LONGUEUIL, QUEBEC--(Marketwired - Sep 15, 2014) - Stornoway Diamond Corporation (SWY.TO) (the "Corporation" or "Stornoway") announced today its first quarter results for the three months ended July 31, 2014 (Fiscal Year 2015).

First Quarter 2015 Highlights

• Completed a precedent setting $946 million¹ project financing transaction to fully fund the development of the Renard Diamond Project;

• Initiated project construction with a focus on site civil works, equipment procurement and camp construction. No major variances forecast to date against plan schedule or budget;

• Entered into an Engineering, Procurement and Construction Management contract with SNC Lavalin inc., including sub-contracted services to be provided by AMEC Americas Ltd. and DRA Americas Inc.;

• Confirmed the Renard 2 kimberlite extends to a vertical depth of at least 970 meters in an ongoing resource expansion drill program, 370 meters below the base of the current Mineral Reserve;

• Cash and cash equivalents of $438.3 million² as of July 31^st, 2014, with a loss for the quarter of $11.5 million, or $0.04 per share.

Matt Manson, President and CEO of Stornoway stated "Stornoway's first quarter of fiscal 2015 has been the most impactful in the Corporation's history. We successfully closed the largest single project financing transaction for a publically listed Diamond company comprised of debt, equity and stream, which is expected to fully fund the project to completion. With all major permitting authorizations, access infrastructure and funding in place, construction of the project has commenced expeditiously with mobilization proceeding on plan. At the same time, our drilling program is supporting our optimism on the resource potential of the Renard 2 kimberlite at depth. Stornoway's first quarter 2015 financial results reflect the transformative nature of our financing arrangements on the capital structure and resources of the Corporation. Successive quarters will reflect the expenditure of our funded and committed cash resources on the project's capital costs until commercial production is achieved, anticipated to occur during the second quarter of calendar 2017."

Financial Summary

Following the completion of the financing transaction in July, the Corporation ended the quarter with a strong balance sheet, including $438.3 million in cash and cash equivalents, after the deduction of financing, operating and capital costs. Mine development capital expenditures for the Renard Project were $24.3 million against a total project capital cost estimate of $811 million (including contingencies and capital escalation allowances). The $11.5 million net loss for the period ($0.04 per share) relates mainly to finance costs, a foreign exchange gain, the recognition of changes in the estimated fair value of embedded derivatives associated with the Corporation's financing as well as transaction fees attributed to these derivatives.

The Corporation's unaudited condensed interim consolidated Financial Statements are prepared in Canadian dollars in accordance with International Financial Reporting Standards. Unaudited condensed interim consolidated financial statements for the three months ended July 31, 2014 and Management's Discussion and Analysis have been posted on the Corporation's website www.stornowaydiamonds.com and on SEDAR at www.sedar.com.

Funding Completed for the Renard Diamond Project

On April 9^th 2014, Stornoway announced a comprehensive funding package (the "Financing Transaction") with Orion Mine Finance, Diaquem Inc. and Ressources Québec (wholly-owned subsidiaries of Investissement Québec), and the Caisse de dépôt et placement du Québec intended to fund the construction of the Renard Diamond Project to completion. Shareholder approval was received on June 26^th and the Financing Transaction closed on July 8^th. In total $946 million¹ has been funded, or committed for funding, through a combination of senior and subordinated debt facilities, equity issuances, an equipment financing facility with Caterpillar Financial, and the forward sale of diamonds.

The Financing Transaction included $458 million³ in funds made available to the Corporation immediately upon the July 8^th closing, comprising:

• $242 million in gross proceeds from the private placement of 171.3 million subscription receipts at a price of $0.70 per subscription receipt;
• $132 million from a public offering of 188.6 million subscription receipts at the same price; and
• US$81.3 million⁴ from the private placement of unsecured convertible debentures with a 6.25% coupon and a 7 year term.

In addition, the Financing Transaction included $482 million¹ in committed funding scheduled to be made available during the course of construction, comprising:

• A US$250 million forward sale of diamonds by way of the first ever Diamond streaming agreement;
• A $100 million Tranche "A" senior secured loan;
• A $48 million cost overrun credit facility in the form of a $20 million Tranche "B" senior secured loan and a $28 million unsecured non-convertible loan; and
• A US$35 million equipment financing facility.

Construction Highlights

A formal decision by the Corporation's Board of Directors to proceed to project construction was announced on July 10^th at a ground breaking ceremony held in the presence of Philippe Couillard, Premier of Québec. Since then, construction mobilization has proceeded rapidly with no major variances forecast to date against the planned schedule or budget. Site activities have focussed on the construction of dry pads at the principal surface facilities such as the permanent accommodation complex, process plant, power plant, machine shops and lay downs. A large borrow pit for construction aggregate has been established within the planned Renard 65 open pit area. Work has commenced on the surface water management ditches, the potable water intake system and waste water treatment facilities, with temporary mine water treatment facilities commissioned and operational. Final gravel top coats have been completed on the Renard Mine Road and the airport, which is now receiving large aircraft.

Temporary construction camps have been established with 250 beds, comprising 110 beds at site and 140 beds at two nearby road construction camps. Onsite manpower averaged 150 persons in August and is forecast to average 235 persons in September. Full completion of a 325 bed permanent accommodation complex and mine office is expected by the end of March 2015 ahead of major facilities construction beginning in April 2015. First ore is expected to be delivered to the plant in the second calendar half of 2016, in support of commercial production by the second calendar quarter of 2017.

Purchase orders or letters of intent have been issued for certain time-sensitive long lead items including the High Pressure Grinding Rolls ("HPGR"), jaw and cone crushers, high capacity thickeners, Diamond recovery equipment, LNG generators and for certain underground and surface mining vehicles. Given the current environment for mine construction, Stornoway does not currently anticipate delays in the receipt of project critical equipment.

Site construction is proceeding under a contract for Engineering, Procurement and Construction Management ("EPCM") with SNC-Lavalin Inc., previously announced on July 21^st 2014. SNC-Lavalin is providing EPCM services for on-site utilities such as the liquid natural gas power plant, the processing plant building, service buildings, water treatment facilities, and on-site infrastructure. The agreement with SNC-Lavalin incorporates sub-contracted services by AMEC Americas Ltd. (AMEC) and DRA Americas Inc. (DRA) who are providing certain specialized engineering and field support services relating to the project's Diamond processing plant and Diamond recovery circuits.

On August 29^th 2014 the Corporation arranged for a surety bond of up to $15.2 million to provide a financial guarantee related to closure obligations at the Renard Diamond Project. Fifty percent of the estimated $15.2 million financial guarantee was provided to the Quebec Ministre de l'Énergie et des Ressources naturelles for site rehabilitation and closure costs in fulfilment of the Corporation's regulatory obligations and in compliance with the terms of the project's Mining Lease, issued in October 2012. The Corporation will be required to increase the financial guarantee by 25% in August 2015 and a further 25% in August 2016.

Resource Drilling Highlights

On April 15^th 2014 the Corporation announced the commencement of a resource expansion drill program focussed on the conversion of Inferred Mineral Resources at the Renard 2 kimberlite between 600 and 700 meters depth, and exploration below 700 meters with deep directional drilling. Currently, three rigs are drilling at site and to date over 8,000 meters of drilling has been completed. On August 25^th 2014 the Corporation announced that multiple intersections of each of the characteristic phases of diatreme intrusion at Renard 2, as well as the pipe's marginal country rock breccias, have been confirmed between 600 meters and a minimum 970 meters below surface, indicating that the kimberlite is maintaining its emplacement style and substantial tonnage potential over this full vertical depth. Drilling at site is expected to continue into October, to be followed by Diamond recovery by caustic dissolution and mini-bulk sampling by dense media separation (DMS) at Microlithics Laboratories in Thunder Bay, Ontario. The resulting geological and Diamond content data will be used to update the Renard 2 geological and grade distribution model in support of an updated Mineral Resource statement scheduled for completion during Q2 2015.

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. On July 8^th 2014 Stornoway announced the completion of a $946 million project financing transaction to fully fund the project to production, and construction commenced on July 10^th, 2014. First ore is scheduled to be delivered to the plant in the second half of 2016 with commercial production scheduled for the 2^nd quarter of 2017.

In January 2013, Stornoway released the results of an Optimized Feasibility Study at Renard 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 in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("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 16.85 million carats classified as Inferred Mineral Resources, and 25.7 to 47.8 million carats classified as non-resource exploration upside. Average annual Diamond production is forecast at 1.6 mcarats/year over the first 11 years of mining, at an average valuation of US$190/carat based on a March 2014 assessment by WWW International Diamond Consultants Ltd.

Readers are cautioned that the potential quality and grade of any target for further exploration is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the target being delineated as a Mineral Resource. All kimberlites remain open at depth. Readers are referred to the technical report dated February 28th, 2013 in respect of the January 2013 Optimization Study, and the press release dated July 23, 2013 in respect of the July 2013 Mineral Resource estimate, for further details and assumptions relating to the project. Disclosure of a scientific or technical nature in this press release was prepared under the supervision of Robin Hopkins, P.Geol. (NT/NU), Vice President, Exploration, a "qualified person" under NI 43-101.

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.

This press release contains "forward-looking information" within the meaning of Canadian securities legislation. This information and these statements, referred to herein as "forward-looking statements", are made as of the date of this press release and the Corporation 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 completion 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; (xi) the economic benefits of using liquefied natural gas rather than diesel for power generation; (xii) sources of and anticipated financing requirements; (xiii) the completion, effectiveness or availability, as the case may require, of the other elements of the Financing Transactions and the use of proceeds therefrom; and (xiv) the impact of the Financing Transactions on the Corporation's operations, infrastructure, opportunities, financial condition, access to capital and overall strategy.. 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 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. 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 in making 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 completion of the Route 167 extension and the impact on the development schedule at Renard; (vii) market prices for rough diamonds and the potential impact on the Renard Diamond Project; (viii) Stornoway's ability to consummate the financing transactions set forth in the Agreement to enable it finance the development and construction of the Renard Diamond Project; and (ix) future exploration plans and objectives. Additional risks are described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A, the amended and restated preliminary short form prospectus filed for the marketed public offering and other disclosure documents available under the Corporation'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 uncertainty as to whether further exploration of exploration targets will result in the targets being delineated as mineral resources; (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) uncertainty of 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; (xii) changes in project parameters as plans continue to be refined; (xiii) risks relating to the 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) execution risk relating to the completion of the Route 167 extension; (xvii) failure to receive regulatory approvals (including stock exchange), shareholder approval or other approvals or otherwise satisfy the conditions to the completion, effectiveness or availability, as the case may require, of each of the elements of the Agreement; (xviii) failure to complete the various elements of the Agreement on acceptable terms or at all; (xix) changes in the terms of the various elements of the Agreement; (xx) the funds of some of the elements of the Agreement not being available to the Corporation; (xxi) future sales or issuances of Common Shares lowering the Common Share price and diluting the interest of existing shareholders; (xxii) Stornoway being unable to meet its Diamond delivery obligations under the Streaming Agreement, and (xxiii) the additional risks described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A and the amended and restated preliminary short form prospectus filed for the marketed public offering, 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, and new, unforeseeable risks may arise from time to time.