PRG.L Regulatory News (PRG)

15 November 2013 Paragon Diamonds Limited ("Paragon" or the "Company") (AIM: PRG) Subscription to raise £3 million Paragon Diamonds Limited is pleased to announce that it has raised £3 million(before expenses) by way of a subscription (the "Subscription") with anexisting shareholder for a total of 60,000,000 new ordinary shares at 5p each(the "Subscription Shares"). The Subscription was arranged by Sanlam SecuritiesUK Limited. Use of Proceeds The net proceeds raised will be used to provide additional capital to developthe Company's Lemphane Kimberlite project in Lesotho, for which the Company wasrecently awarded a Mining Lease, and for working capital purposes generally. Subscription The Company will issue the Subscription Shares under its existing shareauthorities. Lanstead Capital L.P. ("Lanstead"), an institutional investor and existingshareholder of the Company, has subscribed for the Subscription Shares for anaggregate consideration of £3 million. In addition, the Company has enteredinto an Equity Swap Agreement with Lanstead which allows the Company to retainmuch of the economic interest in the Subscription Shares. The Equity Swap Agreement provides that the Company's economic interest will bedetermined and payable in twenty-four settlement tranches as measured against abenchmark price of 6.67p per share ("the Benchmark Price"). If the measuredshare price exceeds the Benchmark Price, for that month, the Company willreceive more than 100 per cent of the monthly settlement due on a pro ratabasis. There is no upper limit placed on the additional proceeds receivable bythe Company as part of the monthly settlements. Should the measured share pricebe below the Benchmark Price, the Company will receive less than 100 per centof the expected monthly settlement on a pro rata basis. In no case would adecline in the Company's share price result in any increase in the number ofordinary shares received by Lanstead or any other advantage accruing toLanstead. The Company has agreed to make a value payment to Lanstead of £400,000 inconsideration for the Equity Swap Agreement within 60 days of Admission of theSubscription Shares which the Company may elect to settle by the issue toLanstead of a further 6,000,000 new ordinary shares. The Equity Swap Agreementallows the Company to secure much of the potential upside arising fromnear-term news flow. The mid-market price of the Company's existing ordinary shares at the close ofbusiness on 14 November 2013 (being the latest practicable day prior to thepublication of this announcement) was 4.17p. The Subscription is conditional onadmission of the Subscription Shares to AIM which is expected to becomeeffective on 19 November 2013. The Subscription Shares will, when issued and fully paid, rank pari passu inall respects with the Company's existing ordinary shares, including the rightto receive any dividend or other distribution thereafter declared, made orpaid. Following Admission, the Company's issued share capital will comprise288,595,917 ordinary shares. Executive Chairman, Martin Doyle commented: "We are pleased with the continued support from Lanstead which allows us tofurther advance our flagship Lemphane Kimberlite project in Lesotho." For further information: Paragon Diamonds Limited +44 (0) 20 7099 1940 Martin Doyle - Chairman Simon Retter - Finance Director www.paragondiamonds.com Sanlam Securities UK (Nominated Adviser & +44 (0) 20 7628 2200Broker) Lindsay Mair Catherine Miles