Stock Symbol: SGF: TSX
Saskatoon, SK, Nov. 9, 2017 /CNW/ - Shore Gold Inc. ("Shore" or
the "Company") reports that the unaudited results of Shore's
operations for the three and nine months ended September 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 2017 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;
- Announced ten hole HQ core drilling program and geotechnical
investigations on the Star Kimberlite
- Working capital of $1.7 million
at September 30, 2017;
- Issued and outstanding shares of 361,005,822 at September 30, 2017
Overview
Shore 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 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
The Company and RTEC recently announced an HQ core drilling
program, consisting of ten holes and some 2,500 metres of drilling,
on the Star Kimberlite (See SGF News Release dated October 12, 2017). This core drilling is required
to accurately document the internal stratigraphy of the Star
Kimberlite prior to a proposed sampling program, which is expected
to commence in 2018. In conjunction with this diamond drill
program, geotechnical investigations on the overburden will also be
conducted.
During the nine months ended September
30, 2017, the Company performed geotechnical investigations,
assessments and test work that would be 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. 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 enabled them to make
significant progress by the end of 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 September 30,
2017, the Company recorded a net loss of $0.6 million or $0.00 per share compared to a net loss of
$1.1 million or $0.00 per share for the same period in 2016. The
losses incurred during the quarters ended September 30, 2017 and 2016 were 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 nine months ended September 30,
2017, the Company recorded net income of $41.6 million or $0.13 per share compared to a net loss of
$4.4 million or $0.02 per share for the same period in 2016. Net
income during the nine months ended September 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. 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 nine months ended
September 30, 2017 primarily related
to work relating to geotechnical investigations and test work for
the Project. The loss during the nine months ended September 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 upon a positive decision being 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 September 30, 2017 was determined to be
$0.7 million.
Selected financial
highlights include:
|
|
|
|
|
|
Condensed
Consolidated Statements of Financial Position
|
As
at
September
30,
2017
|
As
at
December
31,
2016
|
Current
assets
|
$
|
1.8
M
|
$
|
3.2
M
|
Exploration and
evaluation, capital and other assets
|
|
67.6 M
|
|
1.5 M
|
Current
liabilities
|
|
0.1 M
|
|
0.3 M
|
Premium on
flow-through shares
|
|
0.1 M
|
|
0.2 M
|
Non-current
liabilities
|
|
1.4 M
|
|
0.6 M
|
Shareholders'
equity
|
|
67.8 M
|
|
3.6 M
|
|
|
|
|
|
Consolidated
Statements of Loss and Comprehensive Loss
|
Three Months
Ended
September 30,
2017
|
Three Months
Ended
September 30,
2016
|
Nine
Months
Ended
September 30,
2017
|
Nine
Months
Ended
September 30,
2016
|
Interest and other
income
|
$
|
0.0
M
|
$
|
0.0 M
|
$
|
0.0 M
|
$
|
0.0 M
|
Expenses
|
|
0.6 M
|
|
1.2 M
|
|
3.0 M
|
|
4.8 M
|
Flow-through premium
recognized in income
|
|
0.0 M
|
|
0.1 M
|
|
0.1 M
|
|
0.4 M
|
Reversal of prior
impairments to exploration and evaluation assets
|
|
0.0 M
|
|
0.0 M
|
|
44.5 M
|
|
0.0 M
|
Net and comprehensive
income (loss) for the period
|
|
(0.6) M
|
|
(1.1) M
|
|
41.6 M
|
|
(4.4) M
|
Net income (loss) per
share for the period (basic and diluted)
|
|
(0.0)
|
|
(0.00)
|
|
0.13
|
|
(0.02)
|
|
Condensed
Consolidated Statements of Cash Flows
|
Nine
Months
Ended
September 30,
2017
|
Nine Months
Ended
September 30,
2016
|
Cash flows from
operating activities
|
$
|
(2.9)
M
|
$
|
(3.7) M
|
Cash flows from
investing activities
|
|
(0.6) M
|
|
0.1 M
|
Cash flows from
financing activities
|
|
2.1 M
|
|
1.0 M
|
Net decrease in
cash
|
|
(1.4) M
|
|
(2.6) M
|
Cash – beginning of
period
|
|
2.8 M
|
|
4.0 M
|
Cash – end of
period
|
|
1.4 M
|
|
1.4 M
|
Outlook
The successful completion of the consolidation of the Company's
Fort à la Corne mineral properties (including the Star - Orion
South Diamond Project) and the concurrent earn-in arrangement with
RTEC 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 November 9, 2017, the
Company had approximately $1.4
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 (including remaining flow-through commitments) and
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; objectives for the
ensuing year, including drilling 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.