Award of License

Paragon Diamonds Limited

("Paragon" or the "Company")

(AIM: PRG)

kimberlite Dyke Prospecting Licence Award, Lesotho

Highlights

·; Substantial kimberlite dyke (fissure system) close to Lemphane Kimberlite Project.

o Prospecting Licence (PL) 23 km² (9 km by an average 2.5 km)

o 10km of Paragon's Lemphane kimberlite project

o 23 km from operating Letseng mine, Gem Diamonds

·; Diamonds recently recovered from pre-existing artisanal mining operations

·; Substantial dyke widths and lengths in an accessible location.

·; Exploration team to be mobilised with the remainder of 2011

Paragon Diamonds Limited, the African-focussed diamond explorer and developer announces the award of a second kimberlite licence in Lesotho to its 85% owned subsidiary Botle Diamonds (Pty) Ltd ("Botle"). Botle is a Lesotho exploration company incorporated on 29th November 2010, and held through Paragon's 98.5% stake in International Diamond Consultants (IDC).

The Motete Dyke Licence consists of a 23 km² (9 km by an average 2.5 km) prospecting licence under the terms Section 22 of the Kingdom of Lesotho Mines & Minerals Act (2005) for a period of two years effective from 28th November 2011. The licence area is centred on a substantial sub-vertical kimberlite dyke or fissure system trending WNW to ESE which had not previously been identified but has recently been extensively mined at surface (the top 0.5-1.0 m) by local artisanal miners. As such, the dyke appears to be diamondiferous although to an as-yet undetermined degree.

The kimberlite dyke has been traced continuously by company geologists over at least 1 km, and attains widths in excess of 2 m, with an average width exceeding 1 m. Furthermore, the dyke is exposed along the deeply incised walls of the Motete River, and is thus particularly accessible, with kimberlite material present at heights up to 300 m above the valley floor.

The Motete Dyke licence lies circa 10 km NE of the company's major 6 Ha Lemphane Kimberlite Project which is currently undergoing bulk sampling.

Commenting, Paragon Chairman Luc Huyghebaert said: "The conferring of a licence over such a substantial, continuous and accessible kimberlite dyke, with obvious apparent diamond potential presents the company with an opportunity to develop a fast-track diamond production operation, subject to determining an economic grade and value, and a viable resource. As such it is our intention to immediately commence a detailed evaluation of this kimberlite in the coming weeks and months."

In accordance with the AIM Rules, the information in this announcement has been reviewed by Stephen Grimmer PhD., MSc., a qualified geologist with over 20 years' diamond exploration experience.

For further information:

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 of alluvial and hard rock assets which its exploration and development teams are working on to progress. A core focus at present are the companies hard rock licences located in Lesotho, a major producing diamond region. Projects:

Lemphane Kimberlite project Lesotho (85%)

Lemphane is one of five known diamond bearing kimberlite pipes within Lesotho, located 5km from the Liqhobong project . An NS43-101 report carried at Lemphane indicates pipes may contain 30 million tones of kimberlite with white colour diamonds already recovered (19 recovered). The Environmental assessment plan and access routes and exploration camp have been completed.DMS plant constructed and bulk sampling commenced with 25,000 tonnes of ore stockpiled awaiting processing. Extended bulk sampling of a further 25,000 tonnes once initial sample completed

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 Arglye Diamond Mine in Western Australia is 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' largest produce Orapa Mine. Initial exploration work planned for Q1 2012.

Konomo Alluvial Mine, Sierra Leone

This Alluvial diamond project covers 162km2 and has an indicated and inferred resource of 119,000 carats with large tracts of Bafi river remaining unexplored. Circa .3,000 carats recovered by Paragon since operations commenced, with a parcel that includes c.34.18 carat "special" stone and 10.18, 10.46 and 9.96 carat gem quality stones

Mabuki, Tanzania

Located 81km south of Mzanza, 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 edge of licence. Intention to explore (detailed geophysics and sampling) and map-out, then establish drill targets and define resource. Wardell Armstrong completed a competent persons report on Tanzania in September 2010