SGF by Will Purcell
Shore Gold wraps up Star drilling
2007-12-28 17:29 ET - Street Wire
by Will Purcell
Shore Gold Inc. is wrapping up its large diameter drill program on the Star pipe, in the Fort a la Corne district of central Saskatchewan. The flow of news from the program has been slow, prompting investors to worry if the diamond recoveries contain an unpleasant surprise, but Shore's vice-president of exploration, Pieter du Plessis, said he does not see any bad news on the horizon. Such a vision will be good news for shareholders who have spent much of 2007 watching their $8 stock turn into a $4 stock.
The plan
Mr. du Plessis said Shore's two big Bauer drill rigs were now working on their final tests. When those tests wrap up, Shore expects to have sufficient diamond recovery data from across the big pipe to allow it to prepare a mineral resource estimate for the huge and complex Star body, which is up to two kilometres wide and contains several phases of kimberlite. The former South African geologist said that the tests would be complete by the end of the year.
Shore will still take several weeks to process all the material, but the company says it is on track to produce a resource estimate for Star before the end of March. Shore began drilling the big Bauer holes about two years ago, but the only diamond results released by the company covered the first 15 holes, during the summer of 2006. These results came shortly after newsletter writer John Kaiser called the Star project a "slow motion train wreck in the making."
Mr. du Plessis said Shore had no firm decision on when the results would become public, but he added that, "it might be that they come all at once." The lack of information is a red flag to many investors and it certainly raised one with Mr. Kaiser. Earlier this year, the San Francisco-based newsletter writer suggested the diamond grades and values Shore produced from its underground digs could prove unrepresentative of the same rock units farther afield from the vertical shaft.
Shore, no train wreck yet, now has a very large amount of data, from its underground mining and processing of over 50,000 tonnes of kimberlite, plus the significant amount of material the company has been drilling up across the body. Mr. du Plessis said that putting all that information together into a resource estimate was main challenge facing Shore.
One of the tasks that Shore is facing is determining how much diamond breakage occurred with the large diameter drilling. Reverse circulation drills typically produce lower grades than core drilling or mining, so the company will have to assess the potential diamond losses to complete its resource calculation.
The processing and calculating are still in progress, but Mr. du Plessis said the results so far suggest the diamond recoveries from the large diameter drilling suggest the underground bulk samples are very representative of the same rock units across the pipe as a whole.
The encouragement
Shore's big underground digs produced grades of about 0.180 carat per tonne form the early Joli Fou kimberlite and the limited large diameter drilling results point to grades of about 0.105 carat per tonne. That is a significant difference, but Shore believes the markedly lower result is largely the result of significant breakage rates with the largest diamonds.
In fact, the company now touts the early Joli Fou kimberlite at Star as having the potential to deliver production grades as high as 0.23 carat per tonne, which is promotable when combined with a modelled value of $170 (U.S.) per carat for the Star gems.
Mr. du Plessis said there might be a few gaps that the company would need to fill in to complete its three-dimensional modelling of the pipe, but he expected any such infill drilling programs would be modest in comparison with the work completed over the past few years. Therefore, if Shore's prefeasibility study has no nasty surprises, there may be few opportunities for bad news until Star goes into production.
Shore closed up eight cents to $4.20 Thursday on 192,800 shares.