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Stornoway Provides Processing Update
for the Renard Diamond Mine

Stornoway Diamond Corporation is pleased to provide a diamond processing update on the Renard Diamond Mine, subsequent to the recent quarter ended September 30, 2016.

First ore was introduced to the Renard diamond plant on July 15, 2016. As of the quarter end, 91,010 tonnes of ore had been processed with attributable carat production of 111,556 carats, representing an average grade of 123 carats per hundred tonnes. 21 stones were recovered during the quarter larger than 10.8 carats in size (`specials`).

First Diamond Sale
Stornoway is pleased to announce that its first sale of Renard diamonds will be held in Antwerp, Belgium starting on November 14th, 2016. This is two months earlier than previously anticipated.

Ore Processing Report
Ore processing and diamond recovery during July and early August were irregular as plant equipment and material balancing issues were identified and addressed. The plant’s crushing and recovery circuits have performed well, but modifications have been required to the manner in which processed kimberlite is de-watered prior to disposal. These modifications are ongoing, and represent the principal limiting factor on the rate of ramp-up. Nevertheless, during the month of September ore processing was achieved on a continuous basis at an average run-rate of 1,792 tonnes per day, representing 30% of plant nameplate capacity. Peak processing run-rate achieved during September was 3,130 tonnes per day, or 52% of nameplate capacity. Commercial production at Renard is defined as 60% of nameplate capacity for a 30-day period. This is expected to be achieved, on schedule, by December 31, 2016.

As ore processing proceeds, the geological models of the Renard kimberlites, the diamond grades of their internal geological units, and the size and quality distribution of their diamond populations need to be reconciled separately. During this initial period of plant commissioning, ore from each of the 2a, 2b and 2c geological units in the Renard 2 kimberlite has been processed to assess their metallurgical and diamond recovery characteristics. No ore from the Renard 3 or Renard 65 kimberlites has yet been processed.

In terms of geology, mining on the first three benches in the Renard 2-3 open pit has revealed a higher than expected volume of the higher grade 2b and 2c geological units. This has resulted in a greater than expected volume of this material in the ore stockpiles available for the ramp-up, and offers potentially higher overall carat production in the open-pit phase of the mine. Since continuous ore processing was achieved in the second half of the quarter, recovered diamond grades have shown good correlation with the project’s expected Mineral Resource grades. Initial diamond recoveries suggest variability in quality and size distribution between the individual geological units in Renard 2 that are expected to become more apparent with additional processing. The early diamond production that will be sold in the first sale in November will have a higher proportion of small diamonds in its size distribution than expected, leading to a potentially lower than expected initial diamond price. The quality and size distribution of diamond production from the project is expected to remain variable in the near-term as the plant ramp-up continues and multiple ore units are processed in batch fashion.

Matt Manson, President and CEO, commented “We are pleased with the initial progress of the ramp-up at Renard and the production volumes we have achieved. This has allowed us to schedule our first diamond sale earlier than we had planned. We are working through the type of challenges normal in the commissioning of a new diamond processing plant, and remain on schedule for commercial production by year end. Large volumes of production data are required before a meaningful statement of resource reconciliation can be made in any diamond project. Nevertheless, we are cautiously optimistic about the recovery trends we are seeing at this early stage.”

The Renard Mine official opening ceremony will be held on October 19, 2016 in the presence of company’s board of directors and employees, local community members, and key project stakeholders.