The company plans to use the proceeds to support the development of its Lemphane mine in Lesotho, South Africa as well as meet working capital requirements.
Paragon is also planning to issue another 250,000 new shares to advisers for services rendered at the same price.
Paragon chairman Philip Falzon Sant Manduca said: "Today’s small placement with senior management and new shareholders has been undertaken to incentivize and retain senior management and encourage a wider share base as we build Paragon into a leading global vertically integrated diamond house.
"We are firmly committed to commencing production at Lemphane by the end of Q1 2015 (subject to financing) and we feel strongly that this is a highly opportune time thanks to favourable diamond market fundamentals.
"By building our own distribution arm for Lemphane’s production, Paragon will be fit forpurpose to capitalize on these emerging trends."
The company expects diamond prices will rise in the next five plus years.
