Technical Presentation The Star-Orion South Diamond Project George Read P.Geo. Senior VP Exploration & Development. 16 June 2015

Transcription

1 Technical Presentation The Star-Orion South Diamond Project George Read P.Geo. Senior VP Exploration & Development 16 June 2015

2 Safe Harbour Statement This presentation contains forward-looking statements as defined by certain securities laws, including the "safe harbour" provisions of Canadian securities legislation and the United States Private Securities Litigation Reform Act of Forward-looking information is often, but not always, identified by the use of words such as "anticipate", "believe", "expect", "plan", "intend", "forecast", "target", "project", "guidance", "may", "will", "should", "could", "estimate", "predict" or similar words suggesting future outcomes or language suggesting an outlook. In particular, statements regarding Shore's future operations, future exploration and development activities or other development plans constitute forward-looking statements. Forward-looking statements in this presentation include, but are not limited to, anticipated diamond price adjustments, the anticipated Project schedule and attendant timelines, assumptions made in the cash flow model, assumptions made respecting capital and operating costs, anticipated diamond production, anticipated revenue from rough diamond sales, assumptions made respecting diamond price increases resulting from long-term supply/demand fundamentals, the anticipated economic impact of the Project on surrounding communities and anticipated employment opportunities which may result from the Project. The Project schedule includes an estimated 5 year long pre-production period and a 20 year long mine production phase followed by mine closure. These durations were developed based on currently projected timelines for power distribution line design and construction; equipment and material procurement, deliveries, assembly and commissioning; environmental assessment and review; permitting and other factors. The assumed dates and timing of milestone events such as the 2017 commencement of full-scale ore production, and the 2036 cessation of operations were based on available information and the time lines between the assumed dates are reasonable based on the envisaged Project. There is a possibility the assumed dates such as the date for corporate approval to proceed with the Project will shift forward into the future for a multitude of reasons including, but not limited to, longer than projected time lines for environmental assessment and public consultation, engineering, procurement, construction and commissioning, availability of project financing. The cash flow model includes estimates of future federal, provincial and local government taxes. Federal and provincial (Saskatchewan) corporate income taxes payable on pre-tax cash flows were estimated based on future tax rates. The values of future property and school taxes were calculated based on estimates provided by the Saskatchewan Assessment Management Agency ( SAMA ). Diamond royalty payments were estimated based on the royalty regime announced by the Government of Saskatchewan in Additionally, the cash flow model utilizes selected estimated deductions available to the Project from unclaimed costs carried forward for tax purposes (e.g. tax pools) including Canadian exploration expenses and Canadian development expenses. The estimated capital and operating costs (± 15 percent estimation) were derived from first principles and supported by budget quotations and/or cost information derived from relevant cost databases and/or contractor quotations, and assumptions. The cash flow model includes capital contingencies. 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. In making the forward-looking statements contained in this news release, Shore has utilized diamond valuations completed in February 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 prices, risks relating to fluctuations in the Canadian dollar and other currencies relative to the US dollar, changes in exploration, development or mining plans due to exploration results and changing budget priorities of Shore or its joint venture partners, the effects of competition in the markets in which Shore operates, the impact of changes in the laws and regulations regulating mining exploration, development, closure, judicial or regulatory judgments and legal proceedings, operational and infrastructure risks and the additional risks described in Shore's most recently filed Annual Information Form, annual and interim MD&A. 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 forward-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 is made herein. 2

3 Diamond Market Outlook Future outlook for rough prices optimistic with demand expected to exceed supply Current rough prices depressed due to lack of liquidity for some manufacturers RoughPrices.com Diamond Price Index 3

4 Demand for High Value Diamonds Records are regularly set for high value stones sold at auction Sotheby s Hong Kong October 7, 2014: 8.41 carat pink sells for $17.77 million 4

5 Diamond Producers Association May 28, 2015 Alrosa, De Beers, Rio Tinto, Dominion Diamond, Lucara Diamond, Petra Diamonds and Gem Diamonds announce the formation of the Diamond Producers Association (DPA) This group accounts for 80 percent of world production by value The DPA s principal areas of focus will be: Marketing, Best Interest, Industry Information and Best Practices If executed effectively, the creation of the DPA should help strengthen the case for demand for diamonds by increasing transparency across the industry and boosting consumer confidence. Matt O Keefe, Dundee Capital Markets 5

6 Star Orion South Diamond Project Large accessible diamond resource in central Saskatchewan, Canada Feasibility Study completed August 2011: 34.4 million carats at US$242 per carat, 20 year LOM 2014 EIS receives positive Federal decision, 2015 LD Drilling, Optimise Feasibility, await Provincial decision on EIS 6

7 Environment Approval Draft EIS submitted to Provincial and Federal review agencies Dec, 2010 Revised EIS submitted to Provincial and Federal review agencies Aug, 2012 Final consolidated EIS document prepared for the Province in Dec, 2014 The Hon. Leona Aglukkaq, Federal Environment Minister, announced that the Project is not likely to cause significant adverse environmental effects when the mitigation measures described in the Comprehensive Study Report are taken into account December 3,

8 Future Project Footprint 8

9 Star Orion South Project Location 9

10 Mineral Claims & FalC Forest 10

11 Star OS Diamond Project Evaluation 11 Core Drilling Delineation & Internal Structure LDD Mini-Bulk Sampling Underground Bulk Sampling

12 Mineral Reserves and Resources Feasibility Study MINERAL RESERVES Deposit Category Ore (Mt) Ore Grade (cpht) Carats (Mct) Star Probable Orion South Probable Total Probable MINERAL RESOURCES within FS Pit Deposit Category Ore (Mt) Ore Grade (cpht) Carats (Mct) Star Inferred Orion South Inferred Total Inferred MINERAL RESOURCES outside FS Pit Deposit Category Ore (Mt) Ore Grade (cpht) Carats (Mct) Star Inferred Orion South Inferred Total Inferred The cost of excavation of these Inferred Resources is included in the FS but processing cost and resultant revenue is not included, as NI only permits revenue derived from Indicated Resources or Reserves. NI considers Inferred Resources too speculative geologically to have economic considerations applied to them that would enable them to be categorized as Mineral Reserves, and there is no certainty that they will be economic. 12

13 Opportunity to Increase OS Resources Bulk sampling and LD drilling of OS curtailed by World Financial Crisis OS has large proportion of Inferred Resources: some 12 Mct Significant opportunity to increase OS Indicated Resources by drilling some 12 additional 24 inch LD holes to in-fill areas of Inferred Resources Contract with Foraco for drilling up to12 holes to a depth of some 250 metres below surface Budget for drill program & resource estimate: $5.5 million 13

14 Orion South Core Drilling 14

15 Orion South Core Drilling 15

16 Orion South Core Warehouse & Logging 16

17 Orion South LD Drilling 17

18 Orion South LD Drilling 18

19 Orion South LD Drilling 19

20 Star & OS Overburden Stratigraphy Increased OS Indicated Resources may enable OS open pit to dig first (before Star) as OS overburden stratigraphy and higher grade kimberlite accessibility are more favourable than Star for early cash flow 20

21 Re-optimize Feasibility Study Additional LD drilling on Orion South kimberlite Re-estimation of the OS Resource using current diamond prices Re-optimization of the OS open pit using the revised OS Resource estimate Re-optimization of OS and Star open pit mining phases based on the increased OS Resource, which enables OS to dig first OS has 30 metres less overburden than Star reduces pre-strip time, significant reduction in pre-production capital OS has higher grade kimberlite in direct contact with overlying till stronger early stage cash-flow 21

22 Conclusions Accessible, world class diamond project in a stable political jurisdiction Opportunity to improve FS: Increase Reserve, Decrease Costs & Increase Productivity, Increase early cash flow by digging OS open pit first Optimistic world outlook for the sale of rough diamonds Attractive diamond populations with high average price: US$242 per carat. Potential for large high value diamonds Positive Federal decision on environmental impact of Project received Dec 3,

23 Management & Technical Team Kenneth E. MacNeill - President, Chief Executive Officer, Director Extensive background over 31 years experience in all aspects of natural resource exploration and development Greg P. Shyluk Chief Financial Officer Chartered accountant with 16 years experience with mining and natural resource companies George H. Read - Senior Vice President of Exploration and Development Diamond exploration geologist with 31 years of international experience Joseph A. Dickson Manager Corporate Services 15 years of Project experience Mark Shimell Project Manager Geologist with 20 years experience Brian Desgagnes Senior Project Geologist Geologist with 10 years experience Ethan Richardson Manager, Environment Environmental Engineer with 20 years experience MARKET AND FINANCIAL INFORMATION Exchange: Symbol TSX: SGF Shares outstanding 247 million Shares fully diluted 256 million Cash position $5.5 million (May 6, 2015) CORPORATE OFFICE th Avenue S, Saskatoon, SK S7K 5M5 Tel: (306) Fax: (306) shoregold@shoregold.com Web: 23

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