Paragon Diamonds Limited / Index: AIM / Epic: PRG / Sector: Resources     

     14 December 2015

                 Paragon Diamonds Limited ('Paragon' or the 'Company')             

                                   Update on Mothae                                

    Paragon Diamonds Limited, the AIM quoted diamond development company, has
    received a notice of termination for its share purchase agreement with Lucara
    Diamond Corporation ('Lucara') with regards to the acquisition (announced on 14
    July 2015), of the Mothae Kimberlite Resource ('Mothae').  The Company
    maintains the view that the development of Mothae is highly synergistic with
    its Lemphane Kimberlite Pipe Project ('Lemphane').  Accordingly, it will
    negotiate directly with the Government of Lesotho, which controls the
    definitive approval on any transaction in respect of developing Mothae, and
    will update the market accordingly on progress made.

    Finalising funding for the Company to implement its development strategy
    remains an ongoing process.  The conclusion of a financing package has taken
    longer than anticipated.  This is on account of the Board's reluctance to
    materially discount the potential value of the Company and dilute existing
    shareholders, as well as continued administrative delays experienced by the
    expected investor.  It is the Board's belief that the termination of the
    agreement with Lucara will not have material impact on the terms of any such
    funding obtained from the afore-referenced investor.

                                       **ENDS**                                    

    For further information please visit www.paragondiamonds.com or contact:

    Philip Falzon Sant      Paragon Diamonds                +44 (0) 20 7182 1920  
    Manduca                 Limited                                               
                                                                                  
    Simon Retter            Paragon Diamonds                +44 (0) 20 7182 1920  
                            Limited                                               
                                                                                  
    Felicity Winkles        St Brides Partners Limited      +44 (0) 20 7236 1177  
                                                                                  
    Frank Buhagiar          St Brides Partners Limited      +44 (0) 20 7236 1177