Paragon shares suspended as company warns of financial uncertainties
JOHANNESBURG (miningweekly.com) – Aim-listed Paragon Diamonds warned of the material uncertainty over the financial position of the company until a funding package was secured.
The company, which on Monday requested the LSE temporarily suspend trading in its shares until it could clarify its financial position, said it had limited working capital.
“The directors of Paragon remain in negotiations with possible funding providers to secure finance to complete the acquisition of Mothae, provide development funding for Lemphane and to repay short-term debts, including the £500 000 loan facility, which is due on November 18,” Paragon stated.
The company had entered into an agreement to buy TSX-listed Lucara Diamond Corporation’s 75% stake in the Mothae mine, in Lesotho, for $8.5-million. The Lesotho government has approved the deal, but Paragon had yet to complete financing for the acquisition.
It added that if the loan was not repaid within five business days of the due date, it would constitute an event of default and the lender being within its rights to request immediate repayment of the loan at 120% of the outstanding amount.
Alternatively the lender would have the option to convert the outstanding loan into ordinary shares of the company at the lower of 5.22p, being the average share price on June 17 when the loan was issued, and 90% of the prevailing market price on the day that the loan was converted.
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