Stornoway and Motapa Form Alliance to Explore for Diamonds in Botswana


Stornoway Diamonds Corp. (SWY - TSX) and Motapa Diamonds Inc (MTP - TSX-V) are pleased to report that the two companies have entered into an agreement to jointly explore for diamonds on Motapa's extensive Botswana landholdings, totaling in excess of 2.2 million hectares (5.4 million acres).

Botswana is the world's leading diamond producer by value and its mines, Jwaneng, Lethlakhane and Orapa are amongst the most profitable. The country is democratically ruled, boasts a growing economy and a stable political environment. Motapa's diamond exploration rights cover highly prospective terrain throughout central and eastern Botswana and include a 100% interest in 28 prospecting licenses covering 1.77 million hectares and 60% interest in 7 prospecting licenses covering approximately 0.48 million hectares.

President and CEO of Stornoway, Eira Thomas commented: "Our agreement with Motapa to explore Botswana represents a world class opportunity for Stornoway, providing exposure to some of the best diamond real estate in Africa and the chance to work with one of the most respected diamond exploration teams in the world. While diamond exploration in Canada remains our top priority, Stornoway is committed to identifying the best opportunities for our shareholders worldwide. Stornoway will have access to Motapa's highly experienced technical group to carry out work programs in Botswana, ensuring limited dilution of our Canadian resources. These prospective Botswana projects can also be explored year - round, complimenting our seasonal work activities in the Arctic".

In the near future, the joint venture plans to begin work on the Sua Pan Project, located approximately 50 km northeast of the Orapa diamond mine. Sua Pan is a large dry lake bed which creates an environment that is not conducive to conventional heavy mineral prospecting techniques. Motapa has recovered numerous kimberlite indicator minerals on the periphery of Sua Pan which suggests the possibility of a local kimberlite source. Stornoway and Motapa plan to prospect Sua Pan using airborne gravity and magnetics followed by drill testing targets of merit.

The agreement provides Stornoway with the option to earn a 50% participating interest in the joint venture holding Motapa's Botswana diamond interests by fulfilling the following obligations:

  • Issuing to Motapa an initial tranche of common shares in Stornoway equal to US$500,000 upon regulatory approval of the agreement,
  • Completing an airborne gravity survey over the Sua Pan costing at least US$500,000 on or before December 31, 2005,
  • Issuing to Motapa a second tranche of common shares in Stornoway equal to US$500,000 on or before the later of April 27, 2006 and 30 days after receipt of the results of the airborne survey, and
  • Solely funding the first US$2.0 million in joint venture expenditure requirements on any project (including the costs of flying the airborne gravity survey over the Sua Pan) within 30 months of receipt of results of the airborne gravity survey.

Upon completion by Stornoway of its vesting requirements, Motapa and Stornoway will share in ongoing funding requirements in proportion to their respective participating interests.

Stornoway will be the project operator and may seek additional funding joint venture partners on certain of the project areas. In the event that Stornoway does not complete its vesting requirements, but has attracted a funding joint venture partner on terms acceptable to Motapa, and that funding third party has completed its vesting requirements, Stornoway will receive a participating interest equal to 10% of Motapa's interest in the project area.

In commenting on the agreement and the exploration program, Motapa's Chief Executive Larry Ott noted "We are delighted to have Stornoway as a partner on this exciting exploration program. Stornoway's executive and management team brings a set of skills and expertise that complements Motapa's capabilities very well. We are looking forward to an aggressive program on the Sua Pan project area that should produce interesting near-term results."

Stornoway is one of Canada's premier diamond exploration companies with extensive landholdings (approximately 22 million acres) focused in eleven key project areas in northern Canada. Stornoway has been involved in the discovery of 32 kimberlites since 2002, half of which have proven diamondiferous. Stornoway will directly spend more than $15 million (Cdn) to explore its properties and, together with its partners, will be exposed to more than $22 million (Cdn) in exploration expenditures in 2005.

Motapa is among the leading diamond explorers in Africa and controls over 12 million hectares (29.7 million acres) of diamond prospective properties located in Namibia, Zambia, Botswana and Gabon. Motapa's Chairman, Dr. John J. Gurney, is one of the world's leading authorities in the field of geochemical exploration for diamondiferous kimberlites and has been associated with successful diamond exploration programs, including the discovery of the kimberlites that comprise the Ekati(tm) diamond mine.

On behalf of the Board
/s/ "Eira Thomas"
Eira Thomas