Final Results for the year ended 30 June 2013

NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION TO US NEWS WIRE SERVICES.

22 November 2013

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2013

Stellar Diamonds plc, the London listed (AIM: STEL) diamond exploration and development mining company focused on West Africa, announces its audited results for the year ended 30 June 2013.

Operational Highlights Summary:

· Resource base increased 29% to 4 million carats

o Tongo 1.074mcts at a grade of 120cpht and diamond value of $248 per carat

o Droujba 2.92mcts at a grade of 63cpht and diamond value of $45 per carat

o Katcha 0.45mcts at a grade of 140cpht and diamond value of $57 per carat

· Economic scoping studies completed at Tongo and Droujba

o Tongo Dyke-1

§ 17 year life of mine

§ Starting capex of $16m

§ Producing over 1 million carats

§ Gross cash flows of $413m

§ Pre-tax NPV(10) $53m, IRR 32%

o Droujba Pipe

§ 3 year life of mine at 1:1 stripping ratio

§ Capex of $3m

§ Producing 313,000 carats

§ Higher diamond price would increase production potential

§ Katcha adds significant future upside

· Tongo prioritised to full feasibility study

Financial Highlights:

· US$2.3m raised during the year to complete Conceptual Economic Scoping Studies at Tongo and Droujba

· Further $2.4m raised in July 2014 to progress a feasibility study at Tongo

· Net assets at 30 June 2013 of US$17.0m (30 June 2012: US$19.2m)

· Operating loss before interest, tax and impairments reduced to US$3.0m (2012: US$4.0m)

Karl Smithson, CEO, commented:

"During the financial year, Stellar increased its resource base by almost 30% to 4 million carats. This was followed by independent economic scoping studies of the Tongo and Droujba projects which showed that under current market conditions, Tongo has the best potential to deliver superior returns. The Board have therefore decided to advance Tongo towards a full feasibility study during the course of 2014. We hope that subject to positive results, a full scale production decision can then be made at Tongo."

About Stellar Diamonds plc

Stellar is a London (AIM: STEL) listed West African focused diamond exploration and development mining company which is advancing the 1.1 million carat Tongo Dyke-1 resource into the feasibility stage and towards a production decision. In addition, the Company holds the Droujba project which has a defined 3 million carat resource. Stellar recently received a 5 year mining licence renewal for its Mandala project in Guinea.

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

Stellar Diamonds plc

Karl Smithson, Chief Executive Tel: +44 (0) 20 7010 7686

Philip Knowles, Chief Financial Officer

Daniel Stewart & Company plc

(Nominated Adviser & Broker)

Antony Legge, Ciaran Walsh, Colin Rowbury Tel: +44 (0) 20 7776 6550

Chairman's statement for the year ending 30 June 2013

Stellar continues to make good progress on its strategy of advancing key diamonds projects towards production. This past year we have delivered on our objectives of increasing our diamond resource base and conducting preliminary economic scoping studies at the Tongo and Droujba projects. Stellar now has a signed-off inferred resource base of 4 million carats, a 29% increase compared to last year.

At Tongo, the JORC compliant diamond resource was increased from 660,000 carats to 1.1 million carats through additional drilling. The diamond grade was confirmed at 120cpht through further sampling and the average diamond value modelled at $248 per carat provides Stellar with a very high in-situ kimberlite value of $298 per tonne.

At the Droujba project, the JORC compliant diamond resource increased from 2.5 million carats to 3.1 million carats through drilling and sampling a small 700m section of the 5,000m long Katcha dyke which runs adjacent to the Droujba pipe. The Katcha dyke has a grade of 140cpht and modelled diamond value of $57 per carat. The project diamond resource could be considerably expanded through further drilling and sampling of the Katcha Dyke. Further bulk sampling of the Droujba pipe confirmed a grade of 88cpht and diamond value of $45 per carat.

In order to prioritise our projects, Stellar decided to conduct economic scoping studies of the existing resources at Tongo and Droujba projects, using the existing revenues. Paradigm Project Management (PPM), based in Johannesburg, was appointed as independent consultants to undertake this work.

The conclusion was that the Tongo project was deemed to have better economic potential than the Droujba project under current market conditions, primarily due to the higher diamond grade and value of Dyke-1 compared to the Droujba pipe. Based on the work conducted by PPM and extrapolating for the Board's assessment, Tongo has a calculated NPV of $53 million. Therefore, the Board decided to prioritise and accelerate the Tongo project through the feasibility study stage and, hopefully, towards a production decision in the latter part of 2014.

Although Droujba has potential for a short term, three year open pit mining operation producing over 300,000 carats; a higher diamond price is required to make a larger scale mine feasible. The Company has placed Droujba on care and maintenance with the economics periodically reviewed as the diamond price changes going forward. The current consensus is that the rough diamond price will increase significantly in the next few years and the Board believes that Droujba has the potential to deliver a good return for shareholders.

The Kono licence dispute with the Ministry of Mines continued, though little progress has been made towards the reinstatement of the two permits that the Company believes were wrongly revoked. Legal opinions by local Sierra Leonean and International based lawyers support the Company's position and although the Board prefers a negotiated settlement, it is currently considering its legal position in respect of this issue.

Stellar completed two share placings with new and existing shareholders this year, raising a total of £2.6 million. These funds were primarily allocated towards the scoping studies and ongoing Tongo costs as part of the feasibility study.

For the year ended 30 June 2013, the Group incurred an operating loss before interest, tax and impairments of $3.0m (2012: $4.0m). In addition to this, an impairment charge of $2.0m (2012: $1.4m) was recognised in the year. The operating loss is in line with the Board's expectations given the Group's stage of development and has reduced steadily over recent years. The impairment charge related to the Droujba project in Guinea following the results of the Conceptual Economic Scoping Study completed in the year and the decision to focus on Tongo kimberlite project in Sierra Leone. At the balance sheet date, the Group had net assets of $16.3 million, and no debt.

The rough diamond market continues to show some volatility in pricing, though a good first half of 2013 was generally reported by producers. However, tight liquidity is an ongoing issue as the diamond banks continue to tighten credit lines, and a weakening rupee has not helped the predominantly Indian manufactures. Nevertheless, the fundamentals of the diamond market remain robust with a long term supply deficit forecast as rough and polished demand is driven by strong growth in Chinese, and to a lesser extent Indian and USA, diamond jewellery consumption. Although some new diamond mines are coming on stream over the next five years, these are unlikely to meet the demand growth in the longer term and therefore the consensus remains that rough prices will significantly increase as a result.

The Board believes the next year will be a key milestone in the Company's history which will hopefully lead to a positive decision in favour of production at the Tongo project. The Board remains confident that if the current rough diamond price increases with the expected consensus, the Droujba project will become economically viable.

I would like to extend my thanks to the continued support of shareholders in difficult market conditions. Your Company is well positioned to evolve from an exploration to mining company and fulfil its strategy of becoming a diamond producer in a market that has some of the best economic fundamentals the resource sector has to offer. I would finally like to thank the Stellar management and staff for their unwavering commitment to meeting all targets and objectives under often very challenging conditions. I am confident that they will continue to deliver results and with the support of shareholders will take this Company to the next level.

Lord Daresbury

Non-Executive Chairman

Registered number: 5424214

Basis of presentation

Stellar Diamonds plc is presenting audited financial statements as of and for the year ended 30 June 2013. The comparative period presented is audited financial statements as of and for the year ended 30 June 2012.

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRSs") as published by the IASB. The financial statements have also been prepared in accordance with IFRSs as adopted by the European Union and in accordance with the Companies Act, 2006. The consolidated financial statements have been prepared on an historical cost basis, as adjusted for certain financial instruments carried at fair value.

1.1 Going concern

The group made a loss for the year of $4,998,492 and had net current liabilities of $512,111 at the balance sheet date.

During the year the Group raised just over $2.2m through two placings. Following the year end, in July 2013 the Group raised a further $2.4m to further advance its evaluation programme at the Tongo project in Sierra Leone.

Given the positive exploration and evaluation results produced at Tongo to date and the stage of development of the project, the directors believe that the Company will continue to have the ability to access sufficient levels of finance to meet essential administrative expenses and to continue the Group's projects for the foreseeable future. On that basis, the directors continue to adopt the going concern basis in preparing these financial statements.

The going concern of the group is dependent on obtaining additional finance in order to meet its working capital needs for a period of not less than twelve months from the date of approval of the financial statements and to continue to fund development of exploration projects. This indicates the existence of a material uncertainty which may cast significant doubt on the ability of the company and the group to continue as a going concern.

The directors are confident that they can fulfil the funding requirements of the company through attracting funding through joint ventures, sale of assets, re-commencement of mining, reducing overheads or the issue of further shares by way of private placement. On this basis, the directors are satisfied that it is appropriate to prepare the financial statements of the group on a going concern basis. The financial statements do not include any adjustment to the carrying amount or classification of assets and liabilities that would occur if the company was unable to continue as a going concern.

2. Segments

The Company is engaged in the acquisition, exploration, development and production of diamond properties in the West African countries of Sierra Leone and Guinea. Information presented to the Chief Executive Officer for the purposes of resource allocation and assessment of segment performance is focused on the individual projects in geographical locations. The reportable segments under IFRS 8 are therefore as follows:

· Mandala (Guinea);

· Bomboko (Guinea);

· Kono (Sierra Leone);

· Tongo (Sierra Leone);

· Droujba (Guinea);

· Other exploration; and

· Corporate activities in the United Kingdom.

Following is an analysis of the Group's revenue, results, assets and liabilities by reportable segment for the year ended 30 June 2013:

Following is an analysis of the Group's revenue and results by reportable segment for the year ended 30 June 2012:

3. Loss per share

Basic and diluted loss per share are the same as the effect of the outstanding share options are anti-dilutive and are therefore excluded.

4. Intangible assets

At 30 June 2013, the group did not have any contractual commitments for the acquisition of intangible assets.

The realisation of the net carrying value of intangible assets of $13,663,445 is dependent on the discovery and successful development of economic mineral reserves including the group's ability to raise sufficient finance to develop the projects and other factors, as discussed in note 2.12.

Following the completion of the Conceptual Economic Scoping Study on the Droujba project in the year, the directors undertook an impairment review of the Exploration and Evaluation expenditure on the Droujba project and determined that an impairment charge of $2,000,000 be made to the statement of comprehensive income. The impairment review took the form of a net present value calculation taking into account a number of key assumptions:

· economically recoverable reserves are based on management's expectations and technical studies undertaken internally and by a Competent Person, where available;

· diamond prices are based on independent valuations and models and subsequent rough price changes and an annual increase of 4.5% thereafter;

· discount rate of 10%;

· inflation rate of 4.5%;and

· the projected life of the potential mine of 3 years .

The net present value calculation is most sensitive to the modeled diamond price used. A 10% increase or decrease in the modeled diamond price would result in an increase or decrease in the value of the asset of approximately $1.5m.

In the previous year a dispute emerged in relation to the two exploration licenses held for the Kono site. The group received a letter from the Ministry of Mines of Sierra Leone ("the Ministry") which asserts that the Ministry ought not to have granted the renewals of the Company's licences in 2010 under the Mines and Minerals Act of 2009 and that as a result the Company no longer has mineral rights over the licences. The Company disputes the assertions and has continued to pursue the available political, diplomatic and legal routes available.

5. Property, plant and equipment

In accordance with the accounting policies, the Group tests property, plant and equipment for impairment when an indication of impairment exists. The recoverable amount of cash generating units is determined based on value-in-use calculations, which require the use of estimates. Cash flows were estimated over a period of 10 years. The estimated cash flows from the exploration projects produced net present values well in excess of their carrying values and are based on the following assumptions:

· economically recoverable reserves and resources are based on management's expectations based on availability of reserves at mine sites and technical studies undertaken internally and by a Competent Person, where available;

· diamond prices are based on independent valuations and models and an annual increase of 4.5% thereafter;

· discount rate of 10%;

· inflation rate of 4.5%;and

· the remaining useful life.

Mining assets, being previously capitalised exploration costs at Bomboko and Mandala, were fully impaired during the previous year, resulting in an impairment charge in 2012 of $1,367,495 being charged to the statement of comprehensive income.

The Group did not have any further contractually committed costs for the acquisition of property, plant and equipment at 30 June 2013.

The realisation of tangible assets of $3,278,294 is dependent on the discovery and successful development of economic mineral reserves including the group's ability to raise sufficient finance to develop the projects and other factors.

6. Dividends

No dividends have been paid nor are proposed for the period (2012: nil).

In accordance with AIM Rule 20, the Company's audited Reports and Financial Statements for the financial year ended 30 June 2013 has been posted on the Company's website and has been sent to those shareholders who have elected to receive the report by post.

7. Annual General Meeting

The Annual General Meeting will be held on 18 December 2013 at 9.30am at the offices of Daniel Stewart & Company Plc, Becket House, 36 Old Jewry, London, EC2R 8DD. The Notice and Form of proxy has been posted to shareholders and is available for download on the Company's website at www.stellar-diamonds.com.