Stornoway Diamond Corporation
TSX : SWY

Stornoway Diamond Corporation

October 06, 2009 08:00 ET

Stornoway Diamonds Announces Fourfold Tonnage Increase in Renard 2 Following Completion of 2009 Drill Program

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 6, 2009) - Stornoway Diamond Corporation (TSX:SWY) is pleased to announce the completion of the summer drill program on the Renard 2 kimberlite pipe, located at the Renard Diamond Project in North Central Quebec. The latest drilling has confirmed that Renard 2 is significantly larger than previously thought, and detailed drill data now support a high confidence geological model that is approximately four times larger than the initial mineral resource estimate for the kimberlite pipe, which was declared in December 2008. The Renard Diamond Project, which includes the Renard kimberlite pipes and the Lynx-Hibou system of kimberlite dykes, is a 50:50 joint venture with SOQUEM INC. ("SOQUEM").

The new drilling was completed on a detailed in-fill pattern designed to convert previously announced new kimberlite zones on adjacent sides of Renard 2 to the Indicated Mineral Resource category. Whilst the detailed resource estimation work is still ongoing, Stornoway can announce that the latest drilling is consistent with an estimate of between 14.8 and 17.8 million tonnes of potential mineral deposit in Renard 2 calculated to 700m below surface. This new material is in addition to the existing National Instrument ("NI") 43-101 compliant mineral resource for Renard 2, which was estimated to be 3.36 million tonnes of Indicated Mineral Resource (at an average grade of 81 carats per hundred tonnes, or "cpht") and 1.80 million tonnes of Inferred Mineral Resource (at an average grade of 86 cpht) to a depth of 570m below surface (Stornoway Press Release dated December 15, 2008: http://www.stornowaydiamonds.com/investor_relations/news_releases/2008/index.php?&content_id=457). At 700m below surface Renard 2 measures approximately 100 by 230 meters, has a kimberlite surface area of 1.8 hectares, and remains open at depth.

The reader is cautioned that the new kimberlite material reported today, as well as any "potential mineral deposit", does not constitute a mineral resource, and it is uncertain if further exploration will result in it being delineated as a mineral resource. In addition, mineral resources are not mineral reserves and do not have demonstrated economic viability. Work ongoing to update the overall Renard mineral resource statement includes detailed grade estimation, an updated diamond valuation, and revised geological modeling on each of the Renard 2, 3, 4 and 9 kimberlite pipes and the Lynx and Hibou kimberlite dykes. Stornoway expects to release the results of this work within the 4th Quarter of 2009, with a revised conceptual mine plan and economic assessment thereafter. It is expected that the new drilling will have a material impact on the mineral resource statement and economic viability of the project.

Matt Manson, President and CEO, commented: "Renard 2 has continued to grow dramatically in size as we have conducted more detailed deep drilling. Below 250m the pipe is dominated by thick zones of "brown" (kimb2b) kimberlite that characteristically returns diamond grades of well over one carat per tonne. The bulk of the new material is within the scope of the existing conceptual mine plan for the project, which envisions combined open pit and underground mining to 600 meters at a capital cost of C$308 million and a blended, all in operating cost of C$50/tonne. In addition to having a dramatic and immediate effect on the project's potential mine life and economic return, the Renard 2 expansion is also prompting a new assessment of the potential for higher grade, deeper phases of kimberlite in the other Renard kimberlite pipes, most of which have not been drilled below 250m."

Eira Thomas, Executive Chairman, commented: "In late 2008 we released a preliminary economic assessment for Renard that had positive economics on good margin ore but with a short mine life of seven years. Starting in early 2009, we set out to increase the mineable resource at Renard through drilling, and the results have exceeded our most optimistic expectations. We are confident that the updated economic analysis to be completed within the next few months will support moving forward with final feasibility and permitting work in 2010. Renard is now much larger than previously thought and given its location at the end of a planned road development in the heart of Quebec, the world's best mining jurisdiction, we believe it has the potential to become a long-life, world class diamond mine."

During the summer drill program, a total of 24 holes were collared at Renard 2 (including three that extended existing older holes) and 12,718m of new core was collected. Five of the 24 holes were terminated early due to excess deviation that would have prevented critical deep pierce points from being obtained, and one hole was lost at depth due to technical difficulties. This new information has been incorporated into a revised geological model comprising a Tuffisitic Kimberlite Breccia (kimb2a or "Blue" kimberlite) and a dominantly Coherent Kimberlite (kimb2b or "Brown" kimberlite). Intersections of potentially high grade Hypabyssal Kimberlite Breccia and Hypabyssal Kimberlite occur in both the Blue and Brown units. The new geological model also incorporates units of Country Rock Breccia and Cracked Country Rock. It has now been realised that the few deep holes drilled at Renard 2 prior to 2009 terminated in broken country rock, and failed to intersect adjacent units of the older Brown kimberlite contained within the pipe's overall eruptive envelope.

Renard 2 Kimberlite Tonnages

As successive, more detailed drill campaigns at Renard 2 have unfolded, previously conservative geological models for the pipe based on limited data have given way to more detailed models with a higher degree of confidence and, concurrently, greater estimates of kimberlite tonnage. The December 2008 mineral resource estimate for Renard 2 comprised 3.36 million tonnes of Indicated Mineral Resource and 1.80 million tonnes of Inferred Mineral Resource (calculated to 570m depth). At that time, additional upside within Renard 2 in the form of potential mineral deposit was estimated at 2.5 to 7.1 million tonnes of kimberlite (to 700m depth), based primarily on the implied depth extent of the kimberlite pipe or on the basis of geological uncertainty in the definition of the geological model. In March 2009 (Stornoway Press Release dated March 31, 2009: http://www.stornowaydiamonds.com/investor_relations/news_releases/2009/index.php?&content_id=473), following the winter campaign of deep drilling, the estimate for this non-resource, upside material was upgraded to 10.5 to 12.3 million tonnes (to 700m depth). Following the summer campaign, the estimate for this upside material has been further upgraded to 14.8 to 17.8 million tonnes (to 700m depth), and is now based on regularly spaced drill intercepts. This upside material, which is outside the existing mineral resource, is characterized as potential mineral deposit pending the outcome of the ongoing mineral resource estimation. All tonnages cited are for kimberlite units only, and do not include cracked or brecciated country rock units.

The work required to bring this new Renard 2 material into a mineral resource category comprises the integration of the existing bulk sample and reverse circulation diamond data collected over the top 250m of the pipe with an extensive new microdiamond dataset so as to obtain an overall diamond grade model for the complete kimberlite pipe. This work is being conducted using industry standard techniques by Golder Associates Ltd., who has also supervised the preparation of the new geological models.

Stornoway Diamond Corporation

Stornoway Diamond Corporation is one of Canada's leading diamond exploration and development companies, involved in the discovery of over 200 kimberlites in six Canadian diamond districts. The Company 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. The Renard Diamond Project is managed by Dave Skelton, P. Geol. (AB/QC), Vice President, Project Development. Mr. Skelton is a Qualified Person under NI 43-101 and has reviewed the contents of this press release.

SOQUEM INC.

SOQUEM is a wholly-owned subsidiary of Societe generale de financement du Quebec ("SGF"). The SGF, the Quebec industrial and financial holding company, has as its mission to undertake economic development projects in the industrial sector in cooperation with partners and in compliance with the economic development policies of the Government of Quebec.

On behalf of the Board

STORNOWAY DIAMOND CORPORATION

Matt Manson, President and Chief Executive Officer

This news release may contain forward looking statements, being statements which are not historical facts, including, without limitation, statements regarding potential mineralization, exploration results, resource or reserve estimates, anticipated production or results, sales, revenues, costs, "best-efforts" financings or 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. Any statements made regarding a NI 43-101 Preliminary Assessment of a project includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the Preliminary Assessment will be realized. References to NI 43-101 Resource Calculations are Mineral Resources and are not Mineral Reserves and therefore do not have demonstrated economic viability. Important factors that could cause actual results to differ materially from the Company's expectations are in Company 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 Company disclaims any intention or obligation to revise or update such statements.

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