Under the deal, Titanium will pay 3.25p per share.
The companies have agreed to conclude the option in two tranches with plans to complete the initial tranche of 24,000,000 share issue as early as possible.
Paragon chairman Philip Falzon Sant Manduca said: "This additional £1.95m investment in Paragon shares by Titanium Capital Investments reflects a number of recent positive developments both within the Company, at our flagship Lemphane Kimberlite project in Lesotho including a sample sale of diamonds which achieved values as high as US$2,500 per carat, and in our on-going positive assessment of the prospects for diamond prices over the long term."
The transaction for remaining 36,000,000 shares extended until 1 March 2015, subject to completion of buyback of Lanstead shares.
Paragon Diamonds said that if the company will not complete the buyback of the Lanstead shares by 11 December, the settlement date for the final tranche of the option will be as soon as practicable after this date.
