principally capitalised exploration costs, and in the year ended 31 December 2013 it made a profit of nil (having capitalised all exploration costs).

The consideration for the 15 per cent. interest in Meso Diamonds is the issue of 35,471,510 new ordinary shares in the company (‘Consideration Shares’) to Matekane, which is equivalent to 12 per cent. of the Company’s current issued ordinary share capital.  The acquisition was conditional on admission of the new ordinary shares to AIM and application has now been made to the London Stock Exchange for the Consideration Shares to be admitted with admission expected to become effective on 12 June 2014.

Martin Matekane is the son of Sam Matekane, who is a director of Meso Diamonds and is therefore a related party under the AIM Rules.  The directors of Paragon, having consulted with the Company’s nominated adviser, consider the terms of the transaction to be fair and reasonable insofar as the Company’s shareholders are concerned.

Also further to its announcement on 12 May 2014, the 20 per cent. interest in Meso Diamonds has now been granted to the Government of Lesotho. As a result of the above transactions, Paragon Diamonds now has an 80% interest in Meso Diamonds.

Following admission of the Consideration Shares, Martin Matekane will hold 35,471,510 ordinary shares of 1p each in the company (“Ordinary Shares”), equal to 10.71 per cent. of the enlarged share capita and  the Company will have 331,067,427 Ordinary Shares in issue. This figure may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change to their interest in, the Company, under the Disclosure and Transparency Rules.

All definitions used herein are as defined in the company’s announcement of 12 May 2014.