Mabuki Project Update

Paragon Diamonds Limited

("Paragon" or the "Company")

(AIM: PRG)

Initial Results from the Mabuki Licence, Tanzania

Paragon Diamonds Limited, the African focused diamond producer and explorer, today announces that initial prospecting results from reconnaissance field work undertaken on the Mabuki licence suggest the potential for kimberlite on the property.

Highlights

·; Initial sample results indicate potential for kimberlite discovery

·; Licence adjacent to the Mabuki kimberlite cluster where five of the seven identified kimberlite pipes known to be diamondiferous

·; Follow-up groundwork targeted for Q2 2011

A first pass reconnaissance-level pitting and stream sediment sampling program was executed over the property by JICL Consultants Limited, a private Tanzanian geological consultancy. Pits were excavated at an approximate samples spacing of 1 km by 500m over the south western part of the licence. Samples were submitted to the Southern and Eastern African Mineral Centre (SEAMIC) in Dar es Salaam for preparation and analysis.

The Mabuki licence, comprising 64km2, consists of two contiguous blocks, which lie some 60km south of Mwanza, Tanzania's 3rd largest city located on the southern shores of Lake Victoria and occurs approximately 70km north of the Mwadui (Williamson) Diamond Mine.

The geology within the area is poorly exposed, limited to isolated outcrop observed in the north central part of the property. The area sampled lies adjacent to the Mabuki kimberlite cluster where five of the seven identified kimberlite pipes are known to be diamondiferous. Active small-scale alluvial diamond mining is ongoing at Mwanang'wa 2 km off the southern boundary of the property.

According to a report by independent geologists commissioned by the Company, although no kimberlite was observed during the pitting and geological traversing program, the mineralogy and chemical analysis of the 22 samples indicates proximity to kimberlitic source. It may be possible that any kimberlite is concealed, lying under the thick mbuga clay cover. Further survey work including geophysics, deepening of the pits, additional sampling and microprobe analysis on the indicator minerals is required.

Change of Director

Nicholas Lee has resigned as Non-Executive Director in order to pursue other interests. The Board of Paragon wishes to thank Nicholas for his valuable contribution to the development of the Company in its early stages and the IPO.

Commenting today Frank Scolaro, Chairman, said: "These initial reconnaissance results are very encouraging as we develop the hard rock diamond projects within the Paragon portfolio. We will be undertaking further ground based studies in Q2 2011 and look forward to providing updates on our progress. Paragon is committed to building value for our shareholders by rapidly progressing both its production and exploration assets."

In accordance with the AIM Rules, the information in this announcement has been reviewed by Stephen Grimmer PhD, a qualified geologist with over 20 years' diamond exploration experience.

Additional Information

MABUKI AND DIAMOND HISTORY IN TANZANIA

Diamond prospecting & mining in Tanzania started in the 1930s, with several small scale mines beginning operations, but production was insignificant. The Tanganyika Diamond & Gold Development Corporation and Williamson Diamonds Limited were among early diamond explorers and had active operations in Shinyanga, Mwanza, Tabora and Singida Regions. In 1938, the operators of the Mabuki diamond mine at Shinyanga invited Dr. John Thoburn Williamson, a Canadian Geologist to conduct a geological survey of the area, with a view to identifying prospective diamond mining areas. Dr Williamson discovered several pipes at Mabuki and at other areas of the country in 1938 and 1939.

In 1940, Dr Williamson, positively identified a gem-bearing kimberlite pipe, about 130 Km south of the town of Mwanza in the Shinyanga region of Tanzania. The Williamson mine is an open pit diamond mine and at 146 hectares, Williamson is the largest kimberlite pipe ever to be mined economically, having been operated continuously as an open pit mine for almost 70 years. During this time it has produced over 20 million carats, and there remains a major resource of some 40 million carats. The mine regularly produces large, high-quality stones and is a source of rare and extremely valuable fancy pink diamonds.

Although it is often thought that Dr Williamson discovered Tanzania's first diamonds, the Mwadui Williamson mine was in fact preceded by several smaller operations, including the Mabuki Mine which Williamson worked on and later owned. In the late 1930s Williamson Diamond Limited was granted permission to establish a diamond mine at Mabuki. Mabuki revived temporarily on the takeover of the diamond mines by the State Mining Company (STAMICO) in 1979. Artisanal diamond mining in the area started in the early 1980s after STAMICO ceased working.