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Stornoway Announces Closing of C$132 Million Public Offering of Subscription Receipts and C$242 Million Private Placement of Subscription Receipts

MONTREAL, QUEBEC -- (Marketwired) -- 05/23/14 -- Stornoway Diamond Corporation (TSX: SWY) (the "Corporation" or "Stornoway") is pleased to announce that it has closed its previously announced public offering (the "Public Offering") of 188,600,000 subscription receipts (the "Subscription Receipts"), at a price of C$0.70 per Subscription Receipt for aggregate gross proceeds of C$132.02m. The subscription receipts are expected to begin trading on Friday May 23rd, under the ticker symbol TSX-SWY.R.

Stornoway is also pleased to announce the closing of its previously announced private placements (the "Private Placements") of 345,539,916 subscription receipts (the "Private Placement Subscription Receipts"), at a price of C$0.70(1) per Private Placement Subscription Receipt for aggregate gross proceeds of C$241.88m(2). The Private Placements consist of subscriptions of 171,254,203 Private Placement Subscription Receipts by Orion Co-Investments I LLC ("Orion"), 142,857,142 Private Placement Subscription Receipts by Ressources Quebec Inc. ("RQ"), a wholly-owned subsidiary of Investissement Quebec, and 31,428,571 Private Placement Subscription Receipts by Caisse de depot et placement du Quebec ("CDPQ").

Matt Manson, Stornoway's President and CEO, commented: "The successful closing of the public offering of subscription receipts is an important milestone for Stornoway, and a precondition for the completion of the overall project financing agreement announced on April 9th. This agreement contemplates financing commitments to fully fund the Renard Diamond Project through construction to the declaration of commercial production, including all contingencies, capital escalation allowances, working capital requirements, and financing costs. We look forward to submitting the balanced package of equity, debt and streaming agreement that we have arranged to our shareholders for their approval at a special meeting to be held in Montreal on June 26, 2014. Principal project construction is expected to commence upon the receipt of shareholder approval and the satisfaction of all remaining transaction conditions, including the completion of definitive documentation."

The Public Offering and the Private Placements were made pursuant to the previously-disclosed binding financing commitment agreement, as amended (the "Agreement"), among the Corporation, Orion Co-Investments I Ltd., RQ and CDPQ for the construction of the Renard Diamond Project.

The net proceeds of the Public Offering and the Private Placements will be held in escrow pending the completion of the financing transactions described in the Agreement. Upon satisfaction of the escrow release conditions, holders of Subscription Receipts will be entitled to receive, without payment of additional consideration or further action, one common share and one-half of one common share purchase warrant of Stornoway for each subscription receipt held, and holders of Private Placement Subscription Receipts will be entitled to receive, without payment of additional consideration or further action, one common share of Stornoway for each subscription receipt held. Orion, RQ and CDPQ will be paid a placement fee equal to 6% of the aggregate amount subscribed for under the Private Placements payable upon closing of the financing transactions in Stornoway common shares.

If the escrow release conditions have not been satisfied by July 1, 2014 or such later date as may be agreed among Stornoway, Orion Co-Investments I Ltd., RQ and CDPQ (but not later than October 1, 2014), then the Subscription Receipts and the Private Placement Subscription Receipts shall be automatically cancelled and the escrow agent shall remit to holders of Subscription Receipts and Private Placement Subscription Receipts an amount equal to the original purchase price plus accrued interest.

This press release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of any securities referred to in this press release in any jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. Without limiting the foregoing, the securities referenced herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration in the United States or an applicable exemption from registration requirements. The securities being offered have not been approved or disapproved by any regulatory authority, nor has any such authority passed upon the accuracy or adequacy of the final short form prospectus.

(1) Based on the Bank of Canada CAD / USD noon exchange rate on May 22, 2014 of $0.9176.

(2) Ibid.

About the Renard Diamond Project

The Renard Diamond Project 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 Quebec. In November 2011, Stornoway released the results of a Feasibility Study at Renard, followed by an Optimization Study in January 2013, which highlighted the potential of the project to become a significant producer of high value rough diamonds over a long mine life. Probable Mineral Reserves, as defined in National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101"), stand at 17.9 million carats. Total Indicated Mineral Resources, inclusive of the Mineral Reserve, stand at 27.1 million carats, with a further 16.85 million carats classified as Inferred Mineral Resources, and 25.7 to 47.8 million carats classified as non-resource exploration upside. Readers are cautioned that the potential quality and grade of any target for further exploration is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the target being delineated as a Mineral Resource. All kimberlites remain open at depth. Readers are referred to the technical report dated December 29th, 2011 in respect of the November 2011 Feasibility Study for the Renard Diamond Project, and the technical report dated February 28th, 2013 in respect of the January 2013 Optimization Study, for further details and assumptions relating to the project. Disclosure of a scientific or technical nature in this press release was prepared under the supervision of Robin Hopkins, P.Geol. (NT/NU), Vice President, Exploration, a "qualified person" under NI 43-101.

About Stornoway Diamond Corporation

Stornoway is a leading Canadian diamond exploration and development company listed on the Toronto Stock Exchange under the symbol SWY and headquartered in Montreal. Our flagship asset is the 100% owned Renard Diamond Project, on track to becoming Quebec's first diamond mine. Stornoway is a growth oriented company with a world class asset, in one of the world's best mining jurisdictions, in one of the world's great mining businesses.

On behalf of the Board

STORNOWAY DIAMOND CORPORATION

/s/ "Matt Manson"

Matt Manson, President and Chief Executive

This press release contains "forward-looking information" within the meaning of Canadian securities legislation. This information and these statements, referred to herein as "forward-looking statements", are made as of the date of this press release and the Corporation does not intend, and does not assume any obligation, to update these forward-looking statements, except as required by law.

Forward-looking statements relate to future events or future performance and reflect current expectations or beliefs regarding future events and include, but are not limited to, statements with respect to: (i) the amount of mineral resources and exploration targets; (ii) the amount of future production over any period; (iii) net present value and internal rates of return of the mining operation; (iv) assumptions relating to recovered grade, average ore recovery, internal dilution, mining dilution and other mining parameters set out in the Feasibility Study or the Optimization Study; (v) assumptions relating to gross revenues, operating cash flow and other revenue metrics set out in the Feasibility Study or the Optimization Study; (vi) mine expansion potential and expected mine life; (vii) expected time frames for completion of permitting and regulatory approvals and making a production decision; (viii) the expected time frames for the completion of the Route 167 extension and the financial obligations or costs incurred by Stornoway in connection with such road extension; (ix) future exploration plans; (x) future market prices for rough diamonds; (xi) the economic benefits of using liquefied natural gas rather than diesel for power generation; (xii) sources of and anticipated financing requirements; (xiii) the closing of the Financing Transactions; (xiv) the release of the proceeds of the Public Offering and Private Placements and funding of the Convertible Loan and the use of proceeds therefrom, (xv) the completion, effectiveness or availability, as the case may require, of the other elements of the Financing Transactions and the use of proceeds therefrom; (xvi) the impact of the Financing Transactions on the Corporation's operations, infrastructure, opportunities, financial condition, access to capital and overall strategy; and (xvii) the anticipated timing of the shareholder meeting. 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 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. 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 in making forward-looking statements include, but are not limited to: (i) required capital investment and estimated workforce requirements; (ii) estimates of net present value and internal rates of return; (iii) receipt of regulatory approvals on acceptable terms within commonly experienced time frames; (iv) the assumption that a production decision will be made, and that decision will be positive; (v) anticipated timelines for the commencement of mine production; (vi) anticipated timelines related to the completion of the Route 167 extension and the impact on the development schedule at Renard; (vii) market prices for rough diamonds and the potential impact on the Renard Diamond Project; (viii) Stornoway's ability to consummate the financing transactions set forth in the Agreement to enable it finance the development and construction of the Renard Diamond Project; and (ix) future exploration plans and objectives. Additional risks are described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A, the final short form prospectus filed for the marketed public offering and other disclosure documents available under the Corporation's profile at: www.sedar.com.

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 be correct, but specifically include, without limitation, (i) risks relating to variations in the grade, kimberlite lithologies and country rock content within the material identified as mineral resources from that predicted; (ii) variations in rates of recovery and breakage; (iii) the uncertainty as to whether further exploration of exploration targets will result in the targets being delineated as mineral resources; (iv) developments in world diamond markets; (v) slower increases in diamond valuations than assumed; (vi) risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar; (vii) increases in the costs of proposed capital and operating expenditures; (viii) increases in financing costs or adverse changes to the terms of available financing if any; (ix) tax rates or royalties being greater than assumed; (x) uncertainty of results of exploration in areas of potential expansion of resources; (xi) changes in development or mining plans due to changes in other factors or exploration results; (xii) changes in project parameters as plans continue to be refined; (xiii) risks relating to the receipt of regulatory approvals or the implementation of the existing Impact and Benefits Agreement with aboriginal communities; (xiv) the effects of competition in the markets in which Stornoway operates; (xv) operational and infrastructure risks; (xvi) execution risk relating to the completion of the Route 167 extension; (xvii) the closing conditions of the Agreement, or the conditions to the release of the proceeds of the Public Offering and the Private Placements, not being satisfied; (xviii) failure to receive regulatory approvals (including stock exchange), shareholder approval or other approvals or otherwise satisfy the conditions to the completion, effectiveness or availability, as the case may require, of each of the elements of the Agreement; (xix) failure to complete the various elements of the Agreement on acceptable terms or at all; (xx) changes in the terms of the various elements of the Agreement; (xxi) the funds of some of the elements of the Agreement not being available to the Corporation; (xxii) future sales or issuances of Common Shares lowering the Common Share price and diluting the interest of existing shareholders; (xxiii) Stornoway being unable to meet its diamond delivery obligations under the Streaming Agreement, and (xxiv) the additional risks described in Stornoway's most recently filed Annual Information Form, annual and interim MD&A and the final short form prospectus filed for the marketed public offering, 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.

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