2nd QUARTER RESULTSShore Gold Inc. announces second quarter results
Stock Symbol: SGF: TSX
Shore Gold Inc. ("Shore" or the "Company") reports that the unaudited results of Shore's operations for the quarter ended June 30, 2008 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 - Completion of the NI 43-101, risk adjusted, Mineral Resource estimate for the explored portion of the Star Kimberlite - Commencement of drifting on the FALC-JV's Orion South underground bulk sampling program - Third set of diamond results from samples collected from the Orion South shaft released - Expenditures of $9.6 million on the Company's share of the Fort à la Corne Joint Venture ("FALC-JV") exploration program and $1.4 million on the Star Diamond Project advanced exploration program - Working capital of $40.8 million at June 30, 2008 - Issued and outstanding shares of 183,234,242 at June 30, 2008 >>
Overview
Star Diamond Project Advanced Exploration Program
In early June, the Company announced the completion of the NI 43-101, risk adjusted, Mineral Resource estimate for the explored portion of the Star Kimberlite (See SGF News Release June 9, 2008). The Mineral Resource estimate, as prepared by independent Qualified Persons from AMEC Americas Limited ("AMEC"), includes Indicated Resources of 122.7 million tonnes at a grade of 13.6 carats per hundred tonnes ("cpht") for a total of approximately 17Â million carats and Inferred Resources of 30.3 million tonnes at a grade of 13.1 cpht.
Shore commissioned the NI 43-101 Mineral Resource estimate for the Star and Star West properties pursuant to its obligation under NI 43-101 to prepare and file a Technical Report and as such, the Technical Report is the sole responsibility of Shore. The Technical Report can be viewed on the Company's website (www.shoregold.com) or on SEDAR (www.sedar.com).
In addition to the Mineral Resource estimate determined by AMEC, a further 100 to 120 million tonnes of the Star Kimberlite is designated a 'potential mineral deposit', as detailed core logging, whole rock geochemistry, geophysical and density measurements confirm the geological continuity from the Inferred Resource into this part of the kimberlite, which is contained within the 276 million tonnes originally defined in the geological model for the Star Kimberlite (See SGF News Release Oct 17, 2006). In order to bring certain of these tonnages into a resource category, the Company will need to perform additional LD drilling. The 100 to 120 million tonne potential mineral deposit is currently considered conceptual in nature and is not a resource estimate.
FALC-JV Exploration Programs
During the second quarter of 2008, the major activities on the FALC-JV Project were the completion of the shaft and commencement of lateral underground drifting on Orion South, LD drilling and sample processing.
The Orion South shaft was completed during the second quarter, to a depth of 211 metres below surface with a station established at the 186 metre level. The equipment required for lateral drift development has also been lowered down the shaft and assembled in the station. Lateral drift development is presently underway on headings to the south. Progress, however, has been slower than anticipated due to the ground conditions experienced. The intent of this shaft sinking and bulk sampling exercise is to recover substantial, representative diamond parcels from each of the predominant Orion South kimberlite lithologies (Early Joli Fou and Pense) for diamond grade and price determinations.
The third set of diamond results from the underground bulk sampling of Orion South was announced during the second quarter (See SGF News Release May 27, 2008). Total diamond recoveries were 136.68 carats from 3,466.73 dry tonnes processed. Ten diamonds greater than one carat were recovered and the four largest stones were: 2.59, 2.22, 1.63 and 1.19 carats, respectively. These underground bulk sampling diamond results were from samples collected from the Pense Kimberlite during the shaft sinking exercise (at depths from 148.6 metres to 185 metres) and the grades recovered are consistent with Shore's interpretation of the internal geology of Orion South. Existing LD drilling results suggest that the Pense Kimberlite will have a lower grade than the EJF but the EJF is the dominant lithology in Orion South, accounting for more than 60 percent of the total rock volume. The Company continues its underground program on Orion South. The Phase 1 LD drilling program on Orion So uth has been completed and the results are awaited.
Buffalo Hills
The Buffalo Hills Joint Venture participants are Shore (22.5 percent), Diamondex Resources Ltd. ("Diamondex") (22.5 percent), EnCana Corporation (43Â percent) and Pure Diamonds Exploration Inc. (12 percent). Diamondex has been appointed operator of the Buffalo Hills Joint Venture. Shore and Diamondex have the option to increase their combined interest in the joint venture to 72.5 percent by funding the next $15 million of exploration expenditures before April 30, 2010.
Following the review of historical geological data by a technical team from Shore and Diamondex, a 2008 exploration program and budget of $7 million was determined of which Shore will fund $3.5 million (See SGF News Release January 17, 2008).
A winter drill program was performed during the first quarter of 2008 on two (K14 and K252) of the six kimberlite bodies (K91, K225, K14, K252, K6 and K5) of the central corridor of the Buffalo Hills property slated for drilling during the year as part of the approved 2008 exploration program. Drilling on the K6 body resumed in the second quarter following the spring thaw. Also during the second quarter Shore, on behalf of the joint venture, completed logging more than 2,000 metres of drill-core from the 2008 Buffalo Hills winter drilling program.
Quarterly Results
For the quarter ended June 30, 2008, the Company recorded a net loss of $2.8 million or $0.02 per share compared to net income of $1.7 million or $0.01 per share for the same period in 2007. The loss for the quarter ended June 30, 2008 was primarily due to the $2.0 million impairment in fair value of third-party asset-backed commercial paper ("ABCP") held by the Company that was recorded during the quarter. The Company also generated lower interest income for the second quarter of 2008 compared to the same period in 2007 as a result of having less cash on hand due to exploration expenditures incurred, the acquisition of a 22.5 percent interest in the Buffalo Hills Joint Venture, as well as the Company's investment in ABCP being frozen since August of 2007. The net income for the second quarter of 2007 was primarily due to an income tax recovery as a result of the federal government enacting a reduction in corporate income tax rates during that period.
Year to Date Results
For the six-month period ended June 30, 2008, the Company recorded a net loss of $5.0 million or $0.03 per share compared to a net loss of $2.5 million or $0.01 per share for the same period in 2007. The loss during the first six months of 2008 was primarily due to the fair value of stock-based compensation that was expensed during the six-month period ended June 30, 2008 as well as the $2.0 million impairment in fair value of ABCP held by the Company that was recorded during the second quarter of 2008. The Company also generated lower interest income for the six-month period of 2008 compared to the same period in 2007 which also contributed to the six month loss. The net loss for the six-month period ended June 30, 2007 would have been similar to the six-month period ended June 30, 2008 if it had not been for the income tax recovery of $2.0 million in the second quarter of 2007 as a result of the federal government enacting a reduction in corporate income tax rates du ring that period.
<< Selected financial highlights include: ------------------------------------------------------------------------- As at As at June 30, Dec 31, Consolidated Balance Sheets 2008 2007 ------------------------------------------------------------------------- Current assets $ 47.2 M $ 130.0 M ------------------------------------------------------------------------- Capital and other assets 766.6 M 657.5 M ------------------------------------------------------------------------- Current liabilities 6.4 M 11.9 M ------------------------------------------------------------------------- Future income tax and other long-term liabilities 113.1 M 117.5 M ------------------------------------------------------------------------- Share capital 760.9 M 733.5 M ------------------------------------------------------------------------- Contributed surplus 25.5 M 19.2 M ------------------------------------------------------------------------- Deficit 92.1 M 94.6 M ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three Three Six Six months months months months Ended Ended Ended Ended Consolidated Statements June 30, June 30, June 30, June 30, of Income 2008 2007 2008 2007 ------------------------------------------------------------------------- Interest and other income $ 0.3 M $ 1.2 M $ 1.0 M $ 2.5 M ------------------------------------------------------------------------- Operating expenses 1.5 M 1.4 M 4.5 M 6.7 M ------------------------------------------------------------------------- Loss for the period before other items (1.2)M (0.2)M (3.5)M (4.2)M ------------------------------------------------------------------------- Loss from Wescan Goldfields Inc. (0.1)M (0.1)M (0.1)M (0.2)M ------------------------------------------------------------------------- Impairment in fair value of ABCP (2.0)M - M (2.0)M - M ------------------------------------------------------------------------- Income tax recovery 0.5 M 2.0 M 0.6 M 1.9 M ------------------------------------------------------------------------- Net and comprehensive income (loss) for the period (2.8)M 1.7 M (5.0)M (2.5)M ------------------------------------------------------------------------- Income (loss) per share (0.02) 0.01 (0.03) (0.01) ------------------------------------------------------------------------- ------------------------------------------------------------------------- Three Three Six Six months months months months Ended Ended Ended Ended Consolidated Statements June 30, June 30, June 30, June 30, of Cash Flows 2008 2007 2008 2007 ------------------------------------------------------------------------- Cash flows from operating activities $ (0.7)M $ 0.2 M $ (2.1)M $ 0.0 M ------------------------------------------------------------------------- Cash flows from investing activities (1.2)M (45.1)M (9.9)M (37.7)M ------------------------------------------------------------------------- Cash flows from financing activities 0.5 M 0.2 M 0.5 M 1.2 M ------------------------------------------------------------------------- Net decrease in cash (1.4)M (44.7)M (11.6)M (36.5)M ------------------------------------------------------------------------- Cash - beginning of period 21.7 M 72.9 M 31.8 M 64.7 M ------------------------------------------------------------------------- Cash - end of period 20.3 M 28.2 M 20.3 M 28.2 M ------------------------------------------------------------------------- >>
Outlook
As of August 6, 2008, the Company had approximately $36.2 million in cash and cash equivalents and short-term investments. These funds will be used to complete the advanced exploration program on the Star Kimberlite, to fund the Company's portion of the FALC-JV and the Buffalo Hills Joint Venture exploration programs and general corporate matters. Cash and cash equivalents and short-term investments may also be used to fund various other exploration activities as well as acquisition and exploration of additional properties (as opportunities warrant). The next phase of work on the Star Kimberlite currently under way is the determination of the project's viability under current economic conditions. This will primarily entail desk-top engineering studies and data analysis to convert the Mineral Resource to a Mineral Reserve and a feasibility study conforming to NI 43-101 and Canadian Institute of Mining, Metallurgy and Petroleum ("CIM") standards. The FALC-JV has similar objectives; however, based on the stage of current exploration programs on the Orion Cluster, a Mineral Resource estimate is not anticipated for any of the FALC-JV's diamondiferous kimberlites until 2009.
Technical Information