PRG.L Regulatory News (PRG)

Paragon Diamonds Limited / Index: AIM / Epic: PRG / Sector: Resources 17 November 2014 Paragon Diamonds Limited ("Paragon" or the "Company") Sale of large high value diamonds from Lemphane Kimberlite, Lesotho, Africa Paragon Diamonds Limited, the AIM quoted diamond development company, ispleased to announce that it has successfully sold a number of stones recoveredduring the Company's 2013 bulk sampling programme at its flagship Lemphanekimberlite pipe in Lesotho. Lemphane is located among a cluster of activelymined kimberlites known for producing large high value stones. The diamondssold include fancy yellow stones which achieved values as high as US$2,500 percarat. The sale was undertaken as an exercise to test market demand fordiamonds recovered at Lemphane, ahead of the near term commencement of Stage 1production. Stage 1 will involve the extraction of 1 million tonnes ofkimberlite and, according to an independent report, is expected to lead to therecovery of over 100 diamonds larger than 9 carats, including stones over 100carats in size. Paragon's Chairman, Philip Falzon Sant Manduca said, "With Stage 1 productionat Lemphane fast approaching, the successful sale of diamonds demonstratesmanagement's focus on ensuring all relevant stages in the production and salesof diamonds have been tried and tested. This ensures that Paragon hits theground running once mining and distribution operations commence in Q1 2015.Based on our excellent diamond mining address and the work we have carried outto date, we are highly confident Lemphane will provide Paragon with a source oflarge high value diamonds for years to come, giving the Company an excellentplatform to build a leading and cost efficient, diamond house. In line withthis, significant progress has been made on a number of fronts includingsourcing, designing and approving a brand new modular state of the artprocessing plant using the latest X-Ray recovery technology. The currentadvances in this technology have proved highly successful at other miningoperations, increasing recovery of larger stones and significantly enhancingthe project economics. I look forward to providing further updates in the nearterm." **ENDS** For further information please visit www.paragondiamonds.com or contact: Philip Falzon Sant Paragon Diamonds Limited +44 (0) 20 7182 1920Manduca Simon Retter Paragon Diamonds Limited +44 (0) 20 7182 1920 Edward Hutton/Gerry Northland Capital Partners +44 (0) 20 7382 1100Beaney Limited John Howes/Charles Northland Capital Partners +44 (0) 20 7382 1100Laughton Limited Felicity Winkles St Brides Media and Finance Ltd +44 (0) 20 7236 1177 Frank 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.