Charles & Colvard Signs Long Term Agreement To Purchase Silicon Carbide from Norstel AB.

STOCKHOLM, Sweden -- Charles & Colvard, Ltd. (Nasdaq:CTHR) and Norstel AB today announced the signing of an Exclusive Supply Agreement for the supply of silicon carbide (SiC) for use in the manufacturing of Charles & Colvard's moissanite jewels. The initial term of the contract is for three years, and involves the supply of material worth a minimum of approximately $4,000,000.

The agreement gives Charles & Colvard the exclusive right to purchase silicon carbide from Norstel for the purpose of fabricating, distributing or selling faceted jewels. Norstel's operations are currently located on the premises of Linkoping University in Sweden, where it has focused on the development of SiC ingots, wafers and epitaxy. In addition Charles & Colvard will advance $400,000 towards the purchase of certain equipment. This advance is scheduled to be repaid starting December 2005 through a 35% reduction in the price for subsequent purchases. The minimum purchase commitment during the first thirteen months of the agreement is relatively small at approximately $300,000 while Norstel's recently announced silicon carbide plant in Norrkoping, Sweden, is being constructed. As the plant becomes operational in 2006 deliveries are scheduled to increase. The agreement provides Charles & Colvard an option to extend the term of the agreement for a four year period.

"A relationship with Norstel AB will allow Charles & Colvard to have a second source for our raw material, silicon carbide," said Robert Thomas, President and CEO of Charles & Colvard.

Mr. Thomas continued, "Norstel AB has demonstrated, on a limited basis, the ability to provide silicon carbide in the quality that meets our stringent standards. We look forward to their new facility coming on line and seeing them consistently grow larger quantities of high-quality crystals as planned."

Dr. Asko Vehanen, CEO of Norstel AB, said, "I am pleased that by signing this agreement, and at the same time completing the financing of our new facility, we will be able to participate in the growth of Charles & Colvard. We believe that Norstel's crystal growth technique, known as HTCVD, is particularly well suited for growing the pure and perfect crystals required for the manufacturing of moissanite jewels. We view this as the beginning of a mutually beneficial long term relationship."

Charles & Colvard, based in the Research Triangle Park area of North Carolina, is the sole source of moissanite, a created jewel used in fine jewelry. Moissanite is near colorless, with more fire, brilliance and luster than a fine diamond, but retails for only a fraction of the cost. For more information, please access www.moissanite.com.

Norstel AB, a privately held company located in Linkoping, Sweden, is developing and manufacturing silicon carbide crystals, wafers and epitaxial layers for demanding applications. A proprietary method for growing crystals, known as HTCVD, is our basis for creating unique and competitive solutions. For more information, please access www.norstel.com.

This press release contains forward-looking statements that relate to Charles & Colvard. Such forward-looking statements are subject to a number of material risks, uncertainties and contingencies that could cause actual results to differ materially from those set forth in the forward-looking statements. Those risks and uncertainties include but are not limited to: Charles & Colvard's reliance on Cree, Inc. as the current supplier of the substantial majority of the raw materials and risks inherent in developing a material second source of supply through Norstel that could result from unanticipated delays or other difficulties in constructing and bringing a new facility into operation or otherwise; the cost of developing distribution channels; difficulties obtaining silicon carbide crystals from suppliers in desired qualities, sizes and volumes; and other risks and uncertainties set forth in Charles & Colvard's 10-K for the year ended December 31, 2003, 10-Q and other filings with the Securities and Exchange Commission.