BlueRock Diamonds PLC (LON:BRD) has had the prospect of a winding-up of its main subsidiary lifted after reaching an agreement with former chief executive Riaan Visser.
A sum of £230,000 will be put into escrow as a full provision for the claim by Visser against subsidiary Kareevlei Mining.
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BlueRock repeated its belief the action is without merit but said the decision to make the provision was to remove the uncertainty of a court case.
The liquidation hearing has now been cancelled, but Visser can institute proceedings for the money.
Adam Waugh, chief executive, said: "I am delighted that we have removed the possibility, however remote, that the application for a provisional winding up would be granted.
"If Mr Visser decides to pursue his claim further it will be dealt with in the course of a normal recovery process and we remain confident, based on legal advice, that his case is without merit."
Several BlueRock’s directors have agreed to lend the company the full £230,000.
Shares rose 12% to 1.15p.