MONTREAL, QUEBEC--(Marketwired - Oct. 20, 2014) - Stornoway Diamond Corporation (TSX:SWY)(the "Corporation" or "Stornoway") is pleased to announce the results of an optimization in plant design at the Renard Diamond Project which is expected to allow the immediate addition of a large diamond recovery capacity to the Renard diamond plant for no additional net capital cost.

The Renard diamond plant is being designed and constructed under an EPCM agreement between Stornoway and SNC-Lavalin Inc., with sub-contracted services being provided by AMEC Americas Ltd. and DRA Americas Inc. (DRA) for the specialized engineering and field support services relating to the plant's crushing, material handling, and diamond recovery circuits. Detailed plant engineering is ongoing, with the first pouring of concrete for the plant's foundation scheduled for April 2015. However, the work completed to date has already indicated that sufficient design efficiencies and cost savings can be implemented to allow for a Large Diamond Recovery circuit ("LDR") to be fully integrated into the plant's primary flow-sheet within the existing capital budget and with no change of scope in the existing ore processing capacity of 2.2mtonnes per annum. Stornoway's January 2013 Optimized Feasibility Study for the Renard Diamond Project contemplated a diamond plant flow-sheet geared to the recovery of diamonds up to 30mm in diameter (equivalent to a 200 carat round octahedral stone), with room for a LDR circuit to be retrofitted later as required. The direct capital cost for this feasibility plant design, without LDR, was estimated at that time to be C$162.7m, excluding capitalized operating costs. The modified plant design that will be built contemplates the recovery of diamonds up to 45mm in diameter (equivalent to a 600 carat round octahedral stone), with a corresponding direct capital cost estimate of C$147.1m.

Matt Manson, President and CEO, commented: "These plant design optimizations that we will implement at Renard will allow us to recover the potential value upside from large diamonds that is a characteristic feature of the project. The most recent valuation of Renard's diamond samples, conducted in March 2014 by WWW International Diamond Consultants Ltd., indicated a weighted average of value of US$190/carat for the three kimberlites in the project's Mineral Reserve, and US$197/carat for Renard 2, which represents 82% of production in the first 11 years. These valuations, being un-escalated base case diamond price models developed in the conventional manner, assume only nominal value from diamonds larger than 10.8 carats in size. However, the size distribution of samples collected at Renard 2 suggest the potential to recover approximately 3 to 6 stones between 50ct and 100ct in size, and 1 to 2 stones greater than 100ct in size, every 100,000 carats (representing 2 to 3 weeks of output at full production). While the presence and quality of such stones can never be assured at any diamond project, their occurrence is predicted by the sample data collected to date and their impact on project revenue could be significant. Ensuring we have the optimal plant design to recover them from day-one, within our existing plant capital budget, is a noteworthy achievement by the project team."

The optimized Renard diamond plant flow sheet, developed by DRA, will maintain the three stage crushing regime established in the January 2013 Optimization Study. Run-of-mine ore will be broken down with a primary jaw crusher utilizing a 230mm top size cut-off and fed to a 4 meter diameter rotary scrubber for disaggregation. Direct feed to Dense Media Separation ("DMS") circuits will be +1mm to -19mm (compared to +1mm to -30mm previously) so as to improve efficiency and reduce diamond breakage risk. Diamond recovery from concentrate will be through magnetic separation and X-ray technology supplied by DebTech, with no grease table. Recent bench tests on Renard diamonds at DebTech suggests a 98% recovery efficiency with the X-ray sorters that will be employed. Direct feed from the scrubber product screen to the LDR circuit will be +19mm to -45mm, with the top size cut-off adjustable to 60mm. Oversize material between +45mm and -230mm will fed to a cone-crusher under choke feed, before returning to the DMS and LDR circuits via a sizing screen. The non-diamond bearing material from the LDR circuit and the DMS tails between +6mm and -19mm will be conveyed to a High Pressure Grinding Rolls ("HPGR"), with the resulting cake returning to the scrubber for disagglomeration. Fine tails at -1mm will be recovered via thickener and degrit cyclone before dewatering by centrifuge and combination with the +1mm -6mm DMS tails for disposal by dry-stacking as previously.

Nameplate ore processing capacity will remain at 6,000 tonnes per day (2.2 mTonnes per annum) at an overall plant utilization (OPU) of 78%, expandable to 7,000 tonnes per day (2.6 mTonnes per annum) assuming an OPU of 83% and further operational optimization. The Renard mine plan contemplates 6,000 tonnes per day of ore feed from the Renard 2 and Renard 3 open pit and underground mine, supplemented by 1,000 tonnes per day from the Renard 65 open pit.

About the Renard Diamond Project

The Renard Diamond Project is located approximately 250 km north of the Cree community of Mistissini and 350 km north of Chibougamau in the James Bay region of north-central Québec. On July 8th 2014 Stornoway announced the completion of a $946 million project financing transaction to fully fund the project to production, and construction commenced on July 10th, 2014. First ore is scheduled to be delivered to the plant in the second half of 2016 with commercial production scheduled for the 2nd quarter of 2017.

In January 2013, Stornoway released the results of an Optimized Feasibility Study at Renard which highlighted the potential of the project to become a significant producer of high value rough diamonds over a long mine life. Probable Mineral Reserves, as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), stand at 17.9 million carats. Total Indicated Mineral Resources, inclusive of the Mineral Reserve, stand at 27.1 million carats, with a further 16.85 million carats classified as Inferred Mineral Resources, and 25.7 to 47.8 million carats classified as non-resource exploration upside. Average annual diamond production is forecast at 1.6 mcarats/year over the first 11 years of mining, at an average valuation of US$190/carat based on a March 2014 assessment by WWW International Diamond Consultants Ltd.

Readers are cautioned that the potential quality and grade of any target for further exploration is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the target being delineated as a Mineral Resource. All kimberlites remain open at depth. Readers are referred to the technical report dated February 28th, 2013 in respect of the January 2013 Optimization Study, and the press release dated July 23, 2013 in respect of the July 2013 Mineral Resource estimate, for further details and assumptions relating to the project. Disclosure of a scientific or technical nature in this press release was prepared under the supervision of Robin Hopkins, P.Geol. (NT/NU) Vice President, Exploration and the disclosure concerning the processing plant and its cost estimate was prepared under the supervision of Patrick Godin, P.Eng. (Québec) Chief Operating Officer, both "qualified persons" under NI 43-101.

About Stornoway Diamond Corporation

Stornoway is a leading Canadian diamond exploration and development company listed on the Toronto Stock Exchange under the symbol SWY and headquartered in Montreal. Our flagship asset is the 100% owned Renard Diamond Project, on track to becoming Québec's first diamond mine. Stornoway is a growth oriented company with a world class asset, in one of the world's best mining jurisdictions, in one of the world's great mining businesses.

This press release contains "forward-looking information" within the meaning of Canadian securities legislation. This information and these statements, referred to herein as "forward-looking statements", are made as of the date of this press release and the Corporation does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by law.

Forward-looking statements relate to future events or future performance and reflect current expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i) the amount of mineral resources and exploration targets; (ii) the amount of future production over any period; (iii) net present value and internal rates of return of the mining operation; (iv) assumptions relating to recovered grade, average ore recovery, internal dilution, mining dilution and other mining parameters set out in the Feasibility Study or the Optimization Study; (v) assumptions relating to gross revenues, operating cash flow and other revenue metrics set out in the Feasibility Study or the Optimization Study; (vi) mine expansion potential and expected mine life; (vii) expected time frames for completion of permitting and regulatory approvals and making a production decision; (viii) the expected time frames for the completion of the Route 167 extension and the financial obligations or costs incurred by Stornoway in connection with such road extension; (ix) future exploration plans; (x) future market prices for rough diamonds; (xi) the economic benefits of using liquefied natural gas rather than diesel for power generation; (xii) sources of and anticipated financing requirements; (xiii) the completion, effectiveness or availability, as the case may require, of the other elements of the Financing Transactions and the use of proceeds therefrom; and (xiv) the impact of the Financing Transactions on the Corporation's operations, infrastructure, opportunities, financial condition, access to capital and overall strategy. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as "expects", "anticipates", "plans", "projects", "estimates", "assumes", "intends", "strategy", "goals", "objectives", "schedule" or variations thereof or stating that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements.

Forward-looking statements are made based upon certain assumptions by Stornoway or its consultants and other important factors that, if untrue, could cause the actual results, performances or achievements of Stornoway to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business prospects and strategies and the environment in which Stornoway will operate in the future, including the price of diamonds, anticipated costs and Stornoway's ability to achieve its goals, anticipated financial performance, regulatory developments, development plans, exploration, development and mining activities and commitments. Although management considers its assumptions on such matters to be reasonable based on information currently available to it, they may prove to be incorrect. Certain important assumptions by Stornoway in making forward-looking statements include, but are not limited to: (i) required capital investment and estimated workforce requirements; (ii) estimates of net present value and internal rates of return; (iii) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (iv) the assumption that a production decision will be made, and that decision will be positive; (v) anticipated timelines for the commencement of mine production; (vi) anticipated timelines related to the completion of the Route 167 extension and the impact on the development schedule at Renard; (vii) market prices for rough diamonds and the potential impact on the Renard Diamond Project; (viii) Stornoway's ability to consummate the financing transactions set forth in the Agreement to enable it finance the development and construction of the Renard Diamond Project; and (ix) future exploration plans and objectives. Additional risks are described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A, the amended and restated preliminary short form prospectus filed for the marketed public offering and other disclosure documents available under the Corporation's profile at: www.sedar.com.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that estimates, forecasts, projections and other forward-looking statements will not be achieved or that assumptions do not reflect future experience. We caution readers not to place undue reliance on these forward-looking statements as a number of important risk factors could cause the actual outcomes to differ materially from the beliefs, plans, objectives, expectations, anticipations, estimates, assumptions and intentions expressed in such forward-looking statements.

These risk factors may be generally stated as the risk that the assumptions and estimates expressed above do not occur, including the assumption in many forward-looking statements that other forward-looking statements will be correct, but specifically include, without limitation, (i) risks relating to variations in the grade, kimberlite lithologies and country rock content within the material identified as mineral resources from that predicted; (ii) variations in rates of recovery and breakage; (iii) the uncertainty as to whether further exploration of exploration targets will result in the targets being delineated as mineral resources; (iv) developments in world diamond markets; (v) slower increases in diamond valuations than assumed; (vi) risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar; (vii) increases in the costs of proposed capital and operating expenditures; (viii) increases in financing costs or adverse changes to the terms of available financing if any; (ix) tax rates or royalties being greater than assumed; (x) uncertainty of results of exploration in areas of potential expansion of resources; (xi) changes in development or mining plans due to changes in other factors or exploration results; (xii) changes in project parameters as plans continue to be refined; (xiii) risks relating to the receipt of regulatory approvals or the implementation of the existing Impact and Benefits Agreement with aboriginal communities; (xiv) the effects of competition in the markets in which Stornoway operates; (xv) operational and infrastructure risks; (xvi) execution risk relating to the completion of the Route 167 extension; (xvii) failure to receive regulatory approvals (including stock exchange), shareholder approval or other approvals or otherwise satisfy the conditions to the completion, effectiveness or availability, as the case may require, of each of the elements of the Agreement; (xviii) failure to complete the various elements of the Agreement on acceptable terms or at all; (xix) changes in the terms of the various elements of the Agreement; (xx) the funds of some of the elements of the Agreement not being available to the Corporation; (xxi) future sales or issuances of Common Shares lowering the Common Share price and diluting the interest of existing shareholders; (xxii) Stornoway being unable to meet its diamond delivery obligations under the Streaming Agreement, and (xxiii) the additional risks described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A and the amended and restated preliminary short form prospectus filed for the marketed public offering, and Stornoway's anticipation of and success in managing the foregoing risks. Stornoway cautions that the foregoing list of factors that may affect future results is not exhaustive, and new, unforeseeable risks may arise from time to time.

Matt Manson
President and CEO
416-304-1026 x101

Orin Baranowsky
Director, Investor Relations
416-304-1026 x103
Toll free at 1-877-331-2232

M. Ghislain Poirier
Vice-president Affaires publiques de Stornoway
418-254-6550
[email protected]

Stornoway Diamond Corporation
[email protected]
www.stornowaydiamonds.com