-- ADDS COMMENT AND SHARE PRICE --
Paragon Diamonds (LON:PRG) has taken out a £500,000 loan to buy out any uncommitted shareholders and boost the share price.
Philip Falzon Sant Manduca, executive chairman, said, “Paragon’s share price, in my opinion, should already be in double digits, and I have no doubt that it will be shortly after production commences.”
“Shareholders and the market should view this short term debt facility 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.”
A buyback would also ensure the share price is not overly volatile in the lead up to the completion of the Mothae acquisition, he said.
"We have identified that there is some selling going on from one or two investors."
He said he cannot stop investors selling, but said what he can control is that the share price remains relatively stable over the next few weeks while the company tries to gain approval for its Mothae acquisition.
The Mothae deal is currently awaiting approval from the Lesotho Ministry of Mines.
The new diamond mine, to be developed alongside Paragon’s existing Lemphane mine in Lesotho, will be funded by a US$26mln funding package with International Triangle General Trading.
Paragon said it is confident approval for the Mothae deal will be granted soon.
Manduca said: "Within the space of two years, we will be one of the biggest diamonds mines out there."
Shares rose 7.7% to 5.6p on the news.