Rio Tinto agrees to tender shares of Ashton Mining of Canada to bid by Stornoway Diamond

Monday, 24 July 2006

Rio Tinto has agreed to tender its shares in Ashton Mining of Canada Inc. ("Ashton") to a takeover bid for Ashton which was announced today by Stornoway Diamond Corporation ("Stornoway"). Rio Tinto (through both Ashton Canada Pty. Limited ("ACPL"), an indirect, wholly owned subsidiary of Rio Tinto Limited, and QIT-Fer et Titane Inc. ("QIT"), an indirect, wholly owned subsidiary of Rio Tinto plc), holds 49,037,982 common shares of Ashton, representing approximately 51.7 per cent of Ashton's issued and outstanding common shares.

ACPL and QIT have entered into a lock-up agreement with Stornoway under which ACPL and QIT have agreed to tender their Ashton shares and Stornoway has agreed to make the takeover bid for all of Ashton's issued and outstanding common shares. Under the Stornoway takeover bid, Ashton shareholders will be entitled to receive, at their election, either (i) C$1.25 in cash (the “All Cash Alternative”) or (ii) one Stornoway common share plus C$0.01 in cash, in either case for each Ashton share held, subject to a maximum of C$59,500,000 cash available under the All Cash Alternative. Tendering shareholders who elect the All Cash Alternative may have their entitlement to cash pro-rated depending on the percentage of Ashton shares tendered to the bid in respect of which the All Cash Alternative is selected.

ACPL and QIT intend to elect the All Cash Alternative for their Ashton shares although it is anticipated a portion of the total consideration payable to ACPL and QIT will be in the form of Stornoway shares. The number of such shares and the percentage of Stornoway's issued and outstanding shares ACPL and QIT may acquire will not be known until the completion of the bid.

ACPL's tender of 4,912,249 of the 33,848,221 Ashton shares owned by it is subject to regulatory approval pursuant to the terms of an escrow agreement which ACPL entered into at the time of Ashton's initial public offering in 1993.

Rio Tinto has no present intention of acquiring other securities of Ashton or, except as contemplated by the agreement with Stornoway, disposing of any of the securities of Ashton which it holds.

Under the agreement with Stornoway, ACPL and QIT have agreed not to purchase or enter into any agreement to purchase any other securities of Ashton until the termination of the agreement. The agreement also precludes ACPL and QIT from tendering or voting any of their Ashton shares in favour of any other acquisition proposal relating to Ashton and in certain circumstances requires ACPL and QIT to vote against other acquisition proposals or actions which might prevent, delay or interfere with Stornoway’s bid.

ACPL and QIT will be paid C$2,000,000 by Stornoway if the lock-up agreement is terminated, other than as a result of a breach by ACPL or QIT, and Stornoway does not take up and pay for the Ashton shares tendered to the bid by ACPL and QIT. The lock-up agreement will terminate automatically on 26 December 2006 unless extended by mutual agreement of the parties.

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