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Businessexcellence May 07 34 The diamond exploration and development company Shore Gold is investigating the extraction of high value diamonds at a fraction of the average operating costs in neighboring areas, Gary Toushek learns from George Read, Senior VP Exploration & Development Diamonds at a discount

May 07 Businessexcellence 35 The diamond exploration and development industry in Canada began in the 1960s when geologists working in the northern regions postulated that given certain mineral formations, the presence of kimberlite, a dark, buried, coarse-grained igneous rock that sometimes contains diamonds, was inevitable. They were proven correct when spotty kimberlite discoveries were made over 25-odd years in various regions, but it wasn’t until 1991 that the first worthwhile deposit was discovered in the Northwest Territories, about 220 km (140 miles) south of the Arctic Circle. It’s the land of the midnight sun where housing is sparse and ice roads have to be built over the frozen tundra in order to truck-in people and supplies, and energy is usually via diesel generators. However, a considerable distance south, is the Fort a la Corne Region of rural central Saskatchewan (about 60 km east of Prince Albert) with electrical power, accessible by road year-round, and hosting one of the largest, densest, diamond-bearing kimberlite clusters in the world, buried beneath a thick covering of soft sediment including sand, mudstone and glacial till, known in industry jargon as overburden. It’s in this area that Shore Gold Inc. has two major projects underway: Star Diamond Project (begun in 1995) and Fort a la Corne Joint Venture (FALC-JV for short, discovered in 1989, in which Shore has been a participant since 2005). Shore has title to extensive (540) claim holdings in central Saskatchewan, which total some 281,640 hectares. In addition Shore has a 60 percent interest in the FALC-JV which includes some 121 claims covering 22,544 hectares. The Star Kimberlite averages 88 meters (288 feet) in thickness and covers an area of four sq km in the Fort a la Corne region, and is covered by 90 meters of overburden. Shore was the first company in the Fort a la Corne district to locate a root zone beneath the kimberlite crater when drill hole Star 20 intersected 539 meters of continuous kimberlite—the longest intersection of continuous kimberlite from a vertical drill hole ever reported in North America. The FALC-JV is a joint venture between Shore (60 percent) and Newmont Mining Corporation (40 percent). There are over 60 kimberlites in the FALC-JV, and the Orion Kimberlite Cluster, which includes nine of the known kimberlites, hosts over one billion tonnes of kimberlite and is the company’s current focus of attention. As its name suggests, Shore Gold was previously a gold mining company in joint venture in Saskatchewan with Cameco Corporation (a uranium and former gold producer); the Shore gold assets have been spun out into a separate company named Westcan Goldfields Inc., and Shore Gold has a 20 percent holding. Shore is now strictly a diamond exploration development company operating in Saskatchewan, and would consider projects anywhere in the world, according to George Read, senior vice-president of exploration and development and a registered professional geoscientist in the provinces of Saskatchewan and British Columbia. Shore’s initial interest in the area began in 1995. When Uranerz Exploration Mining discovered kimberlite from a series of magnetic anomalies in a sedimentary basin in 1989 and staked its claim, there was an area at the southeast end of the kimberlite chain (near the Saskatchewan River) which was withdrawn from staking, since it was being considered for the potential construction of a hydro reservoir by the Provincial government, which eventually changed its mind—so in late 1995 the area was open for staking, and Shore got the ground. Shore undertook an aerial geophysical survey early in 1996, and subsequent drilling intersected with kimberlite, which assured Shore’s foothold in the area. Drilling 40 exploration holes was financed rather slowly at first, but eventually revealed the large, Star Kimberlite. Shore was eager to move forward, and decided to act on a recommendation by the late Hugo Dummett (a vice-president of BHP Billiton and a principal in the development of the Ekati Diamond Mine) to collect a bulk sample using a shaft and underground development, which ultimately proved successful. Shore Gold