Stellar Diamonds : Commencement of Front End Engineering and Design for Tongo-Tonguma Project

20 February 2017

AIM: STEL

Stellar Diamonds plc

('Stellar' or the 'Company')

Commencement of Front End Engineering and Design for Tongo-Tonguma Project

Stellar Diamonds plc, the London quoted diamond exploration and development company focused on West Africa, announces that the Front End Engineering and Design study ('FEED') for the underground mine development of the Tongo-Tonguma project ('Project') has commenced. A team of five consultants from contractors Paradigm Project Management Pty Ltd ('PPM') and SRK Consulting ('SRK') have arrived on site to begin the various work streams associated with the FEED programme (see below).

Chief Executive Karl Smithson commented:

'We are pleased that the first key milestone in the mine development at Tongo-Tonguma has commenced. PPM are highly experienced in the delivery of diamond mine projects and together with SRK they will refine all elements of the mine plan as determined in the published PEA to higher levels of confidence in order to reduce the project delivery risk. With over 66,000 metres of drilling completed at the Project to date, we will drill of a further 9,000 metres of mine plan related drilling to a depth of 75 metres concurrent with the FEED study.'

FEED Objectives

The main objectives of the FEED study are to better define the technical requirements of the Project in order to ensure that the correct underground mine design is implemented and that the treatment plant design and layout is properly designed and the unit processes are clearly identified.

Although the combined Tongo-Tonguma projects have seen some 66,000 metres of drilling, approximately 9,000 metres of additional core drilling is intended to be undertaken at 50 metre intervals. The aim of this is to better define the near-surface geology of the kimberlites in resource with particular reference to siting of the decline portals, the declines and the development drives for the first two levels of mining to a depth of 75 metres below surface. Furthermore, the drilling will provide the necessary geotechnical and hydrogeological information for the initial years of mining.

The FEED programme will also define the final capital expenditure estimate and the operating cost budgets. In addition, the Project execution plan will also be developed. A refined financial model will also be developed for the mine.

Key FEED Elements and Deliverables

The following list highlights the key FEED work streams and deliverables by PPM/SRK and Stellar:

• Mining and design
• Underground geotechnical
• Hydrology
• Underground infrastructure
• Hydrogeology
• Surface geotechnical
• Surface infrastructure
• Bulk services (power and water supply)
• Treatment plant
• Security and product protection
• Operational readiness (including manpower plan, preliminary project procurement )
• Procurement and logistics
• Project execution plan
• Risk and opportunity management
• Project Management and services
• Infill mine plan drilling
• Environmental management in line with approved EIA's
• Social and community liaison
• Legal and permitting

Review by Competent Person

This announcement has been reviewed by Karl Smithson, Chief Executive of Stellar, a qualified geologist and Fellow of the Institute of Materials, Metals, Mining, with 29 years' experience.

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

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 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.

For further information contact the following or visit the Company's website atwww.stellar-diamonds.com.

Karl Smithson, CEO	Stellar Diamonds plc	Tel: [phone]
Emma Earl Sandy Jamieson	Cairn Financial Advisers (Nominated Adviser)	Tel: [phone]
Jon Bellis	Beaufort Securities Limited (Joint Broker)	Tel: [phone]
Martin Lampshire	Peterhouse Corporate Finance (Joint Broker)	Tel: [phone]
Tim Blythe Nick Elwes	Blytheweigh (Financial PR)	Tel: [phone]

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