|Paragon: Diamonds In Lesotho
Paragon Diamonds is an AIM quoted diamond production and distribution company, focused on producing high value and top quality diamonds and complimenting this with value enhancing sales activities all the way through manufacturing and on to wholesale and retail distribution.
The Company is advancing its flagship large stone/ high value Lemphane Kimberlite project in Lesotho towards production in 2015.
The Company’s in-house 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 development and production companies across the natural resource sector in Africa, as well as growing profitable investment management businesses in London.
“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 focused 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 distribution strategy through the use of specialised partnerships 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 financial assets which are truly mobile and can be stored and used outside the banking system.
Attractive Diamond Market Fundamentals
Management believe global demand for higher quality 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, indeed a proxy currency, providing investors with an alternative store of wealth to gold and cash.
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 first generation wealth markets, diamond prices appear strongly underpinned going forward.