Shore Gold - $3-million may net an additional 6-million caraI spoke with George Read Snr VP of Exploration and Development for Shore Gold on FRiday, and here are my insights and thoughts taken from the conversation. This is also posted at https://prosperitysaskatchewan.wordpress.com/2014/03/07/shore-gold-3-million-may-net-an-additional-6-million-carats-diamond/ Shore Gold’s March 6th 2014 news release (https://shoregold.com/_resources/news_releases/2014/NEWSREL6Mar2014-TFFE.pdf) is about further defining the value of their assets in Fort a la Corne – it further quantifies and qualifies the value of the project. In general, they have already proven 34.4 million carats at the Reserve classification level, followed by 15.7-million in the lower Inferred level; and now in Table 1 of the March 6th release, have demonstrated an additional 51.86 – 90.64 million carats at the Target For Further Exploration level (which is below the “inferred” category). Also, they have in Table 4 delineated a “geological model” for an additional 404.638 – 484.373 million tonnes of kimberlite stemming from an analysis of core drilling already completed. Of the 15.7-million carats in the Inferred category, 9.1-million of these carats are within the already proposed mine pit, but not counted as an asset yet, as they have not been explored enough to move them up into the Indicated level and thus reportable as a value (see the Feasibility Study’s Table 5.2 page 78). As such, these carats and kimberlite holding them are only factored as a removal cost, and not an asset with a potential value. George Read said that “an approximately $3-million drill program could move about 6-million of these 9.1-million carats into the Indicated level” and thus be counted as an asset. If these 6-million carats were proven and the same valuation as the existing count was applicable at $242/carat, the $3-million program could return $1.452-billion in diamonds. Now given these diamonds are physically sitting above those already counted, the pay-back on the mine would logically be expedited from the current 5.3 years and the IRR would be improved. George Read said that these two increases would be “significant” but he cannot quantify beyond that at this time. Read also said that “this same $3-million program would enable a micro-diamond evaluation model/technique to be developed, that could be applied to the kimberlite tonnage reported in Table 4” (the additional 404.638 to 484.373 million tonnes). This tonnage already has a micro-diamond analysis which has not been quantified due to the lack of an accurate model. With a new model, this tonnage could be moved into the Target For Further Exploration level. Of note, if the same results in Table 1 are applicable to these new tonnes, this could amount to approximately an additional 20 to 37-million carats worth potentially $5 to $9-billion. However, it should be noted that all of this has yet to be proven. But of further interest, diamond prices in general are up 7 – 9% above those used in the Feasibility Study and seem to now be forecasted to increase at a higher rate than forecasted within it as well. In short, it seems to be a press release that puts Shore in a stronger position when negotiating project financing – either to raise money for further exploration and/or to finance the mine itself. Yes, this view is biased towards the positive - but that was because the negative was known Why rehash the past? The stock price is very low from where it was, plus the timelines for completing the permitting and financing has been past reset and past again and again. My assumption is, no-one wanted to finance the project given the current math. So we can either wait for the price of diamonds to go up a bunch or do the obvious thing - improve the numbers. Short of a breakthrough in extraction technology, the obvious and cheapest thing to do is prove-up the diamonds in the dirt that is currently working as a cost (diamonds in the overburden/pit rim) and make that dirt a value. We can either spend valuable time and money pointing fingers and arguing over what happened, or we can accept the facts and get on with fixing things. I choose the move ahead. RDG