AGM Statement

Paragon Diamonds Limited / Index: AIM / Epic: PRG / Sector: Resources 8 July 2014 Paragon Diamonds Limited (`Paragon Diamonds' or the `Company') AGM Statement Paragon Diamonds Limited, the AIM quoted diamond development and productioncompany in Africa, is holding its Annual General Meeting (`AGM') today at11.00am at Dixcart House, Sir William Place, St Peter Port, Guernsey, GY1 1GX.At the meeting Simon Retter, the Company's CFO, will make the followingstatement: "This has been a year of significant progress as we look to transform ParagonDiamonds into a cash-generative diamond exploration and production company inAfrica. We have a solid portfolio of multi-stage projects in world-classdiamondiferous regions of Africa where we believe we can deliver significantvalue for shareholders. In Lesotho, our flagship large stone/ high valueLemphane kimberlite project is on course to commence production in the nearterm, while our diamond projects in Botswana and Zambia provide us with ahighly prospective pipeline which we will look to advance along the developmentcurve. In addition, we continue to evaluate strategic and corporateopportunities to diversify our offering and will expose our shareholders to asmuch of the value chain as possible. "Lemphane is believed to be the last world-class kimberlite to be developed inLesotho and has an excellent address being located close to Gem Diamonds'Letseng pipe which is renowned for the recovery of exceptionally large andvaluable diamonds. Post-period end we announced excellent results from anindependent size frequency and revenue modelling report. The results, based on300 carats of diamonds recovered during the 2012/3 bulk sampling programme,highlight that preliminary diamond values from Stage 1 production will bebetween US$930 - US$1,025/carat for grades of 2 carats per hundred tonnes whilethe size frequency study indicated that 12% of carats will be over 9cts.Significantly the report predicts the recovery of exceptionally large sizeddiamonds of 100+ carats, even in the early stages of production. This is inline with our business model to produce large stones with high values.Importantly as Lemphane commences production the grade and the value ofdiamonds are projected to rise as tonnages processed increases. While the valueof our stones at an average grade of 2 carats per hundred tonnes stands atUS$930 - US$1,025/carat, for every 1 million tonnes processed at Lemphane, ourmodelling shows there will be at least one 100+ carat diamond. "The remainder of 2014 looks to be a highly exciting period for ParagonDiamonds as we move to stage 1 production, subject to completing financing. Weexpect to report on further drilling at Lemphane and also a scoping study whichwe expect will upgrade the already attractive economics of Lemphane. "I would like to take this opportunity to thank our shareholders, fellow BoardDirectors and advisors for their support during this transformational stage inParagon Diamonds' development as we continue to build a leading diamondproduction and investment opportunity." **ENDS** For further information please visit www.paragondiamonds.com or contact: Martin Doyle Paragon Diamonds Limited +44 (0) 20 7099 1940 Simon Retter Paragon Diamonds Limited +44 (0) 20 7099 1940 Lindsay Mair Sanlam Securities UK +44 (0) 20 7628 2200 Andrew Wagstaff Sanlam Securities UK +44 (0) 20 7628 2200 Felicity Edwards St Brides Media and Finance Ltd +44 (0) 20 7236 1177 Frank Buhagiar St Brides Media and Finance Ltd +44 (0) 20 7236 1177 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 world-class sized kimberlite to be developed inLesotho. Among the stones recovered in the Company's 2013 bulk samplingprogramme were several large high value stones of up 8.9 carats in size andindividual 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 commencelate 2014 (subject to financing) which will further define the resource atLemphane. As increased tonnages of kimberlite are processed the proportion oflarger diamonds recovered will improve, increasing the average value ofdiamonds recovered at the project, as was the case at Letšeng. Stage 1 production will cover a two year period during which approximately 1 Mtof kimberlite will be mined and processed out of the currently estimated 48.6Mtof kimberlite (to 350m depth) at the site, using a 75 tonne per hour processingplant. The Company is targeting 20,000 carats during Stage 1 production with anestimated minimum value of US$750 per carat that is expected to generaterevenues in excess of US$8m per annum. Cash flow will be reinvested to furtherdevelop Lemphane and complete a bankable feasibility study, a 3D geologicalmodel and a substantial inferred resource ahead of commencing the Stage 2production phase. Stage 2 will see production ramped up to 3Mt/year with peakproduction expected to hit 65,000 carats per year of high value diamonds.