Mining firm Paragon Diamonds suspended trading on Monday ahead of a statement on its financial position. The company is committed to acquiring a 75-percent stake in the Mothae project in Lesotho from Canada’s Lucara Diamond, but said it has limited working capital. Until a funding deal is created, Paragon said there is a “material uncertainty” regarding its financial position.
The diamond miner is in talks with possible financers to obtain funding to complete the acquisition of Mothae, develop the Lemphane project which is also in Lesotho and to repay short-term debts. This includes a $760,000 loan due on November 18. If that loan is not repaid within five business days, Paragon will be in default, and the lender will be able to demand immediate repayment of the loan at 120% of the outstanding amount, or the lender may convert the outstanding loan into shares in the company.