Stellar Diamonds Regulatory News (STEL)

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17 December 2012

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

Resource Increased at Droujba Kimberlite Project in Guinea

Stellar Diamonds plc, the London listed (AIM: STEL) diamond development company focused on West Africa, announces an increase of the diamond resource at the Droujba kimberlite project, comprising the Droujba pipe and Katcha dyke, in eastern Guinea.

Highlights:

·; 475m long section of Katcha dyke has added a further 446,500 carats to Droujba project resource

·; JORC compliant resource increased to 2,920,000 carats at Droujba project

·; Katcha remains open with an estimated strike length of 5km based on field mapping

·; Economic scoping study planned for the first quarter of 2013

Chief Executive Karl Smithson commented:

"In less than one year Stellar has established a combined resource of 4 million carats from its Droujba and Tongo kimberlite projects in Guinea and Sierra Leone. At Droujba the kimberlite pipe resource remains at 2.47 million carats with the nearby Katcha kimberlite dyke adding a further 446,000 carats. Encouragingly, the contributing Katcha resource is from a small 475m long section down to 150m depth, which represents less than 10% of its estimated 5km strike length.

"The weakening of the rough diamond market in 2012 has impacted the average diamond values used in the Droujba resource model. However, we believe in the robust fundamentals for the outlook of the diamond market and that longer term diamond values will readjust to more favourable levels reflecting the projected supply and demand imbalances. Therefore, consistent with our focused strategy of developing our key kimberlite projects, we intend to embark on an economic scoping in order to establish key economic criteria for the Droujba project and then decide whether to move the project towards an indicated resource status as part of a pre-feasibility study. I look forward to updating shareholders as we progress."

Updated Resource Statement

CAE Mining has updated the independent JORC compliant resource statement. The following data and information from both phases of resource evaluation work were utilised in calculating the resource:

Droujba Pipe:

- 31 core holes (7,474m) drilled into Droujba pipe.

- Microdiamond results from 968kg of hypabyssal kimberlite collected from surface bulk samples and drill core.

- Microdiamond results from 539kg of kimberlite breccia collected from surface bulk samples and drill core.

- Ten surface bulk samples of kimberlite weighing a total of 2,421 tonnes and which returned an average diluted grade of 88cpht (+1.0mm).

- Valuation of 1,967 carats of diamonds (+1.0mm) recovered from the surface bulk samples.

- Bulk densities collected from numerous kimberlite and country rock samples.

- Dilution estimates from drill core calculated by estimating the percentage country rock contained within the kimberlite.

- Geological block model of the Droujba pipe to declare an inferred resource.

Although the updated surface bulk sample grade has increased from 70cpht to 88cpht, the Droujba pipe resource grade remained at 70cpht as modelled in March 2012 using spatially more representative microdiamond data that was available for the resource at depth. The previous diamond parcel of 506 carats and recent diamond parcel of 1,461 carats were valued by three independent diamond valuators in Antwerp. The 506 carat parcel was valued at between $39 and $52 per carat whereas the 1,461 carat parcel was valued at between $24 and $46 per carat. The two parcels combined had a modelled value of between $30 and $45 per carat (average of $38 per carat). The lower average value as compared to March 2012 ($50/ct) is due to a weaker rough diamond market and paucity of larger gem stones in both parcels valued.

Katcha Dyke:

- 7 core holes (936) drilled over a 475m strike length of the dyke adjacent to the Droujba pipe.

- Microdiamond results from 199kg of kimberlite collected from surface bulk samples and drill core.

- Five surface bulk samples of in-situ kimberlite weighing a total of 299 dry tonnes and which returned an in-situ grade of 161cpht (+1.0mm).

- Valuation of 477 carats of diamonds (+1.0mm) recovered from the surface bulk samples.

- Bulk densities collected from the dyke and country rock samples.

- Dilution estimates from drill core calculated by estimating the percentage country rock contained within the kimberlite.

- Geological block model of the Katcha dyke to declare an inferred resource.

Using the Katcha microdiamond data and bulk sample results, the diamond grade was modelled by plotting cumulative size distribution (log probability) and total diamond content curves. At a cut off of +1.0mm the in-situ modelled diamond grade for the kimberlite is calculated to be 140cpht. The 477 carat parcel of Katcha diamonds was valued by three independent valuators in Antwerp at between $35 and $65 per carat, with a modelled value of between $40 and $55 per carat (average $47.5 per carat).

A summary of the declared JORC compliant inferred resource (+1mm) for both Droujba and Katcha is given in Table 1 below:

Future Resource Potential

There is considered to be significant future resource potential from both the Droujba and Katcha kimberlites, as follows:

- The Droujba pipe has been drilled to 414m depth and remains open below that level. The current resource is only extended to 360m below surface.

- The volume of Droujba pipe between 160m and 190m has not yet been declared a resource and contains an estimated (non-JORC) 400,000 carats but which requires further delineation drilling.

- Only a 475m section to 150m depth of the 5,000m long Katcha dyke has been established in resource. Further drilling along strike and at depth, along with additional bulk sampling, could result in a significantly larger resource being established on Katcha.

Future Work Programme

Stellar is currently planning the next phase of development work at the Droujba project which, subject to funding, is likely to include an economic scoping study in early 2013. Dependent on the outcome and results generated Stellar may then embark on a pre-feasibility study which would see the Droujba pipe being subjected to large diameter drilling in order to upgrade the resource to indicated status.

The CAE Mining competent person who prepared the resource statement is Johannes Ferreira MSc., Pr. Sci. Nat.In accordance with AIM Rules, Johannes Ferreira and CAE Mining have reviewed and signed off on the information contained in this news release.

Additionally, the information in this announcement has been reviewed by Karl Smithson, Chief Executive of Stellar, a qualified geologist and Fellow of the Institute of Materials, Metals, Mining, with 24 years' experience.

The Droujba updated resource statement report will be lodged on the company's website at www.stellar-diamonds.com 

About Stellar Diamonds plc

Stellar is a London (AIM: STEL) listed West African focussed diamond mining and exploration company which is advancing the Droujba kimberlite pipe in Guinea and the Tongo kimberlite dyke project in Sierra Leone, which combined have a JORC Compliant, inferred diamond resource of approximately 4 million carats. In April 2012 the Company announced a dispute with the Ministry of Mines in Sierra Leone over its two Kono licences and remains in discussions with the Government of Sierra Leone regarding the proper reinstatement of these licences.

For further information 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

(Nominated Advisor and Broker)

Gavin Burnell, Edward Hutton Tel: +44 (0) 20 7796 8800

Daniel Stewart & Company plc

(Co-Broker)

Martin Lampshire, Antony Legge Tel: +44 (0) 20 7776 6550

Pelham Bell Pottinger

James MacFarlane, Joanna Boon Tel: +44 (0) 20 7861 3232