News Release

Vancouver - A British Columbia Securities Commission panel says a B.C.-based diamond exploration company did not contravene B.C. securities laws in making its unsolicited take over bid for the shares of another B.C.-based diamond exploration company.

The commission panel gave details of why it dismissed last week the application by Ashton Mining of Canada Inc. to cease-trade an offer for its shares by Stornoway Diamond Corp. Both companies list their shares for trading on the TSX.

The panel found that, contrary to Ashton’s assertions, an original and amended lock-up agreement between Stornoway and a majority shareholder of Ashton shares, did not contravene securities laws that require identical consideration be offered to all shareholders in the same class of securities during a take over or issuer bid. The panel also found that Stornoway did not contravene the prohibition against collateral benefits.

In connection with its bid for Ashton, Stornoway entered into lock-up agreement with Ashton’s majority shareholder.  One of the provisions of the lock-up agreement gives the shareholder the right to collect $2 million from Stornoway if the bid is not completed, in some circumstances.  The agreement was later amended to provide to all Ashton shareholders the right to the $2 million.

The panel said:

“Because the penalty under the original lock-up agreement is payable only if Stornoway fails to take up and pay for the shares, any amount paid under the penalty is not ‘consideration’ or ‘enhanced consideration’…” and went on to note that “…all shareholders will share in whatever benefit flows from penalty provisions of the amended lock-up agreement.”

The panel concluded, “As Ashton clearly acknowledged in its submissions, there is nothing illegal, or even improper, about lock-up agreements, including hard lock-up agreements. In our opinion, there is nothing unfair, never mind abusive, about the amended lock-up agreement that would justify our exercising our public interest powers to intervene.”

Ashton was refused leave to appeal the commission’s decision by the B.C. Court of Appeal on Sept. 13.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the decision on our website www.bcsc.bc.ca by typing in the search box, Ashton Mining of Canada Inc. or 2006 BCSECCOM 533. If you have questions, contact Andrew Poon, Media Relations, 604-899-6880.