JOHANNESBURG (miningweekly.com) – Aim-listed Paragon Diamonds is on track to start Stage 1 production at its Lemphane kimberlite project, in Lesotho, late this year with 20 000 ct being targeted at an estimated average value of $750/ct, the company said on Friday.

The start of production, which was still subject to financing, would also enable the company to generate its first revenue, which was expected to amount to $8-million a year.

“Being one in a cluster of five major kimberlite pipes in a region of Lesotho known for producing large and exceptionally high-quality diamonds that sell at some of the highest values per carat in the world, the potential of Lemphane has always been clear to us.

“As a result, while we were delighted, we were not surprised with the $2 400/ct valuation achieved for an individual diamond recovered during the initial stages of our bulk sampling programme in early 2013,” Paragon executive chairperson Martin Doyle said in a statement.

He noted that while this stone was part of a limited parcel of 300 ct, it nevertheless indicated the presence of large high-value diamonds.

“It was even more encouraging that this initial small parcel of diamonds has features in common with nearby kimberlites of Mothae and Letšeng, such as a coarse diamond size frequency and Type IIa diamonds,” Doyle added.

Meanwhile, the company also narrowed its loss after tax during the year ended December 31 to £1.3-million from £5.1-million during the prior year.

Further, to ensure that as much funds as possible were invested in the ground, Paragon continued to tightly control its administration costs which totalled £700 000 during the year, as opposed to £1-million previously.

As at December 31, the group held cash of £200 000, net assets of £30.9-million and intangible exploration assets of £40.6-million.

Paragon’s group borrowings were £2.6-million at the end of the period under review.

The company stated that it was well placed to take advantage of the attractive fundamentals of the diamond market, build a cash-generative diamond producer and, in the process, generate value for all its shareholders in future.