Paragon Diamonds Limited Signs Acquisition Agreement
Paragon Diamonds is pleased to announce the signing of a memorandum of understanding(MOU)between Meso Diamonds, the Company's 85% owned Lesotho subsidiary, and Lucara Diamond Corp's Mothae Diamonds Lesothosubsidiaryto acquire the kimberlite processing plant and diamond recovery located at the Mothae Kimberlite in Lesotho.
The plant islocated60 kilometersawayfrom Lemphane with good connecting roads (52 km of which is on the main public road supplying the Kao and Liqhobong mines). Relocation of the plant is expected to commence in Q1 2014 after minimal site preparations at Lemphane.
Under the terms of the MOU, Meso Diamonds will pay to Lucara Diamond Corp. a consideration of $1.15million,comprising $50,000 cash and $400,000 in new Paragon Diamondsshares at a price of 5.5p per share on signing of the asset purchase agreement, followed by $200,000 cash and $500,000 in new Paragon Diamondsshares at a price of 5.5p per share on commencement of relocation from the Mothae site. The signing of the asset purchase agreement is anticipated by the end of January 2014.
The Company plans to initiate Stage I production by Q32014, with Stage Icovering a two year period during which time it is intended that 1 Mt of kimberlite will be minedand processed for the expected recovery of at least 20,000 carats at an estimated average value of $750 per carat at a provisional 2 mm production cut-off.
The plant being acquired has the processing capacity to treat 500,000 tonnes per annum and has been demonstrated to be highly effective in the recovery of large diamonds using coarse-x-ray sorting technology with minimal diamond breakage despite a large diamond size being processed.
The plant flow-sheet will be amended as required and appropriate to the characteristics of the Lemphane Kimberlite. Aproposed plant flow-sheet detailing the recovery process can be viewed on the Company website: www.paragondiamonds.com