Shore Gold acquires Newmont interest and brings Rio Tinto on board at Star-Orion South Diamond Project

Drilling operations at Shore Gold’s Star-Orion South Diamond Project located 60 km east of Prince Albert, Saskatchewan. Source: Shore Gold Inc.

Shore Gold Inc. [SGF-TSX] has acquired all of Newmont Canada FN Holdings ULC’s participating interest in the Fort à la Corne joint venture, resulting in Shore owning 100% of the Star-Orion South Diamond Project located 60 km east of Prince Albert, Saskatchewan. In addition, Shore has concurrently entered into an option to joint venture agreement whereby Rio Tinto Exploration Canada Inc. can earn up to a 60% interest in the project.

In connection with the option, Rio Tinto also agreed to subscribe for units of Shore Gold for an aggregate subscription price of $1,000,000 at a price of $0.18 per unit. Each unit consists of one share and one warrant good to buy one additional share at $0.205 per share for 24 months.

“We are extremely pleased to partner with Rio Tinto to further develop the potential of the project” said Ken MacNeill, CEO of Shore. “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. We are also very pleased to acquire the remaining portion of the project from Newmont and look forward to working with Newmont as a significant shareholder”.

Newmont sold its entire interest to Shore in consideration for approximately 53.8 million shares of Shore and 1.1 million warrants entitling Newmont to acquire one additional share at a price of $0.349 per share for 45 months. Prior to the completion of the Newmont acquisition, Shore held a 69% interest in the joint venture and Newmont had a 31% interest.

Newmont Canada currently holds approximately 17 million common shares of Shore Gold, representing approximately 5.7% of the outstanding and issued shares on a non-diluted basis. Immediately after the closing of the Newmont acquisition and share issuance, Newmont Canada will hold approximately 19.9% of Shore Gold’s issued and outstanding shares on a non-diluted basis.

The Star-Orion South Diamond Project is in close proximity to established infrastructure, including paved highways and the electrical power grid, which provide significant advantages for future mine development. The Technical Report on the Revised Resource Estimate for the Star-Orion South Diamond Project dated November 9, 2015 provided an updated resource estimate for the Star and Orion South kimberlite deposits: Indicated resource of 393 million tonnes containing 55.4 million carats of diamonds at a weighted average price of US $210 per carat. In addition to the indicated resource estimate, the Star and Orion South Kimberlites include inferred resources containing 11.5 million carats.

Filed in: Diamonds, Resources

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