Titanium Capital Investments is acquiring a loan by Obtala Resources to Paragon Diamonds Ltd and has appointed a new executive chairman of the diamond miner.
The original £1.996m of loan notes were not convertible into shares but the terms have been changed. There is no longer any interest charge but the loan notes are convertible at 2.75p a share over the five year term. That would be more than 72.5m shares in total. The ownership of these loan notes enables Titanium to appoint Philip Manduca as executive chairman and also to appoint a non-executive director.
Investment manager Titanium has a call option to acquire 60m shares from Obtala at 3.25p a share – this lasts until 1 December. That will give Titanium a stake of just over 18% before the conversion of any loan notes. The Paragon share price is 3.75p, which values the company at £12.4m.
Titanium intends to establish a sales and marketing company with Paragon, which will have an initial 25% stake. This business will buy and sell diamonds globally. The company will be established when the option to buy the Paragon shares from Obtala is exercised.
Paragon’s 80%-owned Lemphane mine is near to commencing production. Manduca says that he will take responsibility for procuring the finance required to develop the mine. He wants to develop Paragon into a vertically integrated diamond house by moving into trading, manufacturing and sales.
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