Stornoway to Proceed With Liquefied Natural Gas (LNG) Power Plant for Renard Diamond Project

Stornoway Diamond Corporation (TSX:SWY) is pleased to announce the results of a
recent feasibility study on the viability of a Liquefied Natural Gas ("LNG")
fuelled power plant for the Renard Diamond Project. The study was authored by
SNC-Lavalin Inc. and AMEC America Ltd. under the Renard Project EPCM joint
venture, and demonstrates substantial benefits to the project in terms of annual
operating cost and environmental emissions compared to the currently planned
diesel gen-set option. Highlights of the study are as follows:




--  Annual operating cost reductions of between $8 million and $10 million
    over the initial 11 year mine life, representing a life of mine
    operating cost saving of $89 million, or 6.6%. 
    
--  Incremental capital cost of only $2.6 million over the cost of diesel
    gen-sets, representing a net payback of 4 months. 
    
--  An estimated reduction in greenhouse gas emissions of 43%, with
    significant reductions in NO2 and SO2. 
    
--  Stable LNG local supply market based on existing commercial distribution
    network within Quebec. 



Matt Manson, President and CEO, commented: "Since the release of the Renard
Diamond Project Feasibility Study in November 2011 and the subsequent
Optimization Study in January 2013, we have been investigating more efficient
alternatives for power supply at the project compared to the traditional diesel
option contained within the current execution plan. A July 2012 Hydro-Quebec
feasibility study into a powerline for the project demonstrated only a marginal
economic benefit of using grid power owing to the high cost for powerline
construction. The LNG option now provides us with a much more attractive way
forward, with off-the-shelf technology, a positive long-term supply outlook, a
much smaller environmental footprint and immediate economic benefits for the
project through substantially reduced operating costs. This option is made
possible to us because, with an all-season road, we are able to receive regular
shipments of liquefied gas from the existing commercial distribution network in
Quebec, without the need for expensive high-capacity on-site storage facilities.
The LNG study has been completed in time to have it incorporated into the final
project execution plan prior to the planned commencement of project construction
in 2014." 


The Renard LNG power plant will comprise seven 2.1MW rated gas gen-sets,
providing sufficient power generation capacity for the project's normal
operating specification of 9.5MW, which represents five gen-sets operating at a
planned 92% efficiency. Onsite gas storage will be sufficient for 10 days
operation, with new supplies delivered daily by cryogenic tanker truck from the
existing Gaz Metro Liquefaction plant and distribution center in Montreal. In
addition to power generation, the LNG will be used for heating of buildings and
the underground mine, removing the requirement for onsite propane. A smaller
quantity of diesel will continue to be used at site for construction activities
and mobile mining equipment. 


Based on the operating parameters contained within the January 2013 Renard
Optimization Study, the incremental benefits of the LNG option over the existing
diesel gen-set plan are as follows:


Table 1: LNG Feasibility Study Results and Project Impact(1)



                                            January 2013        January 2013
                                            Optimization   Optimization with
                                           Study, Diesel    LNG Power Option
----------------------------------------------------------------------------
Operating Cost             Unit Power Cost                                  
 Parameters(2)                    (C$/kWh)        $0.299  $0.188      (-37%)
                    --------------------------------------------------------
                       Unit Operating Cost                                  
                             (C$/tonne)(3)        $57.63  $53.84       (-7%)
                    --------------------------------------------------------
                    Life of Mine Operating                                  
                             Cost (C$M)(3)        $1,352  $1,263       (-7%)
----------------------------------------------------------------------------
Capital Cost          Initial Capital Cost                                  
 Parameters(2)                       (C$M)        $752.1  $754.0     (+0.3%)
                    --------------------------------------------------------
                      Escalation Allowance                                  
                        on Initial Capital                                  
                                     (C$M)         $45.1   $45.8     (+1.6%)
                    --------------------------------------------------------
                      Life of Mine Capital                                  
                             Cost (C$M)(4)        $1,013  $1,010     (-0.3%)
----------------------------------------------------------------------------
Commodity                    Annual Diesel                                  
 Consumption          Consumption (million                                  
                                   liters)          27.5     5.9      (-79%)
                    --------------------------------------------------------
                    Annual LNG Consumption                                  
                                (m3/annum)           n/a  41,700            
                    --------------------------------------------------------
                            Annual Propane                                  
                    Consumption (m3/annum)         3,500     n/a            
----------------------------------------------------------------------------
Notes                                                                       
                                                                            
1. Based on the 11 year reserve-based mine life (17.9 mcarats) contained    
   within the January 2013 Optimization Study, with a normal operating load 
   of 9.49MW and an oil price assumption of US$95/barrel.                   
2. The January 2013 Optimization Study costs, under either the diesel or LNG
   power options, are expressed in October 2012 terms.                      
3. Excludes capitalized preproduction costs.                                
4. Includes all initial capital, escalation on initial capital, sustaining  
   and deferred capital and contingencies.                                  



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 Quebec. 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.
Total Indicated Mineral Resources, inclusive of the Mineral Reserve, stand at
27.1 million carats, with a further 16.9 million carats classified as Inferred
Mineral Resources, and 25.7 to 47.8 million carats classified as non-resource
exploration upside. All kimberlites remain open at depth. 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 Quebec'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 

STORNOWAY DIAMOND CORPORATION 

Matt Manson, President and Chief Executive Officer

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 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)
required capital investment and estimated workforce requirements; (ii) estimates
of net present value and internal rates of return; (iii) receipt of regulatory
approvals on acceptable terms within commonly experienced time frames; (iv) the
assumption that a production decision will be made, and that decision will be
positive; (v) anticipated timelines for the commencement of mine production;
(vi) 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; (vii) anticipated timelines for community
consultations and the impact of those consultations on the regulatory approval
process; (viii) market prices for rough diamonds and the potential impact on the
Renard Project's value; and (ix) future exploration plans and objectives.
Additional risks are described in Stornoway's most recently filed Annual
Information Form, annual and interim MD&As, and other disclosure documents
available under the Company's profile at: www.sedar.com. 


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.


FOR FURTHER INFORMATION PLEASE CONTACT: 
Matt Manson
President and CEO
416-304-1026 x101


Orin Baranowsky
Director, Investor Relations
416-304-1026 x103
Toll free at 1-877-331-2232
[e-mail]
www.stornowaydiamonds.com


M. Ghislain Poirier
Vice-president Affaires publiques de Stornoway
418-254-6550
[e-mail]