Stornoway Announces Diamond Content Models for Renard 65

Stornoway Diamond Corporation SWY

7/13/2010 8:31:32 AM

VANCOUVER, BRITISH COLUMBIA, Jul 13, 2010 (MARKETWIRE via COMTEX News Network) --

Stornoway Diamond Corporation (TSX: SWY) ("Stornoway" or the "Company") is pleased to announce the results of a diamond content modeling exercise undertaken for most kimberlite lithologies within the Renard 65 kimberlite pipe at the Renard Diamond Project. The Renard Diamond Project is a 50:50 joint venture with SOQUEM INC. ("SOQUEM"), a wholly-owned subsidiary of the Societe generale de financement du Quebec ("SGF"), the Quebec government's main industrial and financial holding company.

Renard 65 is the largest kimberlite pipe in the Renard cluster, with a surface area of approximately 1.7 hectares. In 2003 a large, gem quality diamond of 4.04 carats was recovered within drill core, an exceptionally rare occurrence in diamond exploration. However, subsequent larger scale sampling, through both reverse circulation ("RC") drilling and surface trenching, returned lower diamond contents than the nearby Renard 2, 3, 4 and 9 kimberlites, and consequently Renard 65 was not incorporated in the recently updated Renard Preliminary Assessment (Stornoway Press Release dated March 22, 2010). Nevertheless, Stornoway considers Renard 65 to have the potential to contribute future mineable resources, given its location, amenability to open-pit mining, and recent evidence that suggests its size and diamond content may have been understated. To this end, Stornoway initiated a program of diamond content modeling utilizing existing macro diamond datasets supplemented by new micro-diamond sampling, and integrated with recent geological modeling. Highlights of this exercise are as follows:

--  Modeled diamond contents of between 26 and 38 carats per hundred tonnes
    ("cpht") for commercial sized diamonds within four distinct kimberlite
    lithologies, a substantial improvement on historical sampling results.
--  A diamond size frequency distribution for Renard 65 that is similar to
    other Renard kimberlite pipes, confirming a single diamond population
    previously shown to be characterized by large, high value gems.

Preliminary geological modeling at Renard 65, previously reported, has suggested a potential mineral deposit of between 12.6 and 24.0 million tonnes of kimberlite calculated from surface to 280m depth and from surface to 700m depth, respectively. Recent drilling has confirmed additional upside size potential at depth. The new diamond models now provide a more authoritative interpretation of diamond content. The reader is cautioned that the potential quantity and grade of any potential mineral deposit is conceptual in nature, and the diamond content models reported today do not constitute mineral resource grades. It is uncertain if further exploration will result in the target being delineated as a mineral resource.

Matt Manson, President and CEO, commented: "This work represents an example of the integrated geological and diamond analysis that we are using to gain an increasingly detailed understanding of the diamond distribution within the Renard kimberlite pipes. We now believe that Renard 65 has the potential to add value to an operating Renard diamond mine, which would be developed initially on the higher grade Renard 2, 3 and 4 ore bodies. Without a bulk sample at Renard 65, no mineral reserve can be established in the short term, and no change in the Renard conceptual mine plan is contemplated at this time. However, the implication of this work is that a large tonnage of potentially viable kimberlite occurs close to the planned mine infrastructure, amenable to low cost stripping and open at depth. Consequently, consideration will be made within the ongoing mine design for future development at Renard 65, and additional work will be undertaken to better understand the potential grade distribution within the kimberlite, particularly at depth."

Renard 65 Diamond Content Models

Modeled estimates of commercial diamond recovery grades for four of five lithological units identified to date within Renard 65 are shown in Table 1. The models are constructed using the totality of micro and macro diamond data available for each lithology, which for Renard 65 comprises macro diamond data recovered by Dense Media Separation ("DMS") from successive campaigns of core drilling, RC drilling, and surface trenching in addition to the new microdiamond data reported below. The models utilize size frequency distribution curves to estimate the likely occurrence of diamonds in all commercial size categories (+1 DTC sieve size), with adjustments to take into account the loss of small diamonds typical in a production scale plant.

Table 1: Renard 65 Diamond Content Models by Kimberlite Lithology
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                    Diamond grade models at production plant recovery(1),(3)
                                          (cpht)(4)
                    -------------------------------------------------------
R65 Geological Unit                   Un-Diluted                 Diluted (5)
---------------------------------------------------------------------------
Kimb65a                                       60                         26
---------------------------------------------------------------------------
Kimb65b                                       37                         30
---------------------------------------------------------------------------
Kimb65c                                       40                         38
---------------------------------------------------------------------------
Kimb65d                                       47                         31
---------------------------------------------------------------------------
Kimb65e                                      n/a                        n/a
---------------------------------------------------------------------------
(1) The estimated diamond content, expressed as carats per hundred tonnes,
    may not be representative of the overall diamond content of the body due
    to a number of factors, including location and size of the samples or
    drill holes
(2) For commercial sized stones retained on a +1.18 mm square mesh screen
(3) For commercial sized stones retained on a +1 or greater DTC screen
(4) Carats per hundred tonnes
(5) Represents the measured dilution in the samples processed for
    microdiamonds. May not be representative of the lithological unit
    sampled

Ongoing petrological work suggests that Renard 65 consists of several pipe-filling volcaniclastic to coherent kimberlite units ("Kimb65a", "Kimb65b", "Kimb65d" and "Kimb65e") and a distinct hypabyssal kimberlite unit ("Kimb65c"). These five lithologies have similarities to those in the other Renard kimberlite pipes. Preliminary geological modeling suggests volcaniclastic kimberlite unit Kimb65a, representing the most diluted Renard 65 lithology, comprises between 55% and 65% of the kimberlite pipe down to a depth of 240 meters. However, relative proportions of each unit below this depth are not known at this time. At Renard 2, detailed deep drilling has revealed that less diluted, higher grade, coherent kimberlite, becomes the dominant lithology below approximately 300 meters vertical depth. Both coherent kimberlite and tuffisitic kimberlite breccia were intersected in the single drill hole at Renard 65 that has penetrated to this depth to date. The diamond content models reported today confirm higher diamond contents, following consideration for dilution, in the coherent kimberlite units Kimb65b and Kimb65d, and the hypabyssal unit Kimb65c, compared to the Kimb65a volcaniclastic unit.

The diamond size frequency distribution curves generated in this modeling exercise for Renard 65 closely resemble those generated previously for Renard 2, 3, 4 and 9. This again supports the conclusion, previously reported, that there exists a single diamond population within the Renard kimberlite pipes, and whereas diamond grade can vary within each pipe based on lithology and dilution, the size frequency distribution of the diamond population, and consequently the diamond value, is identical across all the pipes. In the recent NI 43-101 mineral resource estimate, this diamond value was estimated at US$117 per carat ("Base Case" model, estimated at a +1 DTC sieve size cut-off) with sensitivities of US$131 per carat and US$103 per carat, following an updated pricing exercise on the Renard 6,900 carat bulk sample undertaken by WWW International Diamond Consultants Ltd. in September 2009.

Renard 65 Diamond Sampling to Date

Historical DMS diamond recovery results from larger diamond sampling campaigns at Renard 65 are shown in Table 2. The diamond contents estimated in the Renard 65 modeling exercise are significantly higher than four out of five of the historical samples. Recent diamond breakage studies, undertaken as part of the recent NI 43-101 compliant mineral resource estimate, have indicated that breakage of diamonds during the collection and processing of several historical samples has been "severe". Diamonds collected during the Renard 65 RC drill program, undertaken early in the history of the project, exhibit the highest level of breakage of all, with implied diamond weight losses of at least 38%. The high level of breakage seen in the historical Renard 65 samples is consistent with the higher diamond contents now seen in the new Renard 65 models.

Table 2: Historical Renard 65 DMS Sampling Results
---------------------------------------------------------------------------
                                     Dry             Diamond        Largest
                      Sample      Weight           Content(1)      Diamonds
Disclosure Date       Type       (tonnes)   Carats  (cpht)(2)       (carats)
---------------------------------------------------------------------------
March 4, 2008         Trench     266.0(8)  51.77(4)       19     2.06, 1.54
---------------------------------------------------------------------------
February 21, 2005(3)  RC Chips    24.7(9)   5.80(5)       23     0.53, 0.49
---------------------------------------------------------------------------
September 2, 2004(3)  RC Chips   122.5(9)  26.69(5)       22     0.83, 0.82
---------------------------------------------------------------------------
August 11, 2004(3)    Drill Core  17.8(9)   4.05(5)       23     0.88, 0.67
---------------------------------------------------------------------------
August 28, 2003(3)    Drill Core  18.4(9)  10.06(6)       54  4.04(7), 0.92
---------------------------------------------------------------------------
(1) The estimated diamond content, expressed as carats per hundred tonnes,
    may not be representative of the overall diamond content of the body
    due to a number of factors, including location and size of the samples
    or drill holes
(2) Carats per hundred tonnes
(3) Reported by Ashton Mining of Canada

Inc.
(4) Represents only stones retained on a +1 or greater DTC screen, as
discussed below
(5) Represents only stones retained on a +1.18 mm square mesh screen
(6) Represents only stones retained on a +0.85 mm square mesh screen
(7) Represents an estimated w eight of a diamond still embedded in drill
core
(8) Dry w eight
(9) Wet w eight

In order to expand the available diamond dataset for the Renard 65 diamond content modeling exercise, a total of 1.7 tonnes of kimberlite was collected from five drill holes completed since April 2008, and submitted for diamond recovery by standard caustic dissolution. No sample was available for "Kimb65e", and consequently no diamond content model was created for this lithology. The results of the new caustic work, expressed in standard square mesh sieve size categories as a composite dataset, are shown in Table 3, and summarized by lithology in Table 4.

Table 3: Renard 65 Composited Microdiamond Data in Sieve Sizes
------------------------------------------------------------------------
        Sample weight   0.106 to  0.150 to  0.212 to  0.300 to  0.425 to
        processed (kg)   0.150mm   0.212mm   0.300mm   0.425mm   0.600mm
------------------------------------------------------------------------
Kimb65       1,690.58         79        66        51        44        23
------------------------------------------------------------------------
--------------------------------------------------------------------
        Sample weight   0.600 to  0.850 to  1.18 to  1.70 to   Total
        processed (kg)   0.850mm    1.18mm   1.70mm   2.36mm  Stones
--------------------------------------------------------------------
Kimb65       1,690.58         12         8        5        4     292
--------------------------------------------------------------------
Table 4: Renard 65 Microdiamond Data by Kimberlite Lithology
---------------------------------------------------------------------------
                                Kimb65a  Kimb65b  Kimb65c  Kimb65d    Total
---------------------------------------------------------------------------
Microdiamond Sample Weight (kg)  737.20   256.75   192.43   704.21  1690.58
---------------------------------------------------------------------------
Microdiamond Sample Dilution (%)     57%      20%       4%      32%      35%
---------------------------------------------------------------------------
Total Microdiamond Stones            43       34       65      150      292
---------------------------------------------------------------------------
Undiluted Stones per 10kg          1.87     1.66     3.52     3.15     2.66
---------------------------------------------------------------------------

Renard 65 Size Potential

In the recent National Instrument ("NI") 43-101 compliant mineral resource estimate for the Renard Diamond Project (Stornoway Press Release dated December 08, 2009), Renard 65 is included as a potential mineral deposit of between 2.9 and 7.9 million carats of diamonds contained within 12.6 to 24.0 million tonnes of rock at between 23 and 33 cpht. The low range and high range PMD for Renard 65 were determined by projecting reasonable kimberlite volumes from surface to 280m depth and from surface to 700m depth, respectively. Grades were based on previously reported historical work and no allocation was made for upside potential as a result of plant under recovery or diamond breakage.

During the 2010 winter drill program at Renard (Stornoway Press Release dated April 14, 2010), Stornoway reported the completion of a single drill hole at Renard 65 designed to test the vertical extent of the body and its east-west dimension at a level below that of previous drilling. The eastern margin of the pipe was successfully delineated at 486 meters down hole, 166 meters beyond its previously modeled location, at a vertical depth of 383 meters. This new drilling data suggested that, at this depth, the cross-sectional dimensions of Renard 65 could be approximately 100x300m compared to 25x300m assumed in the previous model. Additional drilling will be required to confirm this hypothesis.

Next Steps

Petrographic and geochemical studies on available Renard 65 drill core are ongoing, and a revised geological model is in preparation. Additional deep drilling of the Renard 65 kimberlite will be undertaken as part of the summer 2010 exploration program. Scoping level assessments are ongoing to better understand the optimum development scenario for the kimberlite should a formal mineral resource be established from the current work. Currently, no additional large scale sampling at Renard 65 is contemplated prior to the commencement of production at the project.

Scientific and Technical Data

Caustic dissolution data described above are based on work completed by Microlithics Laboratories, Thunder Bay, Ontario, an independent mineral process laboratory. As part of Stornoway's ongoing QA/QC programs all materials are subject to audit, and any significant changes will be reported when available.

Historical diamond results reported in this release are based on DMS processing that occurred between April 2002 and January 2008. Processing and recovery details for these data, and a more detailed description of the methodology utilized in Stornoway's diamond content modeling, can be found in the NI 43-101 report "2009 Mineral Resource Update, Renard Diamond Project, Northern Quebec, Canada" filed on SEDAR on January 21, 2010 and available on the Stornoway website.

Stornoway's diamond exploration programs are conducted under the direction of Robin Hopkins P.Geol. (NT/NU), Vice President, Exploration, a Qualified Person under NI 43-101. Mr. Hopkins has reviewed the contents of this press release.

About Stornoway Diamond Corporation

Stornoway Diamond Corporation is one of Canada's leading diamond exploration and development companies, involved in the discovery of over 200 kimberlites in seven Canadian diamond districts. The Company benefits from a diversified diamond property portfolio, a strong financial platform and management and technical teams with experience in each segment of the diamond "pipeline" from exploration to marketing.

About SGF

Societe generale de financement du Quebec (sgfqc.com), an industrial and financial holding company, has a mission to carry out economic development projects, particularly in the industrial sector, in cooperation with partners and in compliance with accepted profitability requirements and with the economic development policy of the Quebec government. As part of its new mandate, SGF is authorized by the Quebec government to go beyond its traditional role as an equity investor by offering complementary solutions, such as loans, debentures or preferred shares.

SOQUEM, a wholly-owned subsidiary of Societe generale de financement du Quebec, is to undertake exploration, development and mining activities throughout the province of Quebec.

On behalf of the Board

STORNOWAY DIAMOND CORPORATION

Matt Manson, President and Chief Executive Officer

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