SGF by Will Purcell
Shore Gold Inc
Symbol SGF
Shares Issued 176,187,860
Close 2006-08-17 C$ 5.20
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Shore Gold shows good tonnage potential
2006-08-21 12:14 ET - Street Wire
by Will Purcell
Shore Gold Inc. is proving considerable tonnage and value potential with its Bauer drill program at the huge Star pipe. Drilling across a widening part of the pipe is rapidly expanding the tonnage potential and that will be key to a big mine. The results from the first 15 holes produced lower grades than the targeted bulk sample programs completed over the past few years, but an encouraging size distribution curve and enhanced colour attributes of the larger diamonds point to a potentially improved diamond value. That would largely cancel any decline in rock value.
Shore Gold's large diameter holes produced a grade just two-thirds of what mini-bulk tests of the early Joli Fou kimberlite managed in 2004 and 2005. The drop is disappointing at first glance, but the latest diamond content appears comparable with what Shore found in other vertical tests. That offered enough encouragement to revive Shore's slumping shares. The stock traded as low as $4.50 before the news, but hit an intraday high of $5.77 on Friday.
Improved colour also generated enthusiasm, as it bodes well for improved diamond values. Shore recovered 21 white diamonds larger than one carat, accounting for 60 per cent of its one-carat gems. Another 20 per cent were off-white stones, while just 11 per cent of the diamonds were grey and 9 per cent were brown. The proportions of whites and off-whites are much better than what the bulk samples produced.
Higher tonnage
An overlooked aspect of the current program is the tonnage potential, which is enhanced by the relatively consistent and potentially economic grade over a growing region of the pipe. Shore touted the early Joli Fou phase as having the potential to contain between 200 million to 300 million tonnes, and it is well on the way to proving its estimates accurate.
The underground workings span an area nearly 300 metres from north to south and about 150 metres from east to west, covering just over four hectares of the pipe. Shore encountered its thickest intersections in this area, and the average for the zone probably reaches well over 100 metres. Those dimensions nevertheless define just 11 million tonnes of early Joli Fou kimberlite.
The Bauer drill holes expanded the tonnage potential well to the south and southeast. Seven holes in that area outline a zone extending about 300 metres farther south, and over 400 metres east of Shore's property boundary. With an average thickness of just over 60 metres, the nine-hectare zone could contain about 13 million tonnes of kimberlite.
Six big drill holes to the north of the underground workings now roughly span an area extending 400 metres farther north and extending 300 metres east of the property line. With an average kimberlite thickness of 76 metres, the 12-hectare zone could contain 21 million tonnes of early Joli Fou kimberlite.
Three holes toward the east add more tonnage, although with less confidence. The eastern zone runs nearly 300 metres from north to south and extends about 600 metres east of the underground workings. That 16-hectare region might have yield an average vertical thickness of over 30 metres for the early Joli Fou phase of kimberlite. If so, that implies an added 11 million tonnes of the material.
In all, Shore's drill program has roughly outlined a kimberlite tonnage potential that currently reaches well over 55 million tonnes. The electromagnetic anomaly at Star has a complex shape, but it appears to cover an area roughly two kilometres in diameter. That points to a surface area of over 300 hectares. The current drilling covers roughly 40 hectares of the pipe, or barely one-eighth of the anomaly. The early Joli Fou kimberlite is probably thinner toward the fringes of the pipe, but Shore should be able to hit its tonnage estimates.
The holes also have implications on the western side of Star, where Shore is participating in a joint venture with De Beers Canada Corp. Based on the drilling so far, it is reasonable to expect a zone at least 100 metres wide contains about 50 metres of the richer phase of kimberlite. Over a zone about one kilometre long, that points to another 11 million tonnes of early Joli Fou kimberlite, with the potential for considerably more on the joint venture side of the line.
Shore added 47 cents Friday, closing at $5.67, on 918,342 shares