Stellar Diamonds Regulatory News (STEL)

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3 June 2014

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

Fast Tracking of Baoulé Kimberlite Project in Guinea to Trial Mining Stage

Stellar Diamonds plc, the London listed (AIM: STEL) diamond development company focused on West Africa, provides an update on its Baoulé kimberlite diamond project in Guinea.

Highlights:

· Strategic focus on fast tracking trial mining at the 5ha Baoulé kimberlite pipe

· Trial mining will utilise Stellar's existing in-country mining plant and equipment

· Plant commissioning expected by end August 2014

· Objective to generate early cash flow and determine the diamond grades and value

· Historical data suggests grade of between 13 and 40cpht and diamond value in excess of US$200/ct

· Internal resource target (non JORC) of 3 million carats to 300m depth

Stellar Diamonds Chief Executive Karl Smithson commented,  

"The diamondiferous Baoulé pipe is located in the heart of the Aredor diamond district of Guinea which has historically yielded very large, high value diamonds from alluvial mining. With an internal resource estimate of at least 3 million carats at the lower end of the grade scale of between 13-40cpht we are excited to further unlock the value in this high tonnage project. With this in mind, Stellar's near term objective is to generate cash flow from trial mining of the pipe and to increase our confidence in the diamond grades and values.

"We have already made progress establishing the local infrastructure for the project and we are in the process of relocating our significant earth moving and kimberlite processing plant, already located in Guinea, to the Baoulé pipe. We expect to commission the processing plant in August 2014 and our recently completed financing means that Stellar is fully funded to move Baoulé into the trial mining stage and in-turn cash flow. We are also fully funded to continue bulk sampling and diamond value modelling for the definitive feasibility study underway at our 1.1 million carat Tongo kimberlite project in Sierra Leone. I look forward to reporting on developments from both of our exciting diamond developments over the coming months in what has already been a highly active year for Stellar."

Baoulé Pipe Summary

The Baoulé kimberlite pipe was discovered in 1999 and was subject to drilling and initial bulk sampling by earlier operators. A valuable geological database is available on the project which shows that the pipe was delineated to 5 hectares in size and drilled to a maximum depth of 190m, but remains open at depth. Microdiamond analysis returned modelled macrodiamond grades of between 20 to 40 carats per hundred tonnes ("cpht") though bulk sampling yielded lower grades (+1mm) of 7cpht and 13cpht using pan plant and DMS technology respectively.

In-house modelling of previous drilling over the pipe suggests a target of over 22 million tonnes to a depth of 300m. This is not a resource estimate or in accordance with the JORC Code. At the DMS generated grade of 13cpht this would suggest a target of 3 million carats. However, using the average microdiamond grade of 30cpht the target increases to 6.5 million carats. Internal company modelling suggests that the Baoulé pipe has the potential to host a significant diamond resource.

In 2000, a parcel of 509 carats produced by the pan plant, which did not contain any large stones, was sold for US$157 per carat. The Company believes that there may be considerable upside on this diamond price and the same parcel could realistically be expected to achieve prices in excess of US$200 per carat in the current market.

Operational Progress

Stellar is in the process of dismantling and relocating its 100 tonne per hour DMS processing plant which was used for mining at the Mandala alluvial diamond project in Guinea. In addition, the 5 tonne per hour DMS sampling plant located at the Droujba diamond project in Guinea has already been dismantled and is about to be transported to Baoulé. The Company has retained ADP Metco to erect the plants in such a way that they will be combined to make a fully integrated kimberlite processing plant with a capacity of 100 tonnes per hour. A company will shortly be appointed to undertake an independent environmental impact assessment at the Baoulé project, ahead of the commencement of trial mining and in accordance with governmental requirements. Furthermore, road upgrading, camp and plant infrastructure is well advanced and repairs and maintenance of selected mine fleet earth moving vehicles has commenced. This will enable a kimberlite stockpile to be established whilst the plant construction is on-going. The expected timetable is that the processing plant will be ready to commission and process initial diamondiferous and weathered kimberlite material by the end of August 2014. Once the plant is operating efficiently then trial mining production will commence.

About Stellar Diamonds plc:

Stellar is an AIM quoted (AIM: STEL) West African focused diamond development company which is advancing its diamondiferous Baoulé kimberlite in Guinea towards trial mining, as well as progressing the 1.1 million carat Tongo Dyke-1 resource in Sierra Leone through a definitive feasibility study. In addition, Stellar holds the 3 million carat Droujba project in Guinea and continues to pursue both diplomatic and legal 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.