Stornoway Diamond Corporation
TSX : SWY

Stornoway Diamond Corporation

July 13, 2010 08:30 ET

Stornoway Announces Diamond Content Models for Renard 65

VANCOUVER, BRITISH COLUMBIA--(Marketwire - July 13, 2010) - Stornoway Diamond Corporation (TSX:SWY) ("Stornoway" or the "Company") is pleased to announce the results of a diamond content modeling exercise undertaken for most kimberlite lithologies within the Renard 65 kimberlite pipe at the Renard Diamond Project. The Renard Diamond Project is a 50:50 joint venture with SOQUEM INC. ("SOQUEM"), a wholly-owned subsidiary of the Societe generale de financement du Quebec ("SGF"), the Quebec government's main industrial and financial holding company.

Renard 65 is the largest kimberlite pipe in the Renard cluster, with a surface area of approximately 1.7 hectares. In 2003 a large, gem quality diamond of 4.04 carats was recovered within drill core, an exceptionally rare occurrence in diamond exploration. However, subsequent larger scale sampling, through both reverse circulation ("RC") drilling and surface trenching, returned lower diamond contents than the nearby Renard 2, 3, 4 and 9 kimberlites, and consequently Renard 65 was not incorporated in the recently updated Renard Preliminary Assessment (Stornoway Press Release dated March 22, 2010). Nevertheless, Stornoway considers Renard 65 to have the potential to contribute future mineable resources, given its location, amenability to open-pit mining, and recent evidence that suggests its size and diamond content may have been understated. To this end, Stornoway initiated a program of diamond content modeling utilizing existing macro diamond datasets supplemented by new micro-diamond sampling, and integrated with recent geological modeling. Highlights of this exercise are as follows:



-- Modeled diamond contents of between 26 and 38 carats per hundred tonnes
("cpht") for commercial sized diamonds within four distinct kimberlite
lithologies, a substantial improvement on historical sampling results.

-- A diamond size frequency distribution for Renard 65 that is similar to
other Renard kimberlite pipes, confirming a single diamond population
previously shown to be characterized by large, high value gems.


Preliminary geological modeling at Renard 65, previously reported, has suggested a potential mineral deposit of between 12.6 and 24.0 million tonnes of kimberlite calculated from surface to 280m depth and from surface to 700m depth, respectively. Recent drilling has confirmed additional upside size potential at depth. The new diamond models now provide a more authoritative interpretation of diamond content. The reader is cautioned that the potential quantity and grade of any potential mineral deposit is conceptual in nature, and the diamond content models reported today do not constitute mineral resource grades. It is uncertain if further exploration will result in the target being delineated as a mineral resource.

Matt Manson, President and CEO, commented: "This work represents an example of the integrated geological and diamond analysis that we are using to gain an increasingly detailed understanding of the diamond distribution within the Renard kimberlite pipes. We now believe that Renard 65 has the potential to add value to an operating Renard diamond mine, which would be developed initially on the higher grade Renard 2, 3 and 4 ore bodies. Without a bulk sample at Renard 65, no mineral reserve can be established in the short term, and no change in the Renard conceptual mine plan is contemplated at this time. However, the implication of this work is that a large tonnage of potentially viable kimberlite occurs close to the planned mine infrastructure, amenable to low cost stripping and open at depth. Consequently, consideration will be made within the ongoing mine design for future development at Renard 65, and additional work will be undertaken to better understand the potential grade distribution within the kimberlite, particularly at depth."

Renard 65 Diamond Content Models

Modeled estimates of commercial diamond recovery grades for four of five lithological units identified to date within Renard 65 are shown in Table 1. The models are constructed using the totality of micro and macro diamond data available for each lithology, which for Renard 65 comprises macro diamond data recovered by Dense Media Separation ("DMS") from successive campaigns of core drilling, RC drilling, and surface trenching in addition to the new microdiamond data reported below. The models utilize size frequency distribution curves to estimate the likely occurrence of diamonds in all commercial size categories (+1 DTC sieve size), with adjustments to take into account the loss of small diamonds typical in a production scale plant.



Table 1: Renard 65 Diamond Content Models by Kimberlite Lithology

---------------------------------------------------------------------------
Diamond grade models at production plant recovery(1),(3)
(cpht)(4)
-------------------------------------------------------
R65 Geological Unit Un-Diluted Diluted (5)
---------------------------------------------------------------------------
Kimb65a 60 26
---------------------------------------------------------------------------
Kimb65b 37 30
---------------------------------------------------------------------------
Kimb65c 40 38
---------------------------------------------------------------------------
Kimb65d 47 31
---------------------------------------------------------------------------
Kimb65e n/a n/a
---------------------------------------------------------------------------
(1) The estimated diamond content, expressed as carats per hundred tonnes,
may not be representative of the overall diamond content of the body due
to a number of factors, including location and size of the samples or
drill holes
(2) For commercial sized stones retained on a +1.18 mm square mesh screen
(3) For commercial sized stones retained on a +1 or greater DTC screen
(4) Carats per hundred tonnes
(5) Represents the measured dilution in the samples processed for
microdiamonds. May not be representative of the lithological unit
sampled


Ongoing petrological work suggests that Renard 65 consists of several pipe-filling volcaniclastic to coherent kimberlite units ("Kimb65a", "Kimb65b", "Kimb65d" and "Kimb65e") and a distinct hypabyssal kimberlite unit ("Kimb65c"). These five lithologies have similarities to those in the other Renard kimberlite pipes. Preliminary geological modeling suggests volcaniclastic kimberlite unit Kimb65a, representing the most diluted Renard 65 lithology, comprises between 55% and 65% of the kimberlite pipe down to a depth of 240 meters. However, relative proportions of each unit below this depth are not known at this time. At Renard 2, detailed deep drilling has revealed that less diluted, higher grade, coherent kimberlite, becomes the dominant lithology below approximately 300 meters vertical depth. Both coherent kimberlite and tuffisitic kimberlite breccia were intersected in the single drill hole at Renard 65 that has penetrated to this depth to date. The diamond content models reported today confirm higher diamond contents, following consideration for dilution, in the coherent kimberlite units Kimb65b and Kimb65d, and the hypabyssal unit Kimb65c, compared to the Kimb65a volcaniclastic unit.

The diamond size frequency distribution curves generated in this modeling exercise for Renard 65 closely resemble those generated previously for Renard 2, 3, 4 and 9. This again supports the conclusion, previously reported, that there exists a single diamond population within the Renard kimberlite pipes, and whereas diamond grade can vary within each pipe based on lithology and dilution, the size frequency distribution of the diamond population, and consequently the diamond value, is identical across all the pipes. In the recent NI 43-101 mineral resource estimate, this diamond value was estimated at US$117 per carat ("Base Case" model, estimated at a +1 DTC sieve size cut-off) with sensitivities of US$131 per carat and US$103 per carat, following an updated pricing exercise on the Renard 6,900 carat bulk sample undertaken by WWW International Diamond Consultants Ltd. in September 2009.

Renard 65 Diamond Sampling to Date

Historical DMS diamond recovery results from larger diamond sampling campaigns at Renard 65 are shown in Table 2. The diamond contents estimated in the Renard 65 modeling exercise are significantly higher than four out of five of the historical samples. Recent diamond breakage studies, undertaken as part of the recent NI 43-101 compliant mineral resource estimate, have indicated that breakage of diamonds during the collection and processing of several historical samples has been "severe". Diamonds collected during the Renard 65 RC drill program, undertaken early in the history of the project, exhibit the highest level of breakage of all, with implied diamond weight losses of at least 38%. The high level of breakage seen in the historical Renard 65 samples is consistent with the higher diamond contents now seen in the new Renard 65 models.



Table 2: Historical Renard 65 DMS Sampling Results

---------------------------------------------------------------------------
Dry Diamond Largest
Sample Weight Content(1) Diamonds
Disclosure Date Type (tonnes) Carats (cpht)(2) (carats)
---------------------------------------------------------------------------
March 4, 2008 Trench 266.0(8) 51.77(4) 19 2.06, 1.54
---------------------------------------------------------------------------
February 21, 2005(3) RC Chips 24.7(9) 5.80(5) 23 0.53, 0.49
---------------------------------------------------------------------------
September 2, 2004(3) RC Chips 122.5(9) 26.69(5) 22 0.83, 0.82
---------------------------------------------------------------------------
August 11, 2004(3) Drill Core 17.8(9) 4.05(5) 23 0.88, 0.67
---------------------------------------------------------------------------
August 28, 2003(3) Drill Core 18.4(9) 10.06(6) 54 4.04(7), 0.92
---------------------------------------------------------------------------
(1) The estimated diamond content, expressed as carats per hundred tonnes,
may not be representative of the overall diamond content of the body
due to a number of factors, including location and size of the samples
or drill holes
(2) Carats per hundred tonnes
(3) Reported by Ashton Mining of Canada Inc.
(4) Represents only stones retained on a +1 or greater DTC screen, as
discussed below
(5) Represents only stones retained on a +1.18 mm square mesh screen
(6) Represents only stones retained on a +0.85 mm square mesh screen
(7) Represents an estimated w eight of a diamond still embedded in drill
core
(8) Dry w eight
(9) Wet w eight


In order to expand the available diamond dataset for the Renard 65 diamond content modeling exercise, a total of 1.7 tonnes of kimberlite was collected from five drill holes completed since April 2008, and submitted for diamond recovery by standard caustic dissolution. No sample was available for "Kimb65e", and consequently no diamond content model was created for this lithology. The results of the new caustic work, expressed in standard square mesh sieve size categories as a composite dataset, are shown in Table 3, and summarized by lithology in Table 4.



Table 3: Renard 65 Composited Microdiamond Data in Sieve Sizes

------------------------------------------------------------------------
Sample weight 0.106 to 0.150 to 0.212 to 0.300 to 0.425 to
processed (kg) 0.150mm 0.212mm 0.300mm 0.425mm 0.600mm
------------------------------------------------------------------------
Kimb65 1,690.58 79 66 51 44 23
------------------------------------------------------------------------

--------------------------------------------------------------------
Sample weight 0.600 to 0.850 to 1.18 to 1.70 to Total
processed (kg) 0.850mm 1.18mm 1.70mm 2.36mm Stones
--------------------------------------------------------------------
Kimb65 1,690.58 12 8 5 4 292
--------------------------------------------------------------------


Table 4: Renard 65 Microdiamond Data by Kimberlite Lithology

---------------------------------------------------------------------------
Kimb65a Kimb65b Kimb65c Kimb65d Total
---------------------------------------------------------------------------
Microdiamond Sample Weight (kg) 737.20 256.75 192.43 704.21 1690.58
---------------------------------------------------------------------------
Microdiamond Sample Dilution (%) 57% 20% 4% 32% 35%
---------------------------------------------------------------------------
Total Microdiamond Stones 43 34 65 150 292
---------------------------------------------------------------------------
Undiluted Stones per 10kg 1.87 1.66 3.52 3.15 2.66
---------------------------------------------------------------------------


Renard 65 Size Potential

In the recent National Instrument ("NI") 43-101 compliant mineral resource estimate for the Renard Diamond Project (Stornoway Press Release dated December 08, 2009), Renard 65 is included as a potential mineral deposit of between 2.9 and 7.9 million carats of diamonds contained within 12.6 to 24.0 million tonnes of rock at between 23 and 33 cpht. The low range and high range PMD for Renard 65 were determined by projecting reasonable kimberlite volumes from surface to 280m depth and from surface to 700m depth, respectively. Grades were based on previously reported historical work and no allocation was made for upside potential as a result of plant under recovery or diamond breakage.

During the 2010 winter drill program at Renard (Stornoway Press Release dated April 14, 2010), Stornoway reported the completion of a single drill hole at Renard 65 designed to test the vertical extent of the body and its east-west dimension at a level below that of previous drilling. The eastern margin of the pipe was successfully delineated at 486 meters down hole, 166 meters beyond its previously modeled location, at a vertical depth of 383 meters. This new drilling data suggested that, at this depth, the cross-sectional dimensions of Renard 65 could be approximately 100x300m compared to 25x300m assumed in the previous model. Additional drilling will be required to confirm this hypothesis.

Next Steps

Petrographic and geochemical studies on available Renard 65 drill core are ongoing, and a revised geological model is in preparation. Additional deep drilling of the Renard 65 kimberlite will be undertaken as part of the summer 2010 exploration program. Scoping level assessments are ongoing to better understand the optimum development scenario for the kimberlite should a formal mineral resource be established from the current work. Currently, no additional large scale sampling at Renard 65 is contemplated prior to the commencement of production at the project.

Scientific and Technical Data

Caustic dissolution data described above are based on work completed by Microlithics Laboratories, Thunder Bay, Ontario, an independent mineral process laboratory. As part of Stornoway's ongoing QA/QC programs all materials are subject to audit, and any significant changes will be reported when available.

Historical diamond results reported in this release are based on DMS processing that occurred between April 2002 and January 2008. Processing and recovery details for these data, and a more detailed description of the methodology utilized in Stornoway's diamond content modeling, can be found in the NI 43-101 report "2009 Mineral Resource Update, Renard Diamond Project, Northern Quebec, Canada" filed on SEDAR on January 21, 2010 and available on the Stornoway website.

Stornoway's diamond exploration programs are conducted under the direction of Robin Hopkins P.Geol. (NT/NU), Vice President, Exploration, a Qualified Person under NI 43-101. Mr. Hopkins has reviewed the contents of this press release.

About 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 seven 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.

About SGF

Societe generale de financement du Quebec (sgfqc.com), an industrial and financial holding company, has a mission to carry out economic development projects, particularly in the industrial sector, in cooperation with partners and in compliance with accepted profitability requirements and with the economic development policy of the Quebec government. As part of its new mandate, SGF is authorized by the Quebec government to go beyond its traditional role as an equity investor by offering complementary solutions, such as loans, debentures or preferred shares.

SOQUEM, a wholly-owned subsidiary of Societe generale de financement du Quebec, is to undertake exploration, development and mining activities throughout the province of Quebec.

On behalf of the Board

STORNOWAY DIAMOND CORPORATION

Matt Manson, President and Chief Executive Officer

This document contains "forward-looking information" within the meaning of Canadian securities legislation and "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995. This information and these statements, referred to herein as "forward-looking statements" are made as of the date of this document and the Company 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 potential mineral deposits; (ii) the amount of future production over any period; (iii) net present value and internal rates of return of the proposed mining operation; (iv) capital costs, including plant costs, and operating costs; (v) diamond values and increases in diamond values; (vi) strip ratios, rates of extraction of kimberlite and mining rates; (vii) mine expansion potential; (viii) exploration potential at the Project; (ix) road construction and operation costs; and (x) expected time frames for completion of permitting and regulatory approvals, completion of a Feasibility Study and making a production decision. 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" 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.

All forward-looking statements are based on Stornoway's or its consultants' current beliefs as well as various assumptions made by and information currently available to them. Many of these assumptions are set forth in the news release and include: (i) the presence of and continuity of diamonds in its host rocks at the Project at modeled grades; (ii) diamond values and diamond price escalation factors; (iii) discount rates; (iv) financing structure and costs; (v) reasonable contingency requirements; (vi) anticipated financial performance, (vii) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (viii) the settlement of an Impact and Benefits Agreement on acceptable terms within a reasonable time frame. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect. Many forward-looking statements are made assuming the correctness of other forward looking statements, such as statements of net present value and internal rate of return, which are based on most of the other forward-looking statements and assumptions herein. The cost information is also prepared using current values, but the time for incurring the costs will be in the future and it is assumed costs will remain stable over the relevant period.

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 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, risks relating to variations in the grade, kimberlite lithologies and country rock content within the material identified as mineral resources from that predicted, variations in rates of recovery and breakage; the greater uncertainty of potential mineral deposits, developments in world diamond markets, slower increases in diamond valuations than assumed, risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar, increases in the costs of proposed capital and operating expenditures, increases in financing costs or adverse changes to the terms of available financing, if any, tax rates or royalties being greater than assumed, results of exploration in areas of potential expansion of resources, changes in development or mining plans due to changes in other factors or exploration results of Stornoway or its joint venture partners, changes in project parameters as plans continue to be refined, risks relating to receipt of regulatory approvals or settlement of an Impact and Benefits Agreement, the effects of competition in the markets in which Stornoway operates, operational and infrastructure risks and the additional risks described in Stornoway's most recently filed Annual Information Form, annual and interim MD&As, 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. When relying on our forward-looking statements to make decisions with respect to Stornoway, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Stornoway does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by Stornoway or on our behalf, except as required by law.

Contact Information

  • Stornoway Diamond Corporation
    Matt Manson
    President and CEO
    416-304-1026
    or
    Stornoway Diamond Corporation
    Nick Thomas
    Manager Investor Relations
    604-983-7754 or Toll Free at 1-877-331-2232
    or
    Pour plus d' information, veillez contacter
    Stornoway Diamond Corporation
    M. Ghislain Poirier, Vice-président Affaires Publiques
    418-780-3938
    gpoirier@stornowaydiamonds.com
    www.stornowaydiamonds.com / info@stornowaydiamonds.com