Purchase Offer for Contact Information Circular PDF

Stornoway Diamond Corporation (TSX: SWY) and Contact Diamond Corporation (TSX: CO) announced today that Stornoway has filed its formal offer to acquire all of the outstanding shares of Contact with Canadian securities regulators and has commenced the mailing of its offer and related documents to Contact shareholders. Contact has concurrently filed and commenced mailing of a director's circular concerning the offer. The Board of Directors of Contact recommends that Contact shareholders accept the offer and tender their shares to the offer.

Eira Thomas, President and CEO of Stornoway, commented: "Contact brings top management with unequaled Canadian diamond marketing expertise, a quality Canadian diamond exploration portfolio together with mining development expertise and advice from its largest shareholder, Agnico-Eagle. I see the assets of the two companies as very complimentary and we are pleased to be offering all Contact shareholders a premium bid and the opportunity to participate in the growth of Canada's leading diamond equity".

Matthew Manson, Contact's President and CEO, said: "The proposed bid from Stornoway allows Contact shareholders to participate in the development and growth of a significant new company in the Canadian diamond sector. Stornoway's management and technical teams are outstanding, and the combined company will have a leading mix of diamond exploration and development assets, an enhanced financial platform, and increased liquidity. Stornoway's premium bid, extended equally to all shareholders, has been endorsed unanimously by Contact's officers and board of directors."

Sean Boyd, CEO and Vice-Chairman of Agnico-Eagle Mines Limited, Contact's largest shareholder, said: "As a longstanding shareholder of Contact, we are pleased to see Contact and its management team participate in the creation of a new force in the Canadian diamond industry. We are excited about the opportunities for the new company and we are well positioned to provide technical advice to the new management team as it builds its own standalone mine development and operating capacity".

The boards of directors of both Stornoway and Contact strongly believe that this transaction will result in value creation for shareholders of both Contact and Stornoway, offering the following benefits and opportunities:

• Participation in the Creation and Growth of one of Canada's Leading Diamond Companies. The entity resulting from the combination of Stornoway and Contact is expected to have a market capitalization in excess of $120 million and will be in a strong position to promptly pursue subsequent transactions with the goal of acquiring near term diamond production. Stornoway has also announced its intention to pursue a take over bid for Ashton Mining of Canada Inc. (TSX: ACA). If Stornoway acquires all of the Contact Shares and all of the Ashton Shares, the three-way combination is expected to create a company with a market capitalization in excess of $200 million and will become one of the leading, mid-cap, pure diamond exploration and development companies in Canada.
   
• Valuation Growth. The combined entity should offer opportunities for an improved market valuation due to the combination of the companies, among other things: (i) creating a strong platform from which pre-development assets can be brought to production and achieve a higher valuation multiple; (ii) creating an overall, compelling investment opportunity in rough diamonds; and (iii) providing exposure to a broader exploration and development property portfolio. 
   
• Increased Liquidity. Due to a larger number of shares outstanding and an expected enhanced profile, the combined entity should have greater trading liquidity than Contact does currently.
   
• Strong, Experienced Technical and Management Teams. The combined entity will have a strong, experienced management group with a history of wealth creation for shareholders and supported by a qualified technical team with unique experience in the Canadian diamond exploration and development sector and a track record of discovery.
   
• Enhanced Financial Platform. The combined entity should have greater flexibility and improved access to financial resources to maximize the value of Stornoway and Contact's existing properties as well as to pursue a broader spectrum of future growth opportunities that would have been inaccessible to each company on its own.
   
• Opportunities for Further Consolidation and Acquisition. In general, the trend towards consolidation and growth in the mining sector has been supported and rewarded by the financial markets. Widespread consolidation in the diamond sector has not yet occurred and the combined entity would be in a good position to continue this consolidation. The combined entity will be in a position to identify additional opportunities in Canada and elsewhere and further consolidate the diamond exploration and development landscape.
   
• Large and Diversified Asset Base. The combined entity will benefit from an extensive and diversified asset base consisting of highly prospective exploration landholdings throughout Canada and Botswana, creating a unique project pipeline that is unparalleled among its peers.
   
• No Controlling Shareholder. The new entity will not have a controlling shareholder. However, Agnico-Eagle, a leading mine developer in the Province of Quebec, will be a significant strategic shareholder.

Stornoway has also filed its formal offer to acquire all of the outstanding shares of Ashton Mining of Canada Inc. with Canadian securities regulators and has commenced the mailing of the Ashton offer and related documents to Ashton shareholders. The Contact offer is not conditional on the completion of the Ashton offer and the Ashton offer is not conditional on completion of the Contact offer.

How to Tender

Contact shareholders wishing to accept the Contact 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 Contact 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 Contact shares are held by a broker or other financial intermediary, Contact shareholders should contact such intermediary and instruct it to tender the Contact shares.

Questions About the Contact Offer

For further information about the Contact offer, Contact shareholders should contact Georgeson Shareholder Communications Canada Inc. toll-free at 1-866-399-8737 in North America.

About Stornoway

Stornoway Diamond Corporation has exposure to approximately 18 million acres of prospective diamond properties in under-explored regions of northern Canada and Africa. Eighteen separate project areas in Nunavut, Alberta, Manitoba, the Northwest Territories and Botswana make up the land package. 

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. Since 2000, Stornoway has been involved in the discovery of 62 kimberlites, 31 of which have proven diamondiferous.

About Contact Diamond Corporation

Contact Diamond Corporation is an exploration and development company with diamond properties in Ontario, Québec, Northwest Territories and Nunavut. Timiskaming, at the Ontario-Québec border, is its leading project. Agnico-Eagle Mines Limited (NYSE: AEM, TSX: AEM) is currently the largest shareholder of the corporation.

On behalf of the Board
STORNOWAY DIAMOND CORPORATION
/s/ "Eira Thomas"
Eira Thomas

For further information, please contact Georgeson Shareholder Communications Canada Inc. toll-free at 1-866-399-8737 in North America or Eira Thomas at 604-331-2259 or (888) 338-2200
** Website: www.stornowaydiamonds.com Email: info@stornowaydiamonds.com **

Important Notice:

As a result of restrictions under United States securities laws, Contact 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 Contact shares on behalf of a U.S. Person (collectively "U.S. Shareholders") shall not be entitled to receive Stornoway shares in connection with the Contact 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 Stornoway and Contact to be materially different from Stornoway's and Contact'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 7 of the Circular, ‘‘Risk Factors' and in Contact's Renewal Information Form dated March 3, 2006.

The following factors, among others, related to the business combination of Stornoway with Contact could cause actual results to differ materially from forward-looking information: Stornoway Shares issued in connection with the Contact 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 Contact 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 Contact 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 Contact 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 Contact. 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.