Paragon Diamonds (LON:PRG) said it had completed the purchase of 63mln of its own shares from Lanstead Capital, which will be cancelled.
Last month the company estimated the net cost of the transaction to be around £1.34mln, which it said would be funded by an interest-free convertible loan from chairman Philip Falzon Sant Manduca.
Paragon chief financial officer Simon Retter said: "Cancelling these shares will have an anti-dilutive effect for all current shareholders and I strongly believe this will add significant value to the company.
“Another step has been taken in progressing the company towards its goal and a tidier shareholder register should enable future gains to be enjoyed by our existing and loyal shareholders.
"We are progressing well on both the corporate and operational fronts ahead of our upcoming stage-one production (subject to financing), and look forward to updating shareholders again in the near future."