04/03/2008 - 14:37

Paramount Mining in $40m African IPO, flags restructure

04/03/2008 - 14:37

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The Perth-based diamond explorer Paramount Mining Corporation Ltd is set to launch a $40 million capital raising ahead of a new exploration float on the Johannesburg Stock Exchange in September this year.

Paramount Mining in $40m African IPO, flags restructure

The Perth-based diamond explorer Paramount Mining Corporation Ltd is set to launch a $40 million capital raising ahead of a new exploration float on the Johannesburg Stock Exchange in September this year.

It is proposed that Paramount's South African diamonds assets will be vended into the new IPO, while the company's expanding diamond projects in Ghana are proposed to be vended into a listing and capital raising on London's AIM markets by mid next year.

Other capital raisings planned by June this year, including the proposed placement this month of 11 million ordinary shares, is expected to inject additional and sizeable capital into the company's existing and prospective diamond exploration projects in Western Australia.

Paramount chief executive Maureen Muggeridge said the moves represented a strategic restructure of the company's operations, objectives and financial and operational capability.

"The capital inflows are designed to provide greater quantum and opportunity to the assets built up by the company since its ASX listing in February 2004 - and to provide greater clarity and value to the Australian market of our domestic operations, as these are not always well appreciated," Ms Muggeridge said.

The company's announcement today also foreshadows its intention to focus greater funding on its Western Australian diamondiferous tenement holdings and any additional diamond or non-diamond assets acquired.

"We plan to remain a prominent diamond explorer in Australia, but it is essential to find a near-term cash earner to better underpin our diamond initiatives," Ms Muggeridge said.

"A key consideration of the international floats is that Paramount retains a direct major interest in each of them, although the size of that interest is yet to be determined," she said.

Shareholders will be asked to vote on the proposals at a meeting in April.

"We are embarking on the next stage of our goal of becoming a globally significant producer of fine gems, and a niche participant in the downstream processing and distribution of diamonds," Ms Muggeridge said.

"To that end, we are mandating experienced financial and corporate advisers overseas to commence the IPO processes and due diligence requirements on major project developments.

"The strategy should allow the re-rating of our assets by relevant financial markets, quarantine investor risk to these discrete asset classes, and facilitate the raising of capital to support these projects in global financial centres more experienced in these resource investment types."

In South Africa, Paramount is negotiating to acquire additional tenement rights to add to its existing diamond holdings as part of a capital raising and IPO process expected to be in the range of $30 million to $40 million.

The Ghanaian IPO process is expected to include the outcome of current negotiations to secure "preferred purchaser" status for a significant group of diamondiferous and other tenement interests and related assets.

This will involve the recommissioning of and application of contemporary mining techniques in significant historical producing tenements, the operations on which have ceased.

In Australia, Paramount has an initial $3.5 million target. It is planning to raise up to A$1 million over the coming months in the Australian equities marketplace through an equally sized placement and a Share Purchase Plan - followed by a proposed A$2 million - $2.5 million placement to sophisticated investors.

Prices are yet to be determined.

While primarily a diamond explorer, Paramount also has interests in gold and uranium assets.

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