🕐08.07.14 - 08:27 Uhr

PARAGON DIAMONDS - AGM STATEMENT - SIGNIFICANT PROGRESS MADE AS PARAGON BUILD TO
WARDS BECOMING A CASH-GENERATIVE DIAMOND PRODUCTION COMPANY IN AFRICA



Paragon Diamonds Limited / Index: AIM / Epic: PRG / Sector: Resources 8 July 2014 Paragon Diamonds Limited (Paragon Diamonds or the Company) AGM Statement Paragon Diamonds Limited, the AIM quoted diamond development and production company in Africa, is holding its Annual General Meeting (AGM) today at 11.00am at Dixcart House, Sir William Place, St Peter Port, Guernsey, GY1 1GX.

At the meeting Simon Retter, the Companys CFO, will make the following statement: "This has been a year of significant progress as we look to transform Paragon Diamonds into a cash-generative diamond exploration and production company in Africa.

We have a solid portfolio of multi-stage projects in world-class diamondiferous regions of Africa where we believe we can deliver significant value for shareholders.

In Lesotho, our flagship large stone/ high value Lemphane kimberlite project is on course to commence production in the near term, while our diamond projects in Botswana and Zambia provide us with a highly prospective pipeline which we will look to advance along the development curve.

In addition, we continue to evaluate strategic and corporate opportunities to diversify our offering and will expose our shareholders to as much of the value chain as possible. "Lemphane is believed to be the last world-class kimberlite to be developed in Lesotho and has an excellent address being located close to Gem Diamonds Letseng pipe which is renowned for the recovery of exceptionally large and valuable diamonds.

Post-period end we announced excellent results from an independent size frequency and revenue modelling report.

The results, based on 300 carats of diamonds recovered during the 2012/3 bulk sampling programme, highlight that preliminary diamond values from Stage 1 production will be between US$930 - US$1,025/carat for grades of 2 carats per hundred tonnes while the size frequency study indicated that 12% of carats will be over 9cts.

Significantly the report predicts the recovery of exceptionally large sized diamonds of 100+ carats, even in the early stages of production.

This is in line with our business model to produce large stones with high values.

Importantly as Lemphane commences production the grade and the value of diamonds are projected to rise as tonnages processed increases.

While the value of our stones at an average grade of 2 carats per hundred tonnes stands at US$930 - US$1,025/carat, for every 1 million tonnes processed at Lemphane, our modelling shows there will be at least one 100+ carat diamond. "The remainder of 2014 looks to be a highly exciting period for Paragon Diamonds as we move to stage 1 production, subject to completing financing.

We expect to report on further drilling at Lemphane and also a scoping study which we expect will upgrade the already attractive economics of Lemphane. "I would like to take this opportunity to thank our shareholders, fellow Board Directors and advisors for their support during this transformational stage in Paragon Diamonds development as we continue to build a leading diamond production and investment opportunity." **ENDS** For further information please visit www.paragondiamonds.com or contact: Martin Doyle Paragon Diamonds Limited +44 (0) 20 7099 1940 Simon Retter Paragon Diamonds Limited +44 (0) 20 7099 1940 Lindsay Mair Sanlam Securities UK +44 (0) 20 7628 2200 Andrew Wagstaff Sanlam Securities UK +44 (0) 20 7628 2200 Felicity Edwards St Brides Media and Finance Ltd +44 (0) 20 7236 1177 Frank Buhagiar St Brides Media and Finance Ltd +44 (0) 20 7236 1177
Notes Paragon Diamonds has a pipeline of projects in Lesotho, Botswana and Zambia, the most advanced of which is its Lemphane Kimberlite Pipe Project in Lesotho, located close to the world class Let�eng mine, Lesothos largest diamond mine.

Lemphane is the last known world-class sized kimberlite to be developed in Lesotho.

Among the stones recovered in the Companys 2013 bulk sampling programme were several large high value stones of up 8.9 carats in size and individual diamond values in excess of US$2,400/ct have been achieved, demonstrating the potential for Lemphane to hold large and valuable diamonds.

The first of a two stage production programme is currently expected to commence late 2014 (subject to financing) which will further define the resource at Lemphane.

As increased tonnages of kimberlite are processed the proportion of larger diamonds recovered will improve, increasing the average value of diamonds recovered at the project, as was the case at Let�eng. Stage 1 production will cover a two year period during which approximately 1 Mt of kimberlite will be mined and processed out of the currently estimated 48.6Mt of kimberlite (to 350m depth) at the site, using a 75 tonne per hour processing plant.

The Company is targeting 20,000 carats during Stage 1 production with an estimated minimum value of US$750 per carat that is expected to generate revenues in excess of US$8m per annum.

Cash flow will be reinvested to further develop Lemphane and complete a bankable feasibility study, a 3D geological model and a substantial inferred resource ahead of commencing the Stage 2 production phase.

Stage 2 will see production ramped up to 3Mt/year with peak production expected to hit 65,000 carats per year of high value diamonds.
Felicity [cid:image002.png@01CECBDD.61F8A860] Felicity Edwards St Brides Media & Finance Ltd 3 St Michaels Alley, London, EC3V 9DS www.stbridesmedia.co.uk Tel: 0207 236 1177 | Mob: 07748843871 | Twitter: @StBrides1



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