$10 Million Bought Deal Financing - $3.0 Million Flow Through Financing


Stornoway Diamond Corporation (the "Company") is pleased to announce that the Company has agreed to sell, to Canaccord Capital Corporation, with a syndicate of underwriters, including Haywood Securities Inc., BMO Nesbitt Burns Inc., Raymond James Ltd., on a bought deal underwritten basis, 6,666,666 million units by way of private placement at a price of $1.50 per unit for gross proceeds of $10 million. In addition, the syndicate of underwriters will have an over allotment option, exercisable at any time until the closing date, to acquire up to an additional 1,333,333 million units for additional gross proceeds of $2.0 million. Each unit will consist of one common share and one half of one common share purchase warrant. Each whole common share purchase warrant will entitle the holder to purchase one common share at a price of $1.75 per common share for 12 months from the closing date. The underwriters will receive a 6.5% cash commission and underwriters warrants for common shares equal to 10% of the units sold under the offering. The underwriter's warrants will be exercisable at a price of $1.55 per share for a period of 12 months from the closing date. In addition the syndicate of underwriters has agreed to sell, on a best efforts basis, 2.0 million flow through shares by way of private placement at a price of $1.50 per flow through share for gross proceeds of $3 million. The underwriters will receive a 3% cash commission for the flow through offering. The securities issuable under the private placement are subject to a four month hold period from the closing date. The private placement is subject to approval by the TSX Venture Exchange.  

Stornoway Diamond Corporation holds interests in more than 11 million acres of prospective diamond properties throughout northern Canada and will spend in excess of $8 million on exploration during 2003. Landholdings include properties in the Melville (NU), Churchill (NU), Coronation (NU) and Otish Mountains (PQ) diamond districts. Stornoway has been involved in twelve new kimberlite discoveries within the past twelve months, including AV-1, which has returned encouraging preliminary diamond counts (see Company press release of May 8, 2003). Results from the remaining eleven are pending. The Company is continuing with an aggressive exploration program that includes airborne and ground geophysics, till sampling, prospecting and further diamond drilling on at least two of its properties later this summer.

This news release does not constitute an offer to sell or a solicitation of an offer to buy any of the securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. Not for distribution to US newswire services or for dissemination in the United States.

On behalf of the Board
/s/ "Eira M Thomas"
Eira M Thomas, President

For further information, please contact the Company at 604-687-7545 or (888) 338-2200
** INTERNET ADDRESS: www.stornowaydiamonds.com **

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release