Stornoway Arranges $22 Million Private Placement

Proceeds To Redeem Convertible Debentures

VANCOUVER, BRITISH COLUMBIA–(EMWNews – July 16, 2008) – Stornoway Diamond Corporation (TSX:SWY) is pleased to report that it has arranged for a $22 million private placement comprising 24,444,444 common shares at a price of $0.90 per common share to Agnico Eagle Mines Ltd. (“Agnico Eagle”) and Lorito Holdings Ltd. (“Lorito”). Agnico Eagle and Lorito presently hold, equally between them, convertible debentures in the aggregate principal amount of $20 million, which are due in March 2009. Agnico Eagle and Lorito have agreed to permit Stornoway to redeem the debentures prior to the maturity date in consideration for an additional $2 million payment. The proceeds of the private placement will be used to redeem the principal amount of the debentures and the $2 million early redemption payment. The private placement is subject to the completion of subscription agreements and receipt of stock exchange and regulatory acceptances and approvals, including compliance with related party requirements as Agnico Eagle is a related party of the Corporation. Upon the completion of this financing, Stornoway will be debt free.

Eira Thomas, CEO, commented: “We are extremely pleased to be able to settle this outstanding debt at a significant premium to market and see it is a strong endorsement of Stornoway’s strategy to grow and develop a significant Canadian diamond resource base.”

Agnico Eagle reports 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 will increase to approximately 17.6%.

Stornoway Diamond Corporation

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

Eira Thomas, Chief Executive Officer

This news release may contain forward looking statements, being statements which are not historical facts, including, without limitation, statements regarding potential financings, the use of proceeds, stock exchange and regulatory approval and discussions of future plans and objectives. There can be no assurance that such statements will prove accurate. Such statements are necessarily based upon a number of estimates and assumptions that are subject to numerous risks and uncertainties that could cause actual results and future events to differ materially from those anticipated or projected. Important factors that could cause actual results to differ materially from the Corporation’s expectations are in Corporation documents filed from time to time with the Toronto Stock Exchange and provincial securities regulators, most of which are available at www.sedar.com. The Corporation disclaims any intention or obligation to revise or update such statements.