RNS Release - Droujba Kimberlite Pipe Update

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

28 November 2011

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

Resource Drilling Completed on Droujba Kimberlite Pipe in Guinea

Stellar Diamonds plc, the London listed (AIM: STEL) diamond mining and exploration company focused on West Africa, announces that the initial resource drilling programme at the Company's diamondiferous Droujba kimberlite pipe project located in eastern Guinea has been completed.

Highlights:

·      31 holes completed for 7,457 metres in Droujba pipe

·      Deepest intersection of 414m and ore body remains open at depth

·      Bulk sampling expected to commence in December

·      Processing of overburden yielded 57 carats, including two stones of over 4 carats

·      On track for JORC compliant resource estimate in Q1 2012

Chief Executive Karl Smithson commented:

"We are pleased with the progress we are making as we look to advance our kimberlite portfolio and establish JORC compliant maiden resources at our Droujba and Tongo projects by the end of the first quarter of 2012. Now that resource drilling of the Droujba pipe is completed bulk sample processing is scheduled to commence in December so that a representative parcel of diamonds for grade and value estimation can be produced. Initial indications from processed diluted stockpiled overburden are encouraging and demonstrate potential for a coarse diamond size distribution for the pipe, though this is based on the relatively small diamond parcel produced to date. We however remain confident in the potential that Droujba offers as we continue to develop the project and I look forward to updating shareholders as we make further progress."

Drilling Programme

Resource drilling was recently completed over the 3 hectare Droujba kimberlite pipe. Some 31 holes for 7,457.15m were drilled into the pipe with the deepest intersection to date being at 414m below surface and the pipe remains open at depth. Geological re-modelling of the pipe is ongoing by independent consultants, CAE Mining, with the objective of defining an inferred resource to a depth of 350m below surface. Two main geological units were identified during the drill core logging, being a central core of hypabyssal kimberlite and an outer envelope of kimberlite breccia with varying kimberlite content. It is the hypabyssal kimberlite unit that was mined to a depth of 20m below surface by the Russian Aid Mission with a reported grade of 90cpht to 100cpht.

As previously reported drilling of a 1km section of the 5km long Katcha kimberlite dyke, which runs adjacent to the Droujba pipe, was also drilled with seven holes for 935.90m with a deepest intersection of 106.5m from surface. This kimberlite remains open along strike and at depth. In addition, three discrete geophysical anomalies in the vicinity of the pipe were drilled for 456.30m but none intersected kimberlite.

Bulk Sample Processing

Construction of the DMS processing plant at Droujba is continuing. The crushing circuit that was manufactured in South Africa has arrived in the capital of Conakry and has undergone customs clearance. It will now be transported to site and installed on the front end of the plant, thus allowing commissioning to commence in December.

The kimberlite pipe has been dewatered and a four metre thick silt and mud layer is being removed from the top of the kimberlite pipe. Bulk samples, totalling an initial 1,000 tonnes, will be collected and stockpiled adjacent to the plant and processed in batches per the two main geological units. The objective of the kimberlite bulk sampling is to ascertain representative grades of the hypabyssal and breccia kimberlite facies in support of the maiden JORC inferred mineral resource estimate, which will be prepared the first quarter of 2012.

During the period of plant construction, some arbitrary grab samples of the old mine dump were collected and processed via a 16-foot pan plant to test for diamond content. These dumps are considered to comprise surface overburden, with some minimal kimberlite included which was scraped from the surface of the pipe prior to mining in the 1960's. The pan plant concentrate was transported to the DMS and X-Ray Flowsort recovery plant at the Company's Mandala project, where diamonds were recovered in a secure environment. Some 176 diamonds totalling 56.67 carats of diamond were recovered from these samples at a 1.7mm cut off, giving an average stone size of 0.32 per carat. Some nine stones weighed over one carat, with the largest diamonds being 4.28, 4.18, 2.76, 2.71 and 1.94 carats in size. Observation shows that approximately 23% of the diamonds are of gem quality, although the parcel is not sufficiently large on which to provide a representative diamond valuation at this stage.

Microdiamond Sampling and Results

A further 352kg of kimberlite core has been consigned to the Saskatchewan Research Council laboratory in Canada for microdiamond recovery. These samples were collected from numerous drill holes and depths of the kimberlite to give spatially representative diamond information across the pipe. Results are expected in the near future.

In accordance with the AIM Rules, the information in this announcement has been reviewed by Karl Smithson, CEO 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 in Guinea and Tongo in Sierra Leone are ongoing. Bulk sampling of the Lion-5 dyke at Kono (Sierra Leone) is ongoing and at Bouro (Guinea) a previous bulk sample realised a grade of 243cpht. Mining at Mandala is currently on an extended seasonal break due to the current weak diamond market.

For further information please 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

Gavin Burnell, Edward Hutton

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

Daniel Stewart & Company plc

Martin Lampshire, Oliver Rigby                                       Tel: +44 (0) 20 7776 6550

Pelham Bell Pottinger

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