Shore Gold Inc. announces year end results

    Stock Symbol: SGF: TSX

    SASKATOON, March 22 /CNW/ - Shore Gold Inc. ("Shore" or the "Company")
reports that the audited results of Shore's operations for the year ended
December 31, 2006 have been filed and may be viewed at A
summary of key financial and operating results for the year are as follows:

        -  Acquisition of remaining 57.755% interest in the Fort a la Corne
           Joint Venture ("FALC-JV")
        -  Sale of 40% interest in FALC-JV to Newmont Mining Corporation of
           Canada Limited ("Newmont")
        -  Announced a $66.5 million exploration program for 2006/2007 on the
           FALC-JV once Newmont became partner
        -  Spending of $55.5 million on the Star Kimberlite advanced
           exploration program and $23.1 million spent on the Company's share
           of the FALC-JV exploration program
        -  Tonnage estimates of 275 million tonnes of kimberlite on the
           Star/Star West Kimberlite and 1.2 billion tonnes of kimberlite on
           FALC-JV kimberlites (Orion North and South)
        -  Working capital of $118.1 million at December 31, 2006
        -  Issued and outstanding shares of 176,762,460 at December 31, 2006

    FALC-JV Interest Purchases and Sale and Exploration Programs

    On September 25, 2006 (see SGF News Release September 25, 2006), Shore
announced that Kensington, a 100% wholly-owned subsidiary, had entered into
agreements to acquire De Beers Canada Inc.'s ("De Beers") 42.245%
participating interest in the FALC-JV for $180 million and to acquire Cameco
Corporation's ("Cameco") and UEM Inc.'s ("UEM") remaining interests for a
combined cash price of $66.1 million giving Kensington 100% ownership.
Concurrent with these acquisitions, Kensington sold a 40% interest in the
FALC-JV to Newmont for $170.4 million on the same terms and conditions as
those associated with the De Beers, Cameco and UEM acquisitions.
    These transactions resulted in Kensington holding a 60% interest in the
FALC-JV with Shore maintaining a sufficient cash position to fund exploration
programs on both Star and the FALC-JV through to the anticipated timeframe of
completing a bankable feasibility study on the Star Property (expected to be
achieved by the end of 2008). Kensington also became operator of the FALC-JV
which has allowed for a more synergistic use of resources in moving both
properties forward.
    Before the change in ownership took place, the former joint venture
participants had come to a unanimous agreement on a $43.2 million budgeted
program for the 2006 fiscal year of which Shore would have been responsible to
fund approximately $20 million. By late June 2006, the core pattern-drilling
program (that was part of the previously approved $43.2 million budget) had
commenced on the Orion Kimberlite Cluster of the FALC-JV. That program was
budgeted to consist of over 200 core drill holes and between five to nine
large diameter ("LD") holes. Scheduled completion of the program was projected
to be in late December, however, with the change in ownership in the FALC-JV
in late September, the program was reevaluated to more aggressively explore
the property. The technical teams from Shore and Newmont met to reevaluate all
available FALC-JV data to reassess the balance of the 2006 exploration program
and to establish a program and budget for 2007. On November 8, 2006 (see SGF
News Release November 8, 2006), Shore announced a $20.3 million budget on the
FALC-JV property for the last quarter of 2006 and a $46.2 million budget for
the 2007 exploration program. The primary focus of these programs is the Orion
Cluster of kimberlites, with emphasis on performing core and LD drilling to
define the best location for a new shaft which would enable a bulk sample to
be extracted. The original $43.2 million budget for 2006 had a similar focus
and as a result of the modifications by the new JV participants the total
budget increased to $45.2 million. The addition of LD drilling holes to the
program was the main reason for the increase in budget.
    As a result of the core drilling already completed, a tonnage estimate of
800-870 million tonnes of kimberlite for Orion North was recently released
(see SGF News Release November 24, 2006) and more recently (see SGF News
Release March 2, 2007) a tonnage estimate for Orion South was estimated to be
360-400 million tonnes. Though neither estimate is a Resource or a Reserve,
the tonnage estimates are based on the significant core drilling performed to
date. Based on the drilling results to date, the tonnage estimate for Orion
South has more than doubled from the previous September 2004 estimate of
134 million tonnes. The announcements to date bring the total estimate of
kimberlite to 1.2 billion tonnes from seven of the sixty known kimberlites on
the FALC-JV.

    Star Diamond Property Advanced Exploration Program

    Considerable advancement was also achieved on Shore's 100% owned Star
Kimberlite Property's advanced exploration program. The Company announced that
a geological model estimate of approximately 275.8 million tonnes of
kimberlite (see SGF News Release October 17, 2006) had been constructed for
the Star Kimberlite including the portion referred to as Star West (the
portion of the kimberlite that falls within the FALC-JV). This tonnage
estimate will continue to be refined as recovered diamonds from Phase 3 bulk
sampling and LD drilling are valued and incorporated into the model. The
completion of certain aspects of the Star advanced exploration program have
been deferred as the LD drilling rigs have temporarily been moved to the Orion
Kimberlite Cluster on the FALC-JV property in order to expedite results from
this area. Once the first phase of LD drilling on the Orion Kimberlite Cluster
has been completed in early 2007, the LD drilling rigs will return to the Star
Kimberlite to complete the remaining LD holes. 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.

    Year End Results

    For the year ended December 31, 2006, the Company recorded a net loss of
$77.5 million or $0.44 per share compared to a net loss of $8.5 million, or
$0.08 per share for 2005. The reason for the large loss in 2006 compared to
2005 relates to the disposition of a 40% interest in the FALC-JV property
resulting in a loss of $124.5 million net of a $55.9 million future income tax
recovery. This loss was offset by a $44.9 million future income tax recovery
that was recorded during the second quarter of 2006 resulting from the federal
and provincial governments enacting a decrease in corporate income tax rates.
Furthermore, a $6.1 million increase in interest and other income was offset
by a $2.1 million increase in operating cash expenditures. The increase in
interest revenue is indicative of the level of investments the Company held
after the completion of two significant financings in 2005 that were
undertaken to fund expanding exploration efforts. These expanding exploration
efforts include operating two multi-million dollar exploration programs which
has required the Company to rapidly expand its personnel and administrative
support over the past twelve months. Non-cash expenses in 2006 of
approximately $0.6 million related to the fair value of stock-based
compensation were significantly less than the $9.0 million in 2005. After the
effects of the mineral property sale and the corporate income tax rate change
have been removed, the increased interest income this year has resulted in the
Company creating taxable income of approximately $4.2 million that led to a
non-cash future income tax expense of $1.3 million.

    Selected financial highlights include:
                                                      As at          As at
                                                   December 31,  December 31,
    Consolidated Balance Sheets                        2006          2005
    Current assets                                 $  130.0 M    $   267.4 M
    Capital and other assets                          657.5 M        679.5 M
    Current liabilities                                11.9 M         14.8 M
    Future income tax and other long-term
     liabilities                                      117.5 M        216.8 M
    Share capital                                     733.5 M        693.0 M
    Contributed surplus                                19.2 M         39.4 M
    Deficit                                            94.6 M         17.1 M

                                                   Year Ended    Year Ended
                                                   December 31,  December 31,
    Consolidated Statements of Loss                    2006            2005
    Interest Income                                $    9.5 M    $     3.4 M
    Operating Expenses                                  6.3 M         12.4 M
    Income (loss) for the period before
     other items                                        3.2 M         (9.0)M
    Loss on sale of property interest                (180.4)M            -
    Income tax recovery (expense)                      99.5 M         (0.4)M
    Other income                                        0.2 M          0.9 M
    Net loss for the period                            77.5 M          8.5 M
    Loss per share                                       0.44           0.08

                                                  Year Ended     Year Ended
                                                  December 31,   December 31,
    Consolidated Statements of Cash Flows             2006           2005
    Cash flows from operating activities           $    3.5 M    $    (0.8)M
    Cash flows from investing activities             (219.7)M        (20.9)M
    Cash flows from financing activities               19.2 M        254.7 M
    Net increase (decrease) in cash                  (197.0)M        233.0 M
    Cash - beginning of period                        261.7 M         28.7 M
    Cash - end of period                               64.7 M        261.7 M


    As at March 15, 2007, the Company had approximately $110 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 and
to fund the Company's portion of the FALC-JV 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.
    With current exploration plans, cash balances are expected to last until
the end of 2008. Alternative sources of financing will be required beyond this
point to continue exploration and development efforts.

    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
evaluation study or other development plans contain forward-looking
    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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