15th Nov 2013 16:02
LONDON (Alliance News) - Paragon Diamonds Limited Friday said it has raised GBP3 million before expenses to fund the development of its Lemphane Kimberlite project in Lesotho, where it was recently awarded a mining lease.
Lanstead Capital LP, an existing shareholder, provided the funding by subscribing for 60 million new shares in the company. The two parties have also entered an equity swap agreement, under which Paragon Diamonds can retain most of its economic interest in the shares.
Paragon's economic interest in the shares will be based on monthly payments over the next two years. If the company's share price is above a 6.67 pence benchmark in any given month, Paragon Diamonds will receive over 100% of the monthly settlement, on a pro rata basis, in that month, with no upper limit on anything over and above the full amount. If the share price is under 6.67 pence per share, the Paragon Diamonds will receive less than 100% of the monthly settlement, though no decline in share price would entitle Lanstead to any shares above the 60 million already agreed.
Paragon Diamonds said that a decline in its share price would not under any circumstances mean Lanstead would receive more shares.
Paragon Diamonds has agreed to pay GBP400,000 to Lanstead in order to have the equity swap agreement, which can be settled by the issue of a further 6 million new shares to Lanstead.
The capital raising was arranged by Sanlam Securities UK Limited.
Paragon Diamonds shares were Friday quoted at 4.45 pence, up 0.28 pence.
By Samuel Agini; [email protected]; @samuelagini
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