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Shore Gold Inc. ("Shore" or the "Company") reports
that the audited results of its operations for the year ended December 31,
2010 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
are as follows:
Highlights
- Announced
a National Instrument ("NI") 43-101 compliant combined
pre-feasibility study and Mineral Reserve estimate on the Star - Orion
South Diamond Project of 279 million tonnes at
a weighted average grade of 12.5 carats per hundred tonnes
containing 35 million carats
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- Welcomed
the announcement of a diamond royalty system for the Province of
Saskatchewan
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- Announced
the results of a diamond analysis performed on the Star underground bulk
sample diamond parcel which indicated that 26 percent of all diamonds
exceeding 2.7 carats in size from the Star underground bulk sample are
Type IIa diamonds
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- Purchased
the three percent Net Profits Interest relating to fifteen claims, three
of which are directly associated with the Star Kimberlite
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- Submitted
the Environmental Impact Statement for the Star - Orion South Diamond
Project to the Saskatchewan Ministry of Environment and Federal
Regulators
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- Announced
information gathering agreements and Memoranda of Understanding with
certain First Nation and Métis communities
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- Announced
the completion of an updated valuation of the diamond parcels from the
Star and Orion South Kimberlites which showed
increases between 28 and 130 percent above March 2008 prices
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- Incurred
expenditures of $17.9 million advancing the Company's mineral properties
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- Working
capital of $15.6 million at December 31, 2010
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- Issued
and outstanding shares of 224,454,242 at December 31, 2010
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Overview
During 2010, the Company accomplished a series of significant
milestones with respect to ultimately bringing Saskatchewan's first diamond
mine into production. The Star - Orion South Diamond Project is situated in
the Fort à la Corne kimberlite
field in central Saskatchewan. The Star - Orion South Diamond 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 66 percent (2009 - 63 percent)
interest in the FALC-JV and Newmont Mining Corporation of Canada Limited
("Newmont") has a 34 percent interest (2009 - 37 percent).
The Company's achievements included the completion of the Star - Orion
South Diamond Project pre-feasibility study and Mineral Reserve estimate
("Combined PFS"), the successful negotiation of a diamond royalty
system with the Province of Saskatchewan, and the submission of the
Environmental Impact Statement ("EIS") for the Star - Orion South
Diamond Project. The Company remains focused on completing a feasibility
study on the Star - Orion South Diamond Project ("Final Feasibility
Study") in the first half of 2011, which will incorporate the updated
diamond valuations as announced in March 2011. The Company fully expects
rough diamond prices to continue to rise in the future, which will continue
to improve project economics.
Year to Date Results
For the year ended December 31, 2010, the Company recorded a net loss
of $3.4 million or $0.02 per share compared to a net loss of $9.1 million or $0.04
per share for 2009. These losses were primarily due to the $1.1 million
(2009 - $0.5 million) fair value of stock-based compensation expensed by the
Company, the $0.7 million (2009 - $0.1 million) adjustment for the Company's
investment in Wescan Goldfields Inc. and the $0.5
million (2009 - $6.3 million) write-down of expenditures incurred by the
Company on certain of its mineral properties. Also contributing to the losses
for 2010 and 2009 were ongoing operating costs incurred by the Company
exceeding interest revenue earned on cash and cash equivalents and short-term
investments.
Total operating costs for the year ended December 31, 2010 were $6.5
million compared to $5.9 million for the year ended December 31, 2009. This
represents an increase of $0.6 million, all of which is attributed to the
fair value of stock-based compensation that was expensed from the issuance of
stock options during 2010 ($1.1 million) as compared to 2009 ($0.5 million).
After removing the effect of accounting for stock-based compensation,
expenses for the year ended December 31, 2010 were consistent with the prior
year.
Selected financial highlights include:
Consolidated Balance Sheets
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As at
December 31,
2010
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As at
December 31,
2009
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Current assets
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$
19.3 M
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$
40.5 M
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Capital
and other assets
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248.4 M
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230.8 M
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Current liabilities
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3.7 M
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2.1 M
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Long-term liabilities
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1.5 M
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1.5 M
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Share capital
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791.9 M
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795.3 M
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Contributed surplus
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28.2 M
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26.6 M
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Deficit
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557.6 M
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554.2 M
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|
|
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Consolidated Statements of Loss
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Year Ended
December 31,
2010
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Year Ended
December 31,
2009
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Interest and other income
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$
0.2 M
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$
0.1 M
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Operating
expenses
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6.5 M
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5.9 M
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Loss before other
items
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(6.3) M
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(5.8) M
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Change in fair value of investments
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0.6 M
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(0.4) M
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Investment in Wescan
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(0.7) M
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(0.1) M
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Write-down of mineral properties
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(0.5) M
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(6.3) M
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Future
income taxes
|
3.5 M
|
3.5 M
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Net loss for the period
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(3.4) M
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(9.1) M
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Loss per share (basic and diluted)
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(0.02)
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(0.04)
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Consolidated Statements of Cash Flows
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Year Ended
December 31, 2010
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Year Ended
December 31, 2009
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Cash flows from operating activities
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$
(4.8) M
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$
(4.3) M
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Cash flows from investing activities
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5.0 M
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(41.5) M
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Cash flows from financing activities
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0.0 M
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25.8 M
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Net increase (decrease) in cash
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0.2
M
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(20.0)
M
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Cash - beginning of period
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2.6
M
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22.6
M
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Cash - end of period
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2.8
M
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2.6
M
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Outlook
The Company is focused on the completion of a Final Feasibility Study
for the Star - Orion South Diamond Project, which is anticipated to be
completed in the second quarter of 2011. The updated valuation will be used
in the Final Feasibility Study for resource estimation, pit optimization and
associated financial model. The rising price for rough diamonds is being
driven by increasing demand and shrinking supply, which may become more
pronounced in the future as old mines decline in production and close and
limited new projects are developed to take their place. The potential of
future diamond prices to increase at a very significant pace over the next
several years will benefit the long-term nature of this proposed project and
future prospects from the Fort à la Corne
area.
As of March 23, 2011, the Company had approximately $15.5 million in
cash and cash equivalents and short-term investments (excluding the $14.3
million in long-term Notes and $2.3 million in restricted cash). A portion of
the Company's cash and cash equivalents and short-term investments will be
used for the completion of the Final Feasibility Study, the continuation of
the environmental impact assessment ("EIA") process, the funding of
certain site power design and engineering costs, carrying out on-going
mineral property administration and reclamation as well as for general
corporate matters. Cash and cash equivalents and short-term investments may
also be used to fund various other exploration and evaluation activities, to
purchase certain assets or to acquire and explore additional properties as
opportunities warrant.
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 Shawn Harvey, Geology Manager, Professional
Geoscientist in the Province of Saskatchewan, who are the Company's
"Qualified Persons" under the definition of NI 43-101.
Caution Regarding Forward-looking Information
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 related to rising prices of rough
diamonds resulting from changes in diamond supply and demand, and their
corresponding impact on the project in particular and the Fort a la Corne area in general, statements relating to completion
of the Final Feasibility Study, and statements made respecting the use of
funds.
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 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 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.
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