Stornoway Diamond Corporation
TSX : SWY

Stornoway Diamond Corporation

July 31, 2008 20:04 ET

Stornoway Closes $22 Million Private Placement and Redeems Convertible Debentures

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 31, 2008) - Stornoway Diamond Corporation (TSX:SWY) is pleased to announced that it has closed a $22 million private placement (the "Private Placement") comprising 24,444,444 common shares at a price of $0.90 per common share split equally between Agnico-Eagle Mines Limited ("Agnico-Eagle") and Lorito Holdings Limited ("Lorito"), as previously announced on July 16, 2008. Agnico-Eagle and Lorito held, equally between them, convertible debentures in the aggregate principal amount of $20 million, which were due in March 2009. Agnico-Eagle and Lorito agreed to amend the debentures to permit Stornoway to redeem them prior to the maturity date in consideration for an additional $2 million payment to be split equally between Agnico-Eagle and Lorito.

The proceeds of the Private Placement were required to redeem the $10 million principal amount of convertible debentures held by each of Agnico-Eagle and Lorito and to make the $2 million payment in respect of the amendment of the debentures. As a result of the Private Placement, Stornoway is now debt-free.

On July 31, 2008, Stornoway issued a further 1,055,894 common shares (the "Interest Shares") in payment of interest payable on the convertible debentures to the redemption date in the amount of $289,315.

Agnico-Eagle is a related party of Stornoway. Prior to completion of the Private Placement and issuance of the Interest Shares, Agnico-Eagle reported holdings of 27,520,809 common shares of Stornoway, representing approximately 13.6% of Stornoway's issued and outstanding common shares. As a result of the private placement, Agnico-Eagle's holdings have increased to 40,270,978 common shares, representing approximately 17.7% of Stornoway's 227,226,346 common shares issued and outstanding.

Stornoway Diamond Corporation

Stornoway Diamond Corporation is one of Canada's leading diamond exploration and development companies, involved in the discovery of over 150 kimberlites in seven Canadian diamond districts. The Corporation benefits from a diversified diamond property portfolio, a strong financial platform and management and technical teams with experience in each segment of the diamond "pipeline" from exploration to marketing.

On behalf of the Board

STORNOWAY DIAMOND CORPORATION

Eira Thomas, Chief Executive Officer

This news release may contain forward looking statements, being statements which are not historical facts, including, without limitation, statements regarding potential financings, the use of proceeds, stock exchange and regulatory approval and discussions of future plans and objectives. There can be no assurance that such statements will prove accurate. Such statements are necessarily based upon a number of estimates and assumptions that are subject to numerous risks and uncertainties that could cause actual results and future events to differ materially from those anticipated or projected. Important factors that could cause actual results to differ materially from the Corporation's expectations are in Corporation documents filed from time to time with the Toronto Stock Exchange and provincial securities regulators, most of which are available at www.sedar.com. The Corporation disclaims any intention or obligation to revise or update such statements.

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