Stock Symbol: SGF: TSX
SASKATOON,
June 23,
2017 /CNW/ - Shore Gold Inc. (TSX: SGF)
("Shore" or the "Corporation") is pleased to announce today that it
has acquired (the "Newmont Acquisition") from Newmont Canada FN
Holdings ULC ("Newmont Canada") all of Newmont's participating
interest in the Fort à la Corne joint venture (the "FalC JV"),
resulting in Shore owning 100% of the Star‑Orion South Diamond
Project (the "Project"), and has concurrently entered into an
Option to Joint Venture Agreement (the "Option Agreement") with Rio
Tinto Exploration Canada Inc. ("RTEC") pursuant to which the
Corporation has granted RTEC an option to earn up to a 60% interest
in the Project on the terms and conditions contained in the Option
Agreement. All dollar figures herein are in Canadian dollars
unless otherwise indicated.
In connection with the Option Agreement, RTEC has also agreed to
subscribe for units of the Corporation for an aggregate
subscription price of $1,000,000 at a
price of $0.18 per unit, with each
unit consisting of one common share in the capital of the
Corporation and one common share purchase warrant, with each
warrant entitling RTEC to acquire one additional common share at a
price of $0.205 per share for a
period of 24 months following the issuance of the units.
"We are extremely pleased to partner with Rio Tinto to
further develop the potential of the project" said Ken MacNeill, Chief Executive Officer of
Shore. "Rio Tinto is one of the few companies in the world
with the resources and expertise to move forward with a project of
the magnitude of the Star-Orion South Diamond Project. We are
also very pleased to acquire the remaining portion of the project
from Newmont and look forward to working with Newmont as a
significant shareholder".
Summary of the Newmont Acquisition
The Newmont Acquisition was completed pursuant to a
Participating Interest Purchase Agreement effective as of
June 22, 2017 between Shore, its
wholly owned subsidiary, Kensington Resources Ltd., and Newmont
Canada whereby Newmont Canada sold its entire interest in the FalC
JV to Shore in consideration for approximately 53.8 million common
shares of Shore and 1.1 million common share purchase warrants,
with each warrant entitling Newmont Canada to acquire one
additional common share at a price of $0.349 per share for a period of 45 months from
the date of issuance. Prior to the completion of the Newmont
Acquisition, Shore held a 69 percent interest in the FalC JV and
Newmont Canada had a 31 percent interest. Under the terms of the
warrants and the rules of the TSX, Newmont Canada is not permitted
to exercise warrants if, as a result of such exercise, it would
beneficially own or control 20% or more of the outstanding shares
of the Corporation, subject to certain exceptions including
approval by the shareholders of the Corporation.
As additional consideration for Newmont Canada's interest in the
FalC JV, the Corporation has agreed to grant Newmont Canada a
participation right to subscribe for and purchase such number of
common shares in order to maintain its proportionate interest in
the share capital of the Corporation; Newmont Canada may exercise
this right each time Shore undertakes financing (subject to certain
exemptions) at the same price and terms as the financing. The
Corporation has also agreed that Newmont Canada will receive a
contingent payment in the aggregate amount of $3,200,000 if a positive decision is made to
develop a mine on the Project. Shore, in its sole discretion
(subject to regulatory approvals), may satisfy the contingent
payment due to Newmont Canada through a cash payment or the
issuance of common shares priced at the VWAP at that time.
The Participating Interest Purchase Agreement relating to the
Newmont Acquisition contains representations, warranties, covenants
and indemnities as customary for transactions of this nature.
Newmont Canada currently holds approximately 17 million common
shares in the capital of the Corporation representing approximately
5.7% of the common shares outstanding and issued on a non-diluted
basis. Immediately after the closing of the Newmont
Acquisition and issuance of common shares, Newmont Canada will hold
approximately 19.9% of the common shares issued and outstanding on
a non-diluted basis.
Consolidation of the Project
Following the Newmont Acquisition, Kensington transferred its interest in the
FalC JV to Shore and thereafter, the FalC-JV was terminated,
resulting in Shore holding 100% of the Star-Orion South Diamond
Project.
Summary of the Rio Tinto Option
Agreement
Pursuant to the Option Agreement, the Corporation has
granted to RTEC four options which in aggregate permit RTEC to earn
a 60% interest in the Project, as follows:
First Option. RTEC has the exclusive right to conduct a 10
hole bulk sampling program on the Project, including processing and
diamond recovery, or incur $18.5
million of direct and indirect expenses in connection with
mineral prospecting, exploration, development, mining, and related
expenses ("Expenditures"). Completion of the First Option does not
entitle RTEC to an interest in the Project.
Second Option. Provided RTEC completes the First Option,
RTEC has the exclusive option to acquire 51% of the Project by
conducting a 10 hole bulk sampling program on the Project or
incurring $18.5 million of
Expenditures.
Third Option. Provided RTEC completes the Second Option,
RTEC has the exclusive option to acquire an additional 4% undivided
interest in the Project by conducting a 10 hole bulk sampling
program on the Project or incurring $18.5
million of Expenditures.
Fourth Option. Provided RTEC completes the Third Option,
RTEC has the exclusive option to acquire an additional 5% undivided
interest in the Project by completing a feasibility study in
respect of the Project or incurring an additional $15 million of Expenditures.
RTEC has three years to complete the First Option, 18
months from completion of the First Option to complete the Second
Option, 18 months from completion of the Second Option to complete
the Third Option and 18 months from completion of the Third Option
to complete the Fourth Option; in aggregate, the time from the
effective date to the end of the Fourth Option cannot exceed 7.5
years. RTEC may, at its discretion, conduct operations to exercise
the options in parallel, and may at any time make a payment to
Shore in lieu of any expenditures.
At any time after RTEC has earned an interest in the
Project, RTEC may elect to form a joint venture with Shore. If
after RTEC has earned an interest in the Project, RTEC allows an
option to expire or terminates the Option Agreement, RTEC will be
deemed to have elected to form a joint venture with Shore. Under
the Option Agreement, each party has granted the other a right of
first refusal with respect to the sale of its interest. During the
option periods RTEC will conduct all operations, provided that
during the First Option RTEC may appoint Shore to conduct
operations.
The Project
The Star-Orion South Diamond Project is located in central
Saskatchewan approximately 60
kilometres east of the city of Prince
Albert. The Project is in close proximity to established
infrastructure, including paved highways and the electrical power
grid, which provide significant advantages for future mine
development. The Technical Report on the Revised Resource Estimate
for the Star-Orion South Diamond Project dated November 9, 2015 provided an updated Mineral
Resource Estimate for the Star and Orion South kimberlite deposits:
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 include Inferred Resources containing 11.5 million
carats.
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 Corporation's
"Qualified Persons" under the definition of NI 43-101.
Advisors
Canaccord Genuity Corp. acted as financial advisor and Bennett
Jones LLP acted as legal advisor to Shore. Lawson Lundell LLP acted
as legal advisor to RTEC. Goodmans LLP acted as legal advisor
to Newmont.
About Shore
Shore is a Canadian based corporation engaged in the
acquisition, exploration and development of mineral properties.
Shares of the Corporation trade on the TSX Exchange under the
trading symbol "SGF".
About Newmont
Newmont Canada is a subsidiary of Newmont Mining
Corporation ("Newmont"). Newmont is a leading gold and copper
producer. Newmont's operations are primarily in the United States, Australia, Ghana, Peru
and Suriname. Newmont is the only gold producer listed in the
S&P 500 Index and was named the mining industry leader by the
Dow Jones Sustainability World Index in 2015 and 2016. Newmont is
an industry leader in value creation, supported by its leading
technical, environmental, social and safety performance. Newmont
was founded in 1921 and has been publicly traded since
1925.
Newmont Canada will evaluate its investment in the
Corporation from time to time and may, based on such evaluation,
market conditions and other circumstances, increase or decrease
shareholdings as circumstances require. The exemption relied on for
the acquisition of the common shares in connection with the Newmont
Acquisition is Section 2.12 of National Instrument 45-106 –
Prospectus and Registration Exemptions. A copy of the early
warning report filed by Newmont Canada in connection with the
acquisition will be available on Shore's SEDAR profile. In order to
obtain a copy of the early warning report, please contact
Meredith H. Bandy, Vice President,
Investor Relations at Newmont Canada, at telephone number:
303-837-5143. Newmont Canada's head office is located at 6363 South
Fiddler's Green Circle, Suite 800, Greenwood Village, CO 80111.
Caution Regarding Forward-Looking
Statements
This press release contains "forward-looking statements" and/or
"forward-looking information" (collectively, "forward-looking
statements") within the meaning of applicable securities
legislation. All statements, other than statements of historical
fact, are forward-looking statements. Generally, forward-looking
statements can be identified by the use of forward-looking
terminology such as "plans", "expect", "is expected", "in order
to", "is focused on" (a future event), "estimates", "intends",
"anticipates", "believes" or variations of such words and phrases
or statements that certain actions, events or results "may",
"could", "would", or the negative connotation thereof. In
particular, statements regarding Shore's future operations, future
exploration and development activities or other development plans
constitute forward-looking statements. By their nature, statements
referring to mineral reserves or mineral resources constitute
forward-looking statements. Forward-looking statements in this
press release include, but are not limited to statements with
respect to the work programs under the Option Agreement and
estimates of mineral resources.
These forward-looking statements are based on Shore's current
beliefs as well as assumptions made by and information currently
available to it and involve inherent risks and uncertainties, both
general and specific.
Risks exist that forward-looking statements will not be achieved
due to a number of factors including, but not limited to,
developments in world diamond markets, changes in diamond prices,
risks relating to fluctuations in the Canadian dollar and other
currencies relative to the US dollar, changes in exploration,
development or mining plans due to exploration results and changing
budget priorities of Shore or its joint venture partners, the
effects of competition in the markets in which Shore operates, the
impact of changes in the laws and regulations regulating mining
exploration, development, closure, judicial or regulatory judgments
and legal proceedings, operational and infrastructure risks and the
additional risks described in Shore's most recently
filed Annual Information Form, annual and interim MD&A. Shore's
anticipation of and success in managing the foregoing risks could
cause actual results to differ materially from what is anticipated
in such forward-looking statements.
Although management considers the assumptions contained in
forward-looking statements to be reasonable based on information
currently available to it, those assumptions may prove to be
incorrect. When making decisions with respect to Shore, investors
and others should not place undue reliance on these statements and
should carefully consider the foregoing factors and other
uncertainties and potential events. Unless required by applicable
securities law, Shore does not undertake to update any
forward-looking statement that is made herein.
Note Regarding Mineral Resources
Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability. The estimation of Mineral
Resources may be materially affected by environmental, permitting,
legal, title, taxation, socio-political, marketing or other
relevant issues.
SOURCE Shore Gold Inc.