PARAGON DIAMONDS : Corporate Update

         Paragon Diamonds Limited / Index: AIM / Epic: PRG / Sector: Resources     

    24 December 2015

                 Paragon Diamonds Limited ('Paragon' or the 'Company')             

                                   Corporate Update                                

    Paragon Diamonds Limited, the AIM quoted diamond development company with
    diamond mining interests in Lesotho, announces an update on activity and
    corporate matters.

    The Directors of the Company have been working tirelessly to finalise the
    required funding to bring its Lemphane Kimberlite Pipe Project ('Lemphane') in
    Lesotho into production and to enable continued negotiation regarding acquiring
    a licence to explore the Mothae Kimberlite Resource ('Mothae') also in Lesotho.

    The Board now believes that it is unlikely that any conclusion to the current
    funding discussion in the form of transferred funds will be achieved by the
    year end.  The delay in funding has meant that on-going discussions with
    several Nominated Advisors have not been successful, which means the Company's
    shares will be delisted at 7 am on the 29 December 2015.

    The Directors are of the opinion that the value of investors' share holdings
    will not be materially affected by the event of a delisting.  The Company
    retains the same prospects and remain highly confident that the funding
    discussion will be concluded successfully in the near future and will enhance
    the existing value of the Company when finalised.

    The Board continue to seek completion of the required funding as a matter of
    urgency and will update shareholders regularly via the Company's website, which
    we encourage shareholders to monitor closely.  The Company will continue to act
    in the best interests of all shareholders and, assuming the required funding is
    obtained, work towards a new listing on AIM or the main market as soon as
    practicable in 2016.

                                       **ENDS**                                    

    For further information please visit www.paragondiamonds.com or contact:

    Philip Falzon Sant      Paragon Diamonds              [phone] 
    Manduca                 Limited                                            
                                                                               
    Simon Retter            Paragon Diamonds              [phone] 
                            Limited                                            
                                                                               
    Felicity Winkles        St Brides Partners Limited    [phone] 
                                                                               
    Frank Buhagiar          St Brides Partners Limited    [phone] 

    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 kimberlite to be developed in Lesotho.  Among the
    stones recovered in the Company's 2013 bulk sampling programme were several
    large high value stones of up 8.9 carats in size and individual 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 commence in 2016 which will
    further define the resource at Lemphane.  As increased tonnages of kimberlite
    are processed the proportion of larger diamonds recovered will improve,
    increasing the average value of diamonds recovered at the project, as was the
    case at Letšeng.

    Stage 1 production will cover a two year period during which approximately 1 Mt
    of kimberlite will be mined and processed out of the currently estimated 48.6Mt
    of kimberlite (to 350m depth) at the site, using a 75 tonne per hour processing
    plant.  The Company is targeting 20,000 carats during Stage 1 production with
    an estimated minimum value of US$930 per carat that is expected to generate
    revenues in excess of US$9m per annum.  Cash flow will be reinvested to further
    develop Lemphane and complete a bankable feasibility study, a 3D geological
    model and a substantial inferred resource ahead of commencing the Stage 2
    production phase.  Stage 2 will see production ramped up to 3Mt/year with peak
    production 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 company
    maximising the margins gained from being exposed from the mining to selling of
    diamonds.