Issue of convertible loan notes

9 June 2014

Paragon Resources PLC

("Paragon" or the "Company")

(AIM: PAR)

Issue of convertible loan notes

The Company is pleased to announce that it has agreed a new financing facility with Apex Utilities Limited ("Apex"), an existing shareholder of the Company, to provide working capital funding (the "Facility"). The terms of the Facility are as follows:

· A total facility amount of £50,000, available for drawdown at the Company's request, £30,000 of which is to be drawn down immediately.

· Interest payable at 8% per annum on all drawn balances.

· Unsecured.

The outstanding balance of the Facility will automatically be converted into ordinary shares of 0.05 pence each in the Company ("Ordinary Shares") on completion of a reverse takeover as defined under the AIM Rules for Companies ("Admission") at a conversion price equal to 83.33% of the price (the "Conversion Price") that any new Ordinary Shares are issued for cash pursuant to the Admission ("Conversion"). It is agreed that the Facility will not be repayable in cash. If Admission has not occurred before 30 June 2015, then on that date the outstanding balance of the Facility will be converted into Ordinary Shares at a conversion price of £0.0015 per Ordinary Share ("Alternative Conversion").

On Conversion, Apex will receive warrants to subscribe for new Ordinary Shares on the basis of 1 warrant for every 1.25 new shares received on Admission, such warrants to be exercisable within 3 years from the date of grant at the Conversion Price ("Warrants"). On Alternative Conversion, Apex will receive warrants to subscribe for new Ordinary Shares on the basis of 1 warrant for every 1.25 new shares received by way of the Alternative Conversion, such warrants to be exercisable within 3 years from the date of grant at a price of £0.0015 per Ordinary Share.

Interest is payable in cash on the earlier of Conversion on Admission or Alternative Conversion.

ENDS

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