Investors have put some sparkle back in Paragon Diamonds' (LON:PRG) share price after the company confirmed late on Tuesday that it was in talks with Titanium Capital Investments.
It said that it is discussing the potential appointment of a Titanium Capital representative to the company’s board.
In the statement, responding to press speculation, Paragon told investors that it has not received an offer to buy the company from Titanium or any other party.
City broker Charles Stanley, in a note on Wednesday morning, speculated that an offer consisting of some form of capital financing was made to Paragon.
Such an arrangement would, according to Charles Stanley, remove near term funding risks and provide Paragon with essential capital to help progress the Lemphane project towards commercial production.
Last week, Paragon said it remains on course to bring its Lemphane mine in Lesotho into production in the near term.
Speaking at the firm's annual meeting, Simon Retter, Paragon’s chief financial officer, said: “Lemphane is believed to be the last world-class kimberlite to be developed in Lesotho and has an excellent address being located close to Gem Diamonds' Letseng pipe which is renowned for the recovery of exceptionally large and valuable diamonds."
A recent independent size frequency and revenue modelling report indicated preliminary diamond values from Stage 1 production at Lemphane will be between US$930 - US$1,025/carat for grades of 2 carats (cts) per hundred tonnes while the size frequency study indicated that 12% of carats will be over 9cts.
"The remainder of 2014 looks to be a highly exciting period for Paragon Diamonds as we move to stage 1 production, subject to completing financing.
“We expect to report on further drilling at Lemphane and also a scoping study.”
By mid-morning on AIM Paragon shares were up 0.2p, 4.95%, trading at 4.25p each.