August 14, 2017

Repayment and issue of Convertible Loan Notes and Warrants

14 August 2017

AIM: STEL

Stellar Diamonds plc

(“Stellar” or the “Company”)

Repayment and issue of Convertible Loan Notes and Warrants

Stellar Diamonds plc (AIM: STEL), the London listed diamond development company focused on West Africa, announces that it has repaid the existing $1.24 million Convertible Loan Note (“$1.24 million CLN”) to its noteholders being Deutsche Balaton, Steven Poulton and Creditforce (the “Noteholders”) by way of entering into a new $1.34 million Convertible Loan Note (“$1.34 million CLN”) agreement with the Noteholders. The terms of the $1.24 million CLN and accompanying warrants are described in the announcements of the Company of 6 October 2016, 24 February 2017 and 5 July 2017. The $1.34m CLN and accompanying warrants has the same terms as the $1.24 million CLN and accompanying warrants, other than the following amendments:

– An increase in the aggregate principal amount of the convertible loan by $0.1 million;

– Change in the definition of the “Transaction” (or “Potential Transaction”) for the purposes of the $1.34 million CLN to the completion of the Tribute Mining Agreement with Octea Mining Limited over the Tonguma kimberlite project in Sierra Leone and the raising of at least US$35,000,000 in debt or equity finance;

– Change in the conversion period for the $1.34 million CLN to the period commencing on the later of i) the earlier of the date on which the Transaction completes (or the date on which the Company makes an announcement that the Transaction will not proceed) and ii) the date of obtaining the necessary shareholder authorisations which are needed to enable the Company to issue new Ordinary Shares pursuant to conversion of the CLN and ending on 5 June 2018 (the Maturity Date);

– Change in the definition of “Transaction Default” to being upon the occurrence of the earlier of the Transaction failing to complete or upon the Company announcing the termination of the Transaction on or before 31 December 2017;

– Change in the definition of “Subscription Price” of the CLN Warrants (as such warrants are defined in the 6 October 2016 announcement) to the lower of: 5 pence or the Transaction Price (as defined below).

– The Transaction Price is defined as the lower of:

a) the VWAP of the next US$2 million in equity raised; or

b) the VWAP of the first US$10 million in equity raised after 1 February 2017; or

c) the VWAP of equity raisings from the date of this agreement until at least US$35 million in debt financing has been raised for the Tongo-Tonguma Project;

– Change in the definition of the “Default Subscription Price” (or “Alternative Subscription Price”) (being the conversion price and subscription price in respect of the $1.24 million CLN and CLN Warrants respectively in the event of Transaction Default) to the lower of 70% of: 5 pence or the 3 or 45 day VWAP prior to notice of exercise of the warrants.

– Amendment of Subscription Price of the Repayment Warrants (as such warrants are defined in the announcement dated 6 October 2016) to 70 percent of the Transaction Price or, in the event that a Transaction Default has occurred the Default Subscription Price.

As per the existing CLN warrants, the new CLN warrants (including the Repayment Warrants) will have an 18 month exercise period from the date of issue. The quantum of the CLN warrants (including the Repayment Warrants) remains as set out in the announcement dated 6 October 2016). For the avoidance of doubt, the conversion price of the $1.34 million CLN is 70% of the Transaction Price or in the event of the Transaction Default, the Default Subscription Price.

The $1.34 million CLN consists of $0.60 million from Steven Poulton, $0.45 million from Creditforce and $0.29 million from Deutsche Balaton. The $0.1 million additional capital provided from the $1.34 million CLN following repayment of the $1.24 million CLN will be used for working capital purposes.

By virtue of Deutsche Balaton being a substantial shareholder of the Company and Steven Poulton being a Director of the Company, agreements relating to the $1.34 million CLN and accompanying warrants constitute related party transactions under the AIM Rules for Companies. The Directors who are independent of the $1.34 million CLN and warrants consider, having consulted with the Company’s Nominated Adviser, that the terms of the $1.34 million CLN and the warrants are fair and reasonable in so far as the Company’s shareholders are concerned.

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) 596/2014.

About Stellar Diamonds plc

Stellar is an AIM listed (AIM: STEL) diamond development company focused on the 4.5 million carat high-grade and high value Tongo-Tonguma kimberlite diamond project in the world famous diamond fields of eastern Sierra Leone. An independently generated mine plan, based on over 66,000m of drilling that has been completed to date, envisages the production of over 4 million carats, generating gross revenues of more than US$1.2 billion, over a 21 year life of mine. Initial production at Tongo-Tonguma is scheduled to occur in the first year of development, building up to over 200,000 carats per annum, with a weighted average modelled diamond value of $229 per carat. The Tongo-Tonguma mine is estimated to give Stellar an attributable a Post-tax NPV(8) of US$104 million and IRR of 31%.

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

Karl Smithson, CEO

Philip Knowles, CFO

Stellar Diamonds plc

Stellar Diamonds plc

Tel: +44 (0) 20 7164 6371
Emma Earl

Sandy Jamieson

Cairn Financial Advisers (Nominated Adviser) Tel: +44 (0) 20 7213 0880
Jon Bellis Beaufort Securities Limited (Joint Broker) Tel: +44 (0) 20 7382 8300
Martin Lampshire

Rory Scott

Peterhouse Corporate Finance (Joint Broker)

Mirabaud Securities (Financial Advisers)

Tel: +44 (0) 20 7469 0930

Tel: +44 (0) 20 7878 3360

Tim Blythe

Nick Elwes

Blytheweigh

(Financial PR)

Tel: +44 (0) 20 7138 3204