Commencement of bulk sampling at Lemphane, Lesotho

Monday 7 November 2011

Paragon Diamonds Ltd ("Paragon" or "Paragon Diamonds")

(AIM:PRG)

Commencement of bulk sampling at Lemphane, Lesotho

·; Lemphane Kimberlite bulk sample processing commences

·; First diamonds recovered

·; 27,000 tonnes have now been mined and will be processed immediately.

Paragon Diamonds, the AIM quoted African focused diamond explorer and developer is pleased to announce the commencement of processing operations at its Lemphane Kimberlite bulk sampling operation in Lesotho.

Since starting the exploration phase of the project in mid July, the company has prepared and mined over 27,000 tonnes of kimberlite samples from a series of trenches and pits across the circa 6 hectare surface area kimberlite pipe. These have been transported circa 1 km to the process plant site and laid down in the extensive stock-pile area. Circa 6,500 tonnes of planned samples remain to be mined over the coming days.

The 30 tonnes per hour (tph) bulk sampling plant incorporating a 10 tph dense media separation (DMS) plant and an x-ray and grease final recovery circuit, plus a new secondary crushing circuit, has been successfully transported to Lesotho, re-furbished, transported to and erected on site and commissioned.

The process plant has now successfully commenced treating the first sample of circa 1,000 tonnes, consisting of material taken from the small satellite body located on the north-western margin of the main pipe and this has been proved to be diamondiferous, although the material sampled so far was taken from one distinct sub-facies of the kimberlite and should not be considered representative of the body as a whole.

Some 100 tonnes were processed initially, of which circa 50 tonnes still await re-crushing and processing, as do the DMS tailings. All concentrates also await secondary diamond recovery. As such, circa 50 tonnes processed by x-ray recovery alone yielded 2.81 carats above a 1.5mm bottom cut, with the largest diamond of 0.90 carats, for an average (initial) grade of 5.6 cpht and an average stone size of 0.35 carats per stone. The majority of diamonds were clear, white transparent and of dodecahedral shape or fragments of the same. The balance of the sample and further samples will be processed in the coming months and results will be reported in due course.

Commenting, Paragon Chairman Luc Huyghebaert said: "We are pleased with this first result and await further results as the programme progresses. The Paragon project team has fast-tracked this bulk sampling programme from a greenfields site to the point of start-up in only four months since Paragon assumed management control over the Lemphane Project - an impressive performance. We are eagerly awaiting the onset of the rain season in the next few weeks so that we can commence the remaining sample".

In accordance with the AIM Rules, the information in this announcement has been reviewed by Stephen Grimmer PhD., MSc., a qualified geologist with over 24 years' diamond exploration experience.

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Definitions

Cpht - carats per hundred tonnes