Strengthens Balance Sheet and Provides Greater Operational Flexibility

Stornoway Diamond Corporation (TSX-SWY; the "Corporation" or "Stornoway") is pleased to announce the entering into a series of financing transactions with lenders and key stakeholders designed to provide the Corporation greater financial and operational flexibility (the "Financing Package"). In total, the Financing Package represents additional consideration and liquidity for the Corporation of up to $129 million by way of:

-- The deferral of certain loan principal repayments for a 24 month period, representing debt service cost deferral of up to $54 million;

-- Amendments to the Renard diamond streaming agreement comprising a supplementary up front deposit of the US dollar equivalent of $45 million in cash and certain sales and pricing changes;

-- A private placement of units consisting of common shares and warrants for approximately $20 million, with an additional amount of up to approximately $10 million, subscribed by existing shareholders.

All quoted figures in CAD, unless otherwise noted.

Matt Manson, President and CEO, stated "The multiple financing transactions announced today demonstrate once again the strong support Stornoway has from its stakeholders, and their positive outlook on the Renard asset and the diamond mining sector. The combination of reduced debt costs and new capital has been designed to greatly strengthen our balance sheet for the long term, while at the same time being sensitive to shareholder value. With major capital expenditures at Renard behind us and our underground mine now fully ramped up, this comprehensive deal allows our team to now focus fully on bringing forward the operating and cash flow potential of the business."

A summary of the key terms of the various elements of the Financing Package follows, which are described in greater detail in the agreements that will be available on the SEDAR website maintained by the Canadian securities administrators at www.SEDAR.com. Stornoway's board of directors determined that the Financing Package is in Stornoway's best interests in that it will allow Stornoway to fund the working capital requirements of the Renard Diamond Mine. The agreements referred to below have been entered into by the parties and Stornoway anticipates the transactions to be formally completed upon receipt of all funds thereunder.

Amended Loan Agreements

Stornoway has entered into agreements with certain lenders on the terms described below.

The Corporation and Diaquem inc. ("Diaquem"), an affiliate of Investissement Quebec ("IQ") have agreed to amend certain terms of the Credit Agreement dated July 8, 2014 between the Corporation, as guarantor, its wholly-owned subsidiary Stornoway Diamonds (Canada) Inc. ("SDCI"), as borrower, and Diaquem as lender (the "Senior Secured Loan") to provide for (i) a moratorium on principal repayments for the period from June 30, 2018 up to, but excluding, June 30, 2020, (ii) amendments to SDCI's obligation to make mandatory repayments (currently required at 50% of excess cash flow) and to the historical and projected debt service coverage ratios and (iii) acceleration of the maturity of the Senior Secured Loan to June 30, 2021.

Concurrently, Corporation has also agreed with Fonds de solidarite FTQ, Fonds regionaux de solidarite FTQ Nord-du-Quebec and IQ to amend certain terms of the Convention de pret dated as of May 3, 2012 (the "Fonds Loan") to provide for (i) a moratorium on principal repayments for the period from June 30, 2018 up to, but excluding, June 30, 2020 and (ii) the extension of the maturity date from May 3, 2021 to July 1, 2021.

The Corporation has also requested a moratorium on principal repayments from one of its lenders for a period of 24 months commencing as of June 30, 2018. The moratorium is subject to formal approval by such lender, which is expected to be obtained no earlier than the second half of November 2018. When combined with the amendments to the Senior Secured Loan and the Fonds Loan, these debt service deferral arrangements represent additional liquidity of $54 million in the aggregate to the Corporation.

Diaquem and IQ are related parties of Stornoway under Multilateral Instrument 61-101 Protection of Minority Security holders in Special Transactions ("MI 61-101") by virtue of IQ's shareholding being in excess of 10% of Stornoway' issued and outstanding share capital. Accordingly, the amendments to the Senior Secured Loan and the Fonds Loan each constitute a "related party transaction" under MI 61-101. The amendments are not subject to the formal valuation requirements because pursuant to section 5.4 of MI 61-101, the formal valuation requirement does not apply to related party transactions described in paragraph (l) of the definition of "related party transaction" under MI 61-101. The amendments were exempt from the minority approval requirement pursuant to section 5.7(1)(f) of MI 61-101, on the basis that such transactions are each a loan that is obtained from a related party on reasonable commercial terms that are not less advantageous to the Corporation than if the loan w ere obtained from a person dealing at arm's length with the Corporation, and each of the loans is not (a) convertible, directly or indirectly, into equity or voting securities of the Corporation or a subsidiary entity of the Corporation, or otherwise participating in nature, or (b) repayable as to principal or interest, directly or indirectly, in equity or voting securities of the Corporation or a subsidiary entity of the Corporation.

Amended Renard Streaming Agreement

Stornoway has entered into an amended and restated Purchase and Sale Agreement (the "Amended Renard Streaming Agreement") with Osisko Gold Royalties Ltd, Caisse de depot et placement du Quebec ("la Caisse"), Triple Flag Mining Finance Bermuda Ltd., Albion Exploration Fund LLC and Washington State Investment Board, as buyers (collectively, the "Buyers") pursuant to which the Buyers have paid Stornoway the US dollar equivalent of $45 million in gross cash proceeds as an additional up front deposit to Stornoway's subsidiary, FCDC Sales and Marketing Inc. The terms of the Amended Renard Streaming Agreement provide that the Buyers will continue to purchase a 20% undivided interest in all diamonds produced from the Renard mining property for the life of the mine and, upon the completion of a permitted sale of diamonds, the Buyers will remit to Stornoway, in cash, the lesser of 40% of achieved sales price or US$40 per carat, with the balance of purchase price payable by the Buyers, i f any, being paid by way of offset against the up-front deposits. Previously, the Renard Stream provided for a sale of an undivided interest in 20% of all diamonds produced from the first 5 project kimberlites to be mined at Renard for the life of mine, and the first 30 million carats from the property overall, with the Buyers remitting to Stornoway, in cash, US$50 per carat escalating at 1% per annum, with the balance of purchase price payable by the Buyers, if any, being paid by way of offset against the up-front deposits. Stornoway will continue as the appointed marketing agent for 100% of the Renard diamond production. For the purpose of calculating remittances, the Amended Renard Streaming Agreement will apply separately to Run of Mine ("ROM") diamonds sold at tender, and any diamonds smaller than the +7 DTC sieve size that are recovered in excess of agreed upon proportions within a run of mine diamond sale. In this manner, Stornoway will undertake to cap the proportion of smal l diamonds contained in a ROM sale such that the Buyers and Stornoway will be fully aligned on upside price exposure with downside protection on price and product mix.

Private Placement of Units

Stornoway is carrying out a treasury offering of 57,142,858 units of the Corporation ("Units") with la Caisse on a private placement basis, for gross proceeds of approximately $20 million, at a price of $0.35 per Unit, with each unit comprised of one common share of the Corporation and one-half of a common share purchase warrant, with each whole warrant exercisable until October 2, 2023 for one common share of the Corporation at an exercise price of $0.455, subject to certain adjustments. In addition, Stornoway's largest shareholder, Ressources Quebec (an affiliate of IQ) ("RQ"), has expressed the intent to subscribe for up to approximately $10 million in aggregate amount of Units on the same terms as the private placement with la Caisse, subject to RQ obtaining all necessary consent and approvals, including formal ministerial approval, which is expected no earlier than mid-November 2018. As a result of la Caisse's subscription, la Caisse became an insider of the Corporation a nd now holds 11.4% of Stornoway's issued and outstanding common shares. Assuming completion of RQ's subscription on the above terms, IQ and la Caisse (together with their respective affiliates) would hold approximately 25.8% and 11.0%, respectively, of Stornoway's issued and outstanding common shares.

Board Representation

Pursuant to the Financing Package announced today, Stornoway has granted the right to nominate one member of the Stornoway Board of Directors to la Caisse, based on its exclusive shareholding in Stornoway remaining above 5%, and a further right to the Buyers to nominate an additional member to the Board, based on their collective shareholding in Stornoway remaining above 5%.

ABOUT THE RENARD DIAMOND MINE

The Renard Diamond Mine is Quebec's first producing diamond mine and Canada's sixth. It 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 Quebec. Construction on the project commenced on July 10, 2014, and commercial production was declared on January 1, 2017. Average annual diamond production is forecast at 1.8 million carats per annum over the first 10 years of mining. Readers are referred to the technical report dated January 11, 2016, in respect of the September 2015 Mineral Resource estimate, and the technical report dated March 30, 2016, in respect of the March 2016 Updated Mine Plan and Mineral Reserve Estimate for further details and assumptions relating to the project.

ABOUT STORNOWAY DIAMOND CORPORATION

Stornoway is a leading Canadian diamond exploration and production company listed on the Toronto Stock Exchange under the symbol SWY and headquartered in Montreal. A growth oriented company, Stornoway owns a 100% interest in the world-class Renard Mine, Quebec's first diamond mine.

On behalf of the Board

STORNOWAY DIAMOND CORPORATION

/s/ "Matt Manson"

Matt Manson

President and Chief Executive Officer

For more information, please contact Matt Manson (President and CEO) at 416-304-1026 x2101
or Orin Baranowsky (CFO) at 416-304-1026 x2103 or Alexandre Burelle (Manager, Investor Relations and Business Development) at 450-616-5555 x2264
or toll free at 1-877-331-2232
Pour plus d'information, veuillez contacter Alexandre Burelle (Directeur, Relations avec les investisseurs et developpement des affaires) au 450-616-5555 x2264, aburelle@stornowaydiamonds.com
** Website: www.stornowaydiamonds.com Email: info@stornowaydiamonds.com **

FORWARD-LOOKING STATEMENTS

This document contains forward-looking information (as defined in National Instrument 51â?'102 - Continuous Disclosure Obligations) and forward-looking statements within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as "forward-looking information" or "forward-looking statements"). These forward-looking statements are made as of the date of this document and, the Corporation does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by law.

These forward-looking statements relate to future events or future performance and include, among others, statements with respect to Stornoway's objectives for the ensuing year, our medium and long-term goals, and strategies to achieve those objectives and goals, as well as statements with respect to our management's beliefs, plans, objectives, expectations, estimates, intentions and future outlook and anticipated events or results. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward-looking statements reflect current expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i) the amount of Mineral Reserves, Mineral Resources and exploration targets; (ii) the estimated amount of future production over any period; (iii) net present value and internal rates of return of the mining operation; (iv) expectations and targets relating to recovered grade, size distribution and quality of diamonds, average ore recovery, carats recovered, carats sold, internal dilution, mining dilution and other mining parameters set out in the 2016 Technical Report as well as levels of diamond breakage; (v) expectations, targets and forecasts relating to gross revenues, operating cash flows and other revenue metrics set out in the 2016 Technical Report, growth in diamond sales, cost of goods sold, cash cost of production, gross margins estimates, planned and projected diamond sales, mix of diamonds sold, and capital e xpenditures, liquidity and working capital requirements; (vi) mine and resource expansion potential, expected mine life, and estimated incremental ore recovery, revenue and other mining parameters from potential additional mine life extension; (vii) expected time frames for completion of permitting and regulatory approvals related to ongoing construction activities at the Renard Diamond Mine; (viii) the expected time frames for the completion of the open pit and underground mine at the Renard Diamond Mine; (ix) the expected financial obligations or costs incurred by Stornoway in connection with the ongoing development of the Renard Diamond Mine; (x) mining, development, production, processing and exploration rates, progress and plans, as compared to schedule and budget, and planned optimization, expansion opportunities, timing thereof and anticipated benefits therefrom; (xi) future exploration plans and potential upside from targets identified for further exploration; (xii) expectat ions concerning outlook and trends in the diamond industry, rough diamond production, rough diamond market demand and supply, and future market prices for rough diamonds and the potential impact of the foregoing on various Renard financial metrics and diamond production; (xiii) the economic benefits of using liquefied natural gas rather than diesel for power generation; (xiv) requirements for and sources of, and access to, financing and uses of funds; (xv) the ability to meet Subject Diamonds Interest delivery obligations under the Purchase and Sale Agreement; (xvi) the foreign exchange rate between the US dollar and the Canadian dollar; and (xvii) the anticipated benefits from recently approved plant modification measures and the anticipated timeframe and expected capital cost thereof; (xviii) the use of proceeds from the Financing Package; and (xix) the expectations regarding the timing and likelihood of approval for the moratorium from one of its lenders and the private placement of Units by RQ. 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", "schedule" 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 prospects and strategies and the environment in which Stornoway will operate in the future, including the recovered grade, size distribution and quality of diamonds, average ore recovery, internal dilution, and levels of diamond breakage, the price of diamonds, anticipated costs and Stornoway's ability to achieve its goals, anticipated financial performance, regulatory developments, development plans, exploration, development and mining activities and commitments, access to financing, and the foreign exchange rate between the US and Canadian dol lars. Although management considers its assumptions on such matters to be reasonable based on information currently available to it, they may prove to be incorrect. Certain important assumptions by Stornoway or its consultants in making forward-looking statements include, but are not limited to: (i) the accuracy of our estimates regarding capital and estimated workforce requirements; (ii) estimates of net present value and internal rates of return; (iii) recovered grade, size distribution and quality of diamonds, average ore recovery, carats recovered, carats sold, internal dilution, mining dilution and other mining parameters set out in the 2016 Technical Report as well as levels of diamond breakage; (iv) the expected mix of diamonds sold, and successful mitigation of ongoing issues of diamond breakage in the Renard Diamond Mine process plant and realization of the anticipated benefits from plant modification measures within the anticipated timeframe and expected capital cost; (v) the stabilization of the Indian currency market and full recovery of prices; (vi) receipt of regulatory approvals on acceptable terms within commonly experienced time frames and absence of adverse regulatory developments; (vii) anticipated timelines for the development of an open pit and underground mine at the Renard Diamond Mine;â?? (viii) anticipated geological formations; (ix) continued market acceptance of the Renard diamond production, conservative forecasting of future market prices for rough diamonds and impact of the foregoing on various Renard financial metrics and diamond production; (x) the timeline, progress and costs of future exploration, development, production and mining activities, plans, commitments and objectives; (xi) the availability of existing credit facilities and any required future financing on favourable terms and the satisfaction of all covenants and conditions precedent relating to future funding commitments; (xii) the ability to meet Subject Diamonds Interest delivery obligations under the Purchase and Sale Agreement; (xiii) Stornoway's interpretation of the geological drill data collected and its potential impact on stated Mineral Resources and mine life; (xiv) the continued strength of the US dollar against the Canadian dollar and absence of significant variability in interest rates; (xv) improvement of long-term diamond industry fundamentals and absence of material deterioration in general business and economic conditions; and absence of significant variability in interest rates; (xvi) increasing carat recoveries with progressively increasing grade in LOM plan; (xvii) estimated incremental ore recovery, revenue and other mining parameters from potential additional mine life extension with minimal capital expenditures; (xviii) availability of skilled employees and maintenance of key relationships with financing partners, local communities and other stakeholders; (xix) long-term positive demand trends and rough diamond demand m eaningfully exceeding supply; (xx) high depletion rates from existing diamond mines; (xxi) global rough diamond production remaining stable; (xxii) modest capital requirements post-2018 with significant resource expansion available at marginal cost; (xxiii) substantial resource upside within scope of mine plan; (xxiv) opportunities for high grade ore acceleration and processing expansion and realization of anticipated benefits therefrom; (xxv) significant potential upside from targets identified for further exploration; (xxvi) limited cash income taxes payable over the medium term; and (xxvii) the anticipated timelines for approval for the moratorium from one of its lenders and the private placement of Units