Sch 1 update - Paragon Diamonds Limited

ANNOUNCEMENT TO BE MADE BY THE AIM APPLICANT PRIOR TO ADMISSION IN ACCORDANCE WITH RULE 2 OF THE AIM RULES FOR COMPANIES ("AIM RULES")

COMPANY NAME:

Paragon Diamonds Limited (the "Company" or "Group")

COMPANY REGISTERED OFFICE ADDRESS AND IF DIFFERENT, COMPANY TRADING ADDRESS (INCLUDING POSTCODES) :

Albert House

2nd Floor

PO Box 19

South Esplanade

St. Peter Port

Guernsey

GY1 3AJ

COUNTRY OF INCORPORATION:

Guernsey

COMPANY WEBSITE ADDRESS CONTAINING ALL INFORMATION REQUIRED BY AIM RULE 26:

www.paragondiamonds.co (Live from day of admission)

COMPANY BUSINESS (INCLUDING MAIN COUNTRY OF OPERATION) OR, IN THE CASE OF AN INVESTING COMPANY, DETAILS OF ITS INVESTING POLICY). IF THE ADMISSION IS SOUGHT AS A RESULT OF A REVERSE TAKE-OVER UNDER RULE 14, THIS SHOULD BE STATED:

Main country of operation - Sierra Leone

Paragon Diamonds Limited will be the holding company of a mineral exploration and development group, principally focused on diamond opportunities in Sierra Leone and Tanzania.

Conditional on admission to AIM, the Company will acquire the entire issued share capital of Sierra Leone Hard Rock Limited ("SLHR"). SLHR, through its local subsidiary, SLHR (SL), owns and operates the established Konoma Mine in Kono, Sierra Leone. Konoma is an alluvial diamond deposit located in eastern Sierra Leone, approximately 220km east of Freetown, the capital city, and 58km northwest of Koidu. The project comprises four mining licences, ML001/06, ML002/06, ML003/06 and ML004/06 covering a total of 162.4km2 in the Nimiyama, Nimikor, Sandor and Kamara Chiefdoms respectively. The project extends along the Lower Bafi River east of the confluence with the Sewa River and west of the Moinde River.

Conditional on admission to AIM, the renewal of the Mabuki Diamond Licence (which is due to expire on 25 October 2010), and consent to its change in control by the relevant Tanzanian licensing authority, the Company will also acquire the entire issued share capital of African Rock Resources Limited ("ARR"). The acquisition is anticipated to complete within two months of Admission. ARR owns the Mabuki licence area in Tanzania. The licence area is situated in North West Tanzania, approximately 81km southeast of the city of Mwanza, and is considered prospective for diamond exploration. The licence area covers 64km2 and is situated in a region where evidence indicates that known diamond deposits are currently being worked by artisanal miners. Although no exploration work has been undertaken to date, the geological setting of the licence indicates the area may have the potential for, as yet, undiscovered diamond deposits.

The Group's objective is to increase production from the established operating Konoma Mine in Sierra Leone, with the intention of subsequently increasing the value of its diamond assets through the development of resource estimates and, where appropriate, commence production of other economically feasible diamond assets.

DETAILS OF SECURITIES TO BE ADMITTED INCLUDING ANY RESTRICTIONS AS TO TRANSFER OF THE SECURITIES (i.e. where known, number and type of shares, nominal value and issue price to which it seeks admission and the number and type to be held as treasury shares):

106,784,925 ordinary shares of 1p each

Placing/ issue price - 20p per ordinary share

CAPITAL TO BE RAISED ON ADMISSION (IF APPLICABLE) AND ANTICIPATED MARKET CAPITALISATION ON ADMISSION:

Capital to be raised on admission - £3.8m

Market Capitalisation on admission - £21.4m

PERCENTAGE OF AIM SECURITIES NOT IN PUBLIC HANDS AT ADMISSION:

82.1 per cent.

DETAILS OF ANY OTHER EXCHANGE OR TRADING PLATFORM TO WHICH THE AIM COMPANY HAS APPLIED OR AGREED TO HAVE ANY OF ITS SECURITIES (INCLUDING ITS AIM SECURITIES) ADMITTED OR TRADED:

NONE

FULL NAMES AND FUNCTIONS OF DIRECTORS AND PROPOSED DIRECTORS (underlining the first name by which each is known or including any other name by which each is known):

Francesco ("Frank") Scolaro, Executive Chairman

Simon James Retter, Finance Director

Rudi Saaiman, Operations Director

Nicholas Lee, Non-Executive Director

James Lawrence Ede-Golightly, Non-Executive Director

Buddy James Doyle, Non-Executive Director

FULL NAMES AND HOLDINGS OF SIGNIFICANT SHAREHOLDERS EXPRESSED AS A PERCENTAGE OF THE ISSUED SHARE CAPITAL, BEFORE AND AFTER ADMISSION (underlining the first name by which each is known or including any other name by which each is known):

Before Admission:

Obtala Resources Limited - 100%

After Admission:

Obtala Resources Limited - 81.94%

NAMES OF ALL PERSONS TO BE DISCLOSED IN ACCORDANCE WITH SCHEDULE 2, PARAGRAPH (H) OF THE AIM RULES:

Rudi Saaiman - 133,300 ordinary shares

Ilene Hardy - 66,650 ordinary shares

Melvin Young - 66,650 ordinary shares

(i) ANTICIPATED ACCOUNTING REFERENCE DATE

(ii) DATE TO WHICH THE MAIN FINANCIAL INFORMATION IN THE ADMISSION DOCUMENT HAS BEEN PREPARED (this may be represented by unaudited interim financial information)

(iii) DATES BY WHICH IT MUST PUBLISH ITS FIRST THREE REPORTS PURSUANT TO AIM RULES 18 AND 19:

(i) 31 December

(ii) 30 June 2010

(iii) 30 June 2011 (audited results for the period from incorporation to 31 December 2010)

31 September 2011 (Interim results for the six months ended 30 June 2011)

30 June 2012 (Annual results for the year ended 31 December 2011)

EXPECTED ADMISSION DATE:

1 November 2010

NAME AND ADDRESS OF NOMINATED ADVISER:

ZAI Corporate Finance Limited

12 Camomile Street

London

EC3A 7PT

NAME AND ADDRESS OF BROKER:

ZAI Corporate Finance Limited

12 Camomile Street

London

EC3A 7PT

OTHER THAN IN THE CASE OF A QUOTED APPLICANT, DETAILS OF WHERE (POSTAL OR INTERNET ADDRESS) THE ADMISSION DOCUMENT WILL BE AVAILABLE FROM, WITH A STATEMENT THAT THIS WILL CONTAIN FULL DETAILS ABOUT THE APPLICANT AND THE ADMISSION OF ITS SECURITIES:

www.paragondiamonds.co (Live from day of admission)

DATE OF NOTIFICATION:

22 October 2010

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