Stornoway Provides Renard Project Update


Progress on Project Financing, Access Road Construction, and Final Permitting

Stornoway Diamond Corporation (TSX-SWY) is pleased to provide an update on progress at the Renard Diamond Project, Stornoway’s 100% owned diamond development project located in north-central Québec. Stornoway’s principal focus at this time is the timely completion of project financing on a schedule defined by the development of the Renard Mine Road, which is currently in construction under Stornoway’s management. Stornoway’s development team is also engaged in detailed mine engineering work, the completion of all outstanding permitting, and an update to the project’s NI 43-101 Mineral Resource estimate following the completion of the recent bulk sample at the Renard 65 kimberlite.

Matt Manson, Stornoway’s President and CEO, stated: “We are pleased to report continued good progress on the construction of the Renard Mine Road, where we are forecasting completion on schedule and within budget. We are also encouraged by the progress made to date on project financing. Stornoway is pursuing a financing strategy based on a combination of debt, equity and the forward sale of diamonds. Despite challenging market conditions, the project has been well received by potential financing partners based on, among other things, its scale of resource, accessibility, strong social acceptability, and long potential mine life. Our aim is the completion of this financing on a schedule that allows us to utilize the Renard Mine Road for mine construction as soon as it becomes available for all-season traffic later in the year. This schedule offers Stornoway the opportunity to develop the Renard Project over a period when the diamond market is expected to strengthen markedly, and when the global mining sector has entered a period of cost stabilization and contractor availability.”

The Renard Mine Road

On March 27th Stornoway announced that construction on the 97km long Renard Mine Road had commenced ahead of schedule due to favourable winter weather conditions. Good progress has continued to be made through April and May, and overall completion currently stands at 22% with 7 of 16 permanent bridges in place. First all-season vehicle access to Renard is currently scheduled for October 2013, well within the previously announced schedule.

The cost of the Renard Mine Road has been budgeted at $77 million, including a 15% contingency. This cost is being funded through a credit facility provided to Stornoway by the Québec Ministère des Finances et de l’Économie bearing interest at the rate of 3.35% and amortized over a period of 15 years. Stornoway is also entitled to draw an additional $7.7 million bearing interest at the rate of 6.3%, for a total facility of up to $84.7 million, should extra contingencies be required. The schedule of repayment of these loans will be based on the financing and construction schedule of the Renard Diamond Project. To-date, Stornoway has drawn $26.3 million from the credit facility and anticipates completing construction work within the base budget.

Project Financing

On September 6th, 2012 Stornoway announced that it had entered into a Mandate Letter and draft term sheet with seven financial institutions (the “Mandated Lead Arrangers”) in connection with a potential senior debt financing of up to US$475 million. Since that time, the Mandated Lead Arrangers have undertaken their due diligence and are well advanced in this process. When all due diligence has been completed, the parties will establish a final view on the quantum of debt, equity, forward sale proceeds and contingent overrun facilities required to be in place at closing. The Mandate Letter does not itself constitute a commitment to underwrite, provide or secure financing, which remains subject to, among other things, the terms and conditions of the term sheet attached to the Mandate Letter, credit and other approvals, and the completion of definitive loan documentation. However, based on the progress made to date, Stornoway has engaged in discussions with potential equity investors and off-takers with a view to completing the balance of project funding forthwith. These discussions are ongoing.

Project Permitting and Social Acceptance

The Renard Diamond Project Mining Lease was issued by the Québec Ministère des Ressources naturelles in October 2012 and the Québec Certificate of Authorization was issued by the Ministère du Développement Durable, de l’Environnement,de la Faune et des Parcs (“MDDEFP”) in December 2012. The accompanying Government of Canada review of the project under the Canadian Environmental Assessment Act remains ongoing. Federal authorizations are required from Fisheries and Oceans Canada and Natural Resources Canada with respect to the Fisheries Act and the Explosive Act. Successful local hearings on the project were held by the federal regulators in June 2012, and on May 10th, 2013 the Canadian Environmental Assessment Agency (“CEEA”) released its Comprehensive Study Report (“CSR”), which concluded that the Renard Project is “not likely to cause significant adverse environmental effects”. The CEEA have invited public comments on the CSR before June 10th, 2013. Following completion of this process the Renard Project will become eligible to receive its federal approval, termed an “Environmental Assessment Decision”, at which time all major permitting milestones will have been achieved.

Stornoway received the transfer of the Certificate of Authorization for the construction of the Renard Mine Road from the MDDEFP in December 2012. Consistent with this transfer, and the reduced scope of the Renard Mine Road compared to the two-lane public highway that was previously contemplated, Stornoway filed an amendment to the road project’s Environmental and Social Impact Assessment on February 15th, 2013 with the Evaluation Committee (“COMEX”) of the James Bay and Northern Québec Agreement, the environmental protection regime for the James Bay Region of Québec. On May 30th Stornoway received the addendum to the road’s Certificate of Authorisation relating to this amendment.

Renard Resource Update

Stornoway expects to complete an update to the project’s National Instrument “NI” 43-101 Mineral Resource Estimate prior to the end of the second quarter. This new estimate is expected to incorporate the conversion of a portion of existing Inferred Mineral Resources at Renard 65 to Indicated Mineral Resources following the completion of the 2012 5000 tonne bulk sampling program and March 2013 diamond valuation exercise. In addition, Stornoway will update the existing Mineral Resource estimates for certain other kimberlite pipes, including Renard 2, based on new drill data received following normal-course geotechnical and hydrogeological studies over the past 12 months.

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
/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 toll free at 1-877-331-2232

Pour plus d’information, veuillez contacter M. Ghislain Poirier, Vice-président, Affaires publiques de Stornoway au 418 254-6550,

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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.