19 January 2012

AIM: STEL

Encouraging Diamond Grades and Values at Tongo Kimberlite Project in Sierra Leone

Stellar Diamonds plc, the London listed (AIM: STEL) diamond mining and exploration company focused on West Africa, is pleased to provide an update on the resource definition programme at the Company's high-grade Tongo kimberlite diamond project in eastern Sierra Leone.

Highlights:

• Final Dyke 1 bulk sample grade of 121cpht with average diamond value of $185 per carat
• Microdiamond analysis of drill core samples indicates encouraging size distribution
• Initial resource drilling completed with 32 holes drilled for 4,048m along 1.9km of strike
• Maiden resource estimate for Dyke 1 on track to be completed in first quarter of 2012

Chief Executive Karl Smithson commented:

"The drilling and bulk sampling of the high-grade 2.5km long Dyke 1 kimberlite has now been completed and has generated excellent results. With a diamond grade of 121 carats per hundred tons ("cpht") and diamond value of $185/ct, the calculated in-situ value of the kimberlite is $224 per tonne. Sampling of the nearby 1km long Dyke 4 has also yielded a high grade of 106cpht demonstrating further kimberlite resource potential in the immediate vicinity. Independent consultants CAE Mining are now compiling the maiden Tongo resource statement for Dyke 1, which remains on track for completion during this first quarter of 2012. I look forward to updating shareholders on our progress at Tongo, as well as at the Company's Droujba kimberlite pipe in Guinea."

Tongo Resource Drilling

Initial resource drilling of a 1.9km section of the 2.5km long Dyke 1 kimberlite was completed in December 2011. The remainder of the dyke will be drilled during the next phase of resource definition. Some 32 holes, totalling 4,048m, were drilled at collar intervals of approximately 200m and near vertical dipping kimberlite was intersected in 27 of the 32 holes. Several holes had multiple intersections of kimberlite that are cumulatively grouped into two main dyke zones up to 150cm in width. The drill holes were orientated to intersect kimberlite at 50m, 100m and either 150m or 200m from each drill collar so as to enable a geological model along strike and at depth to be determined. The deepest intersection of kimberlite was recorded at 202m vertical depth from surface and the kimberlite remains open at depth along strike length.

Bulk Sampling Results

Dyke 1

Bulk sampling of Dyke 1 was completed in October 2011 and the tonnage and diamond recoveries have since been reconciled. Previously reported grades and tonnages were based on calculations taken from daily plant feed statistics, which can be inaccurate. Therefore it was considered more prudent to calculate the tonnage using the accurately determined measurements taken from the bulk sample trench. The diluted grade is based on the amount of dilution experienced during the bulk sampling, which may not be the same as in an economic mining scenario. The final results of the bulk sampling are represented in the table below, and compared against previously announced results.

Dyke 4

A small bulk sample of Dyke 4 was collected to confirm the previously established high grade of 100cpht, from a mini-bulk sample undertaken by Stellar in 2008. In November 2011 87.36 dry tonnes of kimberlite were processed and 92.47 carats were yielded for a +1mm dry grade of 105.9 cpht. Due to the very decomposed nature of this kimberlite the sampling dilution experienced was considered high, but carefully calculated so that an accurate in-situ grade could be determined. The diamonds remain to be exported to Antwerp for valuation.

Although Dyke 4 will not be included in the Dyke 1 resource statement, it is considered relevant to the potential of the Tongo kimberlite project and its future global resource base.

Dyke 1 Microdiamond Results

As part of the resource estimation programme, a number of samples have been consigned to the Saskatchewan Research Council laboratory in Canada ("SRC") for microdiamond analysis so that grade estimation with depth can be calculated. A first consignment of 23 drill core samples weighing 86.15kg was submitted to SRC in late 2011 and these results are now available. A total of 229 diamonds were recovered with two classified as commercial sized diamonds over 0.85mm in size.

In 2008 two microdiamond samples weighing 200kg each were collected from surface exposures of Dyke 1 and sent to the SGS Laboratory in Johannesburg. Both these samples returned abundant diamonds including a number of stones in the +0.85mm size fraction.

A second consignment of 18 samples of drill core weighing approximately 38kg is currently undergoing processing at SRC and results should be available at the end of the month.

The following table summarises the microdiamond results from the Dyke 1 kimberlite core samples as well as the 2008 microdiamond results that were processed in the SGS Laboratory in Johannesburg:

In accordance with AIM rules the information in this announcement has been reviewed by Karl Smithson, Chief Executive of Stellar, a qualified geologist with 23 years' experience.

About Stellar Diamonds plc

Stellar is a London (AIM: STEL) listed diamond mining and exploration company focussed on West Africa where programmes aimed at generating maiden resource estimates at Droujba (Guinea) and Tongo (Sierra Leone) are ongoing and are expected to be delivered in the first quarter of 2012. Bulk sampling of the Lion-5 dyke at Kono (Sierra Leone) is also ongoing.

For further information please contact the following or visit the Company's website at www.stellar-diamonds.com.

Stellar Diamonds plc

Karl Smithson,Chief ExecutiveTel: +44 (0) 20 7257 2930

Northland Capital Partners Limited

Gavin Burnell, Edward Hutton

Charles Vaughan (Sales) Tel: +44 (0) 20 7796 8800

Daniel Stewart & Company plc

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

Pelham Bell Pottinger

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