Stellar Diamonds Regulatory News (STEL)

NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION TO US NEWS WIRE SERVICES.

5 February 2013

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

SHARE PLACING AND SUBSCRIPTION

Stellar Diamonds plc, the London listed (AIM: STEL) diamond mining and exploration company focused on West Africa, announces that the Company has raised approximately £1.1 million before expenses through a placing and subscription of, in aggregate, 41,960,640 new Ordinary Shares of 1p each (the "Placing Shares") with directors, institutional and other investors at a price of 2.65p per Placing Share (the "Placing and Subscription"). The Placing Shares represent approximately 12.47 per cent. of the enlarged share capital.

Highlights

·; Placing and Subscription to raise £1.1 million before expenses

·; Directors and Management participation of approximately £0.2m

·; Funds to be used to advance the Droujba and Tongo projects

·; Independent economic scoping studies on the Droujba and Tongo projects to be commissioned

Karl Smithson, Chief Executive of Stellar, commented:

"We are very pleased with the level of shareholder support from existing and new institutional and private client investors. The placing funds will be applied to the development of our key kimberlite projects of Droujba in Guinea and Tongo in Sierra Leone. Having established at the end of last year a combined inferred resource of 4 million carats, the next phase is to commissi on independent conceptual economic scoping studies on both projects to establish their preliminary economics before deciding whether to move into the pre-feasibility stage later this year."

Use of proceeds

Approximately £0.6m of the net funds raised will be used to fund independent conceptual economic scoping studies at Tongo and Droujba, together with on-going operational expenditure at these sites. These studies are expected to take up to six months to complete. Approximately £0.45m will be used to fund the Company's on-going working capital during this time. Further funding will then be required to meet the cost of any pre-feasibility studies and on-going working capital requirements.

The Placing and Subscription

The Placing and Subscription has raised a total of £1,111,957 through the issue of 41,960,640 Placing Shares at the placing price of 2.65 pence. The Placing Shares will be issued credited as fully paid and will rank pari passu in all respects with the existing Ordinary Shares, including the right to receive all dividends and other distributions declared on or after the date on which they are issued. Application will be made for admission to AIM of the Placing Shares ("Admission") which is expected to occur, and trading to commence, on or around 8.00 am on 8 February 2013.

Directors' participation in the Placing and Subscription

Markus Elsässer, through Nassim Funds, and Steve Poulton have respectively invested £70,000 and £10,000 in cash in the Placing and Subscription. In addition, and in order to preserve cash and further align the Directors' interests with those of Stellar shareholders, the Directors are participating in the Placing and Subscription at the Placing Price through conversion of accrued fees and expenses of £91,686.

* Mr Elsässer's interest is held both directly and indirectly through Nassim Funds

The issue of Placing Shares to the Directors is deemed a related party transaction under the AIM Rules for Companies ("the AIM Rules"). There are no independent directors for the purposes of providing the statement required under Rule 13 of the AIM Rules. Northland Capital Partners Limited, the Company's Nominated Adviser, considers that the terms of the issue of Placing Shares to the Directors are fair and reasonable insofar as the shareholders of the Company are concerned. 

Total voting rights

Following Admission, the Company's total issued share capital will comprise of 336,473,040 Ordinary Shares. The Company does not hold any ordinary shares in treasury. Therefore the total number of shares with voting rights in the Company will be 336,473,040. This figure 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 to their interest in, the share capital of the Company following Admission.

About Stellar Diamonds plc

Stellar is a London (AIM: STEL) listed West African focussed diamond mining and exploration company which is advancing the Droujba and Tongo kimberlite projects in Guinea and Sierra Leone respectively. These projects have a combined 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.

Further information about the Company can be found at www.stellar-diamonds.com

Enquiries:

Stellar Diamonds plc

Karl Smithson, Chief Executive Tel: +44 (0) 20 7010 7686

Northland Capital Partners Limited

(Nominated Advisor and Broker)

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

Daniel Stewart & Company plc

(Joint Broker)

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

Pelham Bell Pottinger 

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