Stellar Diamonds Regulatory News (STEL)

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11 August 2014

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

Progress Update on Baoulé Kimberlite Project in Guinea

Stellar Diamonds plc, the London listed (AIM: STEL) diamond development company focused on West Africa, provides a progress update on its Baoulé kimberlite diamond project in Guinea ('Baoulé'). The Company is utilising its existing in-country mining plant and equipment with the objective of fast-tracking Baoulé to trial mining to generate early cash-flow and determine the commercial diamond grade and value for the project.

A presentation with pictures illustrating progress to date can be viewed on the Company's website (www.stellar-diamonds.com).

Highlights:

· Relocation of Stellar's owner-operated processing plants to Baoulé completed ahead of schedule

· Base camp and road upgrade complete and plant construction in progress

· Environmental Impact Study site visit completed and report in preparation

· First commissioning ore expected to be processed in September 2014

· Internal company modelling suggests that the Baoulé pipe has the potential to host a significant diamond resource

Stellar Diamonds Chief Executive Karl Smithson commented:

"Stellar has made tremendous progress over the past few weeks towards our objective of bringing the Baoulé kimberlite pipe into trial mining and generating early cash flow in Q4 2014. Both our Mandala 100tph DMS and the Droujba Bulk Sampling DMS plants have now been relocated to the Baoulé site and construction of the base camp has also been completed. Our team on the ground has made strong headway with the re-assembling of the plants, and I am delighted to confirm we are on track for commissioning in early September. I look forward to providing further updates as we progress towards trial mining the diamondiferous Baoulé pipe, which is located in the heart of the world famous Aredor diamond fields, a region that has historically produced some of the largest and highest value gem diamonds in Guinea."

Operational Progress

Stellar has successfully dismantled and relocated to the Baoulé site its 100 tonne per hour DMS processing plant, which was used for mining at the Mandala alluvial diamond project, as well as its 5 tonne per hour DMS sampling plant, which was previously located at the Droujba diamond project. Construction of a fully integrated kimberlite processing plant that can process both weathered and fresh kimberlite material is now well advanced.

Now that the processing plants and earth moving machinery have been relocated to Baoulé, stripping of disturbed and previously dug areas of the five hectare Baoulé kimberlite pipe has commenced in advance of collection and stockpiling of kimberlite ore. Commissioning of the plant is on track for early September at which point initial weathered kimberlite material will be processed. Once the plant is operating efficiently, trial mining production will commence, and the diamond grade and value will be determined.

An Environmental Impact Study ('EIS') site visit has recently been completed by Guinean consultancy, Okapi, ahead of the commencement of trial mining and in accordance with governmental requirements. This follows the completion of road upgrading (50km of road between Mandala and Baoulé) and the reconstruction of the haul road as well as the finalisation of the Base Camp. The EIS report is expected to be issued during August 2014.

Baoulé Pipe Summary

The Baoulé kimberlite pipe was discovered in 1999 and was subject to drilling and initial bulk sampling by earlier operators. A 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, which, at the DMS generated grade of 13cpht, would suggest a target of 3 million carats; increasing to 6.5 million carats using the average microdiamond grade of 30cpht. However, investors should note that this is not an independent resource estimate or in accordance with the JORC Code.

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.

Ebola Update

The Company's projects in Guinea and Sierra Leone have been unaffected by the Ebola virus and operations are continuing as normal. However, a number of precautionary initiatives to mitigate the risks of the virus occurring have been instigated by the Company at its Tongo and Baoulé project sites. The Company is monitoring the situation closely to ensure the continued well-being of all employees and that of the local communities.

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.