Issue of Equity

Paragon Diamonds Limited

("Paragon" or the "Company")

(AIM: PRG)

Fundraising of £2,890,000

Paragon (AIM: PRG), the African diamond production and development company is pleased to announce today that it has raised £2,890,000 through a subscription of 8,500,000 new ordinary shares in the Company at a price of 34p each.

The new shares will rank pari passu with all existing ordinary shares, and dealings on AIM are expected to commence in the new ordinary shares on 01 February 2011.

Following the issue of ordinary shares in relation to this fundraising as described above, the Company's issued share capital now consists of 151,182,819 ordinary shares of 1p each.

Frank Scolaro, Chairman, commented: "I am pleased with the continuing investor support and am confident that the additional funds raised will further strengthen Paragon's interests throughout Africa, in the rapidly recovering diamond market."