Stornoway Diamond Corporation
TSX : SWY

Stornoway Diamond Corporation

March 16, 2007 17:36 ET

Stornoway Completes Convertible Debenture Offering

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - March 16, 2007) - Stornoway Diamond Corporation (TSX:SWY) is pleased to announce that it has completed the non-brokered sale of $20,000,000 in unsecured convertible debentures to Agnico-Eagle Mines Limited ($10 million) and Lorito Holdings Limited ($10 million), a Lundin Family Trust, as previously announced on March 7, 2007.

The debentures mature two years after their date of issue and interest is payable under the debentures quarterly at 12% per annum. Stornoway issued two series of debentures, $10 million in Series A Debentures that provide Stornoway may repay principal on the maturity date in cash or common shares of Stornoway ("Shares") at Stornoway's election and $10 million in Series B Debentures that provide Stornoway must repay principal on the maturity date in cash or Shares at the holder's election. Each of Agnico-Eagle and Lorito acquired $5 million of the Series A Debentures and $5 million of the Series B Debentures.

The terms of the debenture financing have changed from what was previously announced on March 7, 2007 in that if principal is paid in Shares, the Shares will be issued at a deemed price of the lower of $1.25 and the five day volume weighted average price of the shares ending three trading days before the payment date (the "VWAP") instead of the lower of $1.25 and 95% of the VWAP as previously announced. In addition, the conversion privilege described above and the option to make interest payments in cash or in Shares described below are subject to such limitations as may be necessary to permit Stornoway to complete the debenture financing without having to obtain shareholder approval under the policies of the Toronto Stock Exchange. Notwithstanding the limits on the number of Shares which may be issued on payment of interest or conversion of principal, if the Stornoway shareholders approve a higher limit on the number of Shares which may be issued, then the number approved by the shareholders shall govern, subject to TSX approval. Stornoway does not have a right of prepayment.

Interest payments may be paid in cash or in Shares, at Stornoway's election. If interest is paid in Shares, the Shares will be issued at a deemed price of 95% of the five day volume weighted average price of the shares ending three trading days before the payment date.

The proceeds of the debenture financing, together with funds Stornoway has on hand, will be used to repay all amounts owing under the bridge loan that was used to finance the acquisition by Stornoway of Ashton Mining of Canada Inc.

Stornoway Diamond Corporation

Stornoway Diamond Corporation is one of Canada's leading diamond exploration and development companies. The Company and its affiliates have been responsible for discovering over 150 kimberlites and six new Canadian diamond districts. Stornoway's management and technical team has a proven track record in wealth creation for shareholders and direct operating 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 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. 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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