October 16, 2017

Update on Disposal of Guinea Assets

16 October 2017

AIM: STEL

Stellar Diamonds plc

(“Stellar” or the “Company”)

Update on Disposal of Guinea Assets

Stellar Diamonds plc, the diamond development company focused on West Africa, announces that it has signed conditional share purchase agreements with Gold Knight Limited, a wholly owned subsidiary company of BDG Capital Limited (“BDG”) in relation to the proposed sale (the “Transaction”) of Stellar’s assets in the Republic of Guinea (“Guinea”), as previously announced on 5 June and 14 August 2017.

Following the due diligence process undertaken by BDG, a final purchase price of US$1,250,000 has been agreed for the Transaction, of which Stellar has received US$500,000 to date. The proceeds already received have been applied to the Company’s working capital since June. Completion of the Transaction and receipt of the balance of funds is conditional upon payment by Stellar of certain government taxes in Guinea, amounting to approximately US$123,000 which are due by Stellar’s locally incorporated subsidiary in Guinea which is being sold. Completion is expected to occur later this month. A further announcement will be made in due course regarding completion.

Chief Executive Karl Smithson commented:

“We are delighted to be able to bring the disposal of our Guinea assets to a close. Stellar’s carrying cost in Guinea is approximately US$70,000 per month and we look forward to focusing our resources exclusively on progressing the high-grade and high value 4.5 million carat Tongo-Tonguma kimberlite mine development project in Sierra Leone.

“We wish BDG every success in taking the Guinea projects forward.”

 

Further terms of the Transaction

Pursuant to the conditional share purchase agreements entered into, Stellar has made customary warranties and indemnities in respect of the Guinea assets.

This announcement contains inside information for the purposes of Article 7 of EU Regulation 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$109 million and IRR of 30%.

Caution regarding forward looking statements

Certain statements in this announcement, are, or may be deemed to be, forward looking statements. Forward looking statements are identified by their use of terms and phrases such as ”believe”, “expect”, ”could”, “should” ”envisage”, ”estimate”, ”intend”, ”may”, ”plan”, ”potentially”, ”will” or the negative of those, variations or comparable expressions, including references to assumptions. These forward looking statements are not based on historical facts but rather on the Directors’ current expectations and assumptions regarding the Company’s future growth, results of operations, performance, future capital and other expenditures (including the amount, nature and sources of funding thereof), competitive advantages, business prospects and opportunities. Such forward looking statements reflect the Directors’ current beliefs and assumptions and are based on information currently available to the Directors.

A number of factors could cause actual results to differ materially from the results discussed in the forward looking statements including, but not limited to, Completion of the Guniean disposal or the Tongo-Tonguma transaction not occurring, the Tribute Mining Agreements being terminated before the end of the Project mine life, recoverability of diamonds not being as expected, risks associated with vulnerability to general economic and business conditions, competition, environmental and other regulatory changes, actions by governmental authorities, the availability of capital markets, reliance on key personnel, uninsured and underinsured losses and other factors, many of which are beyond the control of the Company. Although any forward looking statements contained in this announcement are based upon what the Directors believe to be reasonable assumptions, the Company cannot assure investors that actual results will be consistent with such forward looking statements. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Subject to any continuing obligations under applicable law or any relevant AIM Rule requirements, in providing this information the Company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.

About Stellar Diamonds plc

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 7010 7686

Tel: +44 (0) 20 7010 7686

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

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