Stellar Diamonds Regulatory News (STEL)

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09 December 2014

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

Loan Facility

Stellar Diamonds plc, the London quoted (AIM: STEL) diamond development company focused on West Africa, announces that it has entered into a bridging loan agreement for up to US$2 million with YA Global Master SPV Ltd ("Yorkville") (the "Loan Facility"). The Loan Facility, which will be available to the Company for 3 years provides for two initial loan tranches of principal amounts of US$250,000 each. The net proceeds of the two tranches will be used to support the immediate working capital needs of the Company and its operating expenses before the regular diamond exports and sales from the Baoulé Project gets underway.

In conjunction with the Loan Facility, the Company has also entered into a £1 million Standby Equity Distribution Facility ("SEDA")and warrant agreement with Yorkville.

Chief Executive Karl Smithson commented:

"The Company is at an inflection point with the first sale of diamonds from our Baoulé Project expected this month and further regular exports and sales expected to occur every 2 months thereafter. This Loan Facility provides a source of bridge finance to support the working capital and operating requirements of the Company whilst we begin to generate regular cash flows from Baoulé. There is no minimum draw down required under the terms of the SEDA and the Board do not currently anticipate that it will be necessary for the Company to use the SEDA facility. Neither the Company nor Yorkville is under any obligation to agree to any bridging loan beyond the two tranches of US$250,000 each."

Details of Loan Facility

An initial tranche of US$250,000 ("Initial Tranche") will be available for drawdown immediately, followed by a second tranche of US$250,000 ("Second Tranche") which is expected to be drawn down as soon as practicable thereafter. Further tranches may be available if mutually agreed by the Company and Yorkville and subject to certain conditions being met. Each tranche drawn down by the Company is subject to an arrangement fee of 7% of such tranche and interest at 10% per annum.

The Initial and Second Tranches are expected to be repaid in cash, on a monthly basis over 10 months, with first payments commencing three months after the date of the first drawdown.

In the event that Stellar does not meet the expected repayment schedule in respect of repayment of the Initial Tranche, the Second Tranche or any other agreed tranche, the outstanding principal amount of a tranche (a "Loan") drawn down by Stellar under the Loan Facility is convertible at Yorkville's option (in whole or in part) into ordinary shares of the Company ("Ordinary Shares") at 95% of the lowest daily volume weighted average price ("VWAP") of the Ordinary Shares during the 10 trading days following receipt by the Company of notification of an intended conversion.

The Company is entitled to prepay the Loan in cash, in whole or in part. Subject to Stellar making repayments by the agreed repayment dates, Yorkville's option to convert that Loan into Ordinary Shares is terminated. The Facility provides for customary events of default. If an event of default, including failure to meet a repayment date obligation, has been continuing for at least 30 calendar days, the outstanding principal amount of a Loan may at Yorkville's option, be converted in whole or in part into Ordinary Shares at 70% of the closing share price (or the nominal value of the shares if higher) on the trading day prior to the notice of conversion being given by Yorkville to the Company.

The Loan Facility requires that the Company has sufficient share authorities to issue Ordinary Shares to Yorkville under the conversion terms of the Loan Facility and the subscription rights to be granted to Yorkville (details of which are set out below) and repayment of any outstanding Loan may be required if the Company does not have sufficient share authorities.

Details of SEDA Facility

Subject to its terms, the up to £1 million SEDA facility can be drawn upon at the discretion of the Company over a period of up to three years in exchange for the issue of new Ordinary Shares. There is no minimum draw down requirement by Stellar under the terms of the SEDA.

New Ordinary Shares issued under the terms of the SEDA will be issued at a 5% discount to the lowest VWAP during the 10 dealing day pricing period of each draw down.

The maximum advance that may be requested by the Company is 200% of the average daily value traded of the Ordinary Shares for each of the ten dealing days prior to the date of the draw down request or 2.99% of the issued share capital of the Company or such other amount as may be agreed upon by mutual consent.

The SEDA may be terminated in certain circumstances including a breach of, or event of default under, the Loan Facility.

Any amounts drawn down under the SEDA must be applied towards repayment of any amounts then due for payment under the Loan Facility.

Stellar does not currently anticipate a requirement to utilise the SEDA facility.

Subscription Rights

Upon the advance of each tranche under the Loan Facility, including each of the Initial Tranche and the Second Tranche, Yorkville will be granted subscription rights which will entitle it to subscribe for such number of Ordinary Shares as is equivalent to 25% of the value of each tranche drawn down under the Loan Facility divided by the average VWAP for the 5 trading days prior to draw down (the "Subscription Rights"). Each Subscription Right will give Yorkville the right, but not the obligation to acquire one Ordinary Share at an exercise price of 125% of the average VWAP for the 5 trading days prior to the date of drawdown of the relevant tranche under the Loan Facility. The Subscription Rights are exercisable at any time prior to the 3rd anniversary from the date of their grant.

Ebola Update

The Company is encouraged by the international support given to the countries of Guinea and Sierra Leone in tackling the Ebola virus. The Company is also taking necessary steps and precautions to ensure the safety of staff and local communities and as such has continued operations at its Baoulé trial mining project.

About Stellar Diamonds plc

Stellar is an AIM quoted (AIM: STEL) West African focused diamond development company which has commenced trial mining of its Baoulé kimberlite in Guinea, and is progressing the 1.45 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 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.