January 15, 2009

Stornoway Reports 144 Cpht In Large Tonnage Hibou Dyke Sampling

Stornoway Diamond Corporation (TSX-SWY) is pleased to provide Diamond recovery results on a 544 tonne trench sample extracted from the Hibou Dyke, located at the Foxtrot Property in North Central Qu?bec.  The Foxtrot Property, which includes the Renard kimberlite pipes and the Lynx-Hibou system of kimberlite dykes, is a 50:50 joint venture with SOQUEM INC. (?SOQUEM?).  The new result represents the highest Diamond content yet observed at Hibou.  In total, 781.41 carats of diamonds were recovered from 543.86 tonnes (dry weight) of kimberlite, representing an overall Diamond recovery of 144 carats per hundred tonnes (cpht) for stones retained on a +1 DTC screen.

Stornoway recently reported a positive Preliminary Assessment at Foxtrot based on the potential mining of 7.5 million tonnes of mineral resources containing 5.9 million carats within three Renard kimberlite pipes (Stornoway press release dated December 15, 2008 ).  The Hibou dyke represents an additional 1.6 million tonnes of potential mineral deposit located close to surface and adjacent to the Renard pipes, and has the potential to provide additional mineral resources to the Renard conceptual mine plan.  The current large tonnage sampling was undertaken to establish a more authoritative Diamond grade and valuation for Hibou in support of its potential elevation to a mineral resource category compliant with National Instrument (?NI?) 43-101.

The new Hibou sample represents in-situ kimberlite collected during 2008 from a single trench excavated at the southern margin of the dyke, and in a location previously used for smaller scale trench sampling in 2006.  The largest intact Diamond recovered was a 3.14 carat brown rounded octahedron, although extensive Diamond breakage is evident in the sample and at least one stone in the 4-5 carat range is implied from smaller, freshly broken fragments.  The sample was contaminated with an estimated 3-7% of non-Diamond bearing silt that had permeated through surface fractures, suggesting a potential non-diluted Diamond content in the range of 148 to 154 cpht . Complete Diamond recovery data, following Dense Media Separation (?DMS?) processing and utilizing both x-ray sorter and grease table recovery circuits, are as follows:

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/size of the samples and processing parameters.
² The sample was contaminated with an estimated 3-7% of non-Diamond bearing silt that had permeated through surface fractures, suggesting a potential non-diluted Diamond content in the range of 148 to 154 cpht.
³ Carats per hundred tonnes

President and CEO Matt Manson stated, ?This new trench sample forms part of an ongoing program of work to realize the potential of between 9 and 21 million carats of diamonds at Renard currently classified as potential mineral deposit and outside the scope of the Renard conceptual mine plan.  The results at Hibou, the first component of this program, are consistent with our expectations and expand the resource potential at Renard considerably.  As previously reported, a 2009 program of targeted drilling and sampling aimed at realizing additional upside material in multiple ore bodies has been developed and is currently being considered for approval by the joint venture.?

The Hibou dyke was discovered in 2005 and lies approximately 1.3 km northwest of Renard kimberlite pipes 2, 3, 4 and 9, and 900m east of the Lynx dyke system (see location map ).  Previous delineation drilling suggests the dyke has a strike extent of at least 850m with a shallow dip of approximately 10 degrees.  It is open down dip and along strike to the northwest.  Prior to the current large tonnage sampling results being available, Hibou was estimated to contain 1.6 million tonnes of potential mineral deposit to a 100m vertical depth, with a Diamond content of between 106 and 120 cpht calculated at a +3 DTC sieve size cut-off (see press release dated October 28, 2008 ).  The potential quantity and grade of any potential mineral deposit is conceptual in nature, and additional exploration is required to define such material as a mineral resource.  It is uncertain if further exploration will result in the target being delineated as a mineral resource.  The current positive sampling result represents an important component of this additional exploration for Hibou, which will likely now also include additional drilling and smaller scale sampling to test for grade and geological continuity. 

Starting in 2005, Stornoway and its predecessor company, along with it JV partner SOQUEM, collected a series of samples of varying sizes from surface boulders, trenches and drill core at Hibou, and performed Diamond recovery by both caustic dissolution and DMS.  Observed Diamond content from DMS samples varied between 9 cpht and 126 cpht for multi-tonne samples of varying size, and now appears related to kimberlite geology.  Samples with low Diamond content are derived from a fine grained macrocrystic kimberlite occurring, intermittently, at the basal contact of the dyke.  The main body of the dyke comprises a coarser macrocrystic texture similar in nature to the Lynx dyke system, and returns a higher Diamond content.  Coarser grained kimberlite is the dominant kimberlite lithology at Hibou, comprising approximately 87% of all Hibou drill intersections to date.  The new 544 tonne trench sample comprised coarse grained material and has returned a higher Diamond content.

Complete DMS Diamond recovery results now from the Hibou dyke are as follows:

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 Interpreted to be one of two broken Diamond pieces totalling 1.11 carats in weight

In a Diamond valuation exercise undertaken in March 2008, WWW Diamond Consultants International Ltd. (?WWW?) determined an ?observed? (un-modeled) price of US$42 per carat for the Hibou dyke based on a very small sample of 40 carats (Stornoway press release dated April 28, 2008 ).  Owing to the size of the parcel, no Diamond price modeling exercise was possible.  However, WWW at the time recommended that, for planning purposes, a Diamond price of US$66 per carat be adopted for Hibou, conditional upon the collection of a bulk sample that demonstrated an incidence of large diamonds similar to that seen at the nearby Lynx dyke.  WWW?s Diamond valuation estimate for a 520 carat Lynx Diamond sample comprised an average ?observed? (un-modeled) price from three separate valuators of US$53 per carat, and a modeled Diamond price estimate of US$66 (with sensitivities of US$97 per carat and US$56 per carat).  Stornoway will conduct a Diamond valuation exercise on the new 781 carat Hibou Diamond sample once the world rough Diamond market, which is currently experiencing internal financial volatility, has stabilized such that valuation data usable for long term mine planning can be obtained. 

Scientific and Technical Data

Diamond results reported in this release are based on sample processing between October 2008 and November 2008 utilizing a 10 tph DMS plant owned by Stornoway and SOQUEM in joint venture, and operated by Stornoway at the Renard project site in Qu?bec.  Recovery of diamonds from concentrate was carried out at Stornoway?s wholly owned Diamond laboratory in North Vancouver between November 2008 and January 2009.  Quality assurance protocols and actual operating procedures for the processing, transport and recovery of diamonds under the Renard Project sampling programs, including arms-length security provisions, conform to industry standard Chain of Custody provisions. 

The 544 tonne Hibou trench sample processed at Stornoway and SOQUEM?s 10 tph DMS plant in Qu?bec was first prepared through a primary jaw crusher.  To facilitate production of a heavy mineral concentrate, -20 mm material was fed directly into the DMS and +20 mm material was reduced through a secondary cone crusher set at 11 mm.  Within the DMS, +6mm coarse reject ?floats? were re-crushed and re-circulated.  During the processing of the current sample a 1.0 mm by 12.0 mm slotted screen was employed within the DMS.  The use of this screen can be expected to produce a minimum stone size greater than that retained on a +1 DTC screen which is approximately equivalent to a 0.85 mm square mesh screen.  However, the bottom cut-off screen sizes used on the DMS will result in under-recovery of smaller diamonds and will not allow a direct comparison with previously reported Diamond contents.

Resultant DMS concentrates from the 10 tph plant were then processed twice through x-ray sorter equipment to generate a final concentrate which was hand sorted to extract diamonds.  A grease table finish was used to recover diamonds from all x-ray sorter rejects.  As part of Stornoway?s ongoing QA/QC program, DMS tails, concentrate residues and other materials are also subject to audit.  Any significant changes to the recovered Diamond grades provided above will be reported when available.  The Renard Diamond Project is managed by Dave Skelton, P.Geol., Vice President, Project Development.  Stornoway?s Diamond exploration programs are conducted under the direction of Robin Hopkins P.Geol, Vice President, Exploration, a Qualified Person under NI 43-101.

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 six 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.

SOQUEM INC. 

SOQUEM is a wholly-owned subsidiary of Soci?t? g?n?rale de financement du Qu?bec (?SGF?).  The SGF, the Qu?bec industrial and financial holding company, has as its mission to undertake economic development projects in the industrial sector in cooperation with partners and in compliance with the economic development policies of the Government of Qu?bec. 

On behalf of the Board
STORNOWAY Diamond CORPORATION
/s/ ?Matt Manson?
Matt Manson
President and Chief Executive Officer