More from Will P on Stockhouse concerning Sgf Ken MacNeill and George Read's Shore Gold Inc.(SGF) slid 9.5 cents to 34 cents on 3.69 million shares after it said it was working on a deal regarding its mammoth Star-Orion South diamond project in central Saskatchewan. Shore's stock, mired near the 20-cent mark for the past three years, broke free of its chains a month ago. The rally gained strength late in May and the stock leapt as high as 44 cents on Monday, prompting the regulators to ask the company what was up, besides the shares.
Mr. MacNeill, president and chief executive officer, and Mr. Read, executive vice-president, say that "Shore is engaged in preliminary discussions regarding a potential transaction with a third party involving an earn-in on Shore's mineral properties." That concept was the one of the worst-kept secrets in the diamond sector this spring, given the northward spurt by Shore's stock and the blizzard of posts from retail shareholders speculating about an imminent deal. Curiously, many of those same retail shareholders were skeptical of Shore's news, pointing out the empty calories offered by the company's side dish of adjectival fudge in its news about the talks.
Investors say that Shore has been unofficially telling them for some time that the company has been talking with as many as three potential partners. Officially, Shore has been telling investors each quarter for several years -- so long that its comments have become boilerplate -- that it is "pursuing options to finance" Star-Orion South, adding that its options include "joint venture arrangements, debt financing, equity financing or other means." The latest news suggests the current talks centre on an unnamed potential partner concluding a joint venture deal, although with the usual regulatory caveats that there are no assurances that a deal can be reached, or if there is an agreement, that the terms will be favourable. (Favourable to Shore is one thing; favourable in the eyes of the company's retail shareholders, who were pledging a decade ago to rebuff any offer of less than $20 per share, is another matter entirely.)
Shore has said it was close to a deal before. Early in 2012, the company revealed that it had "reached an advanced stage of negotiation" with one of a few potential partners that it was talking with about a deal. Unfortunately, those advanced discussions broke off because of "current world uncertainties." That unnamed entity was widely rumoured to be Rio Tinto PLC, a company that is again at the forefront of the rumour mill regarding the latest round of "preliminary discussions." Curiously, investors were more eager when the possibility of a possible Star-Orion South deal was just a rumour than today, when Shore acknowledged that it was indeed talking with a possible co-venturer: Shore's stock dipped as low as 31 cents in intraday trading today.