Archives

STORNOWAY FILES 2nd QUARTER INTERIM CONSOLIDATED FINANCIAL STATEMENTS AND MD&A

Stornoway Diamond Corporation (TSX-SWY) has filed its interim consolidated financial statements and its Management Discussion and Analysis (Form 51-102F1) for the six months ended October  31, 2004, with the regulatory authorities through SEDAR (www.sedar.com) and has mailed them to shareholders whose names appear on the Company's Supplemental List.  The interim financial statements were prepared by management in accordance with Canadian generally accepted accounting principles and were not reviewed by Stornoway's auditors.  This news release is being issued pursuant to National Instrument 54-102.

Highlights of Stornoway's diamond exploration activities during its second quarter for fiscal 2005 are:

• Final AV-1 diamond results from 2004 drilling yielded a sample grade of 0.83 carats per tonne (diamonds >0.85 mm using square mesh sieve) from a total of 10.4 tonnes processed. 
• Eight holes comprising 1,142 metres were completed at Aviat, testing four targets.  Kimberlite was intersected in each hole with intercepts ranging from 0.1 m to 61.0 m.  Diamond analyses are pending.

Corporate highlights include:

• Authorized capital increased from 100,000,000 common shares to an unlimited number of common shares, without par value.
• Nick Thomas appointed Manager of Investor Relations.
• Stornoway's securities now trade on the Toronto Stock Exchange and the Company is no longer a "venture issuer".

The Company's loss from operations for the six months ended October 31, 2004 totaled $2,323,205, a loss of $0.03 per share, as compared to a loss of $694,000 for the six months ended September 30, 2003, a loss of $0.02 per share.  Assets increased from $39,754,098 as at April 30, 2004 to $62,986,746 as at October 31, 2004.  Capitalized resource property costs also increased, from $15,506,905 as at April 30, 2004 to $25,669,776 as at October 31, 2004.  The Company's cash and short-term deposits increased from $23,291,730 as at April 30, 2004 to $34,218,674 as at October 31, 2004.  The increase in the Company's cash position is attributable to a private placement of 8,000,000 units for gross proceeds of $20 million in May 2004 and a number of warrant exercises during the six months ended October 31, 2004 which increased the Company's working capital by an additional $5.3 million. 

General and administrative expenses increased as compared to the prior period, from $482,692 in the six months ended September 30, 2003 to $1,659,999 in the six months ended October 31, 2004.  Stock-based compensation expense accounts for approximately 53%, or $872,949 (2003 - $nil) of the Company's total general and administrative expenses of $1,659,999 (2003 - $482,692) and reflects the Company's adoption of full fair value based accounting for all stock options granted after January 1, 2003. Also included in the Company's regulatory compliance costs for the current period is the initial listing fee of $150,000 that was paid to the Toronto Stock Exchange upon the Company's graduation to the TSX effective October 14, 2004.  Resource property write-offs totaled $1,101,140 in the current period as compared to a write-off of $307,193 in the prior period.  The write-off of resource property costs in the prior period accounts for about 44% of the Company's total loss of $694,000, as compared to about 47% of the Company's total loss of $2,323,205 in the current period.  The Company also wrote-down its investments in marketable securities by $88,200 (2003 - $nil) during the six months ended October 31, 2004.  Interest income increased significantly as compared to the six months ended September 30, 2003 due to a substantial increase in the cash balances available for short-term investment from period to period.  Interest income increased to $448,469 (2003 - $55,433).  The increase in the Company's property management fees to $68,414 (2003 - $40,452) is a result of larger exploration expenditures on properties that the Company is jointly exploring, resulting in higher management fees as compared to the prior period.

On behalf of the Board
STORNOWAY DIAMOND CORPORATION

/s/ "Eira Thomas"
Eira Thomas, President