SRM Shear Diamonds Ltd.

Shear Diamonds Ltd. (TSX VENTURE:SRM) ("Shear") is providing a processing and
operations update with respect to the high grade concentrate stockpiles at its
Jericho diamond mine:




--  On May 29, 2012 Shear delivered its first parcel of diamonds to Tache
    Company N.V. ("Tache"), Shear's diamond marketing partner, for sale into
    end markets. This first parcel amounted to 11,317.98 carats. 
    
--  Pending ultimate determination of the prices to be paid by Tache for the
    parcel, Tache has made an initial payment of US$500,000 to Shear. Tache
    will reconcile a final payment to Shear once prices per carat can be
    ascertained based on the formula provided in the marketing agreement.
    While it is anticipated that the ultimate amount to be paid by Tache
    will exceed the initial payment made to Shear by Tache, recent
    significant reductions in world rough diamond market prices have
    resulted in an expected ultimate price for the parcel being
    significantly lower than world market prices existing until very
    recently. 
    
--  Although, Shear has had considerable success in starting up and steadily
    improving processing, it had to temporarily suspend processing for two
    full days and reduce processing for an additional two days to address
    clean-up requirements for wind dispersed fine processed kimberlite which
    came to light as a result of spring thawing. Processing has now fully
    resumed. 
    
--  On the recommendation of operations personnel, the processing rate has
    been slowed to more fully maximize the processing yield.



Shear's processing activities to date are meeting two of Shear's three stated
goals, in that (i) Shear has demonstrated that a significant number of diamonds
went unrecovered by Jericho's prior operators and can be recovered and (ii)
Shear has acquired (and continues to acquire) key processing knowledge which can
be applied to future production at Jericho. However, the recent drop in world
diamond market prices, which are significantly lower than those used for Shear's
operating plans and budgets, will not generate sufficient cash flow to support
operations.


Efforts continue to achieve around the clock processing to generate
significantly greater carat recovery, and it is anticipated that 24 hour
processing will commence shortly. Lower current diamond prices need to be offset
with greater production. Shear must obtain financing in the very near term to
fund continuing operations and to increase production by going to around the
clock processing.


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                      



This news release may contain forward looking statements, being statements which
are not historical facts, including, without limitation, statements regarding
potential mineralization, exploration results, resource or reserve estimates,
anticipated production or results, sales, revenues, costs, "best-efforts"
financings or discussions of future plans and objectives. There can be no
assurance that such statements will prove accurate. Such statements are
necessarily based upon a number of estimates and assumptions that are subject to
numerous risks and uncertainties that could cause actual results and future
events to differ materially from those anticipated or projected. Important
factors that could cause actual results to differ materially from Shear's
expectations are in its documents filed from time to time with the TSX or the
TSX Venture Exchange and provincial securities regulators, most of which are
available at www.sedar.com. Shear disclaims any intention or obligation to
revise or update such statements.

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