Further positive micro-diamond results from Motete

7 February 2012

Paragon Diamonds Limited

("Paragon" or the "Company")

(AIM: PRG)

 Further positive micro-diamond sampling results from Motete Dyke, Lesotho

Highlights

·; Motete Dyke yields 1,641 micro diamonds from 4 new sample sites

·; Total of 863 kg processed from 4 sites produced 1.9 stones per kilogram,

·; Overall results to date 2,175 diamonds from 1,086 kg of samples, 2.0 stones per kilogram

·; Sampling for larger macro diamonds and drilling of Motete Dyke proposed for Q2 2012

Paragon Diamonds Limited, the African-focused diamond explorer and developer, announces further micro-diamond results from 4 samples totalling 863 kg. A total of 1,641 diamonds (1.90/kg) were recovered weighing 0.9841 carats, equivalent to 1.14 carats per tonne.

Samples were taken to extend the reach of sampling along the strike of the diamondiferous Motete Dyke. Of particular note are samples MTD-5 and MTD-6, sampled from locations 600 metres apart showing remarkable consistency in terms of diamond characteristics and content.

MTD-5 is the most westerly and highest elevation sample to date, taken circa 600 metres west of the Motete River at an altitude of 2,690 m ASL, whereas MTD-6 lies 260 m lower at 2,430 m ASL on the bank of the Motete River. Results for the 4 samples (MTD-3, -4, -5 & -6) together with all previous micro-diamond results, are shown in the table below:

The Motete Dyke continues to yield a high proportion of clean crystal forms with exceptional colour and transparency, as shown in the table below. As seen in previous samples, the diamonds are characterised by more than 70% dodecahedral and octahedral shapes, very few broken or fragmented stones, exceptional colour and with clarity (transparency) exceeding 95 %.

The company has now submitted all micro-diamond results obtained to date for a comprehensive grade modelling exercise overseen by the company's accredited consultants, MSA Group. These results are expected in the coming weeks and should these prove positive, the Company will begin sampling the Motete Dyke for larger macro diamonds, extracting circa 1,000 tonnes for treatment through the nearby Lemphane bulk sampling plant. This sample is anticipated to yield up to 1,000 carats of macro diamonds which will be sent for grade confirmation and valuation. At this stage the company will also commission a core drilling programme to test the continuity and characteristics of the diamondiferous Motete Dyke at depth.

Paragon MD Stephen Grimmer commented: "with over one tonne of material now sampled to date, and an initial modelled grade exceeding one carat per tonne, the Motete Dyke is without a doubt consistently diamondiferous to a high degree. Providing the expected positive results from the comprehensive grade modelling exercise are obtained, the Company will embark with confidence on a resource development program as a first step towards a full scoping study."

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. 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 . 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.

Motete Dyke exploration, Lesotho (85%)

Motete is a substantial kimberlite dyke (fissure system) in close proximity to the Lemphane project. Known to be diamondiferous and currently undergoing initial exploration & micro diamond analysis with results expected Q1 2012. The licence was awarded in December 2011.

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 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. 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.