Lesotho-based diamond group Paragon Diamonds (LON:PRG) has bought out its equity swap agreement with Lanstead Capital, which comprised 18.9% of its share capital.
Paragon has bought back 63mln shares at 3p, with the shares to be cancelled.
All other outstanding equity swaps held with Lanstead have also been scrapped and will be offset against the purchase price for the other equity swap shares, making a net cost of in total around £1.34mln.
Titanium Capital, a vehicle of Paragon’s chairman Philip Falzon Sant Manduca, is providing the company with an interest-free £1.3mln convertible loan to complete the transaction.
Repayable on demand, it is convertible into Paragon shares at 3p per share.
Paragon is working towards Stage 1 production at its Lemphane mine in Lesotho.
Falzon Sant Manduca said: "The acquisition of Lanstead's interest highlights management's commitment to building a vertically integrated diamond company, while ensuring the issued share capital is kept to a minimum.
“Since becoming executive chairman of Paragon, my conviction in the wider management team, the quality of Lemphane's diamond resource, and in Lesotho itself, have all increased from already elevated levels, and this lies behind the financing provided by Titanium Capital.
"The on-going support of Titanium increases Paragon's options with regards to funding Stage 1 production, which will help ensure existing shareholders' exposure to the considerable upside on offer is maximised.
"Stage 1, which is targeted to commence in Q1 2015, will involve 1 million tonnes of ore mined which, according to an independent report, is expected to result in the recovery of over 100 diamonds larger than 9 carats, including stones up to 100 carats.
“In addition to generating significant revenues, we are highly confident the near term commencement of Stage 1 will confirm Lemphane's credentials as the next world class pipe in Lesotho.”