Stornoway Reports First Quarter 2018 Production and Sales Results

LONGUEUIL, Quebec, April 11, 2018 — Stornoway Diamond Corporation(TSX:SWY) (the “Corporation” or “Stornoway”) is pleased to provide production and sales results at the Renard Diamond Mine for the first quarter ended March 31, 2018. Highlights are as follows:

• 399,135 carats sold in three tender sales for gross proceeds¹ of $56.4 million² at an average price of US$112 per carat ($141 per carat²).
• Included in the sales was a 37 carat Type II-a, D colour, internally flawless stone that sold for US$1.3 million (US$36,000 per carat), the highest price achieved for an individual stone from the Renard Diamond Mine to date.
• First quarter diamond production was 285,851 carats produced from the processing of 562,520 tonnes of ore at an average grade of 51 cpht. Grade and carat recoveries during the quarter reflect the processing of lower grade production ore and ore stockpiles as the Renard mine transitions from open pit to underground mining.
• Subsequent to the quarter end, the Corporation recovered a 189 carat stone that, while of relatively low quality, is notable for being one of the largest diamonds ever reported to have been recovered in Canada.

Matt Manson, President and CEO of Stornoway commented: “The first quarter saw a strong performance for Stornoway in sales and pricing, with successively higher prices at each of our three sales reflecting an improved size and quality mix and a strong start to the year for the diamond market. The quarter also saw the sale of our highest value stone to date, and ended with the recovery of the largest stone to date. To our knowledge, this is one of the largest diamonds ever reported recovered in Canada since diamond mining began in 1998. Our first quarter also saw lower than expected carat production, which was primarily due to the processing of lower grade ore from stockpile as we complete mining in the Renard 2-Renard 3 open pit and transition to underground mining. This transition, and the commissioning of our new ore-waste sorting circuit, are progressing satisfactorily. Both are scheduled to be complete by the end of the second quarter, at which time the principal capital expenditure of this long-life project will be behind us.”

First Quarter Diamond Sales Results

The first quarter sales of 399,135 carats represented run-of-mine production recovered between October 2017 and January 2018. Gross proceeds¹ were $56.4 million² at an average price of US$112 per carat ($141 per carat²). On a segmented basis, 286,051 carats of +7 DTC sieve size diamonds were sold at an average price of US$148 per carat ($187 per carat²), and 113,083 carats of -7 DTC sieve size diamonds were sold at an average price of US$20 per carat ($26 per carat²). Revenue from the third sale of the quarter will be recorded in the second quarter, as deliveries to clients were made subsequent to the quarter-end.

In addition to the sale of run of mine production, an additional 42,663 carats of diamonds smaller than the -7 DTC sieve size were sold in an out of tender contract sale for gross proceeds of $1.0 million³ at an average price of US$18.50 per carat ($24 per carat³). These represent recoveries of small diamond “incidentals” produced between October 2017 and February 2018 that are in excess of that expected from the Renard Mineral Resource. The sale of such incidentals represents incremental revenue above that provided in Stornoway’s FY2018 segmented sales guidance.

¹ Before stream and royalty.

² Based on an average $: US$ conversion rate of $1.2661

³ Based on an average $: US$ conversion rate of $1.2894
First Quarter Production Results

First quarter mine production was 285,851 carats recovered from the processing of 562,520 tonnes of ore at an attributable grade of 51 carats per hundred tonnes (“cpht”). During the quarter, mining in the Renard 2-Renard 3 open pit was hampered by poor weather conditions which restricted mining access and impacted equipment availability. In addition, approximately 55,000 tonnes of high grade Renard 2 ore which was scheduled for mining at the base of the pit could not be recovered due to unsafe working conditions adjacent to the west pit wall. This resulted in a higher proportion of low grade stockpile material being processed during the quarter than was planned, with a commensurate reduction in carat recoveries. In addition, the extreme weather conditions resulted in lower than expected plant availability, as ore froze in feed-bins. Processing rates in the quarter averaged 6,250 tonnes per day compared to an annual plan of 7,000 tonnes per day.

By the end of the quarter, open pit mining at Renard 2 had been completed, and a progressively higher proportion of processed ore was being derived from the Renard 2 underground mine. Processing in March averaged 6,750 tonnes per day. Second quarter production is expected to be sourced predominantly from the underground mine as production from the 290 meter level ramps-up, supplemented by Renard 3 open pit ore, Renard 65 open pit ore and low grade stockpile. Underground mine production commenced in the first quarter on schedule, with a focus on production blasting, the build up of ore inventory in the production stopes, and rock mass monitoring as experience is gained with the mining method. Ore available for processing will be derived predominantly from the underground mine by the beginning of the third quarter.

Equipment commissioning of the new ore-waste sorting circuit at Renard commenced on March 25^th. During the second quarter, a progressively higher volume of ore will be processed through the new circuit as spectral sorting configurations are established and the main process plant is re-balanced. Full transition to underground mine production and ore-waste sorting is expected to be completed by the end of the second quarter.

FY2018 Guidance

Sales pricing achieved during the first quarter was within or above FY2018 guidance provided in January 2018, which on a segmented basis US$125 to US$165 per carat for +7 DTC sieve size production and US$15 to $19 per carat for -7 DTC sieve size production.

Carat production during the first quarter was lower than planned. Higher than budgeted carat production in the remainder of the year will be required to achieve Stornoway’s full year FY2018 production guidance of 1.6 million carats produced and 1.6 million carats sold.
Notable Diamond Recoveries

Included in Stornoway’s March 2018 tender sale was a 37 carat Type II-a, D colour, internally flawless stone that sold for US$1.3 million (US$36,000 per carat). This is the highest price achieved for an individual stone from the Renard Diamond Mine to date. The stone is believed to have been derived from the Renard 65 kimberlite. Subsequent to the quarter end, a 189 carat diamond was recovered from the processing of blended Renard 2-Renard 3 ore. While of relatively low “clivage” quality, this stone is notable for being amongst the largest diamonds ever reported to have been recovered in Canada. The largest gem quality diamond reported recovered in Canada to date was the 187.7 Foxfire diamond recovered at the Diavik Diamond Mine in 2015. In 2017, fragments of a Renard stone believed to have originally exceeded 200 carats in size were recovered, with the largest individual fragment weighing 77 carats.

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 a “qualified person” 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 CORPORATION
/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 Jodi Hackett (Manager, Communications) at 416-304-1026 x2104 or toll free at 1-877-331-2232

Pour plus d’information, veuillez contacter M. Ghislain Poirier, Vice-président Affaires publiques de Stornoway au 418-254-6550, gpoirier@stornowaydiamonds.com

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

NT4