Stornoway Diamond Corporation (TSX-SWY) is pleased to provide the results of an independent valuation on the Renard 65 bulk sample diamonds recently recovered at the Renard Diamond Project in north-central Quebec. The valuation was undertaken in Antwerp, Belgium by WWW International Diamond Consultants (“WWW”) utilizing their March 2013 price book. Highlights are as follows:

• An average price of US$250 per carat on the total Renard 65 parcel of 997 carats.
   
• A diamond price model for Renard 65 of US$180 per carat, with a “High” sensitivity of US$203 per carat and a “Minimum” sensitivity of US$169 carat.
   
• Valuations of US$8,500 per carat and US$5,900 per carat on the two largest stones of 9.77 carats (G colour) and 6.40 carats (F colour) respectively.

Matt Manson, President and CEO commented “This new valuation work has confirmed a high quality diamond population at Renard 65 that we anticipate will now allow the addition of a substantial quantity of new, open-pit resources to the project’s mine plan. Two features of this work stand out. Firstly, the two large stones in the sample, previously announced by Stornoway, have been confirmed by WWW as amongst the most valuable stones recovered at the project to date. Their large impact in the parcel valuation has been tempered, appropriately, in the recommended base case price model, but their presence confirms a key characteristic of the Renard Project: upside value potential in large gems. Secondly, the WWW work has determined that Renard 65 possesses a diamond population with a different, and generally better, assortment of qualities than is seen in the other Renard kimberlite pipes. This has prompted a re-evaluation of the valuation models used in the project generally, which have previously been based on the assumption that Renard exhibits a single diamond population sampled by multiple pipes. The consequences of these findings for the project are significant, and positive.”

Renard 65 and the Renard Mine Plan

The Renard 65 bulk sample was undertaken with a view to the potential conversion of material that is currently classified as an Inferred Mineral Resource to an Indicated Mineral Resource and, if warranted, to a Mineral Reserve. Within the larger Renard Mineral Resource inventory, Renard 65 contains an Inferred Mineral Resource of 3.7 million carats (representing 12.9 million tonnes at an average grade of 29 carats per hundred tonnes) to a depth of 290m, with an exploration potential estimated at between 6.8 and 13.7 million carats (29.5 to 41.6 million tonnes at between 23 and 33 cpht) from 290m to 775m in depth. As outlined in November 2011 Feasibility Study and subsequent Optimization Study, the Renard mine plan currently contemplates the mining of a 17.9 million carat Mineral Reserve from Renard 2, 3 and 4 from a combined open pit and underground mine at a processing rate of 6000 tonnes per day. Consistent with Canadian disclosure standards, this mine plan does not include the mining and processing of any of the project’s Inferred Mineral Resources. The addition of new open-pit resources at Renard 65 is expected to allow an increase in processing capacity to 7000 tonnes per day and the extension of the project’s reserve life.

The reader is cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. In addition, the potential quantity and grade of any exploration target is conceptual in nature, and it is uncertain if further exploration will result in it being delineated as a mineral resource.

Diamond Market Survey

The Renard 65 valuation exercise has also afforded an opportunity to calibrate the value of the Renard 2, 3 and 4 diamond parcels in the current market against the May 2011 price assumptions that were used in the November 2011 Feasibility Study and subsequent Optimization Study. Over this period the diamond market has experienced a high degree of price volatility, including a sustained period of weakness in 2012. However, the market has recovered in the first quarter of 2013 and WWW have reported that prices for Renard-specific diamond assortments are currently within 7% to 8% of May 2011 levels.

Table 1: Summary of Parcel Valuations¹

Notes

1. All prices in US$/carat. Samples utilizing a +1 DTC sieve size cut-off.
    
2. Based on the average of 5 independent diamantaire valuations, as established in the May 2011 open market valuation exercise. This average is adjusted into March 2013 terms based on the application of the relative price changes seen by WWW over this period.
    
3. Based on WWW alone. In each case WWW’s own valuation was higher than the average of the five valuations.

Renard Diamond Price Models

The May 2011 valuation exercise utilized valuations by 5 independent valuators, including WWW, from which diamond price models were derived for mine planning purposes. At that time, the diamond samples from each kimberlite pipe were interpreted by Stornoway to have similar characteristics and represented a single diamond population. This interpretation led to the recommendation that employing a single diamond price model, derived from combining the Renard 2 and Renard 3 datasets, would be the most appropriate method for establishing diamond price estimates for the Renard project.

The determination that the Renard 65 kimberlite has a markedly different assortment of diamond qualities than the other kimberlite pipes has led WWW to recommend that individual price models for each pipe now be considered, and that the small differences in diamond quality and size distribution that can be observed in the diamond samples be treated as real. This has the effect of increasing the base case diamond price model for Renard 2 and decreasing the diamond price models for Renard 3 and Renard 4. The Renard kimberlites can now be said to exhibit similar, but different, diamond populations meriting individual consideration for pricing and valuation modeling. This is consistent with what is seen in most other diamond mines in the world that are based on a cluster of individual kimberlite pipes. Since Renard 2 contains 83% of the current Mineral Reserve at Renard, this adjustment to individual valuation models is expected to yield a net positive impact on project value.

Table 2: Diamond Price Models¹

Notes

1. All prices in US$/carat. Samples utilizing a +1 DTC sieve size cut-off.
    
2. Should the Renard 4 diamond population prove to have a diamond population with a size distribution equal to the average of Renard 2 and 3, WWW have estimated that a base case diamond price model of $164 per carat would apply based on May 2011 pricing and $150 per carat based on March 2013 pricing.

For purposes of comparison, updated diamond price models based on the same assumptions used in May 2011 have been estimated by WWW as US$166 per carat for Renard 2 and 3 (with a High sensitivity of US$183 and a Minimum sensitivity of US$155) and US$150 for Renard 4 (with a High sensitivity of US$168 and a Minimum sensitivity of US$140), consistent with recent market price movements.

In the case of Renard 4, independent studies on diamond breakage and poor plant performance during the processing of the bulk sample have previously indicated that the size distribution of the Renard 4 diamond sample has been artificially modified during recovery. Should this prove to have been the case, a higher diamond price estimate for the Renard 4 kimberlite might still be expected.

Large Diamonds in Exploration Samples at Renard

Since its discovery in 2001, a characteristic of the Renard Diamond Project has been the incidence of large, high quality diamonds that have been recovered at each stage of exploration sampling. The most celebrated of these was a Renard 65 white octahedral gem of at least 4 carats discovered embedded in drill core in 2003. To date approximately 8,000 carats have been recovered from the Renard 2, 3, 4 and 65 kimberlite pipes, including 17 stones weighing 5 carats or more with a combined weight of 123.32 carats (see picture on our website /files/images/News/Renard-diamonds-5CT-and-up_0023-Labelled_web.jpg). These include a 15.46 carat top light brown “makeable” gem from Renard 2, a 10.15 carat white octahedral gem from Renard 3, and the 9.77 carat white octahedral gem from Renard 65. In the latest WWW valuation the average value of these 17 stones is US$3,100 per carat. Six stones have values in excess of US$4,000 per carat. The WWW base case valuation models for the Renard project assume an average price of, variously, US$1,900 to US$2,200 per carat for stones between 5 and 10 carats in size. A substantial increase in revenue will be achieved for the Renard Project should large diamonds continue to be recovered upon commercial production on the same basis as has been achieved in the sampling performed to date.

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 Québec. In November 2011, Stornoway released the results of a Feasibility Study at Renard, followed by an Optimization Study in January 2013, which highlighted the potential of the project to become a significant producer of high value rough diamonds over a long mine life. Probable Mineral Reserves as defined under National Instrument (“NI”) 43-101 stand at 17.9 million carats, with a further 17.5 million carats classified as Inferred Mineral Resources, and 23.5 to 48.5 million carats classified as non-resource exploration upside. All kimberlites remain open at depth. Pre-production capital cost stands at an estimated C$752 million, with a life of mine operating cost of C$57.63/tonne giving a 67% operating margin over an initial 11 year mine life. Readers are referred to the technical report dated December 29th, 2011 in respect of the November 2011 Feasibility Study for the Renard Diamond Project, and the technical report dated February 28th, 2013 in respect of the January 2013 Optimization Study, for further details and assumptions relating to the project.

About Stornoway Diamond Corporation

Stornoway is a leading Canadian diamond exploration and development company listed on the Toronto Stock Exchange under the symbol SWY and headquartered in Montreal. Our flagship asset is the 100% owned Renard Diamond Project, on track to becoming Québec’s first diamond mine. Stornoway is a growth oriented company with a world class asset, in one of the world’s best mining jurisdictions, in one of the world’s great mining businesses.

On behalf of the Board
STORNOWAY DIAMOND CORPORATION
/s/ “Matt Manson”
Matt Manson
President and Chief Executive Officer

For more information, please contact Matt Manson (President and CEO) at 416-304-1026
or Nick Thomas (Manager Investor Relations) at 604-983-7754, toll free at 1-877-331-2232

Pour plus d’information, veuillez contacter M. Ghislain Poirier, Vice-président Affaires publiques de Stornoway au 418-780-3938, gpoirier@stornowaydiamonds.com

** Website: www.stornowaydiamonds.com Email: info@stornowaydiamonds.com **

This press 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 press 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: (i) the amount of mineral resources and exploration targets; (ii) the amount of future production over any period; (iii) net present value and internal rates of return of the mining operation; (iv) assumptions relating to recovered grade, average ore recovery, internal dilution, mining dilution and other mining parameters set out in the Feasibility Study or the Optimization Study; (v) assumptions relating to gross revenues, operating cash flow and other revenue metrics set out in the Feasibility Study or the Optimization Study; (vi) mine expansion potential and expected mine life; (vii) expected time frames for completion of permitting and regulatory approvals and making a production decision; (viii) the expected time frames for the construction of a mining grade road by Stornoway and completion generally of the Route 167 extension and the financial obligations or costs incurred by Stornoway in connection with such road extension; (ix) future exploration plans; (x) future market prices for rough diamonds; and (xi) sources of and anticipated financing requirements. 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.

Forward-looking statements are made based upon certain assumptions by Stornoway or its consultants and other important factors that, if untrue, could cause the actual results, performances or achievements of Stornoway to be materially different from future results, performances or achievements expressed or implied by such statements. Such statements and information are based on numerous assumptions regarding present and future business strategies and the environment in which Stornoway will operate in the future, including the price of diamonds, anticipated costs and Stornoway’s ability to achieve its goals. Certain important factors that could cause actual results, performances or achievements to differ materially from those in the forward-looking statements include, but are not limited to: (i) estimated approval date of the Environmental and Social Impact Assessment; (ii) required capital investment and estimated workforce requirements; (iii) estimates of net present value and internal rates of return; (iv) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (v) the assumption that a production decision will be made, and that decision will be positive; (vi) anticipated timelines for the commencement of mine production; (vii) anticipated timelines related to the construction of a mining grade road by Stornoway and completion generally of the Route 167 extension and the impact on the development schedule at Renard; (viii) anticipated timelines for community consultations and the impact of those consultations on the regulatory approval process; (ix) market prices for rough diamonds and the potential impact on the Renard Project’s value; and (x) future exploration plans and objectives.

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 risk 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, (i) risks relating to variations in the grade, kimberlite lithologies and country rock content within the material identified as mineral resources from that predicted; (ii) variations in rates of recovery and breakage; (iii) the greater uncertainty of exploration targets; (iv) developments in world diamond markets; (v) slower increases in diamond valuations than assumed; (vi) risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar; (vii) increases in the costs of proposed capital and operating expenditures; (viii) increases in financing costs or adverse changes to the terms of available financing if any; (ix) tax rates or royalties being greater than assumed; (x) results of exploration in areas of potential expansion of resources; (xi) changes in development or mining plans due to changes in other factors or exploration results of Stornoway; (xii) changes in project parameters as plans continue to be refined; (xiii) risks relating to receipt of regulatory approvals or the implementation of the existing Impact and Benefits Agreement with aboriginal communities; (xiv) the effects of competition in the markets in which Stornoway operates; (xv) operational and infrastructure risks; (xvi) technical, environmental, permitting and execution risk relating to the construction by Stornoway of a mining grade road forming part of the Route 167 extension, (xvii) the additional risks described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A, 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.