July 10, 2007
STORNOWAY ENTERS INTO AGREEMENT WITH BAYSWATER TO EXPLORE
DIAMOND TARGETS AT ITZA LAKE PROPERTY, NU
Stornoway Diamond Corporation (TSX: SWY)
is pleased to announce the Company has entered into an agreement with Bayswater Uranium Corporation (TSX-V:
BAY) to explore Bayswater's 430,738 hectare (1,064,353 acres) Itza Lake property for diamonds. Located 80 kilometres northwest of the hamlet of Baker Lake, Nunavut, marginal to the North Thelon Basin, Itza Lake's diamond potential was recognized late last year through an airborne geophysical survey that identified a number of circular, magnetic features, similar to those associated with kimberlite pipes, the primary host rock for diamonds. As the survey covered only about 20% of the current property, which was expanded in early 2007, there is strong potential to locate further kimberlite targets.
Under the terms of the Letter Agreement, Stornoway can earn a 60% interest in the diamond rights at Itza Lake by issuing $75,000 worth of Stornoway shares to Bayswater and incurring $4,000,000 in exploration expenditures over five years - a minimum of $500,000 must be spent before September 1, 2008. Furthermore, Bayswater will receive 25,000 shares of Stornoway or $40,000 in cash, at Stornoway's election, for each geographically distinct, in-situ kimberlite body, up to a maximum of ten bodies, identified on the property. Bayswater will receive a further 50,000 shares or $200,000 in cash, at Stornoway's election, for each kimberlite which returns greater than 75 carats per hundred tonnes (based on diamonds recovered on a 0.85 mm square mesh sieve) from a minimum one tonne sample.
Upon Stornoway earning its 60% interest, Bayswater has thirty days to elect to form a joint venture whereby Stornoway will contribute 60% and Bayswater shall contribute 40%, of all future expenditures on the property. Provided Stornoway earns a 60% interest and Bayswater elects not to form a joint venture within thirty days, Stornoway has a further thirty days to elect to proceed to earn a further 20% interest in the diamond rights to the Itza property (bringing its total property interest to 80%) by funding all work towards the completion of a bankable feasibility study on the property. Provided Stornoway earns an 80% interest in the diamond rights to Itza, the partners shall enter into a joint venture whereby each partner will contribute its pro-rata share of all future expenditures on the property.
Eira Thomas, CEO of Stornoway comments, "We're delighted to have the opportunity to explore for diamonds at Itza Lake. The initial anomalies identified by Bayswater's first survey are attractive targets; since only a portion of the property has been covered, there is excellent opportunity to find additional targets through more extensive detailed airborne surveys."
George Leary, President of Bayswater states, "As a well financed diamond explorer with extensive experience in the Arctic, Stornoway makes an ideal partner to explore and develop the diamond potential of the Itza Lake properties."
The Itza Lake property is comprised of a contiguous land package consisting of 1,024,353 acres owned 100% by Bayswater and a 40,000 acre permit area held under the Canada Uranium Joint Venture with Strongbow Exploration Inc. (TSX-V:
SBW). The land package is located close to diamond company De Beers' land holdings in the region.
A property map showing the magnetic clusters can be viewed at
Stornoway Diamond Corporation
Stornoway Diamond Corporation is one of Canada's leading diamond exploration and development companies, involved in the discovery of over 150 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.
On behalf of the Board
STORNOWAY DIAMOND CORPORATION
/s/ "Eira Thomas"
Chief Executive Officer
This news release may contain forward looking statements, being statements which are not historical facts, including, without limitation, statements regarding potential mineralization, exploration results, resource or reserve estimates, anticipated production or results, sales, revenues, costs, "best-efforts" financings or discussions of future plans and objectives. There can be no assurance that such statements will prove accurate. Such statements are necessarily based upon a number of estimates and assumptions that are subject to numerous risks and uncertainties that could cause actual results and future events to differ materially from those anticipated or projected. Important factors that could cause actual results to differ materially from the Company's expectations are in Company documents filed from time to time with the Toronto Stock Exchange and provincial securities regulators, most of which are available at www.sedar.com. The Company disclaims any intention or obligation to revise or update such statements.