Paragon Diamonds Ltd Snapshot
“By securing large high value diamonds at source and combining a streamlined business model, which allows for ownership of the distribution and sale of diamonds downstream, Paragon Diamonds’ strategy clearly differentiates it from other one dimensional diamond mining companies currently listed on the London markets.”
Paragon’s strategy is focused on building a leading vertically integrated diamond production and investment company in Europe, the Far East and Africa. As well as being a producer of large diamonds in Africa, it will have stakes in mid and downstream activities such as cutting, polishing and retailing so as to capitalise on the increasing demand for high quality diamonds and to capture the maximum uplift through the value chain for investors.
The Board will look to achieve its distribution strategy through the use of specialised partnerships and offtake agreements with suitable partners. In addition to integrating vertically, there also exist a number of potentially lucrative lateral opportunities, which the Company is actively exploring, such as the establishment of diamond investment vehicles for investors specifically looking for exposure to hard financial assets which are truly mobile and can be stored and used outside the banking system.
Attractive Diamond Market Fundamentals
Management believe global demand for higher quality diamonds is expected to exceed growth in supply for a number of years to come.
On the demand side, over the next ten years, high jewellery demand is expected to grow at a compound annual rate of 6% driven by increased demand from China and India. As well as traditional demand for diamonds for use in jewellery, management believe there is significant potential for diamonds to emerge as an investment asset class, indeed a proxy currency, providing investors with an alternative store of wealth to gold and cash.
On the supply side, investment in new projects is required to maintain current production levels. Together with “new” production increasingly coming from underground operations with associated with higher costs, and the majority of diamond revenues being generated by a small amount of large diamonds, security of supply is becoming a key price driver in the diamond industry.
With no immediate new supplies coming on stream, demand set to rise and strong growth from first generation wealth markets, diamond prices appear strongly underpinned going forward.
Lemphane - Lesotho (80% owned)
Paragon is on schedule to commence Stage 1 production at the 6 ha Lemphane Kimberlite project in the Kingdom of Lesotho in early 2015. Lemphane is the last of five known diamondiferous kimberlite pipes within the region which has not undergone any historic mining activity and Paragon’s application of modern exploration techniques has already yielded positive results. Located in one of the most prolific diamond producing regions in the world, Lemphane sits close to the world-famous Letšeng diamond mine.
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Mothae - Lesotho
Paragon has recently signed an MOU to acquire the Mothae project also in Lesotho. Paragon Diamonds has identified an optimum operating strategy for the Mothae kimberlite, which involves establishing and maintaining robust project economics. Operations will thus commence, and concentrate on the circa 4.5 hectare southern lobe of the kimberlite, which hosts a minimum of 20Mt kimberlite to a depth of circa 200m, at grades of between 2.5-4.6cpht and US$737-US$1,364/ct. In-house estimates place the net present value of Mothae at $115M using the reduced scale mine plan envisaged by Paragon. Paragon expects to bring Mothae into production imminently as soon as the relevant governmental approvals have been obtained for the acquisition.
Philip Falzon Sant Manduca
Philip Falzon Sant Manduca is Chief Executive Officer of Titanium Capital Group, a venture capital and private equity investment group of companies, focused on executing strategic hard asset investments. He has achieved capital gains for shareholders through the realisation of enterprise value growth in a number of asset management businesses over the last 25 years. His vision for the company is to expand Paragon Diamonds into a vertically integrated diamond company, controlling the production, manufacturing, polishing, investment fund and retail distribution of diamonds, which he expects to continue to significantly increase in value in both the near and long term.
Stephen Grimmer holds a PhD in geology from Keele University and an MSc from the Royal School of Mines. He has worked in senior management roles in the diamond industry since 1988, in Angola, Southern and West Africa, South America, Scandinavia and Russia. In his career he has planned and/or built a number of diamond mines, both alluvial and kimberlite, and managed several advanced kimberlite evaluation projects. He also has extensive exploration, mining and production experience gained working for a number of major private producers and London/Toronto listed companies.
Simon Retter read accounting and finance at Bristol University, after which he joined Deloitte LLP and qualified as a chartered accountant. He specialised in resources focused corporate finance transactions including numerous LSE market flotations, extractive industries accounting, finance and internal controls assurance. During his time at Deloitte he advised numerous African based resource companies. Simon has also provided financial consulting services for London listed companies with overseas operations.
Martin begun his career with Anglo American in 1977 as a field geologist conducting diamond exploration in Botswana and he has worked in many other parts of the world in progressive roles for De Beers and Anglo American. These roles include the pioneering evaluation of marine diamond deposits and the development of seabed mining systems for De Beers Marine in South Africa; the exploration and investigation of seabed gold deposits in Chile; managing exploration research and support services for Anglo American in South Africa before returning to diamond exploration for De Beers in Brazil, Uruguay and Venezuela. Martin graduated in 1977 with a BSc (Hons) Geology from the University Of Aberdeen, Scotland and in 1987 graduated with an MBA from the University of Cape Town, South Africa. He is a Registered Professional Geologist (P.Geo) of the Association of Professional Geoscientists of Ontario (APGO), a Fellow of the Society of Economic Geologists (SEG), a Director of Debut Diamonds (DDI), A Director of the Prospectors and Developers Association of Canada(PDAC) and a Director of the Canadian Mining Innovation Council(CMIC).
As at 15 July 2015, in so far as the Directors are aware, the following shareholders held a disclosable interest in the share capital of Paragon Diamonds Ltd:
Titanium Capital Investments Ltd 60,000,000 21.6%*
Martin Matekane: 35,471,510 12.8%
Spreadex Ltd: 29,711,966 10.7%
Investor Nominees Ltd: 15,730,584 5.7%
Barclayshare Nominees Ltd: 16,828,048 6.0%
*Titanium Capital Investments Limited is a private equity investment group of companies which is controlled
by Philip Falzon Sant Manduca, the Executive Chairman of Paragon.
Philip Falzon Sant Manduca is also interested in 700,000 ordinary shares of 1 pence each in the Company via a pension scheme. Philip Falzon Sant Manduca's total holding in Paragon is therefore 60,700,000 which represents 21.8% of the Company's share capital
Sir William Place,
St Peter Port,
Dixcart House, Sir William Place, St Peter Port, GY1 1GX.
Auditors to the Company
Baker Tilly UK Audit LLP. 2 Bloomsbury Street, London, WC1B 3ST.
Nominated Adviser and Broker
Northland Capital Partners Ltd. 131 Finsbury Pavement, London, EC2A 1NT.
Baker Tilly Corporate Finance LLP. 25 Farringdon Street, London, EC4A 4AB.
Legal Advisers to the Company
DWF LLP. Bridgewater Place, Water Lane, Leeds, LS11 5DY.
Carey Olsen. PO Box 98, Carey House, Les Banques, St. Peter Port, Guernsey, GY1 4BZ.
MSA GeoServices (Pty). PO Box 81356, Parkhurst 2120, Johannesburg, South Africa.
Neville Registrars Limited. Neville House, 18 Laurel Lane, Halesowen, B63 3DA.