Stellar Diamonds Regulatory News (STEL)

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25 January 2016 

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

55 carat diamond recovered from Baoulé kimberlite in Guinea

Stellar Diamonds plc, the London listed (AIM: STEL) diamond development company focused on West Africa, provides an operational update from trial mining at its 75% owned, five hectare Baoulé kimberlite pipe ("Baoulé" or "the Project") in Guinea.

Highlights:

· 55 carat diamond recovered confirming presence of large stones in the pipe

· Continued recovery of high quality gems of up to 12 carats

· Trial mining has yielded a total of 8,043 carats to date at an average grade of 12.7 cpht

· Revenue from Baoulé diamond sales to date of US$700,644 from 5,173 carats

· Objective to mine and process 100,000 tonnes of kimberlite now 63% complete

· Target resource of 3 million carats at Baoulé based on previous drilling and diamond results to date; to be confirmed on completion of trial mining

Stellar Chief Executive, Karl Smithson, is currently undertaking a site visit at Baoulé with fellow director Hansjörg Plaggemars, the board representative of Deutsche Balaton AG, a substantial investor in the Company. From the Project site he commented:

"We are extremely encouraged to have recovered this 55 carat stone as it confirms that the Baoulé pipe is a possible source of the large diamonds which have been mined in alluvial deposits downstream of the Baoulé pipe for many years, several of which have been +100 carats in size. We will carefully examine the stone which appears to have a 'boart' exterior and a potentially better quality diamond on the interior. Gem quality diamonds continue to be recovered from the Baoulé kimberlite up to 12 carats in size.

"With approximately 63% of our trial mining and processing at Baoulé now complete, subject to the Company having sufficient working capital, we are currently on track to finalise the trial mining and processing of 100,000 tonnes in Q3 and look forward to providing further updates in due course."

Trial Mining Production and Processing

Trial mining of the Baoulé kimberlite pipe resumed in late November 2015 after the rainy season, with stripping and mining of the western lobe. Extraction of the kimberlite commenced in December 2015 and processing of the material continues on a double shift basis (16 hours per day). The kimberlite material remains predominantly weathered, with increasing amounts of friable harder primary kimberlite at depth.

The overall objective of the trial mining exercise is to extract and process up to 100,000 tonnes of kimberlite in order to determine with confidence the diamond grade and ultimate value of the pipe. The Company remains on track to achieve this objective, having processed over 63,000 dry tonnes of kimberlite thus far.

Diamond Results

A total of 8,043 carats have been recovered to date from Baoulé at a +1.25mm cut off, giving an average grade of 12.7cpht. This grade is slightly lower than previously reported average grade of 13.5cpht due to an average lower grade for the west lobe (11cpht) as compared to the east lobe (13cpht). This seems to be a consequence of fewer smaller stones in the -7 sieve fraction and thus should not impact negatively on the gross diamond value.

Recently a 55.64 carat diamond was recovered, which is the largest stone discovered to date at Baoulé. This is an unusual stone since it has a low quality (boart) coating but what seems to be a better quality diamond within the interior. The quality and potential value of the stone is currently highly uncertain and the stone will be carefully analysed to accurately determine its value before deciding on the sales process.

A total of 610 stones greater than 1 carat have been yielded including numerous gem diamonds of up to 12 carats in size. The presence of the 55 carat stone confirms the Company's belief that the Baoulé pipe is a source of large diamonds and supports the investment thesis of a potentially lower grade but high value kimberlite orebody.

The table below sets out the diamond results to date from Baoulé:

Ebola Update

Guinea was officially declared Ebola free in early January 2016. However, it is possible that isolated cases of infection may occur, as has happened in neighbouring Sierra Leone and Liberia. These cases have been quickly identified and isolated. Nevertheless, the Company remains vigilant and continues to take the necessary precautions to protect its people and assets.

Competent person

This announcement has been reviewed by Karl Smithson, Chief Executive of Stellar, a qualified geologist and Fellow of the Institute of Materials, Metals, Mining, with 27 years' experience.

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ''believe'', ''could'', "should" ''envisage'', ''estimate'', ''intend'', ''may'', ''plan'', ''potentially'', ''will'' or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors' current expectations and assumptions regarding the Company's future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors' current beliefs and assumptions and are based on information currently available to the Directors.

A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements including risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although any forward looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Subject to any continuing obligations under applicable law or any relevant AIM Rule requirements, in providing this information the Company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

About Stellar Diamonds plc

Stellar is an AIM quoted (AIM: STEL) West African focused diamond development company which continues trial mining of its Baoulé kimberlite in Guinea, and is progressing the 1.45 million carat Tongo Dyke-1 resource in Sierra Leone through the mining licence application process. In addition, Stellar holds the 3 million carat Droujba project in Guinea and continues to pursue diplomatic channels to ensure the proper reinstatement of its Kono licences in Sierra Leone.

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For further information contact the following or visit the Company's website at www.stellar-diamonds.com.