Stornoway – Building a Canadian Diamond Resource Base

Tue, Jun 9, 2009

Overview

Stornoway Diamond Corporation is a leading Canadian diamond exploration and development company. In addition to maintaining a large portfolio of grassroots exploration and four advanced stage properties in Canada, Stornoway has a 50% interest in the Renard Project which received a positive preliminary economic assessment in October 2008, and has the potential to become the first diamond mine in Quebec, Canada. The experienced management and technical team of Stornoway have a strong track record of discovery and a history of wealth creation for shareholders.

What We Like about Stornoway!

Great portfolio of development, advanced stage and exploration properties
Significant 2009 work program in process
Agnico-Eagle is largest shareholder
High Quality Canadian Diamonds

Stornoway Diamonds

Core Properties

Renard

The Renard Project, located within the Foxtrot Property, is a 50:50 JV with SOQUEM INC. (“SOQUEM”). Formed in 1996 to conduct regional reconnaissance scale diamond exploration in north-central Québec, the joint venture currently holds approximately 128,000 hectares of mineral permits in the Otish Mountains region. Exploration on the property has resulted in the discovery of a new field of kimberlitic intrusions, the Renard Cluster, three of which, Renards 2, 3 and 4 form an economically attractive, high value, core resource that, on December 15, 2008, received a positive Preliminary Assessment (“PA”). Overall, including 2009 drilling developments, Renard represents a potential diamond resource of between 20 and 40 million carats in four kimberlite pipes and two kimberlite dikes.

The PA comprises a National Instrument (“NI”) 43-101 compliant resource estimate and a diamond processing plant design prepared by AMEC Americas Limited (“AMEC”), and a mine plan, capital and operating cost estimate, and financial model prepared by Agnico-Eagle Mines Limited (“Agnico”), Stornoway’s largest shareholder. AMEC’s plant design, and elements of Agnico’s mining study such as the cost estimation, have been completed to a pre-feasibility standard.

The NI 43-101 compliant mineral resource estimate released in December 2008 comprised 7.0 million carats of Indicated Resource and 4.5 million carats of Inferred Resource. A further 9-21 million carats was classified on a more conceptual basis as potential mineral deposit (“PMD”) and combined portions of Renard 2, 3, 4, 9, as well as the Lynx and Hibou dikes. Using a base case diamond resource of 5.9 million carats the model yields a pre-tax IRR of 14.2% and an NPV of C$56 million (calculated before tax at an 8% discount rate) in a conceptual mine plan combining open pit and underground mining over a 7 year mine life. Pre-tax IRR increases to 17.5% with an NPV of C$93 million when an alternate and supportable higher average diamond price is applied ($123 US/ carat; same as Renard 2 and 3) to Renard 4 and 9 (calculated before tax at an 8% discount rate). Stornoway considers the Renard PA to be an excellent first step in developing Québec’s first diamond mine.

Winter drilling in 2009 has focussed on the Renard 2 ‘bulge’ as outlined in the PMD. What was discovered at depth was a substantial amount of new kimberlite which has had a dramatic impact on the estimate of the overall size of the pipe. In the PA, Renard 2 contributed the bulk of the mineral resource contained within the conceptual mine plan. The discovery of such a large amount of new kimberlite, much of it within the scope of the existing underground mine design, is expected to have a very positive impact on project economics. Stornoway is currently planning the additional work programs required to convert this new material to a mineral resource to be part of an updated NI 43-101 Resource Estimate scheduled for completion late in 2009.

Stornoway has played a strong advocacy role for the ongoing development of regional infrastructure in the James Bay region of Québec through an active engagement with government and communities. The proposed road development project is designed to connect the communities of Chibougamau and Mistissini to the Renard Diamond Project by way of several other prospective mining projects and the proposed Albanel-Témiscamie-Otish Park. On March 18, 2009 the Québec Government announced major capital funding (~$260 million) towards the construction of the Routes Monts Otish road.

Stornoway believes this deposit has the potential to become Québec’s first diamond mine. It is a substantial and rare resource with considerable upside potential, providing the opportunity for significant value growth in Québec’s emerging diamond story.

Aviat

The 476,000 acre Aviat Project is a joint venture with the Hunter Exploration Group (10%) under which Stornoway holds a 90% interest in the property, is the operator, and holds 100% of the diamond marketing rights.

A total of twelve distinct, but likely related, kimberlite bodies have been identified on the Aviat Property since 2002 (AV1, AV1 West, AV267, AV2 Upper, AV3, AV4, AV5, AV8 Upper, AV8 Middle, AV8 Lower, AV9, and one currently un-named body discovered in 2008). The bodies range from small pipe-like intrusions at AV1, AV4, and AV9 to layered sheet or dyke like intrusions which characterize bodies AV1 West, and AV2 through AV8, including AV267, and reach widths of up to 16 m in the southwest. These shallowly dipping (8 to 20 degrees), macrocrystic, hypabyssal kimberlite sheets with associated zones of kimberlite breccia are thought to be part of a sequence of layered, horizontally stacked sheets separated by vertical distances of 10 to 30m.

Exploration work in 2007 and 2008 has led to a revised geological model and naming system for the Eastern Sheet Complex (”ESC”). Drilling has confirmed the AV267 body to be linked to the AV3 and AV8 Upper sheets, creating a single, 260 ha body averaging 1.7 m (reaching thickness of up to 16 m in the southwest), renamed the ES 1 kimberlite sheet. ES 2 sits in the ES1 hanging wall and ES 3 and 4 sit in the footwall (see satellite image map and cross section of bodies).

Stornoway engaged SRK Consulting (Canada) Inc. (”SRK”), an independent consultant, to provide a conceptual resource study on the Eastern Sheet Complex. The results of which were announced on October 7, 2008, and outlined the potential for 24.1 to 40.3 million carats of diamonds in 12.4 to 16.0 million tonnes of kimberlite using a diamond content of 235 cpht +/- 30 cpht based on existing diamond data. A mini-bulk sample of 202 wet tonnes was extracted from the ES 1 in 2008 for DMS processing for the purpose of providing additional insight into the grade, diamond value and overall economic potential of this large scale, and growing, diamond camp.

Management

Matt Manson – President, Chief Executive Officer and Director. Matt Manson has over 14 years of experience in diamond exploration, development and production. He was appointed President of Stornoway in March 2007 following the acquisition of Ashton Mining of Canada and Contact Diamond Corporation, and subsequently President & CEO in January 2009. Between 1999 and 2005 he was employed by Aber Diamond Corporation (now Harry Winston Diamond Corporation) as VP Marketing and subsequently VP Technical Services & Control, during which time he participated in the US$230m project financing for the Diavik Diamond Project and oversaw Aber’s technical and marketing operations. Matt is a director of Karmin Exploration Inc., and a graduate of the University of Edinburgh (BSc Geophysics, 1987) and the University of Toronto (PhD Geology, 1996).
Eira Thomas – Executive Chairman and Director. Ms. Thomas is a respected Canadian geologist who brings extensive experience to her role with Stornoway. She served as a geologist with Aber Resources Ltd. (now Harry Winston Diamond Corporation) from 1992 to 1997, leading the field exploration team that discovered the Diavik Diamond Project pipes in the Northwest Territories in 1994. She was promoted to Vice-President Exploration for Aber in 1997, a post she held for two years. She served as a director of Aber Diamond Corporation from April 1998 to August 2006.
Catherine McLeod-Seltzer – Lead Director. Catherine McLeod-Seltzer is the Chairman of Bear Creek Mining Corporation and a recognized leader in the minerals industry for her ability to create growth-focused companies that generate significant shareholder value. Catherine partners with successful geological teams and has been instrumental in helping build a number of successful mineral companies in the past 20 years, including Arequipa Resources, Francisco Gold, Miramar Mining, Bear Creek Mining, Stornoway Diamonds and Peru Copper Inc. Catherine was named Mining Man of the Year by The Northern Miner in 1999 and in 1997 she was given the “Award for Performance” by the Association of Women in Finance. She has also held a position on the Financial Post’s “Power 50″ since 2002.
Robin Hopkins – Vice-President, Exploration. Robin Hopkins, P.Geol. (NT/NU), has held this position since January 2006 and was Chief Technical Officer for the predecessor company, Stornoway Ventures Ltd., since 2003. Mr. Hopkins was Vice-President, Exploration, for Navigator Exploration Corporation between 2000 and 2004, and prior to that a key member of the Aber Resources Ltd. exploration team that discovered the Diavik Diamond Project pipes in the Northwest Territories in 1994. With more than 20 years exploration experience throughout Canada, Greenland and southern Africa since graduating from the University of Waterloo (HBASc, Earth Sciences), Mr. Hopkins is a Qualified Person under NI 43-101, and the Company’s diamond exploration programs are conducted under his direction.
Zara Boldt – Vice-President Finance, and Chief Financial Officer. Zara Boldt has held progressive positions with several mineral exploration companies, in addition to working for a national brokerage firm for several years. Her most recent resource industry roles include CFO for Sherwood Copper Corporation from May 2006 to May 2007 and Controller for the Northair Group of Companies between May 2004 and April 2007. Ms. Boldt is a Certified General Accountant and a graduate of the University of Puget Sound in Tacoma, Washington. Beyond her role at Stornoway, Ms. Boldt currently serves as a Corporate Secretary for Strongbow Exploration Inc. and North Arrow Minerals Inc. and is a Director of Troon Ventures Ltd.
Dave Skelton – Vice-President, Project Development. Mr. Skelton brings more than 21 years experience as a geologist including 15 years in diamond exploration and advanced evaluation. For the last 6 years, Mr. Skelton has managed the Renard Diamond Project, recently the subject of a positive Preliminary Assessment study released on October 28, 2008. Renard is Stornoway’s most advanced project and remains on track to be developed as Quebec’s first diamond mine.
Anthony Walsh – Director. Mr. Walsh graduated from Queen’s University (Canada) in 1973 and became a member of The Canadian Institute of Chartered Accountants in 1976. Mr. Walsh has over 20 years experience in the field of exploration, mining and development and is currently the President and CEO of Sabina Silver Corporation. Prior to joining Sabina, Mr. Walsh was President and CEO of Miramar Mining Corporation (1995-2007), was the Senior Vice-President and CFO of a computer leasing company (1993-1995) and the CFO and Senior Vice-President, Finance of International Corona Mines Ltd., a major North American gold producer (1989-1992). From 1985 to 1989 he was Vice-President, Finance of International Corona Mines Ltd., and from 1973 to 1985 Mr. Walsh held various positions at Deloitte, Haskins & Sells, a firm of Chartered Accountants.
David Garofalo – Director. Mr. Garofalo is currently the Vice-President, Finance and Chief Financial Officer of Agnico-Eagle Mines Ltd., an international mining company focused on gold. He has held this position since January, 1999. Before joining Agnico-Eagle, Mr. Garofalo served as Treasurer of Inmet Mining Corporation. Mr. Garofalo also serves on the Board of Directors and Audit Committee of Tiberon Minerals Ltd. Mr. Garofalo is a Chartered Accountant and a graduate of the University of Toronto (B.Comm.).
Yves Harvey – Director. Yves Harvey obtained a Ph.D. in economic geology from Université Laval, Quebec, in 1984. He also holds a Master’s degree in geological engineering, which he obtained from Ecole Polytechnique, Montreal, in 1975. He joined SOQUEM in 1978 as senior geologist, exploration. He left SOQUEM in 1984 to work for Roche ltée, Groupe-Conseil until 1989, after which he returned to SOQUEM as executive vice-president. He was appointed president and executive director of SOQUEM in 1991 and served in this capacity until 2006.
Serge Vézina – Director . Dr. Vézina is a consultant and engineer with over 40 years experience in the mining industry. Between 1988 and June 2006, he was employed by Cambior Inc., most recently as Vice President of Industrial Engineering and Environment. Mr. Vézina is a member of the Order of Engineers of Québec, a former chairman of the board of the Québec Mining Association, a former chairman of the board of COREM, and a member of numerous advisory panels and professional bodies within the Québec Mining Industry. Dr. Vézina is currently an adjunct professor at McGill University in Montreal and Laval University in Québec City, and a director of Osisko Mining Corporation. He is a graduate of Laval University (B.Sc. in Mining, 1966 and Ph.D. in Metallurgical Sciences, 1972).

Search for Stornoway Diamond News

Analyst Reports

GMP Securities- Jacques Wortman (analyst)

Canaccord Adams- Eric Zaunscherb (analyst) not rated

Media Covreage

The Canadian Mining Journal: April 2009 Issue, Mining Matters Column on Route des Monts Otish (Route 167 Extension).

The Globe and Mail – Report on Business Magazine March 2009 Off the Clock (Column) – Pipe Dreams: by Carol Toller (Article on Stornoway CEO and President, Matt Manson)

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