Shear Announces New Board Member and Provides Processing Update

TORONTO, ONTARIO--(Marketwire - Aug. 23, 2012) - Shear Diamonds Ltd. (SRM.V) ("Shear") is providing a processing update and is pleased to announce the appointment of Mr. Manuel Rappaport to Shear's board of directors.

Appointment of New Board Member

Mr. Rappaport is a well-respected, experienced financial consultant with over 15 years in the diamond industry. He is currently a Financial and Operational Consultant for Tache Company N.V. ("Tache"), Shear's diamond marketing partner for sale into end markets. Mr. Rappaport is also the Director of Banyan Consulting BVBA, an independent consulting company, specialized in the diamond sector. He has held various positions within the diamond industry from manager, to consultant and chief financial officer.

"Manuel has been an exceptional business partner for Shear over the last 6 months and we are thrilled to have him join our board. His insight into the diamond markets will be a great asset," said President and CEO Julie Lassonde.

Processing Update

Shear is providing a processing and operations update with respect to the high grade concentrate stockpiles at its Jericho diamond mine:

-- On August 13, 2012 Shear delivered its third parcel of diamonds to

Tache. The third parcel amounted to 22,289.36 carats.

-- The average grade achieved during this cycle was 7.61 cpt. This was

expected as the grade variability in the recovery rejects pile is high.

In addition, Shear has been drawing its material from stockpiles that

have a frozen core, and thus there is a significantly higher moisture

content which in turn affects the grade achieved per tonne.

-- Shear achieved an average rate of 80 tonnes per day while in 24 hour

production.

-- Tache had advanced US$850,000 to Shear for the shipment of the parcel

received on August 13, 2012. In addition, Shear has drawn an additional

US$650,000 from its revolving line of credit with Tache in July. Tache

will reconcile a final payment to Shear once prices per carat can be

ascertained based on the formula provided in the marketing agreement.

-- Effective August 20, 2012 Shear has temporarily halted production so

that it can complete necessary repairs on the thickener cone which is

used in the recovery process. We expect repairs to take approximately

three weeks and that normal production will resume at that time.

-- Shear plans to deliver the fourth parcel in mid-September.

About Shear Diamonds Ltd.

Shear is a Canadian-based company focused on diamond exploration and development in Canada's North, where it explores established diamond districts and has discovered new ones. Shear currently has a portfolio of eight diamond projects, including three advanced projects with development potential. Shear holds a 100% interest in its recently acquired Jericho Diamond Mine and surrounding exploration assets, located in the Kitikmeot region of Nunavut.

On behalf of the Board of

SHEAR DIAMONDS LTD.

Julie Lassonde, President & CEO

Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.