PRG.L Regulatory News (PRG)

9 January 2012

Paragon Diamonds Limited

("Paragon" or the "Company")

(AIM: PRG)

Further results from large micro-diamond sample, Motete Dyke Licence, Lesotho

Highlights

·; 485 diamonds recovered from 200 kg including seven macro-diamonds >0.5mm.

·; Majority are clean crystal forms (83%) and white/transparent (98%).

·; Results awaited from further 900 kg of samples sent for micro-diamond analysis.

Paragon Diamonds Limited, the African-focused diamond mining and exploration company, announces further micro-diamond results for its recently awarded Motete Dyke Licence. These results refer to a first 200 kg large sample submitted to SGS Laboratories in Johannesburg for caustic fusion as part of an ongoing sampling program. A further circa 900 kg in four samples has been acquired and is in the process of being analysed. Samples have been taken at regular intervals along the 1.4 km of the dyke already outlined by surface mapping. The analytical programme and results are managed by the company's consultants, MSA Group.

A total of 485 diamonds, including 23 diamonds above 600 μm mesh size were recovered, with the largest diamond exceeding 850 μm in size. This equates to 2.42 stones per kg with the total weight of 0.3789 carats or 1.89 carats per tonne. The majority (93% of the total) are classified as white the balance being grey or brown (4% & 3%), and similarly, 87% (of the total stones) are transparent. Crystal shapes are predominantly dodecahedra (63%) and octahedra (20%), with minor other crystal forms (14%) and only a few fragments (3%).

Results of the size distribution are shown in the table below (MTD-2) and compared to previous results (MTD-1), which was the initial small sample of 24 kg:

The Company is undertaking initial grade and volumetric modelling and will announce these in due course.

In commenting, Paragon Chairman Luc Huyghebaert said: "This first major sample, showing consistent high quality diamond characteristics, further demonstrates the potential of the Motete Dyke project. It is our intent to vigorously pursue this opportunity through focussed exploration and development work and to fast-track the development of a mine if ongoing results warrant such development."

In accordance with the AIM Rules, the information in this announcement has been reviewed by Stephen Grimmer PhD., MSc., a qualified geologist with over 20 years' diamond exploration experience.

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. A 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 . An NS43-101 report carried at Lemphane indicates pipes may contain 30 million tones of kimberlite with white colour diamonds already recovered (19 recovered). The Environmental assessment plan and access routes and exploration camp have been completed.DMS plant constructed and bulk sampling commenced with 25,000 tonnes of ore stockpiled awaiting processing. Extended bulk sampling of a further 25,000 tonnes 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 & micro diamond analysis with results expected Q1 2012. 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 Arglye Diamond Mine in Western Australia is 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' largest produce 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 Bafi 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 Mzanza, 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. Intention to explore (detailed geophysics and sampling) and map-out, then establish drill targets and define resource. Wardell Armstrong completed a competent persons report on Tanzania in September 2010