Final Results & Notice of AGM

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

24 November 2015

AIM: STEL

Stellar Diamonds plc ("Stellar" or the "Company")

Final Results and Notice of AGM

Stellar Diamonds plc, the London listed (AIM: STEL) diamond development company focused on West Africa, announces its final results for the period ended 30 June 2015.

Operational Highlights:

Baoulé Project, Guinea (75% owned):

· Trial mining yielded 6,400 carats at a +1.25mm run of mine grade of 13.5cpht

· Diamonds sale revenues of over US$700,000 (US$900,000 including other project inventory)

· High quality diamonds with values of up to US$6,800 per carat realised

· Target resource of 3.3 million carats based on historical drilling and current trial mining

Tongo Dyke-1 Project, Sierra Leone (100% owned):

· Preliminary Economic Assessment issued highlighting robust project economics

· NPV (10) of US$53 million and IRR of 31%

· Early cash flow expected to be generated and low capital requirement of US$24.2 million for surface and underground mining

· 18 year life of mine plan yielding target 1 million carats and US$386 million revenues

· Mining licence application and environmental impact assessment study to be submitted in near future

Financial Highlights:

· US$2.2 million raised during the year to complete the Tongo PEA and bring Baoulé into Trial Mining production

· Further US$2.4 million raised in November 2015 to progress the Tongo mine licence process and the Baoulé Trial Mining exercise

· Group administrative costs reduced to US$1.4 million from US$2.8 million with significant reductions made in both corporate and project level administration costs

Stellar Diamonds Chief Executive Officer Karl Smithson commented:

"Having delivered a very robust mine plan and financial model for Tongo the Board has decided to advance the project to the mining licence application stage. The independent PEA outlines an 18 year life of mine at a modest capital requirement of US$24.8 million which is expected to deliver robust revenues at a high margin. The calculated NPV at US$53 million is multiples of our current market capitalisation.

"At Baoulé we commenced trial mining of the 5 hectare kimberlite pipe. Processing via our 100tph DMS plant has so far yielded over 6,400 carats with maiden revenues of US$700,000 with the most recent diamonds sale in May achieving an average value of US$156 per carat. A number of diamonds have achieved high prices with a 10 carat fancy yellow stone fetching US$6,800 per carat which indicates the high value potential of the diamonds contained in the Baoulé pipe.

"We look forward with excitement to the year ahead which we believe will be transformational for Stellar. Securing the mining licence and necessary funding to get Tongo into mine development and production, and continued positive results from trial mine evaluation of Baoulé should hopefully deliver the returns that shareholders deserve."

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

About Stellar Diamonds plc

Stellar is an AIM quoted (AIM: STEL) West African focused diamond development company which is continuing trial mine evaluation of its Baoulé kimberlite in Guinea, and is progressing the 1.45 million carat Tongo Dyke-1 resource through the mining licence application process. In addition, Stellar holds the 3 million carat Droujba project in Guinea and continues to pursue channels to ensure the proper reinstatement of its Kono licences in Sierra Leone.

Chairman's Statement

The past year has been very challenging for all junior resource companies with poor market conditions leading to widespread erosion of market capitalisations. Furthermore in Guinea and Sierra Leone we have been subject to the horror of the Ebola epidemic which further drove the poor market sentiment of those companies working in the West African region.

However, I am pleased to report that despite these immense hurdles Stellar has continued to make tremendous progress and on the ground we have delivered a trial mining operation at Baoulé and advanced the Tongo project to the stage where we are now preparing to submit an application for a mining licence. We faced up to the challenges head on and during the Ebola outbreak, which I am now pleased to say is essentially passed, managed to keep our people and assets safe from harm.

Baoulé Project

During late 2014 and into 2015 Stellar has entered and continued trial mining of the five hectare, diamondiferous Baoulé kimberlite pipe. This pipe is located in the renowned area of Aredor in Guinea which has over many years yielded spectacularly large gem diamonds from alluvial mining. However, there are several diamond bearing kimberlites in the immediate vicinity of these alluvial diamonds, including Baoulé, and these have not been tested for economic potential in any significant way.

Through vesting our 100 tonne per hour DMS plant and various earth moving machines into a joint venture, as well as cash funds to establish trial mining, Stellar has met the expenditure requirements to earn a 75% interest in the Baoulé asset, and the licence, plant and machines are in the process of being formally transferred into a Joint Venture Company.

Trial mining has so far yielded over 6,400 carats at a +1.25mm grade of 13.54cpht. During 2015 we have undertaken two diamond sales totalling 5,100 carats which yielded revenues of over US$700,000 from Baoulé. A further US$220,000 was received from selling the inventory of other projects. These sales of US$220,000 along with US$86,000 of sales from Baoulé were not recorded as revenue as they arose during the plant commissioning phase. The most recent diamond sale in May achieved an average value of US$156 per carat and included high value stones including a 10 carat fancy yellow diamond that sold for an average of over US$6,800 per carat. This demonstrates the high value potential of the diamonds in Baoulé.

In house modelling based on historical drilling data and our bulk sample results to date has led us to target at least 3 million carats in resource in 22 million tonnes at Baoulé (although this is not a resource estimate or in accordance with JORC code). Our trial mining exercise will continue into 2016 with the objective of achieving a sample of 100,000 tonnes, of which we are approximately half the way through. We anticipate a further two diamond sales to be made during this exercise. Upon completion of this sample we expect to have established with confidence the grade and diamond value of the Baoulé pipe and then be in a position to determine the next steps in the development of the resource.

Tongo Project

For the most part of 2015 we have been actively compiling the various exploration data from Tongo Dyke-1 into a Preliminary Economic Assessment, mine plan and financial model which will form the basis of a mining licence application.

The PEA yielded encouraging financial parameters of the future Tongo mine. Based on a 1.1 million carat mine (of the 1.45 million carat inferred resource) our independent consultants PPM have defined an 18 year life of mine with a modest capital requirement of US$24.2 million. The designed mine plan of Dyke-1 incorporates surface mining from years 1 to 4 yielding 117,800 carats with forecast gross revenues of US$28.5 million. Underground mining of the resource from years 3 to 18 yields a further 838,000 carats with forecast gross revenues of US$358 million. The overall pre-tax NPV at a 10% discount rate has been estimated by PPM at US$53.2 million with an IRR of 31%. There are three other high-grade diamondiferous kimberlite dykes on the licence in close proximity to Dyke-1 so we believe that there is potential to increase the diamond resource and expand the life of mine and thus enhance the future economic potential of the asset.

Since Tongo Dyke-1 has an established high grade of 120cpht with a modelled diamond value of US$270 per carat, it is calculated that the in-situ kimberlite resource has a very high value of US$324 per tonne. The starting operating cost, inclusive of mining, processing and admin is forecast by PPM to be US$78 per tonne. Therefore we believe that Dyke-1 represents a compelling, high-margin mining opportunity for Stellar.

In the near future Stellar will be completing an Environmental and Social Impact Study in order to obtain an environmental licence for the mining project. Furthermore, we will be submitting the required documentation to the Ministry of Mines in order to have our application for a mining licence considered, approved and processed. We will also be considering the optimum funding options for the required capital to establish the mining operation.

Other Projects

Our two additional projects in Guinea, the 3 million carat Droujba/Katcha kimberlite project and the Mandala alluvial mining project, are currently under care and maintenance whilst we focus on delivering value at Baoulé and Tongo.

We still continue our efforts to recover our wrongly cancelled Kono licences in Sierra Leone though this has been a frustratingly slow process. Numerous diplomatic channels have been pursued and other initiatives are currently being followed. We remain hopeful that the licences will be reinstated, recovered or awarded.

Diamond Market

The short term outlook for the diamond market has weakened during 2015. Prices have declined around 15% since the start of the year with the potential for further price depreciation in the short term. Major producers have taken steps to cut production and limit supply to support prices and this should have a positive effect as the overhang of polished inventory is reduced.

However, investment in diamond mines should be based on long term fundamentals and strategy. The outlook for supply and demand still favours a shortage of goods in the medium to longer term and this should result in robust pricing of the product. Whilst there has been a relative weakening in demand for luxury goods in China the vast growth of the middle class continues and industry analysts expect this to be positive for diamond jewelry sales. In addition, the main consumer market for diamonds, the USA, has shown relatively strong consumption figures in recent times and with continued economic growth this is likely to continue.

Funding

During the period we have successfully raised c. US$2.2 million through a combination of placings and share subscriptions from existing and new shareholders. Despite the very challenging market conditions, where investor interest has waned considerably for the small cap sector, since the end of this reporting period we have been able to find new institutional support with Deutsche Balaton, an investment group that shares our vision of becoming a significant diamond producer in West Africa and as a result has become a significant shareholder through a combined investment of US$2.35 million via a convertible loan note, warrant and share placing.

Ebola

The past 18 months with Ebola have been very challenging but I am pleased to say that Sierra Leone was recently declared Ebola free by the WHO, and Guinea is also approaching zero new cases. Throughout the crisis we managed to maintain our presence and operations on the ground and successfully protected our staff and local communities through an intense education programme, supplying the necessary sanitation and conducting strict daily testing. Special mention in this regard must go to our COO Rowan Carr who was present on the ground throughout and led the initiatives that were so successful in enabling our operations to continue.

Outlook

Despite the significant challenges faced, Stellar has managed to deliver yet again on the ground. We are now advancing the Tongo project to the mining stage and hopefully the results of the trial mining at Baoulé can prove the economic potential of the pipe. Our main focus will remain on these two projects and in particular the successful funding of Tongo so that we can commence the development of the mine in 2016. There remain a number of challenges, risks and uncertainties affecting Stellar which are discussed in more detail in the Strategic Report.

I would like to take this opportunity to thank our shareholders for their continued patience and support in very difficult market conditions. This has enabled our excellent team to continue moving our projects forward to the stage where we can now evolve from an exploration to a mining company, very much against the odds, but with a brighter outlook for your company as a result.

Peter Daresbury

Non-Executive Chairman

23 November 2015

1. Basis of preparation

1.1 Basis of accounting

Stellar Diamonds plc is presenting audited financial statements as of and for the year ended 30 June 2015. The comparative period presented is audited financial statements as of and for the year ended 30 June 2014.

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.

The auditors have reported on the 2015 statements and their report was unqualified with an emphasis of matter in respect of considering the adequacy of the disclosures made in the financial statements concerning the realisation of intangible assets, property, plant and equipment, recoverability of investments in and amounts due from subsidiaries, and Going Concern and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.

1.2 Going concern

The Group incurred a loss of $3,015,682 (2014: $4,060,549) during the year ended 30 June 2015, and at that date had net current liabilities of $493,184 (2014: net current assets of $1,160,485) which included cash and cash equivalents of $94,624 (2014: $1,358,671) and stock of diamonds of $154,170 (2014: $nil).

During the year the Group raised just under $2.2m through two placings and also entered into a $0.5m 12 month loan. Following the year end the Group entered into a convertible loan note for $1.65m with an additional $1.65m warrant attached and also raised an additional $0.77m before costs through an equity placing. These funds are expected to provide sufficient working capital until the Tongo Mine funding is completed in Q1 2016, however if this is delayed the Company would potentially need to seek additional working capital funding.

The Group has continued to undertake cost reduction initiatives both at a Corporate and Project level. Additionally, the Baoulé Trial Mining project has generated revenues in the period of $0.7m which have significantly offset the cost of the exercise, and will continue to do so during the remainder of the trial mining.

Given the positive evaluation studies concluded on the Tongo project to date, the stage of development of the project, and the positive reaction of the Government of Sierra Leone to Stellar's intention to move the project into commercial production in 2016, the Directors believe that the Company will have the ability to access sufficient levels of finance to fund the capital expenditure requirements at Tongo, and to meet essential administrative expenses and continue the Group's other projects for the foreseeable future. The directors have reviewed the projected cash flows for the Group and on the basis of the projected cash flow information and the prospects for raising additional equity as required, they consider it appropriate to prepare the financial statements on a going concern basis.

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 diamond sales, joint ventures, sale of assets, reducing overheads, obtaining debt funding for Tongo 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.

1.3 Audit Report

Deloitte & Touche, the Group's auditors, have not qualified their audit opinion, however they have included an emphasis of matter in relation to the realisation of intangible assets, property, plant and equipment, and the recoverability of investments in and amounts due from subsidiaries, all of which are dependent on the discovery and successful development of economic mineral reserves, the group's ability to raise sufficient finance to develop the mineral exploration projects and on the future profitable production or proceeds from the resource properties. The emphasis of matter also includes reference to the group's ability 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/Bomboko (Guinea);

· Kono (Sierra Leone);

· Tongo (Sierra Leone);

· Droujba (Guinea);

· Baoulé (Guinea);

· Corporate and other activities.

Following is an analysis of the Group's revenue, results, assets and liabilities by reportable segment for the year ended 30 June 2015:

Following is an analysis of the Group's revenue, results, assets and liabilities by reportable segment for the year ended 30 June 2014:

3. Loss for the year

Loss for the year has been arrived at after charging/(crediting):

$344,142 of depreciation charges were capitalised as exploration and evaluation expenditure during the year and consequently are not included in the Statement of Comprehensive Income (2014: $479,327).

4. Intangible assets

Consolidated Company

At 30 June 2015, the Group did not have any contractual commitments for the acquisition of intangible assets.

The impairment charge of $605,728 in the year relates to other exploration projects that are no longer being pursued. The impairment charge of $760,000 in the previous year related to expenditure on the Kono licence since the date of the licence dispute arising.

The realisation of the net carrying value of intangible assets of $16,700,416 is dependent on the discovery and successful development of economic mineral reserves including the Group's ability to raise sufficient finance to develop the exploration and evaluation projects and other factors, as discussed in the notes.

In the year ended 30 June 2012 a dispute emerged in relation to the two exploration licenses held for the Kono project. 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. The realisation of the Kono intangible assets held at the year ended 30 June 2015 of $4,300,528 in the consolidated statement of financial position and $1,302,561 in the company statement of financial position are also dependent on a satisfactory outcome to this licence dispute. Should these routes prove unsuccessful the carrying value included in the statement of financial position would be written off to the Statement of Comprehensive Income.

In determining the potential impairment of the Kono intangible asset the Directors have considered the likely probabilities of the licence being returned or not and the likely cash flows and Net Present Values of the assets in each case. There is a significant element of judgement when determining these probabilities, and the Directors have used their all relevant information available to them when determining the probabilities used in these assumptions. Cash flows were estimated 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.

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 at least 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.

The Group did not have any further contractually committed costs for the acquisition of property, plant and equipment at 30 June 2015.

The realisation of the property, plant and equipment of $2,192,719 is dependent on the discovery and successful development of economic mineral reserves including the group's ability to raise sufficient finance to develop the exploration projects and other factors, as discussed in the notes.

6. Dividends

No dividends have been paid nor are proposed for the period (2014: nil).

7. Annual General Meeting and posting of report and accounts

The Annual General Meeting will be held on 18 December 2015 at 10.00am at the offices of Daniel Stewart & Company Plc, 33 Creechurch Lane, London, EC3A 5EB. The Notice and Form of proxy has been posted to shareholders who have elected to receive this by post and is available for download on the Company's website at www.stellar-diamonds.com.

In accordance with AIM Rule 20, the Company's audited Reports and Financial Statements for the financial year ended 30 June 2015 has been posted on the Company's website and has been sent to those shareholders who have elected to receive the report by post.