Stornoway Diamond Corporation
TSX : SWY

Stornoway Diamond Corporation

September 07, 2010 09:42 ET

Stornoway Re-Commences Canadian Grass Roots Diamond Exploration

Pursuing New Discovery Potential

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 7, 2010) - Stornoway Diamond Corporation (TSX:SWY) is pleased to provide an update on activities within the company's portfolio of Canadian diamond exploration projects. Currently, Stornoway's principal focus is the completion of a Feasibility Study at the 50% owned Renard Diamond Project in North Central Quebec, and an associated step-out drill program at Renard (see Stornoway Press releases dated July 22, 2010 and August 26, 2010). At the same time, the company has recently initiated exploration activities on several earlier-stage projects where previous work has identified the potential for new kimberlite discoveries.

Matt Manson, President and CEO, commented: "Grass roots exploration has long since been a core strength of Stornoway. Our technical team has been involved in the discovery of some 250 kimberlites across Canada, and we believe Canada retains the potential for further world class diamond discoveries. We are extremely pleased to once again be allocating resources towards the discovery of new diamondiferous kimberlites in support of our balanced, long term growth strategy."

Stornoway's portfolio of earlier-stage projects comprises 3.0 million acres classified as either 'Advanced' (Qilalugaq, Aviat, Churchill and Timiskaming) or 'Grassroots' (Hammer, Chesterfield and others). The advanced projects have demonstrated the potential for significant tonnages and high diamond contents on a non-resource basis, and now merit either additional delineation drilling or bulk sampling. Stornoway considers these advanced stage projects to be credible "pipeline" projects, providing the Company with significant exposure to long term diamond price growth. In the near to medium term, however, the immediate focus of Stornoway's non-Renard exploration efforts will be on less capital intensive, discovery oriented activities, both within the existing property portfolio and in new generative programs.

To this end, highlights of the 2010 Canadian exploration program to date are as follows:

  • Initiation of several grassroots sampling programs in areas previously identified as anomalous for new kimberlite discoveries;
  • Creation of a new Quebec joint venture, the "Consorem Project", to test airborne geophysical anomalies with prospecting, ground geophysics and till sampling;
  • Mobilization for ground geophysics at the Hammer kimberlite in advance of potential drill testing;
  • Discovery of a new kimberlite dyke by prospecting at the Qilalugaq Project;
  • Discovery of new, high potential kimberlite float at the Chesterfield Project, and;
  • Submission of 1,000kg of kimberlite for microdiamond processing from the Aviat Project.

Generative Programs

In late 2008, Stornoway suspended activities on all grassroots generative programs within Canada in response to the deepening international credit crisis and the accompanying contraction of the Canadian venture capital market. At this time, partial results available from several programs had suggested the presence of diamondiferous kimberlites in areas previously unknown for kimberlite discoveries. Exploration activities in high priority locations have now been initiated, designed to confirm previous sampling results and localise potential source areas. Results for this work will be made available when appropriate. Stornoway anticipates continued property acquisition in relation to these generative programs.

Geophysical anomaly checking, prospecting, till sampling and ground magnetic surveys have commenced on the LG-4 Diamants – Consorem Project, situated in the James Bay region of north-central Quebec, north of the Renard Diamond Project and in the vicinity of the Trans-Taiga Highway. Landholdings currently comprise approximately 29,500 acres in 236 claims that host 26 primary geophysical targets identified from an airborne geophysical survey recently commissioned by the Quebec Ministere des Ressources naturelles et de la Faune. This project is a consortium between Stornoway, Mines Virginia Inc., Soquem Inc. and Mines Aurizon Ltd. (each with a 25% interest). Mines Virginia Inc. is the project operator.

Hammer (Nunavut)

In 2009, Stornoway reported discovery of the Hammer kimberlite in the Coronation Gulf/North Slave Diamond District of Nunavut (see Stornoway Press Release dated July 30, 2009). The project is a 75%-25% joint venture between Stornoway and North Arrow Minerals Inc. ("North Arrow"). Weathered kimberlite breccia in bedrock was identified within hand dug pits, in addition to numerous scattered kimberlite occurrences of surface float and frost heaved kimberlite fragments. Permafrost conditions and equipment constraints prevented the collection of fresh kimberlite for representative microdiamond analysis, but caustic fusion of a 6.6kg sample returned a diamond on the 0.106mm square mesh screen, confirming that the body is diamondiferous. The Hammer kimberlite is associated with a prominent topographic feature that is 225 meters long, between 15 and 100 meters wide, and has a surface expression of approximately 1 hectare, although the true nature and size of the body is not known at this time. Plans for 2010 include ground geophysical surveys in early September, the results of which will be used by Stornoway and North Arrow to determine additional work to properly assess the Hammer discovery. Drilling permits are in place for this property.

Aviat and Qilalugaq (Nunavut)

At the 90% owned, 437,500 acre Aviat Project, situated on the Melville Peninsula in Nunavut, a conceptual geological model was previously developed by SRK Consulting (Canada) Inc. ("SRK") for the stacked, sub-parallel, shallowly dipping kimberlite sheets of the 260 hectare Eastern Sheet Complex ("ESC"; see Stornoway Press Release dated October 7, 2008). Total kimberlite in four separate bodies was estimated to be in the range of 12.4 to 16.0 million tonnes with total diamond content estimation of 235 +/- 30 cpht (undiluted) determined by SRK using both micro and macro diamond data. The conceptual range of kimberlite and the estimate of total diamond content imply a potential mineral deposit of between 24.1 and 40.3 million carats of diamonds, after an allowance for approximately 5% internal dilution within the model. The conceptual study did not include Aviat's pipe-like kimberlite bodies (AV1, AV4 and AV9), kimberlite sheets outside of the ESC (such as AV1W and AV5) or drill intersections of un-named kimberlite sheets not yet integrated into the overall geologic model. Caustic fusion results are pending for approximately 1,000kg of kimberlite collected by drilling at AV9 and several of the un-named kimberlite sheets. Results will be reported when processing is complete. The reader is cautioned that a potential mineral deposit is conceptual in nature and do not constitute the estimation of a mineral resource. To date there has been insufficient exploration to define a National Instrument ("NI") 43-101 compliant mineral resource for the Eastern Sheet Complex and it is uncertain at this stage if further exploration will be able to delineate a mineral resource.

Stornoway is pleased to report the July 2010 discovery of a new kimberlite dyke on the 100% owned 451,900 acre Qilalugaq Project, situated near Repulse Bay in Nunavut. The 650m long Naujaat 8 body is represented by a linear series of discontinuous occurrences of frost heaved kimberlite fragments and boulders. Naujaat 8 was identified by prospecting in the vicinity of an anomalous till sample, bringing the total number of kimberlite bodies to 19; 11 discovered by BHP Billiton (the original property holder) and eight discovered by Stornoway. Ongoing geological modeling of the Q1 to 4 kimberlite pipe complex (a 14 ha body less than 10 km from tidewater) suggests the presence of approximately 81 million tonnes of kimberlite to a depth of 330m below surface. At an estimated diamond content of 27 to 33 cpht, this represents a potential mineral deposit of between 21.9 and 26.7 million carats of diamonds. As above, the reader is cautioned that a potential mineral deposit is conceptual in nature and do not constitute the estimation of a mineral resource. To date there has been insufficient exploration to define a NI 43-101 compliant mineral resource for the Q1 to 4 kimberlite pipe complex, and it is uncertain at this stage if further exploration will be able to delineate a mineral resource. Other drill confirmed pipe-like bodies range in size from 0.8 to 11.0 ha based on interpretation of geophysical data. Eight of the dyke-like bodies have not been tested by drilling. A small sample of kimberlite from the Naujaat 7 dyke, discovered in a 6km long structure during the 2008 exploration program (Stornoway Press Release dated September 04, 2008) but not processed until 2010, has returned positive microdiamond results as reported below. Some 70kg of the new Naujaat 8 dyke discovery have been submitted for microdiamond analysis by caustic fusion. Indicator mineral results for till samples collected to follow-up additional anomalous areas are pending.

  Sample                
Kimb- weight                
erlite (kg) +0.106mm +0.150mm +0.212mm +0.300mm +0.425mm +0.600mm +0.850mm Total
Naujaat 7 39.51 5 4 5 2 1 0 0 17

Churchill and Chesterfield (Nunavut)

On August 12, 2010, Stornoway's joint venture partner Shear Minerals Limited ("Shear") reported the prospecting discovery of high diamond potential kimberlite float from a series of nine frost boils (SAZ occurrence) at the Chesterfield Inlet Project, Nunavut. Samples have been collected for diamond analysis by caustic fusion, as well as petrography. The ongoing $500,000 exploration program funded by Rio Tinto Exploration Canada Inc. ("RTECI") includes a 2,300 line km ultra-high resolution airborne magnetic geophysical survey over two blocks and drill testing of 7-10 high priority targets using a lightweight reverse circulation percussion drill. The Chesterfield Inlet Property is a 63%-37% joint venture between Shear and Stornoway. Under the terms of an Option and Joint Venture Agreement (the "Option"), Stornoway and Shear granted RTECI the right to acquire, subject to all underlying royalties, up to a 70% interest in all mineral rights to the 70,000 acre Project. Shear is the operator during the first part of the Option.

On the 600,000 acre Churchill Project, situated immediately south of the Chesterfield Inlet Diamond Project, Stornoway (approximately 37.7%) and Shear have identified some 88 kimberlites, 11 of which are significantly diamondiferous with mini-bulk samples of dykes up to 4.0m wide returning diamond contents up to 220 cpht. Shear plans a $2 million exploration program at Churchill in 2010 (August to October), comprising prospecting, RC drilling of geophysical and structural targets, and valuations on diamonds recovered from the Kahuna and Notch dykes. Tentative plans for 2011 include delineation drilling and bulk sampling.

Timiskaming Project (Ontario and Quebec)

The 100% owned Timiskaming Diamond Project comprises 14,300 acres in northeastern Ontario/ northwestern Quebec. The Company has to date found nine kimberlite pipes in the region, six of which have been proven diamondiferous. The large 95-2 pipe is an oblong, steeply dipping body of greater than 5ha size and a reported overall recovered diamond content of 10.1 cpht. Some 15 million tonnes of 95-2, within the central/eastern parts and to a depth of 300m, have higher indicated diamond content, varying from 12-16 cpht (on a recovered basis). A review of all project kimberlites, including revisions to the geological model and diamond data for 95-2, is underway at the present time. Initial checks undertaken on historical caustic fusion residues have identified a significant under-recovery of microdiamonds which would have resulted in an improper downgrading of the diamond potential and early termination of work. In contrast to diamond projects situated in remote, undeveloped portions of Canada, these kimberlites are located in an established historical mining area that offers existing mine-related infrastructure and support.

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. 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.

On behalf of the Board

STORNOWAY DIAMOND CORPORATION

Matt Manson, President and Chief Executive Officer

This news release 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 news release 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: potential mineralization, exploration plans, objectives or results, resource or reserve estimates, anticipated production or results, costs, 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. References to National Instrument 43-101 Resource Calculations are Mineral Resources and are not Mineral Reserves and therefore do not have demonstrated economic viability. 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. Important factors that could cause actual results to differ materially from the Company's expectations are discussed 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, except as required by law.

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