Stellar Diamonds Regulatory News (STEL)

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18 October 2011

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

Progress Update on Tongo Kimberlite Project in Sierra Leone

Stellar Diamonds plc, the London listed (AIM: STEL) diamond mining and exploration company focused on West Africa, is pleased to provide an update on the resource drilling and bulk sampling at the Company's high-grade Tongo kimberlite diamond project in eastern Sierra Leone.

Highlights:

·; Tongo Dyke-1 intersected at 204m vertical depth and along a strike length of 1km

·; Two rig programme has completed 14 holes to date for 1,833m

·; Further 36 holes planned for 5,000 metres, to include drill testing of parallel kimberlite dykes

·; Bulk sample yielded 1,150 carats for undiluted grade of 111 carats per hundred tonnes ('cpht')

·; Diamond valuations indicate potential for $205 per tonne in-situ value for Dyke-1

·; Initial resource estimate on track to be completed in first quarter of 2012

Chief Executive Karl Smithson commented:

"The work programme at Tongo continues to deliver very strong results and we remain confident in the potential Tongo offers as we continue to focus our portfolio on the development of our high grade kimberlite projects. The current drill programme has confirmed the lateral and depth continuity of the high-grade Dyke 1. The kimberlite has been intersected at a vertical depth of 200m along a strike length of 1km and remains open at depth and along strike. Bulk sampling results from Dyke-1 have also continued to deliver grades which are comfortably in excess of 100cpht. Additionally, initial valuations on the diamonds from the Tongo bulk sample have shown an average value of US$185/ct, highlighting the high quality of the Tongo diamonds. In the next two months the exploration drilling programme will test Dyke-4, located 1km northwest of and parallel to Dyke-1 and further surface bulk samples will be completed. Our objective remains to establish a maiden resource estimate for Tongo in the first quarter of 2012 and we will continue to provide updates on our progress as the programme continues."

Resource Drilling

Drilling with two core rigs has been focussed on the 2.5km long Dyke-1 with 14 holes for 1,833m being completed to date. Each drill collar is spaced at 200m lateral distance along strike of the kimberlite and three holes are drilled from each collar at varying angles so as to intersect the kimberlite at 50m, 100m and either 150m or 200m vertical depth below surface. Dyke-1 has been intersected in each drill hole and remains open along strike and at depth. Intersections often occur in a zone of closely spaced multiple intrusions that cumulatively vary from 27cm to 110cm in width. Samples have been collected for petrographic and microdiamond analysis to ascertain whether the intrusions are of similar origin and to determine the relative diamond content of these kimberlites. Once drilling of Dyke-1 has been completed, the rigs will be relocated to drill kimberlite Dyke-4, which is located just 1km to the northwest of Dyke-1. This 1km long kimberlite was bulk sampled by the Company in 2008 and returned an encouraging grade of 100cpht.

Bulk Sampling and Processing Results

Bulk sampling of Dyke-1 continues to yield high grades. Processing of some 1,730 dry tonnes of kimberlite and wall rock granite mix (1,038t of kimberlite only) has been completed to date which has yielded 1,149.51 carats for a diluted grade of 66.45cpht and an undiluted grade of 110.74cpht based on the 1,038 tonnes of kimberlite processed.

A second diamond parcel from the Tongo project, comprising 310 carats, was recently exported to Antwerp and independently valued at $176 per carat. The first parcel of 639 carats exported in June 2011 was valued at $191 per carat, giving an average value to date for both parcels of $185 per carat and a potential in-situ value of Dyke-1 of approximately $205 per tonne.

The following table shows the cumulative results of the Tongo Dyke bulk sampling and processing programme as reported at 18 October, 16 August 2011 and 11 July 2011:

About Stellar Diamonds plc

Stellar is a London (AIM: STEL) listed diamond mining and exploration company focussed on West Africa where programmes aimed at generating maiden resource estimates at Droujba in Guinea and Tongo in Sierra Leone are ongoing. Bulk sampling of the Lion-5 dyke at Kono (Sierra Leone) is due to commence shortly and at Bouro (Guinea) a previous bulk sample realised a grade of 243cpht. Mining at Mandala is currently on a seasonal break.

In accordance with the AIM Rules, the information in this announcement has been reviewed by Karl Smithson, CEO of Stellar, a qualified geologist with 23 years' experience.

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

Stellar Diamonds plc

Karl Smithson, Chief Executive Tel: +44 (0) 20 7257 2930

Northland Capital Partners Limited

Gavin Burnell, Edward Hutton

Charles Vaughan (Sales) Tel: +44 (0) 20 7796 8800

Daniel Stewart & Company plc

Martin Lampshire, Oliver Rigby Tel: +44 (0) 20 7776 6550

Pelham Bell Pottinger

James MacFarlane / Joanna Boon Tel: +44 (0) 20 7861 3232