Stornoway Diamond Corporation
TSX : SWY

Stornoway Diamond Corporation

August 23, 2006 16:38 ET

Stornoway Responds to Ashton Director's Circular

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Aug. 23, 2006) - Stornoway Diamond Corporation (TSX:SWY) responded today to the filing of a directors' circular by Ashton Mining of Canada Inc. (TSX:ACA) in response to Stornoway's offer to acquire all the outstanding shares of Ashton. Stornoway is disappointed that the Ashton board of directors has recommended that Ashton shareholders not tender their shares to Stornoway's offer.

Eira Thomas, Stornoway's President and CEO, stated: "Our offer for Ashton represents full and fair value for all Ashton shareholders and there was nothing in the Ashton directors' circular to suggest otherwise. In addition to the immediate premium realized by all Ashton shareholders, they will benefit from a business combination that will create the pre-eminent Canadian diamond exploration and development company with a pro forma market capitalization in excess of $200 million, a unique project pipeline, exciting growth prospects and a proven management team."

"We have met with many of Ashton's minority shareholders since making our offer, and the vast majority of them are extremely supportive. They understand the benefits of the proposed transaction and are very enthusiastic about the future prospects of the combined company. They are excited about the opportunity to participate in the creation of a stronger company with an enhanced capital market profile and substantial management depth capable of realizing the full potential of the combined asset portfolio. These shareholders understand the diversification benefits achieved through combining Ashton's development-track Renard Project with Stornoway's extensive exploration portfolio."

Eira Thomas further stated: "The involvement of Agnico-Eagle Mines Limited as a strategic investor will provide the new company the unique and practical benefits of the support of one of Quebec's leading mine developers and operators as we create our own stand-alone mine operating capacity." Sean Boyd, Agnico-Eagle's CEO and Vice-Chairman added: "We regard our investment in the proposed combined entity, through both our support of Stornoway's bid for Contact Diamond Corporation and our new investment in Stornoway, as an important and long term strategic holding in what we believe will be a significant new Canadian diamond company."

As described in the takeover bid circular dated August 10, 2006, the board of directors of Stornoway believes the combination of Stornoway and Ashton will result in significant value creation for all shareholders and provides an opportunity for all shareholders to participate in the creation and growth of one of Canada's leading, mid-cap, pure diamond exploration and development companies, benefiting from:

- a pro forma market capitalization in excess of $200 million and an enhanced profile, which should translate into greater trading liquidity, greater flexibility and improved access to financial resources

- a larger shareholder base with no single controlling shareholder

- an extensive and diversified asset base, including development-track production opportunities, combined with a highly prospective exploration landholdings

- a strong and experienced management group with a history of wealth creation for shareholders

- strategic investment by Agnico-Eagle, a leading mine developer in Quebec

- the opportunity to participate as a leading player in further consolidation within the diamond exploration and development landscape in Canada and elsewhere

"We believe this is a very compelling offer," said Eira Thomas. "These companies are very complementary and the transaction makes sense for all shareholders. Ashton shares have traded in line with the implied value of our offer since we announced our intention to make the bid and we remain confident that our offer will succeed."

How to Tender

Ashton shareholders wishing to accept the Ashton offer are encouraged to tender their shares by completing the letter of transmittal accompanying the documents mailed to them and returning it together with certificates representing their Ashton shares and all other documents to the offices of CIBC Mellon Trust Company in Toronto, Ontario in accordance with the instructions in the letter of transmittal. If Ashton shares are held by a broker or other financial intermediary, Ashton shareholders should contact such intermediary and instruct it to tender the Ashton shares.

Questions About the Ashton Offer

For further information about the Ashton offer, Ashton shareholders should contact Georgeson Shareholder Communications Canada Inc. toll-free at 1-866-390-5139 in North America.

About Stornoway

Stornoway Diamond Corporation has exposure to approximately 18 million acres of prospective diamond properties spanning 40 properties in Canada and Botswana. These include several advance stage properties such as Aviat, Qilalugaq, and Churchill, where a total of 73 kimberlites have been discovered since 2002, 40 of which have proven diamondiferous. Stornoway's experienced management and technical team have a strong track record of discovery in the north and a history of wealth creation for shareholders.

On behalf of the Board

STORNOWAY DIAMOND CORPORATION

Eira Thomas

Important Notice:

As a result of restrictions under United States securities laws, Ashton shareholders that (i) are U.S. Persons (as such term is defined in Regulation S under the United States Securities Act of 1933) or (ii) hold Ashton shares on behalf of a U.S. Person (collectively "U.S. Shareholders") shall not be entitled to receive Stornoway shares in connection with the Ashton offer. Instead, Stornoway shares that would have otherwise been distributed to U.S.

Shareholders will be deposited in trust and sold in the market through an orderly sale and the net cash proceeds remitted to U.S. Shareholders.

This press release is not an offer of Stornoway shares or any other securities for sale in the United States. The Stornoway shares will not be registered under the United States Securities Act and may not be offered or sold in the United States absent registration or an applicable exemption from registration.

Forward-Looking Information:

Certain information included in this press release that expresses management's expectations or estimates of future performance, constitute "forward-looking information". This information relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. 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", "potential", "budgets", "scheduled", "predicts", "believes" 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 information". Statements concerning mineral resource estimates may also be deemed to constitute forward-looking information to the extent that they involve estimates of the mineralization that will be encountered if the property is developed. Forward-looking information is necessarily based upon a number of estimates and assumptions that, while considered reasonable by management are inherently subject to significant business, economic and competitive uncertainties and contingencies. Stornoway cautions the reader that such forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the actual financial results, performance or achievements of the Stornoway to be materially different from the Stornoway's estimated future results, performance or achievements expressed or implied by such forward-looking information and the forward-looking information is not a guarantee of future performance. These risks, uncertainties and other factors include, but are not limited to: financing opportunities, mineral exploration risks, supplies, infrastructure, weather and inflation, market for and marketability of diamonds, title matters, environmental regulations, permits and licenses, operating hazards and risks, competition for properties, economic conditions, dependence on management and conflicts of interest, as well as those factors discussed in greater detail in the Stornoway's Renewal Annual Information Form dated July 11, 2006 on file with the Canadian provincial securities regulatory authorities and in Section 6 of the Circular, "Risk Factors".

The following factors, among others, related to the business combination of Stornoway with Ashton could cause actual results to differ materially from forward-looking information: Stornoway shares issued in connection with the Ashton offer may have a market value lower than expected and will not reflect market price fluctuations, integration of the businesses may not occur as planned, may not occur successfully or such integration may be more difficult, time consuming or costly than expected; the expected combination benefits from the acquisition of Ashton may not be fully realized by Stornoway or not realized within the expected time frame, dissent and appraisal rights may be exercised, Stornoway's interests may differ from those of any remaining minority shareholders, liquidity for Ashton Shares will be reduced, there will be dilution of each shareholder's equity interest in the combined entity, the issuance of a significant number of Stornoway shares could adversely affect the market price of Stornoway shares, the enforcement rights of U.S. Shareholders may be adversely affected, the Ashton Offer may not be completed, the triggering of change of control provisions in agreements, the requirement to repay the bridge facility and the reliability of the information relating to Ashton. These factors are not intended to represent a complete list of the factors that could affect Stornoway and the combination of Stornoway and Ashton. Stornoway's forward-looking information is based on the expectations, beliefs and opinions of management on the date on which the statements are made. Stornoway disclaims any intention or obligation to update or revise any forward-looking information whether as a result of new information, future events or otherwise. For the reasons set forth above, Shareholders should not place undue reliance on forward-looking information.

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