Minimum $18 Million 2004 Diamond Exploration Budget Approved Additional Diamonds Recovered From AV-2


Stornoway Diamond Corporation (TSXV-SWY) is pleased to announce that a preliminary budget of $18 million has been approved for aggressive diamond exploration programs commencing in Nunavut later this month. Stornoway's contribution to the budget is expected to exceed $11 million and will include drilling, ground and airborne geophysics and additional till sampling on the Melville and Churchill Projects in eastern Nunavut as well as the Coronation diamond projects in western Nunavut. The Company has been involved in 20 kimberlite discoveries in Nunavut since 2002, including the diamondiferous AV-1 and AV-2 kimberlites, and currently maintains interests in more than 20 million acres of prospective landholdings throughout northern Canada.

Melville Peninsula - Aviat Project

Stornoway holds varying interests in more than 12 million acres of prospective diamond properties throughout the Melville Peninsula, including a 70% interest in the 5.5 million acre Aviat Project where discovery of the diamondiferous AV-1 and AV-2 kimberlites was announced last year.

The AV-2 kimberlite was tested with two holes during the summer of 2003 and encountered multiple intercepts of kimberlite ranging from 2.2 to 9.3 m in width, which returned a total of 30 diamonds from caustic fusion of 39.4 kgs. In addition, a 49 kg sample collected from a surface exposure of hypabyssal kimberlite at AV-2 has now been processed and has returned thirty-four diamonds, including two stones larger than 0.85 mm. The three largest stones recovered from AV-2 to date measure 1.78 X 1.32 X 0.86, 1.44 X 1.08 X 1.04 mm and 0.54 X 0.50 X 0.44 mm. Complete sieve results from AV-2 are reported below:

The true size and nature of the AV-2 kimberlite is not known at this time, and more drilling is required. Results of caustic fusion work reported above, while too small to be representative, confirm that both the hypabyssal and breccia phases of AV-2 are significantly diamondiferous.

Approximately $5 million was spent at Aviat in 2003 on an aggressive program that included the collection of roughly 2,300 till samples for indicator minerals, 55,000 line km of airborne magnetics, 1,900 line km of airborne electromagnetics, prospecting, ground geophysical surveying, the collection of approximately eight tonnes of kimberlite from the surface exposure of AV-1 and 1,102m of core drilling.

Final airborne geophysical data has now been received and although interpretation is ongoing, high priority targets have been identified for follow-up work in 2004. The majority of till sampling results remain outstanding, however, preliminary results have identified new regions of anomalous kimberlitic indicator minerals outside the core AV-1 area.

So far, the AV-1 kimberlite has returned a total of 2350 diamonds from caustic fusion of 1.7 tonnes of kimberlite collected from surface sampling and drilling (see previous news release December 8, 2004). Interpretation of the drill results to date suggests the body is a minimum of 160m in length and between 40m and 60m in width. The kimberlite remains open to depth and to the east. Additional drilling will be carried out in April, 2004 to more accurately delineate the size potential of AV-1 and to collect a larger sample of the breccia material which appears to have a potentially coarser diamond distribution. The eight tonne sample collected from the surface exposure at AV-1 during the summer/fall of 2003 will be processed for macrodiamonds (stones>0.85mm) beginning mid-March, with results expected in the second quarter, 2004. Results from this eight tonne sample will provide preliminary grade information for the hypabyssal phase of the kimberlite.

Exploration at Aviat in 2004 will commence with camp construction in mid-March followed by ground geophysics and a spring drilling program in April. The spring drilling program will focus on AV-1, but will also test 4-6 lake based targets in the vicinity. Ground-checking of high priority geophysical anomalies and prospecting within anomalous indicator mineral trains will precede a larger drilling campaign scheduled to begin in July/August of 2004. Aviat is a joint venture between Stornoway (70%), BHP Billiton (20%) and Hunter Exploration Group (10%).

Churchill and Churchill West Projects

The Churchill Diamond Project encompasses close to eight million acres of prospective diamond ground near the community of Rankin Inlet, Nunavut. Airborne geophysical surveys have identified more than 400 geophysical anomalies on the property to date, of which 26 have been drill tested. Sixteen new kimberlite bodies were intersected by drilling; nine returned microdiamonds from caustic fusion of samples averaging less than 100kgs in weight.

The 2003 drilling program was designed to test high confidence geophysical targets with limited support from regional geochemical data. Exploration in 2004 will benefit from expanded geophysical coverage and a more extensive geochemical data set that was collected but not available during the 2003 drilling campaign. It is anticipated that approximately $6 million will be spent on the Churchill properties in 2004 for drilling, ground and airborne geophysical surveys and till sampling. Shear Mineral Ltd. has a 51% interest in the project and is Operator. Stornoway and BHP Billiton have 35% and 14% interests, respectively.

Coronation Properties

Stornoway holds varying interests (between 30 and 100%) in thirteen separate properties, totalling ~1.5 million acres in the Coronation (North Slave) diamond district in western Nunavut, and is the Operator on all but two of them. In 2002, six of the properties were surveyed with fixed wing airborne magnetics and four of the properties were surveyed using a heli-borne magnetic and electromagnetic system. Several hundred geophysical responses indicative of pipe-like intrusives were identified from these surveys. In 2003, more than 2600 till samples were collected from throughout the landholdings and processed for kimberlitic indicator minerals to follow up on anomalous regions identified the previous year. This ongoing work is expected to better define these potential new mineral trains and help prioritize geophysical anomalies for drilling in 2004. The exploration budget for the Coronation Properties in 2004 is estimated at $2 million.

On behalf of the Board


/s/ "Eira Thomas"

Eira Thomas


For further information, please contact the Company at 604-687-7545 or (888) 338-2200


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