Buffalo Hills
Star-Orion South Diamond Project
Star-Orion South Diamond Project

North Aerial View of the Star-Orion South Project

North Aerial View of the Star-Orion South Project

 

Introduction

On June 22, 2017, Shore Gold 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 Company 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 (see SGF News Release dated June 23, 2017).

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. As additional consideration for Newmont Canada's interest in the FalC JV, the Company 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 Company; 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 Company has also agreed that Newmont Canada 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 Canada through a cash payment or the issuance of common shares priced at the VWAP at that time.

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.

Pursuant to the Option Agreement, the Company has granted to RTEC four options which in aggregate permit RTEC to earn a 60% interest in the Project. Completion of the First Option does not entitle RTEC to an interest in the Project. 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.

The Star Kimberlite deposit and associated infrastructure are located within mineral dispositions S-132039, S-127109 and S-127186 and the Orion South Kimberlite deposit and associated infrastructure are located within mineral dispositions S-124562 and S-124563, in Section 18 of Township 49, Range 19, west of the 2nd Meridian. Township 49 is located within the Rural Municipality of Torch River. These mineral dispositions are part of a larger group of 189 mineral dispositions totaling 42979.102 ha as of August 3, 2017.

Shore and FalC-JV Mineral Disposition Map

Mineral Resource Estimate

The Revised Mineral Resource estimate supersedes all previous estimates. Highlighted below is the revised independent NI 43-101 Mineral Resource Estimate for the Star and Orion South diamond deposits.

2015 Revised Mineral Resource Estimates tor the Star and Orion South Deposits

Project Resource Category Tonnes x1000 Grade cpht Carats x1000
Star Indicated 193,010 15 28,249
Inferred 56,949 11 6,385
Orion South Indicated 200,160 14 27,153
Inferred 72,080 7 5,180

Reported Mineral Resources are not Mineral Reserves and have not demonstrated economic viability. There is no guarantee that all, or any part, of a Mineral Resource will be converted into a Mineral Reserve.

The updated mineral resource estimate for the Star Deposit is based on:

  • 313 surface diamond core drill holes, completed between 1996 and 2008
  • 213 underground diamond core drill holes completed between 2004 to 2006
  • 105 48" (1219.2 mm) LDD holes completed between 1996 and 2008; and
  • 321 underground bulk samples

Star Kimberlite 3-D Geological Model (Looking North East)

The updated mineral resource estimate for the Orion South Deposit is based on:

  • 238 surface diamond core drill holes, completed between 1993 and 2015
  • 89 LDD holes completed between 1996 and 2010; and
  • 78 underground bulk samples

3D View of the Orion South Kimberlite Geological Model Looking North West

Star Mineral Resources

Non-diluted Indicated Mineral Resources considered amenable to open pit mining, within a preliminary pit shell at a C$5.49/tonne internal cut off and within the Late Joli Fou Pyroclastic Kimberlite (LJF), Early Joli Fou Pyroclastic Kimberlite (EJF), Middle Joli Fou Pyroclastic Kimberlite (MJF), Pense pyroclastic kimberlite (PPK) and Cantuar Pyroclastic Kimberlite (CPK) domains total 193.010 million tonnes with an average diamond grade of 15 cpht for 28.249 million carats.

Non-diluted Inferred Mineral Resources considered amenable to open pit mining, within a preliminary pit shell at a C$5.49/tonne internal cut off and within the LJF, EJF, MJF, PPK and CPK domains total 56.949 million tonnes with an average diamond grade of 11 cpht for 6.385 million carats.

Orion South Mineral Resources

Non-diluted Indicated Mineral Resources considered amenable to open pit mining, within a preliminary pit shell at a C$5.49/tonne internal cut off and within the Early Joli Fou Pyroclastic Kimberlite (EJF) and Pense Volcaniclastic Kimberlite (Pense) domains total 200.160 million tonnes with an average diamond grade of 14 cpht for 27.153 million carats.

Non-diluted Inferred Mineral Resources considered amenable to open pit mining, within a preliminary pit shell at a C$5.49/tonne internal cut off and within the EJF, LJF, Pense and Pense Volcaniclastic Kimberlite 3 (P3) domains total 72.080 million tonnes with an average diamond grade of 7 cpht for 5.180 million carats.

Since the completion of the 2015 Mineral Resource Estimate, significant aspects of test work required for an updated feasibility study on the Star – Orion South Diamond Project has been completed. An updated feasibility study would contain a revised statement of Mineral Reserves for the Project, if warranted, and an economic assessment based thereon.

Document Downloads:

Technical Report and Revised Resource Estimate for the Star – Orion South Diamond Project – December 21, 2015

Feasibility Study NI 43-101 Technical Report(1)

Star-Orion South Diamond Project Environmental Impact Statement - Executive Summary

Technical Report and Updated Preliminary Feasibility Study on the Star - Orion South Diamond Project - March 24, 2010(1)

Project Proposal - November 3, 2008(1)

(1) NOTE: During the fourth quarter of 2015, the Company announced Revised Mineral Resource estimates for the Star and Orion South Kimberlites (see SGF News Release dated November 9, 2015 and Technical Report filed December 21, 2015). Accordingly, the mineral resources and economic assessment previously disclosed by Shore for the Project should no longer be relied upon.

 

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