Stornoway Diamond Corporation
TSX : SWY

Stornoway Diamond Corporation

February 10, 2011 13:30 ET

Stornoway Shareholders Overwhelmingly Approve Acquisition of Remaining 50% of Renard Diamond Project

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 10, 2011) -

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES.

Stornoway Diamond Corporation (TSX:SWY) ("Stornoway") is pleased to announce that Stornoway shareholders have overwhelmingly approved the previously announced acquisition of the 50% interest of DIAQUEM Inc. ("DIAQUEM") in the Renard Diamond Project ("Renard"), Stornoway's feasibility-stage diamond project in north-central Quebec (the "Acquisition"). At a special meeting held today in Toronto, 96.6% of the votes cast by shareholders represented in person or by proxy were voted in favour of the Acquisition, which the parties have agreed will be completed on April 1, 2011 (the "Closing Date"). DIAQUEM is a wholly-owned subsidiary of SOQUEM INC., itself a wholly-owned subsidiary of Societe generale de financement du Quebec ("SGF"), the Quebec government's main industrial and financial holding company.

Matt Manson, President and CEO of Stornoway, commented: "We are very gratified that our shareholders have endorsed so comprehensively our proposal to acquire the remaining 50% interest in Renard. The agreement with SGF that has been approved today establishes a strong foundation for the successful development of Quebec's first diamond mine and the future growth of the Company. We now look forward to the completion of our ongoing bankable feasibility study, scheduled for the 3rd quarter of this year, and the pursuit of the considerable resource growth potential at the project."

Eira Thomas, Executive Chairman of Stornoway, commented: "This is a pivotal moment in our Company's history. We now own 100% of Renard, a leading development track diamond asset, and we have gained SGF as a strong new shareholder and project lender. We look forward to a productive year, working closely with government and local stakeholders, including the communities of Mistissini and Chibougamau, to establish a formal development plan for Quebec's first diamond mine."

On the Closing Date, Stornoway will issue to DIAQUEM such number of common shares as will result in DIAQUEM holding 25% of Stornoway's issued and outstanding common shares, and will further issue newly-created non-voting convertible shares such that DIAQUEM's total interest in Stornoway, if such convertible shares were fully converted for common shares, would be equal to 37% of the issued and outstanding common shares, and the parties will enter into the agreements and complete the transactions described in the proxy circular mailed to shareholders in connection with the special meeting. Also on the Closing Date, the board of directors of Stornoway will be increased from 8 to 9 members and Mr. Jean-Jacques Carrier will sit on the board as the nominee of SGF. The board of directors so formed with the addition of Mr. Carrier as a director will appoint 2 additional directors as nominees of SGF, as provided under the terms of the Acquisition.

Stornoway is also pleased to announce that, at the special meeting of shareholders, Stornoway shareholders approved the consolidation of its common shares on the basis of one (1) post-consolidation share for up to every five (5) pre-consolidation shares (the "Share Consolidation"), as originally announced in a press release dated December 14, 2010. The Share Consolidation was approved by 95.1% of the votes cast by shareholders represented in person or by proxy. Following receipt of shareholder approval by Stornoway shareholders, the board of directors of Stornoway determined to implement the Share Consolidation on the basis of one (1) post-consolidation share for four (4) pre-consolidation shares. In that regard, the Share Consolidation has been conditionally approved by the Toronto Stock Exchange ("TSX") and will be implemented, subject to final TSX approval, in the coming days. Stornoway will issue a press release announcing the date on which the common shares will commence trading on a post-consolidation basis on the facilities of the TSX once such date has been definitively determined.

As at the date hereof, an aggregate of 355,066,702 pre-consolidation common shares of Stornoway are issued and outstanding. It is expected that, upon implementation of the Share Consolidation and prior to the issuance of common shares to DIAQUEM, an aggregate of 88,766,675 post-consolidation common shares will be issued and outstanding (subject to any adjustments for fractional shares). No fractional common shares will be issued pursuant to the Share Consolidation. In the event a shareholder would otherwise be entitled to a fractional common share under the Share Consolidation, the number of common shares issued to such shareholder will be rounded to the next greater whole number if the fractional entitlement is equal to or greater than 0.5, and will, without additional compensation, be rounded down to the next lesser whole number of common shares if the fractional entitlement is less than 0.5.

In addition, the number of common shares issuable upon the exercise of outstanding stock options or other convertible securities of Stornoway will be proportionately adjusted upon the implementation of the Share Consolidation. As a result, the number of common shares and non-voting convertible shares to be issued to DIAQUEM on the Closing Date will be on a post-consolidation basis.

The common shares referred to herein 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 offer, solicitation or sale of the securities in any state in which such offer, solicitation or sale would be unlawful.

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 or convertible 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.

About the Renard Diamond Project

The Renard Diamond Project is located approximately 250 km north of the Cree community of Mistissini and 350 km north of Chibougamau in the James Bay region of North-Central Quebec. In May 2010, Stornoway filed a National Instrument 43-101 compliant technical report for the Preliminary Assessment at Renard that estimated the project to have the potential to produce approximately 30 million carats of diamonds over a 25 year mine life, with a pre-tax Net Present Value of C$885 million (at an 8% discount rate) and an Internal Rate of Return of 24.8%. Total capital investment was estimated at C$511 million. National Instrument 43-101 compliant Indicated and Inferred Mineral Resources currently stand at 23.8 and 17.5 million carats respectively, with a further 23.5 to 48.5 million carats classified as a non-resource, "potential mineral deposit". All kimberlites remain open at depth. Pending the completion of all ongoing mine feasibility and environmental and social impact assessments, and the receipt of all regulatory approvals, Stornoway currently anticipates being able to make a potential production decision at Renard by the end of 2011. Readers are referred to the technical report in respect of the Renard Diamond Project for further details and assumptions relating to the project.

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 and operating costs; (v) mine expansion potential and expected mine life; and (vi) 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) estimates of net present value and internal rates of return; (ii) estimates of potential production and duration of mine life; (iii) estimated completion date for the Feasibility Study; (iv) required capital investment and estimated workforce requirements; (v) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (vi) the assumption that the partners will make a production decision, and that decision will be positive; (vii) anticipated timelines for the commencement of mine production. 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.

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