Stornoway To Sell Interest In Buffalo Hills Project For $17.5 Million


Stornoway Diamond Corporation (TSX: SWY) is pleased to announce that its wholly owned subsidiary, Ashton Mining of Canada Inc. (“Ashton”), has entered into an agreement with Diamondex Resources Ltd. ("Diamondex") and Shore Gold Inc. ("Shore") under which Ashton has agreed to sell its interest in the Buffalo Hills property in north central Alberta for a total consideration of $17.5 million. The agreement provides that Shore and Diamondex will pay $8.75 million and $6.25 million respectively in cash, and Diamondex will pay a further $2.5 million in the form of common shares of Diamondex.

The Buffalo Hills Project is a joint venture with EnCana Corporation and Pure Diamonds Exploration Inc. To date, the joint venture has discovered a total of 38 kimberlites on its properties, of which 26 are diamondiferous. Stornoway, through Ashton, holds an approximate 45 percent interest in the project, and has the option to increase its interest to 72.5 percent by funding the next $15 million of exploration expenditures before April 30, 2010. Under the option agreement, Ashton has a commitment to spend at least $4 million by the end of 2008, of which $2 million must be spent by the end of 2007. A $2.2 million winter exploration program undertaken this winter fulfills that initial commitment.

The closing of the sale is subject to a number of conditions, including:

(a) satisfactory completion of due diligence by Diamondex and Shore;
(b) the execution a formal purchase and sale agreement; and
(c) receipt of all necessary regulatory approvals and third party consents.

The transaction is also subject to a 30-day right of first refusal of the two joint venture partners.

Stornoway Diamond Corporation

Stornoway Diamond Corporation is one of Canada's leading diamond exploration and development companies. The Company and its affiliates have been responsible for discovering over 150 kimberlites and six new Canadian diamond districts. Stornoway's management and technical team has a proven track record in wealth creation for shareholders and direct operating experience in each segment of the diamond "pipeline" from exploration to marketing.

On behalf of the Board
/s/ “Eira Thomas”
Eira Thomas
Chief Executive Officer