Shore Gold (SGF-T) is one step closer to developing Saskatchewan’s first diamond mine with the release of a positive prefeasibility study on its Star and Orion South kimberlites.
The project includes Shore’s 100%-owned Star diamond project and the Star West and Orion South kimberlite which fall within the adjacent Fort a la Corne joint venture held between Shore (60%) and Newmont Mining (NMC-T, NEM-N) (40%).
George Read, Shore’s senior vice president of exploration and development, says he is pleased with how the study shows that combining two open pit mines into one project can be economical.
“The ore from those mines will be processed through one processing plant and so by doing that we significantly reduce our costs,” Read says.
The study put reserves at 279 million tonnes with an average grade of 12.5 carats per hundred tonnes containing 35 million carat and an average carat price of $226 per carat.
Diamond production would be 35 million carats over 20 years. The net present value of the project was estimated at $1.3 billion (using a 7% discount rate) while the internal rate of return would be 16% before taxes and royalties. After taxes and royalties the NPV was estimated at $786 million and the IRR at 13.5%
Preproduction capital costs were estimated at $1.6 billion with total capital cost of $2.5 billion with a payback period of 4.6 years.
Read compares last year’s prefeasibility study on the Star diamond project on its own, noting the significant improvement. That study looked at producing 20 million carats over 12 years. The project had an after tax NPV of $291 million (using a 7% discount) and an IRR of 10%.
The mine would operate at a rate of 40,000 tonnes per day and production would likely begin in the first quarter of 2016.
The project is located 60 km east of Prince Albert, Sask, in the Forte a la Corne forest. It’s accessible year-round via paved highway and gravel roads and is 21 km west of a 230 kilovolt power line.
Shore hopes to complete a feasibility study on the project by early 2011.
Shore shares were up 12% today, or 10¢, to 93¢ on a trading volume of 1.2 million shares.
I believe shore is holding out for a takeover. They have extracted some of the largest aand most test sample bags I have ever heard of.There start up or going into production dates are always postponed due to any reason