Operational Update

Paragon Diamonds Limited

("Paragon" or the "Company") (AIM:PRG)

Operational update

Paragon Diamonds Limited, the AIM quoted, African diamond production and development company, announces an operational update on its activities since admission to AIM on 01 November 2010.

Highlights

·; First diamond sale since admission scheduled for December 2010

o Export parcel expected to total c.3,000 carats

o Parcel includes c.34.18 carat "special" stone and 10.18, 10.46 and 9.96 carat gem quality stones

·; Increase production at the Konoma Diamond Mine

·; Purchase of a complete 15 tph modular diamond recovery plant including pre-treatment, DMS and final recovery for delivery in Q1 2011

·; Acquisition of African Rock Resources progressing well

·; Managing Director appointed

Konoma Diamond Mine

Paragon Diamonds has recovered c.3,000 carats from the 100% owned Konoma Diamond Mine in Sierra Leone that are awaiting sale and export in the coming days. The parcel contained stones recovered from mining activities at both Konoma and Bakidu and included a mixture of gem quality and industrial stones.

The parcel includes a c.34.18 carat "special" stone as well as a 10.18, 10.46 and 9.96 carat gem quality stones.

Mine activities continue to step-up and have moved from the evaluation phase into production. The main areas of mining are focused on Bolima and Bakidu.

Purchase of plant

Paragon is pleased to announce that it has acquired a 15 tph modular diamond recovery plant which is due for delivery to the company during Q1 2011. This plant is suitable for a range of bulk sampling and trial mining operations throughout the company's portfolio of diamond projects.

The management anticipates an increase in production through focussed and cost effective mining in selected areas through utilisation of the new mobile DMS.

Acquisition of African Rock Resources

Paragon is pleased to confirm that African Rock Resources has renewed the Mabuki Diamond Licence for a further period of two years. Once consent for the change of control has been obtained from the Tanzanian Government, all the conditions precedent will have been met and the acquisition will complete as soon as practical.

Management Changes

Paragon has appointed Stephen Carl Grimmer (aged 49) to the Board as Managing Director (see press release dates 19th November 2010). Stephen is a highly experienced diamond exploration and mining professional with over 22 years of practical experience working extensively in Africa. Stephen will principally be based in Sierra Leone with responsibility for mining operations at Konomo and exploration programme within Sierra Leone.

Frank Scolaro, Chairman of Paragon commented: "I am very pleased to announce our first parcel of stones is prepared for sale and export since listing. We have made good progress in commencing and increasing our production levels and I am confident that with the quality of stones from both Bakidu and Bolima a good overall value should be obtained. The imminent finalisation of the joint venture and acquisition illustrate that we are making good progress in diversifying the business into other areas within Africa in line with our strategy. The prices achieved for rough stones have significantly improved since the beginning of 2010 and I am hopeful that the upward trend will continue into 2011."