Paragon Diamonds has conditionally raised £1.55m by way of a share subscription to develop its Lemphane Kimberlite project in Lesotho, a major diamond producing region.

The company will issue 31,000,000 new shares at £0.05, of which Lanstead Capital, an institutional investor, will take 25,000,000.

Paragon has entered in a two-year equity swap agreement with Lanstead over the subscription shares.

Paragon Diamonds chairman Martin Doyle said, "We are pleased with the support from existing and new shareholders which will allow the Company to accelerate the development of the Lesotho Lemphane Kimberlite project."

Lemphane is one of five known diamond bearing kimberlite pipes within Lesotho, located 5km from the Liqhobong project.

The funds from the latest subscription will also be for general working capital, the company said.