Shore GOLD Inc. Announces Third Quarter Results
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NEWS RELEASE November 9, 2017
Stock Symbol: SGF: TSX Saskatoon, Saskatchewan
SHORE GOLD INC. ANNOUNCES THIRD QUARTER RESULTS
Shore Gold Inc. (“Shore” or the “Company”) reports that the unaudited results of Shore’s operations for the three
and nine months ended September 30, 2017 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 2017 is as follows:
Highlights
- Announced the consolidation of the Fort à la Corne mineral properties (including the Star - Orion South
Diamond Project ), resulting in Shore holding a 100% interest with Newmont Canada FN Holdings ULC
(“Newmont”) increasing its interest to a 19.9% shareholder of the Company;
- Announced the concurrent Option to Joi nt Venture Agreement with Rio Tinto Exploration Canada Inc.
(“RTEC”) for the Fort à la Corne mineral properties (including the Star - Orion South Diamond Project);
- Announced the related closing of a subscription by RTEC for 5.6 million Common Shares and 5.6 million
Common Share purchase warrants for aggregate gross proceeds of $1.0 million;
- Announced ten hole HQ core drilling program and geotechnical investigations on the Star Kimberlite
- Working capital of $1.7 million at September 30, 2017;
- Issued and outstanding shares of 361,005,822 at September 30, 2017
Overview
Shore is a Canadian natural resource company focused on exploring and developing Saskatchewan's diamond
resources. The Company, as a result of the recent mineral property consolidation and earn -in agreement (as
discussed below), is now in an enhanced position to advance its 100% held Star - Orion South Diamond Project
(“Project”), which is situated in the Fort à la Corne kimberlite field in central Saskatchewan. Indicated Mineral
Resources for the Project are 55.4 million carats (see SGF News Release dated November 9, 2015 and Technical
Report filed December 21, 2015). In addition to the Indicated Mineral Resource Estimate, the Star and Orion South
Kimberlites include Inferred Resources containing 11.5 million carats.
Consolidation of the Fort à la Corne mineral properties and Option to Joint Venture
During the quarter ended June 30, 2017, Shore announced that it has acquired (the "Newmont Acquisition") all of
Newmont's participating interest in the Fort à la Corne joint venture (the "FalC JV"), resulting in Shore owning
100% of the of the Fort à la Corne mineral properties (including the Project), and has concurrently entered into an
Option to Joint Venture Agreement (the "Option Agreement") with RTEC pursuant to which the Company has
granted RTEC an option to earn up to a 60% interest in the Fort à la Corne mineral properties (including the
Project) on the terms and conditions contained in the Option Agreement (see SGF News Release dated June 23,
2017). Immediately after the closing of the Newmont Acquisition and issuance of common shares, Newmont held
approximately 19.9% of the common shares issued and outstanding on a non-diluted basis.
Activities relating to the Star - Orion South Diamond Project
The Company and RTEC recently announced an HQ core drilling program, consisting of ten holes and some 2,500
metres of drilling, on the Star Kimberlite (See SGF News Release dated October 12, 2017). This core drilling is
required to accurately document the internal stratigraphy of the Star Kimberlite prior to a proposed sampling
program, which is expected to commence in 2018. In conjunction with this diamond drill program, geotechnical
investigations on the overburden will also be conducted.
During the nine months ended September 30, 2017, the Company performed geotechnical investigations,
assessments and test work that would be required for an updated feasibility study on the Project. The work
completed included: X -ray Transmission (“XRT”) recovery of diamonds from Star pyroclastic kimberlite, ore
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processing data review, diamond parcel characterization, kimberlite particle size analysis and overburden removal
investigations. These programs investigate the use of new technology for the efficient excavation of the open pit
and improvements to the flow -sheet of the diamond processing plant, while simultaneously reducing pre -
production capital costs and the time to initial diamond production.
In January 2017, the Company was informed by the Saskatchewan Minister of Envir onment that additional
consultation is required between the government and First Nation and Métis communities for the government to
meet its legal obligation with respect to duty to consult and accommodate process (See SGF News Release dated
January 26, 2017). Since that time, the government proceeded with a work plan that enable d them to make
significant progress by the end of the third quarter of 2017. The Ministry has indicated to Shore that once
consultations with potentially impacted First Nation and M étis communities are completed, all pertinent
information will be reviewed before a decision is made under The Environmental Assessment Act.
Quarterly Results
For the quarter ended September 30, 2017, the Company recorded a net loss of $0.6 million or $ 0.00 per share
compared to a net loss of $1.1 million or $0.00 per share for the same period in 2016. The loss es incurred during
the quarter s ended September 30, 2017 and 2016 were due to operating costs and exploration and evaluation
expenditures incurred by the Company exceeding interest income earned on cash and cash equivalents and short -
term investments.
Year to Date Results
For the nine months ended September 30, 2017, the Company recorded net income of $41.6 million or $0.13 per
share compared to a net loss of $4.4 million or $0.02 per share for the same period in 2016. Net income during the
nine months ended September 30, 2017 was due to the partial reversal of previously recorded impairments relating
to exploration and evaluation assets ($44.5 mill ion). As a result of the Newmont Acquisition, the Company
performed an assessment of the carrying value of exploration and evaluation assets. Based on this assessment, the
carrying value of exploration and evaluation assets (which includes the Fort à la Co rne mineral properties) was
determined to be $66.3 million, resulting in a partial reversal of previously recorded impairments. Exploration and
evaluation expenditures incurred during the nine months ended September 30, 2017 primarily related to work
relating to geotechnical investigations and test work for the Project. The loss during the nine months ended
September 30, 2016 was primarily due to ongoing operating costs and exploration and evaluation expenditures
incurred by the Company exceeding interest i ncome earned on cash and cash equivalents and short -term
investments.
In connection with the Option Agreement, RTEC subscribed for 5.6 million units, for a gross subscription amount
of $1.0 million, with each unit consisting of one common share and one c ommon share purchase warrant . In
addition, options and broker warrants were also exercised during the quarter ended June 30, 2017 for total cash
proceeds of $0.4 million. In connection to the Newmont Acquisition, 53.8 million common shares and 1.1 million
common share purchase warrants were issued to Newmont. The Company also agreed that Newmont will receive a
contingent payment in the aggregate amount of $3.2 million upon a positive decision being made to develop a mine
on the Project. Shore, in its sole discretion (subject to regulatory approvals), may satisfy the contingent payment
due to Newmont through a cash payment or the issuance of common shares. The estimated discounted present
value of this contingent consideration at September 30, 2017 was determined to be $0.7 million.
Selected financial highlights include:
Condensed Consolidated Statements of Financial Position
As at
September 30,
2017
As at
December 31,
2016
Current assets $ 1.8 M $ 3.2 M
Exploration and evaluation, capital and other assets 67.6 M 1.5 M
Current liabilities 0.1 M 0.3 M
Premium on flow-through shares 0.1 M 0.2 M
Non-current liabilities 1.4 M 0.6 M
Shareholders’ equity 67.8 M 3.6 M
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Consolidated Statements of Loss and Comprehensive Loss
Three Months
Ended
September 30,
2017
Three Months
Ended
September 30,
2016
Nine Months
Ended
September 30,
2017
Nine Months
Ended
September 30,
2016
Interest and other income $ 0.0 M $ 0.0 M $ 0.0 M $ 0.0 M
Expenses 0.6 M 1.2 M 3.0 M 4.8 M
Flow-through premium recognized in income 0.0 M 0.1 M 0.1 M 0.4 M
Reversal of prior impairments to exploration and evaluation assets 0.0 M 0.0 M 44.5 M 0.0 M
Net and comprehensive income (loss) for the period (0.6) M (1.1) M 41.6 M (4.4) M
Net income (loss) per share for the period (basic and diluted) (0.0) (0.00) 0.13 (0.02)
Condensed Consolidated Statements of Cash Flows
Nine Months
Ended
September 30,
2017
Nine Months
Ended
September 30,
2016
Cash flows from operating activities $ (2.9) M $ (3.7) M
Cash flows from investing activities (0.6) M 0.1 M
Cash flows from financing activities 2.1 M 1.0 M
Net decrease in cash (1.4) M (2.6) M
Cash – beginning of period 2.8 M 4.0 M
Cash – end of period 1.4 M 1.4 M
Outlook
The successful completion of the consolidation of the Company’s Fort à la Corne mineral properties (including the
Star - Orion South Diamond Project) and the concurrent earn -in arrangement with RTEC sets the stage for a new
phase for the Company. It is the Company’s view that Rio Tinto is one of the few companies in the world with the
resources and expertise to move forward with a project of the magnitude of the Star - Orion South Diamond
Project. The Company is also very pleased to have acquired the remaining portion of the Project from Newmont
and having Newmont as a significant shareholder.
As of November 9, 2017, the Company had approximately $1.4 million in cash and cash equivalents and short-term
investments (excluding $0.8 million in restricted cash). A portion of the Company’s cash and cash equivalents and
short-term investments will be used to complete the 2017 programs (including remaining flow -through
commitments) and advance certain aspects of the Project, inclu ding the environmental assessment process and
assessment and test work programs required for an updated feasibility study , as well as for general corporate
matters.
Caution Regarding Forward-looking Statements
This news release contains forward -looking statements within the meaning of certain securities laws, including the "safe harbour" provisions of Canadian
securities legislation and the United States Private Securities Litigation Reform Act of 1995. The words "may," "could," "sho uld," "would," "suspec t,"
"outlook," "believe," "plan," "anticipate," "estimate," "expect," "intend," and words and expressions of similar import are intended to identify forward-looking
statements, and, in particular, statements regarding Shore's future operations, future exploration and development activities or other development plans contain
forward-looking statements. Forward-looking statements in this news release include, but are not limited to, s tatements relating to mineral resources and/or
reserves; statements related to the approval of the development of the Star - Orion South Diamond Project; statements relating to future development of the
Star - Orion South Diamond Project and associated timelines; the environmental assessment and permitting process; objectives for the ensuing year, including
drilling and geotechnical programs and the re-optimisation of the open pit, the optimisation of the Feasibility Study and the anticipated positive change in the
economic model for the Project.
These forward-looking statements are based on Shore's current beliefs as well as assumptions made by and information currently available to it and involve
inherent risks and uncertainties, both general and specific. Risks exist that forward -looking statements will not be achieved due to a number of factors
including, but not limited to, developments in world diamond markets, changes in diamond valuations, risks relating to fluctuations in the Canadian dollar and
other currencies relative to the US dollar, changes in exploration, developme nt or mining plans due to exploration results and changing budget priorities of
Shore or its contractual partners, the effects of competition in the markets in which Shore operates, the impact of changes i n the laws and regulations
regulating mining exploration and development, judicial or regulatory judgments and legal proceedings, operational and infrastructure risks and the a dditional
risks described in Shore's most recently filed Annual Information Form, annual and interim MD&A, news releases and techni cal reports. Shore's anticipation
of and success in managing the foregoing risks could cause actual results to differ materially from what is anticipated in such forward-looking statements.
Although management considers the assumptions contained in forwa rd-looking statements to be reasonable based on information currently available to it,
those assumptions may prove to be incorrect. When making decisions with respect to Shore, investors and others should not place undue reliance on these
statements and should carefully consider the foregoing factors and other uncertainties and potential events. Unless required by applicable securities law, Shore
does not undertake to update any forward-looking statement that may be made.
For further information: [email protected] or (306) 664-2202
www.shoregold.com
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