Stellar Diamonds Regulatory News (STEL)

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27 June 2011

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

Drilling Update on Droujba Kimberlite Pipe, Guinea

Stellar Diamonds plc, the London listed (AIM: STEL) diamond mining and exploration company focused on West Africa provides an operational update on the drilling programme at the Company's diamondiferous Droujba kimberlite pipe project located in eastern Guinea.

Highlights:

·; Deepest drill intersect recorded to date of 388m considered highly encouraging

·; Drill programme doubled in scope to 12,000m to test targets defined from orebody modelling

·; Bulk sampling plant being installed on site, relocated from the Company's Bomboko project

·; Further 268kg of drill core sample consigned for microdiamond analysis in Canada

·; Previous microdiamond analysis of 400kg of hypabyssal kimberlite returned 952 diamonds

Chief Executive Karl Smithson commented:

"The drilling programme at Droujba is progressing well and the significant intersection of kimberlite at a depth of 388m is considered to be highly encouraging in terms of the potential tonnage of the Droujba pipe. Based on the interpretation of the drilling data the Company has elected to double the current 6,000m drilling programme in order to model the ore body to depth and, in tandem with further microdiamond sampling and a surface bulk sampling programme, establish an initial inferred resource estimate by the end of the first quarter of 2012. I look forward to updating shareholders in due course."

Drilling Programme

Drilling at Droujba is on going with a total of 4,400 metres completed to date from 23 holes. The pipe has been delineated at surface as being at least 3 hectares in size, with the deepest intersection to date being at 388m from surface. The orebody comprises two main intrusions of hypabyssal kimberlite in an envelope of explosion breccia with varying kimberlite content. The southern 'blind intrusion' of hypabyssal kimberlite previously reported has now been intersected at a depth of between 300m and 400m and remains open at depth, proving the existence of this kimberlite unit further to the west and deeper than previously known. Petrographic analysis and microdiamond results suggest that the southern blind intrusion is very similar to the hypabyssal unit that reaches surface and was mined to a depth of 20m in the 1960's by the Russian Aid Mission. Therefore it is possible that these two separate hypabyssal kimberlite intrusions coalesce at depth, although this remains to be proven by further drilling.

The expansion of the drilling programme is designed to further define the kimberlite both near to surface and at depth, as well as test unresolved geophysical anomalies and the extensive Katcha kimberlite dyke which is adjacent to the Droujba pipe. This additional drilling is included in the current budget.

3D Geological Modelling

Independent 3D modelling has been undertaken by Datamine in South Africa on the drilling data received to date. This has defined a geological model containing 4.7 million tons of hypabyssal kimberlite and 10.4 million tons of kimberlite breccia to a depth of 350m below surface. This is not yet classified as a mineral resource estimate. However, it is the objective of the continued drilling programme, microdiamond analysis and planned surface bulk sampling to define an initial inferred resource in accordance with the JORC (or equivalent) code.

Microdiamond Sampling and Results

A further sample of 268kg of kimberlite breccia is currently in the Saskatchewan Research Council laboratory in Canada for microdiamond analysis. Previous results of a 98kg sample of kimberlite breccia (as reported on the 1st February 2011) returned 48 diamonds, including one diamond in excess of 5mm in one dimension. The breccia is volumetrically important to the potential resource and the Company considers that further microdiamond samples are required to provide a more representative result. The hypabyssal kimberlite has so far returned abundant diamond counts of over 2 diamonds per kilogramme. A total of 400.87kg of hypabyssal kimberlite has been processed to date and returned 952 diamonds (as reported on the 1st February and 19th April 2011).

Bulk Sample Processing

A sample processing plant is currently being established at Droujba. The plant has recently been relocated from the Company's Bomboko alluvial project and will be modified to process kimberlite. Once erected and modified it will be used to process a series of bulk samples of approximately 2,000 tonnes each from the fourth quarter of 2011. The bulk samples will test all of the main geological units identified to date, in order to obtain a representative parcel of diamonds for valuation. In addition, a bulk sample of the mine dumps that remain from previous mining undertaken by the Russian Aid Mission in the 1960s will be tested in order to obtain an early understanding of the potential diamond quality.

About Stellar Diamonds plc

Stellar is a London (AIM: STEL) listed diamond mining and exploration company focussed on West Africa. Stellar owns a 100% interest in four high-grade kimberlite projects. In Guinea resource definition drilling is continuing on the diamondiferous Droujba kimberlite pipe and bulk sampling is underway on the high grade Bouro kimberlite dyke which is adjacent to the Company's Mandala alluvial diamond mine. In Sierra Leone at Tongo a bulk sampling programme is ongoing on the high grade Dyke 1 and bulk sampling is planned on the Lion 5 dyke at the Kono kimberlite project.

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

Katie Shelton, Alice Lane (Broking) Tel: +44 (0) 20 7796 8800

Charles Vaughan (Sales)

Daniel Stewart & Company plc

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

Pelham Bell Pottinger

Charles Vivian / James MacFarlane Tel: +44 (0) 20 7861 3232