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RobertJames   Monday, 10/21/13 09:33:03 AM
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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 Québec.

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-Québec 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 Québec, 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 Montréal. 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 Impact1

January 2013
Optimization Study,
Diesel January 2013
Optimization with
LNG Power Option
Operating Cost Parameters2 Unit Power Cost (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 $1,263 (-7%)
Capital Cost Parameters2 Initial Capital Cost (C$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 Consumption Annual Diesel 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

•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.
•The January 2013 Optimization Study costs, under either the diesel or LNG power options, are expressed in October 2012 terms.
•Excludes capitalized preproduction costs.
•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 Québec. 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 47.8million 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 Québec’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
/s/ “Matt Manson”
Matt Manson
President and Chief Executive Officer

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