Exploration Update

Stornoway’s material mineral properties are (i) the Foxtrot Property in the Otish Mountains located in Québec, Canada; (ii) the Aviat One Property on the Melville Peninsula located in Nunavut, Canada; and (iii) the Churchill Property located in Nunavut, Canada. The following discussion is an update to disclosure in documentation filed with regulatory agencies and available for viewing under Stornoway’s profile on the SEDAR website at www.sedar.com.

Foxtrot Property – Renard Kimberlitic Bodies, Quebec

The Foxtrot Property, containing the Renard cluster of kimberlite bodies, is a 50/50 joint venture between Stornoway’s wholly-owned subsidiary Ashton, and SOQUEM Inc.’s (“SOQUEM”) wholly-owned subsidiary, Diaquem. Ashton is the project operator. Since 1996, Ashton and SOQUEM have evaluated an area of more than 400,000 square kilometres of the eastern Archean Superior craton. Exploration conducted by the joint venture has resulted in the discovery of a new field of kimberlitic intrusions on the Foxtrot property, notably the Renard cluster of kimberlitic bodies, and a nearby system of kimberlitic dykes, the Lynx-Hibou dykes. In August 2007, Ashton and SOQUEM completed an advanced stage bulk sample program at the Foxtrot property and recovered 6,497 carats of diamonds from three kimberlite pipes.

Diamond recovery results from the Renard bulk sampling program as well as an analysis of an Antwerp diamond valuation exercise conducted in September 2007, were provided in the Company’s interim MD&A dated December 13, 2007. This information can be obtained under Stornoway’s profile on Sedar (www.sedar.com) or from Stornoway’s website. In addition, subsequent diamond recovery results from an additional 400 tonne sample from the Renard 4 northern complex zone, a 185 tonne sample from Renard 3, a 500 tonne sample from the Lynx kimberlite dyke, a 31 tonne sample from the Hibou dyke, a 266 tonne sample from the Renard 65 kimberlite pipe and a 28 tonne sample from the North Anomaly dyke can also be found in the Company’s interim MD&As dated December 13, 2007 and March 13, 2008.

The results of the Renard bulk sampling program, including diamond valuation work and additional mini-bulk sampling of associated kimberlite bodies, will be utilized in a National Instrument (“NI”) 43-101 compliant mineral resource calculation, currently ongoing. This resource calculation forms a component part of a larger pre-feasibility study into potential diamond mining scenarios at Renard, which is expected to be completed shortly. Pending the results of this program of work, the Foxtrot property has the potential to host Quebec’s first diamond mine.

Revised Renard Diamond Valuation Results

During the current quarter ended April 30, 2008, Stornoway received new diamond valuation results from the Renard 2, 3 and 4 kimberlite pipes, and the Lynx and Hibou kimberlite dykes. The new valuations were commissioned to provide updated diamond price data in support of the Renard Pre-Feasibility study. Three new diamond valuation parcels from Renard 4, Lynx and Hibou were presented for valuation in Antwerp, Belgium under the supervision of WWW International Diamond Consultants Ltd. (”WWW”), an internationally recognized diamond valuation and consulting company. In addition, WWW performed an update of the previously obtained valuation on bulk sample diamond parcels from Renard 2, 3 and 4.

Renard 2 and 3

WWW recommended a revised modeled “Base Case” diamond price estimate for both the Renard 2 and Renard 3 kimberlite pipes of US$121 per carat, with a “High” modeled price estimate of US$136 per carat and a “Low” modeled price estimate of US$108 per carat. This was an 11% increase compared to the previous diamond price model of $109 per carat obtained in September 2007. The revised model was generated by WWW restating their own September 2007 valuation result on each diamond parcel on the basis of their March 2008 price book, and applying an adjustment factor to the diamond price model accordingly.

The revised Renard 2 and 3 diamond price models are summarized as follows:

Renard 2 & 3 Revised Valuation Model
Kimberlite Sampled Weight of Valuation Sample (Carats)* September 2007 “Base Case” Diamond Price Model (US$/carat) March 2008 “Base Case” Diamond Price Model (US$/carat) Percentage Increase in Model Price
Renard 2 1589.57 $109
(with sensitivities of $105 to $122)
$121
(with sensitivities of $108 to $136)
11%
Renard 3 2651.17

* Sample weights represent the total carat weight of diamonds presented for valuation following the combination of individual sub-samples and after acid cleaning.

Renard 4

WWW recommended a revised modeled “Base Case” diamond price estimate for the Renard 4 kimberlite pipe of US$79 per carat, with a “High” modeled price estimate of US$87 per carat and a “Low” modeled price estimate of US$71 per carat. This is a 14% increase compared to the September 2007 diamond price model of US$69 per carat. The revised model was generated in a similar fashion to that of Renard 2 and 3 above, but also incorporated the results of a valuation by WWW of 504 carats from the additional Renard 4 sample “4003”. Sample 4003 was collected in 2006 as part of the Renard 4 bulk sample program, which comprised surface trenching within the Renard 4 “Northern Complex Zone” (NCZ). 4003 was processed subsequent to the September 2007 valuation exercise so as to increase the size of the Renard 4 valuation parcel and to assist in determining the exact nature of the NCZ diamond size distribution.

The revised Renard 4 diamond price model is summarized as follows:

Renard 4 Revised Valuation Model
Kimberlite Sampled Weight of Valuation Sample (Carats)* September 2007 “Base Case” Diamond Price Model (US$/carat)** March 2008 “Base Case” Diamond Price Model (US$/carat) Percentage Increase in Model Price
Renard 4 - N. Complex Zone 2695.63 $69
(with sensitivities of $63 to $73)
$79
(with sensitivities of $71 to $87)
14%

* Sample weights represent the total carat weight of diamonds presented for valuation following the combination of individual sub-samples and after acid cleaning, and including 504 carats of diamonds from sample 4003 not available at the time of the September 2007 valuation.

** Model based on an original valuation sample of 2,192 carats.

Lynx and Hibou

WWW further recommended a modeled “Base Case” diamond price estimate for the Lynx kimberlite dyke of US$66 per carat, with a “High” modeled price estimate of US$97 per carat and a “Low” modeled price estimate of US$56 per carat. In addition to performing their own valuation on the 520 carat Lynx diamond parcel, WWW showed the parcel to two other Antwerp based experienced rough diamond valuators in order to obtain additional market based valuations. The average “observed” (un-modeled) price of the three valuations was US$53 per carat. The Lynx diamond valuation parcel was recently recovered from 494 tonnes of kimberlite extracted from two trench locations along the surface trace of the dyke during 2007. The parcel included a 21 carat stone which was broken during sample processing and recovered in principally three fragments, the largest of which weighed 11.73 carats.

WWW also performed a valuation on a 40 carat parcel of diamonds recovered from recent trenching on the Hibou kimberlite dyke (Stornoway press release dated January 28, 2008). This small parcel of diamonds was valued by WWW alone, who determined an “observed” (un-modeled) price of US$43 per carat. Owing to the size of the parcel, no diamond price modeling exercise was possible. However, WWW recommended that, for planning purposes, a diamond price of US$66 per carat be adopted for the Hibou kimberlite dyke, conditional upon the collection of a bulk sample that demonstrates an incidence of large diamonds similar to that seen at Lynx.

The complete Lynx and Hibou diamond price models are summarized as follows:

Lynx and Hibou Valuations
Kimberlite Sampled Weight of Valuation Sample (Carats)* Largest Diamonds (Carats) Observed (Un-Modeled) Average Diamond Price (US$/carat) “Base Case” Diamond Price Model (US$/carat)
Lynx 519.62 11.73, 5.87 $53 $66
(with sensitivities of $56 to $97)
Hibou 38.98 1.01, 0.67 $42 none determined**

* Sample weights represent the total carat weight of diamonds presented for valuation following the combination of individual sub-samples and after acid cleaning.

** WWW have recommended that, for planning purposes, a diamond price of US$66/carat be adopted for the Hibou kimberlite dyke, conditional upon the collection of a bulk sample that demonstrates an incidence of large diamonds similar to that seen at Lynx.

Scientific and technical data

The diamond valuation results discussed above were obtained during a valuation exercise undertaken in Antwerp, Belgium, between the 26th and 28th of March 2008, and by applying updated diamond price information to a valuation exercise undertaken in Antwerp between the 24th and 28th of September 2007. During the September 2007 valuation exercise, WWW and an additional three independent diamond valuators were employed, under the supervision of WWW, to determine diamond price estimates on the Renard 2, 3 and 4 diamond parcels. During the March 2008 valuation exercise, WWW and an additional two independent diamond valuators were employed to determine a diamond price estimate for the Lynx dyke diamond parcel, and WWW alone was employed to determine a diamond price estimate for the Renard 4 sample “4003” and the Hibou diamond parcel. Adjustment factors to diamond price models for Renard 2, 3 and 4 are based on an estimate of diamond price change between September 2007 and March 2008 by WWW, and assumes a similar price escalation would have been applied by the other three independent diamond valuators over the same period. All diamond valuations were based on a +1 DTC sieve size cut-off.

The diamond parcels valued were recovered after the processing of kimberlite bulk samples with a 10 tph dense media separation plant owned by Stornoway (through its wholly owned subsidiary Ashton) and SOQUEM in joint venture, and operated by Stornoway. Diamonds were recovered from concentrate at Stornoway’s wholly owned and operated mineralogical laboratory in North Vancouver, British Columbia. Quality assurance protocols and actual operating procedures for the processing, transport and recovery of diamonds under the Renard bulk sample program, including arms-length security provisions, conform to industry standard Chain of Custody provisions and were subject to the review of AMEC, who were contracted to provide third party accreditation for program data. The Renard program is managed by Dave Skelton, P.Geol., Senior Project Manager. Stornoway’s diamond exploration programs are conducted under the direction of Robin Hopkins P.Geol, Vice President, Exploration, a Qualified Person under NI 43-101.

Renard Pre-Feasibility Study Update

During the current quarter ended April 30, 2008, Stornoway also gave guidance on the progress of the ongoing Pre-Feasibility Study at Renard. Preliminary mine design, diamond plant design and capital and operating cost estimation have been completed in draft form and are awaiting the finalization of a National Instrument (“NI”) 43-101 compatible resource estimation by AMEC Americas Ltd. (“AMEC”). Completion of the resource estimate is required before a fully optimized, conceptual mine plan can be determined, operating and capital parameters fixed, and a financial model established. Delays in the completion of this work are attributable to congestion within the broader diamond mining sector, with multiple, concurrent development projects competing for a limited number of specialized resource estimation professionals. Stornoway expects to receive a finalized resource model shortly, allowing disclosure of the results of the Pre-Feasibility work to commence on a timely basis.

AMEC is an international project management and services company with broad experience in the Canadian diamond mining sector. The principal author of the Renard Pre-Feasibility Study is Agnico-Eagle Mines Limited (TSX: AEM), a leading mine developer in the Province of Québec and Stornoway’s largest shareholder.

Aviat Property, Nunavut

The Company’s interest in the 486,000 acre Aviat Property was previously governed by a joint venture agreement with BHP Billiton Diamonds Inc. (“BHPB”) and Hunter. Initially, the Company held a 70% interest in the property, BHPB held a 20% interest and Hunter held a 10% carried interest. Stornoway is the Operator. BHPB chose not to participate for its share of the 2006 or 2007 Aviat Property exploration programs, and as a consequence of this election, their interest on the Aviat Property was reduced to approximately 14.4%. Under an assignment agreement between Stornoway and BHPB entered into in May 2008, BHPB assigned to Stornoway all of its interest in the Aviat Project and its rights to market all diamonds of Hunter Exploration Group produced from the Project in consideration for the assumption by Stornoway of BHPB’s obligations under the joint venture agreement, including their bulk sampling obligations and all future funding obligations. Acquisition of BHPB’s interest in the project brings Stornoway’s project interest to 90% (Hunter continues to hold a 10% interest, carried to production) and Stornoway’s diamond marketing rights for the Project to 100%.

Exploration Program Update and Status

Stornoway’s 2007 field program on the Aviat Project commenced in early May under a budget of $2.75 million. Exploration activities have focused on discovering the source of the ‘northern’ mineral anomaly as well as testing the continuity/surface projection of the other Aviat bodies outlined by work in 2006. Drilling began in mid-May and finished in mid-August. Sampling (both till and rock) and prospecting was initiated when the snow cover had melted sufficiently and ran for the duration of the program, finishing in late August.

Highlights of the 2007 exploration program at Aviat include the following:

  • discovered a new diamondiferous kimberlite pipe, AV9
  • collected over 70 tonnes of kimberlite from three Aviat kimberlites (AV1, AV2 and AV8) for
  • macrodiamond recovery through a DMS plant
  • completed 45 diamond drill holes for a total of 4,828 m of core
  • intersected kimberlite in 36 of the 45 holes tested
  • obtained consistent kimberlite intersections within a 1.5 km2 area of the Eastern Sheet Complex
  • submitted 419 kg of drill core from the Eastern Sheet Complex for caustic fusion
  • collected 1,177 till samples for indicator mineral processing
  • acquired more than 600 other surface samples for future work

A new kimberlite pipe, known as AV9, was discovered from drilling in mid-August and represents the third pipe-like body identified within Aviat’s Tremblay Corridor where a total of eleven significantly diamondiferous kimberlites have now been identified since 2002 (AV1, AV1 West, AV2 Upper, AV267, AV3, AV4, AV5, AV8 Upper, AV8 Middle, and AV8 Lower and AV9). 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 AV267 through AV8. Most of the bodies are associated with surficial kimberlite boulders and/or subcrop and/or outcrop. Caustic fusion analysis of small samples collected from each of these kimberlites have proven significantly diamondiferous.

AV9 lies four kilometers east-southeast of the diamondiferous AV1 kimberlite pipe, and is situated along the same regional structural feature that hosts AV1, and which is believed to have influenced emplacement of the other Aviat kimberlite pipes and sheets. As a result of the AV9 discovery, additional targets along this regional feature have been identified and prioritized for drill testing in 2008.

AV9 is described as a transitional kimberlite pipe, containing both macrocrystic hypabyssal and transitional hypabyssal breccia phases. Kimberlite was intersected within a horizontal area measuring approximately 60 x 60 meters, and to a vertical depth greater than 100 meters, but neither the lateral nor vertical extent of AV9 are known at the present time. A total of 307.26kg (dry) of kimberlite core from AV9 was submitted for caustic fusion and returned 236 diamonds (stones retained on a 0.106mm square mesh sieve). The three largest stones had dimensions measuring 2.324×2.307×1.804mm, 1.871×1.529×1.531mm and 1.665×1.403×0.892mm. Further details are shown below:

TOTAL SAMPLE WEIGHT NUMBER OF DIAMONDS PER SIEVE SIZE (MM SQUARE MESH SIEVE) TOTAL
+0.106
mm
+0.150
mm
+0.212
mm
+0.300
mm
+0.425
mm
+0.600
mm
+0.850
mm
+1.180
mm
+1.7
mm
307.26 97 47 42 26 14 6 2 1 1 236

In January 2008, Dense Media Separation (DMS) processing of 20.6 tonnes (dry) of kimberlite collected in three subsamples from surface expressions of the AV267 kimberlite returned a total of 33.36 carats of diamonds, indicating a diamond content of 162 cpht for stones retained on a 0.85mm square mesh screen. During processing, a 3.64 carat diamond (see January 21, 2008 press release) was recovered. This gem quality, white, dodecahedron is the largest stone from the Aviat Project to date and, in management’s opinion, establishes Aviat’s potential to yield large, high quality gemstones, an important value driver in any economic diamond deposit.

Sample Dry Weight (tonnes) No. Stones >0.85mm Carats1 Diamond Content2 (cpht)3 Largest Diamonds (carats)
2007 AV267 20.6 978 33.359 162 3.64, 0.551, 0.525

1 Represents stones retained on a +0.85mm square mesh screen

2 The estimated diamond content, expressed as carats per hundred tonnes, may not be representative of the overall diamond content of the body due to a number of factors, including location and size of the samples

3 Carats per hundred tonnes

As currently identified, the AV267 sheet outcrops at surface in at least three locations, which in the past were referred to as the AV2 Lower, AV6 and AV7 exposures. The 20.6 tonne sample of AV267 reported above was collected in close proximity to the original AV2 Lower site. Historical DMS processing of small tonnage samples collected from each of those three separate outcrop sites returned a composite 5.44 carats of diamonds from 6.66 dry tonnes, for an average diamond content of 82 cpht, as shown individually by disclosure date below:

Disclosure Date Sample Type Dry Weight (tonnes) Carats1 Diamond Content2 (cpht)3 Largest Diamonds (carats)
11-Jan-07 AV2 Lower 2.19 1.58 72 0.19
11-Jul-06 AV7 2.32 1.78 77 0.19
21-Jun-06 AV6 2.15 2.08 97 0.1

1 Represents stones retained on a +0.85mm square mesh screen

2 The estimated diamond content, expressed as carats per hundred tonnes, may not be representative of the overall diamond content of the body due to a number of factors, including location and size of the samples

3 Carats per hundred tonnes

AV267 is one of seven separate kimberlite sheets intersected over an area measuring about 1.5 by 3.5 km within the Eastern Sheet Complex, part of the Tremblay Corridor. 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. The Company is investigating the hypothesis that the eastern kimberlites represent occurrences of a single system of stacked kimberlite sheets underlying the entire 1.5 by 3.5 kilometer area. One such sheet alone would represent a substantial potential tonnage of diamondiferous material. Additional drilling is required to properly test this conceptual model.

Drilling to date has intersected AV267 over approximately 2km of strike length and up to 500m down dip. True thickness averages about 3m, with most intersections ranging from 2.5 to 4.0m. At the present time the sheet is thought to thicken from northeast to southwest, achieving widths of up to 7m. Three roughly rectangular and contiguous ‘blocks’ of kimberlite within the AV267 sheet have been tested with an irregular drill pattern. The first block (9 holes in kimberlite) tested a strike length of about 900m and a down dip extension of about 350m, and represents a body striking at 100 degrees and dipping about 8 degrees to the southwest. The second block (12 holes in kimberlite) has a strike of 800m and a down dip extension of about 500m. This block strikes at 065 degrees and dips 8-10 degrees to the southeast. Both of these ‘blocks’ are open down dip. To the east, a third block of kimberlite (contiguous with the other two, and with a 065 degree strike and 8-10 degree southeast dip) has been intersected over a strike length 800m and a down dip extension of 400m. Drilling in this area suggests the sheet pinches out both along strike and down dip.

Individual core intersections from the 2007 drill program on the AV267 kimberlite totaling 358.7 kg were submitted for caustic dissolution and returned coarse diamond counts that match well with the 20.6 tonne sample reported above. Caustic dissolution results are reported below:

Dry Wt (kg) NUMBER OF DIAMONDS PER SIEVE SIZE (MM SQUARE MESH SIEVE) Total Stones
0.106 to 0.150 0.150 to 0.212 0.212 to 0.300 0.300 to 0.425 0.425 to 0.600 0.600 to 0.850 0.850 to 1.18 1.18 to 1.70 1.70 to 2.36
358.7 143 127 98 70 42 18 8 10 0 518

During the year, Stornoway also reported additional DMS results from three other kimberlite bodies on the Aviat Project.

A total of 48.9 dry tonnes of material from the AV1 kimberlite was collected in 2007 and processed by Dense Media Separation (DMS), recovering 43.41 carats of diamonds for an indicated diamond content of 89 carats per hundred tones (cpht) for stones retained on a 0.85mm square mesh screen. The three largest diamonds recovered from this work were a 0.53 carat colourless macle, a 0.50 carat grey clivage and a 0.49 carat colourless macle.

Previously reported results (Stornoway press release of October 21, 2004) from AV1 comprised 8.54 carats of diamonds recovered from 10.28 dry tonnes of processed material, for an indicated diamond content of 83 cpht (stones retained on a 0.85mm square mesh screen). The largest diamond recovered from this previously reported work was 0.40 carats. Combining this historical result with the new DMS data reported above provides a ‘global’ summary for the AV1 body of 88 cpht (51.95 carats from 59.19 dry tonnes).

Also during 2007, a total of 6.24 dry tonnes of the AV2 Upper kimberlite was collected and processed by DMS to yield 4.99 carats of diamonds for an indicated diamond content of 80 cpht for stones retained on a 0.85mm square mesh screen. The three largest diamonds recovered from this work were a 0.30 carat colourless broken octahedron, a 0.23 carat colourless octahedron and a 0.13 carat grey tetrahexahedroid.

Details of the new AV1 and AV2 Upper results are provided below:

Kimberlite Dry wt. (tonnes) +0.850 mm +1.18 mm +1.70 mm +2.36 mm +3.35 mm No. Stones >0.85mm No. Stones >1.18mm Carats Recovered1 Diamond Content2 (cpht)3
AV1 48.91 1035 485 137 36 5 1698 663 43.41 89
AV2 Upper 6.24 139 73 12 2 0 226 87 4.99 80

1 Represents stones retained on a +0.85mm square mesh screen

2 The estimated diamond content, expressed as carats per hundred tonnes, may not be representative of the overall diamond content of the body due to a number of factors, including location and size of the samples

3 Carats per hundred tonnes

A third DMS sample, collected from a freshly excavated surface expression of the AV8 Upper kimberlite in 2007, returned a total of 1.6065 carats of diamonds from the processing of 1.956 tonnes (dry) of kimberlite, indicating a diamond content of 82 cpht for stones retained on a 0.85mm square mesh screen. The largest stone recovered from this small sample was a 0.38 ct light grey tetrahexahedroid. The AV8 diamonds are described as a mix of white, grey and brown stones representing mostly tetrahexahedroid and combination forms.

Sample Dry Weight (tonnes) No. Stones >0.85mm Carats1 Diamond Content2 (cpht)3 Largest Diamonds (carats)
2007 AV8 Upper 1.956 54 1.6065 82.1 0.38, 0.18, 0.10

1 Represents stones retained on a +0.85mm square mesh screen

2 The estimated diamond content, expressed as carats per hundred tonnes, may not be representative of the overall diamond content of the body due to a number of factors, including location and size of the samples

3 Carats per hundred tonnes

AV8, originally discovered as outcrop in 2005 and situated some 3km east-southeast of AV267, was drill tested in 2005 and 2006. Drilling intersected three distinct sheets of kimberlite (Upper, Middle and Lower), striking roughly north-south, dipping at about 10 - 20 degrees to the west, separated by a vertical distance of 20-30m and extending over a drilled surface area of about 650m by 375m. The AV8 Upper sheet averages 2.9m true thickness in the vicinity of the original AV8 outcrop (see press release dated October 11, 2006). The heavily weathered discovery outcrop of AV8 Upper was the site of an earlier 2.5t surface DMS sample, historical results of which are restated below. The improved diamond content for AV8 Upper derived from the new 2007 work reported herein is ascribed to the collection of a fresher, less weathered sample, and is more consistent with the other Aviat bodies.

Disclosure Date Sample Type Dry Weight (tonnes) Carats1 Diamond Content2 (cpht)3 Largest Diamonds (carats)
11-Jan-07 AV8 Upper 2.53 0.6545 26 0.129

1 Represents stones retained on a +0.85mm square mesh screen

2 The estimated diamond content, expressed as carats per hundred tonnes, may not be representative of the overall diamond content of the body due to a number of factors, including location and size of the samples

3 Carats per hundred tonnes

Diamond results reported above are based on work completed by Microlithics Laboratories, Thunder Bay, Ontario, an independent mineral process laboratory currently providing services exclusively to Stornoway and its affiliates. The 6.2 and 48.9 tonne samples were processed through a 1.5 tonne per hour (tph) DMS plant designed to recover stones retained on a 0.85mm square mesh sieve. Kimberlite was prepared through a primary jaw crusher, with -10 mm material fed directly into the DMS. All +10 mm material was subsequently reduced through secondary cone crushing. DMS concentrates were submitted for caustic fusion and the residues hand sorted to extract diamonds. As part of Stornoway’s ongoing QA/QC programs, DMS tails, concentrate residues and other materials are subject to audit. Any significant changes to recovered diamond grades will be reported when available. Stornoway’s diamond exploration programs are conducted under the direction of Robin Hopkins P.Geol. (NT/NU), Vice President, Exploration, a Qualified Person under NI 43-101.

Planned Exploration Activities for 2008

Exploration activities consisting of ground geophysics and drilling commenced on the Aviat project in mid-May 2008. Initial work will be focused at AV9, with the goal of establishing its size and shape and collecting a larger sample for diamond analysis. Drilling will also be undertaken on the AV267 sheet to support a conceptual resource study. An additional 150-200 tonne sample of kimberlite will be collected from surface exposures of the AV267 sheet this season, once weather and logistical considerations allow. The sample will be shipped south by scheduled barge for DMS processing, with results expected late in 2008. The purpose of the 150-200 tonne sample will be to establish a preliminary value for the Aviat diamonds that can be used in conjunction with the conceptual resource study to examine the economic potential of the Aviat Project. Additional targets established from a Spring ground geophysical program targeting the primary host structure of the AV1, AV4 and AV9 kimberlite pipes will be slated for drill testing later in the summer.

The Company believes that the continuity of the eastern stacked kimberlite sheets, coupled with the discovery of the AV9 pipe and the presence of other unsourced indicator mineral anomalies within the Tremblay Corridor and along the main host structure, demonstrates the potential for both significant tonnage and continued exploration success at the Aviat Project.

Churchill Property, Nunavut

The Company acquired an initial 35% interest in the diamond rights to the Churchill Property pursuant to a letter agreement dated June 13, 2002. A joint venture agreement was executed as of August 1, 2004, among the Company, BHPB and Shear Minerals Ltd. (“Shear”). In July 2007, Stornoway increased its interest in the Churchill property to 41.86% by acquiring a portion of BHPB’s interest in the Churchill Project in consideration of a cash payment of $1,250,000 and by issuing 2,200,000 common shares with a fair value at the time of issuance of $2,134,000. Shear acquired the remainder of BHPB’s interest concurrently. As a result, Shear and Stornoway now own a 58.14% and 41.86% interest, respectively, in the project. The Churchill Property is subject to a 2% GOR/NSR in favour of Hunter.

The Churchill Property comprises approximately 1.1 million acres located near the community of Rankin Inlet in the Kivalliq Region of Nunavut, Canada. Mineral rights to any non-diamond commodities within the Churchill Property have been held by an unrelated company (Kaminak Gold Corp.) since November 2005.

A budget of $8.5 million was approved for the 2007 exploration season and included plans for the minibulk sampling of up to 500 tonnes of kimberlite from the Kahuna and Notch diamondiferous dikes. Other plans included snowmobile ground geophysics to collect detailed magnetic data at 40m line spacing within corridors of high interest G10 chemistry, ongoing exploration drilling to find the source of 17 pyrope dispersion trains, ongoing till sampling and prospecting throughout the summer season, structural study and interpretation and ongoing environmental baseline data collection.

Kahuna minibulk sample results

Processing of the minibulk sample from the Kahuna kimberlite at the Churchill Project was completed in November 2007. The joint venture recovered 11,088 diamonds greater than 0.85 mm from a total sample of 356 dry tonnes resulting in an overall diamond grade of 0.95 carats per tonne. A Kahuna tailings audit completed during the year and reported on June 26, 2008 confirmed the recovery of additional diamonds that potentially increases diamond grade to 1.04 carats per tonne (cpt). The objective of the Kahuna bulk sample program was to establish a preliminary grade and to provide an initial assessment of diamond value.

The minibulk sample, collected earlier in 2007, yielded 337 carats of diamonds with preliminary observation describing the majority as white and colourless. The five largest stones were 5.44, 2.05, 1.54, 1.44 and 1.32 carats. Several of the larger stones are interpreted to be broken fragments of a larger diamond estimated to have been up to 13.42 carats in weight.

The diamond results are from three spatially separate surface samples that were collected by trenching along the Kahuna kimberlite dyke in March and April of 2007. Sample grades are based on diamonds recovered on a 0.85mm sieve size or larger (using a square mesh). The Kahuna kimberlite is inferred to be a sub-vertical kimberlite dyke up to 4m wide that trends for more than 5.5km based on geophysical interpretation.

Sample Number Sample Weight Dry (tonnes) Diamond Recovery Carats per tonne (+0.85mm) Weight of Diamonds Recovered (carats) (+0.85mm) Number of stones +0.85mm 0.85 mm Sieve 1.18 mm Sieve 1.70 mm Sieve 2.36 mm Sieve 3.35 mm Sieve 4.75 mm Sieve 6.70 mm Sieve
Kahuna – Sample 11 98.13 1.03 100.80 3582 1737 1528 263 48 6 0 0
Kahuna – Sample 32 151.63 0.94 142.35 4267 2015 1850 302 76 20 3 1
Kahuna – Sample 23 106.57 0.88 93.54 3239 1609 1374 203 40 13 0 0
Total Kahuna

356.33 0.95 336.69 11088 5499 4772 773 165 39 3 1

1 Largest diamond 0.98 carats

2 Largest diamonds 5.44, 2.05, 1.54, 1.44, and 1.32 carats; as reported in November 14, 2007 news release

3 Largest diamonds 1.39, 1.19 and 0.73 carats; as reported in September 8, 2007 news release

Sample results are based on the recovery of diamonds by dense media separation (DMS) at Kennecott Canada Exploration Inc.’s independent processing plant in Thunder Bay, ON, using a 1mm square mesh bottom cut off. Kahuna Samples 1 and 3 were crushed; Sample 2 required no crushing as the kimberlite was pervasively clay altered. A 135kg and 672.8kg heavy mineral concentrate was generated from Samples 1 and 3 respectively and then passed through an x-ray sorter and picked for diamonds. Diamonds were also recovered during an audit of the magnetic fractions and x-ray rejects resulting in the treatment of these fractions by caustic fusion analysis.

Kahuna Bulk Sample Tailings Audit

On June 26, 2008 Shear reported the recovery of additional macrodiamonds from an audit of the tailings material from the 2007 Kahuna bulk sample. The audit comprised reprocessing of between 15 and 22% of the tails from each sample, and an additional 351 diamonds representing 6.196 carats were recovered, including a 0.27 carat diamond from the Kahuna 3 sample. It was carried out at Microlithics Dense Media Separation (DMS) facility in Thunder Bay, Ontario. The tailings underwent an initial pass through the DMS circuit to produce a heavy mineral concentrate which was then subjected to caustic fusion to recover diamonds.

Based on the results of the audit, the calculated diamond grade for Kahuna (as reported on December 3, 2007) has the potential to increase from 0.96 carats per tonne (cpt) to 1.04 cpt.

Kahuna Bulk Sample Valuation

Given the completion of the tailings audit and breakage studies on the Kahuna bulk sample, Shear is currently in the process of finalizing arrangements for an independent market valuation exercise for the Kahuna diamonds. The valuation will be conducted in Antwerp, Belgium, and is designed to give a preliminary estimate of average diamond value for the parcel recovered to date.

Other exploration results at Churchill

Additional work at Churchill during the year ended April 30, 2008 resulted in the discovery of a total of 31 new kimberlite occurrences, including three kimberlite dykes that have been interpreted to be similar to the higher interest bodies found elsewhere on the property. Work on the property included:

  • High resolution geophysical surveys over all high-interest G10 pyrope corridors to assist with target identification and drilling. This consisted of ground geophysics totaling 5,000 line-km at 40m line spacing and high resolution airborne magnetics surveying using the FUGRO MIDAS system totaling 12,000 line-km at 15m line spacing to provide seamless data for follow-up
  • 488 till samples taken to infill known priority areas
  • 51 auger drill holes completed in the Josephine River Corridor to trace the high-interest pyropes in the glaciofluvial sand deposits. 37 of these holes contained visible kimberlite fragments
  • Sixty-four drill-holes totaling 4,666m were completed on the property to test new exploration targets and to define and better understand the Kahuna kimberlite.

At Kahuna, 30 drill-holes from 18 set-ups totaling 2,333m were drilled along a tested 4.5km strike length of the kimberlite dyke to provide a better understanding of its size and geometry. A total of 142m of kimberlite was intersected down hole, with single intercepts ranging from 0.5 to 4.6 metres and averaging 2.6m in true width. Drill core samples totaling 225kg were also collected for micro diamond analysis to assist in grade modeling. A further 26 exploration targets were tested with 32 drill holes totaling 2,354m which resulted in the discovery of 15 new kimberlites on the property. Three of these are interpreted to be high diamond potential kimberlite dykes, occurring at the heads of three different G10 pyrope mineral trains in the Sedna Corridor and are believed to be the source of the mineral chemistry. Sample material totaling 190.4kg was collected from all drill core and sent for diamond recovery. Kimberlite from the KD308 blow represents 160kg of this material (results reported below). Results from the remaining material will be released when available.

Prospecting on the property resulted in 16 new kimberlite discoveries occurring as outcrop and subcrop. A total of 291kg of kimberlite was collected in 15 to 25kg grab samples from each new outcrop and subcrop occurrence. In addition to the outcrops and subcrops, nine unsourced kimberlite float anomalies were found. All samples will be analyzed to determine diamond potential. Of particular interest is the Meeka kimberlite found from prospecting an east-west linear trend located southeast of the Jigsaw kimberlite. An area of green coloured till was sampled and nineteen diamonds were recovered from a 15kg till sample using caustic fusion. A larger trench sample of similar material yielded a total of 92 microdiamonds from a 102.8kg sample (see news release January 31, 2008). Based on interpretation from a ground geophysical grid, Meeka is an east-west trending dyke 500m in length and open in both directions. Trenching along the body was unable to establish true width due to the highly weathered nature of the kimberlite and surrounding country rock. Nonetheless, a 1.8-tonne mini bulk sample was collected of this material that once dried, resulted in a final sample weighing 860.5 kilograms. This sample was processed through the Microlithics DMS facility and only one >0.5mm diamond was recovered from a concentrate containing abundant chromite and kyanite. Due to the unconsolidated nature of the sample medium it is interpreted that the mini bulk sample was highly diluted by glacial material and weather country rock. Prospecting of the entire Meeka trend will occur in 2008 to attempt to locate fresh bedrock kimberlite for follow up sampling.

Results will be released when available.

KD308 Diamond Results

The KD308 kimberlite, which was drilled in 2006 and reported in a May 2, 2007, press release, was interpreted to represent a kimberlite blow on a parallel structure 2.5 km east of Kahuna. A sample of 160 kg of material was collected and analyzed for diamond content. The results are tabulated below:

Sample Number Sample Weight (kg) 0.106 mm Sieve 0.15 mm Sieve 0.212 mm Sieve 0.3 mm Sieve 0.425 mm Sieve 0.6 mm Sieve 0.85 mm Sieve 1.180 mm Sieve Total
KD-3081 160 10 6 4 0 0 1 0 0 21

1 The three largest diamonds measured 1.00mm x 0.68mm x 0.58mm; 0.5mm x 0.42mmx 0.26mm; 0.38mm x 0.32mm x 0.30mm

All samples were submitted to the Saskatchewan Research Council Geoanalytical Laboratories (“SRC”) accredited to the ISO/IEC 17025 standard by the Standards Council of Canada as a testing laboratory for diamond analysis using caustic fusion.

During the current quarter ended January 31, 2008, the Company and Shear reported additional caustic fusion results received from four new kimberlite dykes discovered by drilling during the 2007 exploration program.

These kimberlites occur at the heads of three different G10 pyrope mineral trains in the Sedna Corridor and are believed to be the source of the mineral chemistry based on their close spatial association. The kimberlite dykes range in size from 10 to 50cm true width and are highly altered with visible pyrope garnets.

Samples were submitted to the Saskatchewan Research Council Geoanalytical Laboratories (”SRC”) accredited to the ISO/IEC 17025 standard by the Standards Council of Canada as a testing laboratory for diamond analysis using caustic fusion. Diamonds from these four dykes will be described, categorized and assessed for any breakage. Complete diamond recoveries were as follows:

Kimberlite Sample Weight (kg) 0.106 mm Sieve 0.15 mm Sieve 0.212 mm Sieve 0.3 mm Sieve 0.425 mm Sieve 0.6 mm Sieve 0.85 mm Sieve 1.180 mm Sieve Total Diamond Count
KD-131 1.0 28 13 6 4 2 1 0 0 54
KD-142 1.7 40 23 7 9 3 1 0 1 84
KD-163 3.75 48 27 17 9 5 2 0 1 109
KD-244 2.2 116 82 49 30 12 9 5 2 305

1 The three largest diamonds measured 1.1mm x 0.9mm x 0.7mm; 0.78mm x 0.6mm x 0.5mm; 0.7mm x 0.5mm x 0.4mm

2 The three largest diamonds measured 2.7mm x 1.9mm x 0.32mm; 0.92mm x 0.9mm x 0.24mm; 1.14mm x 0.74mm x 0.34mm

3 The three largest diamonds measured 1.4mm x 1.36mm x 1.1mm; 0.76mm x 0.66mm x 0.6mm; 0.7mm x 0.64mm x 0.48mm

4 The three largest diamonds measured 1.86mm x 1.58mm x 1.06mm;1.74mm x 1.52mm x 0.96mm; 1.62mm x 1.38mm x1.1mm

Additional diamond results are also reported from the Meeka kimberlite. Meeka is an east-west linear kimberlite dyke 500m in length and open in both directions (based on interpretation from ground geophysics). It is located southeast of the Jigsaw kimberlite and was discovered by prospecting in 2007 (see October 11, 2007 news release). A 15 kg sample of green coloured till adjacent to Meeka was sampled previously and returned nineteen diamonds using caustic fusion. During 2007 a 102.8 kg sample of weathered kimberlite was collected for testing with caustic dissolution in addition to a larger 1.8 tonne mini bulk sample for processing utilizing dense media separation (DMS). Complete diamond recovery results from caustic fusion of the 103kg sample at SRC are as follows:

Sample Number Sample Weight (kg) 0.106 mm Sieve 0.15 mm Sieve 0.212 mm Sieve 0.3 mm Sieve 0.425 mm Sieve 0.6 mm Sieve 0.85 mm Sieve 1.180 mm Sieve Macros Total
Meeka1 102.8 52 35 3 1 0 0 0 0 0 91

1 The three largest diamonds measured 0.4mm x 0.3mm x 0.3mm; 0.28mm x 0.28mm x 0.22mm; 0.28mm x 0.2mm x 0.2mm

Prospecting on the property in 2007 also identified 16 new kimberlite discoveries occurring as outcrop and sub crop. A total of 291kg of kimberlite was collected in 15 to 25kg grab samples from each new outcrop and sub crop occurrence. In addition to the outcrops and sub crops, nine unsourced kimberlite float anomalies were found. Recently completed caustic fusion of these samples did not return any significant diamond results.

On February 20, 2008, Shear and Stornoway announced additional macro and micro diamond recoveries from 2007 drilling of the Kahuna kimberlite dyke. In 2007, 30 drill-holes from 18 set-ups totaling 2,333m were drilled along a 4.5km strike length of the Kahuna kimberlite dyke to provide a better understanding of its size and geometry. A total of 142m of kimberlite was intersected, with intercepts up to 11.8m down-hole (3.8m true width). Based on these intercepts, Shear has described the Kahuna kimberlite as a vertical dyke averaging 2.6m in true width. Drill core samples totaling 206.3 kg were processed and 1,071 diamonds, including 99 macro diamonds, were recovered.

Results:

Total Kahuna Drilling Sample Weight (kg) 0.150 mm Sieve 0.212 mm Sieve 0.300 mm Sieve 0.425 mm Sieve 0.600 mm Sieve 0.850 mm Sieve 1.180 mm Sieve 1.700 mm Sieve Total
Kahuna 206.3 444 291 205 80 34 13 3 1 1071

In addition, samples were collected from each of the three mini bulk sample pits for microdiamond modeling. A total of 288.5 kg was processed with 1,619 diamonds, including 215 macro diamonds, being recovered. Results are listed below:

Sample Number Sample Weight (kg) 0.150 mm Sieve 0.212 mm Sieve 0.300 mm Sieve 0.425 mm Sieve 0.600 mm Sieve 0.850 mm Sieve 1.180 mm Sieve 1.700 mm Sieve Macros Total
Kahuna 1 106.1 236 172 119 54 20 2 4 0 80 607
Kahuna 2 83.65 244 162 96 28 18 10 2 0 58 560
Kahuna 3 98.75 167 131 76 43 25 5 4 1 77 452
Total from Pits 288.5 647 465 291 125 63 17 10 1 215 1619

All samples were submitted to the Saskatchewan Research Council Geoanalytical Laboratories (”SRC”) accredited to the ISO/IEC 17025 standard by the Standards Council of Canada as a testing laboratory for diamond analysis using caustic fusion.

Qilalugaq Property, Nunavut

The Qilalugaq Property is 1.04 million acres and lies on the Melville Peninsula in Nunavut. The property hosts 17 kimberlites, including the 14 ha coalescing Q1-4 bodies, currently the largest known kimberlite in the eastern Arctic and the subject of a previous large scale sampling program by BHPB. Under the terms of an option agreement signed between BHPB and Stornoway on July 10, 2006 and revised June 5, 2008, Stornoway can earn 50% in the project from BHPB by spending $9 million before December 31, 2012.

Dense Media Separation (DMS) processing of 20.28 tonnes (dry) of kimberlite collected during 2007 as a single surface sample from the outcropping Q1 (also known as A28) kimberlite returned a total of 6.081 carats of diamonds, indicating a diamond content of 30 cpht for stones retained on a 0.85mm square mesh screen. The largest intact diamond recovered from this sample was a 0.37 carat light brown irregular stone. Some 25 pieces of a larger but mechanically broken colourless stone were recovered, representing an original crystal weight of at least 0.7925 carats. Other unrecognized fragments of this diamond may be present in the stone counts below. The Q1 (A28) diamonds are described as a mix of mostly octahedral and tetrahexahedroid forms. Stone colours range from colourless to light brown, with a small component of yellows.

Sample Dry Weight (tonnes) No. Stones >0.85mm Carats1 Diamond Content2 (cpht)3 Largest Diamonds (carats)
2007 Q1 (A28) 20.28 193 6.081 30.0 0.794, 0.37, 0.36, 0.29

1 Represents stones retained on a +0.85mm square mesh screen

2 The estimated diamond content, expressed as carats per hundred tonnes, may not be representative of the overall diamond content of the body due to a number of factors, including location and size of the samples

3 Carats per hundred tonnes

4 Broken stone (minimum weight as measured from 25 recovered pieces)

Prospecting activities undertaken during the summer 2007 program extended the strike length of the Naujaat 1 and Naujaat 2 kimberlite dykes, originally discovered during 2006 (see press release dated August 23, 2006), and identified four new kimberlite dykes, Naujaat 3 through Naujaat 6, inclusive (see press release dated September 11, 2007). Collectively, the Naujaat 1 to Naujaat 6 bodies and the known diamondiferous kimberlite pipes suggest the presence of a 26 km long, structurally favourable, belt that has been exploited by kimberlite magmas rising from the mantle. No drilling or mechanized trenching has been undertaken on the Naujaat 1 to Naujaat 6 bodies.

Surface expressions of kimberlite subcrop from Naujaat 1 to 4 and Naujaat 6 were sampled to determine microdiamond content by caustic fusion analysis. As noted previously, (see press release dated September 11, 2007) the Naujaat 5 kimberlite occurs only as disaggregated frost heaved ‘green tills’ for which no fresh representative sample could be collected. All of the 2007 caustic fusion samples retuned diamonds, with results summarized in the table below. Recovery of +0.60 and +0.85mm stones from Naujaat 4 during caustic fusion is considered to be a positive development.

Body Sample Weight (kg) NUMBER OF DIAMONDS PER SIEVE SIZE (MM SQUARE MESH SIEVE) Total
+0.106 mm +0.150 mm +0.212 mm +0.300 mm +0.425 mm +0.600 mm +0.850 mm +1.180 mm +1.7 mm
Naujaat 1

138.49 34 20 12 19 8 1 0 0 0 94
Naujaat 2

60.19 3 3 2 2 0 0 0 0 0 10
Naujaat 3

243.30 0 8 4 2 2 0 0 0 0 16
Naujaat 4

94.75 13 12 13 2 1 1 1 0 0 43
Naujaat 6

158.40 14 14 5 1 1 0 0 0 0 35

Small DMS samples were collected in 2007 from kimberlites Naujaat 1, 2, 3 and 6 to gain greater information on potential macrodiamond content. Although the sample sizes are too small to accurately reflect total diamond content (see discussion in Historical and Comparative section below), only the Naujaat 1 body recovered any diamonds on the 0.85mm or greater square mesh screen, as reported below.

Sample Dry Weight (tonnes) No. Stones >0.85mm Carats1 Diamond Content2 (cpht)3 Largest Diamonds (carats)
Naujaat 1 0.588 4 0.0305 5.2 0.0080
Naujaat 2 0.913 0 n/a n/a n/a
Naujaat 3 1.703 0 n/a n/a n/a
Naujaat 6 0.998 0 n/a n/a n/a

1 Represents stones retained on a +0.85mm square mesh screen

2 The estimated diamond content, expressed as carats per hundred tonnes, may not be representative of the overall diamond content of the body due to a number of factors, including location and size of the samples

3 Carats per hundred tonnes

The 2008 program is anticipated to commence in July, depending on weather and logistical considerations, and will focus on unsourced mineral indicator mineral trains with promising chemistry. Stornoway will also conduct additional prospecting along the Naujaat 4 and 5 bodies to determine if sufficient unweathered material exists at surface to facilitate the collection of larger samples.

The terms of the original option agreement signed between Stornoway and BHPB on July 10, 2006 (see press release dated July 12, 2006) have been revised, such that Stornoway may earn up to a 50% interest in the Qilalugaq Diamond Property by spending a total of $9 million before December 31, 2012 (changed from December 31, 2011). Thereafter, a joint venture will be formed whereby the partners agree to jointly fund the next $6 million in property expenditures over two years. After $6 million in expenditures have been incurred, BHPB shall have a one time election to earn a further 15% interest in the project (bringing its total interest to 65%) by incurring the next $15 million in expenditures.

Historical and Comparative Data

The Qilalugaq Property was acquired by BHPB in 2001 and has undergone several phases of exploration using airborne geophysics (magnetics, electromagnetics and gravity surveying) together with property wide till sampling, drilling and limited minibulk sampling. Eleven kimberlites were discovered by BHPB as a result of this work, ten of these were analysed and proven diamondiferous. The Qilalugaq bodies share geological similarities with the Aviat bodies and appear to be the same age. The largest kimberlite identified by BHPB is a complex made up of the Qilalugaq 1, 2, 3, and 4 pipes which coalesce to form a body with an approximate area of 14 ha. Other drill confirmed bodies range in size from 0.8 to 11.0 ha based on interpretation of geophysical data. A mini-bulk sample of 229.7 dry tonnes extracted from the Qilalugaq 1-4 (Q1-4) complex by RC and core drilling returned a total of 61.37 carats (for stones greater than 1.1 mm), indicating a calculated sample grade of 27 cpht. The Q1 body, approximately 5.4 ha in size, was not tested with RC drilling and is therefore under represented in this mini-bulk sample.

Stornoway collected a 4.2 tonne sample by hand pitting of the Q1 (A28) kimberlite body in 2006, A diamond content of 32.8 cpht, including a 0.587 carat stone, was reported following DMS processing (see press release dated May 14, 2007). BHP Billiton previously collected a 9.6 tonne sample from the same body by drilling and derived a diamond content of 26 cpht. During 2007, Stornoway excavated an additional 20.3 tonnes of kimberlite from the A28 kimberlite pipe by hand pitting of surface exposures as reported above. Historical results and a cumulative total are provided in the table below.

Disclosure Date Sample Type Dry Weight (tonnes) Carats1 Diamond Content2 (cpht)3 Largest Diamond (carats)
05-June-2008 Q1 (A28) Surface 20.28 6.081 30.0 0.794
14-May-2007 A28 Surface 4.19 1.380 32.8 0.587
14-May-2007 Q1 Historical Drilling (BHPB) 9.60 2.496 26.0 n/a
Cumulative Total 34.07 9.957 29.2 0.794, 0.587

1 Represents stones retained on a +0.85mm square mesh screen

2 The estimated diamond content, expressed as carats per hundred tonnes, may not be representative of the overall diamond content of the body due to a number of factors, including location and size of the samples

3 Carats per hundred tonnes

4 Broken stone (minimum weight as measured from 25 recovered pieces)

During 2006, Stornoway also discovered two kimberlite dykes by prospecting - the Naujaat 1 and Naujaat 2 bodies (see press release dated August 23, 2006). Caustic fusion results from Naujaat 1 collected at three locations along strike confirmed that the body was diamondiferous, and suggested a possible variation in diamond content may occur over the 3.1 km strike length. The small DMS sample collected in 2007, and reported above, indicates a potentially higher diamond content than the 2006 work, although the two samples were separated by a distance of 2.5 km. It is possible that what was thought to be a single body (Naujaat 1) is actually two separate features, but limitations to field exposures and unresolved geophysical variations preclude a definitive conclusion. The reader is also cautioned about drawing conclusions from the processing of small samples especially when dealing with lower grade kimberlite bodies. Apparent variations or discrepancies in diamond content may be attributable to natural factors, surficial weathering, collection issues, processing and recovery parameters, etc.

Disclosure Date Sample Type Dry Weight (tonnes) Carats1 Diamond Content2 (cpht)3 Largest Diamond (carats)
05-June-2008 Naujaat 1 2007 0.588 0.0305 5.2 0.0080
14-May-2007 Naujaat 1 2006 1.015 0.0045 0.5 0.0045

1 Represents stones retained on a +0.85mm square mesh screen

2 The estimated diamond content, expressed as carats per hundred tonnes, may not be representative of the overall diamond content of the body due to a number of factors, including location and size of the samples

3 Carats per hundred tonnes

Scientific and Technical Data

Diamond results reported above are based on work completed by Microlithics Laboratories, Thunder Bay, Ontario, an independent mineral process laboratory currently providing services exclusively to Stornoway and its affiliates. The DMS samples were processed through a 1.5 tonne per hour (tph) DMS plant designed to recover stones retained on a 0.85mm square mesh sieve. Kimberlite was prepared through a primary jaw crusher, with -10 mm material fed directly into the DMS. All +10 mm material was subsequently reduced through secondary cone crushing. DMS concentrates were submitted for caustic fusion and the residues hand sorted to extract diamonds. Caustic fusion analysis of individual rock samples was also undertaken at Microlithics. As part of Stornoway’s ongoing QA/QC programs, DMS tails, concentrate residues and other materials are subject to audit. Any significant changes to recovered diamond contents will be reported when available. Stornoway’s diamond exploration programs are conducted under the direction of Robin Hopkins P.Geol. (NT/NU), Vice President, Exploration, a Qualified Person under NI 43-101.

Timiskaming Diamond Project, Ontario/Quebec

The Timiskaming Diamond Project is located in northeastern Ontario/northwestern Quebec. The Company currently maintains a 100% interest in over 280,000 acres of exploration licenses and has to date discovered nine kimberlite bodies in the region. The 95-2 pipe on the property yielded a population of highly commercial diamonds at marginally sub-economic grades in a mini-bulk sample program conducted between 2003 and 2004. Between 2005 and 2006, Contact identified several new kimberlitic indicator mineral trains in the area suggesting the existence of multiple, to date undiscovered kimberlites in the area. Exploration activities in 2007 include follow up till sampling, airborne geophysics, claim staking and drilling, where warranted, of potential kimberlite targets. Drill testing of one such target in November 2006 resulted in the discovery of the BA-19 kimberlite in Baby Township, Fugereville, Québec.

Other Properties

In addition to the material mineral properties described above, the Company holds interests in some 27 other active projects (ranging from early stage to advanced exploration) totalling about 4.9 million acres in Nunavut, Alberta, Saskatchewan, Ontario, Québec and the Northwest Territories, as well as a series of properties currently classified as inactive. Exploration activities have taken place, or are taking place, on both the active properties and on generative projects.