October 24, 2012

Further Investment by Major Shareholder

24 October 2012


Stellar Diamonds plc

(“Stellar” or the “Company”)

Further Investment by Major Shareholder

Stellar Diamonds plc, the London listed (AIM: STEL) diamond mining and exploration company focused on West Africa, announces that its largest shareholder, Nassim Funds, has increased its equity interest in the Company from approximately 11.1% to 14.0% by way of a subscription of £311,250. In total, £346,520 has been raised before expenses through the issue of 10,828,750 new ordinary shares (the “Subscription Shares”), representing 3.68% of the enlarged issued share capital of the Company.

The Subscription Shares were issued at 3.2p per share, a premium of 6.6% over the midmarket price at the time the subscriptions were agreed.

Karl Smithson, Chief Executive of Stellar, commented:

“We welcome the further investment by our largest shareholder, demonstrating their growing and long-term support of the Company, together with the subscription by other existing shareholders. We are currently in the process of compiling updated resource statements for the Droujba and Tongo projects and remain on track to announce these during the final quarter of this year. We then envisage taking the projects into pre-feasibility studies with a view to advancing them to production in the shortest possible time frame. I look forward to updating shareholders as we progress.”

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

Subscription and use of proceeds

The Subscription will raise £346,520 before the deduction of expenses payable by the Company. The net proceeds will be applied to continue with the stated objectives of completing the revised resource statement work during the final quarter of 2012.

The 10,828,750 Subscription 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 has been made for admission of the Subscription Shares to trading on AIM (“Admission”). It is expected that Admission will be effective on or around 8.00 am on Monday 29 October 2012.

Related party transaction

Nassim Funds, and entities controlled by or associated with it (“Nassim”), who are interested in an aggregate of 31,543,333 existing Ordinary Shares representing 11.1 per cent. of the issued ordinary share capital, have subscribed for 9,735,000 Subscription Shares (“the Nassim subscription”). On Admission, Nassim will be interested in 41,278,333 Ordinary Shares (14.0 per cent. of the enlarged issued share capital). The Nassim subscription is deemed to be a related party transaction under the AIM Rules for Companies (“the AIM Rules”). The Board, having consulted with the Company’s Nominated Adviser, Northland Capital Partners Limited, considers that the terms of the Nassim subscription 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 294,512,400 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 294,512,400. 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.


Stellar Diamonds plc

Karl Smithson,Chief ExecutiveTel: +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