Shore Gold slides on De Beers suit

Shares in Saskatoon-based Shore Gold (SGF-T, SHGDF-O) were off as much as 96, or 12.5%, at $6.75 in early trading in Toronto on Feb. 8, after the company said it had been named as a co-defendant in a lawsuit launched by De Beers Canada.

Shore says the statement of claim issued by De Beers Canada relates to the Fort la Corne joint venture. It seeks to have a voting agreement between Shore, Cameco (CCO-T, CCJ-N) and UEM set aside. UEM is jointly owned by Cameco and Cogema, a subsidiary of French energy giant Areva (ARVCF-O).

De Beers is also looking for a restraining order preventing the joint venture’s management committee from approving the 2006 exploration program and budget.

“Shore believes the action to be entirely without merit and intends to vigorously defend the claims made by De Beers,” the company said in a press release.

In early November, Shore inked a deal locking up voting support from Cameco and UEM with regards to operating decisions at the joint venture for up to seven years. That support carried a $10-million price tag.

Shore inherited its 42.245% stake in the Fort la Corne (FalC) diamond project via its merger with Kensington Resources in October. Cameco holds a 5.51% stake in the project, with UEM at 10%; De Beers Canada owns the remaining 42.245% interest.

The 225-sq.-km FalC project is home to 63 known kimberlite bodies, with the largest measuring up to 200 hectares — on scale with some of the biggest in the world. The joint-venture partners are in the midst of a 3-year exploration and evaluation program designed to advance the project to a decision regarding prefeasibility in 2008, with the ultimate goal of outlining a resource of 70-100 million carats of diamonds.

Star shines

On a brighter note, the latest batch of kimberlite from the Star kimberlite surrendered a 19.25-carat grey stone. In all, the 1,538.93-tonne sample yielded 312 carats. The haul also includes stones weighing in at 17.72 (white), 8.95 (off-white), and 5.7 (white) carats, respectively.

The sample is part of a 15,000-tonne, bulk-sampling program aimed at providing data for a prefeasibility study that will include a National Instrument 43-101-compliant reserve estimate. The study will also examine the viability of a potential underground mining operation, which typically requires a diamond valuation parcel of 4,000 to 6,000 carats.

In all, the latest batch included 1,419 commercial-sized diamonds (stones exceeding a 1.18-mm square-mesh screen), with 54 of those tipping the scales at more than a carat. More than half the stones are classified as white, with another 15% being off-white.

So far, Shore has recovered 2,012.51 carats worth of diamond from 11,289.16 tonnes of the Star bulk sample. Combined with diamonds recovered from an initial bulk-sample, Shore has now recovered more than 6,000 carats. Valuations of newly recovered diamonds are in progress, and results will be incorporated into the ongoing $44-million prefeasibility study.