Shore Gold Inc. announces second quarter results



    Stock Symbol: SGF: TSX

    SASKATOON, Aug. 9 /CNW/ - Shore Gold Inc. ("Shore" or the "Company")
reports that the unaudited results of Shore's operations for the quarter ended
June 30, 2007 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 the quarter
are as follows:

    
    Highlights

    -   Expenditures of $9.0 million on the Star Kimberlite advanced
        exploration program and $4.0 million on the Company's share of the
        Fort à la Corne Joint Venture ("FALC-JV") exploration program during
        the second quarter
    -   Recovery of the two largest diamonds in Saskatchewan to date, at
        49.50 and 22.56 carats, from the Star West portion of the Star
        Kimberlite bulk sampling
    -   Recommencement of LD drilling program on the Star Kimberlite
    -   Commencement of drilling for the freeze wall on Orion South, in
        preparation for potential shaft sinking
    -   Acquisition of a 22.5% interest in the Buffalo Hills Joint Venture
        for $8.75 million
    -   Working capital of $92.9 million at June 30, 2007
    -   Issued and outstanding shares of 177,335,460 at June 30, 2007
    

    Overview of Second Quarter

    Star Diamond Property Advanced Exploration Program

    During the second quarter, the Star Diamond Project underground bulk
sampling shaft was decommissioned. In total, three phases of underground bulk
sampling were completed resulting in approximately 70,000 tonnes of kimberlite
being recovered. Final kimberlite tonnages and diamond grades from the Star
underground bulk sampling will be published as soon as all remaining surface
stockpiles of kimberlite have been processed through the on-site dense media
separator plant and the diamonds recovered at a third party laboratory.
    The sixth set of diamond results from Phase 3 of the underground bulk
sampling of the Star Kimberlite were announced in June of 2007, with diamond
recoveries totaling 205.37 carats from 987.26 dry tonnes processed, for an
average of 20.80 carats per hundred tonnes ("cpht") from this set of results.
All of these bulk sampling batches were from the Cantuar lithology located
within Star West - the portion of the Star Kimberlite within the claims of the
FALC-JV.
    Included in this set of results were the two largest diamonds recovered
in Saskatchewan to date, at 49.50 and 22.56 carats, respectively. The
49.50 carat diamond appears to be a fragment of a considerably larger stone,
whose crystal shape and fresh breakages at the surface suggest that less than
50 percent of the original stone was recovered. The recovery of these large
diamonds confirms the statistical modeling by Shore geologists that diamonds
in excess of 100 carats occur in the Star diamond population.
    During the second quarter, the two LD drill rigs returned to the Star
Diamond Project for the remaining LD holes required to estimate a Mineral
Resource as defined by National Instrument 43-101. Many of these LD holes will
be located in close proximity to the recently decommissioned Star underground
workings, an area that could not be sampled, due to safety reasons, while the
underground bulk sampling was still in progress.
    According to the current schedule, and assuming the results from the
remaining samples are positive, management anticipates that a Mineral Resource
estimate may be available for the Star Kimberlite in early to mid 2008 and
that the work required for converting the Mineral Resource to a Mineral
Reserve is expected to be achieved by mid to late 2008.

    FALC-JV Exploration Programs

    During the second quarter of 2007, the major activities on the FALC-JV
property were the completion of the four-hole LD drilling program on Orion
South as well as the processing of samples from the Orion South and Orion
North LD drill programs and the underground bulk sampling from Star West.
Additional planning and permitting work was also performed in preparation of a
potential shaft sinking on the Orion Cluster.
    In July of 2007, the final diamond results from a four-hole LD program
drilled at Orion South were announced. A total of 78.22 carats were recovered
from the processing of 1,448.05 dry tonnes of kimberlite from this LD
drilling. Kimberlite with elevated grades (7.00 to 28.50 cpht) was encountered
at various depths in all four holes. This four-hole program targeted the Pense
lithology (estimated to be 112-124 million tonnes), since previous drill
programs had targeted the Early Joli Fou lithology (estimated to be
176-196 million tonnes). The total Orion South Complex is estimated to contain
some 360-400 million tonnes of which the Pense and EJF lithologies make up
approximately 80 percent. The elevated grades found in the Pense lithology,
along with the significant estimated volumes of EJF and Pense diamond bearing
kimberlite, justify the next phase of exploration on Orion South. As such, in
July of 2007 the Company announced that the drilling of the holes for the
freeze wall, in preparation for potential shaft sinking, had commenced on
Orion South.
    The final diamond results from the twenty-hole LD program drilled at
Orion North between October 2006 and March of 2007 were announced in June.
Diamonds totaling 318.98 carats were recovered from the processing of
7,301.36 tonnes of kimberlite from the twenty LD holes drilled. Five of these
twenty holes were centred around Kimberlite 120 in the northwestern part of
Orion North, with the remaining fifteen holes targeting deep intersections of
kimberlite within the 147-148 Kimberlite Complex that forms the eastern part
of Orion North. The LD drilling results have indicated that Kimberlite 120 and
the central part of the 147-148 Kimberlite Complex are two areas of high
interest within Orion North. The diamond size frequency distributions from
Kimberlite 120 and from the 147-148 Kimberlite Complex appear to be similar to
the diamond size frequency distribution of the Star Kimberlite. Based on this
and previously gathered data, additional exploration programs for 2008 are
currently being contemplated for Orion North.

    Buffalo Hills Diamond Property

    On July 24, 2007, Shore and Diamondex Resources Ltd. ("Diamondex")
completed a transaction with Ashton Diamonds (Canada) Inc. and Ashton Mining
of Canada Inc. (collectively, "Ashton") (wholly owned subsidiaries of
Stornoway Diamond Corporation) to acquire Ashton's 45% interest in the Buffalo
Hills Property in northern Alberta for a total consideration of $17.5 million.
Under the agreement Shore paid $8.75 million in cash and Diamondex paid
$6.25 million in cash and issued Ashton 6,031,363 of its common shares with a
value of $2.5 million. Pursuant to the acquisition, Shore and Diamondex each
acquired a 22.5% interest in the Buffalo Hills Joint Venture, in which Encana
Corporation holds a 43% interest and Pure Diamonds Exploration Inc. holds the
remaining 12% interest. Diamondex has been appointed Operator of the Buffalo
Hills Joint Venture.
    Shore and Diamondex have the option to increase their combined interest
in the joint venture to 72.5 percent by funding the next $15 million of
exploration expenditures before April 30, 2010. Following a review of all
geological data by a technical team from Shore and Diamondex, an exploration
program and budget will be announced.

    Quarterly Results

    For the quarter ended June 30, 2007, the Company recorded net income of
$1.7 million or $0.01 per share compared to net income of $45.6 million or
$0.26 per share for the same period in 2006. The net income is primarily due
to an income tax recovery as a result of the federal government enacting a
reduction in corporate income tax rates during the second quarter of 2007. The
net income from 2006 was predominately related to the $44.9 million future
income tax recovery resulting from federal and provincial governments enacting
a decrease in corporate income tax rates during the second quarter of 2006.
The Company generated lower interest income for the second quarter of 2007
compared to the same period in 2006, which was the result of having less cash
on hand after the 17.755% acquisition of FALC-JV for $77.1 million in the fall
of 2006 and significant expenditures on the exploration projects in the Fort à
la Corne region since the period ended June 30, 2006.

    Year to Date Results

    For the six-month period ended June 30, 2007, the Company recorded a net
loss of $2.5 million or $0.01 per share compared to net income of
$46.0 million or $0.27 per share for the same period in 2006. The net loss is
primarily due to the fair value of stock-based compensation expensed during
the six-month period ended June 30, 2007 ($4.4 million). Without the fair
value of stock-based compensation, the Company would have incurred net income
of $1.9 million for the six-month period ended June 30, 2007. This net income
is primarily due to an income tax recovery as a result of the federal
government enacting a reduction in corporate income tax rates during the
second quarter of 2007. The net income from 2006 was predominately related to
the $44.9 million future income tax recovery resulting from federal and
provincial governments enacting a decrease in corporate income tax rates
during the second quarter of 2006. The Company generated lower interest income
for the six-month period of 2007 compared to the same period in 2006 which was
the result of having less cash on hand after incurring on-going exploration
expenditures on the Fort à la Corne projects as well as the 17.755%
acquisition of the FALC-JV.

    
    Selected financial highlights include:
    -------------------------------------------------------------------------
                                                         As at       As at
                                                        June 30,     Dec 31,
    Consolidated Balance Sheets                           2007        2006
    -------------------------------------------------------------------------
    Current assets                                     $  98.0 M   $ 130.0 M
    -------------------------------------------------------------------------
    Capital and other assets                             685.5 M     657.5 M
    -------------------------------------------------------------------------
    Current liabilities                                    5.1 M      11.9 M
    -------------------------------------------------------------------------
    Future income tax and other long-term liabilities    116.2 M     117.5 M
    -------------------------------------------------------------------------
    Share capital                                        736.9 M     733.5 M
    -------------------------------------------------------------------------
    Contributed surplus                                   22.4 M      19.2 M
    -------------------------------------------------------------------------
    Deficit                                               97.1 M      94.6 M
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                 Three       Three        Six         Six
                                 months      months      months      months
                                 Ended       Ended       Ended       Ended
    Consolidated Statements     June 30,    June 30,    June 30,    June 30,
     of Income                    2007        2006        2007        2006
    -------------------------------------------------------------------------
    Interest and other income  $   1.2 M   $   2.6 M   $   2.5 M   $   4.8 M
    -------------------------------------------------------------------------
    Operating expenses             1.4 M       1.4 M       6.7 M       2.9 M
    -------------------------------------------------------------------------
    Income (loss) for the
     period before other items    (0.2)M       1.2 M      (4.2)M       1.9 M
    -------------------------------------------------------------------------
    Loss from Wescan
     Goldfields Inc.              (0.1)M       0.0 M      (0.2)M       0.0 M
    -------------------------------------------------------------------------
    Income tax recovery            2.0 M      44.4 M       1.9 M      44.1 M
    -------------------------------------------------------------------------
    Net and comprehensive
     income (loss) for the
     period                        1.7 M      45.6 M      (2.5)M      46.0 M
    -------------------------------------------------------------------------
    Income (loss) per share       0.01        0.26       (0.01)       0.27
    -------------------------------------------------------------------------


    -------------------------------------------------------------------------
                                 Three       Three        Six         Six
                                 months      months      months      months
                                 Ended       Ended       Ended       Ended
    Consolidated Statements     June 30,    June 30,    June 30,    June 30,
     of Cash Flows                2007        2006        2007        2006
    -------------------------------------------------------------------------
    Cash flows from operating
     activities                $   0.2 M   $   0.9 M   $   0.0 M   $   2.1 M
    -------------------------------------------------------------------------
    Cash flows from investing
     activities                  (45.1)M     (21.2)M     (37.7)M     (41.3)M
    -------------------------------------------------------------------------
    Cash flows from financing
     activities                    0.2 M      13.1 M       1.2 M      17.8 M
    -------------------------------------------------------------------------
    Net decrease in cash         (44.7)M      (7.2)M     (36.5)M     (21.4)M
    -------------------------------------------------------------------------
    Cash - beginning of period    72.9 M     247.5 M      64.7 M     261.7 M
    -------------------------------------------------------------------------
    Cash - end of period          28.2 M     240.3 M      28.2 M     240.3 M
    -------------------------------------------------------------------------
    

    Outlook

    As at August 3, 2007, the Company had approximately $80.4 million in cash
and cash equivalents and short-term investments. These funds will be used to
complete the advanced exploration program on the Star Kimberlite Property, to
fund the Company's portion of the FALC-JV exploration programs and to finance
the proposed Buffalo Hills exploration programs. The advanced exploration
program of the Star Kimberlite Property will be conducted in order to
determine the project's viability under current economic conditions. This will
entail the collection of additional exploration information, such as
geological, geotechnical, geometallurgical, geochemical, assaying and other
relevant information to delineate and define the Star Kimberlite, with a
sufficient level of confidence, to estimate a Mineral Resource conforming to
National Instrument 43-101 and Canadian Institute of Mining, Metallurgy and
Petroleum ("CIM") standards. Based on current timelines the Company
anticipates a Mineral Resource estimate to be defined by early to mid 2008,
followed by a Mineral Reserve and a bankable feasibility study. The FALC-JV
has similar objectives; however, based on the stage of current exploration
programs a Mineral Resource estimate would not likely be available until
approximately 2010 or later.

    Caution Regarding Forward-looking Information

    From time to time, Shore makes written or oral forward-looking statements
within the meaning of certain securities laws, including the "safe harbour"
provisions of Securities legislation in Canada and the United States Private
Securities Litigation Reform Act of 1995. Shore may make such statements in
this press release, in other filings with Canadian regulators or the United
States Securities and Exchange Commission, in reports to shareholders or in
other communications. These forward-looking statements include, among others,
statements with respect to Shore's objectives for the ensuing year, our medium
and long-term goals, and strategies to achieve those objectives and goals, as
well as statements with respect to our beliefs, plans, objectives,
expectations, anticipations, estimates and intentions. The words "may,"
"could," "should," "would," "suspect," "outlook," "believe," "plan,"
"anticipate," "estimate," "expect," "intend," and words and expressions of
similar nature are intended to identify forward-looking statements. In
particular, statements regarding Shore's future operations, future exploration
and development activities or the anticipated results of Shore's advanced
exploration study or other development plans contain forward-looking
statements.
    All forward-looking statements and information are based on Shore's
current beliefs as well as assumptions made by and information currently
available to Shore concerning anticipated financial performance, business
prospects, strategies, regulatory developments, development plans,
exploration, development and mining activities and commitments. Although
management considers these assumptions to be reasonable based on information
currently available to it, they may prove to be incorrect.
    By their very nature, forward-looking statements involve inherent risks
and uncertainties, both general and specific, and risks exist that
predictions, forecasts, projections and other forward-looking statements will
not be achieved. We caution readers not to place undue reliance on these
statements as a number of important factors could cause the actual results to
differ materially from the beliefs, plans, objectives, expectations,
anticipations, estimates and intentions expressed in such forward-looking
statements. These factors include, but are 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, development or mining plans due to exploration
results and changing budget priorities of Shore or its joint venture partner;
the effects of competition in the markets in which Shore operates; the impact
of changes in the laws and regulations regulating mining exploration and
development; 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
and short form prospectus, and Shore's anticipation of and success in managing
the foregoing risks.
    Shore cautions that the foregoing list of factors that may affect future
results is not exhaustive. When relying on our forward-looking statements to
make decisions with respect to Shore, investors and others should carefully
consider the foregoing factors and other uncertainties and potential events.
Shore does not undertake to update any forward-looking statement, whether
written or oral, that may be made from time to time by Shore or on our behalf.





For further information:

For further information: Mr. Kenneth MacNeill, Chief Executive Officer
and President, 300 - 224 4th Avenue South, Saskatoon, SK, S7K 5M5, PH: (306)
664-2202, FAX: (306) 664-7181; OR Mr. Harvey Bay, Chief Financial Officer and
Chief Operating Officer, 300 - 224 4th Avenue South, Saskatoon, SK, S7K 5M5,
PH: (306) 664-2202, FAX: (306) 664-7181


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