Stellar Diamonds Limited Strategic and Operational Update by 24hgold

Re: News Releases - Monday, February 21, 2011
Title: Strategic and Operational Update

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

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

Stellar Diamonds plc, the London listed (AIM:STEL) Diamond exploration and development company focused on West Africa, announces its strategic decision to accelerate the development of its hard rock kimberlite projects and provides an update on its alluvial Diamond operations.

Highlights:

Stellar to focus on the development of its kimberlite Diamond projects
Bomboko sale realises record average price of $201/ct
Mandala Diamond production of 10,264 carats in Q4 2010 at an average grade of 16cpht

10,048 carats sold in February realising $361,500

Strategic focus on kimberlite portfolio
In light of the strong rebound in Diamond prices as evidenced by the record Diamond prices achieved from the recent sale of a parcel of diamonds from the Company's Bomboko project, as well as those achieved by other Diamond producers, the Board of Stellar has decided that substantial value may be created by focusing the Company's human and other resources on fast tracking the development of its hard rock kimberlite portfolio. These projects include the Droujba kimberlite pipe in Guinea and the Tongo kimberlite dyke in Sierra Leone. If proven economic, the Board considers that these projects have the potential to generate substantial revenues over long mine lives and in turn have the potential to transform Stellar into a significant Diamond production company in Africa.

Recently announced results from drilling at the Droujba kimberlite pipe indicate that it has a number of hallmarks of a potentially substantial kimberlite deposit with significant diamonds counts, including commercial sized stones, and with the pipe remaining open below 120m. Kimberlite has also been intersected in a priority geophysical anomaly adjacent to the pipe, confirming the suspicion of an extension to the pipe at depth. Similarly the recently announced initial bulk sampling results from Dyke 1 of the Tongo project suggest it has the potential to be a high value kimberlite ore body, with an undiluted grade of 130cpht and a Diamond value in the order of $169/ct having been reported. This suggests that the Tongo kimberlite has a potential in-situ value of $220 per tonne. Stellar has also recently embarked on a bulk sampling exercise of the Bouro North kimberlite dyke, located 1km from the Company's Mandala Diamond processing plant in Guinea. Previously announced grades from Bouro suggest it has the potential to be significantly diamondiferous, with grades of up to 500cpht reported which potentially make it one of the most diamondiferous kimberlites globally.

Proceeds from Diamond Sale
A 10,048 carat parcel of diamonds from Stellar's operations was recently sold in Antwerp for $361,000. This parcel comprised 9,767 carats from Mandala and 281 carats from Bomboko. The Mandala goods were sold for an average price of $31 per carat (2010 average $32 per carat). The Bomboko goods, however, sold for a record average price for the project at $201 per carat (2010 average $116 per carat). The lower than average price at Mandala is a reflection of a weaker Diamond parcel based on the lower than normal gem Diamond content from the area mined. However, the excellent value achieved at Bomboko was driven by some high value gem stones in the 2 to 4 carat range.

Mandala alluvial Diamond project, Guinea
For the period of October 2010 to January 2011 mining and production processed 86,534 tons of gravel which yielded 13,566 carats at an average grade of 15.7cpht. Recent mining has been testing areas in an adjacent valley to the Mandala valley and this has yielded lower grades than projected. Although the production levels at Mandala have realised the expected increase in tonnage throughput since the end of the rainy season, the mining grade has not achieved past averages of 30cpht. This has impacted negatively on forecast cash flow from the project and as a consequence the project has not realised an operational profit for this period. Once the current Bouro bulk sample is completed the Company intends to focus its efforts on an as yet un-mined area in the N'Keliyani River valley, once access has been established. This extensive area has modelled higher grades based on previous evaluation work. However, should this area not realise a significant increase in grade then the Mandala project will be placed on care and maintenance and the plant will be modified to process bulk samples from the high-grade Bouro North kimberlite, if warranted by results.

Bomboko alluvial Diamond project, Guinea
Bulk sampling of the lower Bomboko valley resumed in December 2010 after a prolonged rainy season. An extensive area was identified for testing with the objective of establishing a potential future mineable resource. A number of sampling trenches were excavated and the underlying gravel hauled to the Bomboko processing plant. Some 360 carats were recovered at grades ranging between 1cpht to over 6cpht, with an average grade of 2cpht. The Diamond sale that realised $201 per carat was comprised of diamonds from this particular area. Further areas remain to be tested and a final report will be assembled within two months on the delineated resource, the results of which will determine whether or not the area is subjected to future commercial scale mining.

Chief Executive Karl Smithson commented:
"Over the last three years Stellar has established an exciting portfolio of key kimberlite Diamond projects in Guinea and Sierra Leone, in line with the Company's long term strategy. With the recovery in global Diamond prices, the Board of Stellar considers that superior and potentially transformational value may be created for the Company's shareholders by focusing on the exploration and development of its hard rock assets, which include potentially some of the highest grade and highest value kimberlites globally. I look forward to updating shareholders on the results from the on going bulk sampling and drilling programmes at our Tongo and Droujba projects respectively."

About Stellar Diamonds plc
Stellar is a London (AIM: STEL) listed Diamond development company that has a portfolio of projects in West Africa. Tongo, Kono, Droujba and Bouro are all potentially high grade kimberlites that are at various stages of development. Stellar is currently focussing on a bulk sampling project at Tongo in Sierra Leone and completing an initial drill project and Diamond evaluation of the Droujba kimberlite pipe in Guinea.

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

In accordance with the AIM Rules, the information in this announcement has been reviewed by Karl Smithson, CEO of Stellar, a qualified geologist with 22 years' experience.

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 / Daniel Conti
Tel: +44 (0) 20 7653 4000

Northland Capital Partners Limited
Charles Vaughan / Gavin Burnell
Tel: +44 (0) 20 7492 4763

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

Copyright � 2011 STELLAR DIAMONDS PLC (All) All rights reserved. For more information visit our website at http://www.stellar-diamonds.com/ or send email to info@stellar-diamonds.com ..
Message sent on Mon Feb 21, 2011 at 1:17:40 AM Pacific Time

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