PRG.L Regulatory News (PRG)

26 April 2012

Paragon Diamonds Limited

("Paragon" or the "Company")

(AIM: PRG)

Acquisition of remaining interest in IDC

Highlights:

·; Company has acquired remaining interest in IDC for £330,000

·; Paragon now holds an interest of 100% in IDC

Paragon Diamonds, the African-focused diamond explorer and developer, is pleased to announce that it has acquired the remaining 1.5% interest in International Diamond Consultants ("IDC") from Obtala Resources Limited.

IDC holds interests in the Group's Lemphane and Motete mining exploration projects in Lesotho, the KapLamp lamproite project in Zambia and the Kabale licence, a diamond kimberlite exploration project both in Zambia. Paragon originally purchased 44.3% of IDC in December 2010 and subsequently increased its interest to 98.5% in May 2011.

Details of the transaction

Paragon has acquired a further 1.5% interest in IDC from Obtala Resources Limited, bringing the Group's interest to 100%. The 600,000 shares have been acquired at a price of $0.88 per share. The consideration of £330,000 has been satisfied by way of issuing 970,588 new ordinary shares in the Company to Obtala Resources Limited.

The completion of this further acquisition, results in the Company holding the entire share capital of IDC.

A total of 970,588 new ordinary shares in the Company have been issued at a price of 34 pence per share representing consideration for the purchase.

The value per share offered to Obtala for its shareholding in IDC is the same as offered to the previous vendors of IDC shares.

Related Party Transaction

Obtala Resources is a related party due to its shareholding of 45% of Paragon and Francesco Scolaro is the Executive Chairman of both Obtala and Paragon.

Issue of Equity

The new shares will rank pari passu with all existing ordinary shares, and dealings on AIM are expected to commence in the new ordinary shares on 1 May 2012.

Following the issue of ordinary shares in relation to the acquisition, the Company's issued share capital now consists of 195,095,917 ordinary shares of 1p each.

Paragon Chairman, Francesco Scolaro commented:

"I am pleased that Paragon now holds 100% of IDC, with the positive results now coming from Lesotho I believe this will generate further upside for PRG shareholders . The value per share paid to Obtala for its stake in IDC is the same as that offered to the previous vendors of IDC, which I believe, in light of the current good news flowing out of Lesotho, represents good value for the shareholders of Paragon. I look forward to reporting further on the current developments in Lesotho in the coming months."

For further information:

Notes to editors

Paragon Diamonds is looking to rapidly develop producing and exploration diamond properties into a portfolio of high value assets located within Africa. To date it has secured a series of alluvial and hard rock assets which its exploration and development teams are working on to progress. The core focus at present are the companies hard rock licences located in Lesotho, a major producing diamond region. The Projects include:

Lemphane Kimberlite project Lesotho (85%)

Lemphane is one of five known diamond bearing kimberlite pipes within Lesotho, located 5km from the Liqhobong project. The Environmental assessment plan and access routes and exploration camp have been completed.DMS plant constructed and bulk sampling commenced with 35,000 tonnes of ore stockpiled awaiting processing. Extended bulk sampling of a further 25 - 40,000 tonnes is possible once initial sample completed.

Motete Dyke exploration, Lesotho (85%)

Motete is a substantial kimberlite dyke (fissure system) in close proximity to the Lemphane project. Known to be diamondiferous and currently undergoing initial exploration. Initial micro diamond analysis results in 2012 indicated that an in-situ grade of up to 1 carat per tonne is likely. The licence was awarded in December 2011.

Kaplamp diamond hosting Lamproite', Zambia

Kaplamp is a large prospecting licence known to host 14 Lamproite pipes within a known diamondiferous region and with five high profile targets identified for initial evaluation. The area is highly prospective as De Beers recovered significant amount of stones in 60's and 70's but relinquished area as Lamproites were not yet recognised as viable. The Argyle Diamond Mine in Western Australia is the most renowned Lamproite hosted mine - in 1994 produced 39% of worlds diamond production.

Kopje kimberlite exploration, Botswana

This newly awarded prospecting licence covering 15 km sq in highly prospective area 35 km east of DeBeers' large producing Orapa Mine. Initial exploration work planned for Q1 2012.

Konomo Alluvial Mine, Sierra Leone

This Alluvial diamond project covers 162km2 and has an indicated and inferred resource of 119,000 carats with large tracts of the river remaining unexplored. Circa 3,000 carats recovered by Paragon since operations commenced, with a parcel that includes c.34.18 carat "special" stone and 10.18, 10.46 and 9.96 carat gem quality stones.

Mabuki, Tanzania

Located 81km south of Mwanza, Tanzania with good infrastructure nearby (roads, power, water, transport) the licence sits within a known Kimberlite Field. Artisanal activity occurs to the west of licence with diamond bearing gravels identified off the edge of the licence. The intention is to explore (detailed geophysics and sampling) and map-out, then establish drill targets and define a resource. Wardell Armstrong completed a competent persons report on Tanzania in September 2010.