PRG.L Regulatory News (PRG)

26 September 2014 Paragon Diamonds Limited ("Paragon" or the "Company") (AIM: PRG) Issue of Equity Paragon Diamonds Limited, the African-focused diamond development company,announces that it has issued, conditional on admission, a total of 1,500,000new ordinary shares of 1p each in the Company ("Ordinary Shares"), at a priceof 3.5 pence per Ordinary Share, as payment for services provided by advisersto the Company. The new Ordinary Shares will, when issued, rank pari passu in all respects withthe Company's existing ordinary shares. Application will be made for the1,500,000 Ordinary Shares to be admitted to trading on AIM. Admission isexpected to become effective and dealings are expected to commence on AIM on 1October 2014. Following the issue of the Ordinary Shares the Company will have332,567,427 ordinary shares in issue. For further information: Paragon Diamonds Limited +44 (0) 20 7099 1940Philip Falzon Saint Manduca - ChairmanSimon Retter - Finance Directorwww.paragondiamonds.com Sanlam Securities UK (Nominated Adviser & Broker) +44 (0) 20 7628 2200Lindsay Mair Northland Capital Partners Limited (Broker) +44 (0) 20 7382 1100John Howes/Alice Lane 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.