Stellar Diamonds Regulatory News (STEL)

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15 March 2016

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

Issue of Equity, Diamond Sale and Directorate Change

Stellar Diamonds plc, the London listed (AIM: STEL) diamond development company focused on West Africa, announces that it has conditionally raised £600,000 before expenses through an equity issue, in addition to realising approximately US$300,000 through a sale of diamonds from its Baoulé project in Guinea. It also announces the resignation of two Directors in line with the Company's strategy to reduce corporate costs.

Issue of Equity

The Company announces that it has conditionally raised £600,000 before expenses, through a placing of 4,400,000 new ordinary shares of 1 pence each ("Ordinary Shares") at 10 pence per share in the Company ("Placing Shares") and through the subscription of 1,600,000 new Ordinary Shares at 10 pence per share ("Subscription Shares" and together "the Placing and Subscription").

It is intended that the proceeds of the Placing and Subscription will be used for general working capital purposes in addition to being used to:

· support the Tongo Mine Licence application process in Sierra Leone;

· complete the trial mining and diamond sales exercise at Baoulé; and

· complete a maiden resource statement at Baoulé targeting 3 million carats.

Completion of the Placing and Subscription is conditional on admission of the Placing Shares and Subscription Shares to trading on AIM ("Admission"). Application will be made for the Placing Shares and Subscription Shares, both of which will, on issue, rank pari passu with the existing Ordinary Shares, to be admitted to trading on AIM. Admission is expected to occur on 31 March 2016.

The Company's largest shareholder Deutsche Balaton AG has agreed to subscribe for 1,600,000 Subscription Shares as part of the Placing and Subscription, conditional on Admission. Following the completion of the Placing and Subscription, Deutsche Balaton will be interested in 8,512,692 Ordinary Shares in aggregate representing 26.77 per cent. of the enlarged issued share capital of the Company. Deutsche Balaton are a related party of the Company as defined by the AIM Rules for Companies by virtue of their status as a significant shareholder. Accordingly their participation in the Subscription is a related party transaction. The Directors who are independent of the Subscription consider, having consulted with the Company's nominated adviser, that the terms of the Subscription are fair and reasonable in so far as the Company's shareholders are concerned.

Following Admission, the Company's enlarged share capital will comprise of 31,802,476 Ordinary Shares. This number may be used by shareholders in the Company as the denominator for the calculations by which they will determine if they are required to notify their interest in, or a change in their interest in, the share capital of the Company under the FCA's Disclosure and Transparency Rules.

Baoulé Diamond Sale

A sale of 3,291 carats was recently completed by auction in Antwerp and realised proceeds of US$299,988 at an average of US$91.05 per carat. The lower average price when compared with the previous sale in May 2015 (US$156 per carat) is due to a different mix of goods with a higher proportion of lower quality stones as well as a broadly weaker rough diamond market since mid-last year. However, certain gemstones in this most recent auction realised prices of over US$1,000 per carat and up to US$4,600 per carat, mostly white gems and fancy coloured yellows, demonstrating that high quality stones are present within the Baoulé pipe. Following detailed analysis, it was determined that the 55 carat stone that had recently been found at the Baoulé project and had a boart exterior, would not add significant value through polishing so it was sold as a rough stone. However it remains the case that this large stone 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.

Directorate Changes

The Board announces that Liviu Meran and Dr. Markus Elsässer will step down as non-executive directors with effect from 15 March 2016 following a rationalisation of the board in line with the Company's on-going corporate cost rationalisation.

The Board would like to take this opportunity to thank Liviu and Markus for their contribution to the Company and will endeavour to work closely with them as representatives of key shareholders of the Company.

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 project 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 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.