Shear Announces Final Water License Approval by Minister for Jericho Diamond Mine

TORONTO, ONTARIO–(Marketwire – Feb. 16, 2012) – Shear Diamonds Ltd. (TSX VENTURE:SRM) is pleased to announce that further to our press release dated December 22, 2011, the final approval for an eight year Type A water license has been received from the Minister of Aboriginal Affairs and Northern Development for the Jericho Diamond Mine. The Jericho Mine's previous water license was for six years, and it is Shear's understanding that the granting of this eight year water license is the longest in Nunavut's history.

"The news of the Minister's final approval is instrumental in Shear's next steps. The granting of the Type A water license allows us to continue towards our path to full commercial production at the Jericho Mine. Being granted the longest water license in Nunavut's history is a true reflection of the hard work and dedication Shear's team has given towards this project over the last 18 months" comments CEO Julie Lassonde.

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 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, CEO & Executive Chairman

Pamela Strand, P. Geol., President

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