Paragon Diamonds sees at least $160m in revenue from Lesotho mines

Paragon Diamonds sees at least $160m in revenue from Lesotho mines

Paragon Diamonds' operatons in Lesotho.

Africa-focused Paragon Diamonds (LON:PRG) said Friday it will kick-off production at its Lemphane and Mothae mines in Lesotho later this year, while giving a confident outlook in its full year results.

The miner, which does not yet generate any revenue, said it made "significant strides" towards achieving its strategy and has laid the foundations for "significant growth" as it gears up to move its Lemphane kimberlite project in Lesotho, Africa, into diamond production later in 2015.

Paragon also said it is in the process of acquiring the Mothae Kimberlite mine from Canada's Lucara Diamond (TSX:LUC), and that once the transaction announced last month is completed, it will also move it into production.

Looking ahead, the London-listed miner said that with supply “struggling to keep up with rising demand,” securing a source of large investment grade stones was key for Paragon.

"Thanks to the progress made during both the year under review and post period end, we have what we believe are two impressive development projects located in a renowned diamondiferous region of Lesotho," it said in a statement.

At full operational capacity (within the next three years) Paragon expects to be a five-million-tonne per year producer of in excess of 100,000 carats with average values exceeding $1,500 per carat at current prices.

This, said the company, could generate combined annual revenue of approximately $160 million and combined profit of roughly $97 million.

The two mines are expected to generate combined revenues of around $36 million in the first year of both being in production.

Various independent producers, including Paragon, Lucara, Gem and Petra, have made noise in recent years for their incursion in the diamond market and, sometimes, for their record-breaking gem discoveries. However, worldwide production continues to be controlled by giants De Beers and Alrosa.