|Paragon: Diamonds In Lesotho
Paragon Diamonds is an AIM quoted diamond development and production company with a multi-stage portfolio of projects in known diamondiferous regions of Africa including Lesotho, Botswana and Zambia.
The Company is advancing its flagship large stone/ high value Lemphane Kimberlite project in Lesotho towards near-term production in H1 2015, while its diamond projects in Lesotho (Motete), Zambia (Kaplamp) and Botswana (Tsabong) provide a highly prospective pipeline to advance up the development curve to add future value.
The Company’s in-house exploration and development team is recognised as leaders in the global diamond mining sector. In addition its Board of Directors has a proven track record of operating successful exploration, development and production companies across the natural resource sector within emerging markets.
“By securing large high value diamonds at source and combining a streamlined business model, which allows for ownership of the distribution and sale of diamonds downstream, Paragon Diamonds’ strategy clearly differentiates it from other one dimensional diamond mining companies currently listed on the London markets.”
Paragon’s strategy is focussed on building a leading vertically integrated diamond production and investment company in Europe, the Far East and Africa. As well as being a producer of large diamonds in Africa, it will have stakes in mid and downstream activities such as cutting, polishing and retailing so as to capitalise on the increasing demand for high quality diamonds and to capture the maximum uplift through the value chain for investors.
The Board will look to achieve its strategy through the use of vehicles such as JVs, SPVs and offtake agreements with suitable partners. In addition to integrating vertically, there also exist a number of potentially lucrative lateral opportunities, which the Company is actively exploring, such as the establishment of diamond investment vehicles for investors specifically looking for exposure to hard assets.
Attractive Diamond Market Fundamentals
Management believe global demand for diamonds is expected to exceed growth in supply for a number of years to come.
On the demand side, over the next ten years high jewellery demand is expected to grow at a compound annual rate of 6% driven by increased demand from China and India. As well as traditional demand for diamonds for use in jewellery, management believe there is significant potential for diamonds to emerge as an investment asset class providing investors with an alternative store of wealth to gold.
On the supply side, investment in new projects is required to maintain current production levels. Together with “new” production increasingly coming from underground operations with associated with higher costs, and the majority of diamond revenues being generated by a small amount of large diamonds, security of supply is becoming a key price driver in the diamond industry.
With no immediate new supplies coming on stream, demand set to rise and strong growth from emerging markets, diamond prices appear well underpinned going forward.