Paragon Diamonds Ltd : Lemphane scoping study and drilling contracts

14 January 2013

Paragon Diamonds Limited

("Paragon" or the "Company")

(AIM: PRG)

Lemphane Scoping Study, Drilling Contract and Geological Modelling

• Paradigm Project Management to undertake scoping study towards planned Mining Lease Application

• Rodio Geotechnics contracted for an initial 2,000m deep delineation drilling program

• AMEC commissioned to undertake geological and 3d modelling of the Lemphane Kimberlite

Paragon Diamonds Ltd. announces the commissioning of three major sub-contracts towards development of its Lemphane Kimberlite Project in Lesotho.

Paradigm Project Management, a multi-disciplinary mining consultancy with extensive operational experience in Lesotho, have been contracted to undertake a first-pass scoping study to design an operational model for the development of the Lemphane kimberlite. The study, which will be completed and delivered to the company by the end of February 2013, will be utilized as supporting documentation towards a Mining Lease Application which the company intends to prepare and submit to the Lesotho Department of Mines (Ministry of Natural Resources) during Q1-2013. The study will include open-pit mine designs, tailings and waste rock disposal options as well as process plant design and capital and operating costs estimates. Elements of this study are already at an advanced preparatory stage.

Rodio Geotechnics Ltd., who have extensive experience of undertaking drilling programs on other Lesotho kimberlites, have been contracted to undertake a 2,000+metre ("m") first stage delineation drilling program of up to six holes to a maximum depth of 400m on the Lemphane Kimberlite. The drilling equipment is due to be mobilized and commence drilling during January 2013. The objective of the program is to determine the internal structure and dimensions of the kimberlite body to a base depth of circa -350 m below mean surface, beyond the likely maximum open-pit development depth. This program will be followed by a more extensive 3,000 m campaign provisionally in Q2-3 of 2013, to accurately delineate the kimberlite from surface to -250 m.

AMEC, one of the world's leading engineering, project management and consultancy companies, has been commissioned to deliver a full geological model of the Lemphane Kimberlite. Surface mapping and core logging will be undertaken by Dr. Rachel Ogilvie-Harris, assisted by company geologists, and under the supervision of Dr. Matthew Field of AMEC who will act as the "Competent Person" for this study. Dr. Field, who was the former Chief Geologist at Debswana's Orapa Mine, is a world-renowned expert in kimberlite resource geology, with over sixty peer-reviewed scientific articles on the subject in the last ten years. His doctoral research concerned the quantitative geological economic evaluation of diamond-bearing kimberlites.

The study programme is anticipated to commence in February 2013 and continue for several months. The objective is to deliver a clear understanding of the internal structure of the kimberlite with regard to geology and grade distribution, which, on completion will be integrated with the geology mapped at surface as well as the surface bulk sampling results.  These results will give direction to future bulk sampling results at depth.  The ultimate objective is a well constrained resource in three dimensions, yielding reliable tonnage, grade and ore value data.

In comment, Paragon MD Stephen Grimmer said: "these work programs on the Lemphane Kimberlite, together with our on-going bulk sampling program, are intended to advance the project towards an inferred resource status, and in conjunction with the planned application for a Mining Lease, allow us to  determine the economic potential of our flag-ship project. The involvement of Drs. Field & Ogilvie-Harris at this stage is particularly welcome, given the technical challenges associated with evaluating Lesotho's unique high-value and low grade kimberlites"

In accordance with the AIM Rules, the information in this announcement has been reviewed by Stephen Grimmer PhD., MSc., a qualified geologist with over 25 years' diamond exploration experience.

For further information:

Paragon Diamonds Limited Martin Doyle - Chairman Simon Retter - Finance Director www.paragondiamonds.com	[phone]
Fox-Davies Capital Ltd (Nomad and Broker) Jonathan Evans Simon Leathers	[phone]

Notes to editors

Paragon Diamonds is looking to rapidly develop producing and exploration diamond properties into a portfolio of high value assets located within Africa. To date it has secured a series assets which its exploration and development teams are working to progress. The core focus at present are the companies hard rock licences located in Lesotho, a major producing diamond region. The Projects include:

Lemphane Kimberlite project Lesotho (85%)

Lemphane is one of five known diamond bearing kimberlite pipes within Lesotho, located 5km from the Liqhobong project.The Environmental assessment plan and access routes and exploration camp have been completed.DMS plant constructed and bulk sampling commenced with 35,000 tonnes of ore stockpiled awaiting processing. Extended bulk sampling of a further 25 - 40,000 tonnes is possible once initial sample completed.

Motete Dyke exploration, Lesotho (85%)

Motete is a substantial kimberlite dyke (fissure system) in close proximity to the Lemphane project.  The licence was awarded in December 2011. During 2012 a resource of 0.86Mct attributable to Paragon at a grade of 65 cpht and an average value of US$62/ct was defined.

Kaplamp diamond hosting Lamproite', Zambia

Kaplamp is a large prospecting licence known to host 14 Lamproite pipes within a known diamondiferous region and with five high profile targets identified for initial evaluation. The area is highly prospective as De Beers recovered significant amount of stones in 60's and 70's but relinquished area as Lamproites were not yet recognised as viable. The Argyle Diamond Mine in Western Australia is the most renowned Lamproite hosted mine - in 1994 produced 39% of worlds diamond production. 

Kopje kimberlite exploration, Botswana

This newly awarded prospecting licence covering 15 km sq in highly prospective area 35 km east of DeBeers' large producing Orapa Mine.

Mabuki, Tanzania

Located 81km south of Mwanza, Tanzania with good infrastructure nearby (roads, power, water, transport) the licence sits within a known Kimberlite Field.  Artisanal activity occurs to the west of licence with diamond bearing gravels identified off the edge of the licence. The intention is to explore (detailed geophysics and sampling) and map-out, then establish drill targets and define a resource. Wardell Armstrong completed a competent persons report on Tanzania in September 2010.