PRG.L Regulatory News (PRG)

16 October 2013 Paragon Diamonds Limited ("Paragon" or the "Company") (AIM: PRG) Diamond Valuations Highlights: * Valuation of Lemphane Kimberlite diamonds - individual stone values exceeding $2,400/ct * Presence of high value stones and large average stone size * Average value expected to increase as number of carats increases with Stage 1 production Paragon is pleased to announce it has concluded a valuation on the parcel ofdiamonds (221.19 carats) representing the majority of pit samples collectedover the Lemphane Kimberlite project in Lesotho. The valuation was undertaken by WWW International Diamond Consultants Ltd inAntwerp, and included a re-pricing of the 90.22 carats previously valued inJanuary 2013. The valuation parcel of diamonds was made up from samples excavated fromdifferent locations from the surface of the Lemphane Kimberlite. Someindications of variable stone valuations are evident which can be attributedeither to varying sample locations or to the volumes of material excavated. 1. Samples from the centre of the Lemphane Kimberlite (Pits 2, 3, 4 and 5)contained the larger more valuable stones, with 12 stones greater than 2carats. 2. Samples (Pits 6 & 7) from the edge of the Lemphane Kimberlite contained nolarge high quality stones although these sample volumes were small and could bebelow the volume threshold for recovery of large stones 3. The largest sample to date of nearly 3,000 tonnes (Pit 5) returned thelargest stone to date (8.83carats) and there is a tendency for sample sizes inexcess of 2,000 tonnes to recover a greater number of stones exceeding 2 carats 12 diamonds in excess of 1.80 carats (known as 2 caraters) were recovered andincluded two large stones valued at US$2,000 per carat (on 8.83cts) andUS$2,400 per carat (on 3.71 cts) respectively. These 12 diamonds representedsome 63% of the parcel value but only 21% of the parcel weight, emphasizing theneed to collect a large volume sample to recover the larger stones present. Samples from Pits, 2, 3, 4 and 5, which make up the centre of the LemphaneKimberlite, returned average carat values of US$582, US$413, $211 and US$609per carat respectively. The most valuable stones in the samples are: * Pit 5, an 8.83 carat off colour makeable stone valued at $2,000 per carat * Pit 2, a 3.71 carat light yellow dodecahedron valued at $2,400 per carat This central area of the pipe will be the focus of the Stage 1 production. An average value of US$358 per carat was achieved for the combined overallparcel of 221.19 carats, including the samples valued in January 2013. Great care must be taken with these valuation results as all the samples aretoo small to give representative average prices of the in situ resource. Martin Doyle, Chairman of Paragon, commented: "Although the amount of carats recovered to date is too small to give astatistically confident average price for the diamond population in theLemphane Kimberlite pipe,it is very encouraging to see a relatively largenumber of good quality stonesshowing at this level of sampling. Since the 2carater diamonds recovered to date account for 63% of the valuebut only 20% ofthe weight, it is to be expected that the larger tonnages envisaged in miningwill result in recovery of a higher proportion of larger stones. With theinclusion of the anticipated larger stones the average value is expected toincrease. This has been observed in the historic data published during thesampling of other kimberlites in the region and is a function of having themajority of the value represented bya small number of large high value stones. The results are consistent with what would be expected from a parcel of similarsize from other high value diamond populations from kimberlites mined inLesotho such as Mothae and Letseng." In accordance with the AIM Rules for Companies, the information in thisannouncement has been reviewed by Stephen Grimmer PhD., MSc., a qualifiedgeologist with over 25 years diamond exploration experience. For further information: Paragon Diamonds Limited +44 (0) 20 7099 1940 Martin Doyle - Chairman Simon Retter - Finance Director Sanlam Securities UK (Nominated Adviser & +44 (0) 20 7628 2200Broker) Lindsay Mair Catherine Miles