PRG.L Regulatory News (PRG)

22 April 2013

Paragon Diamonds Limited

("Paragon Diamonds" or the "Company")

(AIM: PRG)

Lemphane Scoping Study Released

Highlights

·; Anticipated kimberlite tonnage to be mined of 27Mt to 280m below surface at a 1.3:1 waste:ore ratio

·; Anticipated all-in mining costs

·; 10+ year life of mine at peak annual production in excess of 65,000 carats at US$ 1,500 per carat

·; Notional average operating profit of US$35M per year(1) excluding capital

·; 22% IRR at an anticipated ore value of US$33/tonne

Paragon Diamonds announces the release of content from its recently commissioned scoping study on the Lemphane Kimberlite Project in Lesotho.

The Company has made available on its website a summary version of the recently completed high-level scoping study commissioned with independent consultancy group Paradigm Project Management. The summary version consists of a 13 page condensed version of the 127 page full version submitted in February 2013 to the Ministry of Mines in Lesotho together with a Mining Lease Application.

The summary version details the main assumptions and parameters of the study including tonnages, grades, pit design, mine scheduling, tailings and waste rock disposal, an estimation of capital and operating costs and a financial model and sensitivity analysis. 

The scoping study summary can be viewed and downloaded as a PDF file at:

http://www.paragondiamonds.com/independent_technical_reports.php

Paragon Diamonds Chairman Martin Doyle said: "The scoping study confirms the favourable economics of the mining of the Lemphane kimberlite. Work is continuing on resource development with the current bulk sampling and delineation drilling programs. It is anticipated that on completion of the next trial mining phase of 100,000 tonnes of kimberlite a sufficiently robust resource will have been established to support a decision to proceed to full scale production."

Note (1) The definition of a mineral resource according to criteria laid down by the Canadian Institute of Mining, Metallurgy and Petroleum has not currently been achieved at Lemphane and accordingly the revenue assumptions used in the scoping study have been derived from the results of a number of statistically unrepresentative bulk samples over the surface of the exposed kimberlite.

In accordance with the AIM Rules, the information in this announcement has been reviewed by Stephen Grimmer PhD., MSc., a qualified geologist with over 25 years diamond exploration experience.

For further information:

Notes to editors

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

Lemphane Kimberlite project Lesotho (85% interest)

Lemphane is one of five known diamond bearing kimberlite pipes within Lesotho, located 5km from the Liqhobong project. The environmental assessment plan, access routes and exploration camp have been completed. DMS plant has been constructed and bulk sampling commenced with 15,000 tonnes processed to date and 20,000 tonnes stockpiled awaiting processing. Extended bulk sampling of a further 25,000 - 40,000 tonnes is possible once initial sample is completed. Mining licence application submitted and drilling underway.

Motete Dyke exploration, Lesotho (85% interest)

Motete is a substantial kimberlite dyke (fissure system) in close proximity to the Lemphane project. The licence was awarded in December 2011. During 2012 a resource of 0.86Mct attributable to Paragon at a grade of 65 cpht and an average value of US$62/ct was defined.

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.

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.