September 11, 2014

Commissioning of Diamond Processing Plant at Baoulé Kimberlite Project in Guinea

AIM: STEL

Stellar Diamonds plc

Commissioning of Diamond Processing Plant at Baoulé Kimberlite Project in Guinea

Stellar Diamonds plc (“Stellar” or the “Company”), the London listed (AIM: STEL) diamond development company focused on West Africa, is pleased to announce that commissioning testing of its 100tph DMS plant at the Baoulé kimberlite project in Guinea has commenced ahead of trial mining which is targeted for October 2014.

Highlights:

  • 100tph processing plant constructed on schedule at 5ha Baoulé kimberlite pipe
  • Waste stripping and ore extraction for stockpiling has commenced
  • Objective to process at least 100,000 tonnes for diamond grade and value estimation
  • Internal resource statement targeted for Q4 2014
  • First cash flow expected from diamond sales in Q4 2014
  • Project located in heart of world famous Aredor diamond district – a large and high value diamond producing area

Stellar Diamonds Chief Executive Karl Smithson commented:

“I am delighted that our team at Baoulé is continuing to deliver on schedule resulting in our processing plant now being fully constructed ahead of imminent trial mining. Commissioning is underway to establish the optimal operating parameters for the 100tph plant, after which the first kimberlite ore will be processed. Our objective is to process a very large sample which will not only establish the diamond grades and values with high levels of confidence, but also determine the presence of any large stones for which the Aredor region of Guinea is world renowned. During this process any diamonds produced from trial mining will be sold in order to generate cash flow for the Company. I look forward to providing further progress updates at this exciting time as we look to commence trial mining in the coming weeks and transition Stellar into a diamond producer.”

Operational Progress

Over the past three months Stellar has successfully relocated its processing plants and earth moving machines from its Mandala alluvial mine and Droujba kimberlite project in Guinea to the Baoulé site. These have been re-constructed to establish an integrated kimberlite processing plant that can process both weathered and fresh kimberlite material from the 5 hectare kimberlite pipe.

Stripping of waste material and previously dug (by artisanal diggers) kimberlite has commenced and a commissioning stockpile of this mixed kimberlite and waste has been established adjacent to the plant. This material will be used to test the plant in order to achieve operational efficiency. Simultaneously a stockpile of kimberlite ore is being established that will be processed once the plant is fully commissioned.

The objective of this programme is to collect and process a minimum 100,000 tonnes of kimberlite over the coming year to determine the diamond grade and value of the pipe. Furthermore, such a large sample will establish the presence and quality of large stones in the pipe. As part of this exercise, any diamonds produced will be sold into the market and generate cash flow.

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 by Stellar 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, it 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 Baoulé project has been unaffected by the Ebola virus and operations are continuing as normal. The Company has implemented certain operational protocols to protect its staff and these continue to be strengthened with the input and expertise of International SOS. Stellar continues to monitor the situation very closely in order to protect its staff and the communities in which the Company operates.

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.

Karl Smithson, CEOPhilip Knowles, CFO Stellar Diamonds plcStellar Diamonds plc Tel: +44 (0) 20 7010 7686Tel: +44 (0) 20 7010 7686
Antony LeggeColin Rowbury Daniel Stewart & Company plc (Nomad)Daniel Stewart & Company plc (Broker) Tel: +44 (0) 20 7776 6550Tel: +44 (0) 20 7776 6550
Hugo de Salis St Brides Media & Finance Ltd Tel: +44 (0) 20 7236 1177
Lottie Brocklehurst St Brides Media & Finance Ltd Tel: +44 (0) 20 7236 1177