Stornoway Provides Update on Recent Renard Resource Development Activities

LONGUEUIL, Nov. 07, 2018 - Stornoway Diamond Corp. (TSX-SWY; the “Corporation” or “Stornoway”) is pleased to provide an update on recent resource development activities on the Renard 3 and Renard 4 kimberlites at the Renard Diamond Mine. Since earlier this year, Stornoway has been conducting a program of drilling and sampling at Renard with the goal of converting certain Mineral Resources to Mineral Reserves, and of accelerating the mining of both the Renard 3 and Renard 4 ore bodies in the Renard mine plan. Results to date are as follows:

• Renard 3 successfully delineated to a depth of 315 meters, supporting its inclusion in the Renard production schedule above the 290 meter mining level in 2019, several years earlier than currently planned.
• Renard 4 successfully sampled from surface, with approximately 3,000 carats recovered to date, including three “special” stones, supporting its potential development as a new open pit source of ore to supplement underground mine feed to the Renard process plant.

Matt Manson, President and CEO, commented: “The update provided today covers activities that have been ongoing at Renard during the course of this year to expand and accelerate ore supply options within the Renard Mine Plan. The Renard 3 work is about accelerating the mining of high grade ore in our production schedule, and maintaining over the long term a blend of ore from two sources in the underground mine as we go deeper. The Renard 4 work is about expanding our understanding of the diamond population at the top of the ore body prior to developing a potential new open pit. This would require a water retention structure within Lagopède Lake, but would allow us to take advantage of the expanded plant processing capacity offered by our new ore-sorting circuit. The results of both of these resource development programs have been encouraging. We expect to see the benefits of the Renard 3 work already in the 2019 production schedule, and we anticipate proceeding to the next stages of economic study, community consultation and permitting following the completion of the Renard 4 work, which remains ongoing at this time.”

Renard 3

Renard 3 was mined between 2016 and April 2018 in the Renard 2-Renard 3 open pit to a depth of 120 meters. The current Renard mine plan (referred to as the “March 2016 Renard Mine Plan”) contemplates the mining of Renard 3 by underground methods between 2026 and 2027 following the completion of mining at Renard 2. As of December 31, 2017, Renard 3 comprised 0.78 mcarats of Probable Mineral Reserves (1.15 mtonnes at 68 carats per hundred tonnes, “cpht”) below the base of the open pit to a depth of 255 meters, and 0.61 mcarats of Inferred Mineral Resources (0.54 mtonnes at 112 cpht) to a depth of 405 meters. In addition, a Target for Further Exploration has been estimated at between 3.5 and 6.3 mcarats below the Inferred Mineral Resources. In 2014, in drilling undertaken on the Renard 2 kimberlite, Renard 3 was interpreted to have been intersected fortuitously over 126.6 meters at a vertical depth of approximately 1,000 meters. The implied true width of this intersection was a minimum 47 meters, supporting the potential for mineable widths at Renard 3 even at a considerable depth.

During the course of 2018, Renard 3 has been successfully delineated in 5,345 meters of detailed drilling between 255 and 290 meters of depth, with additional intersections of kimberlite confirmed over mineable widths to as deep as 315 meters below surface, below which Renard 3 remains open. The new drilling has confirmed the expected location and width of Renard 3, and the continuation at depth of the high grade Renard 3dg and 3h units that support the body’s high grade estimate in the Mineral Resource statement. Renard 3 continues to be open at further depth.

The new data are being incorporated into a revised geological model and Mineral Resource estimate for Renard 3, with a view to the incorporation of new Renard 3 Mineral Reserves above the 290 meter level into the 2019 mining schedule. This will allow two underground sources of ore feed to be mined simultaneously, and provide additional high grade ore feed to supplement Renard 2 production.

Renard 4

In the March 2016 Renard Mine Plan, the Renard 4 kimberlite is scheduled for underground mining between 2026 and 2029, following the completion of mining at the Renard 2 and Renard 3 kimberlites. As of December 31, 2017, the Renard 4 kimberlite comprised 4.44 mcarats of Indicated Mineral Resources (7.25 mtonnes at an average grade of 61 cpht), including 1.67 mcarats of Probable Mineral Reserves (3.46 mtonnes at an average grade of 48 cpht) in the underground mine plan, as well as 1.99 mcarats of Indicated Mineral Resources (2.93 mtonnes at an average grade of 68 cpht) between surface and 140 meters depth, and 2.46 mcarats of Inferred Mineral Resources below the Mineral Reserves (4.75 mtonnes at an average grade of 52 cpht).

Stornoway is investigating the potential for open pit mining at the Renard 4 and nearby Renard 9 kimberlites to supply additional ore feed earlier in the mine life. Such a pit would allow the extraction of a portion, or all, of the approximately 2 million carats of diamonds in the top 140 meters of Renard 4. These diamonds are contained within the project’s Indicated Mineral Resources, but are outside the current Mineral Reserve as they occur in the area of the proposed crown pillar for the Renard 4 underground mine.

During July and August of this year, a surface bulk sample of approximately 13,546 tonnes was excavated from the Renard 4 kimberlite at a site where it occurs close to surface adjacent to Lagopède Lake. In 2007, a 2,104 tonne surface sample located on a nearby outcrop of the high grade Renard 4d unit returned 2,722 carats of diamonds for a grade of 129 cpht. The new sampling is designed to recover parcels of diamonds from the lower grade Renard 4a and 4b units which comprise the remainder of the Renard 4 diatreme.

A total of 11,646 tonnes of sample were processed through the main Renard process plant during a three-day period in September. In addition, approximately 1,900 tonnes of material are being processed through Renard’s 10 tonne per hour bulk sampling plant. Diamond recovery from concentrate is being conducted at Renard, and at Stornoway’s Vancouver exploration office. Sample processing and diamond recovery is ongoing. However, to date, a parcel of 574 carats of diamonds have been recovered from the Renard 4b unit (1,287 tonnes at 45 cpht), and 2,444 carats have been recovered from the Renard 4a unit (10,359 tonnes at 24 cpht). Of note, three “special” stones have been recovered so far: a 14.89 carat white octahedral gem, a 12.42 carat white octahedral gem, and a 11.12 carat brown clivage stone. Initial indications are that the grade, size distribution and quality assortment of the diamonds recovered are consistent with previous sampling.

The results of the current sampling will be used to support an economic assessment for the development of a Renard 4-Renard 9 open pit, which will require a water retention structure within Lagopède Lake. If successful, such a pit would provide sufficient ore to take full advantage of the increased process plant capacity created by the introduction of the new ore-sorting circuit.

ABOUT THE RENARD DIAMOND MINE

The Renard Diamond Mine is Quebec’s first producing diamond mine and Canada’s sixth. It 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. Construction on the project commenced on July 10, 2014, and commercial production was declared on January 1, 2017. Average annual diamond production is forecast at 1.8 million carats per annum over the first 10 years of mining. Readers are referred to the technical report dated January 11, 2016, in respect of the September 2015 Mineral Resource estimate, and the technical report dated March 30, 2016, in respect of the March 2016 Updated Mine Plan and Mineral Reserve Estimate for further details and assumptions relating to the project.

QUALIFIED PERSON

Disclosure of a scientific or technical nature in this press release was prepared under the supervision of M. Patrick Godin, P.Eng. (Québec), Chief Operating Officer and Mr. Robin Hopkins, P.Geol. (NT/NU), Vice President, Exploration, both “qualified persons” under National Instrument (“NI”) 43-101.

ABOUT STORNOWAY DIAMOND CORPORATION

Stornoway is a leading Canadian diamond exploration and production company listed on the Toronto Stock Exchange under the symbol SWY and headquartered in Montreal. A growth oriented company, Stornoway owns a 100% interest in the world-class Renard Mine, Québec’s first diamond mine.

On behalf of the Board
Stornoway Diamond Corp.
/s/ “Matt Manson”
Matt Manson
President and Chief Executive Officer

For more information, please contact Matt Manson (President and CEO) at 416-304-1026 x2101
or Orin Baranowsky (CFO) at 416-304-1026 x2103 or Alexandre Burelle (Manager, Investor Relations and Business Development) at 450-616-5555 x2264 or toll free at 1-877-331-2232

Pour plus d’information, veuillez contacter Alexandre Burelle (Directeur, Relations avec les investisseurs et développement des affaires) au 450-616-5555 x2264, aburelle@stornowaydiamonds.com

** Website: www.stornowaydiamonds.com Email: info@stornowaydiamonds.com **

Forward-Looking Statements

This document contains forward-looking information (as defined in National Instrument 51‑102 – Continuous Disclosure Obligations) and forward-looking statements within the meaning of Canadian securities legislation and the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as “forward-looking information” or “forward-looking statements”). These forward-looking statements are made as of the date of this document and, the Corporation does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by law.

These forward-looking statements relate to future events or future performance and include, among others, statements with respect to Stornoway’s objectives for the ensuing year, our medium and long-term goals, and strategies to achieve those objectives and goals, as well as statements with respect to our management’s beliefs, plans, objectives, expectations, estimates, intentions and future outlook and anticipated events or results. Although management considers these assumptions to be reasonable based on information currently available to it, they may prove to be incorrect.

Forward-looking statements reflect current expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i) the amount of Mineral Reserves, Mineral Resources and exploration targets; (ii) the estimated amount of future production over any period; (iii) net present value and internal rates of return of the mining operation; (iv) expectations and targets relating to recovered grade, size distribution and quality of diamonds, average ore recovery, carats recovered, carats sold, internal dilution, mining dilution and other mining parameters set out in the 2016 Technical Report as well as levels of diamond breakage; (v) expectations, targets and forecasts relating to gross revenues, operating cash flows and other revenue metrics set out in the 2016 Technical Report, growth in diamond sales, cost of goods sold, cash cost of production, gross margins estimates, planned and projected diamond sales, mix of diamonds sold, and capital expenditures, liquidity and working capital requirements; (vi) mine and resource expansion potential, expected mine life, and estimated incremental ore recovery, revenue and other mining parameters from potential additional mine life extension; (vii) expected time frames for completion of permitting and regulatory approvals related to ongoing construction activities at the Renard Diamond Mine; (viii) the expected time frames for the completion of the open pit and underground mine at the Renard Diamond Mine; (ix) the expected financial obligations or costs incurred by Stornoway in connection with the ongoing development of the Renard Diamond Mine; (x) mining, development, production, processing and exploration rates, progress and plans, as compared to schedule and budget, and planned optimization, expansion opportunities, timing thereof and anticipated benefits therefrom; (xi) future exploration plans and potential upside from targets identified for further exploration; (xii) expectations concerning outlook and trends in the diamond industry, rough diamond production, rough diamond market demand and supply, and future market prices for rough diamonds and the potential impact of the foregoing on various Renard financial metrics and diamond production; (xiii) the economic benefits of using liquefied natural gas rather than diesel for power generation; (xiv) requirements for and sources of, and access to, financing and uses of funds; (xv) the ability to meet Subject Diamonds Interest delivery obligations under the Purchase and Sale Agreement; (xvi) the foreign exchange rate between the US dollar and the Canadian dollar; and (xvii) the anticipated benefits from recently approved plant modification measures and the anticipated timeframe and expected capital cost thereof. 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 recovered grade, size distribution and quality of diamonds, average ore recovery, internal dilution, and levels of diamond breakage, 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, access to financing, and the foreign exchange rate between the US and Canadian dollars. 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 or its consultants in making forward-looking statements include, but are not limited to: (i) the accuracy of our estimates regarding capital and estimated workforce requirements; (ii) estimates of net present value and internal rates of return; (iii) recovered grade, size distribution and quality of diamonds, average ore recovery, carats recovered, carats sold, internal dilution, mining dilution and other mining parameters set out in the 2016 Technical Report as well as levels of diamond breakage; (iv) the expected mix of diamonds sold, and successful mitigation of ongoing issues of diamond breakage in the Renard Diamond Mine process plant and realization of the anticipated benefits from plant modification measures within the anticipated timeframe and expected capital cost; (v) the stabilization of the Indian currency market and full recovery of prices; (vi) receipt of regulatory approvals on acceptable terms within commonly experienced time frames and absence of adverse regulatory developments; (vii) anticipated timelines for the development of an open pit and underground mine at the Renard Diamond Mine;‎ (viii) anticipated geological formations; (ix) continued market acceptance of the Renard diamond production, conservative forecasting of future market prices for rough diamonds and impact of the foregoing on various Renard financial metrics and diamond production; (x) the timeline, progress and costs of future exploration, development, production and mining activities, plans, commitments and objectives; (xi) the availability of existing credit facilities and any required future financing on favourable terms and the satisfaction of all covenants and conditions precedent relating to future funding commitments; (xii) the ability to meet Subject Diamonds Interest delivery obligations under the Purchase and Sale Agreement; (xiii) Stornoway’s interpretation of the geological drill data collected and its potential impact on stated Mineral Resources and mine life; (xiv) the continued strength of the US dollar against the Canadian dollar and absence of significant variability in interest rates; (xv) improvement of long-term diamond industry fundamentals and absence of material deterioration in general business and economic conditions; and absence of significant variability in interest rates; (xvi) increasing carat recoveries with progressively increasing grade in LOM plan; (xvii) estimated incremental ore recovery, revenue and other mining parameters from potential additional mine life extension with minimal capital expenditures; (xviii) availability of skilled employees and maintenance of key relationships with financing partners, local communities and other stakeholders; (xix) long-term positive demand trends and rough diamond demand meaningfully exceeding supply; (xx) high depletion rates from existing diamond mines; (xxi) global rough diamond production remaining stable; (xxii) modest capital requirements post-2018 with significant resource expansion available at marginal cost; (xxiii) substantial resource upside within scope of mine plan; (xxiv) opportunities for high grade ore acceleration and processing expansion and realization of anticipated benefits therefrom; (xxv) significant potential upside from targets identified for further exploration; and (xxvi) limited cash income taxes payable over the medium term.

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 not be correct, but specifically include, without limitation: (i) risks relating to variations in the grade, size distribution and quality of diamonds, kimberlite lithologies and country rock content within the material identified as Mineral Resources from that predicted; (ii) variations in rates of recovery and levels of diamond breakage; (iii) the uncertainty as to whether further exploration of exploration targets will result in the targets being delineated as Mineral Resources; (iv) risks associated with our dependence on the Renard Diamond Mine and the limited operating history thereof; (v) unfavourable developments in general economic conditions and in world diamond markets; (vi) variations in diamond valuations and fluctuations in diamond prices from those assumed; (vii) insufficient demand and market acceptance of our diamonds; (viii) risks associated with the production and increased consumer demand for synthetic gem-quality diamonds; (ix) risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar and variability in interest rates; (x) inaccuracy of our estimates regarding future financing and capital requirements and expenditures, significant additional future capital needs and unavailability of additional financing and capital, on reasonable terms, or at all; (xi) uncertainties related to forecasts, costs and timing of the Corporation’s future development plans, exploration, processing, production and mining activities; (xii) increases in the costs of proposed capital, operating and sustainable capital expenditures; (xiii) increases in financing costs or adverse changes to the terms of available financing, if any; (xiv) tax rates or royalties being greater than assumed; (xv) uncertainty of mine life extension potential and results of exploration in areas of potential expansion of resources; (xvi) changes in development or mining plans due to changes in other factors or exploration results; (xvii) risks relating to the receipt of regulatory approvals or the implementation of the existing Impact and Benefits Agreement with aboriginal communities; (xviii) the failure to secure and maintain skilled employees and maintain key relationships with financing partners, local communities and other stakeholders; (xix) risks associated with ongoing issues of diamond breakage in the Renard Diamond Mine process plant and the failure to realize the anticipated benefits from plant modification measures within the anticipated timeframe and expected capital cost, or at all; (xx) the negative market effects of recent Indian demonetization and continued impact on pricing and demand; (xxi) the effects of competition in the markets in which Stornoway operates; (xxii) operational and infrastructure risks; (xxiii) execution risk relating to the development of an operating mine at the Renard Diamond Mine; (xxiv) the Corporation being unable to meet its Subject Diamonds Interest delivery obligations under the Purchase and Sale Agreement; (xxv) future sales or issuances of Common Shares lowering the Common Share price and diluting the interest of existing shareholders; (xxvi) the risk of failure of information systems; (xxvii) the risk that our insurance does not cover all potential risks; (xxviii) the risks associated with our substantial indebtedness and the failure to meet our debt service obligations; and (xxix) the additional risk factors described herein and in Stornoway’s annual and interim MD&A, its other disclosure documents 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.