SASKATOON, March 23, 2017 /CNW/ - Shore Gold Inc. ("Shore" or the "Company") reports that the audited results of its operations for the year ended December 31, 2016 will be filed today and may be viewed at www.sedar.com once posted. A summary of key financial and operating results for the year is as follows:
Highlights
- Announced results of core drilling programs on the Star and Orion South Kimberlites;
- Announced the completion of certain geotechnical investigations and other test work on the Star – Orion South Diamond Project ("Project");
- Announced the closing of a private placement of 9.1 million Flow-Through Common Shares and 2.5 million Common Shares for aggregate gross proceeds of $2.5 million;
- Announced the closing of a private placement for gross proceeds of $1.0 million;
- Continued to seek opportunities for Project development capital;
- Working capital of $2.9 million at December 31, 2016;
- Issued and outstanding shares of 293,961,008 at December 31, 2016
Overview
The Project is situated in the Fort à la Corne kimberlite field in central Saskatchewan. The Project includes the 100 percent Shore owned Star Diamond Project, as well as Star West and the Orion South Kimberlite, which fall within the adjacent Fort à la Corne Joint Venture ("FALC-JV"). Shore has a 69 percent interest (2015 – 69 percent) in the FALC-JV and Newmont Canada FN Holdings ULC ("Newmont") has a 31 percent interest (2015 – 31 percent).
During 2015, the Company announced Revised Mineral Resource estimates for the Star and Orion South Kimberlites (see SGF News Release dated November 9, 2015 and Technical Report filed December 21, 2015). Accordingly, the mineral resources and economic assessment previously disclosed by Shore for the Project should no longer be relied upon. The Technical Report on the Revised Resource Estimate for the Project provided an updated Mineral Resource Estimate for the Star and Orion South kimberlite deposits which included an Indicated Mineral Resource of 393 million tonnes containing 55.4 million carats of diamonds at a weighted average price of US$210 per carat. In addition to the Indicated Mineral Resource Estimate, the Star and Orion South Kimberlites includes Inferred Resources containing 11.5 million carats.
Events relating to the Star - Orion South Diamond Project
During 2016, the Company completed core drilling programs to further expand the internal stratigraphy of the Orion South and Star Kimberlites extending and in-filling geological continuity from the 2015 drilling programs. Five holes, totaling 1,257.97 metres of drilling, were completed on the Star West portion of the Star Kimberlite located within the claims of the FALC-JV (See SGF News Release dated March 29, 2016). This drilling on Star West aimed to delineate the extent of all kimberlite units, particularly the lower unit, which is high value Cantuar kimberlite. The Company also announced the completion of the core drilling on the western margin of Orion South, which consisted of eight holes and totaling 1,592.75 metres of drilling (See SGF News Release dated July 19, 2016). During the third quarter of 2016, Shore announced that it had successfully completed significant aspects of geotechnical investigations and other test work on the Project (See SGF News Release dated September 26, 2016).
Shore recently announced that it has successfully completed significant aspects of test work towards an updated feasibility study on the Project (See SGF News Release dated March 6, 2017). The work completed in recent months includes: X-ray Transmission ("XRT") recovery of diamonds from Star pyroclastic kimberlite, ore processing data review, diamond parcel characterization, kimberlite particle size analysis and overburden removal investigations. These programs investigate the use of new technology for the efficient excavation of the open pit and improvements to the flow-sheet of the diamond processing plant, while simultaneously reducing pre-production capital costs and the time to initial diamond production.
During December 2014, the Canadian Environmental Assessment Agency ("CEAA" or the "Agency") announced an Environmental Assessment Decision for the proposed Project (See SGF News Release dated December 3, 2014). The Environment Minister announced that the Project "is not likely to cause significant adverse environmental effects when the mitigation measures described in the Comprehensive Study Report are taken into account".
The Saskatchewan Ministry of Environment ("Ministry") is continuing to work on fulfilling the Province's Duty to Consult responsibilities with First Nation and Métis communities potentially impacted by the proposed Project. The Company has recently been informed by the Saskatchewan Minister of Environment that additional consultation is required between the government and First Nation and Métis communities for the government to meet its legal obligation with respect to duty to consult and accommodate process (See SGF News Release dated January 26, 2017). The government is proceeding with a work plan that they anticipate will enable them to complete this required consultation process within six months. The Ministry has indicated to Shore that once consultations with potentially impacted First Nation and Métis communities are thorough and completed, all pertinent information will be reviewed before a decision under The Environmental Assessment Act is made. During 2016 the Company also continued with discussions concerning potential education and training, job, business and participation opportunities for members of James Smith First Nation, Peter Chapman Cree Nation and Chakastaypasin Cree Nation, collectively referred to as the James Smith Cree Nation ("JSCN"). The intention of such discussions are to establish mutually agreeable terms for a participation agreement in anticipation of the proposed Project
Year to Date Results
For the year ended December 31, 2016, the Company recorded a net loss of $5.4 million or $0.02 per share compared to a net loss of $9.1 million or $0.04 per share in 2015. These losses were primarily due to ongoing operating costs and exploration and evaluation expenditures incurred by the Company exceeding interest income earned on cash and cash equivalents and short-term investments. Exploration and evaluation expenditures incurred during the year ended December 31, 2016 primarily related to expenditures relating to the drilling programs, geotechnical investigations and test work as well as the continuation of the environmental assessment process for the Project.
Selected financial highlights include:
| Consolidated Statements of Financial Position | As at December 31, 2016 | As at December 31, 2015 | ||
| Current assets | $ | 3.2 M | $ | 4.3 M |
| Capital and other assets | 1.5 M | 1.7 M | ||
| Current liabilities | 0.3 M | 0.3 M | ||
| Premium on flow-through financings | 0.2 M | 0.5 M | ||
| Long-term liabilities | 0.6 M | 0.6 M | ||
| Shareholders' equity | 3.6 M | 4.6 M | ||
| Consolidated Statements of Loss and Comprehensive Loss | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||
| Interest and other income | $ | 0.0 M | $ | 0.0 M |
| Expenses | (5.9) M | (9.1) M | ||
| Loss for the period before other items | (5.9) M | (9.1) M | ||
| Flow-through share premium | 0.5 M | (0.0) M | ||
| Net and comprehensive loss for the year | (5.4) M | (9.1) M | ||
| Net loss per share for the year (basic and diluted) | (0.02) | (0.04) | ||
| Consolidated Statements of Cash Flows | Year Ended December 31, 2016 |
Year Ended December 31, 2015 |
||
| Cash flows from operating activities | $ | (4.5) M | $ | (7.7) M |
| Cash flows from investing activities | 0.1 M | 0.9 M | ||
| Cash flows from financing activities | 3.3 M | 5.1 M | ||
| Net increase (decrease) in cash | (1.1) M | (1.7) M | ||
| Cash – beginning of year | 3.9 M | 5.6 M | ||
| Cash – end of year | 2.8 M | 3.9 M | ||
Outlook
The 2016 core drilling programs were required to further expand the internal stratigraphy of the Orion South and Star Kimberlites extending and in-filling geological continuity from the successful programs of 2015. The Company intends to update the previous Feasibility Study with a revised mine plan, where new technology is applied to more efficiently remove the sand and clay of the overburden, in addition to the application of new technology in the processing plant. Preliminary calculations suggest that such an updated feasibility study can positively change the economic model for the Project by increasing the Mineral Reserve estimate and reducing the pre-production capital costs and schedule to diamond production.
In addition, the Company is proceeding with the environmental assessment process and is continuing to seek opportunities for development capital through participation in the Project by a third party or a syndicate of investors.
As of March 23, 2017, the Company had approximately $2.3 million in cash and cash equivalents and short-term investments (excluding $1.0 million in restricted cash). A portion of the Company's cash and cash equivalents and short-term investments will be used to advance certain aspects of the Project, including work required for an updated feasibility study, the environmental assessment process, as well as for general corporate matters.
Technical Information
All technical information in this press release has been prepared under the supervision of George Read, Senior Vice-President of Exploration and Development, Professional Geoscientist in the Provinces of Saskatchewan and British Columbia and Mark Shimell, Project Manager, Professional Geoscientist in the Province of Saskatchewan, who are the Company's "Qualified Persons" under the definition of NI 43-101.
