Award of Mining Licence

14 October 2013 Paragon Diamonds Limited ("Paragon" or the "Company") (AIM: PRG) Award of Mining Licence Paragon Diamonds Limited, the African-focused diamond development company, ispleased to announce that it has been awarded a Mining Licence by the LesothoMinistry of Mines for its 85% owned Lemphane Kimberlite project in Lesotho. The Licence was approved and signed by the Minister of Mines, the Hon. TlaliKhasu MP, and received by the Company on 11October 2013. The Licence was issuedin terms of Section 33 of the terms of the Mines and Minerals Act of 2005 andis for a duration of 10 years until 9 October 2023, and is renewable. TheLicence is issued subject to the conditions of Section 59 (royalty) and Section63 (fees) of the Act, and in accordance with the approved Programme of Mining. The approved Programme of Mining is premised on a two year `Stage 1' mine planof 540,000 tonnes per annum, followed by an eight year `Stage 2' mine plan of3,000,000 tonnes per annum for an initial open-pit life of ten years. The Company will provide an operational update shortly on the implementation ofthe `Stage 1' mine plan, which is considerably enlarged from the original200,000 tonnes annually thereby shortening the development path. Negotiations regarding Government participation and royalty, as provided forunder Section 44 and Sections 60/61 of the Act, are on-going at this time andexpected to be in-line with other licences awarded to other mining operationsin the region. Stephen Grimmer, Managing Director of Paragon, commented: "The award of the Mining Licence, following two years of considerableexploration and development work on the Lemphane Kimberlite,is a majormilestone and step forward for the Company. I wish to express my thanks toour shareholders, staff, consultants and to the Basotho authorities for theirsupport thus far. We now look forward to developing the Kingdom of Lesotho'snewest diamond mine." Martin Doyle, Chairman of Paragon, commented: "The award of the Mining Licence is a significant event for the Company and isthe starting gun for the road to production. I am excited at the prospect ofParagon Diamonds becoming part of the select club of diamond producers inLesotho. Our work to date indicates that the Lemphane Kimberlite has apotential multi-billion dollar resource. I look forward to the prospect ofreporting on the recovery of exceptional gem diamonds for which the region isfamous, such as the 12.47 carat blue diamond recovered from Letseng andrecently sold by Gem Diamonds for a record $7.5m or $603,047 per carat." In accordance with the AIM Rules for Companies, the information in thisannouncement has been reviewed by Stephen Grimmer PhD., MSc., a qualifiedgeologist with over 25 years diamond exploration experience. For further information: Paragon Diamonds Limited +44 (0) 20 7099 1940 Martin Doyle - Chairman Simon Retter - Finance Director Sanlam Securities UK (Nominated Adviser & +44 (0) 20 7628 2200Broker) Lindsay Mair Catherine Miles