Star - Orion South Diamond Project updated rough diamond prices: 31 to 46 percent increases since February 2011
SASKATOON, July 28, 2011 /CNW/ --
Stock Symbol: SGF: TSX
SASKATOON, July 28, 2011 /CNW/ - George H. Read, P. Geo., Senior Vice
President Exploration & Development of Shore Gold Inc. ('Shore') is
pleased to announce the completion of an updated valuation of the
diamond parcels from the Star and Orion South Kimberlites. This
valuation confirms the significant rough diamond price increases
recently reported in the News Release highlighting the results of the
combined Feasibility Study ('FS') on the Star-Orion South Diamond
Project ('the Project')(Shore News Release July 14, 2011). These Parcel
and Model prices were determined by WWW International Diamond
Consultants Limited ('WWW'), an industry leading rough diamond
valuation and consulting company. In this current valuation exercise
WWW has applied its July 18, 2011 price book to parcels from Star and
Orion South. All price figures are expressed in US dollars.
The Parcel and Model price details for each of the kimberlite units in
the Star Kimberlite are listed in the table below.
______________________________________________________________________
| Star | Carats | Parcel | Model | Minimum | High | Parcel |
|Kimberlite| | Price | Price | Price | Price | Price |
| | |($/carat)|($/carat)|($/carat)|($/carat)|Percentage|
| Unit | | | | | |Increase |
| | | | | | | from |
| | | | | | |February, |
| | | | | | | 2011 |
|__________|________|_________|_________|_________|_________|__________|
|Cantuar |1,667.96| 376 | 456 | 347 | 651 | 31 |
|__________|________|_________|_________|_________|_________|__________|
|Pense |1,410.47| 185 | 237 | 181 | 298 | 39 |
|__________|________|_________|_________|_________|_________|__________|
|EJF |7,124.74| 218 | 293 | 230 | 382 | 34 |
|__________|________|_________|_________|_________|_________|__________|
|MJF-LJF | 91.28| 256 | 263 | 142 | 388 | 33 |
|__________|________|_________|_________|_________|_________|__________|
The Parcel and Model price details for each of the kimberlite units in
the Orion South Kimberlite are listed in the table below.
______________________________________________________________________
| Orion | Carats | Parcel | Model | Minimum | High | Parcel |
| South | | Price | Price | Price | Price | Price |
|Kimberlite| |($/carat)|($/carat)|($/carat)|($/carat)|Percentage|
| Unit | | | | | | Increase |
| | | | | | | from |
| | | | | | |February, |
| | | | | | | 2011 |
|__________|________|_________|_________|_________|_________|__________|
|EJF |1,400.01| 204 | 249 | 194 | 332 | 37 |
|__________|________|_________|_________|_________|_________|__________|
|Pense | 581.47| 106 | 172 | 130 | 228 | 46 |
|__________|________|_________|_________|_________|_________|__________|
The price of the highest value stone, the 11.96 carat Type IIa recovered
from a large diameter drill (LDD) hole in the Early Joli Fou (EJF) unit
of the Star Kimberlite, has increased from $15,000 per carat (February
2011) to $18,000 per carat, with a total stone value of $215,190. The
LDD stones are not included in the Parcel Price but are used in the
development of the Model Prices. The increased number of large stones
enables more rigorous constraint of the Model Prices.
Two high value stones were identified among the Orion South LDD parcels
from the EJF: a 10.53 carat stone with a price of $7,900 per carat
(February 2011: $6,000 per carat) and a stone value of $83,148 and a
4.26 carat stone with a price of $4,900 per carat (February 2011:
$3,900 per carat) and a stone value of $20,800. As is the case with
Star, these Orion South LDD stones are not included in the Parcel Price
but are used in the development of the Model Prices.
The Parcel Prices show increases between 31 and 46 percent above the
February, 2011 prices. Model Prices ranging between US$172 and US$456
per carat have been determined for the diamond populations of the major
kimberlite units that make up the Star and Orion South Kimberlites.
These updated Model Prices will have a significant positive effect on
the future economics of the Star - Orion South Diamond Project.
The Parcel Price is the price in US dollars per carat at which these
valued goods would currently sell in a diamond trading centre such as
Antwerp, Belgium. The following table documents the evolution of the
Parcel Price for the individual kimberlite units of Star and Orion
South from the March 2008 prices, which were used for the Mineral
Reserve estimate and Prefeasibility Study of February 2010.
____________________________________________________________________
| Star |Mar 2008 |Apr 2010 |Feb 2011 |Jul 2011 | Percentage |
| Kimberlite |($/carat)|($/carat)|($/carat)|($/carat)| Increase |
| Units | | | | |Mar 2008 to Jul|
| | | | | | 2011 |
|____________|_________|_________|_________|_________|_______________|
|Cantuar | 193 | 229 | 287 | 376 | 95 |
|____________|_________|_________|_________|_________|_______________|
|Pense | 79 | 92 | 133 | 185 | 134 |
|____________|_________|_________|_________|_________|_______________|
|EJF | 115 | 136 | 162 | 218 | 90 |
|____________|_________|_________|_________|_________|_______________|
|MJF/LJF | 84 | 97 | 193 | 256 | 205 |
|____________|_________|_________|_________|_________|_______________|
|Orion South | | | | | |
| Kimberlite | | | | | |
| Units | | | | | |
|____________|_________|_________|_________|_________|_______________|
|EJF | 98 | 114 | 149 | 204 | 108 |
|____________|_________|_________|_________|_________|_______________|
|Pense | 57 | 63 | 73 | 106 | 86 |
|____________|_________|_________|_________|_________|_______________|
The Model Price is determined using statistical methods to estimate the
average value of diamonds that will be recovered from potential future
production from the Star and Orion South Kimberlites, based on the
valuation of the parcels for each lithology at current diamond prices.
The difference between the Parcel Price and the Model Price results
from under sampling of the top end (plus 5 carat) of the diamond size
frequency distribution by the current bulk sample. The Star Cantuar
Model Price of $456 lies between a 'minimum' of $347 and a 'high' of
$651. While the $347 minimum is a base price below which the Cantuar
price is not expected to fall, the $651 is referred to as a 'high' and
not a 'maximum' as there is a possibility of rising above this high
price.
Richard Wake Walker of WWW International Diamond Consultants, who
participated in all the valuations, states: 'While rough diamond prices
have risen consistently since the March 2009 low following the world
financial crisis, there has been a dramatic price increase of some 50
percent in the first six months of 2011. Rough prices have continued to
rise into July and the De Beers July 2011 sight is reported to have the
largest value on record. It would seem unlikely, however, that the same
rate of increase can be maintained for the rest of this year, although
prices have continued to rise throughout July. The Cantuar unit has a
particularly coarse size frequency distribution (SFD) with 6 percent of
the carats recovered and valued being greater than 10 carats per stone.
This is a major contributor to the high average price. The EJF unit
also has a high incidence of large stones with over 3 percent being
greater than 10 carats per stone, which is well above the world
average. There is very little boart (the lowest classification of
diamond) in the samples and the vast majority of the stones are
suitable for manufacture into polished.'
Senior Vice President Exploration & Development, George Read, states:
'The continued significant increase in rough diamond prices will have a
major positive effect on the economics of the Star - Orion South
Diamond Project. The recently announced results of the FS show that the
economic model is particularly sensitive to diamond prices and the
Project Net Present Value increases rapidly with rising diamond price,
as shown in Table 4 of the Shore July 14, 2011 News Release. The
diamond populations from both Star and Orion South EJF Kimberlites and
Star Cantuar Kimberlite have unusually coarse SFDs, suggesting that
large stones (greater than 100 carats) will be recovered from future
production. The current high and rising price of rough is driven by
increasing demand and shrinking supply, which may become more
pronounced in the future as old mines decline in production and close
and a limited number of new projects are developed to take their place.
The Star - Orion South Diamond Project is expected to play a
significant role in future diamond production.'
Senior Vice President Exploration & Development, George Read,
Professional Geoscientist in the Provinces of Saskatchewan and British
Columbia, is Shore's Qualified Person responsible for the verification
and quality assurance of analytical results. Shore is a Canadian based
corporation engaged in the acquisition, exploration and development of
mineral properties. Shares of the Company trade on the TSX Exchange
under the trading symbol 'SGF'.
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. Forward-looking information
is often, but not always, identified by the use of words such as
'anticipate', 'believe', 'expect', 'plan', 'intend', 'forecast',
'target', 'project', 'guidance', 'may', 'will', 'should', 'could',
'estimate', 'predict' or similar words suggesting future outcomes or
language suggesting an outlook. In particular, statements regarding
Shore's future operations, future exploration and development
activities or other development plans constitute forward-looking
statements. Forward-looking statements in this press release include,
but are not limited to, statements related to rising Parcel and Model
diamond prices and their impact on Project economics, pit optimization
and mineral reserves; the incidence of large stones and the associated
coarse size frequency distribution of diamonds in the Project;
statements and assumptions made regarding world diamond markets and
diamond supply and demand; and statements relating to future production
from and mining of the Star-Orion South Diamond Project.
All forward-looking statements and information are based on Shore's
current beliefs as well as assumptions made by and information
currently available to Shore concerning anticipated financial
performance, business prospects, strategies, regulatory developments,
development plans, exploration, development and mining activities and
commitments. Although management considers these assumptions to be
reasonable based on information currently available to it, they may
prove to be incorrect.
By their very nature, forward-looking statements involve inherent risks
and uncertainties, both general and specific, and risks exist that
predictions, forecasts, projections and other forward-looking
statements will not be achieved. We caution readers not to place undue
reliance on these statements as a number of important factors could
cause the actual results to differ materially from the beliefs, plans,
objectives, expectations, anticipations, estimates and intentions
expressed in such forward-looking statements. These factors include,
but are 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, changes in dates for
corporate approval due to, inter alia, longer than projected time lines
for environmental assessment, public consultation, engineering,
procurement, construction and commissioning, the availability of
project financing and the additional risks described in Shore's most
recently filed Annual Information Form, annual and interim MD&A, and
Shore's anticipation of and success in managing the foregoing risks.
Shore cautions that the foregoing list of factors that may affect future
results is not exhaustive. When relying on our forward-looking
statements to make decisions with respect to Shore, investors and
others should carefully consider the foregoing factors and other
uncertainties and potential events. Unless required by applicable
securities legislation, Shore does not undertake to update any
forward-looking statement that may be contained herein.
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/July2011/28/c8110.html
Joseph Dickson, Investor Relations Manager at (306) 667-3505 and www.shoregold.com