18th Jun 2015 10:09
LONDON (Alliance News) - Paragon Diamonds Ltd said Thursday it has secured a GBP500,000 loan with an investment company, which it may use to initiate a share buyback programme and to support its working capital requirements, whilst it buys the Mothae Diamond project in Lesotho from Lucara Diamond Corp.
Paragon said that it believes its stock is currently undervalued following the progress it has made over the last year, and believes its share price should be trading at "significantly higher levels" than it currently is.
"We wish to ensure that our share price more accurately reflects the growing value of the company and if necessary the board can now take action to ensure that the share price remains orderly," said Executive Chairman Philip Falzon Sant Manduca in a statement.
"Shareholders and the market should view this short-term debt facility principally as a mechanism for the board to remove any shareholders if they wish to exit, promote positive sentiment around the share price at this important time, and ensure that the board transition the share price in a strong and proper manner during the coming weeks, thereby enabling a more efficient share price valuation to emerge," Sant Manduca added.
Paragon is currently awaiting approval from the Lesotho Ministry of Mines over the acquisition of Mothae. It expects to provide a further update on this process after a meeting with the Lesotho Minister of Mines scheduled for next Monday.
The GBP500,000 loan matures end-September, and carries a fixed monthly interest rate of 1.25%, Paragon said. It also carries a 3% arrangement fee and 3.57 million detachable call warrants with an issue price of 7 pence.
Shares in Paragon are trading up 8.2% at 5.65 pence Thursday morning.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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