Stornoway Diamond Corporation
TSX : SWY

Stornoway Diamond Corporation

October 20, 2005 15:15 ET

Stornoway Diamond Corporation: $8.4 Million Private Placement Financing Closed; Underwriter's Option Exercised

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Oct. 20, 2005) -

NOT FOR DISTRIBUTION TO US NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Stornoway Diamond Corporation ("Stornoway") (TSX:SWY) is pleased to announce it has closed an $8.4 million financing with a syndicate of underwriters led by Raymond James Ltd. and Canaccord Capital Corporation, and including Haywood Securities Inc. (the "Underwriters"), under which the Underwriters have bought, on a private placement basis 7,000,000 Flow Through Shares at a price of $1.20 per share.

On October 3, 2005, Stornoway announced a $6 million dollar private placement of 5,000,000 Flow Through Shares at $1.20 per share with an underwriters option for an additional 2,000,000 Flow Through Shares. Prior to closing, the Underwriters exercised their option and increased the private placement to 7,000,000 Flow Through Shares for gross proceeds of $8.4 million.

The underwriters received a 6% cash commission. All securities issued at closing are subject to a four month hold period, expiring February 21, 2006.

The securities offered have not been registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any State in which such offer, solicitation or sale would be unlawful.

On behalf of the Board

STORNOWAY DIAMOND CORPORATION

Eira Thomas, President

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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