Proposed Placing to Raise ?1.9 Million

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

22 September 2010

AIM: STEL

Stellar Diamonds plc

("Stellar" or the "Company")

PROPOSED PLACING TO RAISE £1.9 MILLION

Stellar, the AIM-quoted diamond mining and exploration company focused on West Africa, announces that it has today conditionally placed 38 million new Ordinary Shares of 5 pence each in the Company (the "Placing Shares") with institutional and other investors at par value to raise gross proceeds of £1.9 million (the "Placing").

Highlights:

·; Brokered private placement to raise gross proceeds of £1.9m

·; Funds to accelerate exploration at the Droujba Kimberlite pipe in Guinea

The Company has also agreed to grant warrants to each placee on the basis of one warrant for every two Placing Shares subscribed (the "Placing Warrants"). Each Placing Warrant will entitle the holder to subscribe for one new Stellar Ordinary Share at a price of 12 pence each for a period of 18 months from the date of admission of the Placing Shares to trading on AIM ("Admission").

Following the Placing the enlarged issued share capital will be 139,266,659 ordinary shares and the Placing Shares will represent approximately 27.3 per cent. of the enlarged issued share capital. The Placing was arranged by Astaire Securities, assisted by RBC Capital Markets. The total number of Placing Warrants, together with those issued in lieu of fees, will be 23,064,383. The Placing Warrants will not be listed.

Karl Smithson, Chief Executive of Stellar, commented:

"We are pleased to have received an oversubscribed interest in the Placing from a number of new investors as well as existing shareholders. Our strategy of evaluating and developing our key kimberlite diamond projects can now be implemented before the end of the year. We intend to commence a drilling programme over the high-grade Droujba pipe in November. The results will enable geological modelling of the pipe at depth, as well as diamond grade analysis on the core material recovered. In the meantime we are on track to deliver our first bulk sample results from the Tongo kimberlite dykes project in Sierra Leone by the end of October, with full results before the end of the year."

Use of proceeds

An extended period of adverse weather conditions in mid 2010 caused delays to the delivery of equipment and vehicles to the Company's Mandala and Bomboko diamond mines in Guinea.

While the ramp up to full production is now underway at these projects, the board of Stellar has decided it would be prudent to raise additional funds in order to accelerate the planned kimberlite exploration programmes at Droujba and Tongo.

Approximately £1 million of the Placing proceeds will be invested in a detailed drilling and diamond evaluation programme on the high-grade Droujba kimberlite pipe located in Guinea. Approximately £200,000 will be allocated to completion of the ongoing Tongo kimberlite dyke bulk sampling programme in Sierra Leone. The balance of funds will be utilised for general working capital purposes and Placing expenses. Further information about the Droujba project can be found at http://www.stellar-diamonds.com/temp/Droujba.asp.

Shareholder approval

The Placing is conditional on the approval of shareholders at a General Meeting (which it is intended will be convened by the Company for 11 October 2010) and Admission. A circular, containing a notice of the General Meeting, will in due course be sent to Stellar shareholders outlining the terms of the Placing and seeking the necessary approval of shareholders for the issue of the Placing Shares and the grant of the Placing Warrants.

Application will be made for Admission and, subject to the requisite shareholder approval for the Placing being obtained at the General Meeting, it is expected that Admission will become effective on or around 12 October 2010.

Directors' participation in the Placing

The following directors of the Company are participating in the Placing at the Placing price:

Irrevocable Undertakings

All of the directors and Mano Diamonds Ltd have irrevocably undertaken to vote (or to procure that the relevant votes are cast) in favour of the Resolutions to be proposed at the General Meeting in respect of their holdings and those of their immediate families and connected persons totalling 32,737,302 existing Stellar ordinary shares, representing approximately 32.3% per cent of the current issued ordinary share capital of the Company.

Enquiries:

Stellar Diamonds plc

Karl Smithson, Chief Executive  Tel: +44 (0) 7783 707 971

Angus Ogilvie, Finance Director Tel: +44 (0) 7885 201 903

RBC Capital Markets

Martin Eales / Brett Jacobs Tel: +44 (0) 20 7653 4000

Astaire Securities

Charles Vaughan Tel: +44 (0) 20 7492 4763

Pelham Bell Pottinger

Charles Vivian / James MacFarlane Tel: +44 (0) 20 7861 3232

About Stellar Diamonds plc

Stellar Diamonds plc is a London (AIM: STEL) quoted diamond mining and exploration company that has a portfolio of projects in West Africa. Two projects in Guinea are in production, Mandala and Bomboko, which provide cash flow to the Company.

Stellar also owns rights over four high-grade kimberlites that are the focus of further development. In Sierra Leone the Tongo and Kono projects comprise a series of kimberlite dykes, with the Kono project having produced 4,200 carats of diamonds through underground trial mining. In Guinea the Droujba kimberlite pipe and the Bouro kimberlite dykes are located in proximity to the Mandala mine and demonstrate grades of up to 200cpht and 500cpht respectively.