Stock Symbol: SGF: TSX
SASKATOON, Aug. 10, 2017 /CNW/ - Shore Gold Inc. ("Shore" or
the "Company") reports that the unaudited results of Shore's
operations for the quarter ended June 30,
2017 will be filed today on SEDAR and may be viewed at
www.sedar.com once posted. A summary of key financial and operating
results for the quarter is as follows:
Highlights
- Announced the consolidation of the Fort à la Corne mineral
properties (including the Star - Orion South Diamond Project),
resulting in Shore holding a 100% interest with Newmont Canada FN
Holdings ULC ("Newmont") increasing its interest to a 19.9%
shareholder of the Company;
- Announced the concurrent Option to Joint Venture Agreement with
Rio Tinto Exploration Canada Inc. ("RTEC") for the Fort à la Corne
mineral properties (including the Star - Orion South Diamond
Project);
- Announced the related closing of a subscription by RTEC for 5.6
million Common Shares and 5.6 million Common Share purchase
warrants for aggregate gross proceeds of $1.0 million;
- Working capital of $1.4 million
at June 30, 2017;
- Issued and outstanding shares of 356,365,557 at June 30, 2017
Overview
Shore Gold Inc. is a Canadian natural
resource company focused on exploring and developing Saskatchewan's diamond
resources. The Company, as a result of the recent
mineral property consolidation and earn-in agreement (as discussed
below), is now in an enhanced position to advance its 100% held
Star - Orion South Diamond Project ("Project"), which is situated
in the Fort à la Corne kimberlite field in central Saskatchewan. Indicated Mineral Resources for
the Project are 55.4 million carats (see SGF News Release dated
November 9, 2015 and Technical Report
filed December 21, 2015). In addition
to the Indicated Mineral Resource Estimate, the Star and Orion
South Kimberlites include Inferred Resources containing 11.5
million carats.
Consolidation of the Fort à la Corne mineral properties and
Option to Joint Venture
During the quarter ended
June 30, 2017, Shore Gold announced
that it has acquired (the "Newmont Acquisition") all of Newmont's
participating interest in the Fort à la Corne joint venture (the
"FalC JV"), resulting in Shore owning 100% of the of the Fort à la
Corne mineral properties (including the Project), and has
concurrently entered into an Option to Joint Venture Agreement (the
"Option Agreement") with RTEC pursuant to which the Company has
granted RTEC an option to earn up to a 60% interest in the Fort à
la Corne mineral properties (including the Project) on the terms
and conditions contained in the Option Agreement (see SGF News
Release dated June 23, 2017).
Immediately after the closing of the Newmont Acquisition and
issuance of common shares, Newmont held approximately 19.9% of the
common shares issued and outstanding on a non-diluted basis.
Activities relating to the Star - Orion South Diamond
Project
During the six months ended June 30, 2017, the Company performed geotechnical
investigations, assessments and test work required for an updated
feasibility study on the Project. The work completed included:
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 (See SGF News Release dated
March 6, 2017). 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.
In January 2017, the Company was
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). Since that time,
the government proceeded with a work plan that they anticipate will
enable them to complete this required consultation process during
the third quarter of 2017. The Ministry has indicated to Shore that
once consultations with potentially impacted First Nation and Métis
communities are completed, all pertinent information will be
reviewed before a decision is made under The Environmental
Assessment Act.
Quarterly Results
For the quarter ended June 30, 2017, the Company recorded net income of
$43.0 million or $0.14 per share compared to a net loss of
$1.9 million or $0.01 per share for the same period in 2016. Net
income during the quarter ended June 30,
2017 was due to the partial reversal of previously recorded
impairments relating to exploration and evaluation assets
($44.5 million). As a result of the
Newmont Acquisition, the Company performed an assessment of the
carrying value of exploration and evaluation assets at June 30, 2017. Based on this assessment, the
carrying value of exploration and evaluation assets (which includes
the Fort à la Corne mineral properties) was determined to be
$66.3 million, resulting in a partial
reversal of previously recorded impairments. Exploration and
evaluation expenditures incurred during the quarter ended
June 30, 2017 were primarily related
to work relating to geotechnical investigations and test work for
the Project. The loss during the quarter ended June 30, 2016 was due to operating costs and
exploration and evaluation expenditures incurred by the Company
exceeding interest income earned on cash and cash equivalents and
short-term investments.
Year to Date Results
For the six months ended
June 30, 2017, the Company recorded
net income of $42.2 million or
$0.14 per share compared to a net
loss of $3.3 million or $0.01 per share for the same period in 2016. Net
income during the quarter ended June 30,
2017 was due to the partial reversal of previously recorded
impairments relating to exploration and evaluation assets
($44.5 million). Exploration and
evaluation expenditures incurred during the six months ended
June 30, 2017 primarily related to
work relating to geotechnical investigations and test work for the
Project. The loss during the quarter ended June 30, 2016 was 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.
In connection with the Option Agreement, RTEC subscribed for 5.6
million units, for a gross subscription amount of $1.0 million, with each unit consisting of one
common share and one common share purchase warrant. In addition,
options and broker warrants were also exercised during the quarter
ended June 30, 2017 for total cash
proceeds of $0.4 million. In
connection to the Newmont Acquisition, 53.8 million common shares
and 1.1 million common share purchase warrants were issued to
Newmont. The Company also agreed that Newmont will receive a
contingent payment in the aggregate amount of $3.2 million 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 through a cash payment or the issuance of
common shares. The estimated discounted present value of this
contingent consideration at June 30,
2017 was determined to be $0.7
million.
Selected financial highlights include:
|
|
|
|
|
Condensed
Consolidated Statements of Financial Position
|
|
|
As
at June
30, 2017
|
As
at December
31, 2016
|
Current
assets
|
|
|
$
|
3.2
M
|
$
|
1.7
M
|
Exploration and
evaluation, capital and other assets
|
|
|
67.5
M
|
1.6
M
|
Current
liabilities
|
|
|
1.8
M
|
0.3
M
|
Premium on
flow-through shares
|
|
|
0.1
M
|
0.2
M
|
Long-term
liabilities
|
|
|
1.3
M
|
0.6
M
|
Shareholders'
equity
|
|
|
67.5
M
|
2.2
M
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Loss and Comprehensive Loss
|
Three Months
Ended June 30,
2017
|
Three Months
Ended June 30,
2016
|
Six
Months Ended June
30, 2017
|
Six
Months Ended June
30, 2016
|
Interest and other
income
|
$
|
0.0
M
|
$
|
0.0
M
|
$
|
0.0
M
|
$
|
0.0
M
|
Expenses
|
1.5
M
|
2.0
M
|
2.4
M
|
3.6
M
|
Flow-through premium
recognized in income
|
0.0
M
|
0.1
M
|
0.1
M
|
0.3
M
|
Reversal of prior
impairments to exploration and evaluation assets
|
44.5
M
|
0.0
M
|
44.5
M
|
0.0
M
|
Net and comprehensive
income (loss) for the period
|
43.0
M
|
(1.9) M
|
42.2
M
|
(3.3) M
|
Net income (loss) per
share for the period (basic and diluted)
|
0.14
|
(0.01)
|
0.14
|
(0.01)
|
|
|
|
|
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
Six
Months Ended June
30, 2017
|
Six
Months Ended June
30, 2016
|
Cash flows from
operating activities
|
|
|
$
|
(0.4)
M
|
$
|
(2.7) M
|
Cash flows from
investing activities
|
|
|
(1.0) M
|
0.0
M
|
Cash flows from
financing activities
|
|
|
1.3
M
|
0.0
M
|
Net decrease in
cash
|
|
|
(0.1) M
|
(2.7) M
|
Cash – beginning of
period
|
|
|
2.8
M
|
4.0
M
|
Cash – end of
period
|
|
|
2.7
M
|
1.3
M
|
Outlook
The successful completion of the recently
announced consolidation of the Company's Fort à la Corne mineral
properties (including the Star - Orion South Project) and the
concurrent earn-in arrangement with Rio Tinto Exploration Canada
sets the stage for a new phase for the Company. It is the Company's
view that 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. The Company is
also very pleased to have acquired the remaining portion of the
Project from Newmont and having Newmont as a significant
shareholder.
As of August 10, 2017, the Company
had approximately $2.4 million in
cash and cash equivalents and short-term investments (excluding
$0.8 million in restricted cash). A
portion of the Company's cash and cash equivalents and short-term
investments will be used to complete the 2017 programs as well as
advance certain aspects of the Project, including the environmental
assessment process and assessment and test work programs required
for an updated feasibility study, as well as for general corporate
matters.
Caution Regarding Forward-looking Statements
This news release contains forward-looking statements within the
meaning of certain securities laws, including the "safe harbour"
provisions of Canadian securities legislation and the United States
Private Securities Litigation Reform Act of 1995. The words "may,"
"could," "should," "would," "suspect," "outlook," "believe,"
"plan," "anticipate," "estimate," "expect," "intend," and words and
expressions of similar import are intended to identify
forward-looking statements, and, in particular, statements
regarding Shore's future operations, future exploration and
development activities or other development plans contain
forward-looking statements. Forward-looking statements in this news
release include, but are not limited to, statements relating to
mineral resources and/or reserves; statements related to the
approval of the development of the Star - Orion South Diamond
Project; statements relating to future development of the Star -
Orion South Diamond Project and associated timelines; the
environmental assessment and permitting process; Shore's objectives
for the ensuing year, including the drill and geotechnical programs
and the re-optimisation of the open pit, the optimisation of the
Feasibility Study and the anticipated positive change in the
economic model for the Project.
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 valuations, 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 contractual partners, the effects of competition in
the markets in which Shore operates, the impact of changes in the
laws and regulations regulating mining exploration and development,
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, news releases and technical reports.
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 may be made.
SOURCE Shore Gold Inc.