Shore Gold Inc. has reported its unaudited results of Shore’s operations for the quarter ended June 30
Highlights include:
Announced the results of a revaluation of the diamond parcels from the Star and Orion South Kimberlites, which indicated parcel prices show increases between 11 and 19 percent above the prices that were used in the combined pre-feasibility study (“PFS”) and Mineral Reserve estimate (“Combined PFS”)
Announced the results of a diamond type analysis which indicates that 26 percent of all diamonds exceeding 2.7 carats in size from the Star underground bulk sample are Type IIa diamonds
Announced information gathering agreements and Memoranda of Understanding (“MOU”) with certain First Nation and Metis communities
Announced the purchase of the three percent Net Profits Interest (“NPI”) held for a consideration of $1.0 million
Welcomed the announcement of a diamond royalty system for the Province of Saskatchewan – Working capital of $27.9 million at June 30, 2010
Issued and outstanding shares of 224,454,242 at June 30, 2010
Combined Star – Orion South Diamond Project
During the quarter, the Company was pleased to announce the results of a revaluation of the diamond parcels from the Star and Orion South Kimberlites (See SGF News Release dated June 8, 2010). The parcel prices show increases between 11 and 19 percent above the March 2008 prices that were used in the Combined PFS. Modeled prices ranging between US$116 and US$344 per carat have been determined for the diamond populations of the major kimberlite units that make up the Star and Orion South Kimberlites. These valuations were determined on underground diamond parcels totaling 10,309.07 carats for the Star Kimberlite (“Star”) and 2,320.20 carats from the Orion South Kimberlite. These updated modeled diamond prices will have a significant positive effect on the future economics of the Star – Orion South Diamond Project. Increased diamond prices not only have an immediate positive effect on the current financial model, which is sensitive to diamond prices, but also enable the recalculation and optimization of the Star and Orion South open pits.
In addition to the revaluation, the Company also announced the results of a diamond type analysis performed on the Star underground bulk sample diamond parcel (See SGF News Release dated June 9, 2010). This analysis indicated that 26 percent of all diamonds exceeding 2.7 carats in size from the Star underground bulk sample are Type IIa diamonds. Type IIa diamonds are rare and account for less than 2 percent of all natural rough diamonds in the world. Type IIa diamonds contain no nitrogen or boron impurities and are frequently either top white colours (D, E, F or G) or any shade of brown. Many pink and brownish-pink diamonds are also Type IIa. The coarse diamond size frequency distribution for the Star diamond populations (particularly the Early Joli Fou and Cantuar kimberlite units), combined with this significant proportion of Type IIa diamonds, strongly suggests the potential for the recovery of large (plus 100 carat), high quality diamonds at Star. Based on the coarse diamond size frequency distribution for the Star diamond populations, the processing plant contemplated for the Star – Orion South Diamond Project is being designed to recover diamonds up to 800 carats, depending on their shape.
During the quarter, the Company was also pleased to announce it had reached agreement with Red Earth Cree Nation to gather information on traditional aboriginal land use and traditional knowledge in the Fort ? la Corne forest (See SGF News Release May 12, 2010). This information will be used in preparation of Shore’s Environmental Impact Statement (“EIS”) for the Star – Orion South Diamond Project and will form part of the Environmental Impact Assessment (“EIA”) that will be completed later this year. As part of the EIA, the Company also held the second round of Community Open House meetings, with local communities continuing to show strong support for the project (See SGF News Release June 21, 2010).
The Company also announced that it has signed Memoranda of Understanding (“MOU”) with Sturgeon Lake First Nation (“Sturgeon Lake”), M?tis Nation – Saskatchewan Eastern Region II (“Eastern Region II”) and M?tis Nation – Saskatchewan Western Region II (“Western Region II”) (See SGF News Releases dated May 17 and June 17, 2010). These Memoranda agree that discussions will be held surrounding potential education, training, employment and business opportunities for Sturgeon Lake, Eastern Region II and Western Region II members as a result of the potential development of the Star – Orion South Diamond Project. The MOUs follow earlier agreements with Sturgeon Lake, Eastern Region II and Western Region II concerning information gathering about traditional aboriginal land use in the Fort ? la Corne forest.
In early June, Shore also welcomed the announcement by the Province of Saskatchewan of a competitive diamond royalty system (See SGF News Release dated June 2, 2010). The royalty system was developed in consultation with the mining industry and is consistent with the parameters used in the financial model developed for the Combined PFS. The announcement of the diamond royalty system removes one more uncertainty with respect to the potential development of the Star – Orion South Diamond Project.
The Company also recently announced that Shore has exercised its right to purchase the three percent Net Profits Interest (“NPI”) for a consideration of $1.0 million (See SGF News Release dated August 9, 2010). Fifteen claims (S-132025 to S-132039), three of which are directly associated with the Star Kimberlite, were originally staked by a third party in 1995 and were subsequently transferred to Shore in 1997 for a consideration of the grant of a three percent NPI, payable should a positive production decision be made and the property achieve commercial mineral production. Shore had the option to purchase the NPI any time prior to 90 days after a positive production decision on any of the claims, for $1.0 million.
Quarterly Results
For the quarter ended June 30, 2010, the Company recorded a net loss of $1.4 million or $0.01 per share compared to a net loss of $2.2 million or $0.01 per share for the same period in 2009. The loss for the quarters ended June 30, 2010 and 2009 were primarily due to ongoing operating costs incurred by the Company exceeding interest revenue earned on cash and cash equivalents and short-term investments. Also contributing to the net loss for the comparative period in 2009 was a $0.6 million write-down of certain mineral property expenditures incurred during that quarter.
Related posts:
- Combined Star-Orion South Prefeasibility Study NPV of $1.3 billion and IRR of 16 percent 279 million tonne, 35 million carat mineral reserve
- Star – Orion South Diamond Project rising rough diamond prices strengthen Project economics
- Star – Orion South Diamond Project – Significant Proportion of Type IIa Diamonds Present at Star
- Former Leader of Fort a la Corne Diamond Project Technical Team Resigns from Shore Gold
- Shore Gold: Rising Price for Rough Diamonds Driven by Increasing Demand and Shrinking Supply
