Lemphane Bulk Sampling Program Update

29 April 2013

Paragon Diamonds Limited

("Paragon" or the "Company")

(AIM: PRG)

Lemphane Bulk Samping Program Update

Highlights

·; 8.86 carat diamond recovered on 22 April 2013

·; Over 14,000 tonnes processed to date - 40% complete

·; Over 200 carats recovered to date including 31 diamonds over 1 carat

Paragon Diamonds Ltd. announces an update on progress at its Lesotho Lemphane Kimberlite Project bulk sampling program.

Following the successful installation of its water supply pipeline, the Company has now increased the plant process rate to over 230 tonnes per day and has completed the processing of two additional kimberlite samples of 3,371 tonnes (2,849 dry tonnes) and 1,201 tonnes (1,029 dry tonnes).

The 3,371 tonne sample P5 has yielded the largest diamond recovered to date at Lemphane, an 8.86 carat yellow dodecahedron. Photographs of this diamond can be viewed in the image gallery on the Company's website at www.paragondiamonds.com. The same sample also produced four other diamonds above one carat (of 3.00, 2.27, 1.19 and 1.08 carats) for a total of 35.35 carats at a grade of 1.24 carats per hundred tonnes (cpht). This grade excludes diamonds which may still be recovered by re-processing tailings and thus the grade may increase marginally.

To date the Company has processed 14,401 tonnes (12,398 dry tonnes) of a planned total 35,000 tonnes (~30,000 dry tonnes) and has recovered 201.79 carats (183.3 from the main pipe), for an average recovered sample grade of 1.62 cpht. The results to date also reflect a coarse diamond size distribution with an average diamond size of 0.23 carats per diamond (at an approximate 1.5 mm cut-off) and 0.41 carats per diamond (at an approximate 2 mm cut-off estimated from diamond weights) and some 36% of diamonds above one carat in size (40% above one carat at 2 mm cut-off). In total, 31 diamonds over one carat and 10 diamonds over two carats in size have been recovered to date. The results for all samples processed from Lemphane to date are shown in the table below.

Paragon MD Stephen Grimmer commented:

 "The largest stone recovered to date helps to confirm our view of Lemphane as potentially a large diamond producer - this single stone represents 5% of the total carats recovered so far. Importantly, over one third of all carats to date are in diamonds of one carat or greater. It clearly shows that with increased sampling, further and larger diamonds should be forthcoming in-line with statistical projections. We also expect improvement in the grade as sampling increases - the recovery of a single large stone can have a disproportionately positive effect on the total carats, and thus on the grade, as has already been demonstrated."

† Results for P3 released on 11th April 2011 did not include 43 diamonds subsequently recovered during final recovery concentrate audit, comprising an additional 4.35 carats.

In accordance with the AIM Rules, the information in this announcement has been reviewed by Stephen Grimmer PhD., MSc., a qualified geologist with over 25 years diamond exploration experience.

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Notes to editors

Paragon Diamonds is looking to rapidly develop producing and exploration diamond properties located within Africa. To date it has secured a series of potentially high value assets which its exploration and development teams are working to progress. The core focus at present is the Company's hard rock licences located in Lesotho, a major producing diamond region. The Company's projects include:

Lemphane Kimberlite project Lesotho (85% interest)

Lemphane is one of five known diamond bearing kimberlite pipes within Lesotho, located 5km from the Liqhobong project. The environmental assessment plan, access routes and exploration camp have been completed. DMS plant has been constructed and bulk sampling commenced with 15,000 tonnes processed to date and 20,000 tonnes stockpiled awaiting processing. Extended bulk sampling of a further 25,000 - 40,000 tonnes is possible once initial sample is completed. Mining licence application submitted and drilling underway.

Motete Dyke exploration, Lesotho (85% interest)

Motete is a substantial kimberlite dyke (fissure system) in close proximity to the Lemphane project. The licence was awarded in December 2011. During 2012 a resource of 0.86Mct attributable to Paragon at a grade of 65 cpht and an average value of US$62/ct was defined.

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 Argyle Diamond Mine in Western Australia is the 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' large producing Orapa Mine.

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. The intention is to explore (detailed geophysics and sampling) and map-out, then establish drill targets and define a resource. Wardell Armstrong completed a competent persons report on Tanzania in September 2010.