July 31, 2008

STORNOWAY CLOSES $22 MILLION PRIVATE PLACEMENT AND REDEEMS CONVERTIBLE DEBENTURES

Stornoway Diamond Corporation (TSX-SWY) is pleased to announced that it has closed a $22 million private placement (the "Private Placement") comprising 24,444,444 common shares at a price of $0.90 per common share split equally between Agnico-Eagle Mines Limited ("Agnico-Eagle") and Lorito Holdings Limited ("Lorito"), as previously announced on July 16, 2008. Agnico-Eagle and Lorito held, equally between them, convertible debentures in the aggregate principal amount of $20 million, which were due in March 2009.  Agnico-Eagle and Lorito agreed to amend the debentures to permit Stornoway to redeem them prior to the maturity date in consideration for an additional $2 million payment to be split equally between Agnico-Eagle and Lorito. 

The proceeds of the Private Placement were required to redeem the $10 million principal amount of convertible debentures held by each of Agnico-Eagle and Lorito and to make the $2 million  payment in respect of the amendment of the debentures.  As a result of the Private Placement, Stornoway is now debt-free.

On July 31, 2008, Stornoway issued a further 1,055,894 common shares (the "Interest Shares") in payment of interest payable on the convertible debentures to the redemption date in the amount of $289,315. 

Agnico-Eagle is a related party of Stornoway.  Prior to completion of the Private Placement and issuance of the Interest Shares, Agnico-Eagle reported holdings of 27,520,809 common shares of Stornoway, representing approximately 13.6% of Stornoway's issued and outstanding common shares.  As a result of the private placement, Agnico-Eagle's holdings have increased to 40,270,978 common shares, representing approximately 17.7% of Stornoway's 227,226,346 common shares issued and outstanding.

Stornoway Diamond Corporation is one of Canada's leading diamond exploration and development companies, involved in the discovery of over 150 kimberlites in seven Canadian diamond districts. The Corporation 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"
Eira Thomas
Chief Executive Officer