PRG.L Regulatory News (PRG)

Paragon Diamonds Limited / Index: AIM / Epic: PRG / Sector: Resources 20 November 2014 Paragon Diamonds Limited ("Paragon" or the "Company") Exercise of option by Titanium Capital Investments Limited Paragon Diamonds Limited, the AIM quoted diamond development company, has beennotified that Titanium Capital Investments Limited ("Titanium") has exercisedits call option over 60,000,000 Ordinary Shares in the Company (the "Option")from Obtala Resources Limited ("Obtala") at a price of 3.25p per share. Someamendments have been made to the original terms of the Option since it wasannounced on 27 August 2014, as set out below: Titanium and Obtala have agreed that the Option is to be settled in twotranches, with payment for and transfer of 24,000,000 shares ("the initialtranche") to occur on the earliest practicable settlement date followingexercise, with a delayed settlement extended to the remaining 36,000,000 shares("the final tranche") until 1 March 2015, conditional upon the Companysuccessfully completing the buyback of the Lanstead shares as previouslyannounced 11 November 2014. Should the Company not complete the buyback of theLanstead shares by 11 December 2014, the settlement date for the final trancheof the Option will be as soon as practicable after this date. Following settlement of the initial tranche, the holding of the Company'sChairman, Philip Falzon Sant Manduca, (including by virtue of his interest inTitanium Capital Investments Limited) will be 24,700,000 Ordinary Shares,representing 7.4 per cent of the Company's issued share capital, and theholding of Obtala will be 66,470,582 Ordinary Shares, representing 20 per centof the Company's issued share capital. Obtala will remain the legal andbeneficial owner of the final tranche of the Option Shares pending settlementof the final tranche. Paragon's Chairman, Philip Falzon Sant Manduca said, "This additional £1.95minvestment in Paragon shares by Titanium Capital Investments reflects a numberof recent positive developments both within the Company, at our flagshipLemphane Kimberlite project in Lesotho including a sample sale of diamondswhich achieved values as high as US$2,500 per carat, and in our on-goingpositive assessment of the prospects for diamond prices over the long term..The combination of Lemphane's excellent address amongst a cluster of worldclass producing kimberlites, the highly attractive economics of its high value/large stone model, and additional information that I have gained since I joinedthe Board of Paragon, allied to positive structural developments now occurringwithin the diamond industry geared towards producers, leads me to unequivocallystate that I have never been more positive or excited about any priorinvestment as I now am with Paragon. "I believe Paragon remains significantly undervalued as a company and I expectan increasing number of global investors to come to the same conclusion as meshortly, as the good news at Paragon is anticipated to continue in the nearfuture as we advance Lemphane towards Stage 1 production in Q1 2015." **ENDS** For further information please visit www.paragondiamonds.com or contact: Philip Falzon Sant Paragon Diamonds Limited +44 (0) 20 7182 1920ManducaSimon Retter Paragon Diamonds Limited +44 (0) 20 7182 1920 Edward Hutton/Gerry Northland Capital Partners +44 (0) 20 7382 1100Beaney LimitedJohn Howes/Charles Northland Capital Partners +44 (0) 20 7382 1100Laughton Limited Felicity Winkles St Brides Media and Finance Ltd +44 (0) 20 7236 1177Frank Buhagiar St Brides Media and Finance Ltd +44 (0) 20 7236 1177 Notes Paragon Diamonds has a pipeline of projects in Lesotho, Botswana and Zambia,the most advanced of which is its Lemphane Kimberlite Pipe Project in Lesotho,located close to the world class Letšeng mine, Lesotho's largest diamond mine.Lemphane is the last known world-class sized kimberlite to be developed inLesotho. Among the stones recovered in the Company's 2013 bulk samplingprogramme were several large high value stones of up 8.9 carats in size andindividual diamond values in excess of US$2,400/ct have been achieved,demonstrating the potential for Lemphane to hold large and valuable diamonds.The first of a two stage production programme is currently expected to commencelate 2014 (subject to financing) which will further define the resource atLemphane. As increased tonnages of kimberlite are processed the proportion oflarger diamonds recovered will improve, increasing the average value ofdiamonds recovered at the project, as was the case at Letšeng. Stage 1 production will cover a two year period during which approximately 1 Mtof kimberlite will be mined and processed out of the currently estimated 48.6Mtof kimberlite (to 350m depth) at the site, using a 75 tonne per hour processingplant. The Company is targeting 20,000 carats during Stage 1 production with anestimated minimum value of US$930 per carat that is expected to generaterevenues in excess of US$9m per annum. Cash flow will be reinvested to furtherdevelop Lemphane and complete a bankable feasibility study, a 3D geologicalmodel and a substantial inferred resource ahead of commencing the Stage 2production phase. Stage 2 will see production ramped up to 3Mt/year with peakproduction expected to hit 65,000 carats per year of high value diamonds. It is the intention of the Company to become a fully integrated diamond companymaximizing the margins gained from being exposed from the mining to selling ofdiamonds.