Titanium Capital Investments has invested £1.95 mln in Paragon Diamonds (LON:PRG) after exercising a call option on 60mln shares held by Obtala Resources (LON:OBT).
Following this, Paragon chairman Philip Falzon Sant Manduca, through his interest in Titanium, will hold 7.4% of the firm, while Obtala will hold 20% of the capital.
The shares were exercised at 3.25p per share and Titanium and Obtala agreed that the settlement will be made in two tranches.
An initial tranche sees a payment of £780,000, while a second of 36mln shares with a payment of £1.17mln shares will be made on March 1 next year.
Sant Manduca said: "This additional £1.95m investment in Paragon shares by Titanium Capital Investments reflects a number of recent positive developments both within the company, at our flagship Lemphane Kimberlite project in Lesotho including a sample sale of diamonds which achieved values as high as US$2,500 per carat, and in our on-going positive assessment of the prospects for diamond prices over the long term.."
He added: "I believe Paragon remains significantly undervalued as a company and I expect an increasing number of global investors to come to the same conclusion as me shortly, as the good news at Paragon is anticipated to continue in the near future as we advance Lemphane towards Stage 1 production in Q1 2015."
Paragon shares added 6.25% to 4.25p, while Obtala added 2.53% to 10.125p.