The acquisition is subject to approval from the Government of Lesotho, a binding share purchase agreement, contracted albeit agreed funding and several regulatory approvals.
Paragon, which will pay Lucara $8.5m, plans to polish a selection of diamonds recovered from the Mothae asset.
Mothae features an indicated and inferred 39 million tonnes of ore at 2.7 carats per hundred tonnes
Lucara will receive 5% of the profits secured from the divestment of polished stones. The payments will continue for the processing of not less than 6.75 million tonnes of ore.
Paragon Diamonds executive chairman Philip Falzon Sant Manduca said: "Mothae is the perfect fit for Paragon at this stage of our growth and business development.
"We have agreed to incorporate the entire Mothae senior and mid-level Lesotho based management teams into Paragon within our Lesotho subsidiary, Meso Diamonds.
Lucara Diamond president and chief executive officer William Lamb said: "The transaction returns cash to Lucara and allows us to participate in future sales of diamonds from Mothae.
"We are working with the Government of Lesotho and Paragon to finalize the transaction and to transition ownership of the Mothae project to Paragon in an efficient manner."
