TECHNICAL REPORT AND PRELIMINARY FEASIBILITY STUDY
ON THE
STAR DIAMOND PROJECT
FORT À LA CORNE, SASKATCHEWAN, CANADA
Latitude 53° 15‛ N. Longitude 104° 48‛ W.
For
Shore Gold Inc.
By
P & E Mining Consultants Inc.
NI-43-101F1
TECHNICAL REPORT No. 169
Mr. David Orava, P. Eng
Mr. Daniel C. Leroux, P. Geo
Mr. Wayne Clifton, P. Eng
Mr. Jaroslav Jakubec, C. Eng
Mr. Ian Judd-Henrey, P. Geo
Ms. Alexandra Kozak, P. Eng
Dr. Caius Priscu, P. Eng
Mr. Steven Sibbick, P. Geo
Mr. Gary Taylor, P. Eng
Mr. Harnam Trehin, P. Eng
Mr. Fred H. Brown, CPG PrSciNat
Dr. Wayne Ewert, P. Geo
Mr. Eugene Puritch, P. Eng
Report No. 169
Effective Date: August 17, 2009
Signing Date: August 31, 2009
IMPORTANT NOTICE
This report was prepared as a National Instrument 43-101 Technical Report, in accordance with
Form 43-101F1, for Shore Gold Inc. (“Shore”) by P&E Mining Consultants Inc. (“P&E”).
Portions of this report were prepared by AMEC Americas Limited (“AMEC”).
The quality of information, conclusions, and estimates contained herein is consistent with the
level of effort involved in P&E’s, and AMEC’s services, based on: i) information available at the
time of preparation, ii) data supplied by outside sources, and iii) the assumptions, conditions,
and qualifications set forth in this report. This report is intended to be used by Shore subject to
the terms and conditions of its contracts with P&E and AMEC. Those contacts permit Shore to
file this report as a Technical Report with Canadian Securities Regulatory Authorities pursuant
to provincial securities legislation. Except for the purposes legislated under provincial securities
laws, any use of this report by any third party is at that party’s sole risk.
TABLE OF CONTENTS
SUMMARY..................................................................................................................................... i EXECUTIVE SUMMARY ................................................................................................ i KEY CONCLUSIONS ................................................................................................................... i MINERAL RESERVE...................................................................................................... ii PROCESS PLANT ............................................................................................................ ii DIAMOND PRICES ......................................................................................................... ii ROYALTIES .................................................................................................................... iii OVERBURDEN STRIPPING......................................................................................... iii MINING ............................................................................................................................ iii DEWATERING................................................................................................................ iii ENERGY ........................................................................................................................... iii TRANSPORTATION ...................................................................................................... iv ENVIRONMENT ............................................................................................................. iv TECHNICAL SUMMARY ......................................................................................................... iv LOCATION, ACCESS AND INFRASTRUCTURE .................................................... iv TENURE AND SURFACE RIGHTS ............................................................................. iv GENERAL GEOLOGY ................................................................................................... v KIMBERLITE GEOLOGY ................................................................................. v GEOLOGICAL MODEL .................................................................................... vi SAMPLING AND SAMPLE PROCESSING ................................................................ vi UNDERGROUND SAMPLING ......................................................................... vi LARGE DIAMETER DRILLING ..................................................................... vi DIAMOND RECOVERY ................................................................................... vii MINERAL RESOURCE ESTIMATE AS OF FEBRUARY 23, 2009 ....................... vii ECONOMIC PARAMETERS ..................................................................................................... x PRICE SENSITIVITIES ................................................................................................. xi MINE DESIGN BASIS .................................................................................................... xi OPTIMIZATION ............................................................................................................. xi GEOTECHNICAL AND HYDROGEOLOGICAL CONSIDERATIONS ............... xii ENVISAGED MINING OPERATION ......................................................................... xii PHASED PIT DEVELOPMENT................................................................................... xii MINE SCHEDULE AND PRODUCTION RATE ...................................................... xiii MINERAL RESERVE ESTIMATE AS OF JULY 31, 2009 ..................................... xiii ORE PROCESSING PLANT........................................................................................ xiv PROJECT INFRASTRUCTURE ................................................................................ xvii ELECTRICAL POWER SUPPLY .................................................................. xvii ADMINISTRATION AND MAINTENANCE FACILITIES ....................... xvii WATER BALANCE AND WATER MANAGEMENT ................................ xvii SOCIAL AND ENVIRONMENTAL ......................................................................... xviii FINANCIAL EVALUATION ................................................................................................. xviii SUMMARY................................................................................................................... xviii CASH FLOW MODEL .................................................................................................. xx ECONOMIC CRITERIA AND ASSUMPTIONS .................................................... xxiii BASIS OF GROSS REVENUE ESTIMATES .......................................................... xxiv DIAMOND VALUATION .............................................................................. xxiv PRICE ESCALATION .................................................................................... xxiv MARKETING COST ....................................................................................... xxv TAXES AND ROYALTIES ............................................................................. xxv CONTINGENCY ......................................................................................................... xxvi SENSITIVITY ANALYSIS ......................................................................................... xxvi 1.0 INTRODUCTION ............................................................................................................. 1 1.1 TERMS OF REFERENCE .............................................................................................. 1 1.2 SITE VISITS...................................................................................................................... 4 1.3 UNITS AND CURRENCY ............................................................................................... 5 1.4 SOURCES OF INFORMATION..................................................................................... 5 1.5 GLOSSARY OF TERMS ................................................................................................. 6 2.0 RELIANCE ON OTHER EXPERTS ............................................................................ 10 3.0 PROPERTY DESCRIPTION AND LOCATION........................................................ 11 3.1 LOCATION ..................................................................................................................... 11 3.2 PROPERTY DESCRIPTION AND TENURE ............................................................. 12 3.2.1 EXPLORATION LICENSES .......................................................................... 12 3.2.2 SURFACE RIGHTS AND LEASES ............................................................... 21 3.2.3 NET PROFITS INTEREST............................................................................. 21 4.0 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES,
INFRASTRUCTURE AND PHYSIOGRAPHY .......................................................... 22 5.0 HISTORY ........................................................................................................................ 23 6.0 GEOLOGICAL SETTING ............................................................................................ 24 7.0 DEPOSIT TYPES ........................................................................................................... 25 8.0 MINERALIZATION ...................................................................................................... 26 9.0 EXPLORATION ............................................................................................................. 27 10.0 DRILLING....................................................................................................................... 28 11.0 SAMPLING METHOD AND APPROACH ................................................................. 30 11.1 DIAMOND DRILLING - LOGGING AND SAMPLING PROCEDURES .............. 30 11.2 UNDERGROUND SAMPLING PROCEDURES ........................................................ 31 11.2.1 SHAFT AND LATERAL DRIFT SAMPLING ............................................. 31 11.2.2 UNDERGROUND SAMPLING PROTOCOLS ............................................ 32 11.3 LDD (RC DRILLING) - SAMPLE RECOVERY DESCRIPTION ........................... 32 11.3.1 LDD DOWNHOLE CALIPER MEASUREMENTS .................................... 32 12.0 SAMPLE PREPARATION, ANALYSES AND SECURITY ..................................... 33 12.1 INTRODUCTION - MINERAL PROCESSING AND DIAMOND
RECOVERY .................................................................................................................... 33 12.1.1 PROCESSING PLANT – CRUSHING AND SCRUBBING
CIRCUIT ........................................................................................................... 33 12.1.2 PROCESSING PLANT DMS CIRCUIT........................................................ 33 12.3 DIAMOND RECOVERY PLANT SAMPLE HANDLING AND
PROCESSING PROCEDURES .................................................................................... 34 12.3.1 X-RAY SORTEX DIAMOND SORTER........................................................ 34 12.3.2 GREASE TABLE DIAMOND RECOVERY ................................................ 35 12.4 CHAIN OF CUSTODY AND SECURITY PROTOCOLS ......................................... 35 12.5 DIAMOND PICKING AND SORTING PROCEDURES........................................... 36 13.0 DATA VERIFICATION................................................................................................. 37 13.1 INTRODUCTION ........................................................................................................... 37 13.2 QA/QC AUDITS.............................................................................................................. 37 13.3 DATA BASE VERIFICATION ..................................................................................... 41 13.4 BULK DENSITY VALIDATION .................................................................................. 41 14.0 ADJACENT PROPERTIES .......................................................................................... 42 15.0 MINERAL PROCESSING AND METALLURGICAL TESTING ........................... 43 15.1 METALLURGICAL TESTWORK .............................................................................. 43 15.2 MINERAL PROCESSING ............................................................................................ 44 16.0 MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES ...................... 49 16.1 P&E (2009) UPDATED MINERAL RESOURCE ESTIMATE ................................. 49 16.2 MINERAL RESERVE ESTIMATES ........................................................................... 52 16.2.1 STAR KIMBERLITE DEPOSIT .................................................................... 53 16.2.2 WASTE DUMPS ............................................................................................... 53 17.0 OTHER RELEVANT DATA AND INFORMATION ................................................ 55 17.1 PRE-FEASIBILITY STUDY ......................................................................................... 55 17.2 STAR-ORION SOUTH PROJECT PROPOSAL ........................................................ 55 17.3 ENVIRONMENTAL ASSESSMENT ........................................................................... 56 17.4 HYDROGEOLOGY ....................................................................................................... 56 17.5 GEOTECHNICAL .......................................................................................................... 56 17.6 DIAMOND CUTTING AND POLISHING .................................................................. 56 18.0 INTERPRETATION AND CONCLUSIONS .............................................................. 59 18.1 MINERAL RESERVES ................................................................................................. 59 18.2 PROCESS PLANT .......................................................................................................... 59 18.3 DIAMOND PRICES ....................................................................................................... 59 18.4 ROYALTIES ................................................................................................................... 60 18.5 OVERBURDEN STRIPPING........................................................................................ 60 18.6 MINING ........................................................................................................................... 60 18.7 DEWATERING............................................................................................................... 60 18.8 ENERGY .......................................................................................................................... 60 18.9 TRANSPORTATION ..................................................................................................... 61 18.10 ENVIRONMENT ............................................................................................................ 61 19.0 RECOMMENDATIONS ................................................................................................ 62 19.1 MINING ........................................................................................................................... 62 19.2 WATER MANAGEMENT............................................................................................. 62 19.3 PROCESSING ................................................................................................................. 62 19.4 INFRASTRUCTURE...................................................................................................... 63 19.5 BUDGET FOR FUTURE STUDY WORK .................................................................. 63 20.0 REFERENCES ................................................................................................................ 64 21.0 CERTIFICATES ............................................................................................................. 66 APPENDICES ............................................................................................................................. 79 A.0 MINING ........................................................................................................................... 80 A.1 SUMMARY...................................................................................................................... 80 A.1.1 MINE PRE-PRODUCTION DEVELOPMENT............................................ 80 A.1.2 IN-PIT CRUSH CONVEY (IPCC) WASTE STRIPPING SYSTEM ......... 83 A.1.3 ORE PRODUCTION ....................................................................................... 83 A.2 HYDROGEOLOGY AND PIT DEWATERING ......................................................... 84 A.3 GEOTECHNICAL AND PIT SLOPES ........................................................................ 84 A.3.1 PIT SLOPES IN THE OVERBURDEN SOILS ............................................ 85 A.3.2 PIT SLOPES IN THE SUB-OVERBURDEN ROCK ................................... 85 A.3.3 KIMBERLITE PIT SLOPE RECOMMENDATIONS ................................ 86 A.4 PIT DESIGN .................................................................................................................... 87 A.5 PIT OPTIMIZATION .................................................................................................... 90 A.6 PRODUCTION SCHEDULE ........................................................................................ 91 A.7 MINING EQUIPMENT ................................................................................................. 92 A.8 MAINTENANCE ............................................................................................................ 93 A.9 OPERATIONS AND MAINTENANCE PERSONNEL REQUIREMENTS ............ 96 A.10 MINE INFRASTRUCTURE.......................................................................................... 99 B.0 PROCESSED KIMBERLITE AND WATER MANAGEMENT
STRUCTURES .............................................................................................................. 100 B.1 COARSE PK MANAGEMENT .................................................................................. 100 B.2 FINE PK MANAGEMENT ......................................................................................... 100 B.3 PROCESSED KIMBERLITE GEOCHEMISTRY ................................................... 101 B.4 SITE WATER MANAGEMENT STRUCTURES .................................................... 102 C.0 HYDROGEOLOGY AND WATER MANAGEMENT ............................................ 103 C.1 WATER MANAGEMENT........................................................................................... 103 C.2 WATER BALANCE ..................................................................................................... 104 C.3 GEOLOGY .................................................................................................................... 104 C.4 HYDROGEOLOGICAL SYSTEMS .......................................................................... 105 C.5 WATER QUALITY ...................................................................................................... 105 C.6 WATER MANAGEMENT........................................................................................... 106 C.6.1 DEWATERING WELLS ............................................................................... 106 C.6.2 IN-PIT DEWATERING SYSTEM ............................................................... 106 C.6.3 WATER MANAGEMENT RESERVOIR AND DIVERSION
CHANNEL ...................................................................................................... 108 C.7 SITE WATER BALANCE ........................................................................................... 108 D.0 ANCILLARY BUILDINGS AND FACILITIES ....................................................... 109 D.1 SUMMARY.................................................................................................................... 109 D.2 ADMINISTRATION AND CHANGEHOUSE BUILDING ..................................... 109 D.3 MAINTENANCE AND TECHNICAL SERVICES BUILDING ............................. 109 D.4 WAREHOUSE AND COLD STORAGE BUILDING .............................................. 111 D.5 FUEL STORAGE.......................................................................................................... 111 D.6 VEHICLE WASH FACILITY, WARM-UP SHED AND FIRE AND
EMERGENCY RESPONSE BUILDING ................................................................... 111 D.7 SECURITY .................................................................................................................... 111 D.8 BULK SAMPLE PLANT (BSP) .................................................................................. 112 D.9 SORTING FACILITY .................................................................................................. 112 E.0 INFRASTRUCTURE.................................................................................................... 113 E.1 PLANT SITE LOCATION AND DESCRIPTION .................................................... 113 E.2 ACCESS ROAD AND UTILITIES CORRIDOR ...................................................... 115 E.3 RAILWAY SPUR.......................................................................................................... 115 E.4 POWER SUPPLY AND DISTRIBUTION ................................................................. 116 E.5 NATURAL GAS SUPPLY ........................................................................................... 118 E.6 FUEL SUPPLY AND DISTRIBUTION ..................................................................... 118 E.7 EXPLOSIVES SUPPLY AND DISTRIBUTION ....................................................... 118 E.8 TELECOMMUNICATIONS ....................................................................................... 118 E.9 PROCESS AND POTABLE WATER SUPPLY ........................................................ 118 E.10 WASTE POTABLE WATER AND SEWAGE .......................................................... 119 E.11 COMBUSTIBLE SOLID DOMESTIC WASTE MANAGEMENT
FACILITIES AND RECYCLING............................................................................... 119 E.12 HAZARDOUS WASTE ................................................................................................ 119 E.13 INFORMATION TECHNOLOGY ............................................................................. 119 F.0 WORKFORCE, HEALTH, SAFETY AND SECURITY.......................................... 120 F.1 WORKFORCE SUMMARIES BY AREA ................................................................. 120 G.0 ENVIRONMENTAL, PERMITTING AND CLOSURE .......................................... 123 G.1 EXISTING ENVIRONMENT ..................................................................................... 123 G.2 ENVIRONMENTAL IMPACT AND MITIGATION ............................................... 123 G.3 STAKEHOLDER ENGAGEMENT............................................................................ 124 G.4 PERMITTING............................................................................................................... 125 G.5 MONITORING PROGRAM ....................................................................................... 125 G.6 RECLAMATION AND CLOSURE ............................................................................ 126 H.0 CONSTRUCTION AND DEVELOPMENT .............................................................. 128 H.1 PROJECT ORGANIZATIONAL STRUCTURE ...................................................... 128 H.2 PROJECT PLANNING AND MOBILIZATION ...................................................... 128 H.3 ENGINEERING ............................................................................................................ 129 H.4 TENDERING PROCESS ............................................................................................. 129 H.5 CONTRACTING PLAN............................................................................................... 130 H.6 CONSTRUCTION ........................................................................................................ 130 H.7 PROJECT IMPLEMENTATION SCHEDULE ........................................................ 130 I.0 CAPITAL COSTS ......................................................................................................... 132 I.1 SUMMARY.................................................................................................................... 132 I.2 BASIS OF ESTIMATE................................................................................................. 132 I.3 MINING ......................................................................................................................... 133 I.3.1 MINE CAPITAL COST SUMMARY .......................................................... 133 I.3.2 MINE PRE-PRODUCTION DEVELOPMENT COST.............................. 133 I.3.3 MINE PRE-PRODUCTION INDIRECT AND PIT EPCM COST ........... 134 I.3.3.1 MINE EPCM GROUP ................................................................. 135 I.3.3.2 MINE INDIRECT OPERATING COSTS DURING PREPRODUCTION DEVELOPMENT ............................................. 136 I.3.4 MINE EQUIPMENT COST .......................................................................... 138 I.3.4.1 IPCC SYSTEM ............................................................................. 138 I.3.4.2 ORE CONVEYOR SYSTEM ...................................................... 138 I.3.4.3 MINE MOBILE AND ANCILLARY EQUIPMENT................ 139 I.3.5 MINE SUSTAINING CAPITAL................................................................... 140 I.4 PROCESSING & INFRASTRUCTURE .................................................................... 143 I.4.1 PROCESS EQUIPMENT .............................................................................. 143 I.5 INDIRECT COSTS ....................................................................................................... 143 I.5.1 CONTINGENCY ............................................................................................ 144 I.6 MINE CLOSURE.......................................................................................................... 144 J.0 OPERATING COSTS .................................................................................................. 145 J.1 BASIS OF ESTIMATE................................................................................................. 145 J.2 LABOUR COSTS.......................................................................................................... 146 J.3 MINING ......................................................................................................................... 146 J.3.1 MINING OPERATING COST SUMMARY ............................................... 146 J.3.2 IPCC SYSTEM OPERATING COST .......................................................... 147 J.3.3 J.3.4 J.3.5 J.3.2.1 IPCC SYSTEM OPERATING LABOUR .................................. 148 J.3.2.2 IPCC SYSTEM MAINTENANCE LABOUR ........................... 148 J.3.2.3 IPCC SYSTEM – CONSUMABLES .......................................... 149 J.3.2.4 IPCC SYSTEM – ELECTRICAL POWER ............................... 149 J.3.2.5 IPCC SYSTEM SUPPORT EQUIPMENT ................................ 150 DRILLING AND BLASTING ....................................................................... 150 ORE MINING AND WASTE ROCK COST ............................................... 151 PIT–SPECIFIC INDIRECT COSTS ............................................................ 152 J.4 OPERATING COSTS – PROCESSING .................................................................... 153 J.4.1 OPERATING COST SUMMARY ................................................................ 153 J.4.2 LABOUR REQUIREMENTS ....................................................................... 153 J.4.3 PLANT POWER ............................................................................................. 154 J.4.4 PLANT OPERATING SUPPLIES ............................................................... 155 J.4.5 PLANT MAINTENANCE SUPPLIES ......................................................... 155 J.5 GENERAL AND ADMINISTRATION ...................................................................... 156 J.5.1 COMPONENTS .............................................................................................. 156 J.5.1.1 G&A LABOUR ............................................................................. 156 K.0 FINANCIAL EVALUATION ...................................................................................... 158 K.1 SUMMARY.................................................................................................................... 158 K.2 CASH FLOW MODEL ................................................................................................ 160 K.3 ECONOMIC CRITERIA AND ASSUMPTIONS ..................................................... 163 K.3.1 PROJECT SCOPE ......................................................................................... 163 K.3.2 100 % BASIS ................................................................................................... 164 K.3.3 MINERAL RESERVE ................................................................................... 164 K.3.4 PLANT THROUGHPUT ............................................................................... 164 K.3.5 EIS, PERMITTING, AND FEASIBILITY STUDY (FS) COSTS ............. 164 K.3.6 BASIS OF GROSS REVENUE ESTIMATES ............................................. 164 K.3.6.1 DIAMOND VALUATION ........................................................... 164 K.3.6.2 CURRENCY EXCHANGE RATE ............................................. 165 K.3.6.3 PRICE ESCALATION................................................................. 165 K.3.7 CAPITAL COST ............................................................................................ 166 K.3.8 OPERATING COSTS .................................................................................... 166 K.3.9 MARKETING COST ..................................................................................... 166 K.3.10 INDIRECT COSTS ........................................................................................ 166 K.3.10.1 EPCM COSTS............................................................................... 166 K.3.10.2 INDIRECT COSTS DURING THE PRE-PRODUCTION
PHASE (Q4-2010 TO MID-2014) ................................................ 166 K.3.10.3 GENERAL AND ADMINISTRATION COSTS (MID-2014 TO
MID-2026)...................................................................................... 167 K.3.10.4 PIT DEWATERING AND CRANE COSTS.............................. 167 K.3.11 WORKING CAPITAL ................................................................................... 167 K.3.12 MINE CLOSURE COST ............................................................................... 167 K.3.13 SALVAGE VALUE ........................................................................................ 167 K.3.14 TAXES AND ROYALTIES ........................................................................... 167 K.3.15 CONTINGENCY ............................................................................................ 168 K.4 SENSITIVITY ANALYSIS .......................................................................................... 168 LIST OF FIGURES
Figure X-1: Sensitivity Analysis (After Tax Basis, NPV (7 %)) ..............................................xxvii Figure 3-1: Location Map of the Star Diamond Project................................................................ 11 Figure 3-2: Claim Disposition Map for the Star Diamond Project ............................................... 13 Figure 15-1: Block Flow Diagram of Mineral Processing ............................................................ 47 Figure 15-2: Block Flow Diagram of the Diamond Recovery Process from DMS Concentrate .. 48 Figure 16-1: Waste Management Area – Plan View..................................................................... 54 Figure A-1: Plan View of Star Pit Phases 1a, 1b, 2, 3 and 4......................................................... 81 Figure A-2: Star Pit Development and Production Schedule........................................................ 82 Figure A-3: Cross Section 514,650E Showing Surficial Sand and Clay Layers .......................... 88 Figure A-4: Typical Pit Slope Configuration ................................................................................ 88 Figure A-5: Ultimate Pit Design – Pit Phases 1a, 1b, 2, 3 & 4 ..................................................... 89 Figure A-6: Pit Phases - Cross Section 514,650E ......................................................................... 91 Figure C-1: Water Management Schematic (values are for the average climatic and general
conditions) ................................................................................................................................... 107 Figure D-1: General Plant Site Layout........................................................................................ 110 Figure E-1: General Site Plan...................................................................................................... 114 Figure E-2: Site Access Road Routing........................................................................................ 115 Figure E-3: Power Transmission Line and Natural Gas Pipeline Options .................................. 117 Figure K-1: Sensitivity Analysis (After Tax Basis, NPV (7 %)) ................................................ 169 LIST OF TABLES
Table X.1: Results of the Cash Flow Analyses ...............................................................................ii Table X.2: WWW Modeled Diamond Parcel Value by Kimberlite Unit .....................................vii Table X.3: Mineral Resource Statement for the Star Kimberlite Deposit Including the Star
Diamond Project (100 % Shore) and Star West (60 % Shore, 40 % Newmont)1,2,3,4,5,6,7 ........... viii Table X.4: Mineral Resource Statement for the Star Diamond Project (100 % Shore)
only1,2,3,4,5,6,7 ................................................................................................................................... ix Table X.5: Mineral Resource Statement for Star West (60 % Shore, 40 % Newmont)
only1,2,3,4,5,6,7 .................................................................................................................................... x Table X.6: Price Sensitivity at a $5.08/t Cut-Off. .......................................................................... xi Table X.7: Open Pit Development Phases .................................................................................. xiii Table X.8: Star Diamond Project Open Pit Mineral Reserve as of July 31, 2009 ...................... xiii Table X.9: Results of the Cash Flow Analyses ............................................................................ xix Table X.10: Base Case Cash Flow (1 % price escalation and before capital contingency) ......... xxi Table X.11: Modified Base Case Cash Flow (1 % price escalation and $178 M capital
contingency) ................................................................................................................................xxii Table X.12: Economic Criteria Utilized in the Cash Flow Model ............................................ xxiii Table X.13: WWW Modelled Diamond Price by Kimberlite Unit (March 20081 re-pricing) .. xxiv Table X.14: Projected NPV and IRR for 0 %, 1 % and 2 % Price Escalation Rates in Base Case
..................................................................................................................................................... xxv Table X.15: Sensitivity Analysis Results (After-Tax Basis, NPV (7 %)).................................. xxvi Table 3.1: Tenure Summary of Shore 100 % Held Property, Effective June 15, 2009 ................ 14 Table 3.2: Tenure Summary of the FALC-JV Property, Effective June 15, 2009 ........................ 17 Table 9.1: Summary of Exploration Activities on the Star Diamond Project ............................... 27 Table 10.1: Summary of Surface, Underground and LDD Drilling on the Star Diamond Project,
1995-2008 ..................................................................................................................................... 28 Table 16.1: Mineral Resource Statement for the Star Kimberlite Deposit Including the Star
Diamond Project (100 % Shore) and Star West (60 % Shore, 40 % Newmont)1,2,3,4,5,6,7 ............. 50 Table 16.2: Mineral Resource Statement for the Star Diamond Project (100 % Shore)
only1,2,3,4,5,6,7 .................................................................................................................................. 51 Table 16.3: Mineral Resource Statement for Star West (60 % Shore, 40 % Newmont)
only1,2,3,4,5,6,7 .................................................................................................................................. 52 Table 16.4: Star Open Pit Mineral Reserve................................................................................... 52 Table 16.5: Waste Management Area Volume ............................................................................. 54 Table 17.1: Summary of the Results of the Cutting and Polishing Exercise ................................ 56 Table 17.2: Results of the Cutting and Polishing Exercise ........................................................... 57 Table A.1: Open Pit Development Phases .................................................................................... 80 Table A.2: Key Events to be Completed Prior to the Start of Ore Production ............................. 84 Table A.3: Preliminary Pit Stability Results for the Berm and Slope Flattening Alternative....... 85 Table A.4: Proposed Pit Slope Angles in Kimberlite and the Mannville Formation .................... 86 Table A.5: Pit Phases .................................................................................................................... 90 Table A.6: Star Pit Production Schedule ....................................................................................... 92 Table A.7: Mine Equipment .......................................................................................................... 95 Table A.8: Number of Operations and Maintenance Personnel Included in the Pit Operating Cost
Estimates ....................................................................................................................................... 97 Table C.1: Summary of Hydrogeological Parameters ................................................................ 105 Table F.1: Project Workforce by Area ........................................................................................ 121 Table G.1: Preliminary Reclamation Cost Estimate ................................................................... 127 Table H.1: Key Project Tasks and Milestones ............................................................................ 131 Table I.1: Pre Production Capital Cost Summary ....................................................................... 132 Table I.2: Total Capital Cost ....................................................................................................... 132 Table I.3: Mine Capital Cost Summary ...................................................................................... 133 Table I.4: Mine Pre-Production Development Cost .................................................................... 134 Table I.5: Mine EPCM and Pre-Production Indirect Costs......................................................... 134 Table I.6: Projected Annual Mine EPCM Cost ........................................................................... 136 Table I.7: Projected Mine Pre-Production Indirect Costs ........................................................... 137 Table I.8: Projected Annual Cost of Mine Indirect Staff ............................................................ 137 Table I.9: Mine Equipment Cost ................................................................................................. 138 Table I.10: IPCC System Capital Cost ........................................................................................ 138 Table I.11: Ore Conveyor System ............................................................................................... 138 Table I.12: Mine Mobile Equipment Cost .................................................................................. 139 Table I.13: Mine Ancillary Equipment Capital Cost .................................................................. 140 Table I.14: Mine Sustaining Capital Cost ................................................................................... 141 Table I.15: Sustaining Pit Equipment Schedule .......................................................................... 142 Table I.16: Processing and Infrastructure Capital Costs ............................................................. 143 Table I.17: Indirect Costs for Processing and Infrastructure ...................................................... 144 Table J.1: Key Parameters Used in Developing the Operating Costs ......................................... 145 Table J.2: Estimated Open Pit Operating Cost............................................................................ 146 Table J.3: IPCC System – Projected Waste Rock Stripping Cost in Phase 1a ........................... 148 Table J.4: IPCC System – Projected Phase 1a Operating Labour Cost ...................................... 148 Table J.5: IPCC System – Phase 1a Maintenance Labour .......................................................... 149 Table J.6: IPCC System – Projected Equipment Parts, Lubricants and Consumables Cost ....... 149 Table J.7: Estimated IPCC Electrical Power Cost ...................................................................... 149 Table J.8: Projected IPCC System Support Equipment Cost ...................................................... 150 Table J.9: Projected Blast Pattern ............................................................................................... 150 Table J.10: Estimated Drilling and Blasting Cost ....................................................................... 151 Table J.11: Estimated Cost to Mine Ore and Waste Rock Using Conventional Mobile Equipment
..................................................................................................................................................... 151 Table J.12: Estimated Cost to Mine Ore and Waste Rock Utilizing Conventional Equipment .. 152 Table J.13: Estimated Mine-Specific Indirect Costs ................................................................... 152 Table J.14: Operating Cost Summary – Process Plant ................................................................ 153 Table J.15: Plant Workforce........................................................................................................ 154 Table J.16: Plant Operating Supplies – Basis for Estimate ......................................................... 155 Table J.17: Summary of Cost Basis for Maintenance Supplies (excluding freight costs) .......... 155 Table J.18: Estimated G&A Cost ................................................................................................ 156 Table J.19: Estimated G&A Labour Cost ................................................................................... 157 Table K.1: Results of the Cash Flow Analyses ........................................................................... 159 Table K.2: Base Case Cash Flow (1 % price escalation and before capital contingency) .......... 161 Table K.3: Modified Base Case Cash Flow (1 % price escalation and $178 M capital
contingency) ................................................................................................................................ 162 Table K.4: Economic Criteria Utilized in the Cash Flow Model ................................................ 163 Table K.5: WWW Modelled Diamond Price by Kimberlite Unit (March 2009 re-pricing) ....... 165 Table K.6: 12 To 72 Month Trailing Average Currency Exchange Rates .................................. 165 Table K.7: Projected NPV and IRR for 0 %, 1 % and 2 % Price Escalation Rates in Base Case
..................................................................................................................................................... 166 Table K.8: Sensitivity Analysis Results (After-Tax Basis, NPV(7 %))...................................... 169 SUMMARY
EXECUTIVE SUMMARY
P&E Mining Consultants Inc. (“P&E”) was retained by Shore Gold Inc. (“Shore”) to prepare this
independent, NI 43-101 compliant Technical Report (the “Report”) and Preliminary Feasibility
Study (“PFS”) on the Star Diamond Project (the “Project”) situated in the Fort à la Corne
(“FALC”) Provincial Forest, Saskatchewan, Canada. In addition, A.C.A. Howe International
Limited, AMEC Americas Limited (“AMEC”), Clifton Associates Ltd., Hydrologic Consultants
Inc. and SRK Consulting (“SRK”), were also retained and have prepared or contributed to
sections of this Report. WWW International Diamond Consultants Ltd. (“WWW”) provided the
diamond pricing estimates utilized by P&E.
This Report documents the Mineral Reserve Estimate as of July 31, 2009 for the Star Diamond
Project and the results of a PFS of a potential Star Diamond Project open pit mining and on-site
processing operation.
The Star Diamond Project encompasses the Star Kimberlite deposit, which straddles a mineral
disposition boundary between ground that is held 100 % by Shore (Star Property), and ground
(Star West Property) that is held by the FALC Joint Venture (“FALC-JV”), between Kensington
Resources Ltd., a wholly-owned subsidiary of Shore (60 %) and Newmont Mining Corporation
of Canada Limited (“Newmont”) (40 %). The Star Diamond Project is operated by Shore, and is
being explored and developed as a single entity.
The PFS assessed the viability of developing and operating the Star Diamond Project as a
standalone open pit and on-site ore processing project based on the proposed mining method, ore
processing methodology; stated assumptions of technical, engineering, legal, operating,
economic, social and environmental factors and other relevant factors, with projected gross
revenues from rough diamond sales. The PFS is based on the Mineral Reserve Estimate as of
July 31, 2009 for the Star Diamond Project.
Costs are reported in Q1 2009 Canadian dollars unless otherwise stated.
KEY CONCLUSIONS
The results of the discounted cash flow analyses for the Project are shown in the table below.
Based on the results of the PFS including the discounted cash flow analyses, it is P&E’s opinion
that the PFS has demonstrated the potential of the Project to become a significant diamond
producer, and that the Project merits further assessment and should be advanced to a Feasibility
Study (“FS”) stage.
This Technical Report has been prepared in accordance with National Instrument 43-101
Standards of Disclosure for Mineral Projects and Form 43-101 F1 Technical Report. The terms
“Mineral Resource”, “Measured Mineral Resource”, “Indicated Mineral Resource”, “Inferred
Mineral Resource”, “Mineral Reserve”, and “Probable Mineral Reserve” have the meanings
ascribed to those terms by the Canadian Institute of Mining, Metallurgy and Petroleum (“CIM”),
as the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by CIM
Council on December 11, 2005.
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Table X.1: Results of the Cash Flow Analyses
Item
After-tax cash flow
(undiscounted total)
After-tax IRR
After-tax NPV (7 %)
Payback
1
Base Case
(1 % price escalation and
excluding capital contingency)1
$1,540 M
Modified Base Case
(1 % Price escalation and
$178 M plant and
infrastructure capital
contingency)1
$1,433 M
10.4 %
$291M
5.2 years
8.9 %
$179 M
6.2 years
Refer to the footnotes to Table X.9
MINERAL RESERVE
The Star Kimberlite is a significant diamond deposit with a Mineral Reserve Estimate in the
Probable category, at $5.08/t cut off, of 170,838,000 t at an ore grade of 11.7 cpht (equivalent to
a value of $31.04/t) taking projected mining dilution and mining losses into account.
An opportunity for improvement is to conduct additional exploration with a view to converting a
portion or all of the Project’s Inferred Resources to the Probable Mineral Reserve category.
The resource modeling of the Star Kimberlite deposit extends to a depth of 70 m asl; however,
diamond drilling has confirmed the presence of diamondiferous Mid Joli Fou (“MJF”) kimberlite
material within the central vent to a depth of -270 m asl. It is not unusual for an open-pit
diamond mine to convert to underground mining when open pit mining becomes uneconomic
due to ever-increasing stripping ratios. Diamond mines that have converted to underground
mining, or that are currently planning to replace production with underground mining, include
Cullinan, Kimberley and Venetia in South Africa, Jwaneng in Botswana, Ekati and Diavik in
Canada, Argyle in Australia and Mir in Russia.
PROCESS PLANT
The PFS assumed that the plant will process 14.2 Mtpa ore which is equivalent to 97.3 % of the
plant’s 14.6 Mtpa nameplate capacity. Since the plant is capable of higher tonnage than mining
can deliver, this will allow possible plant interruptions but at the same time increases some
indirect and operating costs. There is an opportunity to improve ore stockpiling and process
14.6 Mtpa ore and reduce some of the indirect and operating costs utilized in the cashflow.
DIAMOND PRICES
The results of the sensitivity analysis show that the Project is most sensitive to fluctuations in the
US:CAD currency exchange rate, diamond head grade, and diamond prices. Samples of Star
Kimberlite diamonds were priced by WWW in March of 2008. Since that time, a reduction in
diamond prices and an offsetting increase in US$ strength has yielded a similar CAD$ diamond
value per carat. Expectations are that Shore will sell its rough diamonds through a yet to be
defined sales arrangement in Antwerp at an assumed marketing cost of 2.2 % of gross revenue.
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ROYALTIES
The Government of Saskatchewan is developing its diamond royalty structure, and as such the
financial analysis in the PFS utilizes an assumed diamond royalty structure that is generally
consistent with the diamond royalty structures applied in the Northwest Territories and Ontario,
Canada. Shore has consulted with government officials in regard to possible diamond royalty
structure approaches. Expectations are that the Government of Saskatchewan may make a
competitive diamond royalty structure available for public review in late 2009.
OVERBURDEN STRIPPING
The proposed approach to stripping the overburden is based on the results and recommendations
of geotechnical and hydrological studies, and experience at other projects. The stratigraphy in
the pit area has been well-characterized as a result of field investigations and testing and
technical assessments. The geotechnical stability of the pit walls in the overburden and in the
sub-overburden materials has been assessed. The results of hydrologic pit slope depressurization
and mine dewatering assessments including preliminary three dimensional modeling indicate
that an active dewatering well system would reduce the residual passive inflow (“RPI”) into the
pit to levels that are inconsequential relative to the mining operations. There is a risk that the inpit crush and convey (“IPCC”) system may not be able to attain its predicted performance.
Opportunities for improvement include redesigning the intermediate pit walls to increase the
length of straight faces available to the IPCC system and increasing the performance of the IPCC
system.
MINING
There is a risk that more than 40 % of the ore and waste rock will need to be drilled off and
lightly blasted and that wet conditions may restrict the use of ammonium nitrate and fuel oil
(“ANFO”).
DEWATERING
The proposed pit water management system, can handle the projected volumes of runoff, surface
water and shallow and deep groundwater that are expected to flow or be pumped into the water
management system.
The PFS water balance indicates that in every year of production the processed kimberlite
containment facility (“PKCF”) will discharge water to the Saskatchewan River. The PFS water
balance forecasts that additional water would be required by the processing plant in every year of
operation. This supplemental water could be provided by drilling dewatering wells around the
Orion South Kimberlite and / or taking makeup water from the PKCF. The additional water that
is required in an average year and a dry year are 0.83 Mm3 and 10.24 Mm3, respectively.
ENERGY
There is a possibility that the time required for SaskPower to engineer, permit, procure and
construct the powerline and associated upgrades may take longer than expected and may delay
the project start-up date.
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An opportunity may exist to use geothermal systems for all of the Projects’ heating requirements
which would reduce operating costs and be good for the environment.
TRANSPORTATION
There is an opportunity to provide a rail spur to the site which would reduce the cost of transport
to site for bulk supplies such as fuel and blasting agents.
ENVIRONMENT
The Environmental Assessment Branch of the Saskatchewan Ministry of Environment (“MOE”)
has made draft guidelines for the preparation of an Environmental Impact Statement (“EIS”)
available for public review and comment in regard to Shore Gold’s proposed Star – Orion South
Project (Environmental Impact Assessment (“EIA”) Notice under Section 10, July 13, 2009).
The project includes the excavation of an open pit at the Star Kimberlite and a potential second
pit at the Orion-South deposit and constructing a common processing plant and associated
infrastructure.
TECHNICAL SUMMARY
LOCATION, ACCESS AND INFRASTRUCTURE
The Star Diamond Project is located in the FALC Provincial Forest, situated some 60 km east of
Prince Albert, Saskatchewan. Good access is provided by paved highways, a grid gravel road
system and an extensive network of forestry roads, passable by four-wheel drive and high
clearance two-wheel drive vehicles all year round.
The Star Kimberlite is situated on the north side of the Saskatchewan River, which can be
crossed by bridge at either Prince Albert, to access the property from the west, or at Wapiti,
north of Melfort to access the area from the east. A 230 kV power line runs 9.6 km south of the
area, and a larger-capacity 230 kV power line is located 21 km to the east. A pool of personnel is
available from the many towns in the area.
The climate, in this region of Saskatchewan, ranges from warm dry summers with temperatures
typically averaging 23°C to cold dry winters with temperatures typically averaging about -11°C.
Precipitation averages 405 mm annually.
TENURE AND SURFACE RIGHTS
The Star Kimberlite deposit and associated infrastructure are located within mineral disposition
S-132039 in Section 18 of Township 49, Range 19, west of the 2nd Meridian. Township 49 is
located within the Rural Municipality of Torch River. This mineral disposition is, in turn, located
within claim block GC#45826, which comprises 23 contiguous mineral dispositions totalling
9,280 ha. Shore owns a 100 % working interest in these claims subject to a NPI on 4 of the
original claims. Shore owns a 100 % interest in the additional remaining 19 claims in
GC#45826.
Shore holds a 100 % interest in an additional 116 claims in the immediate area, for a total of 139
claims covering 49,345 ha as of June 15, 2009. The Star Kimberlite deposit is one of the largest
diamond bearing kimberlite deposits in the world, with a surface area totalling some 352 ha.
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Shore also holds an interest in the FALC-JV, which is partially contiguous with the Star
Diamond Project. The FALC-JV holds 121 claims, totalling 22,544 ha as of June 15, 2009. Two
of the mineral dispositions within the FALC-JV are considered to be part of the Star Diamond
Project, namely S-127109 and S-127186. The claims covering the Star Kimberlite deposit are in
good standing as of June 15, 2009.
Shore’s claim block GC#45826 has been legally surveyed in accordance with the Saskatchewan
Mineral Disposition Regulations of 1986, Part IV, Article 30(1)(d), and the boundaries coincide
with the boundaries of the land survey system pursuant to the Saskatchewan Land Surveys Act
and / or with the boundaries of existing surveyed land parcels.
In accordance with Saskatchewan Mineral Disposition Regulations, 1986, Sask. Reg. 30/86
(under the Crown Minerals Act, S.S. 1984-85-86, c-50.2), each claim may be held for two years
and, thereafter, from year to year subject to the holder expending the required amounts in
exploration operations on the claim lands. There are no charges for the first year of the claim;
there is a $12/ha fee for the second to tenth year and a $25/ha fee for every year thereafter. As
Saskatchewan Ministry of Energy and Resources accepts assessment work as credit instead of
paying the yearly fees, most of the claims have enough assessment credits to keep them in good
standing for several years.
From financial data supplied by Shore, it appears that sufficient exploration expenditures have
been made and assessment credits earned such that Shore has assessment credits sufficient to
maintain the main claim block, GC#45826, for a period of at least seventeen years. The Crown
retains surface rights in the area of the Star mineral dispositions; Shore is able to access the
property through the exploration permits granted to it.
GENERAL GEOLOGY
The property lies near the north-eastern edge of the Phanerozoic Interior Platform that extends
from the Rocky Mountains in the west to the Precambrian Canadian Shield in the northeast. The
Phanerozoic cover consists of basal Cambro-Ordovician dolomitic carbonate rocks and clastic
sedimentary rocks succeeded by Cretaceous shale and sandstone. The entire area is overlain by
Quaternary glacial deposits ranging from 40 m in thickness close to the Saskatchewan River and
up to 120 m in thickness elsewhere. In the FALC area, a northwest-trending kimberlite province
that is approximately 50 km long by 30 km wide has been identified. Sixty-nine kimberlitic
bodies have been discovered to date in the FALC kimberlite province.
KIMBERLITE GEOLOGY
Based on surface and underground core drilling and underground mapping data the Star
Kimberlite deposit contains two distinct types of kimberlite: 1) eruptive kimberlite phases; and,
2) kimberlitic sedimentary rocks.
The eruptive kimberlites are sub-divided into five main phases: Late Joli Fou Kimberlite
(“LJF”), MJF, Early Joli Fou Kimberlite (“EJF”), Pense Kimberlite (“PPK”), and Cantuar
Kimberlite (“CPK”). Each phase has distinct physical and chemical properties that enable their
mapping and stratigraphic correlation in three dimensions.
The Star Kimberlite deposit is dominated by crater facies rocks, which include well-defined
pyroclastic flows that radiate away from the crater. The sheet-like CPK and the PPK are
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kimberlites deposited from pyroclastic flows from nearby kimberlite volcanoes. The EJF is a
combination of vent filling pyroclastics and pyroclastic flows away from the crater. MJF and
LJF are a crater facies vent filling pyroclastic kimberlite.
GEOLOGICAL MODEL
On October 17, 2006, Shore produced a preliminary three dimensional (3-D) geological model
of the Star Kimberlite. The model was constructed for all kimberlite phases above an elevation
of 71 m asl, which corresponds to a depth of approximately 350 m below the existing land
surface.
In November, 2007, Shore produced an updated 3-D geological model utilizing data from an
additional 157 surface and underground in-fill and step out holes. The updated geological model
estimated that the Star Kimberlite contained a total of 278 Mt of kimberlite. The geological
models for kimberlite and country rock were finalized by Shore and AMEC on January 23, 2008
and were used by P&E in their updated February 23, 2009 Mineral Resource Estimate and the
current Mineral Reserve Estimate.
SAMPLING AND SAMPLE PROCESSING
UNDERGROUND SAMPLING
Shore sank a 250 m shaft with a drill station at 175 m from surface and a working level at 235 m
from surface in order to bulk sample the various kimberlite phases for diamond grade estimation
and diamond valuation purposes. Shaft sinking began in January, 2003 and was completed in
May, 2004. Underground drifting commenced immediately after with drifting completed in
April, 2007 totalling 2,930 m.
Upon completion of the underground bulk sampling program on the Star Kimberlite (both Star
and Star West Properties), a combined total of 10,966 ct of commercial sized diamonds greater
than 0.85 mm were recovered from a total of 75,436 dry tonnes of kimberlite material that was
processed through Shore’s on-site batch sampling process plant. Tonnages include sampling of
drift material, underground resource evaluation samples, geotechnical test samples and clean-up
samples.
All underground openings were geologically mapped and, in the opinion of P&E, are adequate to
support Mineral Resource / Mineral Reserve Estimation and related mine planning activities.
LARGE DIAMETER DRILLING
From September 14, 2005 to December 27, 2007, a total of 95 Large Diameter Drill (“LDD”)
holes (1.20 m diameter) were drilled on the Star Kimberlite, totalling 19,398 m.
In the summer of 2008 Shore completed an additional eight in-fill LDD holes designed to
upgrade Inferred Resources to the Indicated category, bringing the total LDD holes drilled on the
Project to 103. Based on a review of data supplied by Shore, P&E is of the opinion that the data
are acceptable for Mineral Resource Estimation; however, adjustment for diamond breakage and
stone loss during sampling is required.
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DIAMOND RECOVERY
Shore purchased and commissioned a Bateman Engineering PTY Limited-designed process plant
that started receiving kimberlite in late January, 2004. The process plant consists of a 30 t/h
crushing circuit, and a 10 t/h Dense Media Separation (DMS) circuit which utilizes a 250 mm
diameter separating cyclone, and a recovery section consisting of a Flow Sort® X-Ray diamondsorting machine and grease tables. All kimberlite was stored in individual batch samples in a
dedicated storage facility.
MINERAL RESOURCE ESTIMATE AS OF FEBRUARY 23, 2009
The updated Mineral Resource Estimate prepared by P&E includes kimberlite volume, density
and tonnage data collected during the surface and underground core drilling program, diamond
and tonnage data from underground bulk sampling. Diamond grade and tonnage estimates were
also derived from 103 LDD holes, of which 96 LDD holes reported diamond sampling data.
Diamond sampling data consisted of 11,663 processed tonnes and 1,417 ct. Based on a review of
data supplied by Shore, P&E is of the opinion that the data are acceptable for Mineral Resource
Estimation.
Shore commissioned WWW in Antwerp, Belgium to complete valuation studies of the Star
diamond parcels. Variable diamond prices were provided by kimberlite unit relative to the
WWW March 11, 2008 price book. The table below summarizes those prices determined by
WWW and used by P&E for the Mineral Resource Estimate as of February 23, 2009.
Table X.2: WWW Modeled Diamond Parcel Value by Kimberlite Unit
Kimberlite
Lithology
CPK
PPK
EJF
MJF-LJF
Total
Carats
1,126.32
1,410.73
7,123.10
80.09
Parcel Price
(US$/ct)
$193
$79
$115
$84
Model Price
(US$/ct)
$309
$103
$167
$105
Minimum Price
(US$/ct)
$247
$88
$138
$75
High Price
(US$/ct)
$420
$126
$216
$152
9,740.24*
$120
$172
$141
$225
Notes: *Diamonds weighing 509.25 carats (mixed EJF-Cantuar material) and 59.58 carats (surface stockpile clean-up) have not been included
in the diamond populations used for the determination of these modeled prices to ensure the integrity of the parcels and the accuracy of the
modeled prices. This explains the difference between this total of 9,740.24 carats and the overall parcel total of 10,309.07 carats (which was the
carat total at the time of valuation). Due to the conservative nature of the WWW price models, where the upside potential of the coarse size
frequency distribution was not fully reflected, P&E used the WWW High scenario for the reporting of resources.
Diamond grades from LDD batch samples were adjusted upwards by P&E to compensate for
observed diamond breakage and loss during drilling. The adjustment factor was derived using
industry standard analyses of diamond recoveries from LDD mini-bulk sampling and
underground bulk sampling. The calculated adjustment factor was applied across the model for
all units and P&E believes the adjustment factor to be reasonable and appropriate for the Star
Kimberlite deposit Mineral Resource Estimate.
Diamond grades were estimated for each kimberlite unit using Ordinary Kriging of adjusted
LDD sample grades. A partial block percentage model was used to accurately represent the
volume and tonnage of the individual kimberlite units within each block. The Mineral Resource
Estimate uses a 1.0 mm bottom diamond size cut-off and considers all diamondiferous material
above an elevation of 70 m asl. Average bulk density values were assigned by P&E to the
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resource model by lithological unit, based on extensive bulk density measurements completed by
Shore on drillhole core.
An internal cut-off value of $5.08/t was calculated by P&E based on a G&A cost of $1.50/t and a
processing cost of $3.58/t. Mineral resources as reported by P&E were constrained to a
conceptual optimized pit shell derived from the WWW ‘high value’ scenario. The results from
the pit optimization analysis were used solely for the purpose of reporting mineral resources that
have reasonable prospects for economic extraction.
The Mineral Resource Estimate has an effective date of February 23, 2009 and was been
reported in conformity with the Canadian Securities Administrators’ National Instrument 43-101
and CIM guidelines on the “Estimation of Mineral Resource and Mineral Reserves Best
Practices”, including the “Guidelines for Reporting of Diamond Exploration Results”. The table
below summarizes the total Star Kimberlite deposit Mineral Resource Estimate by main
kimberlite unit and classification.
Table X.3: Mineral Resource Statement for the Star Kimberlite Deposit Including the Star
Diamond Project (100 % Shore) and Star West (60 % Shore, 40 % Newmont)1,2,3,4,5,6,7
Class
Indicated
Inferred
UNITS
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Indicated
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Inferred
Tonnes
x 1000
11,507
8,002
80,516
32,120
18,617
896
151,659
426
3,178
2,672
19,857
1
30
26,164
Grade
cpht
15.03
15.64
16.60
9.67
5.42
4.00
13.51
7.84
13.99
15.86
10.87
4.96
3.58
11.70
Carats
x 1000
1,729
1,251
13,362
3,106
1,009
36
20,493
33
445
424
2,158
0
1
3,061
(1) Mineral Resources are accumulated within an optimized floating-cone pit shell.
(2) Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be
materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
(3) The quantity and grade of reported inferred resources in this estimate are conceptual in nature. There is no guarantee that all or any part of the
Mineral Resource will be converted into a Mineral Reserve.
(4) 1mm bottom cut-off assumed.
(5) WWW High scenario.
(6) Due to rounding figures may not add up to the totals shown.
(7) Reported at an internal cut-off value of $5.08/t for the CPK, EJF, MJF and LJF kimberlite units.
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The following table summarizes that portion of the Star Kimberlite deposit Mineral Resource
Estimate that falls within the 100 % Shore-owned portion of the Star Kimberlite deposit Mineral
Resource.
Table X.4: Mineral Resource Statement for the Star Diamond Project (100 % Shore)
only1,2,3,4,5,6,7
Class
Indicated
Inferred
UNITS
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Indicated
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Inferred
Tonnes
x 1000
4,985
8,002
58,886
27,378
1,651
158
101,062
347
3,178
1,282
17,762
0
25
22,594
Grade
cpht
12.67
15.64
16.57
9.72
4.60
4.54
14.24
6.32
13.99
17.30
10.94
0.00
3.62
11.65
Carats
x 1000
632
1,251
9,760
2,662
76
7
14,388
22
445
222
1,943
0
1
2,632
(1) Mineral Resources are accumulated within an optimized floating-cone pit shell.
(2) Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be
materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
(3) The quantity and grade of reported inferred resources in this estimate are conceptual in nature. There is no guarantee that all or any part of the
Mineral Resource will be converted into a Mineral Reserve.
(4) 1mm bottom cut-off assumed.
(5) WWW High scenario.
(6) Due to rounding figures may not add up to the totals shown.
(7) Reported at an internal cut-off value of $5.08/t for the CPK, PPK, EJF, MJF and LJF kimberlite units.
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That portion of the Star Kimberlite Mineral Resource that falls wholly within the FALC-JV
property is summarized in the following table.
Table X.5: Mineral Resource Statement for Star West (60 % Shore, 40 % Newmont)
only1,2,3,4,5,6,7
Class
Indicated
Inferred
UNITS
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Indicated
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Inferred
Tonnes
x 1000
6,522
0
21,630
4,741
16,966
738
50,597
79
0
1,390
2,095
1
5
3,571
Grade
cpht
16.83
0.00
16.65
9.36
5.50
3.88
12.07
14.46
0.00
14.54
10.24
4.96
3.38
12.00
Carats
x 1000
1,098
0
3,602
444
933
29
6,105
11
0
202
215
0
0
428
(1) Mineral Resources are accumulated within an optimized floating-cone pit shell.
(2) Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be
materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
(3) The quantity and grade of reported inferred resources in this estimate are conceptual in nature. There is no guarantee that all or any part of the
Mineral Resource will be converted into a Mineral Reserve.
(4) 1mm bottom cut-off assumed.
(5) WWW High scenario.
(6) Due to rounding figures may not add up to the totals shown.
(7) Reported at an internal cut-off value of $5.08/t for the CPK, PPK, EJF, MJF and LJF kimberlite units.
A conceptual optimized pit shell, based on the economic parameters in the table below, was used
to estimate a Mineral Resource on the Star Kimberlite deposit. This meets the CIM requirement
for “reasonable prospects for economic extraction”. Economic parameters were derived by P&E
from knowledge of similar projects. The overall pit slope angle of 25° was based on preliminary
geotechnical investigations, which suggest that a standard bench configuration with a slope of
18° in the overburden and 30° in ore and waste rock is achievable. Estimated grades are based on
the recovery of diamonds from bulk sample pilot plant processing of the Star Kimberlite deposit,
and therefore diamond recovery was assumed to be 100 %.
ECONOMIC PARAMETERS
Exchange Rate
Stripping Cost
Mining Cost
Processing Cost
G&A
Overall Pit Slope Angle
Internal Cut-off
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CAD$1.00 = US$0.85
CAD$1.00/overburden t
CAD$1.34/rock t
CAD$3.58/ore t
CAD$1.50/ore t
25°
CAD$5.08/ore t
x
PRICE SENSITIVITIES
As a test of the sensitivity of the Star Kimberlite deposit Mineral Resource to market and
diamond price fluctuations, the resource model was also run with the High value scenario pit
shell using the WWW Low and Model price scenarios. The results suggest that the Star
Kimberlite deposit Mineral Resource is relatively insensitive to moderate diamond price
fluctuations, as shown in the table below.
Table X.6: Price Sensitivity at a $5.08/t Cut-Off.
Scenario
Minimum
Model
High
Class
Indicated
Inferred
Indicated
Inferred
Indicated
Inferred
Million
Tonnes
138.5
26.1
146.0
26.1
151.7
26.2
Grade
cpht
14.4
11.7
13.9
11.7
13.5
11.7
Million
Carats
19.9
3.1
20.3
3.1
20.5
3.1
MINE DESIGN BASIS
Following the completion of the P&E 2009 Mineral Resource Estimate update for the Star
Diamond Project, the project moved from a capital intensive data gathering exercise
(underground bulk sampling, core drilling and LDD) to lower cost, engineering studies and data
analysis including pit design, Mineral Reserve Estimation, and the PFS.
OPTIMIZATION
A Whittle 4X pit optimization was undertaken to create a pit shell that was then utilized as a
guide for pit design purposes. The inputs to the Whittle optimization were as follows.
Diamond Price ................................ Taken from WWW and the Resource model
Overburden removal cost ............... = $0.80/t
Ore & waste mining cost ................ = $1.56/t
Processing cost ............................... = $3.58/t
G&A cost ....................................... = $1.50/t
Pit slopes ........................................ = 16° above 340 m el; 30° below 340 m el
The resulting optimized pit shell was exported to the Gemcom pit design utility where plan
views were developed to guide the pit design on a bench by bench basis from pit bottom to pit
crest. P&E utilized an inter-ramp design slope of 16° above the 340 m elevation for overburden
and an inter-ramp design slope of 30° below the 340 m elevation based on pre-feasibility level
Star pit slope stability evaluations. The pit ramps were designed to be 32 m wide to
accommodate two-way traffic for 6.7 m wide, 136 t capacity haulage trucks. Ramp gradients
were designed at 10 %.
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GEOTECHNICAL AND HYDROGEOLOGICAL CONSIDERATIONS
The proposed open pit design is based on the results of pit slope geotechnical and
hydrogeological investigations and assessments. The principal drivers of slope stability concerns
relate to high ground water levels in shale and glacial sediments that will be slow to depressurize
upon dewatering; and the existence of glacially sheared horizons, mostly in the Joli Fou shale
and near the drift-bedrock contact. It is currently estimated that 22 pumping wells will be
required to depressurize the country rock around the Star open pit, and that these wells will
pump between 60,000 and 90,000 m3/d from the deep groundwater aquifer, on an annual basis at
full development.
The in-pit dewatering system will manage precipitation, water contained within the rock that is
mined, groundwater seepage from pit walls, and potentially any drains that may be required for
geotechnical stability. The envisaged in-pit dewatering system includes temporary and
permanent ditches, drains and sumps. The water pumped from the dewatering wells and from
locations in the pit will be piped to the water management reservoir. It is projected that the in-pit
dewatering system will handle up to a maximum of 20,000 m3/d of groundwater and
precipitation / snow melt, and that the volumes of water that require pumping from the open pit
will be highly seasonal and vary with the stage of development.
Additional and detailed hydrogeological modeling of the Star pit is currently underway by SRK,
and the results of their work will be available for use in refining the envisaged pit dewatering
program, the water balance, and dewatering cost estimates in the Project FS.
ENVISAGED MINING OPERATION
The envisaged Star Diamond Project open pit will be a conventional open pit mining operation.
The pit will be developed both by contractor and Shore using their own equipment and work
forces. Shore will be responsible for: establishment of the pit haulage roads; de-watering,
production drilling and blasting; the excavation of ore to the primary crusher; excavation of
overburden and waste rock to the waste management area; boulder drilling and blasting, oversize
breakage; haul road maintenance; and equipment maintenance. The pit will be developed using
15 m high benches.
In the initial pit development phase (Phase 1a), the surficial sand and clay layers will be stripped
by Shore with the assistance of an earthmoving contractor(s) with much of the surficial waste
being stripped using conventional excavators, trucks, loaders, bulldozers and scrapers. Shore
will then commission its in-pit crush and convey (“IPCC”) waste stripping system and use it to
strip the tills to expose ore. The ore and associated waste rock will be mined using a
conventional hydraulic excavator and trucks. The ore and waste rock will be hauled to in-pit ore
and waste sizers, sized, and conveyed to the processing plant ore stockpile / waste management
area. Once the IPCC shovels and sizers have completed their work in Phase 1a they will be
moved to the Phase 1b pushback to recommence stripping. This process will be repeated
between pit phases.
PHASED PIT DEVELOPMENT
A five phase pit development approach was taken in order to reduce the amount of pre-strip
waste removal and to reduce the waste / ore ratio in the early years of pit production and pit
equipment capital expenditures. The starter pit (Phase-1a) is developed on a high-grade zone
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located in the southern portion of the deposit to a depth of 175 m el. The pit is sequentially
expanded to Phase-1b, Phase-2, Phase-3 and Phase-4. The five pit phases contain the tonnages
and waste / ore ratios shown below.
Table X.7: Open Pit Development Phases
1
Phase
1a
Diluted Ore
(Mt)1
32.354
Overburden
(Mbcm)
93.28
Waste Rock
(Mbcm)
27.97
1b
33.057
41.23
15.25
2
40.674
64.01
34.27
3
41.876
58.26
45.76
4
22.877
81.96
42.39
Total
170.838
338.8
165.6
Stripping Ratio
(t waste : t ore)1
(bcm waste : t ore)1
7.37:1
3.75:1
3.32:1
1.71:1
4.72:1
2.42:1
5.16:1
2.48:1
10.73:1
5.44:1
5.86:1
2.95:1
Dry tonnes. Moisture is taken into account in pit equipment throughput and pit operating costs.
MINE SCHEDULE AND PRODUCTION RATE
The open pit, plant and infrastructure will be developed over a 4 year time line, and is scheduled
to produce ore at a rate of 14.2 Mtpa for 12 years commencing in mid-2014. The proposed open
pit production rate of 14.2 Mtpa is 97.3 % of the 14.6 Mtpa processing plant capacity and allows
for possible mine production delays during pit mobile equipment and conveyor moves. P&E
developed annual pit bench plans and utilized them to assess equipment requirements, and
possible sources of delays that may occur during equipment moves including conveyor segment
and sizer moves, and estimated and scheduled annual waste stripping and production
requirements. P&E believes that the pit design is sufficient to support a +/- 25 % cost estimation
for the purposes of a Mineral Resource to Mineral Reserve Statement.
MINERAL RESERVE ESTIMATE AS OF JULY 31, 2009
The Star Diamond Project Mineral Reserve Estimate was derived from the recent Mineral
Resource dollar value per tonne block model. Utilizing preliminary operating costs for mining,
processing and G&A and engineered pit slopes, a pit optimization was undertaken to derive a pit
shell for design purposes. This five phase pit design includes vehicle access ramps, conveyor
ramps and berms. The pit design surface is used to determine which mineralization contained
within it from the resource model is to be converted to mineral reserves by CAD$ value cut-off
and the inclusion of appropriate ore losses and dilution. The Mineral Reserve Estimate as of
July 31, 2009 is shown below.
Table X.8: Star Diamond Project Open Pit Mineral Reserve as of July 31, 2009
Category
Ore
Tonnes
Cut-off Value
$/t
Ore Grade
cpht
Probable
170,838,000
$5.08
11.7
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The conversion of Star Diamond Project open pit mineral resources to mineral reserves does not
utilize a direct conversion of NI 43-101 stated resources for the following reasons:
1. The resource optimized pit shell utilized a single 25° overall slope whereas the reserve
optimized pit shell utilized a 30° slope in kimberlites and 16° in overburden.
2. The reserve pit design incorporates some indicated classification mineralization that is
outside the resource optimized pit shell due to the inclusion of vehicle access ramps,
conveyor ramps and berms.
3. The resource optimized pit shell utilized a preliminary set of operating cost parameters as
compared to the more definitive ones utilized in the reserve pit optimization. The net
result of these factors is that the undiluted Indicated Resources in the reserve optimized
pit design were 6,927,000 t greater than the disclosed NI 43-101 Indicated Resource
tonnage of 151,659,000 t. The base undiluted Indicated Resource is 158,586,000 t at a
value of $34.34/t.
The conversion of the 158,586,000 undiluted reserve pit design tonnes to reserves included the
addition of 11.3 % dilution at a diluting grade of 0.73 cpht (equivalent to $1.94/t) and a
subsequent mining loss of 2.5 % in all phases of the pit design except Phase 1B where the high
proportion of ore on the 250, 235, 220 and 205 benches did not allow for the acquisition of 11.3
% dilution. The average dilution on these four benches was 7.2 % and they maintained the 2.5 %
mining loss. The estimated overall effective average dilution for the entire pit was 10.489 %
which after also taking losses into consideration translates into 170.838 Mt diluted. The
undiluted reserve grade of 12.96 cpht (equivalent value of $34.34/t) converts to a diluted reserve
grade of 11.7 cpht (equivalent value of $31.04/t).
ORE PROCESSING PLANT
The proposed 14.6 Mtpa capacity process facility incorporates autogenous milling, classification,
dense media separation, diamond recovery and reject disposal.
Important metallurgical parameters were obtained by processing 75,436 dry t of underground
bulk samples and 11,663 t of LDD samples from the Star Kimberlite deposit through Shore’s
processing plant. Final hand sorting of the x-ray and grease table concentrates was initially
carried out by SGS Lakefield in Ontario then this activity was switched to MSC in North
Vancouver, British Columbia. The data obtained from processing the underground and LDD
samples demonstrated that the Star Kimberlite units have low densities with an average density
of 2.27 t/m3 and subsequently produce a low DMS yield with the average being 0.7 % of
headfeed. This information indicates that mineral separation using DMS will be easy and the
recovery plant size will not be excessive.
The ROM feed is anticipated to be 100 % kimberlite, based on the samples processed and the
mine plan.
Other important design parameters obtained from processing in the BSP include:
•
•
•
•
•
plant mass balances;
feed size distribution;
tailings size distribution;
diamond recovery; and
diamond size distributions.
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Additional process plant design parameters were obtained from laboratory scale and pilot scale
test work. Extensive ore characterization work was also completed. Test work findings were:
•
•
•
•
•
•
On average, an additional 6.7 % and 3.7 %, -1 mm material are produced when EJF and
PPK samples are scrubbed, respectively.
On processing EJF samples with an average moisture content of 8.6 % through a
laboratory high pressure rolls crusher (“HPRC”) with an average operating pressure of 43
bar and moisture content of 8.6 % a product containing 30 % passing 1 mm was obtained.
Similar results were achieved for PPK with a moisture content of 7.2 %. At an operating
pressure of 45 bar a product containing 33 % passing 1 mm was obtained.
Based on abrasion index results carried out on 541 samples by SGS Lakefield, the Star
Kimberlite units may be classified as 53 % very soft, 25 % soft, 19 % medium and 3 %
hard.
During pilot testing with a high pressure cone crusher, the flow of kimberlite through the
crusher stopped on two occasions due to high moisture and high fine content, indicating
some of the Star Kimberlite will require water to assist the flow of material through the
crushing cavity if cone crushers are installed.
Bench scale thickening tests demonstrated low flocculant dosage rates (10 g/t to 20 g/t) to
settle slimes samples from the four major kimberlite types. Dosage rates must be
increased, up to 70 g/t, if waste materials such as shale are present.
Magnetic separation offers significant opportunity to reduce the quantity of DMS
concentrate prior to the x-ray and grease concentration processes, due to the presence of
ilmenite and magnetite.
Off-site autogenous milling pilot tests were conducted at SGS Lakefield, Ontario using a 6 ft x
2 ft mill and a 58 t sample of EJF Kimberlite from Orion South. Although not directly applicable
to the Star Diamond Project, the test work was used for comparative purposes in developing the
modelling parameters for the Star Kimberlite deposit. During the pilot milling, diamond simulant
breakage tests were completed to understand the relationship between mill operating parameters
and breakage.
AMEC believes that the amount and types of metallurgical test work performed is appropriate
for the PFS stage and is adequate to support a Mineral Resource to Mineral Reserve Statement.
AMEC has used in-house data for most of the recovery plant design.
During the course of the PFS three flow sheet options as listed below were evaluated:
•
option 1 – conventional diamond processing techniques including crushing, scrubbing,
screening, DMS, recrushing, thickening, x-ray sorting and grease recovery;
•
option 2 – similar to option 1 except unconventional high pressure jigging was used as a
concentration method to reduce DMS capacity; and
•
option 3 – a comminution circuit based on autogenous milling, classification, DMS,
magnetic separation, x-ray sorting and grease recovery.
The evaluation concluded that incorporating autogenous milling is preferable when treating soft
kimberlites with high clay contents, characteristics prevalent to the Star and Orion South
Kimberlites. In addition, the autogenous milling offered an opportunity to simplify the flow
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sheet and hence reduce capital and operating costs through the reduction of crushing and
materials handling equipment.
The process plant based on autogenous milling is designed with two process lines where
practical, with each process line having a capacity of 20,000 t/d. The plant nameplate capacity
will be 14.6 Mt/a, with provision for future expansion by increments of 20,000 t/d.
A bottom cut-off of 1.15 mm (3 diamond sieve) was selected for the process plant. During the
bulk sampling campaign, 98.03 % of the diamonds recovered by weight were greater than
1.15 mm, representing 99.76 % of the value. In practice, screen panels with slotted 0.85 mm
openings will be selected and the panels will be allowed to wear to 1.15 mm allowing some
diamonds smaller than 1.15 mm to be recovered. The plant design is sufficiently flexible to raise
the bottom cut-off size if market requirements and prices become less favourable for small
diamonds.
The plant top size selected was 45 mm, based on recovering all diamond sizes predicted to occur
within five years. The size range reporting to DMS will be -45 + 1 mm. To ensure optimal
separation and recovery efficiency, this wide size range will be split into three narrower size
ranges; -45 + 18 mm, -18 + 8 mm and -8 + 1 mm and fed to coarse, middles and fines DMS
plants respectively.
At this stage, recrushing of DMS or recovery plant rejects has not been included. This decision
was based on the diamond recovery results obtained in Shore’s BSP following the treatment of
+1 mm material after completion of the autogenous milling tests, where only 1.33 % of the
diamonds were liberated after recrushing +6 mm DMS rejects. This indicates that diamond lockup in the production plant DMS rejects will be minimal. Space has been allocated in the process
plant building for future inclusion of recrush, if economical.
Attached to the production plant, Shore will incorporate the original BSP, but with modifications
for the purposes of:
•
•
•
auditing future mining benches in the pit to provide information for mine planning;
auditing the production plant to ensure efficient operation; and
processing exploration bulk samples from other kimberlite bodies.
The features of the process plant incorporating autogenous milling are as follows:
•
primary crushing with an in-pit, semi-mobile mineral sizer to produce a -400 mm
product;
• coarse ore stockpiling equipped with a stacker conveyor;
• autogenous milling and classification where the ore is processed and split into three size
fractions, +45 mm, -45 +1 mm and -1 mm;
• DMS feed preparation where the ore is washed and split into four size fractions, -45 +
18 mm, -18 +8 mm, -8 +1 mm and -1 mm;
• DMS treating coarse ore in the size range -45 +18 mm;
• DMS treating middlings in the size range -18 +8 mm;
• DMS treating fine ore in the size range -8 +1 mm;
• recovery plant incorporating magnetic separation to remove unwanted magnetic particles
in the size fractions -2 +1 mm, -4 +2 mm and -8 +4 mm;
• the -2 +1 mm non-magnetic fraction will then be processed by grease;
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Star Diamond Project - Report No 169
•
•
•
•
•
•
x-ray with grease as a scavenging step will be used to process the -4 +2 mm, - 8 +4 mm,
non-magnetic fractions;
x-rays with grease as a scavenging step will be used to treat the -18 +8 mm and -45
+18 mm DMS concentrates;
fines rejects disposal, where -1 mm material in slurry form is pumped to the processed
kimberlite (“PK”) containment area;
coarse rejects disposal, where the DMS rejects are combined and conveyed to a coarse
rejects dump (-45 + 1 mm);
water systems; and
compressed air systems.
The block flow sheets were further developed by Metso (autogenous milling (“AG milling”) and
DMS) and by AMEC (recovery plant, rejects disposal and water and air systems) to produce
detailed flow sheets, an equipment list and plant layouts suitable for cost estimation purposes at a
PFS level. AMEC provided plant layouts and the cost estimation for the process plant. AMEC
believes that the process plant pre-feasibility design is sufficient to support a +/- 25 % cost
estimation for the purposes of a Mineral Resource to Mineral Reserve Statement.
PROJECT INFRASTRUCTURE
ELECTRICAL POWER SUPPLY
Electrical power will be obtained from the provincial utility SaskPower.
ADMINISTRATION AND MAINTENANCE FACILITIES
Administration and maintenance facilities will be constructed on site. The maintenance shop
complex will be used to service mine and plant equipment and will have a warehouse, change
rooms, lunch and training rooms, and offices. The diamond sorting facility will be established
off-site.
WATER BALANCE AND WATER MANAGEMENT
The water balance considered the three major water streams: the water management reservoir,
the open pit and the PKCF. The water balance was calculated based on annual average volumes
without detailed consideration for inter-annual or seasonal/monthly variations; however, three
climatic scenarios were considered with respect to precipitation and evaporation: average;
average plus one standard deviation (wet) and average minus one standard deviation (dry). The
process plant demands exceed reservoir inflow on a yearly basis during all production years
under each of the three climate scenarios. The forecasted volume shortfalls in an average year
and a dry year are 0.83 Mm3 and 10.2 Mm3, respectively. Additional supplemental water for the
process plant can be provided by either reclamation from the PKCF discharge stream, or
potentially, a deep well dewatering system in the immediate area of the facilities.
The water management reservoir will be used to store groundwater from the dewatering wells,
the water from the in-pit collection system, the surface runoff that currently flows into the East
Ravine and potentially a lesser amount of surface runoff from the site and surrounding areas.
Much, if not all, of the water discharged to the reservoir will be used in the plant processing and
the excess water will be allowed to discharge into the Duke Ravine, via a proposed 2 km long
diversion channel. The water management reservoir will require the construction of two dams.
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The initial water balance for the PKCF PFS suggests that the PKCF cells reach capacity volume
and overflow to the polishing pond, and ultimately to the Saskatchewan River every year of
production.
SOCIAL AND ENVIRONMENTAL
The Environmental Assessment Branch of the Saskatchewan MOE has made draft guidelines for
the preparation of an EIS available for public review and comment in regard to Shore’s proposed
Star–Orion South Diamond Project (EIA Notice under Section 10, July 13, 2009). The Project
includes the excavation of an open pit at the Star Kimberlite and a potential second pit at the
Orion-South Kimberlite and constructing a common processing plant and associated
infrastructure.
FINANCIAL EVALUATION
The Star Diamond Project has been valued using a discounted cash flow analysis, and the effect
of changes in key cash flow inputs on the economic viability of the project has been assessed.
SUMMARY
The after-tax basis results of the cash flow analysis for the base case and a modified base case
are summarized in the table below. The base case includes a 1 % per annum diamond price
escalation and excludes capital contingency. The modified base case includes a $178M plant and
infrastructure capital contingency.
The results of the sensitivity analysis show that the project is most sensitive to $CAD/$US
exchange rate fluctuations, followed by the price of diamonds or recovered grade, capital costs
and operating costs, respectively.
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Table X.9: Results of the Cash Flow Analyses
Item
After-tax cash flow
(undiscounted total)
After-tax IRR
After-tax NPV (7 %)
Payback
Base Case
(1 % price escalation and
excluding capital
contingency)1,2,3,4,5
$1,540 M
Modified Base Case
(1 % Price escalation and
$178 M plant and
infrastructure capital
contingency)1,2,3,4,5
$1,433 M
10.4 %
$291 M
5.2 years
8.9 %
$179 M
6.2 years
1
The Project schedule includes an estimated 4 year pre-production period and a 12 year long mine production phase followed by mine closure.
These durations were developed based on currently projected time lines for power distribution line design and construction; equipment and
materials procurement, deliveries, assembly and commissioning; environmental assessment and review; technical studies including a
recommended feasibility study for the Project; permitting and other factors. The assumed dates and timing of milestone events such as the date
for corporate approval to proceed with the Project, the mid-2014 commencement of ore production, and the mid-2026 cessation of operations
were based on available information and the time lines between the assumed dates are 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 originally projected time lines for environmental assessment and public consultation, and engineering,
procurement, construction and commissioning. Based on P&E’s perception of the information available to it at the effective date of this technical
report, the projected 4 year pre-production period and the 12 year producing life of the mine are reasonable.
2
The projected gross annual revenues from rough diamond sales have been estimated taking into consideration the mining and processing
schedule; High price scenario modeled diamond parcel values by kimberlite unit presented in WWW’s March 2008 re-pricing of samples of Star
Project diamonds; a US$0.85 = CAD$1.00 exchange rate; and Shore’s current perception of the future diamond market including a projected
1 %/annum rough diamond price escalation commencing year 2010. The WWW valuation noted that the High Price scenario does not represent
maximum values, and that, for modelling purposes, the same average price was applied to all stones of 6 ct or higher. Readers are reminded that
rough diamond pricing is not static and is known to fluctuate. Shore has utilized diamond valuations completed in March, 2008 and although
diamond prices have since dropped by 10 to 15 %, changes in the Canadian $/US $ exchange rate have improved by approximately 15 %, thereby
supporting the use of the March, 2008 diamond price valuation. The projected effects of 0 %/a, 1 %/a and 2 %/a diamond price escalation rates
on total LOM gross revenue, NPV and IRR are compared in the Table X.14. Gross revenues were converted from USD to CAD using a
projected $1/US$0.85 exchange rate which approximates the 60 and 72 month trailing averages to the end of Q1 2009 of $1/US$0.87 and
$1/US$0.84 (rounded) respectively. The sensitivity analysis showed that the project is most sensitive to grade, diamond pricing, and $/$US
exchange rate changes.
3
The cash flow model for the Project estimates future federal, provincial and local government taxes. Federal and provincial (Saskatchewan)
corporate income taxes payable on pre-tax cashflows were estimated based on future tax rates substantively enacted as March 31, 2009. The
value of future property and school taxes were estimated based on the current understanding of the levels of local government taxes paid by
similar scale mines in Saskatchewan. Diamond royalty payments have been estimated based on an assumed diamond royalty structure generally
consistent with terms and royalty payments of diamond royalty regimes already in place in the Northwest Territories and Ontario, Canada. The
Government of Saskatchewan is developing its diamond royalty regime and may issue it for public review later this year but this may occur later
than anticipated. Depending on the details of the Government of Saskatchewan’s diamond royalty structure, it has the potential to affect the
projected economics of the Project. Additionally, both the base case and modified base case cashflows utilize 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.
4
The estimated capital and operating costs (± 25 % 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 modified base case includes a $178M plant
and infrastructure contingency but no mine contingency in consideration of the envisaged mining methodology and identified opportunities for
improvement including potential IPCC operation improvements and reduced overburden stripping costs, and utilizing ore stockpiling to enable
the plant to process at its 14.6 Mpta ore capacity instead of processing 14.2 Mtpa ore as currently proposed. In concept, a plant feed rate of 14.6
Mtpa ore could reduce the operating life of the mine by about 0.3 years, and reduce the total estimated cost of duration-dependent cost
components such General and Administration costs over the operating life of the mine.
5
The results of the PFS presented in this Report are based on developing the Project as a standalone project and does not assess the potential
economic viability of the Orion-South deposit.
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xix
CASH FLOW MODEL
The cash flow model was developed by Shore and reviewed in detail and refined for use in the
PFS by P&E. The discounted cash flow analysis is conventional utilizing annual cash flow
inputs (annual revenues) and annual costs (i.e. operating costs, capital costs, taxes) based on the
mine plan and ore processing schedule and 100 % equity (0 % debt). The annual net cash flows
are discounted back to present value at the date of evaluation (mid-2009) using a range of
discount rates and summed to determine the after-tax NPV of the project.
The cash flow models for the base case and modified base case are summarized in the following
tables.
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xx
Table X.10: Base Case Cash Flow (1 % price escalation and before capital contingency)
Total
Ore Tonnes
Recoverable grade
Total carats recovered
Average carat value
(before escalation)
Value per Ore tonne
(before escalation)
2010
Mt
171
2011
0
2012
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
0
0
7.7
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
7.0
0.09
ct/t
0.118
0.0
0.0
0.0
0.0
0.11
0.11
0.17
0.10
0.13
0.12
0.10
0.14
0.11
0.11
0.13
0.09
Mct
20.10
0.0
0.0
0.0
0.0
0.9
1.6
2.4
1.4
1.8
1.7
1.4
2.0
1.6
1.6
1.9
1.2
0.6
$/ct
$263.88
$
-
$
$254.69
$286.95
$248.08
$258.36
$248.75
$272.72
$341.12
$244.33
$240.02
$277.36
$295.29
-
$
-
$
-
$231.41
$245.84
$/t
$31.04
$
-
$
-
$
-
$
-
$ 25.97
$ 27.59
$ 42.88
$ 29.22
$ 31.87
$ 30.67
$ 24.43
$ 37.99
$ 38.88
$ 26.84
$ 31.46
$ 24.21
$ 27.34
Revenues before escalation
Escalation factor (1 %
compounded per annum)
$M
$ 5,303
$
-
$
-
$
-
$
-
$
$
$
$
$
$
$
$
$
$
$
$
$
Revenues
$M
$ 5,912
$
-
Mining costs
$M
$ 1,038
$
-
Process costs
$M
$
562
$
-
G&A costs
$M
$
282
$
Marketing costs
$M
$
130
Pit dewatering costs
Reclamation costs
Total cash operating
costs before royalties and
taxes
Earnings before taxes,
royalties
and
amortization
$M
$M
$
$
$M
$ 3,799
Amortization
Earnings before taxes
and royalties
Estimated taxes and
royalties to be paid in
period
$M
$ 1,950
$
26
$
18
$
13
$M
$ 1,849
$
(26)
$
(18)
$
(13)
$M
$
Net Income
$M
$ 1,249
$
(26)
$
(18)
$
(13)
$ (1,111)
$ (450)
$
188
$
491
$
276
$
308
$
206
$
174
$
313
$
297
$
177
$
232
$
170
$
37
Plus: Amortization
Minus: Change in working
capital
$M
$ 1,950
$
26
$
18
$
13
$ 1,111
$
$
73
$
6
$
8
$
11
$
16
$
20
$
19
$
17
$
15
$
14
$
12
$
38
$M
$
Minus: Capital expenses
$M
Net Cash Flow
$M
Cum Cashflow
$M
1.010
1.020
$
1.030
1.041
199
1.051
392
1.062
-
$
-
$
-
$
209
$
416
$
-
$
-
$
-
$
79
$
72
$
-
$
-
$
-
$
25
$
47
-
$
-
$
-
$
-
$
13
$
23
$
-
$
-
$
-
$
-
$
5
$
35
65
$
$
-
$
$
-
$
$
-
$
$
-
$
$
3
-
$ 2,113
$
-
$
-
$
-
$
-
$
124
609
1.072
$
415
1.083
453
1.094
653
$
449
$
$
67
$
81
$
$
47
$
47
$
$
23
$
23
$
9
$
14
$
10
$
$
3
-
$
$
3
-
$
$
$
154
$
155
$
262
$
498
495
436
1.105
347
1.116
539
1.127
552
1.138
381
1.149
447
1.161
344
190
1.173
1.184
$
481
$
387
$
608
$
628
$
438
$
519
$
403
$
225
91
$
171
$
98
$
66
$
85
$
81
$
69
$
52
$
27
47
$
47
$
47
$
47
$
47
$
47
$
47
$
47
$
23
23
$
23
$
23
$
23
$
23
$
23
$
23
$
23
$
11
$
11
$
11
$
9
$
13
$
14
$
10
$
11
$
9
$
5
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
0
65
$
164
$
175
$
255
$
179
$
153
$
172
$
163
$
153
$
134
$
132
$
285
$
320
$
226
$
208
$
455
$
456
$
275
$
365
$
269
Cash costs:
599
-
$
$
-
-
$
$
-
-
$
$
$
1,111
-
$
$
$
$ (1,111)
110
$
$
128
$
94
73
$
6
$
8
$
11
$
16
$
20
$
19
$
17
$
15
$
14
$
12
$
38
$ (447)
$
189
$
492
$
277
$
309
$
210
$
188
$
436
$
439
$
260
$
351
$
257
$
55
$
2
533
$
1
$
1
$
1
$
1
$
4
$
14
$
123
$
142
$
83
$
120
$
87
29
$
19
$ (29)
488
$
142
$
5
$
11
$
20
$
21
$
44
$
19
$
15
$
9
$
8
$
12
$
3
$
0
$ (110)
$ (624)
$ (128)
$ (488)
$
(88)
$
255
$
486
$
263
$
298
$
179
$
175
$
317
$
305
$
184
$
234
$
180
$
104
$ (110)
$ (733)
$ (862)
$ (1,350)
$(1,438)
$ (136)
$
42
$
217
$
534
$
839
$ 1,023
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$
$
$
$
85
533
-
-
$ 1,659
$ 1,540
$
$(1,183)
$ (697)
xxi
$ (434)
$ 1,257
$ 1,437
$ 1,540
Table X.11: Modified Base Case Cash Flow (1 % price escalation and $178 M capital contingency)
Total
Ore Tonnes
Recoverable grade
Total carats recovered
Average carat value
(before escalation)
Value per Ore tonne
(before escalation)
2010
Mt
171
2011
0
2012
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
0
0
7.7
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
7.0
0.09
ct/t
0.118
0.0
0.0
0.0
0.0
0.11
0.11
0.17
0.10
0.13
0.12
0.10
0.14
0.11
0.11
0.13
0.09
Mct
20.10
0.0
0.0
0.0
0.0
0.9
1.6
2.4
1.4
1.8
1.7
1.4
2.0
1.6
1.6
1.9
1.2
0.6
$/ct
$263.88
$
-
$
$254.69
$286.95
$248.08
$258.36
$248.75
$272.72
$341.12
$244.33
$240.02
$277.36
$295.29
-
$
-
$
-
$231.41
$245.84
$/t
$31.04
$
-
$
-
$
-
$
-
$ 25.97
$ 27.59
$ 42.88
$ 29.22
$ 31.87
$ 30.67
$ 24.43
$ 37.99
$ 38.88
$ 26.84
$ 31.46
$ 24.21
$ 27.34
Revenues before escalation
Escalation factor (1 %
compounded per annum)
$M
$ 5,303
$
-
$
-
$
-
$
-
$
$
$
$
$
$
$
$
$
$
$
$
$
Revenues
$M
$ 5,912
$
-
Mining costs
$M
$ 1,038
$
-
Process costs
$M
$
562
$
-
G&A costs
$M
$
282
$
Marketing costs
$M
$
130
Pit dewatering costs
Reclamation costs
Total cash operating
costs before royalties and
taxes
Earnings before taxes,
royalties
and
amortization
$M
$M
$
$
$M
$ 3,799
Amortization
Earnings before taxes
and royalties
Estimated taxes and
royalties to be paid in
period
$M
$ 2,129
$
26
$
18
$
13
$M
$ 1,670
$
(26)
$
(18)
$
(13)
$M
$
Net Income
$M
$ 1,142
$
(26)
$
(18)
$
(13)
Plus: Amortization
Minus: Change in working
capital
$M
$ 2,129
$
26
$
18
$
13
$M
$
Minus: Capital expenses
$M
Net Cash Flow
$M
Cum Cashflow
$M
1.010
1.020
$
1.030
1.041
199
1.051
392
1.062
-
$
-
$
-
$
209
$
416
$
-
$
-
$
-
$
79
$
72
$
-
$
-
$
-
$
25
$
47
-
$
-
$
-
$
-
$
13
$
23
$
-
$
-
$
-
$
-
$
5
$
35
65
$
$
-
$
$
-
$
$
-
$
$
-
$
$
3
-
$ 2,113
$
-
$
-
$
-
$
-
$
124
609
1.072
$
415
1.083
453
1.094
653
$
449
$
$
67
$
81
$
$
47
$
47
$
$
23
$
23
$
9
$
14
$
10
$
$
3
-
$
$
3
-
$
$
$
154
$
155
$
262
$
498
495
436
1.105
347
1.116
539
1.127
552
1.138
381
1.149
447
1.161
344
1.173
190
1.184
$
481
$
387
$
608
$
628
$
438
$
519
$
403
$
225
91
$
171
$
98
$
66
$
85
$
81
$
69
$
52
$
27
47
$
47
$
47
$
47
$
47
$
47
$
47
$
47
$
23
23
$
23
$
23
$
23
$
23
$
23
$
23
$
23
$
11
$
11
$
11
$
9
$
13
$
14
$
10
$
11
$
9
$
5
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
0
65
$
164
$
175
$
255
$
179
$
153
$
172
$
163
$
153
$
134
$
132
$
285
$
320
$
226
$
208
$
455
$
456
$
275
$
365
$
269
Cash costs:
528
-
$
$
-
-
$
-
$
-
$
$
$
1,225
-
$
$
$
$ (1,225)
-
123
$
$
134
94
82
$
6
$
8
$
11
$
16
$
20
$
19
$
17
$
15
$
14
$
12
$
38
$ (503)
$
180
$
492
$
277
$
309
$
210
$
188
$
436
$
439
$
260
$
351
$
257
$
55
$
2
$
2
$
2
$
2
$
2
$
4
$
6
$
84
$
124
$
85
$
112
$
86
$
18
$ (504)
$
178
$
491
$
275
$
307
$
206
$
182
$
352
$
315
$
175
$
239
$
171
$
37
$
$
$
82
$
6
$
8
$
11
$
16
$
20
$
19
$
17
$
15
$
14
$
12
$
38
1,225
$
579
$
588
29
$ (29)
163
$
5
$
11
$
20
$
21
$
44
$
19
$
15
$
9
$
8
$
12
$
3
$
0
$ (123)
$ (672)
$ (134)
$ (579)
$ (108)
$
254
$
485
$
263
$
297
$
178
$
183
$
357
$
323
$
182
$
241
$
180
$
104
$ (123)
$ (795)
$ (929)
$ (1,507)
$(1,616)
$(1,361)
$ (138)
$
45
$
402
$
725
$
907
$ 1,148
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$
$
$
$
85
588
$ (1,225)
-
$ 1,838
$ 1,433
$
$ (876)
xxii
$ (613)
$ (316)
$ 1,329
$ 1,433
ECONOMIC CRITERIA AND ASSUMPTIONS
The economic criteria utilized in the cash flow model are summarized below.
Table X.12: Economic Criteria Utilized in the Cash Flow Model
Area
Project start date:
Production parameters:
Revenue:
Criteria
Basis Used In Cash Flow Model
Assumed date of corporate Approval
to proceed with project
Projected start of ore production
No. of operating days per year
Process plant availability
Processing rate
Estimated LOM total processing
plant feed
Diamond recovery
Ore processing rate / plant capacity
Instantaneous process rate
Source of revenue
Weighted average diamond price per
carat
Projected diamond price escalation
March 31, 2010
Cost escalation
Exchange rate
Payable
Marketing costs
Royalties
Operating costs ($/t processed):
Open pit mining
Ore processing
General and Administration
Marketing
Taxes and royalties
Closure cost
Capital costs:
Pre-production capital
Mine EPCM & indirects
Plant EPCM & indirects
Contingency
Sustaining capital
Total
Unit costs of production:
Total
Capital
Operating before tax and royalties
Taxes and royalties
Q2 – 2014
360 days per year
97 %
40,000 tpd ore
170.8 Mt ore at
average 11.7 cpht
100 %
14.2 Mtpa ore / 14.6 Mtpa ore
2,000 tph / 17.5 Mtpa. (1)
Rough diamond sales
$265 (US$225)
1 % price increase per year
commencing in year 2010
0%
US$0.85 = CAD$1.00
100 %
2.2 % of gross revenue
Assumed basis generally consistent
with diamond royalty structures in
the Northwest Territories and
Ontario, Canada
$6.29 / t processed
$3.29 / t processed
$1.65 / t processed
$0.76 / t processed
$3.51 / t processed
$0.38 / t processed
$15.88/ t processed
$7.72 / t processed
$0.25/t processed
$0.76/ t processed
None in base case cash flow.
$0.98 / t processed
$9.71 / t processed
$82.57 per carat
$105.12 per carat
$29.83 per carat
(1) Instantaneous processing rate is 2,000 tonnes per hour for a maximum of 17.5 Mtpa. When the mechanical availability of 83 % for the process
plant is applied, the nameplate capacity becomes 14.6 Mtpa.
The Star Diamond Project encompasses the Star Kimberlite, which straddles a mineral
disposition boundary between ground that is held 100 % by Shore, and ground that is held by the
FALC-JV, between Kensington, a wholly owned subsidiary of Shore (60 %) and Newmont
(40 %). The financial evaluation in the PFS is done on a 100 % basis and does not separate the
cash flows of the joint venture partners.
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The cash flow includes:
•
•
•
$5.2M for the completion of the EIA and preparation of the EIS, permitting, the
preparation of the FS for the Star Diamond Project, and the cost of purchasing a NPI;
working capital based on 25 % of the mining, processing and G&A costs in year 2014;
and
$64.78M for closure costs in year 2026, and annual financial assurance costs.
The cash flow analysis does not include salvage value.
BASIS OF GROSS REVENUE ESTIMATES
Projected annual gross revenues from the sale of rough diamonds are based on the ore release
and processing schedule and a diamond valuation carried out by WWW. The projected annual
gross revenues were converted to Canadian dollars and escalated.
DIAMOND VALUATION
The diamond values used in the present PFS are based on WWW’s March 13, 2008 valuation of
diamonds from the Star Diamond Project which was an update of WWW’s November 5, 2007
valuation using WWW’s March 11, 2008 price book. The prices determined by WWW and used
by P&E for the February, 2009 Mineral Resource Estimate are summarized in the table below.
The WWW valuation noted that the High Price scenario does not represent maximum values,
and that, for modelling purposes, the same average price was applied to all stones of 6 ct or
higher. Due to the conservative nature of the WWW price models, where the upside potential of
the coarse size frequency distribution was not fully reflected, P&E used the WWW High Price
scenario for the reporting of economic resources and to estimate the gross annual revenues
shown in the cash flow.
Table X.13: WWW Modelled Diamond Price by Kimberlite Unit (March 20081 re-pricing)
Kimberlite
Lithology
CPK
PPK
EJF
MJF-LJF
Weighted Average
Model
Price
(US$/ct)
$309
$103
$167
$105
$172
Minimum
Price
(US$/ct)
$247
$88
$138
$75
$141
High Price
(US$/ct)
$420
$126
$216
$152
$225
1
Since the 2008, WWW diamond pricing, reductions in diamond prices and an offsetting increase in US$ strength has yielded a similar CAD$
diamond value per carat for this PFS.
PRICE ESCALATION
The base case and modified base case cash flows utilize a 1 % annual compound diamond price
escalation rate starting in year 2010. Base case pre-tax and after-tax results based 0 %, 1 %, and
2 % pricing escalation are shown in the table which follows for comparison.
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Table X.14: Projected NPV and IRR for 0 %, 1 % and 2 % Price Escalation Rates in Base
Case
Item
Total LOM
gross revenue
Undiscounted
Cumulative
Cash Flow
NPV (4 %)
NPV (5 %)
NPV (6 %)
NPV (7 %)
NPV (8 %)
NPV (9 %)
NPV (10 %)
IRR
Pre-Tax Basis
Escalation Rate (compounded annually)
0%
1%
2%
After-Tax Basis
Escalation Rate (compounded annually)
0%
1%
2%
$5,303M
$ 1,469M
$5,912M
$ 2,003M
$6,591M
$ 2,596M
$5,303M
$ 1,151M
$5,912M
$ 1,540M
$6,591M
$ 1,974M
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 1,332M
$ 1,110M
$
916M
$
747M
$
598M
$
467M
$
353M
14.3 %
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
617M
469M
340M
227M
129M
43M
(31)M
9.6 %
957M
774M
614M
474M
352M
245M
152M
12.0 %
433M
308M
199M
103M
20M
(52)M
(116)M
8.3 %
687M
537M
406M
291M
191M
103M
26M
10.4 %
965M
787M
632M
495M
376M
271M
179M
12.4 %
MARKETING COST
Shore will sell and promote its rough diamonds and provide assurance as to their origin. It is
assumed that Shore will enter into an arrangement with a diamond marketer in Antwerp and that
marketing costs will amount to 2.2 % of gross revenue.
TAXES AND ROYALTIES
The tax flow model takes Federal and Provincial corporate income taxes, the Federal Goods and
Services Tax, Saskatchewan Provincial Sales Tax, and Municipal property and education taxes
and projected royalties into consideration.
There are currently no producing diamond mines in the Province of Saskatchewan, but in
anticipation of the development of a diamond mine the Province is developing its diamond sector
royalty structure. The PFS utilizes an assumed diamond royalty structure that is generally
consistent with those being applied in the Northwest Territories and Ontario. Expectations are
that the diamond royalty structure will be competitive with those in other Canadian jurisdictions
and that Saskatchewan’s diamond sector royalty structure may be available for review later this
year.
Based on currently enacted legislation, the combined federal and provincial income tax rates
applicable at the time of anticipated production will be 27 % of net income. The federal
component will be 15 % of net income while the provincial component will be 12 % of net
income. Net income for tax purposes allows for the deduction of normal operating costs as well
as capital development and previous exploration work.
The cash flow model assumes Canadian exploration expenses (“CEE”) and Canadian
development expenses (“CDE”) tax pools incurred to the end of 2008 by Shore and its
subsidiaries are available as a tax deduction to the project. Other tax pools currently available to
Shore and its subsidiaries, such as non-capital losses, capital cost allowance (“CCA”), and
cumulative eligible capital have been excluded from the cash flow model.
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Goods and services are subject to the Federal goods and services tax (“GST”) at a rate of 5 %.
This tax is refundable to Shore and is therefore not included in the analysis. Certain goods and
services are subject to a Saskatchewan Provincial sales tax (“PST”) at a rate of 5 %. The capital
and operating costs that are estimated to be subject to PST have been included in this model with
an additional 5 % of the estimated costs to account for the PST.
The municipal property tax and education taxes have been included in the general and
administrative expense line of the cash flow analysis and have been estimated based on what
similar scale mining operations in the Province of Saskatchewan pay for such taxes.
CONTINGENCY
The plant and infrastructure cost contingency amounts to $178M. No cost contingency is
included in the mine costs in consideration of the mining approach and cost basis and stated
opportunities for improvement.
SENSITIVITY ANALYSIS
Economic risks were assessed using base case cash flow sensitivities to recovered grade,
diamond prices, $CAD/$US exchange rate, capital costs (“CAPEX”), and operating costs
(“OPEX”). Each of the sensitivity items were independently adjusted up and down by 10 %,
20 % and 25 % to project the impact it would have on the NPV at a 7 % discount rate. The
results are presented in the table below.
Table X.15: Sensitivity Analysis Results (After-Tax Basis, NPV (7 %))
75 %
Recovered Grade
(cpht)
Diamond Price
$CAD/$US
Exchange rate
CAPEX
OPEX
80 %
90 %
100 %
110 %
120 %
125 %
$(187)M
$(85)M
$107M
$291M
$471M
$649M
$737M
$(187)M
$849M
$(85)M
$711M
$107M
$479M
$291M
$291M
$471M
$134M
$649M
$(2)M
$737M
$(60)M
$545M
$495M
$393M
$291M
$187M
$82M
$30M
$468M
$433M
$363M
$291M
$219M
$146M
$110M
As depicted in the figure below, the Star Diamond Project is most sensitive to $CAD/$US
exchange rate fluctuations, followed by the price of diamonds or recovered grade, capital costs
and operating costs, respectively.
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Figure X-1: Sensitivity Analysis (After Tax Basis, NPV (7 %))
Sensitivity Graph at 7 % NPV
NPV @ 7% After Tax ($M CAD)
$1,000.00
$800.00
$600.00
Recovered Grade (cpht)
$400.00
Diamond Price
$200.00
CAD/US$ exchange rate
$0.00
Capital Expenses
‐$200.00
Operating Expenses
‐$400.00
70%
80%
90%
100%
110%
120%
Percent of Value
P & E Mining Consultants Inc
Star Diamond Project - Report No 169
xxvii
130%
1.0
INTRODUCTION
1.1
TERMS OF REFERENCE
The following report (the ‘Report’) presents the Mineral Reserve Estimate as of July 31, 2009
along with the results of a preliminary feasibility study (“PFS”) both prepared by P&E Mining
Consultants Inc (“P&E”) regarding the Star Diamond Project located approximately 60 km east
of Prince Albert, Saskatchewan (the ‘Project’). Both the Mineral Reserve Estimate and the PFS
outlined in this report have been prepared in compliance with the requirements of Canadian
National Instrument (“NI”) 43-101 and in accordance with guidelines of the Canadian Institute
of Mining, Metallurgy and Petroleum (“CIM”) Standards on Mineral Resources and Reserves,
Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions
and adopted by CIM Council December 11, 2005.
This report was prepared at the request of Mr. Pieter Du Plessis, Vice President Exploration of
Shore Gold Inc. (“Shore”). Shore is a Saskatoon based company trading on the TSX exchange
under the symbol “SGF” with its corporate office at:
300-224 4th Avenue South
Saskatoon, Saskatchewan S7K 5M5
Telephone: (306) 664-2202
Fax: (306) 664-7181
This report is considered current as of August 17, 2009.
The Star Diamond Project encompasses the Star Kimberlite deposit, which straddles a mineral
disposition boundary between ground that is held 100 % by Shore, and ground that is held by the
Fort à la Corne Joint Venture (“FALC-JV”) between Kensington Resource Ltd. (“Kensington”),
a wholly owned subsidiary of Shore (60 %) and Newmont Mining Corporation of Canada
Limited (“Newmont”) (40 %). The Star Diamond Project is operated by Shore and is being
explored and developed as a single entity. The financial evaluation in the PFS is done on a
100 % basis and does not separate the cash flows of the joint venture partners.
The PFS for the Star Diamond Project has been prepared by P&E. Shore retained P&E to
prepare the PFS in order to advance the development of the deposit towards an open pit
production scenario. P&E’s terms of reference focussed on the mining engineering aspects of the
Project and encompassed the following:
•
•
•
•
The independent development of the Mineral Resource Estimate for the Star Diamond
Project based on the geological block model and data provided by Shore.
The development of a preliminary open pit mining schedule for the phased development
and exploitation of the Star Kimberlite deposit based on a mine production rate of
14.2 Mtpa ore.
The development of preliminary estimates of the open pit operating costs, and mine
capital and sustaining capital costs. Cost accuracy to be ± 25 %.
P&E: Mineral Reserve Estimate, block model, preliminary pit design, mine development
and ore release schedule, mining capital and operating costs, financial evaluation.
Shore also retained and worked with other consulting firms which then provided their study
results to Shore which in turn provided that information to P&E for use in developing the PFS.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 1 of 169
The general areas in which the consulting firms worked are as follows:
•
•
•
•
•
AMEC Americas Limited (“AMEC”): Metallurgical flow sheet and process equipment
sizing (with report from Metso Minerals Canada Inc. (“Metso”)), preliminary plant and
infrastructure design, plant and infrastructure capital costs, plant operating costs.
AMEC: Geotechnical and environmental consulting in regard to mine waste (processed
kimberlite) management and disposal, groundwater and surface water management, water
balance calculations.
Clifton Associates Ltd (“Clifton”): Geotechnical consulting in regard to pit slope stability
and trafficability in overburden horizons.
Hydrologic Consultants Inc. (“HCI”): Hydrogeological consulting in regard to pit
dewatering.
SRK Consulting (“SRK”): Geotechnical consulting in regard to pit slope stability below
overburden: kimberlite contact.
Shore provided overall management and coordination of the PFS including liaison with its
mining, metallurgical, geotechnical, hydrogeological and environmental consultants. Shore
received and reviewed study results received from consultants and provided the relevant
information to P&E for its use in preparing the PFS. Shore also provided P&E with additional
information as and when requested by P&E.
P&E has prepared several sections of the PFS including, but not limited to, the Mineral Resource
Estimate, Mineral Reserve Estimate, open pit design and production schedule, the mine capital
and operating cost estimates, and the cash flow based financial evaluation. A.C.A. Howe
International Ltd. (“Howe”) was subcontracted by P&E to undertake the QAQC aspects of the
sample data used to derive the resource estimate. P&E’s prime assignment in generating the PFS
has been to assess the economic viability of the Star Kimberlite deposit. Shore also worked with
its other consultants, as referenced above, and provided the results of their work to P&E. Key
members of Shore’s consultant team met and reviewed a range of Project aspects in Shore’s
Saskatoon office in April 2009. Shore organized consultant site visits utilized to assess site
selection aspects and garner information on infrastructure and site development requirements.
Shore provided a range of information and guidance on specific aspects of the Project to P&E.
P&E assessed the information and guidance provided to it by reviewing and clarifying
information in consultation with Shore, comparing information to the source reports provided to
Shore, reviewing information in comparison to that from other relevant operations, obtaining
input from Shore’s other consultants, reviewing publicly available information on the status of
the Environmental Impact Assessment (“EIA”) process and on the development of the diamond
royalty structure for the Province of Saskatchewan, requests for additional information including
business sensitive information incorporated into the cash flow based financial evaluation,
parallel checks, the sensitivity analysis of an input parameter, and experience and judgement.
Shore responded positively when P&E requested information, clarification or supplementary
information. Shore provided P&E with information and / or guidance on the following:
•
•
•
The processing plant throughput capacity (14.6 Mtpa design capacity).
The waste management area and plant site and infrastructure locations.
Target dates for the commissioning of the electrical transmission line and substations;
EIA acceptance and construction permit issuance; processing plant start-up. The target
dates were incorporated into P&E’s project development and operating schedule.
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•
•
•
•
•
•
•
•
•
•
Annual labour costs including payroll burdens for mine operations personnel and staff
based on a comprehensive labour survey completed by Shore.
The unit costs of diesel fuel ($l/L) and electricity ($0.0575/kWh). Shore had obtained an
estimate of the cost of electricity from utility SaskPower.
General guidance in regard to drilling and lightly blasting 40 % of the kimberlite and
waste rock excavated in the pit limits. Shore also provided P&E with explosives, blasting
agents and blasting accessories cost quotes. P&E independently developed the drilling
and blasting parameters and associated drilling and blasting capital and operating cost
estimates.
Obtaining budget quotes for mobile pit equipment and ancillary mobile equipment from
suppliers and provided the information to P&E. P&E led discussions with in-pit crush
and convey (“IPCC”) system supplier P&H Mining Equipment Inc. (“P&H”) and
Continental Conveyor and received the quote for the IPCC waste stripping and stacking
system. P&E selected the pit mobile and ancillary equipment and developed the mine
operating cost estimates.
Obtaining a waste stripping quote from a Saskatchewan-based earthmoving contractor.
P&E obtained additional quotes from earthmoving contractors in Alberta.
Gross revenue estimation, including: rough diamond valuations, recovery, pricing,
currency exchange rate, price escalation, and marketing costs; available tax pools;
Shore’s costs such as the surface lease costs, project-specific insurance, legal costs
included in mine-related engineering, procurement and construction management
(“EPCM”) costs and mine pre-production indirect costs; the projected costs of
completing the environmental assessment, preparing the environmental impact statement,
permitting, a feasibility study (“FS”) and a net profit interest (“NPI”) buy-out; property
taxes, reclamation credit facility allowance, surface lease and insurance costs included in
the General and Administration (“G&A”) costs.
The assumed diamond royalty structure utilized in the cash flow financial analysis. P&E
also reviewed the general structure of the diamond royalty regimes applied in the
Northwest Territories and Ontario.
Federal and Provincial taxation rates. P&E reviewed tax rate projections (KPMG 2009),
and consulted externally.
Providing P&E with its cash flow model. P&E reviewed and refined the cash flow model
in consultation with Shore. P&E and Shore then independently applied the cash flow
model with parallel checks on selected aspects by P&E to assess the economic viability
of the deposit under base case and modified base case conditions; assess the effects of
0 %, 1 % and 2 % diamond price escalation rates on the project net present value
(“NPV”) and internal rate of return (“IRR”), and conduct the sensitivity analysis.
Mine dewatering costs which were based on the costs developed in a preliminary study
completed by HCI for Shore.
Shore had liaised with senior representatives of SaskPower in regard to power transmission line
cost and timing and electrical power cost; Ministry of Environment (“MOE”) (Saskatchewan) in
regard to EIA completion and EIS preparation; and other government ministries in regard to
taxation and the development of a diamond royalty structure for Saskatchewan. Shore retained
WWW International Diamond Consultants Ltd. (“WWW”) to price diamonds from the Star
Diamond Project. WWW’s March 2008 rough diamond pricing was utilized in projecting annual
gross revenues from rough diamond sales.
The Star Kimberlite deposit had been exploration-drilled with advanced exploration underground
workings including a shaft, exploration level development and underground sampling. In
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developing the Mineral Reserve Estimate for the Star Kimberlite deposit, P&E assessed the
possible influence of these underground workings on the Mineral Reserve Estimate and
determined that it does not impact the Mineral Reserve Estimate and is well within the level of
resolution for the PFS. It is projected that these historical and small heading underground
workings will collapse or can be backfilled as encountered and will have no significant effect on
the envisaged open pit mining operation and mine operating costs.
Shore managed the collection of the PFS sections from its above referenced consultants and
provided this information to P&E which in turn reviewed the information and prepared the PFS
report. All sections have been reviewed and approved for inclusion in the PFS report by the
Qualified Persons (“QP”) responsible for them.
1.2
SITE VISITS
During the course of the Mineral Resource / Mineral Reserve Estimation and PFS process for the
Star Diamond Project, the following QPs visited the site to review the status of the Project,
conduct audits, and discuss future plans with Shore staff.
Site visits by the QPs for the report were as follows:
Name
Company
Mr. Jaroslav Jakubec
SRK
Mr. Wayne Clifton
Mr. Daniel C. Leroux
Clifton
Howe
Mr. Ian Judd-Henrey
Dr. Caius Priscu
Mr. Gary Taylor
AMEC
AMEC
AMEC
Mr. Fred Brown
Dr. Wayne Ewert
Mr. Eugene Puritch
P&E
P&E
P&E
Site Visit Dates
May 11-13, 2005
October 16-21, 2005
September 5-11, 2006
September 18, 2008
July 14-16, 2008
December 14-15, 2007
February 9-10, 2007
August 15-17, 2007
November 7, 2007
April 13-15, 2005
September 27-28, 2005
June 2, 2006
October 3-6, 2007
November 27-30, 2007
May 4-7, 2008
October 27-28, 2008
October 27-28, 2008
Shore has accepted that the qualifications, expertise, experience, competence and professional
reputation of all of the QPs who have contributed to this technical report are appropriate and
relevant for the preparation of this technical report and the QPs are members of professional
bodies that are appropriate and relevant for the preparation of this technical report.
The purpose of the current report is to provide an independent, NI 43-101 compliant, Technical
Report and Mineral Reserve Estimate on the Star Diamond Project. P&E understands that this
Report will be used for internal decision making purposes and may be used to support a FS on
the Star Diamond Project. This Report will be filed as required under TSX regulations.
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1.3
UNITS AND CURRENCY
All units of measurement used in this Report are metric unless otherwise stated. Historical grade
and tonnage figures are reported as originally published. Dry tonnages processed through
Shore’s process plant during Phase 1 and 2 underground bulk sampling program were measured
in dry Imperial short tons and have been converted to dry metric tonnes by a factor of
0.9071847. Dry tonnages for the Phase 3 underground bulk sampling program and large
diameter drilling (“LDD”) mini-bulk sampling program were measured in dry metric tonnes.
Diamond grade values are reported in carats per metric tonne (“cpt”) or carats per hundred (100)
metric tonne (“cpht”). Diamond weights are reported in carats (“ct”). The Canadian dollar
(“CAD”) is used in this Report unless otherwise stated. Diamond valuations are quoted in United
States Dollar (“US$” or “USD”). The Canadian dollar exchange rate to US$ equivalent at the
time of the diamond valuations (based on the press release dates) are as follows:
Diamond Valuation #1
Diamond Valuation #2
Diamond Valuation #3
Diamond Re-valuation
February 23, 2005
March 20, 2006
November 5, 2007
March 25, 2008
US$1.00 = CAD$1.24
US$1.00 = CAD$1.16
US$1.00 = CAD$0.98
US$1.00 = CAD$1.02
Costs are reported in Q1 2009 Canadian dollars. US dollars are converted to Canadian dollars at
US$0.85 = CAD$1.00.
1.4
SOURCES OF INFORMATION
This Report is based, in part, on internal company technical reports, and maps, published
government reports, company letters and memoranda, and public information as listed in the
‘References’ Section 20.0 at the conclusion of this Report. Several sections from reports
authored by other consultants have been directly quoted or summarized in this Report, and are so
indicated where appropriate.
It should be noted that the authors have relied heavily upon selected portions or excerpts from
material contained in the following NI 43-101 compliant technical reports. All of these reports
are publicly available on SEDAR (www.sedar.com):
Ewert, W.D., Brown, F.H., Puritch, E.J. and Leroux, D.C. (2009) Technical Report and Resource
Estimate Update on the Star Diamond Project, Fort à la Corne area, Saskatchewan, Canada. NI
43-101 report prepared by P&E Mining Consultants Inc. for Shore Gold Inc., March 26, 2009.
Harvey, S. (2009) Technical Report on the Fort à la Corne Joint Venture Diamond Exploration
Project, Fort à la Corne Area, Saskatchewan, Canada. NI 43-101 report prepared by Shore Gold
Inc. for Kensington Resources Ltd., March 19, 2009.
Eggleston, T., Parker, H., Brisebois, K., Kozak, A., and Taylor, G. (2008) Shore Gold Inc., Star
Diamond Project, Fort à la Corne, Saskatchewan, Canada, NI 43-101 Technical Report. NI 43101 report prepared by AMEC Americas Limited for Shore Gold Inc., June 9, 2008.
Leroux, D. (2008a) Technical Report on the Star Diamond Project, Fort à la Corne Area,
Saskatchewan, Canada. NI 43-101 report prepared by A.C.A. Howe International Ltd. for Shore
Gold Inc., March 20, 2008.
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Star Diamond Project - Report No 169
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Leroux, D. (2008b) Technical Report on the Fort à la Corne Joint Venture, Diamond Exploration
Project, Fort à la Corne area, Saskatchewan, Canada. NI 43-101 report prepared by A.C.A.
Howe International Ltd. for Kensington Resources Ltd., March 20, 2008.
Leroux, D. (2007) Technical Report on the Star Diamond Project, Fort à la Corne area,
Saskatchewan, Canada. NI 43-101 report prepared by A.C.A Howe International Ltd. for Shore
Gold Inc., March 15, 2007.
1.5
GLOSSARY OF TERMS
Abbreviation
%
~
<
>
º
µ
µg
µm
ABA
AG Milling
AMEC
ANFO
asl
Bateman
bcm
bgl
BSP
C&P
CAD$
CanNorth
CAPEX
CCA
CCTV
CDE
CEE
CIM
Clifton
cm
cpht
CPK
CPP
cpt
CSA
ct
ct/t
d
d/wk
DC
Description
Percent
Approximately
Less than
Greater than
Degree
Micron
Microgram
Micrometre
Acid base accounting
Autogenous milling
AMEC Americas Limited
Ammonium nitrate and fuel oil
Above sea level
Bateman Engineering PTY Limited
Bank cubic metre
Below ground level
Bulk sample plant
Cutting and polishing
Canadian dollar
Canada North Environmental Services
Capital expenditure
Capital cost allowance
Closed circuit television
Canadian development expenses
Canadian exploration expenses
Canadian Institute of Mining, Metallurgy and Petroleum
Clifton Associates Ltd
Centimetre
Carats per hundred tonnes
Cantuar Kimberlite
Canadian Pension Plan
Carats per tonne
Canadian Securities Administrators
Carat
Carats per tonne
Day
Days per week
Direct current
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Abbreviation
DDAC
De Beers
DMS
E
EI
EIA
EIS
EJF
el
EPCM
FALC
FALC-JV
FCDC
FeSi
ft
FS
g
g/t
G&A
GC
GST
h
H
h/d
h/wk
h/y
ha
HCI
Howe
HPRC
HSWDG
IPCC
IRR
IT
J
k
K
Kensington
kg
kg/h
kg/m3
kg/t
km
kPa
kV
kW
kWe
kWh
Description
Diamond development advisory committee
De Beers Canada Inc.
Dense Media Separation
East
Employment insurance
Environmental Impact Assessment
Environmental Impact Statement
Early Joli Fou Kimberlite
Elevation level
Engineering, procurement, construction management
Fort à la Corne
Fort à la Corne Joint Venture
Fort à la Corne Development Corporation
Ferrosilicon powder
Foot/feet
Feasibility Study
Gram
Gram per tonne
General and administration
Group Claim
Goods and services tax
Hour
Horizontal
Hours per day
Hours per week
Hours per year
Hectare
Hydrologic Consultants Incorporated
A.C.A. Howe International Limited
High pressure rolls crusher
Hazardous substances and waste dangerous goods
In-pit crush and convey
Internal rate of return
Information technology
Joule
Kilo (thousand)
Hydraulic conductivity
Kensington Resources Ltd.
Kilogram
Kilograms per hour
Kilograms per cubic metre
Kilograms per tonne
Kilometre
Kilopascal
Kilovolt
Kilowatt
Kilowatts adjusted for motor efficiency
Kilowatt hour
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Abbreviation
kWh/t
kWh/y
L
LDD
LIMS
LJF
LOM
M
m
m2
m3
m3/d
m3/h
m3/s
m asl
Mb
Mbcm
m/d
Metso
mg/L
MJF
ML/ARD
mm
Mm3
MOE
MPa
MSC
Mt
Mtpa
MVA
MW
NE
Newmont
NI
NPI
NPV
NW
OPEX
P&E
P&H
PDCE
PDP
PFS
PK
PKCF
PMF
PPK
PSG
Description
Kilowatt hours per tonne
Kilowatt hours per year
Litre
Large diameter drilling
Laboratory information management systems
Late Joli Fou Kimberlite
Life of mine
Mega or Million
Metre
Square metre
Cubic metre
Cubic metres per day
Cubic metres per hour
Cubic metres per second
Metres above sea level
Megabyte
Million banked cubic metres
Metres per day
Metso Minerals Canada Inc.
Milligrams per litre
Mid Joli Fou Kimberlite
Metal leaching/acid rock drainage
Millimetre
Million cubic metres
Ministry of Environment
Megapascal
Mineral Services Canada Inc.
Million tonnes
Million tonnes per annum
Megavolt-ampere
Megawatt
Northeast
Newmont Mining Corporation of Canada Limited
National Instrument
Net profit interest
Net present value
Northwest
Operating expenditures
P&E Mining Consultants Inc.
P&H Mining Equipment Inc.
Preliminary decommissioning cost estimate
Preliminary decommissioning plan
Preliminary feasibility study
Processed kimberlite
Processed kimberlite containment facility
Probable maximum flood
Pense Kimberlite
Project specific guidelines
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Abbreviation
PST
Q
QA/QC
QP
RC
ROM
RPI
RQD
s
SEDAR
SG
SGS Lakefield
SGS Saskatoon
Shore
Sortex
Spectrum
SRK
SW
SWEP
t
t/d
t/h
T10
Ta
TDS
TGI
tpa
tpd
tph
TSX
UCS
UG
US$
USD
UTM
V
V
VEC
W
W
WCB
WWW
y
Description
Provincial sales tax
Quarter
Quality assurance and quality control
Qualified Person
reverse circulation (drilling)
Run-of-mine
Residual passive inflow
Rock quality designation
Second
System for Electronic Document Analysis and Retrieval
Specific Gravity
SGS Lakefield Research Limited
SGS Canada Inc. (Saskatoon)
Shore Gold Inc.
Flow-Sort® X-ray diamond sorting machine
Spectrum Mapping Corporation
SRK Consulting
Southwest
Standard waste extraction procedure
Tonne (metric, 1,000 kg)
Tonnes per day
Tonnes per hour
Drop test samples
Scrubbability
Total dissolved solids
Targeted geosciences initiative
Tonnes per annum (year)
Tonnes per day
Tonnes per hour
Toronto Stock Exchange
Unconfined compressive strength
Underground drift bulk samples
US dollar
US dollar
Universal Transverse Mercator
Vertical
Volt
Valued ecosystem components
Watt
West
Workers Compensation Board
WWW International Diamond Consultants Ltd
Year
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2.0
RELIANCE ON OTHER EXPERTS
P&E has assumed, and relied on the fact, that all the information and existing technical
documents listed in the References section of this Report are accurate and complete in all
material aspects. While we carefully reviewed all the available information presented to us, we
cannot guarantee its accuracy and completeness. We reserve the right, but will not be obligated
to revise our Report and conclusions if additional information becomes known to us subsequent
to the date of this Report.
Information on tenure and permits was obtained from Shore. Although copies of the tenure
documents, operating licenses, permits, and work contracts were reviewed, an independent
verification of land title and tenure was not performed. P&E has not verified the legality of any
underlying agreement(s) that may exist concerning the licenses or other agreement(s) between
third parties but has relied on the clients’ solicitors to have conducted the proper legal due
diligence.
A draft copy of this Report has been reviewed for factual errors by Shore and P&E has relied on
Shore’s historical and current knowledge of the property in this regard. Any statements and
opinions expressed in this document are given in good faith and in the belief that such statements
and opinions are not false and misleading at the date of this Report.
P&H and Continental Conveyor provided P&E with budget pricing for the P&H4100 shovels,
waste sizers, ore sizer, ore and waste conveyors and waste stacker as well as projected
throughput, power consumption, number of operators required, and hourly maintenance costs.
Shore provided cost information / criteria to P&E including: tabulated projected annual labour
cost including payroll burdens on a per person basis for staff, mine and plant operations and
maintenance job classifications; unit costs for new pit mobile and ancillary equipment based on
budget quotes received from suppliers during the preparation of the PFS; the projected drilling
and blasting of 40 % of the ore and waste rock; and the projected electrical power cost
($0.0575/kWh) and diesel fuel price ($1/L).
Shore provided its cash flow model to P&E and provided guidance to P&E in regard to
applicable corporate and sales taxes, royalties, price escalation, diamond marketing cost,
available tax pool, mineral lease costs and other interests applicable to the project revenue or
income. During P&E’s detailed review of the cash flow model and the inputs to the model,
Shore also provided P&E with supporting information in regard to the reported WWW March
2008 diamond parcel re-pricing numbers; tax pool; and the corporate tax rates as reported in
tabulated substantively enacted income tax rates for general corporations (KPMG, 2009) in
which in year 2012 and beyond the gross federal rate is projected to reduce to 15.00 % and the
Provincial (Saskatchewan) rate is projected to be 12.00 %. The capital and operating costs and
contingency utilized in the cash flow model, including the capital and operating cost estimates
developed by P&E, are reported in the relevant sections of the PFS report. P&E has also relied
on publicly available information in regard to the issuance of draft guidelines for the preparation
of the environmental impact statement for the Star pit and a possible Orion-South pit; trailing
average US:CAD exchange data obtained from the Bank of Canada; and diamond royalty
structures being applied in the Northwest Territories and Ontario.
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3.0
PROPERTY DESCRIPTION AND LOCATION
3.1
LOCATION
The Star Diamond Project is located in the Fort à la Corne (“FALC”) Provincial Forest situated
some 60 km east of Prince Albert, Saskatchewan (Figure 3-1). Good access is provided by paved
highways, a grid gravel road system and an extensive network of forestry roads, passable by
four-wheel drive and high-clearance two-wheel drive vehicles all year round. Provincial
Highway 55 located to the north of the Project area connects Prince Albert with several towns
located directly north of FALC to the town of Nipawin. Highway 6 runs north - south and is
located to the east of FALC.
Figure 3-1: Location Map of the Star Diamond Project
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3.2
PROPERTY DESCRIPTION AND TENURE
The Star Kimberlite deposit comprises Shore’s Star Diamond Project and straddles a mineral
disposition boundary between ground that is held 100 % by Shore, and ground that is held by the
FALC-JV, between Kensington (a wholly-owned subsidiary of Shore; 60 %) and Newmont
(40 %). The Star Diamond Project is operated by Shore, and is being explored and developed as
a single entity. For convenience, that portion of the Star Kimberlite deposit which falls on the
FALC-JV mineral dispositions is referred to as the Star West area, and, unless otherwise
specified, the Star Kimberlite deposit refers to kimberlite on both the Star and FALC-JV Star
West properties.
The Star Kimberlite deposit is one of the largest diamond bearing kimberlites in the world, with
a surface area totalling some 352 ha.
3.2.1
EXPLORATION LICENSES
The Star Kimberlite deposit and associated infrastructure are located within mineral disposition
S-132039 in Section 18 of Township 49, Range 19, west of the 2nd Meridian. Township 49 is
located within the Rural Municipality of Torch River. This mineral disposition is, in turn, located
within claim block GC#45826, which comprises 23 contiguous mineral dispositions totalling
9,280 ha. Shore owns a 100 % working interest in these claims subject to a NPI on 4 of the
original claims. Shore owns a 100 % interest in the additional remaining 19 claims in
GC#45826.
Shore holds a 100 % interest in an additional 116 claims in the immediate area, for a total of 139
claims covering 49,345 ha as of June 15, 2009 (Figure 3-2).
Shore also holds an interest in the FALC-JV, which is partially contiguous with the Star
Diamond Project. The FALC-JV holds 121 claims, totalling 22,544 ha as of June 15, 2009. Two
of the mineral dispositions within the FALC-JV are considered to be part of the Star Diamond
Project, namely S-127109 and S-127186.
As shown in Tables 3.1 and 3.2, all claims covering the Star Kimberlite deposit are in good
standing as of June 15, 2009.
Shore’s claim block GC#45826 has been legally surveyed in accordance with the Saskatchewan
Mineral Disposition Regulations of 1986, Part IV, Article 30(1)(d), and the boundaries coincide
with the boundaries of the land survey system pursuant to the Saskatchewan Land Surveys Act
and / or with the boundaries of existing surveyed land parcels.
In accordance with Saskatchewan Mineral Disposition Regulations, 1986, Sask. Reg. 30/86
(under the Crown Minerals Act, S.S. 1984-85-86, c-50.2), each claim may be held for two years
and, thereafter, from year to year subject to the holder expending the required amounts in
exploration operations on the claim lands. There are no charges for the first year of the claim;
there is a $12/ha fee for the second to tenth year and a $25/ha fee for every year thereafter. As
Saskatchewan Ministry of Energy and Resources accepts assessment work as credit instead of
paying the yearly fees, most of the claims have enough assessment credits to keep them in good
standing for several years.
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From financial data supplied by Shore, it appears that sufficient exploration expenditures have
been made and assessment credits earned such that Shore has assessment credits sufficient to
maintain the main claim block, GC#45826, for a period of at least seventeen years.
Figure 3-2: Claim Disposition Map for the Star Diamond Project
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Table 3.1: Tenure Summary of Shore 100 % Held Property, Effective June 15, 2009
Disposition
(Claim)
Number
S-124672
S-124674
S-127155
S-127156
S-127157
S-127158
S-127283
S-127284
S-132025
S-132026
S-132027
S-132028
S-132029
S-132030
S-132031
S-132032
S-132033
S-132034
S-132035
S-132036
S-132037
S-132038
S-132039
S-132079
S-132080
S-132081
S-132082
S-133444
S-133445
S-133446
S-133447
S-133452
S-133453
S-133454
S-133455
S-133456
S-133457
S-133458
S-133459
S-133460
Area
(Ha)
256
256
96
48
16
32
256
256
256
128
128
128
128
256
128
128
512
512
512
512
512
512
256
512
256
512
256
64
128
128
128
128
128
192
256
96
128
128
32
256
Grouping
Certificate
GC #45825
GC #45825
GC #45819
GC #45819
GC #45819
GC #45819
GC #45825
GC #45825
GC #45826
GC #45826
GC #45826
GC #45826
GC #45826
GC #45826
GC #45826
GC #45826
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Effective Date
16-Aug-88
16-Aug-88
5-Dec-88
5-Dec-88
6-Sep-89
6-Sep-89
1-Jun-92
1-Jun-92
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
1-Dec-95
19-Jan-96
19-Jan-96
19-Jan-96
19-Jan-96
2-Feb-98
2-Feb-98
2-Feb-98
2-Feb-98
2-Feb-98
2-Feb-98
2-Feb-98
2-Feb-98
2-Feb-98
2-Feb-98
2-Feb-98
2-Feb-98
2-Feb-98
In Good
Standing to
15-Aug-09
15-Aug-09
4-Dec-09
4-Dec-09
5-Sep-09
5-Sep-09
31-May-09
31-May-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
30-Nov-09
18-Jan-10
18-Jan-10
18-Jan-10
18-Jan-10
1-Feb-10
1-Feb-10
1-Feb-10
1-Feb-10
1-Feb-10
1-Feb-10
1-Feb-10
1-Feb-10
1-Feb-10
1-Feb-10
1-Feb-10
1-Feb-10
1-Feb-10
Current Status
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
RENEWAL PENDING
RENEWAL PENDING
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
Page 14 of 169
Disposition
(Claim)
Number
S-133461
S-133714
S-133715
S-133716
S-133717
S-133722
S-133723
S-133726
S-133733
S-134407
S-135759
S-135760
S-135761
S-135762
S-135763
S-135764
S-135765
S-135766
S-135767
S-135771
S-135772
S-135773
S-135818
S-135819
S-135820
S-135841
S-136686
S-137280
S-137321
S-137322
S-137323
S-137324
S-137327
S-137328
S-137332
S-137333
S-137921
S-137924
S-137925
S-137926
S-138346
S-138873
Area
(Ha)
192
128
128
128
256
256
256
256
128
64
384
256
256
256
256
256
256
256
256
256
256
256
32
32
16
192
128
24
512
512
512
512
512
512
128
512
256
192
256
256
128
64
Grouping
Certificate
GC #45826
GC #45826
GC #45826
GC #45826
GC #45650
GC #45650
GC #45650
GC #45650
GC #45650
GC #45650
GC #45650
GC #45650
GC #45650
GC #45822
GC #45822
GC #45822
GC #45650
GC #45826
GC #45822
GC #45822
GC #45825
GC #45825
GC #45825
GC #45822
GC #45825
GC #45822
GC #45825
GC #45822
GC #45825
GC #45825
GC #45822
GC #45822
GC #45826
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Effective Date
2-Feb-98
1-Jun-98
1-Jun-98
1-Jun-98
1-Jun-98
1-Jun-98
1-Jun-98
1-Jun-98
5-Aug-98
20-Sep-00
2-Jul-02
2-Jul-02
2-Jul-02
2-Jul-02
2-Jul-02
2-Jul-02
2-Jul-02
2-Jul-02
2-Jul-02
2-Jul-02
2-Jul-02
2-Jul-02
3-Sep-02
3-Sep-02
3-Sep-02
3-Feb-03
3-Nov-03
1-Apr-04
1-Apr-04
1-Apr-04
1-Apr-04
1-Apr-04
1-Apr-04
1-Apr-04
1-Apr-04
1-Apr-04
3-Jan-05
3-Jan-05
3-Jan-05
3-Jan-05
1-May-05
1-Dec-05
In Good
Standing to
1-Feb-10
31-May-09
31-May-09
31-May-09
31-May-09
31-May-09
31-May-09
31-May-09
4-Aug-09
19-Sep-09
1-Jul-09
1-Jul-09
1-Jul-09
1-Jul-09
1-Jul-09
1-Jul-09
1-Jul-09
1-Jul-09
1-Jul-09
1-Jul-09
1-Jul-09
1-Jul-09
2-Sep-09
2-Sep-09
2-Sep-09
2-Feb-10
2-Nov-09
31-Mar-10
31-Mar-10
31-Mar-10
31-Mar-10
31-Mar-10
31-Mar-10
31-Mar-10
31-Mar-10
31-Mar-10
2-Jan-10
2-Jan-10
2-Jan-10
2-Jan-10
30-Apr-09
30-Nov-09
Current Status
ACTIVE
RENEWAL PENDING
RENEWAL PENDING
RENEWAL PENDING
RENEWAL PENDING
RENEWAL PENDING
RENEWAL PENDING
RENEWAL PENDING
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
RENEWAL PENDING
ACTIVE
Page 15 of 169
Disposition
(Claim)
Number
S-139000
S-139006
S-139010
S-140248
S-140253
S-140256
S-140257
S-140259
S-140263
S-140264
S-140265
S-140268
S-140269
S-140271
S-140272
S-140273
S-140274
S-140275
S-140276
S-140277
S-140278
S-140279
S-140466
S-140467
S-140471
S-140472
S-140473
S-140474
S-140475
S-140476
S-140477
S-140529
S-140530
S-141420
S-141426
S-141427
S-141428
S-141870
S-141871
S-141872
S-141873
S-141874
Area
(Ha)
512
256
128
1,024
1,024
512
1,024
768
1,024
256
512
768
1,024
512
1,024
1,280
1,013
1,024
224
256
256
256
256
128
64
64
640
256
64
768
768
384
72
512
128
64
256
144
1,024
1,024
512
1,536
Grouping
Certificate
GC #45826
GC #45819
GC #45819
GC #45826
GC #45826
GC #45826
GC #45826
GC #45826
GC #45826
GC #45826
GC #45822
GC #45822
GC #45825
GC #45822
GC #45825
GC #45822
GC #45822
GC #45822
GC #45822
GC #45822
GC #45819
GC #45819
GC #45819
GC #45819
GC #45825
GC #45825
GC #45825
GC #45825
GC #45825
GC #45825
GC #45825
GC #45822
GC #45822
GC #45826
GC #45822
GC #45822
GC #45822
GC #45819
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Effective Date
3-Jan-06
3-Jan-06
3-Jan-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
19-Jun-06
1-Sep-06
1-Sep-06
19-Sep-06
19-Sep-06
19-Sep-06
19-Sep-06
19-Sep-06
19-Sep-06
19-Sep-06
16-Nov-06
16-Nov-06
20-Dec-06
20-Dec-06
20-Dec-06
20-Dec-06
19-Jul-07
19-Jul-07
19-Jul-07
19-Jul-07
19-Jul-07
In Good
Standing to
2-Jan-10
2-Jan-10
2-Jan-10
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
18-Jun-09
31-Aug-09
31-Aug-09
18-Sep-09
18-Sep-09
18-Sep-09
18-Sep-09
18-Sep-09
18-Sep-09
18-Sep-09
15-Nov-09
15-Nov-09
19-Dec-09
19-Dec-09
19-Dec-09
19-Dec-09
18-Jul-09
18-Jul-09
18-Jul-09
18-Jul-09
18-Jul-09
Current Status
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
Page 16 of 169
Disposition
(Claim)
Number
S-141875
S-141876
S-141877
S-141878
S-141879
S-141880
S-141881
S-142348
S-142349
S-142350
S-142351
S-142352
S-142353
S-142354
S-142355
S-142356
139
Area
(Ha)
768
96
160
128
256
128
44
512
192
768
1,280
256
1,536
512
128
64
49,345
Grouping
Certificate
GC #45819
GC #45819
GC #45819
Effective Date
19-Jul-07
19-Jul-07
19-Jul-07
19-Jul-07
19-Jul-07
19-Jul-07
19-Jul-07
19-Sep-07
19-Sep-07
19-Sep-07
19-Sep-07
19-Sep-07
19-Sep-07
19-Sep-07
19-Sep-07
19-Sep-07
In Good
Standing to
18-Jul-09
18-Jul-09
18-Jul-09
18-Jul-09
18-Jul-09
18-Jul-09
18-Jul-09
18-Sep-09
18-Sep-09
18-Sep-09
18-Sep-09
18-Sep-09
18-Sep-09
18-Sep-09
18-Sep-09
18-Sep-09
Current Status
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
TOTAL
Note: Highlighted claims in Tables 3.1 are within their 90 day grace period and are in the
process of receiving approval for their annual renewal from the Saskatchewan Government.
Table 3.2: Tenure Summary of the FALC-JV Property, Effective June 15, 2009
Disposition
(Claim)
Number
S-124553
S-124554
S-124555
S-124556
S-124557
S-124561
S-124562
S-124563
S-124568
S-124573
S-124574
S-124639
S-124640
S-124641
S-124646
S-124647
S-124649
S-124651
Area
(Ha)
768
768
768
768
768
512
512
512
512
256
256
192
384
384
576
384
512
768
Grouping
Certificate
GC #45130
GC #45130
GC #45130
GC #44961
GC #44961
GC #44961
GC #44961
GC #44961
GC #44961
GC #45031
GC #45031
GC #45131
GC #45131
GC #44961
GC #44961
GC #45131
GC #44961
GC #44961
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Effective Date
12-Aug-88
12-Aug-88
12-Aug-88
12-Aug-88
12-Aug-88
12-Aug-88
12-Aug-88
12-Aug-88
12-Aug-88
12-Aug-88
12-Aug-88
16-Aug-88
16-Aug-88
16-Aug-88
16-Aug-88
16-Aug-88
16-Aug-88
16-Aug-88
In Good
Standing to
11-Aug-09
11-Aug-09
11-Aug-09
11-Aug-09
11-Aug-09
11-Aug-09
11-Aug-09
11-Aug-09
11-Aug-09
11-Aug-09
11-Aug-09
15-Aug-09
15-Aug-09
15-Aug-09
15-Aug-09
15-Aug-09
15-Aug-09
15-Aug-09
Current Status
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
Page 17 of 169
Disposition
(Claim)
Number
S-124652
S-124653
S-125981
S-125983
S-126003
S-126004
S-126007
S-126008
S-126009
S-126010
S-126038
S-126039
S-126040
S-126041
S-126042
S-126043
S-126044
S-126045
S-126046
S-126047
S-126048
S-126049
S-126095
S-126096
S-126097
S-126098
S-126099
S-126100
S-126101
S-126102
S-126103
S-126104
S-126105
S-126106
S-126112
S-126113
S-126114
S-126115
S-126116
S-126117
S-126118
S-126119
Area
(Ha)
768
768
256
128
256
256
256
256
256
256
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
Grouping
Certificate
GC #44961
GC #45130
GC #45031
GC #45031
GC #44961
GC #45131
GC #44961
GC #44961
GC #44961
GC #44961
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #44961
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #44961
GC #44961
GC #44961
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Effective Date
16-Aug-88
16-Aug-88
20-Jul-89
20-Jul-89
20-Jul-89
20-Jul-89
20-Jul-89
20-Jul-89
20-Jul-89
20-Jul-89
18-Aug-89
18-Aug-89
18-Aug-89
18-Aug-89
18-Aug-89
18-Aug-89
18-Aug-89
18-Aug-89
18-Aug-89
18-Aug-89
18-Aug-89
18-Aug-89
28-Aug-89
28-Aug-89
28-Aug-89
28-Aug-89
28-Aug-89
28-Aug-89
28-Aug-89
28-Aug-89
28-Aug-89
28-Aug-89
28-Aug-89
28-Aug-89
6-Sep-89
6-Sep-89
6-Sep-89
6-Sep-89
6-Sep-89
6-Sep-89
6-Sep-89
6-Sep-89
In Good
Standing to
15-Aug-09
15-Aug-09
19-Jul-09
19-Jul-09
19-Jul-09
19-Jul-09
19-Jul-09
19-Jul-09
19-Jul-09
19-Jul-09
17-Aug-09
17-Aug-09
17-Aug-09
17-Aug-09
17-Aug-09
17-Aug-09
17-Aug-09
17-Aug-09
17-Aug-09
17-Aug-09
17-Aug-09
17-Aug-09
27-Aug-09
27-Aug-09
27-Aug-09
27-Aug-09
27-Aug-09
27-Aug-09
27-Aug-09
27-Aug-09
27-Aug-09
27-Aug-09
27-Aug-09
27-Aug-09
5-Sep-09
5-Sep-09
5-Sep-09
5-Sep-09
5-Sep-09
5-Sep-09
5-Sep-09
5-Sep-09
Current Status
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
Page 18 of 169
Disposition
(Claim)
Number
S-126120
S-126121
S-126122
S-126123
S-126124
S-126221
S-126257
S-127085
S-127086
S-127087
S-127088
S-127089
S-127090
S-127091
S-127092
S-127093
S-127094
S-127095
S-127096
S-127097
S-127098
S-127099
S-127100
S-127101
S-127102
S-127103
S-127104
S-127105
S-127106
S-127107
S-127108
S-127109
S-127110
S-127111
S-127112
S-127113
S-127114
S-127115
S-127116
S-127117
S-127118
S-127145
Area
(Ha)
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
64
32
64
64
64
64
64
64
64
64
64
64
64
64
64
64
32
64
64
64
64
64
64
64
Grouping
Certificate
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #44961
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #45131
GC #44961
GC #44961
GC #44961
GC #44961
GC #44961
GC #44961
GC #44961
GC #44961
GC #45130
GC #45130
GC #45130
GC #45130
GC #45130
GC #45130
GC #44961
GC #44961
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Effective Date
6-Sep-89
6-Sep-89
6-Sep-89
6-Sep-89
6-Sep-89
13-Sep-89
21-Sep-89
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
2-Jan-91
20-Feb-91
In Good
Standing to
5-Sep-09
5-Sep-09
5-Sep-09
5-Sep-09
5-Sep-09
12-Sep-09
20-Sep-09
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
1-Jan-10
19-Feb-10
Current Status
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
Page 19 of 169
Disposition
(Claim)
Number
S-127146
S-127147
S-127148
S-127183
S-127184
S-127185
S-127186
S-127187
S-127188
S-127189
S-127190
S-127191
S-127192
S-127193
S-127194
S-127195
S-127196
S-127275
S-127341
121
Area
(Ha)
64
64
64
352
496
256
448
192
256
256
192
480
768
128
192
32
192
192
192
22,544
Grouping
Certificate
GC #44961
GC #44961
GC #44961
GC #45130
GC #45130
GC #44961
GC #44961
GC #45131
GC #44961
GC #45131
GC #45130
GC #45130
GC #45031
GC #45031
GC #45031
GC #45131
GC #45031
GC #45130
GC #45130
Effective Date
20-Feb-91
20-Feb-91
20-Feb-91
12-Aug-88
12-Aug-88
12-Aug-88
12-Aug-88
16-Aug-88
16-Aug-88
16-Aug-88
16-Aug-88
16-Aug-88
13-Sep-88
20-Jul-89
20-Jul-89
6-Sep-89
20-Jul-89
5-May-92
12-Jun-92
In Good
Standing to
19-Feb-10
19-Feb-10
19-Feb-10
11-Aug-09
11-Aug-09
11-Aug-09
11-Aug-09
15-Aug-09
15-Aug-09
15-Aug-09
15-Aug-09
15-Aug-09
12-Sep-09
19-Jul-09
19-Jul-09
5-Sep-09
19-Jul-09
4-May-09
11-Jun-09
Current Status
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
ACTIVE
RENEWAL PENDING
RENEWAL PENDING
TOTAL
Note: Highlighted claims in Tables 3.2 are within their 90 day grace period and are in the
process of receiving approval for their annual renewal from the Saskatchewan Government.
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3.2.2
SURFACE RIGHTS AND LEASES
The Crown retains all surface rights in the area of the Star Kimberlite deposit mineral
dispositions. Surface access for exploration purposes is obtained through the issuance of
exploration permits from the MOE. Shore is able to access the property through the exploration
permits granted to it.
3.2.3
NET PROFITS INTEREST
Fifteen claims (S-132025 to S-132039, four of which fall under Claim Group GC #45826) were
staked by a third party and were subsequently transferred to Shore for consideration of a 3 %
NPI should a positive production decision be made and the property achieve mineral production.
Shore has the option to purchase the NPI for one million Canadian dollars. Seagrove Capital
Corporation is the successor party holding the NPI.
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4.0
ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND
PHYSIOGRAPHY
Information on the accessibility, climate, local resources, infrastructure and physiography of the
Star Diamond Project has been detailed in previous technical reports by Ewert et al. (2009),
Harvey et al. (2009), Eggleston et al. (2008), Leroux (2008a) and Leroux (2007). The reader is
referred to these reports for further information.
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5.0
HISTORY
Historical exploration activities on the Star Diamond Project are detailed in the technical reports
by Ewert et al. (2009), Harvey et al. (2009), Eggleston et al. (2008, Leroux (2008a) and Leroux
(2007). The reader is referred to these reports for further information.
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6.0
GEOLOGICAL SETTING
The geological setting of the Star Diamond Project is described in detail in previous technical
reports by Ewert et al. (2009), Harvey et al. (2009), Eggleston et al. (2008), Leroux (2008a) and
Leroux (2007). The reader is referred to these reports for further information.
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7.0
DEPOSIT TYPES
An overview of kimberlite diamond deposits and the FALC and Star Kimberlite deposit models
has been described in previous technical reports by Ewert et al. (2009), Harvey et al. (2009),
Eggleston et al. (2008), Leroux (2008a) and Leroux (2007). The reader is referred to these
reports for further information.
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8.0
MINERALIZATION
An overview of mineralization of the Star Kimberlite deposit has been described in previous
technical reports by Ewert et al. (2009), Harvey et al. (2009), Eggleston et al. (2008), Leroux
(2008a) and Leroux (2007). The reader is referred to these reports for further information.
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9.0
EXPLORATION
An extensive overview of the exploration activities on the Star Diamond Project is given in
Ewert et al. (2009), Eggleston et al. (2008) and Leroux (2008a) and summarized below.
A summary of the 1996-2009 exploration work completed by Shore on the Star Diamond Project
is shown in Table 9.1.
Table 9.1: Summary of Exploration Activities on the Star Diamond Project
YEAR
EXPLORATION ACTIVITY
1996–1998
-Aeromagnetic surveys
-Diamond drilling (11 holes)
-Microdiamond analysis.
2000
-Diamond drilling (16 holes)
-Microdiamond analysis.
2000–2001
-Diamond drilling (7 holes)
-Microdiamond analysis
-Airborne geophysics re-interpretation.
2001
-Petrographic studies
-Diamond drilling (7 holes)
-Microdiamond analysis
-Large diameter (24 inch) reverse circulation drill program (Star 31 RC)
-Sample processing (split sample: De Beers Canada’s Grande Prairie Processing Facility; Lakefield Research).
2002–2003
-Bulk rock and multi-element lithogeochemistry work (Targeted Geoscience Initiative or “TGI”)
-2-D and 3-D seismic surveys
-TGI borehole geophysics survey -TGI geochronology
-Petrographic studies -Borehole collar surveying
-Detailed core logging and re-interpretation studies
-Initial bulk sampling work program (permitting, pilot hole drilling, etc.)
2003–2004
-Regional airborne GeoTEM survey
-Diamond drilling (8 holes)
2003–2005
-Underground bulk sampling program
site set-up
process plant construction and commissioning
shaft sinking, lateral drift developments 175 m and 235 m levels
underground geological mapping and surveying
16,000 m underground diamond drilling and sample processing between 2003-2006
-Bulk sampling results of Phase 1 program
-Diamond valuation of 3,050 carat parcel
2005– 2007
-Underground bulk sampling program
lateral drift development 235 m and 215 m levels
underground geological mapping and surveying
16,000 m underground diamond drilling and sample processing between 2003-2006
-Bulk sampling results of Phase 2 and 3 programs
-Diamond valuation of 5,950 carat parcel – Modelled price est. of US$170 per carat for UG sample
-Airborne geophysical and laser surveys
-233 exploration, geotechnical and hydrogeological core holes and 95 Large-diameter mini-bulk sample holes
-45,000 m of surface core drilling
2008-2009
-Completion of initial NI 43-101 compliant Mineral Resource Estimate by AMEC
-Completion of Preliminary LDD Spacing Study by F.H. Brown
-Completion of additional 8 LDD holes
-Completion of NI 43-101 compliant Mineral Resource Estimate update by P&E
-Completion of Bulk Sample Processing Plant and Diamond Recovery Audit by Howe
-Submission of Star-Orion Project Proposal to Saskatchewan MOE
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10.0
DRILLING
An extensive overview of the surface, underground and LDD drill programs on the Star
Diamond Project is given in Ewert et al. (2009), Eggleston et al. (2008), Leroux (2008a) and
Leroux (2007) and is summarized below.
Between 1995 to 2008, 613 surface and underground, reverse circulation (“RC”), LDD and
diamond drill holes totalling 107,610 m were drilled on the Star Kimberlite deposit. Table 10.1
below outlines the drill programs for all years.
Table 10.1: Summary of Surface, Underground and LDD Drilling on the Star Diamond
Project, 1995-2008
YEAR
1995
NO. OF
DRILL
HOLES
5
METRES
1,134
CORE
SIZE
LOCATION
HQ
Surface
Sep-Oct
1996
3
812.00
NQ-HQ
Surface
1997
1
210.00
RCA
Surface
1997
Jan 2000
Nov
2000-Jan
2001
2
16
7
450.6
3,259.21
2,035.79
Jul-Aug &
Oct 2001
8
2,195.72
Oct 2002
1
356.1
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DRILLING PROGRAM
Three NQ vertical drill holes drilled on the Star
Kimberlite deposit totalling 812 m drilled to test four
magnetic anomalies (FALC 96-2 to FALC 96-4).
Drill holes intersected kimberlitic material.
Recovery of 184 stones, nine macrodiamonds.
Surface
Two vertical drill holes drilled, totalling 450.60 m,
close to FALC 96-3 to confirm presence of four
stacked kimberlitic zones. Recovery of 749 stones,
66 macrodiamonds, averaging 7.6 diamonds per
10 kg.
Surface
Star 1 to 16 drilled, consisting of 15 vertical NQ drill
holes and one vertical PQ drill hole. Drilling
intersected 1,082.1 m of kimberlite. Every drill hole
returned diamonds, recovery of 523 stones, 120
macrodiamonds.
Surface
Star 17 to 23 drilled, consisting of 7 vertical NQ drill
holes. Drilled to test lateral extent off kimberlite,
locate feeder zone and clarify geological
interpretation. Not every drill hole returned
diamonds,
recovery
of
259
stones,
77
macrodiamonds. Core from previous drill programs
logged to ensure uniformity of geological
interpretation.
NQ/RC
Surface
Star 24 to 30 drilled, 7 vertical NQ drill holes,
totalling 1,900.17 m and intersecting 859.6 m of
kimberlitic material. Drilled for exploration as well
as delineating pipe geometry and clarification of
geological interpretation. Not every drill hole
returned diamonds, recovery of 393 stones, 68
macrodiamonds. Large diameter RC hole Star 31RC
drilled as a mini-bulk sample, totalling 295.55 m.
Processed by De Beers, diamond recovery by De
Beers and Lakefield Research totalling 7039 stones.
Granulometry studies, microdiamond analysis and
heavy mineral abundance analysis.
HQ
Surface
Star 32 vertical HQ drill hole drilled as a pilot hole
for the shaft.
PQ
NQ/PQ
NQ
Page 28 of 169
YEAR
NO. OF
DRILL
HOLES
METRES
CORE
SIZE
LOCATION
DRILLING PROGRAM
20032004 &
Jun 2005Dec 2006
213
16,880.41
BQ
Underground
Underground holes drilled as pilot holes in order to
obtain geological, geotechnical and hydrological
information of areas to be laterally drifted to for
future underground batch sampling. Holes
geologically logged but not sampled.
Oct-Nov
2004
8
1,739.15
NQ
Surface
Star 33 to 40 drilled, intersecting 238.5 m of
kimberlitic material. Drilled to test magnetic
anomalies and further delineate geometry.
Surface
13 HQ core holes on the Star West FALC-JV.
Drilled to obtain geological, geotechnical and
hydrological information on the Star West extension
of the Star Kimberlite deposit.
Surface
80 LDD vertical holes drilled (at 1.2 m diameter) for
mini-bulk sampling. Drilled to obtain geological,
diamond grade and diamond valuation information
on the various kimberlite facies previously
identified.
PQ
Surface
Designed to test continuity, shape and thickness of
various kimberlite facies and provide additional
geological, geochemical, geophysical, geotechnical
and bulk density measurements for a revised 3D
geological model and NI 43-101 complaint Resource
Estimate.
NQ,
HQ, PQ
Surface
Hydrogeological holes
Surface
Vertical and inclined infill core drilling. Designed to
test continuity, shape and thickness of various
kimberlite facies and provide additional geological,
geochemical, geophysical, geotechnical and bulk
density measurements for a revised 3D geological
model and NI 43-101 complaint Resource Estimate.
Additional geohydrological and geotechnical drill
programs on the Star Kimberlite deposit.
Surface
Core holes drilled on the Star West FALC-JV
property. Drilled to obtain geological, geotechnical
and hydrological information on the Star West
extension of the Star Kimberlite deposit.
2005
Sep 2005Dec 2007
Jul 2005Jun 2007
2006
June
20062007
20062007
13
80
3,362.00
15,802.71
158
38,346.15
4
1,123.65
38
20
7,382.38
5,079.16
HQ
LLD
HQ
PQ
Jul-Oct
2007
15
3,595.12
LDD
Surface
LDD (1.2 m diameter) holes drilled on Star West.
Drilled to obtain geological, diamond grade and
diamond valuation information on the various
kimberlite facies previously identified.
Mar-Nov
2008
14
2,477.80
HQ
Surface
Geotechnical/hydrogeological holes, drilled to gather
detailed information on country rock lithologies and
hydrogeology.
Surface
- 8 LDD (1.2 m diameter) holes drilled on the Star
Kimberlite deposit (including 3 on Star West),
totalling 1,368.80 m with 306.20 m of kimberlite
intersected.
2008
TOTAL
8
613
1,368.75
LLD
107,610.70
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11.0
SAMPLING METHOD AND APPROACH
11.1
DIAMOND DRILLING - LOGGING AND SAMPLING PROCEDURES
Throughout the surface and core drilling programs, the geotechnical and geological core logging
was carried out at the main exploration core logging facility. Once a core hole was completed, all
of the drill core boxes were transported to the main exploration core logging facility.
All geotechnical logging and photographic records were undertaken before the core was marked
and cut for detailed core logging and sampling.
During the detailed logging process all geological descriptions were entered into a SQL-based
logging program. For the majority of the core holes, the following samples and testwork were
carried out for each major kimberlite facies / lithological break:
•
•
•
bulk density samples;
whole rock geochemistry samples; and
ore dressing – communition samples: drop test samples (“T10”) and scrubbability (“Ta”)
samples and unconfined compressive strength (“UCS”) samples.
All core was digitally photographed on a hole by hole basis. The photographs were downloaded
as individual JPEG computer files and incorporated into the Project database.
During the geological core logging process, the following information / data collection was
recorded:
•
•
•
•
•
•
•
•
•
•
main lithological units and sub-units;
o pyroclastic kimberlite
o volcaniclastic kimberlite
o kimberlite breccia
o resedimented volcaniclastic kimberlite
o magmatic kimberlite
o other (shale, limestone, etc.)
proportion of constituents (quantitatively captured);
average grain size;
support (matrix or clast supported);
sorting (poorly or well sorted);
fabric (bedded, massive or granular);
country rock dilution percentages (crustal xenolith size, shape, alteration, percentage that
is quantitatively captured);
kimberlitic indicator minerals (type, size, percentage that is quantitatively captured);
nature of contacts ( sharp, undulating or gradational); and
rock quality designation (“RQD”).
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11.2
UNDERGROUND SAMPLING PROCEDURES
Shore’s sampling methods and procedures were designed to optimize the precision and accuracy
of the sample results in order to quantify the representative diamond grade within the sampled
interval area. Efforts to reduce sample contamination during the underground mucking process
were monitored daily by on-site geologists.
The following is a description of the sampling method(s) used and procedures applied during the
underground bulk sampling programs.
11.2.1
SHAFT AND LATERAL DRIFT SAMPLING
SHAFT SAMPLES
In the shaft sinking phase, miners drilled, blasted and mucked out on a bench by bench basis.
Benches varied between 4 to 6 ft in depth depending on ground conditions. The sample material
was hauled to the surface and transported to the secure area by loader under the control of Shore
security personal.
LATERAL DRIFT SAMPLES
In the lateral drifts, the miners drilled, blasted and mucked out each drift round (4 to 8 ft in
length with variable width and height). The kimberlite material was then hauled to surface where
it was stored as individual batch sample piles within the dedicated storage facility area. Each
batch sample was identified with a sign denoting the drift it was from. All batch samples were
then recorded by mapping of the pile locations. The kimberlite muck was piled on top of a
sand / clay rich base.
Geological control of the sampling enabled the various kimberlite units to be individually
sampled with very little contamination by other kimberlite types, the results of which provide
invaluable diamond content data to model variations in diamond quality and abundance
throughout the different phases of the Star Kimberlite deposit.
In accordance with the information obtained from underground mapping, on-site geologists
continuously refined the sample separation process. Sample batches thus changed from the
optimum planned size, and some of the larger batches were subdivided into smaller batches for
processing in the plant.
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11.2.2
UNDERGROUND SAMPLING PROTOCOLS
The following quality assurance and quality control (“QA/QC”) protocols were conducted and
adhered to by Shore and its contractors during the bulk sampling program:
•
•
•
•
11.3
Geologists verified that all sample material for each sample interval was cleanly mucked
out.
Geologists verified that the kimberlite for each batch hoisted to surface was transported
to its specified location.
To avoid sample spillage, all loader operators were given specific instructions not to
overload their buckets when transporting kimberlite.
In order to maintain sample integrity and security of all extracted kimberlite from the
underground workings, a Shore security officer was present at all times during the
movement of kimberlite muck from the head frame to the storage facility.
LDD (RC DRILLING) - SAMPLE RECOVERY DESCRIPTION
The Bauer BG-36 drilling rig is designed to carry out air assisted RC drilling, utilizing a drill
string consisting of 6 m long dual walled drill rods, heavy weights (which provide downward
pressure on the bit), stabilizers and a rotating drill bit assembly. The RC drilling is assisted
through the introduction of compressed air which is forced down through the outer annulus of
the dual walled drill rods so as to assist the drill cuttings and the mud in returning to the surface
through the inner tube of the drill rods.
The drill cuttings after passing through a desander plant are collected, labelled, and securely
delivered to and processed through Shore's on-site process plant.
11.3.1
LDD DOWNHOLE CALIPER MEASUREMENTS
A downhole caliper survey to measure the diameter of the drill hole along its length was used to
calculate the volume (in cubic metres) of material removed from each of the LDD holes. This
calculated volume, coupled with diamond recovery data, was then used for estimating the sample
grade for each of the LDD samples. The data were presented as a graphic 3-D downhole log and
a downhole Excel spreadsheet.
Eggleston et al. (2008) recalculated the volumes of several holes and found the volumes
provided by the caliper survey to be accurate and reliable.
Actual sample weights of material recovered from the drilling cannot be used for grade estimates
because the material is screened after it exits the hole and fine material smaller than 0.85 mm is
not collected. There is also loss of material to downhole fractures and joints. Therefore, this
necessitates a theoretical estimation of sample volume using the caliper data and the density data
measured on core from the pilot core holes.
P&E (in part through the Howe 2009 audit) found the sampling methods, sample storage, and
security to be acceptable and is of the opinion that diamond grade and quality data generated
from the underground and LDD samples is adequate for Mineral Reserve Estimation and mine
planning purposes.
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12.0
SAMPLE PREPARATION, ANALYSES AND SECURITY
12.1
INTRODUCTION - MINERAL PROCESSING AND DIAMOND RECOVERY
In order to process a significant amount of kimberlite, Shore purchased and commissioned a
batch sampling process plant to treat the bulk samples and recover diamonds. The process plant
was designed to simulate a commercial kimberlite ore treatment plant. Shore’s process plant was
designed and constructed by Bateman Engineering PTY Limited (“Bateman”) of South Africa.
Shore’s Bateman process plant (Bateman Reference Number M7007) consists of the following
circuits:
•
•
•
a 30 t/h crushing circuit;
a 10 t/h Dense Medium Separation (“DMS”) circuit which consists of a 250 mm DMS
cyclone; and
a recovery circuit consisting of a Flow Sort® X-Ray diamond sorting machine (“Sortex”)
and a grease table.
A detailed description of Shore’s processing and diamond recovery circuits can be found in
Eggleston et al. (2008) and is briefly described below.
12.1.1
PROCESSING PLANT – CRUSHING AND SCRUBBING CIRCUIT
The underground kimberlite material (stored as individual batches or piles on surface) is
delivered from the storage facility area to the primary static feed bin where, after being screened
to 250 mm, it is fed at a constant rate onto the run-of-mine (“ROM”) conveyor belt to be
weighed and recorded. The kimberlite is then crushed, cleaned and sized so that the final
resultant size fraction reporting to the DMS circuit is +1.0 mm to -20 mm.
12.1.2
PROCESSING PLANT DMS CIRCUIT
The +1.0 mm to -20 mm sized kimberlite material from the primary double deck vibrating
classifying screen was pumped from the transfer pump box, dewatered and then stored into a 5 t
capacity DMS surge bin for product separation into light and heavy mineral fractions. The
material was then fed in a wet state to the DMS circuit by the combined vibrating pan feeder and
DMS feed pump and dewatered once again. The kimberlite material was then mixed with a
dense circulating medium consisting of ferrosilicon powder (“FeSi”) and water. Separation of
the heavy and light particles (i.e. product) was achieved on the basis of the specific gravity
(“SG”) of the minerals.
Both the heavy and light products exiting the cyclone were screened and then washed to recover
the FeSi for recycling.
The +1.0 mm to -20 mm heavy mineral concentrate (DMS concentrate) that reported to the sinks
screen was collected in 40 L stainless steel canisters. When the steel canister was full, the
canister was locked, then transported and escorted to the recovery plant for particle sizing and
diamond recovery by the plant Lead Hand and Shore security personnel (prior to January, 2007
this process was completed by Howe personnel and two Shore security personnel). The +1.0 mm
to -6 mm light fraction product (‘coarse reject kimberlite’) was disposed outside of the process
plant via conveyor belt. A front-end loader was used to transport the coarse reject kimberlite to a
dedicated storage area and stockpiled on a per batch basis.
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The SG of the circulating medium was monitored electronically, in real time with a dense
medium controller system, and manually with a densitometer scale. Density tracer tests were
carried out daily with the use of cube-shaped epoxy tracers, with SGs ranging from 2.70 to 3.53
and sizes from 2 mm, 4 mm and 8 mm, to monitor the separating effectiveness of the DMS
cyclone. The density tracers that reported to the floats or sinks screen were counted separately
and a Tromp curve was plotted in order to obtain the percentage of density tracers versus particle
SG. An estimate of the effective separation of light and heavy fractions, including diamond, was
determined from the shape and slope of the Tromp curve. The separating SG (or cut point) was
determined as the point where the curve has a value of 50 %.
12.3 DIAMOND RECOVERY PLANT SAMPLE HANDLING AND PROCESSING
PROCEDURES
Once a full canister of DMS concentrate arrived in the recovery plant, the gross weight (wet) and
arrival time was taken and then recorded by security personnel. The DMS concentrate canister
was then loaded into a steel cradle and the contents emptied into the recovery plant hopper.
The DMS concentrate was separated into three particle size fractions by a vibrating classifying
screen deck unit beneath the recovery plant hopper. The size fractions obtained were +1 to -3
mm, +3 to -6 mm and +6 to -20 mm respectively. During the sizing process, the respective size
fractions were collected in individual 40 L stainless steel canisters located below the vibrating
classifying screen deck. Once the particle sizing was completed, each sized canister was left to
dewater as much as possible. The gross weight (wet) of each sized canister was weighed and
recorded by security personnel and readied for diamond processing.
12.3.1
X-RAY SORTEX DIAMOND SORTER
All of the wet DMS concentrate size fractions were processed separately via a Sortex. All three
individual sized fractions were manually fed to the Sortex receiving hopper for processing, with
only the +6 to –20 mm sized fraction processed twice through the Sortex unit.
The Sortex unit was designed on the principle of diamonds fluorescing / luminescing when
bombarded by x-rays. The wet diamond bearing concentrates slide past photomultiplier tubes
that detect fluorescent material (i.e. particles emitting light) which have been irradiated by xrays. Excitation of the photomultiplier tubes triggers the ejector gate doors to open, forcing the
diamond (and other fluorescent material plus gangue) into a separate stainless steel canister from
the gangue minerals. The Sortex tailings were collected in a 40 L steel canister to be reprocessed
by the grease table.
Each size fraction was processed individually; however, the diamonds ejected for each size
fraction were collected in a single stainless steel canister that was locked in place below the
Sortex unit. Once a batch sample was processed, the stainless steel canister was removed,
locked, escorted and then stored in Shore’s secure safe-house facility located within the recovery
plant by Shore’s security personnel and kept under video surveillance until delivered to SGS
Lakefield Research (“SGS Lakefield”), SGS Canada Inc., Saskatoon (“SGS Saskatoon”) and / or
Mineral Services Canada Inc. (“MSC”) for diamond sorting. As of January 2007, the sample
handling procedures were carried out by Shore personnel with no third party involvement,
although Howe acted as an external QA/QC provider and has made periodic audits of the Shore
processing plant (prior to January 2007 the recovery room was operated under Howe
supervision).
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12.3.2
GREASE TABLE DIAMOND RECOVERY
A two-stepped (1 m wide) grease table was employed to concentrate the three sized Sortex
tailings in the following order +3 to -6 mm and +1 to -3 mm. The larger size fraction (+6 mm to
-20 mm) was not processed through the grease table, but processed twice through the Sortex.
Most diamonds are hydrophobic (i.e. non-wettable) and thus will adhere to grease specially
formulated for diamond recovery. The diamonds adhere to the grease on first contact and the
flow of concentrate over the adhering diamonds causes them to be pushed further into the grease.
All non-adhering (i.e. hydrophyllic) material reported to the grease table tailings belt for storage
in 1.0 m3 canvas bulk sample storage bags.
The removal and application of fresh grease was dependent upon the amount of grease adherent
material in the concentrate. More particles adhering to the grease reduces the effective surface
area for diamonds to adhere to. When the effective surface area was < 50 %, the grease and
grease concentrates were scraped off the grease table and placed into pre-numbered, sealed
plastic buckets and shipped to SGS Lakefield, SGS Saskatoon and / or MSC for diamond
recovery.
12.4
CHAIN OF CUSTODY AND SECURITY PROTOCOLS
During the processing plant commissioning period of the bulk sampling program in 2004, Shore
and Howe representatives developed security protocols that were designed to enhance the chain
of custody and maintain the integrity of the sampling program, as a whole, from the extraction of
kimberlite from underground to the shipment of diamond concentrate to SGS Lakefield, SGS
Saskatoon and MSC for final diamond picking. Shore’s chain of custody and security protocols
were designed around a three-lock system, requiring three individuals be present at the removal,
transport and escort of all concentrate at all times. A video surveillance camera system was
designed and installed in the process plant to follow the movement and processing of DMS
concentrate from the DMS to the fenced-in recovery plant area. The video surveillance system
was monitored 24 hours, seven days a week by Shore’s security personnel. All security images
were backed up for potential security reviews by a third party security auditor.
Howe and Shore also developed security and chain of custody protocols for both surface core
and LDD drilling and sample processing programs.
In October, 2006, a number of security system enhancements were implemented to heighten the
overall site and process / recovery plant security measures. The enhancements to the security
systems included the building of a security entrance building on the north side of the
process/recovery plant. The attached plant security entrance building allowed for the monitoring
of persons entering the process/recovery plant and a more effective search capability for those
persons leaving the plant. The plant security building also included male and female changing
facilities. All plant employees and authorized visitors were required to change into designated
pocketless coveralls before entering the process / recovery facilities. The plant security entrance
also housed the security control area, which allowed for a more secure environment for the
security officers to monitor all high risk areas, utilizing the digital video (“CCTV”) and door
accesses recorded on the security management system.
A new main site access security building and security gate were constructed and placed in a
location to afford tighter monitoring, recording and control of persons and vehicles accessing the
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main site. All vehicle parking was placed outside of the designated high security area, and only
authorized vehicles were allowed entrance. All vehicles and persons leaving the designated high
security areas were searched before being allowed to exit.
Enhanced security protocols were also implemented within the process / recovery plant
operations area.
12.5
DIAMOND PICKING AND SORTING PROCEDURES
Since the commencement of the underground bulk sampling program and LDD mini-bulk
sampling program in 2004 and September, 2005 respectively, diamond concentrate samples
(Sortex, and grease table concentrates) were shipped to SGS Lakefield, SGS Saskatoon and / or
MSC. SGS Lakefield is accredited to the ISO/IEC 17025 standard by the Standards Council of
Canada, while SGS Saskatoon has followed the same quality protocols in preparation for
accreditation. MSC is not currently accredited to the ISO/IEC 17025 standard by the Standards
Council of Canada as a testing laboratory for specific tests; however, the MSC facility, process
and quality assurance procedures have been audited and ratified by an independent industry
expert (Harry Ryans, Process Specialist of AMEC; see Ryans, 2006).
Once all of the security checks were completed, the applicable laboratory carried out the
following laboratory test work:
•
•
processing and sorting of the Sortex concentrate; and,
processing and sorting of the grease concentrate.
All of the sample information from SGS Lakefield and SGS Saskatoon were electronically
entered into SGS’s Laboratory Information Management System (LIMS) or MSC’s Laboratory
Data Management System.
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13.0
DATA VERIFICATION
13.1
INTRODUCTION
The database management of underground shaft and drift sampling of Shore’s underground bulk
sampling, LDD mini-bulk sampling, and diamond processing program was administered and
monitored on a number of levels throughout the program.
From January 2003 to January 2007, Howe provided third party supervisory and monitoring
services to Shore in the sample processing, chain of custody and sample integrity of Shore’s
underground bulk sample program and LDD mini-bulk sampling program. Since January 2007,
Shore personnel conducted all supervision and monitoring services while Howe acted as a third
party auditor. Howe believes that the quality of the diamond processing data is reliable and that
the sample preparation, analysis and security were carried out in accordance with exploration
best practices and industry standards.
Shore and Howe developed operating QA/QC protocols to monitor and quantify the efficiency
and recovery of the process plant; these are discussed in detail in Eggleston et al. (2008) and
briefly summarized below.
13.2
QA/QC AUDITS
The following QA/QC operating protocols were established by Shore and Howe for the efficient
operation of the DMS and recovery circuits.
•
DMS QA/QC Operating Protocols: During the operation of the DMS circuit, the
operating parameters were strictly monitored by Shore and Howe in order to achieve
proper kimberlite material separation:
o The SG of the circulating medium was measured manually every 15 minutes
with a densitometer and in real time with a DebTech® dense medium
controller system. Since the commissioning of the DMS circuit, the operating
range of the DMS circuit, determined by numerous density tracer tests over
several SG values was between SG 2.30 and SG 2.50.
o Circulating medium SG readings of both the DMS cyclone overflow and
underflow were collected periodically.
o The operating range of the cyclone inlet velocity pressure was maintained at a
constant pressure (i.e. no surging).
o It was ensured that the volumetric ratio between kimberlite material feed and
circulating medium fed to the mixing box was such that the loss of diamonds
to the floats screen (due to the overfeeding of material through the cyclone)
was negligible.
o Periodic wet screening checks of the circulating medium for fines from the
kimberlitic material were carried out in order to verify the presence, quantity
and size of non-magnetic contaminants that could increase the viscosity of the
circulating medium.
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o Periodic dry screening checks of the circulating medium particle size analysis
were carried out in order to determine the coarsening of the circulating
medium due to a reduction of fine FeSi particles.
o Periodic checks of the +1 to -6 mm float material exiting the process plant for
any > 1 mm sized kimberlitic indicator minerals such as pyrope garnet (SG
3.50), eclogitic garnet (SG 3.50) and Cr-diopside (SG 3.20).
o Density tracer tests were carried out daily to monitor the separating
effectiveness of the DMS cyclone.
•
Sortex QA/QC Operating Protocols: In order for the Sortex to maintain operating
efficiency, the unit was calibrated weekly by conducting marble tracer tests. As well, a
regular preventive maintenance schedule for the Sortex unit was strictly followed.
•
Process Plant - Sample Contamination: Contamination of samples by diamonds from
previously run samples can adversely affect sample results and subsequent economic
decisions. Therefore, strict guidelines were followed by Shore to prevent batch sample
cross-contamination.
•
Process Plant - Diamond Recovery Efficiency and QA/QC Audits: Audits of grease
and coarse reject kimberlite table tailings have been regularly undertaken since 2004.
Both AMEC and Howe concluded that audit results for the recovery plant tailings were
good, and tailings data were accepted with no problems (Ryans 2006 and Eggleston et al.
2008). Results obtained to October, 2007 from MSC indicate that low diamond
recoveries from the audited samples confirm the integrity of the process and recovery
plants.
•
Grease Table Tailings Audit Program: In order to confirm the efficiency of the
recovery plant circuit at Shore’s process plant facility, grease table tailings bulk sample
bags from both the underground sampling and the LDD mini-bulk sampling programs
were shipped to MSC for tailings audits with recovered diamonds being added to the
Shore diamond database.
Four independent tests achieved 100 % recovery of spike diamonds in the size range -4
+2 mm. The diamond summary reports provided by MSC conform to the CIM guidelines
for the reporting of diamond exploration results (CIM, 2003).
Results from the grease table tailings audits of 16 underground batches and 356 LDD
batches, completed by MSC indicate that the carats recovered in the audit process from
underground batches on the Star Kimberlite deposit added 1.4 % to the total carat weight
of the batches audited. Carats recovered in the audit process from LDD batches added
4.6 % of the total carat weight.
Any diamonds recovered at this audit stage were reported separately by MSC. The
diamond counts and total carat weight for each batch sample, however, have been
incorporated into a merged diamond results database containing the results from MSC for
final diamond grade reporting.
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The processing method has been demonstrated to be effective and reliable in the recovery
of diamonds through a series of tests run using natural diamond spikes on test sample
material provided by Shore.
•
X-Ray Concentrate Audit Program: In order to evaluate the final picking of x-ray
concentrate by SGS Lakefield and SGS Saskatoon, final concentrate audits were
completed by MSC on both underground (111 batches) and LDD (792 batches) sample
batches. Carats recovered in the audit process from underground batches on the Star
Kimberlite deposit added approximately 2.3 % to the total carat weight. Carats recovered
in the audit process from LDD batches added 1.2 % of the total carat weight for Star
LDD samples.
Any diamonds recovered at this audit stage were reported separately by MSC and SGS
Lakefield and SGS Saskatoon. The diamond counts and total carat weight for each batch
sample, however, have been incorporated into a merged diamond results database
containing the results for final diamond grade reporting.
•
Independent Laboratory Audits: Howe conducted a laboratory audit of SGS Lakefield
on November 4, 2005. AMEC carried out a laboratory audit of MSC in November, 2007.
Details of these earlier audits are presented in Eggleston et al. (2008).
From July, 2008 to December, 2008, Howe conducted an audit of the following
independent laboratories (MSC and SGS Saskatoon) in order to:
o review and audit the SGS Saskatoon facility;
o review and audit the grease table tailings audit program (MSC); and
o review and audit MSC’s processing facility for final diamond recovery from
Sortex and grease concentrates.
During the audits, the chain of custody, handling, sorting, and security protocols were
reviewed by Howe and were determined to provide reasonable assurance of the adequacy
of the quality of operations at each facility. No material deficiencies were identified.
•
Site Audits: During the advanced exploration program phase, AMEC carried out several
site visits. The audits were dedicated to review the operation of the process plant and
examination of the kimberlite material and to conduct regular visits in order to review all
aspects of the technical work and QA/QC being carried out on the Project (i.e. LDD and
underground sampling and processing, geological core logging, etc.) and data verification
reviews.
Howe also carried out several site visits. As with the previous AMEC audits, Howe’s
audits reviewed the operation of Shore’s process plant and examination of the kimberlite
material. Howe conducted regular visits in order to review all aspects of the technical
work and QA/QC being carried out on the Project (i.e. LDD and underground sampling
and processing, geological core logging, etc.) and data verification reviews. Howe
determined that audit exercises revealed a well operated and documented operation of the
treatment of bulk samples and that there were no issues of sample integrity (Coopersmith,
2009).
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•
AMEC Bulk Sample Processing Audit (2006): A processing audit utilizing random
periodic spiking, which could substitute for continuous spiking, was performed in March,
2006 (Coopersmith, 2006). Twenty natural diamond tracers were placed in mini-bulk
samples from the Star LDD hole LDD-011. The tracer diamonds were natural diamond
crystals with at least one polished face with the tracer number and weight in carats laseretched onto the polished face. The tracers have known luminosity properties for x-ray
recovery, and are of a variety of weights and shapes similar to what might be expected to
occur naturally in a bulk sample. The tracers were placed at random intervals into the raw
sample feed just as it exited from the feed hopper and before it dropped onto the primary
feed belt.
All diamond tracers placed in sample LDD-011-03 were recovered from the x-ray
concentrate by Shore’s bulk sample plant (“BSP”).
•
Howe Bulk Sample Processing Audit (2008): A second processing audit utilizing
random periodic spiking, was performed in September and December, 2008 at Shore’s
plant. Two samples were chosen by Howe for auditing and securely shipped to SGS
Saskatoon (LDD sample) and MSC (underground sample). Four natural and 14 synthetic
diamond tracers were placed in the LDD sample and 16 natural and 99 synthetic diamond
tracers were added to the underground bulk sample. SGS Saskatoon routinely performs
all x-ray and grease concentrate processing and diamond sorting (selection) of LDD
samples, audit samples, and in the past has treated underground samples. MSC has been
routinely treating the underground samples and audit samples. The procedures at each of
the above laboratories are largely similar.
Howe was present for the diamond sorting of the two audited samples at their respective
laboratories. Procedures, operations, security and documentation were reviewed and
observed. No issues were noted by Howe.
All natural diamond tracers placed in the samples were recovered by Shore’s BSP, and
all from the x-ray concentrate. The synthetic tracers were mostly recovered, with the loss
of three 2 mm and one 4 mm tracers. The three 2 mm tracers were recovered on the
grease table. In the opinion of Howe, this shows acceptably good recovery efficiency.
According to Howe, the audit exercise revealed a well-operated and documented
operation of the treatment of bulk samples. There were no issues of sample integrity.
Audit results indicate a high efficiency of diamond recovery. The bulk sampling plant
facility established and operated by Shore conforms to industry standards. The audit
results for the recovery plant tailings were good, as expected, and tailings data were
accepted with no problems. Based on the review of the historical density tracer tests of
the DMS cyclone as well as results obtained by Howe during its audit, Howe was
satisfied with the DMS circuit efficiency.
P&E and Howe consider that the QA/QC program and results obtained were adequate to ensure
quality data to support Mineral Reserve Estimation work. Further, it is Howe’s and P&E’s
opinion that the sampling and processing procedures and QA/QC program for the underground
bulk sampling, LDD mini-bulk sampling and diamond processing program has been well
documented by Shore, and meets industry standards.
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13.3
DATA BASE VERIFICATION
P&E imported all collar, geology and LDD sample data into an Access format Gemcom
database. LDD batch sample intervals were then back-tagged against the geological wireframes
supplied by Shore and compared to the Shore geology logs. A small number of discrepancies
were noted by P&E. The database had a very low rate of error overall and those discrepancies
noted by P&E were resolved by Shore. P&E having reviewed the Project database believe it to
be suitable for Mineral Resource / Mineral Reserve Estimation purposes.
13.4
BULK DENSITY VALIDATION
Shore has undertaken a number of comprehensive bulk density programs on diamond drill hole
core, and a total of 2,661 bulk density values were available for this Mineral Resource Estimate.
P&E has reviewed the bulk density data and believe it to be suitable for Mineral
Resource / Mineral Reserve estimation purposes.
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14.0
ADJACENT PROPERTIES
The Star Diamond Project is located within the 50 km long by 30 km wide FALC kimberlite
province. At least 69 kimberlitic bodies have been drilled to date in this province, but there is no
current production from any of the kimberlites. The Orion kimberlite cluster with the FALC-JV
is 2 km N-NW of the Star Kimberlite deposit and is at an advanced exploration stage.
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15.0
MINERAL PROCESSING AND METALLURGICAL TESTING
15.1
METALLURGICAL TESTWORK
Important metallurgical parameters were obtained by processing 75,435.68 dry t of underground
bulk samples and 11,662.87 t of LDD samples from the Star Kimberlite deposit through Shore’s
processing plant. Final hand sorting of the x-ray and grease table concentrates was initially
carried out by SGS Lakefield in Ontario then this activity was switched to MSC in North
Vancouver, British Columbia.
The data obtained from processing the underground and LDD samples demonstrated that the Star
Kimberlite units have low densities with an average density of 2.27 t/m3 and subsequently
produce a low DMS yield with the average being 0.7 % of headfeed. This information indicates
that mineral separation using DMS will be relatively easy and the recovery plant size will not be
excessive.
The ROM feed is anticipated to be 100 % kimberlite, based on the samples processed and the
mine plan.
Other important design parameters obtained from processing in the BSP include:
•
•
•
•
•
plant mass balances;
feed size distribution;
tailings size distribution;
diamond recovery; and
diamond size distributions.
Additional process plant design parameters were obtained from laboratory scale and pilot scale
test work. Extensive ore characterization work was also completed.
Test work findings were:
•
On average, an additional 6.7 % and 3.7 %, -1 mm material are produced when Early Joli
Fou Kimberlite (“EJF”) and Pense Kimberlite (“PPK”) samples are scrubbed,
respectively.
•
On processing EJF samples with an average moisture content of 8.6 % through a
laboratory high pressure rolls crusher (“HPRC”) with an average operating pressure of 43
bar and moisture content of 8.6 % a product containing 30 % passing 1 mm was obtained.
Similar results were achieved for PPK with a moisture content of 7.2 %. At an operating
pressure of 45 bar a product containing 33 % passing 1 mm was obtained.
•
Based on abrasion index results carried out on 541 samples by SGS Lakefield, the Star
Kimberlite units may be classified as 53 % very soft, 25 % soft, 19 % medium and 3 %
hard.
•
During pilot testing with a high pressure cone crusher, the flow of kimberlite through the
crusher stopped on two occasions due to high moisture and high fine content, indicating
some of the Star Kimberlite deposit will require water to assist the flow of material
through the crushing cavity if cone crushers are installed.
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•
Bench scale thickening tests demonstrated low flocculant dosage rates (10 g/t to 20 g/t) to
settle slimes samples from the four major kimberlite types. Dosage rates must be
increased, up to 70 g/t, if waste materials such as shale are present.
•
Magnetic separation offers significant opportunity to reduce the quantity of DMS
concentrate prior to the x-ray and grease concentration processes, due to the presence of
ilmenite and magnetite.
Off-site autogenous milling pilot tests were conducted at SGS Lakefield, Ontario using a 6 ft x
2 ft mill and a 58 t sample of EJF Kimberlite from Orion South. Although not directly applicable
to the Star Diamond Project, the test work was used for comparative purposes in developing the
modelling parameters for the Star Kimberlite deposit. During the pilot milling, diamond simulant
breakage tests were completed to understand the relationship between mill operating parameters
and breakage.
AMEC believes that the amount and types of metallurgical test work performed is appropriate
for the PFS stage and is adequate to support the mineral processing modifying factors used to
convert Mineral Resources to Mineral Reserves. AMEC has used in-house data for most of the
recovery plant design and recommends suitable x-ray, wet magnetic separation and grease belt
test work if the Project is studied at a feasibility level.
15.2
MINERAL PROCESSING
During the course of the PFS three flow sheet options as listed below were evaluated:
•
option 1 – conventional diamond processing techniques including crushing, scrubbing,
screening, DMS, recrushing, thickening, x-ray sorting and grease recovery;
•
option 2 – similar to option 1 except unconventional high pressure jigging was used as a
concentration method to reduce DMS capacity; and
•
option 3 – a comminution circuit based on autogenous milling, classification, DMS,
magnetic separation, x-ray sorting and grease recovery.
The evaluation concluded that incorporating autogenous milling is preferable when treating soft
kimberlites with high clay contents, characteristics prevalent to the Star and Orion South
kimberlites. In addition, the autogenous milling offered an opportunity to simplify the flow sheet
and hence reduce capital and operating costs through the reduction of crushing and materials
handling equipment.
The process plant based on autogenous milling is designed with two process lines where
practical, with each process line having a capacity of 20,000 t/d. The plant nameplate capacity
will be 14.6 Mt/a, with provision for future expansion by increments of 20,000 t/d.
A bottom cut-off of 1.15 mm (3 diamond sieve) was selected for the process plant. During the
bulk sampling campaign, 98.03 % of the diamonds recovered by weight were greater than
1.15 mm representing 99.76 % of the value. In practice, screen panels with slotted 0.85 mm
openings will be selected and the panels will be allowed to wear to 1.15 mm allowing some
diamonds smaller than 1.15 mm to be recovered. The plant design is sufficiently flexible to raise
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the bottom cut-off size if market requirements and prices become less favourable for small
diamonds.
The plant top size selected was 45 mm, based on recovering all diamond sizes predicted to occur
within five years. This analysis was completed by Ore Pro X (Pty) Ltd. in South Africa.
The size range reporting to DMS will be -45 + 1 mm. To ensure optimal separation and recovery
efficiency this wide size range will be split into three narrower size ranges: -45 + 18 mm, -18 + 8
mm and -8 + 1 mm and fed to coarse, middles and fines DMS plants respectively.
At this stage, recrushing of DMS or recovery plant rejects has not been included. This decision
was based on the diamond recovery results obtained in Shore’s BSP following the treatment of
+1 mm material after completion of the autogenous milling tests, where only 1.33 % of the
diamonds were liberated after recrushing +6 mm DMS rejects. This indicates that diamond lockup in the production plant DMS rejects will be minimal. Space has been allocated in the process
plant building for future inclusion of recrush, if economical.
Attached to the production plant, Shore will incorporate the original BSP, but with modifications
for the purposes of:
•
auditing future mining benches in the pit to provide information for mine planning;
•
auditing the production plant to ensure efficient operation; and
•
processing exploration bulk samples from other kimberlite bodies.
A block flow diagram of the main process plant is shown in Figure 15-1. Figure 15-2 shows a
block flow diagram of the diamond recovery process that will process the DMS concentrate. The
features of the process plant incorporating autogenous milling are as follows:
•
primary crushing with an in-pit semi-mobile mineral sizer to produce a -400 mm product;
•
coarse ore stockpiling equipped with a stacker conveyor;
•
autogenous milling and classification where the ore is processed and split into three size
fractions, +45 mm, -45 +1 mm and -1 mm;
•
DMS feed preparation where the ore is washed and split into four size fractions, -45 +
18 mm, -18 +8 mm, -8 +1 mm and -1 mm;
•
DMS treating coarse ore in the size range -45 +18 mm;
•
DMS treating middlings in the size range -18 +8 mm;
•
DMS treating fine ore in the size range -8 +1 mm;
•
recovery plant incorporating magnetic separation to remove unwanted magnetic particles
in the size fractions -2 +1 mm, -4 +2 mm and -8 +4 mm;
•
the -2 +1 mm non-magnetic fraction will then be processed by grease;
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•
x-ray with grease as a scavenging step will be used to process the -4 +2 mm, - 8 +4 mm,
non-magnetic fractions;
•
x-rays with grease as a scavenging step will be used to treat the -18 +8 mm and -45
+18 mm DMS concentrates;
•
fines rejects disposal, where -1 mm material in slurry form is pumped to the processed
kimberlite (“PK”) containment area;
•
coarse rejects disposal, where the DMS rejects are combined and conveyed to a coarse
rejects dump (-45 + 1 mm);
•
water systems; and
•
compressed air systems.
The block flow sheets were further developed by Metso (autogenous milling (“AG milling”) and
DMS) and by AMEC (recovery plant, rejects disposal and water and air systems) to produce
detailed flow sheets, an equipment list and plant layouts suitable for cost estimation purposes at a
PFS level. AMEC provided plant layouts and the cost estimation for the process plant.
Additional layout optimization work and metallurgical testwork are recommended to advance
the autogenous milling plant design in the feasibility study stage of the Project. These
recommendations include recovery plant testwork and detailed mass and water balance
calculations.
AMEC believes that the process plant pre-feasibility design is sufficient to support a +/- 25 %
cost estimation for the purposes of converting Mineral Resources to Mineral Reserves.
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Figure 15-1: Block Flow Diagram of Mineral Processing
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Figure 15-2: Block Flow Diagram of the Diamond Recovery Process from DMS Concentrate
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16.0
MINERAL RESOURCE AND MINERAL RESERVE ESTIMATES
16.1
P&E (2009) UPDATED MINERAL RESOURCE ESTIMATE
The effective date of the P&E 2009 Mineral Resource Estimate is 23 February 2009 (Ewert et al.
2009). All Mineral Resource Estimation work reported here was done by F.H. Brown, M.Sc.
(Eng), CPG, Pr.Sci.Nat.
The Mineral Resource Estimate was derived from data supplied by Shore and included
underground drift bulk sampling comprising 66,545 t of kimberlite, 270 surface diamond core
drillholes, 213 underground diamond core drillholes and 103 LDD drillholes, of which 96 LDD
drillholes reported diamond sampling data. Seven LDD drillholes did not sample kimberlite due
to drilling difficulties (e.g. hole collapse or deviation). Topographic control was provided by two
separate regional airborne laser and digital camera surveys.
Kimberlite unit 3D wireframes for the Late Joli Fou kimberlite (“LJF”), Mid Joli Fou kimberlite
(“MJF”), EJF, PPK and Cantuar Kimberlite (“CPK”) were developed by Shore geologists using
sectional interpretation of diamond drilling. Where not defined by drilling, the distal limits of the
Star Kimberlite deposit were defined by EM signature. The kimberlite units have been modelled
to a lower limit of 70 m asl (approximately 350 m below surface).
Recovered diamond grades from LDD batch samples were adjusted upwards to compensate for
diamond breakage and loss during drilling. The ratio of the average middle-fraction diamond
grade between the LDD samples and the UG samples within the EJF Inner Zone was used to
compensate for the observed diamond damage. A calculated adjustment factor of 1.62 was
applied across the model for all units.
Shore commissioned WWW of Antwerp, Belgium to complete valuation studies of the Star
diamond parcels. Variable diamond prices were provided by kimberlite unit relative to the
WWW 11 March 2008 pricebook, and WWW confirmed on 12 January 2009 that the modelled
diamond prices estimated for the diamond parcel from Shore’s Star Kimberlite deposit in March
2008 remain reasonable and valid for inclusion in an economic model.
Mineral Resources were estimated in accordance with guidelines established by the CIM (2005).
Weighting of samples by linear Ordinary Kriging of adjusted LDD sample data was used for the
estimation of block grades, and kriging parameters were derived from the global EJF
variography.
Two passes were used for estimation. During the first pass, a minimum of four and a maximum
of six samples from two or more LDDs within 170 m (the semi-variogram range) of the block
centroid were required. All block grades estimated during the first pass were classified as
Indicated. During the second pass, blocks not populated during the first pass were estimated. A
minimum of three and a maximum of six samples from one or more LDDs within 340 m (twice
the semi-variogram range) of the block centroid were required. All block grades estimated
during the second pass were classified as Inferred. All tabulated Mineral Resources are contained
within a conceptual floating-cone pit shell (Tables 16.1, 16.2 and 16.3).
An additional 60 Mt to 70 Mt of diamondiferous material within the limits defined by the
kimberlite unit wireframes but beyond the range of the second pass were not estimated. P&E
believes that additional LDD sampling data are required for resource modeling of this tonnage.
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Table 16.1: Mineral Resource Statement for the Star Kimberlite Deposit Including the Star
Diamond Project (100 % Shore) and Star West (60 % Shore, 40 % Newmont)1,2,3,4,5,6,7
Class
Indicated
Inferred
UNITS
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Indicated
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Inferred
Tonnes
x 1000
11,507
8,002
80,516
32,120
18,617
896
151,659
426
3,178
2,672
19,857
1
30
26,164
Grade
cpht
15.03
15.64
16.60
9.67
5.42
4.00
13.51
7.84
13.99
15.86
10.87
4.96
3.58
11.70
Carats
x 1000
1,729
1,251
13,362
3,106
1,009
36
20,493
33
445
424
2,158
0
1
3,061
(1) Mineral Resources are accumulated within an optimized floating-cone pit shell.
(2) Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be
materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
(3) The quantity and grade of reported inferred resources in this estimate are conceptual in nature. There is no guarantee that all or any part of the
Mineral Resource will be converted into a Mineral Reserve.
(4) 1mm bottom cut-off assumed.
(5) WWW High scenario.
(6) Due to rounding figures may not add up to the totals shown.
(7) Reported at an internal cut-off value of $5.08/t for the CPK, EJF, MJF and LJF kimberlite units.
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Table 16.2: Mineral Resource Statement for the Star Diamond Project (100 % Shore)
only1,2,3,4,5,6,7
Class
Indicated
Inferred
UNITS
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Indicated
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Inferred
Tonnes
x 1000
4,985
8,002
58,886
27,378
1,651
158
101,062
347
3,178
1,282
17,762
0
25
22,594
Grade
cpht
12.67
15.64
16.57
9.72
4.60
4.54
14.24
6.32
13.99
17.30
10.94
0.00
3.62
11.65
Carats
x 1000
632
1,251
9,760
2,662
76
7
14,388
22
445
222
1,943
0
1
2,632
(1) Mineral Resources are accumulated within an optimized floating-cone pit shell.
(2) Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be
materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
(3) The quantity and grade of reported inferred resources in this estimate are conceptual in nature. There is no guarantee that all or any part of the
Mineral Resource will be converted into a Mineral Reserve.
(4) 1mm bottom cut-off assumed.
(5) WWW High scenario.
(6) Due to rounding figures may not add up to the totals shown.
(7) Reported at an internal cut-off value of $5.08/t for the CPK, PPK, EJF, MJF and LJF kimberlite units.
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Table 16.3: Mineral Resource Statement for Star West (60 % Shore, 40 % Newmont)
only1,2,3,4,5,6,7
Class
Indicated
Inferred
UNITS
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Indicated
CPK
PPK
EJF Inner
EJF Outer
MJF
LJF
TOTAL Inferred
Tonnes
x 1000
6,522
0
21,630
4,741
16,966
738
50,597
79
0
1,390
2,095
1
5
3,571
Grade
cpht
16.83
0.00
16.65
9.36
5.50
3.88
12.07
14.46
0.00
14.54
10.24
4.96
3.38
12.00
Carats
x 1000
1,098
0
3,602
444
933
29
6,105
11
0
202
215
0
0
428
(1) Mineral Resources are accumulated within an optimized floating-cone pit shell.
(2) Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be
materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.
(3) The quantity and grade of reported inferred resources in this estimate are conceptual in nature. There is no guarantee that all or any part of the
Mineral Resource will be converted into a Mineral Reserve.
(4) 1mm bottom cut-off assumed.
(5) WWW High scenario.
(6) Due to rounding figures may not add up to the totals shown.
(7) Reported at an internal cut-off value of $5.08/t for the CPK, PPK, EJF, MJF and LJF kimberlite units.
16.2
MINERAL RESERVE ESTIMATES
The Star Diamond Project Mineral Reserve Estimate was derived from the recent Mineral
Resource dollar value per tonne block model. Utilizing preliminary operating costs for mining,
processing and G&A along with engineered pit slopes, a pit optimization was undertaken to
derive a pit shell for design purposes. This five phase pit design includes vehicle access ramps,
conveyor ramps and berms. The pit design surface is used to determine which mineralization
contained within it from the resource model is to be converted to Mineral Reserves by dollar
value cut-off and the inclusion of appropriate ore losses and dilution.
A summary of Mineral Reserve for the Star open pit is shown in Table 16.4.
Table 16.4: Star Open Pit Mineral Reserve
Category
Ore
Tonnes
Cut-off Value
$/t
Ore Grade
cpht
Probable
170,838,000
$5.08
11.7
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Star Diamond Project - Report No 169
Page 52 of 169
The conversion of Star open pit Mineral Resources to Mineral Reserves does not utilize a direct
conversion of NI 43-101 stated resources for the following reasons:
1. The resource optimized pit shell utilized a single 25° overall slope whereas the reserve
optimized pit shell utilized a 30° slope in kimberlites and 16° in overburden.
2. The reserve pit design incorporates some indicated classification mineralization that is
outside the resource optimized pit shell due to the inclusion of vehicle access ramps,
conveyor ramps and berms.
3. The resource optimized pit shell utilized a preliminary set of operating cost parameters as
compared to the more definitive ones utilized in the reserve pit optimization.
The net result of the above factors is that the undiluted Indicated Resources in the reserve
optimized pit design were 6,927,000 t greater than the disclosed NI 43-101 Indicated Resource
tonnage of 151,659,000 t. Therefore the base undiluted Indicated Resource is 158,586,000 t at a
value of $34.34/t.
The conversion of the 158,586,000 undiluted reserve pit design tonnes to reserves included the
addition of 11.3 % dilution at a diluting grade of 0.73 cpht (equivalent to $1.94/t) and a
subsequent mining loss of 2.5 % in all phases of the pit design except Phase 1B, where the high
proportion of ore on the 250, 235, 220 and 205 benches did not allow for the acquisition of
11.3 % dilution. The average dilution on these four benches was 7.2 % and they maintained the
2.5 % mining loss.
Based on the above, the overall effective average dilution for the entire pit was 10.489 % which
translates into the following diluted tonnage calculation:
158,586,000 t x 1.10489 x 0.975 = 170,838,000 diluted t
The dollar value per tonne calculation is not tonnage dependent. Therefore the undiluted reserve
grade of 12.96 cpht (equivalent to $34.34/t) converts to a diluted reserve value by the following
reserve calculation:
12.96 cpht + (0.113 x 0.73 cpht)]/1.113 = 11.69 cpht
16.2.1
STAR KIMBERLITE DEPOSIT
The Reserve Estimate for the Star Kimberlite deposit open pit mine, at $5.08/t cut-off, is
170,838,000 t at an Ore Grade of 11.7 cpht (equivalent value of $31.04/t). Mining dilution of
11.3 % at 0.73 cpht (equivalent to $1.94/t) is included. Mining losses of 2.5 % are also
incorporated.
16.2.2
WASTE DUMPS
An estimated 605 Mm3 of overburden and waste rock with a projected 20 % swell factor
generated from the Star open pit will be disposed in the waste management area, comprising of
the Main Dump, 470 m el to a height of 45 m, Top Dump1, 500 m el and Top Dump2, 490 m el.
The capacity of these dumps is shown in Table 16.5. The waste management area is designed
with a final placement slope of 18.3° or 3H to 1V and is shown in Figure 16-1.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 53 of 169
Table 16.5: Waste Management Area Volume
Dumps
Main Dump 470 m el
Top Dump1 500 m el
Top Dump2 490 m el
Total
Volume (Mm3)
328
172
105
605 Mm3
Figure 16-1: Waste Management Area – Plan View
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 54 of 169
17.0
OTHER RELEVANT DATA AND INFORMATION
17.1
PRE-FEASIBILITY STUDY
Details of the subjects considered in the PFS are provided in the following Appendices.
•
•
•
•
•
•
•
•
•
•
•
17.2
Appendix A:
Appendix B:
Appendix C:
Appendix D:
Appendix E:
Appendix F:
Appendix G:
Appendix H:
Appendix I:
Appendix J:
Appendix K:
Mining
Processed Kimberlite and Water Management Structures
Hydrogeology and Water Management
Ancillary Buildings and Facilities
Infrastructure
Workforce, Health, Safety and Security
Environmental, Permitting and Closure
Construction and Development
Capital Costs
Operating Costs
Financial Evaluation
STAR-ORION SOUTH PROJECT PROPOSAL
In November, 2008, Shore announced that a project proposal for the Star-Orion South Diamond
Project had been submitted to the Environmental Assessment Branch of the Saskatchewan MOE.
The project proposal represents the first step in the EIA process and initiates discussion with
regulators and the public about the implications of the Project. The project proposal contains a
detailed project description of the Star-Orion South Diamond Project, which includes an open pit
on the Star Kimberlite deposit (based on the NI 43-101 compliant Mineral Resource Estimate Shore News Release February 23, 2009), a potential second pit at Orion South (dependent on the
results of underground bulk sampling and LDD), a common processing plant and associated
infrastructure. The project footprint is estimated to be between 3,000 and 4,000 ha (or 2.3 to
3.0 % of the FALC Provincial Forest), depending on the inclusion of Orion South.
The project proposal is intended to provide the MOE with sufficient project and environmental
information to initiate the EIA process and develop Project Specific Guidelines (“PSG”), which
outline the scope of the EIA. The satisfactory completion of the EIA, and the resultant EIS,
which will have assessed the environmental, social and economic impacts of the Project, will
then be the basis of potential Ministerial Approval, which if, granted, would allow the Company
to consider a production decision. In the event of a positive production decision, the Company
could apply for the requisite construction and other permits. The Project description presents
project alternatives for discussion with Provincial and Federal regulators and the public,
particularly the neighbouring communities. Throughout the EIA process, these alternatives will
be assessed from an environmental, social and economic perspective to determine an optimized
Project.
In July 2009, the Environmental Assessment Branch of the Saskatchewan MOE, in anticipation
of environmental assessment of the Star – Orion South Diamond Project, made the draft projectspecific guidelines available for public review with comments due initially by August 17, 2009
and recently extending the public review period until September 17, 2009.
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Star Diamond Project - Report No 169
Page 55 of 169
17.3
ENVIRONMENTAL ASSESSMENT
AMEC and Canada North Environmental Services (“CanNorth”) have been retained to prepare
an EIS for the Star Diamond Project. Baseline data collection is expected to be complete in 2009.
The EIA and the resultant EIS are expected to be completed in 2010.
17.4
HYDROGEOLOGY
Construction of a groundwater flow model will be undertaken. Water management issues, such
as open pit dewatering and dealing with large volumes of water that contain elevated levels of
total dissolved solids are also to be assessed.
Further information on hydrogeology and water management is discussed in Appendix C.
17.5
GEOTECHNICAL
The geotechnical assessment has been undertaken by SRK and Clifton. Collection and summary
of geotechnical data from the sampling programs has been completed.
17.6
DIAMOND CUTTING AND POLISHING
In early 2007 Shore selected 44 diamonds, weighing approximately 200 ct, from the Star bulk
sample parcel for a cutting and polishing (“C&P”) exercise. The stones selected for the exercise
included a spectrum of colour from top white to yellow, brown and grey, and generally more
challenging shapes. No sawables were included in the C&P parcel. The C&P for the lower
quality goods was completed at two manufacturing centres in Antwerp, Belgium and the higher
quality goods were processed in Perth, Australia.
The summarized results are shown below in Tables 17.1 and 17.2:
Table 17.1: Summary of the Results of the Cutting and Polishing Exercise
Rough Diamonds
Polished Diamonds
Weight
(Carats)
214.6
63.5
Estimated Total Value
(USD)
$149,198
$165,183
Price per Carat
(USD)
$695
$2,601
The C&P exercise was a great success and proved that a high quality polished product can be
produced from Star Kimberlite deposit diamonds. The overall polished yield of the parcel
(polished / rough) is 29.6 % and is reflective of the shapes and quality of the selected stones.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 56 of 169
Table 17.2: Results of the Cutting and Polishing Exercise
WWW
Weight
Carat
(Rough)
3.31
6.41
WWW
Price
Per
Carat
(Rough)
1,250
325
WWW
Value
USD $
(Rough)
4,138
2,083
Stone
No.
1
2
Kimberlite
Lithology
EJF
EJF
3
EJF
7.81
1,000
7,810
4
EJF
3.6
530
1,908
5
EJF
3.47
90
312
6
7
8
EJF
EJF
EJF
3.4
3.37
5.53
125
1,251
600
425
4,216
3,318
9
EJF
7.47
1,250
9,338
10
11
EJF
EJF
8.1
10.11
150
550
1,215
5,561
12
13
EJF
EJF
3.31
2.22
1,475
975
4,882
2,165
14
15
CPK
CPK
3.51
3.14
1,425
560
5,002
1,758
16
17
18
19
20
CPK
CPK
CPK
CPK
EJF
4.28
3.92
8.05
2.34
3.06
92
655
145
850
1,100
394
2,568
1,167
1,989
3,366
21
22
EJF
EJF
1.96
2.78
680
750
1,333
2,085
23
EJF
19.67
1,300
25,571
24
25
EJF
MJF
1.99
3.97
750
140
1,493
556
26
MJF
1.62
1,200
27
28
MJF
MJF
2.34
2.55
29
EJF
2.35
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Polished
Weight
Carat
1.28
0.77
0.41
1.03
0.65
2.36
0.34
0.95
0.6
0.28
1.04
1.01
0.92
1.57
1.18
1.02
1.4
1.8
0.7
0.17
1.09
1
0.72
0.1
5.37
1.68
0.7
0.22
0.14
1.1
Model
pear
round
round
round
marquis
round
round
round
oval
pear
round
round
round
oval
pear
emerald
rough
round
round
trillant
pear
round
round
radiant
round
round
rough
round
heart
round
round
round
princess
round
round
marquis
oval
round
round
marquis
emerald
1,944
0.76
radiant
60
435
140
1,109
525
1,234
0.35
0.93
0.15
0.68
round
round
round
round
0.25
0.66
1.8
1.25
0.83
0.21
2.02
0.17
1.04
Estimated
Price Per
Carat
USD $
(Polished)
2,500
1,700
2,100
1,500
1,600
2,450
675
1,350
1,250
750
700
5,400
1,400
3,700
4,600
4,000
f
j
id
h/i
h/i
ik
j
1,250
650
4,500
4,500
2,600
875
5,400
650
2,800
h
lbr
g
f
f
iij
i/j
i/j
d
llb
tlb
lbr
fancy c
(yellow)
f
f
f
ttlb
1,850
1,600
3,700
575
2,200
3,450
1,850
200
4,600
2,800
3,600
650
550
2,600
Estimated
Value
USD $
(Polished)
3,200
1,309
861
1,545
1,040
5,782
230
1,283
750
210
728
5,454
1,288
5,809
5,428
4,080
Not cut
313
429
8,100
5,625
2,158
184
10,908
476
2,912
Not cut
2,590
2,880
2,590
98
2,398
3,450
1,332
20
24,702
4,704
2,520
143
77
2,860
4,000
3,040
275
550
180
1,250
96
512
27
850
Colour
e
f
e
h
tlb
lb
h
j
e
e
dbr
d
h
j
f
e
Page 57 of 169
WWW
Weight
Carat
(Rough)
3.31
1.99
WWW
Price
Per
Carat
(Rough)
70
570
WWW
Value
USD $
(Rough)
232
1,134
Stone
No.
30
31
Kimberlite
Lithology
EJF
EJF
32
EJF
4.62
425
33
EJF
1.62
34
EJF
35
36
Polished
Weight
Carat
1,964
0.65
0.1
1.18
Model
rough
round
round
round
900
1,458
0.73
round
3.72
280
1,042
EJF
EJF
2.91
3.33
945
945
2,750
3,147
37
38
39
40
EJF
EJF
EJF
EJF
2.84
4.03
2.36
8.93
1,700
1,200
435
1,300
4,828
4,836
1,027
11,609
41
42
EJF
EJF
2.79
2.99
500
450
1,395
1,346
43
44
EJF
EJF
19.21
2.46
140
845
2,689
2,079
45
EJF
3.77
425
1,602
46
47
EJF
EJF
2.92
5.16
660
980
1,927
5,057
1.01
0.7
1.03
0.93
0.41
1
1.49
0.45
1.76
0.68
1.02
1.07
0.31
1.51
0.28
0.69
0.57
0.7
0.56
1.51
0.46
round
oval
round
round
round
round
radiant
round
round
round
round
round
round
pear
round
round
round
heart
oval
pear
pear
Total
214.6
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
$149,198
63.5
Colour
g
g
f
fancy c
(yellow)
j
j
k
j
g
g
f
h
ttlb
h
ttlb
tlb
h
tlb
f
g
lbr
lbr
lbr
lbr
lbr
Estimated
Price Per
Carat
USD $
(Polished)
1,200
650
1,350
Estimated
Value
USD $
(Polished)
Not cut
780
65
1,593
4,300
3,139
1,100
1,100
2,100
1,450
750
5,200
3,000
550
3,000
190
1,450
1,400
650
2,700
450
650
1,150
1,350
1,150
2,100
750
1,111
770
2,163
1,349
308
5,200
4,470
248
5,280
129
1,479
1,498
202
4,077
126
449
656
945
644
3,171
345
$165,183
Page 58 of 169
18.0
INTERPRETATION AND CONCLUSIONS
The PFS has assessed the economic viability of developing the Star Diamond Project as a standalone project based on suitable and sufficient levels of technical, environmental, and financial
information, and stated assumptions and has allowed the calculation of a Mineral Reserve
Estimate.
Based on the results of the PFS, it is P&E’s opinion that the PFS has demonstrated the potential
of the Project to become a significant diamond producer, and that the Project merits further
assessment and should be advanced it to its FS stage.
18.1
MINERAL RESERVES
The Star Kimberlite deposit is a significant diamond deposit with a Mineral Reserve Estimate, at
$5.08/t cut off, of 170,838,000 t at an ore grade of 11.7 cpht (equivalent value of $31.04/t) taking
projected mining dilution and mining losses into account.
An opportunity for improvement is to conduct additional exploration with a view to converting a
portion or all of the Project’s Inferred Resources to the Probable Mineral Reserve category.
The resource modeling of the Star Kimberlite deposit was extended to a depth of 70 m asl;
however, diamond drilling has confirmed the presence of diamondiferous MJF kimberlite
material within the central diatreme to a depth of -270 m asl. It is not unusual for an open-pit
diamond mine to convert to underground mining when open pit mining becomes uneconomic
due to ever-increasing stripping ratios. Diamond mines that have converted to underground
mining, or that are currently planning to replace production with underground mining, include
Cullinan, Kimberley and Venetia in South Africa, Jwaneng in Botswana, Ekati and Diavik in
Canada, Argyle in Australia and Mir in Russia.
18.2
PROCESS PLANT
The PFS assumed that the plant will process 14.2 Mtpa ore which is equivalent to 97.3 % of the
14.6 Mtpa plant’s nameplate capacity. This allowed for possible mine production interruptions,
extended the mine production schedule and increased some indirect and operating costs. There
is an opportunity to improve ore stockpiling and process 14.6 Mtpa ore and reduce some of the
indirect and operating costs utilized in the cashflow.
18.3
DIAMOND PRICES
The results of the sensitivity analysis show that Project is most sensitive to fluctuations in the
diamond head grade, diamond prices, and the US:CAD currency exchange rate. Samples of Star
Kimberlite deposit diamonds were priced by WWW in March of 2008. Since that time,
reductions in diamond prices and an offsetting increase in US$ strength has yielded a similar
CAD$ diamond value per carat. Expectations are that Shore will sell its rough diamonds through
a yet to be defined sales arrangement in Antwerp at an assumed marketing cost of 2.2 % of gross
value.
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Star Diamond Project - Report No 169
Page 59 of 169
18.4
ROYALTIES
The Government of Saskatchewan is developing its diamond royalty structure, and as such the
financial analysis in the PFS utilizes an assumed diamond royalty structure that is generally
consistent with the diamond royalty structures applied in the Northwest Territories and Ontario,
Canada. Shore has consulted with government officials in regard to possible diamond royalty
structure approaches. Expectations are that the Government of Saskatchewan will make a
competitive diamond royalty structure available for public review in late 2009.
18.5
OVERBURDEN STRIPPING
The proposed approach to stripping the overburden is based on the results and recommendations
of geotechnical and hydrological studies, and the consultants’ experience at other projects. The
stratigraphy in the pit area has been well-characterized as a result of field investigations and
testing and technical assessments. The geotechnical stability of the pits walls in the overburden
and in the sub-overburden materials has been assessed. The results of hydrologic pit slope
depressurization and mine dewatering assessments including preliminary three dimensional
modeling indicate that an active dewatering well system would reduce the residual passive
inflow (“RPI”) into pit to levels that are inconsequential relative to the mining operations.
Opportunities for improvement include redesigning the intermediate pit walls to increase the
length of straight faces available to the IPCC system and increasing the performance of the IPCC
system.
18.6
MINING
There is a risk that more than 40 % of the ore and waste rock will need to be drilled off and
lightly blasted and that wet conditions may restrict the use of ammonium nitrate and fuel oil
(“ANFO”).
18.7
DEWATERING
The proposed pit water management system, can handle the projected volumes of: runoff,
surface water and shallow and deep groundwater that are expected to flow or be pumped into the
water management reservoir.
The PFS water balance indicates that in every year of production the water in the processed
kimberlite containment facility (“PKCF”) overflows and discharges water to the Saskatchewan.
The PFS water balance forecasted that additional water would be required by the processing
plant in every year of operation. This supplemental water could be provided by drilling
dewatering wells around the Orion South Kimberlite and / or taking makeup water from the
PKCF. The additional water that is required in an average year and a dry year are 0.83 Mm3 and
10.24 Mm3, respectively.
18.8
ENERGY
There is a possibility that the time required for SaskPower to engineer, permit, procure and
construct the powerline and associated upgrades may take longer than expected and may delay
the Project start-up date.
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Star Diamond Project - Report No 169
Page 60 of 169
18.9
TRANSPORTATION
There is an opportunity to provide a rail spur to the site which would reduce the cost of transport
to site for bulk supplies such as fuel and explosives.
18.10 ENVIRONMENT
The Environmental Assessment Branch of the Saskatchewan MOE has made draft guidelines for
the preparation of an EIS available for public review and comment in regard to Shore Gold’s
proposed Star – Orion South Project (EIA Notice under Section 10, July 13, 2009). The Project
includes the excavation of an open pit at the Star Kimberlite deposit and a potential second pit at
the Orion South deposit and constructing a common processing plant and associated
infrastructure.
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Star Diamond Project - Report No 169
Page 61 of 169
19.0
RECOMMENDATIONS
The undertaking of the PFS resulted in the development of the following recommendations
which should be considered during the advancement of the Project to the FS stage.
19.1
MINING
Revisit the IPCC productivity estimates utilizing quarterly bench plans tracing bench and IPCC
system layout, equipment and conveyor moves, conveyor system extensions, sinking cuts, and
other factors and risks affecting IPCC productivity and costs in close cooperation with several
established IPCC suppliers. Concurrently revisit the proposed ore mining, sizing and conveying
system, pit design and mine production schedule.
Finalize the geotechnical pit slope and related pit dewatering system and pit dewatering system
design parameters and monitoring program.
Revisit the financial evaluation for the Project when the Government of Saskatchewan makes its
diamond royalty structure available for public review and comment.
19.2
WATER MANAGEMENT
Finalize the design of the system that will convey the process water and the excess water in the
water management reservoir into the Saskatchewan River (i.e. into Duke Ravine or piped into
the river).
Refine all aspects of the water balance to account for monthly, seasonal and climatic variability
and to confirm the assumptions made in the PFS.
19.3
PROCESSING
The following work is recommended during the FS to confirm concepts and optimize plant
design:
•
Plant Layout: Develop the plant layout in greater detail and continue layout
optimization.
•
Slimes Pumping Testwork: Conduct slimes pumping tests to determine pressure drop
for various solids concentrations. This will assist with proper slimes pump selection.
•
Wet Magnetic Separator Testwork: Conduct suitable tests using the proposed magnetic
separator machines to verify throughputs, product splits and efficiency.
•
Grease Belt Testwork: Conduct grease belt testwork to confirm throughput, yield and
efficiency. Ideally this work will require diamonds, or at the very least diamond
simulants.
•
X-ray Testwork: Conduct x-ray testwork using the proposed x-ray machines to verify
throughputs, tracer recovery efficiencies and yields.
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Star Diamond Project - Report No 169
Page 62 of 169
•
Plant Mass and Water Balance: It is recommended to develop a complete plant mass
and water balance for three feed size distributions (average, coarse and fine) using the
MetSim® software package or equivalent.
•
Coarse Cyclone Selection: It is recommended to review the selection of cyclones for the
coarse DMS duty, to determine if a 750 mm diameter cyclone with a nominal capacity of
300 t/h would be a better choice.
19.4
INFRASTRUCTURE
It is recommended that a detailed assessment of the heating requirements be completed and use
this as a basis to obtain an updated proposal from SaskEnergy / Transgas for natural gas supply
to the site.
It is recommended that a detailed road routing and design study for the main access road to the
site be completed.
19.5
BUDGET FOR FUTURE STUDY WORK
It is recommended that Shore advance the Star Diamond Project to the FS with the following
budget:
Geotechnical Studies (overburden/kimberlite pit slopes) .......................... $235,000
Hydrogeological Studies ............................................................................ $130,000
Process Testwork and Design .................................................................... $100,000
Permitting and EIA Completion................................................................. $600,000
FS ............................................................................................................ $1,750,000
Total ........................................................................................................ $2,815,000
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 63 of 169
20.0
REFERENCES
CIM (2003) Guidelines for the Reporting of Diamond Exploration Results – Final. CIM
Standing Committee, CIM website (www.cim.org), 6p.
CIM (2005) NI 43-101 – Standards of Disclosure for Mineral Projects, including Form FI –
technical report and companion policy, dated December 30, 2005 (www.cim.org).
Clifton Associates Limited (2008) Preliminary Geo-technical and Geological Report for the Fort
à la Corne, Saskatchewan. Clifton Associates Limited, File No. R3832, dated June 31, 2008.
Clifton Associates Limited (2009a) Geotechnical field program summary: Star Kimberlite, Fort à
la Corne Kimberlite Field, Saskatchewan, dated March 9, 2009.
Clifton Associates Limited (2009b) Pre-feasibility stability evaluation of Star pit overburden
slopes. Memorandum to Shore Gold Inc. from A. Wayne Clifton, P.Eng., Clifton Project
R383.10, March 27, 2009.
Coopersmith, H.G. (2006) Visit report Shore Gold Inc. Star Project, Saskatchewan, dated March,
2006.
Coopersmith, H.G. (2009) AMEC site visit to Star Project, March 14, 2006 – Core drilling audit,
dated June 2, 2006.
Eggleston, T., Parker, H., Brisebois, K., Kozak, A., and Taylor, G. (2008) Shore Gold Inc., Star
Diamond Project, Fort à la Corne, Saskatchewan, Canada, NI 43-101 Technical Report. NI 43101 report prepared by AMEC Americas Limited for Shore Gold Inc., June 9, 2008.
Ewert, W.D., Brown, F.H., Puritch, E.J. and Leroux, D.C. (2009) Technical Report and Resource
Estimate Update on the Star Diamond Project, Fort à la Corne area, Saskatchewan, Canada. NI
43-101 report prepared by P&E Mining Consultants Inc. for Shore Gold Inc., March 26, 2009.
Harvey, S. (2009) Technical Report on the Fort à la Corne Joint Venture Diamond Exploration
Project, Fort à la Corne Area, Saskatchewan, Canada. NI 43-101 report prepared by Shore Gold
Inc. for Kensington Resources Ltd., March 19, 2009.
Hydrologic Consultants Inc. (2005) Preliminary hydrogeologic evaluation of Fort à la Corne
project area and predicted ground water conditions during mining, November, 2005.
Hydrologic Consultants Inc. (2007) Pre-feasibility Level Hydrogeologic Investigation of Star
Kimberlite Area. Hydrologic Consultants Inc. of Colorado, HCI-1819, dated August, 2007.
KPMG LLP. (2009) Substantively enacted income tax rates for general corporations. General
corporate income rate, substantively enacted as of March 31, 2009, for years 2008 to 2012 and
beyond, dated March 31, 2009.
Leroux, D. (2008a) Technical Report on the Star Diamond Project, Fort à la Corne Area,
Saskatchewan, Canada. NI 43-101 report prepared by A.C.A. Howe International Ltd. for Shore
Gold, March 20, 2008.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 64 of 169
Leroux, D. (2008b) Technical Report on the Fort à la Corne Joint Venture, Diamond Exploration
Project, Fort à la Corne area, Saskatchewan, Canada. NI 43-101 report prepared by A.C.A.
Howe International Ltd. for Kensington Resources Ltd., March 20, 2008.
Leroux, D. (2007) Technical Report on the Star Diamond Project, Fort à la Corne area,
Saskatchewan, Canada. NI 43-101 report prepared by A.C.A Howe International Ltd. for Shore
Gold Inc., March 15, 2007.
Ryans, H. (2006) Report on Visit to Bulk Sampling Facilities of Shore Gold – Fort à la Corne,
Saskatchewan. AMEC Americas memorandum, 8 p.
Shore Gold Inc. (2008) Project Proposal Star-Orion South Diamond Project. Report prepared by
Shore Gold Inc. with assistance from AMEC Earth and Environmental. Submitted to the
Environmental Assessment Branch of the Saskatchewan Ministry of Environment, November 3,
2008.
SRK Consulting (2009) Star Kimberlite pit slope recommendations. SRK Consulting
memorandum to Shore Gold Inc. SRK Project 2CS016.004, dated June 17, 2009.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 65 of 169
21.0
CERTIFICATES
CERTIFICATE OF QUALIFIED PERSON
DAVID A. ORAVA, P. ENG.
19 Boulding Drive,
Aurora, Ontario, L4G 2V9,
I, David A. Orava, M.Eng., P. Eng., do hereby certify that:
1.
I am an Associate Mining Engineer at P&E Mining Consultants Inc. and President of Orava Mine Projects Ltd.
2.
I am a graduate of McGill University located in Montreal, Quebec, Canada at which I earned my Bachelor
Degree in Mining Engineering (B.Eng. 1979) and Masters in Engineering (Mining - Mineral Economics
Option B) in 1981. I have practiced my profession continuously since graduation. My summarized career
experience is as follows:
- Mining Engineer – Iron Ore Company of Canada. ....................................................... 1978-1980
- Mining Engineer – J.S Redpath Limited / J.S. Redpath Engineering. .......................... 1981-1986
- Mining Engineer & Manager Contract Development – Dynatec Mining Ltd. ............. 1986-1990
- Vice President – Eagle Mine Contractors .............................................................................. 1990
- Senior Mining Engineer – UMA Engineering Ltd. ............................................................... 1991
- General Manager - Dennis Netherton Engineering ..................................................... 1992-1993
- Senior Mining Engineer – SENES Consultants Ltd. .................................................... 1993-2003
- President – Orava Mine Projects Ltd. ................................................................... 2003 to present
- Associate Mining Engineer – P&E Mining Consultants Inc. ................................ 2006 to present
3.
I am licensed by the Professional Engineers of Ontario (License No. 34834119).
4.
This certificate applies to the technical report titled “Technical Report and Preliminary Feasibility Study on The
Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada”, (the “Technical Report”) with an effective
date of August 17, 2009.
5.
I am responsible for authoring the Executive Summary, Appendices F and K in their entirety, as well as
authoring Appendices A.1 to A.1.3, A.4 to A.9, I.1, I.3 to I.3.5, J.1 to J.3.5 and J.5 to J.5.1.1 and Section 16.2.2
as well as co-authoring Sections 1.0, 2.0, 18.0 and 19.0 and Appendix I.2, of the Technical Report.
6.
I have not visited the Star Kimberlite Property.
7.
As of the date of this certificate, to the best of my knowledge, information and belief, the technical report
contains all scientific and technical information that is required to be disclosed to make the technical report not
misleading.
8.
I am an independent of the issuer applying all of the tests in sect 1.4 of NI 43-101.
9.
I have not had any prior involvement with the Star Diamond Project that is the subject of this technical report.
10. I have read NI 43-101 and Form 43-101F1 and the Report has been prepared in compliance therewith.
11. I am a “qualified person” for the purposes of NI 43-101 due to my experience and current affiliation with a
professional organization (Professional Engineers of Ontario) as defined in NI 43-101.
Effective Date: August 17, 2009
Signed Date: August 31, 2009
{SIGNED AND SEALED}
[David Orava]
____________________________________
David Orava, M.Eng., P.Eng.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 66 of 169
CERTIFICATE OF QUALIFIED PERSON
DANIEL C. LEROUX, P. GEO
37 Pittmann Cres, Ajax, Ontario, L1S 3G4
I, Daniel C. Leroux, B.Sc., P.Geo. (ON, SASK), do hereby certify that:
1.
I am a Vice President with the firm of A.C.A. Howe International Limited, Mining and Geological Consultants
(“Howe”) located at 365 Bay St., Suite 501, Toronto, Ontario, Canada, M5H 2V1;
2.
This certificate applies to the technical report titled “Technical Report and Preliminary Feasibility Study on the
Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada” (the “Technical Report”) with an effective
date of August 17, 2009.
3.
I graduated with a Bachelor of Science, Geology degree from Laurentian University in 1993 and have practiced
the profession of geoscience since graduation. I have been employed with Howe since 1993; since 2007 as
Vice President, from 2005 to 2007 as a Senior Consulting Geologist, from 1999 to 2004 as an associate
consulting geologist and from 1993 to 1999 as Project Geologist. I have a total of 15 years of direct experience
with diamond projects located in Canada, Africa and South America, including managerial responsibilities for
all various exploration stage diamond projects from conceptual grassroots exploration projects to bulk sampling
and pre-feasibility studies on advanced diamond projects. I also have extensive diamond processing
experience of various types of process plant technology (e.g. jig and rotary pan plants) utilized in both primary
and alluvial diamond mining operations worldwide. Additional experience includes the completion of various
National Policy 2A and NI 43-101 technical reports for both primary and alluvial diamond projects worldwide.
4.
I am a Professional Geoscientist (P.Geo.) registered with the Association of Professional Geoscientists of
Saskatchewan (APEGS, No. 10475) and with the Association of Professional Geoscientists of Ontario (APGO,
No. 742), a member of the CIMM and of the Society of Economic Geologists.
5.
I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify
that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past
relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.
6.
I completed three separate site visits to the Star Diamond Project; from February 9-10, 2007, from December
14-15, 2007 and from July 14-16, 2008 respectively.
7.
I am responsible for Sections 11 through 13 inclusive of the Technical Report.
8.
I am independent of Shore Gold Inc. applying all of the tests in section 1.4 of National Instrument 43-101.
9.
I have had prior involvement with the Star Kimberlite project that is the subject of this report. The nature of my
involvement is that I have worked on the Star Diamond Project since January 5, 2004, as an independent
consulting geologist for A.C.A. Howe International Limited, to act as the Independent Qualified Person and to
assist Howe contractors and Shore staff in the day to day operation and supervision of both the underground
mapping and sampling program and the process plant, review the data entry, data validation and monitor the
QA-QC of the bulk sampling program with Shore’s staff. I was on site for over 60 % of the duration of the
Phase 1 to 3 bulk sampling programs. The information and data used in this report are public and were obtained
from the references cited and data collected by Shore during their previous exploration programs. I am a coauthor of the technical report titled “Technical Report and Resource Estimate Update on The Star Diamond
Project, Fort à la Corne Area, Saskatchewan, Canada, NI 43-101 Technical Report” dated March 2, 2009.
10. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in
compliance with that instrument and form.
11. As of the date of the certificate, to the best of my knowledge, information and belief, the Technical Report
contains all scientific and technical information that is required to be disclosed to make the Technical Report
not misleading.
Effective Date: August 17, 2009.
Signed Date: August 31, 2009
{SIGNED AND SEALED}
[Daniel C. Leroux]
________________________________
Daniel C. Leroux, B.Sc., P. Geo. (ON, SASK)
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 67 of 169
CERTIFICATE OF QUALIFIED PERSON
WAYNE CLIFTON, P. ENG.
340 Maxwell Crescent, Regina, SK S4N 5Y5
Tel: (306) 721 7611
Email: wayne_clifton@clifton.ca
I, .Wayne Clifton, do hereby certify that:
1.
I am a graduate of University of Saskatchewan located in Saskatoon, SK at which I earned my Bachelor Degree
in Civil Engineering (B.Eng. 1963) and Masters in Civil Engineering (MSc. 1965), followed by an MSc and
DIC in Soil Mechanics (Geotechnical Engineering) from Imperial College, University of London, 1966. I have
practiced my profession continuously since graduation. My career experience is summarized as follows:
•
•
•
1966 - 1973:
1973 - to present:
1978 - to present:
Scientists.
Senior Geotechnical Engineer, Saskatchewan Highways and Transportation
Consulting Geotechnical Engineer
President and Senior Principal, Clifton Associates Ltd, Consulting Engineers and
2.
I am licensed by the Professional Engineers and Geoscientists of BC (No. 17781); Professional Engineers,
Geologists and Geophysicists of AB (No. M33284); Professional Engineers and Geoscientists of SK
(No. 1758); and Professional Engineers and Geoscientists of MB (No. 25417).
3.
This certificate applies to the technical report titled “Technical Report and Preliminary Feasibility Study on the
Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada, (the “Technical Report”) with an effective
date of August 17, 2009.
4.
I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify
that by reason of my education, affiliation with professional association (as defined in NI 43-101) and past
relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.
5.
I am responsible for co-authoring portions of Appendix A.3 and A3.1 in the Technical Report.
6.
I have visited the Star Kimberlite Property several times during 2007-08, most recently on September 18, 2008.
7.
As of the date of this certificate, to the best of my knowledge, information and belief, the technical report
contains all scientific and technical information that is required to be disclosed to make the technical report not
misleading.
8.
I am independent of the issuer applying all of the tests in Section 1.4 of NI 43-101.
9.
I have had prior involvement with the Property that is the subject of this technical report, having produced
previous technical reports on Geotechnical Conditions at The Orion and Star sites
10. I have read NI 43-101 and Form 43-101F1 and the Report has been prepared in compliance therewith.
Effective Date: August 17, 2009
Signing Date: August 31, 2009
{SIGNED AND SEALED}
[Wayne Clifton]
Wayne Clifton, P.Eng.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 68 of 169
CERTIFICATE OF QUALIFIED PERSON
JAROSLAV JAKUBEC, C. ENG
SRK Consulting
Suite 2200 -1066 West Hasting
Vancouver, BC
Telephone: (604) 681-4196
Fax: (604) 681-5532
E-mail: jjakubec@srk.com
I, Jaroslav Jakubec, C.Eng., am employed as Manager of the Mining and Geology Group in Vancouver for SRK
Consulting (Canada) Inc. (SRK) with an office at Suite 2200, 1066 West Hastings Street, Vancouver, B.C., Canada;
1.
I am a registered Chartered Engineer (No 509147) and member of the Institute of Materials, Minerals and
Mining in the United Kingdom.
2.
I am a graduate of the Mining University in Ostrava, Czech Republic with a MSc. in Mining Geology in 1984.
3.
I have practiced my profession continuously since 1984 and have been involved in project management, mine
design, due diligence studies, geological and geotechnical modeling around the world. I have direct operational
experience from a mine in Canada and have been involved in diamond mining studies in Canada, Russia, South
Africa, Botswana, Australia and China.
4.
As a result of my experience and qualifications, I am a Qualified Person as defined in the National Instrument
43-101.
5.
I was previously involved in the Star Diamond Project. I have had prior involvement with the Property that is
the subject of this technical report, having produced previous technical reports on Geotechnical Conditions at
The Orion and Star sites.
6.
I have visited the Star Kimberlite property in Saskatchewan in May 11-13 2005, October 16-21 2005 and
September 5-11 2006.
7.
I am responsible for authoring Appendices A.2, A.3.2 and A.3.3 and co-authoring A.3 of the Technical Report,
titled “Technical Report and Preliminary Feasibility Study on The Star Diamond Project, Fort à la Corne Area,
Saskatchewan, Canada, (the “Technical Report”) with an effective date of August 17, 2009.
8.
I am not aware of any material fact or material change with respect to the subject matter of this technical report
that is not reflected in this report and that the omission to disclose would make this report misleading.
9.
I am independent of Shore Gold Inc.in accordance with the application of Section 1.4 of National Instrument
43-101.
10. I have read National Instrument 43-101 and Form 43-101FI and this report has been prepared in compliance
with same.
Effective Date: August 17, 2009
Signing Date: August 31, 2009
{SIGNED AND SEALED}
[Jaroslav Jakubec]
Jaroslav Jakubec, C.Eng.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 69 of 169
CERTIFICATE OF QUALIFIED PERSON
IAN JUDD-HENREY, B.Sc., M.Sc., P.Geo.
I, Ian B. Judd-Henrey, 3017 Faithfull Ave, Saskatoon, Saskatchewan S7K 8B3, do hereby certify that:
1.
I am an associate Hydrogeologist with AMEC Earth and Environmental, employed since January 8, 2007.
2.
I graduated with an Honours Bachelor of Science degree in Earth Sciences from the University of Waterloo in
1984 and a Master of Science degree in Earth Sciences (Hydrogeology) from the University of Waterloo in
1992
3.
I am a member of the National Groundwater Association, Canadian Institute of Mining and Metallurgy
(Saskatoon Chapter), a P. Geo., Registered in the Province of Saskatchewan (APEGS No. 12324) and in the
Province of New Brunswick (APEGNB No. L4368), and a P.Geo. in the Province of Alberta (APEGGA No.
M101552).
4.
I have worked as a geologist, geophysicist and hydrogeologist for a total of 23 years since obtaining my B.Sc.
degree.
5.
I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify
that by reason of my education and past relevant work experience, I fulfill the requirements to be a “qualified
person” for the purposes of NI 43-101.
6.
I have visited the Star Diamond Project several times in 2006 and 2007 with the last time being August 15-17,
2007. I have had prior involvement with the property in that I conducted a limited environmental investigation
on the site while I was employed with Saskatchewan Research Council;
7.
I am responsible for Sections 17.2 to 17.4, 18.7, 18.10 and 19.2 and Appendix C and G of the technical report
titled “Technical Report and Preliminary Feasibility Study on the Star Diamond Project, Fort à la Corne,
Saskatchewan, Canada” (the ‘Technical Report’), with an effective date of August 17, 2009.
8.
As of the date of this certificate, to the best of my knowledge, information and belief, the technical report
contains all scientific and technical information that is required to be disclosed to make the technical report not
misleading;
9.
I am independent of the issuer applying all of the tests in section 1.4 of National Instrument 43-101;
10. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in
compliance with that instrument and form.
Effective Date: August 17, 2009
Signing Date: August 31, 2009
{SIGNED AND SEALED}
[Ian Judd-Henrey]
________________________________
Ian Judd-Henrey, M.Sc. P.Geo
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 70 of 169
CERTIFICATE OF QUALIFIED PERSON
ALEXANDRA J. KOZAK, P.ENG.
AMEC Americas Limited
111 Dunsmuir Street, Suite 400
Vancouver, BC
Tel: (604) 664-4578
Fax: (604) 664-3057
alexandra.kozak@amec.com
I, Alexandra J. Kozak, P.Eng., am employed as Manager, Process Engineering with AMEC Americas Limited.
1.
This certificate applies to the technical report entitled “Technical Report and Preliminary Feasibility Study on
the Start Diamond Project, Fort à la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective
date of August 17, 2009.
2.
I am a member of the Association of Professional Engineers and Geoscientists of British Columbia. I graduated
from the University of Alberta with a Bachelor of Science degree in Mineral Process Engineering in 1985.
3.
I have practiced my profession continuously since 1985 and have been involved in operations in Canada and
Guyana and preparation of scoping, pre-feasibility, and feasibility level studies for gold, base metal and
diamond properties in Canada, United States, Peru, Mexico, Mongolia, Ghana, and New Guinea. I am currently
a Consulting Engineer and have been so since September 1996.
4.
As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–
101 Standards of Disclosure for Mineral Projects (NI 43–101).
5.
I have not visited the Star Diamond Project.
6.
I am responsible for Section 15, Mineral Processing and Metallurgical Testing and those portions of the
summary, conclusions and recommendations that pertain to that section of the Technical Report. I was assisted
by Harry Ryans, AMEC Process Specialist, who reviewed aspects of the process plant conceptual design, and
the diamond sampling completed on the Project to date.
7.
I am independent of Shore Gold Inc. as independence is described by Section 1.4 of NI 43–101.
8.
I have previously acted as a qualified person for the Star Diamond Project, Fort à la Corne, Saskatchewan,
Canada, NI 43-101 Technical Report prepared by AMEC Americas Limited for Shore Gold Inc., June 9, 2008.
9.
I have read NI 43–101 and this Technical Report has been prepared in compliance with that Instrument.
10. As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report
contains all scientific and technical information that is required to be disclosed to make the Technical Report
not misleading.
Effective Date: August 17, 2009
Signing Date: August 31, 2009
{SIGNED AND SEALED}
[Alexandra J. Kozak]
Alexandra J. Kozak, P.Eng.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 71 of 169
CERTIFICATE OF QUALIFIED PERSON
CAIUS PRISCU, PH.D, P.ENG
I, Caius Priscu, Ph.D, P.Eng, 440 Dovercourt Drive, Winnipeg, Manitoba R3Y 1N6 do hereby certify that:
1.
I am an Associate Geotechnical Engineer with AMEC Earth & Environmental, employed since February 2,
2004.
2.
I graduated with an M.Sc degree in Civil Engineering (Hydraulic Structures) from the Civil Engineering
Institute of Bucharest, Romania in 1989; I have graduated from McGill University in Montreal, QC with an
M.Eng degree in Civil Engineering (Geotechnical) in 1993 and a Ph.D in Mining Engineering (Mining
Geotechnics) in 1999.
3.
I am a registered Professional Engineer (P.Eng), member of the Association of Professional Engineers and
Geoscientists of Saskatchewan (APEGS) since 2004, the Association of Professional Engineers and
Geoscientists of Manitoba (APEGM) since 2000, the Professional Engineers of Ontario (PEO) since 2002, and
as an ingenieur (ing.) with the Ordre des Ingenieurs du Quebec (OIQ) since 1995.
4.
I have worked as a geotechnical engineer on projects related to the water resources and mining industries for a
total of 19 years since completion of my M.Sc degree.
5.
I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify
that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past
relevant work experience, I fulfill the requirements to be a “Qualified Person” for the purposes of NI 43-101.
6.
I visited the Star Diamond Project site in Saskatchewan in November 7, 2007 and I was involved with the
geotechnical aspects related to the processed kimberlite containment facilities, management and disposal, and
the surface water management structures for the Star Diamond Project.
7.
I am responsible for authoring Appendices B.0, B.1, B.2 and B.4 of the technical report titled “Technical Report
and Preliminary Feasibility Study on the Star Diamond Project, Fort à la Corne, Saskatchewan, Canada” (the
‘Technical Report’) with an effective date of August 17, 2009.
8.
As of the date of this certificate, to the best of my knowledge, information and belief, the technical report
contains all scientific and technical information that is required to be disclosed to make the technical report not
misleading;
9.
I am independent of the issuer applying all of the tests in section 1.4 of National Instrument 43-101;
10. I have read National Instrument 43-101 and Form 43-101F1, and the section of that Technical Report relevant
to my input into the project has been prepared in compliance with that instrument and form.
Effective date: August 17, 2009
Signing Date: August 31, 2009
{SIGNED AND SEALED}
[Caius Priscu]
________________________________
Dr. Caius Priscu, P.Eng
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 72 of 169
CERTIFICATE OF QUALIFIED PERSON
STEVEN SIBBICK, P. GEO.
I, Steven Sibbick, P. Geo., 160 Traders Blvd East, Mississauga, Ontario L4Z 3K7 do hereby certify that:
1.
I am a Senior Associate Geochemist with AMEC Earth & Environmental, employed since 2005.
2.
I graduated with a Honours Bachelor of Science degree in Geology from the University of Western Ontario in
1986 and with a MSc. degree in Geology (Applied Geochemistry) from the University of British Columbia in
1990.
3.
I am a P. Geo. (Geochemistry), registered in the Province of British Columbia (APEGBC No. 19954) and
P.Geol. (Geology) with the Northwest Territories and Nunavut (NAPEGG No. L1473).
4.
I have worked as a geologist/geochemist for a total of 19 years since obtaining my B.Sc. degree.
5.
I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify
that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past
relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.
6.
I was involved in a previous geochemical evaluation of the property, namely that I co-authored the report:
“Preliminary Metal Leaching and Acid/Alkaline Rock Drainage Geochemical Characterization Star Diamond
Project”, dated 28 November, 2008;
7.
I have not visited the Star Diamond Property that is the subject of this report as my role was to assess
geochemical data provided by laboratories and geological data supervised by other QP’s.
8.
I am responsible for authoring Appendix B.3 of the Technical Report titled “Technical Report and Preliminary
Feasibility Study on the Star Diamond Project, Fort à la Corne, Saskatchewan, Canada” with an effective date
of August 17, 2009 (the ‘Technical Report’);
9.
As of the date of this certificate, to the best of my knowledge, information and belief, the technical report
contains all scientific and technical information that is required to be disclosed to make the technical report not
misleading;
10. I am independent of the issuer applying all of the tests in section 1.4 of National Instrument 43-101;
11. I have read National Instrument 43-101 and Form 43-101F1, and the section of that Technical Report relevant
to my input into the project has been prepared in compliance with that instrument and form.
Effective date: August 17, 2009
Signing Date: August 31, 2009
{SIGNED AND SEALED}
[Steven Sibbick]
________________________________
Steven Sibbick P. Geo.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 73 of 169
CERTIFICATE OF QUALIFIED PERSON
GARY TAYLOR, P. ENG
AMEC Americas Limited
301 – 121 Research Drive
Saskatoon, SK
Tel: (306) 477-1155
Fax: (306) 477-1161
gary.taylor@amec.com
I, Gary W. Taylor, P.Eng. am employed as Manager, Mining with AMEC Americas Limited.
1.
This certificate applies to the technical report entitled “Technical Report and Preliminary Feasibility Study on
the Star Diamond project, Fort a la Corne, Saskatchewan, Canada” (the “Technical Report”), with an effective
date of August 17, 2009.
2.
I am a member of the Association of Professional Engineers of Saskatchewan. I graduated from McGill
University with a M. Eng. (Mining) in 1973.
3.
I have practiced my profession for 36 years. I have been directly involved in mine operations of mines, mine
design and management of Feasibility Studies for gold, diamonds and other mining projects throughout my
career.
4.
As a result of my experience and qualifications, I am a Qualified Person as defined in National Instrument 43–
101 Standards of Disclosure for Mineral Projects (NI 43–101).
5.
I have visited the Star Diamond Project on a number of occasions: 13–15 April 2005; 27–28 September, 2005;
2 June 2006; 3–6 October, 2007; and 27–30 November, 2007.
6.
I am responsible for Sections 18.8, 18.9, 19.4, Appendices D, E, H, those parts of I.1 and I.2 related to Plant and
Infrastructure, I.4, I.5, I.6 and J.4 to J.4.5 of the Technical Report.
7.
I am independent of Shore Gold Inc. as independence is described by Section 1.4 of NI 43–101.
8.
I have provided ongoing technical assistance to the Star Diamond Project, during the period 2005 to August
2009, and I am AMEC Project Manager for AMEC’s Scope of Work for the Prefeasibility Study for this
project. I have had no other involvement with the project.
9.
I have read NI 43–101 and this report has been prepared in compliance with that Instrument.
10. As of the date of this certificate, to the best of my knowledge, information and belief, the technical report
contains all scientific and technical information that is required to be disclosed to make the technical report not
misleading.
Effective Date: August 17, 2009
Signing Date: August 31, 2009
{SIGNED AND SEALED}
[Gary W. Taylor]
Gary W. Taylor, P.Eng.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 74 of 169
CERTIFICATE OF QUALIFIED PERSON
HARNAM TREHIN, P.ENG.
261 Kingsdale Ave., North York,
Ontario M2N 3X3
I, Harnam Trehin., P.Eng., residing at 261 Kingsdale Ave., North York, Ontario M2N 3X3, do hereby certify that:
1.
I am an independent professional Electrical Engineer contracted by P& E Mining Consultants Inc;
2.
This certificate applies to the technical report titled “Technical Report and Preliminary Feasibility Study on the
Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada, (the “Technical Report”) with an effective
date of August 17, 2009.
3.
I am a graduate of Concordia University at Montreal, Quebec with a M.Eng. in Electrical Engineering (1977);
4.
I am a Professional Engineer currently licensed by the Professional Engineers Ontario (License No. 46912507 );
5.
I have worked as an Electrical Engineer for a total of 32 years since obtaining my M.Eng., degree;
6.
I am responsible for authoring Appendix A.10 of the Technical Report.
7.
I have not visited the Star Diamond Property;
8.
I have not had prior involvement with the Star Property that is the subject of this Technical Report.
9.
I have read the definition of "qualified person" set out in National Instrument 43-101 (NI 43-101) and certify
that by reason of my education and past relevant work experience, I fulfill the requirements to be a "qualified
person" for the purposes of NI 43-101. My relevant experience for the purpose of the Technical Report is:
•
Aker Solutions (Supervisor Electrical Engineering)
2007-2009
•
Stone and Webster (Senior Electrical Engineer)
2005-2007
• Acers International (Senior Electrical Engineer)
2001-2003
10. I have read NI 43-101 and Form 43-101F1 and the Technical Report has been prepared in compliance
therewith.
11. As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report
contains all scientific and technical information that is required to be disclosed to make the Technical Report
not misleading.
12. I am independent of the issuer applying the test in Section 1.4 of NI 43-101.
Effective Date: August 17, 2009
Signed Date: August 31, 2009
{SIGNED AND SEALED}
[Harnam Trehin}]
____________________________________
Harnam Trehin, P.Eng.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 75 of 169
CERTIFICATE OF QUALIFIED PERSON
FRED H. BROWN, CPG, PrSciNat
Suite B-10, 1610 Grover St.
Lynden WA, 98264 USA
I, Fred H. Brown, do hereby certify that:
1.
I am an independent geological consultant and have worked as a geologist continuously since my graduation
from university in 1987.
2.
This certificate applies to the technical report titled “Technical Report and Preliminary Feasibility Study on the
Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada, (the “Technical Report”) with an effective
date of August 17, 2009.
3.
I graduated with a Bachelor of Science degree in Geology from New Mexico State University in 1987. I
obtained a Graduate Diploma in Engineering (Mining) in 1997 from the University of the Witwatersrand and a
Master of Science in Engineering (Civil) from the University of the Witwatersrand in 2005. I am registered
with the South African Council for Natural Scientific Professions as a Professional Geological Scientist
(registration number 400008/04), the American Institute of Professional Geologists as a Certified Professional
Geologist (certificate number 11015) and the Society for Mining, Metallurgy and Exploration as a Registered
Member (#4152172).
4.
I have read the definition of “qualified person” set out in National Instrument 43-101 (NI 43-101) and certify
that by reason of my education and past relevant work experience, I fulfill the requirements to be a “qualified
person” for the purposes of NI 43-101. This report is based on my personal review of information provided by
Shore Gold Inc. and on discussions with its representatives. My relevant experience for the purpose of the
Technical Report is:
•
Underground Mine Geologist, Freegold Mine, AAC ........................................ 1987-1995;
•
Mineral Resource Manager, Vaal Reefs Mine, Anglogold ................................ 1995-1997;
•
Resident Geologist, Venetia Mine, De Beers .................................................... 1997-2000;
•
Chief Geologist, De Beers Consolidated Mines ............................................... 2000-2004;
5.
• Consulting Geologist ......................................................................................... 2004-2008.
I visited the Star Diamond property between May 4-7, 2008.
6.
I am responsible for co-authoring Section 16.0 of this Technical Report.
7.
I am independent of Shore Gold Inc. applying the test in Section 1.4 of NI 43-101.
8.
I have had any prior involvement with the project that is the subject of this Technical Report. The nature of my
involvement is as a co-author of a technical report titled “Technical Report and Resource Estimate Update on
The Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada, NI 43-101 Technical Report” dated
March 2, 2009.
9.
I have read NI 43-101 and Form 43-101F1 and the Technical Report has been prepared in compliance
therewith.
10. As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report
contains all scientific and technical information that is required to be disclosed to make the Technical Report
not misleading.
Effective Date: August 17, 2009
Signed Date: August 31, 2009
{SIGNED AND SEALED}
[Fred H. Brown]
_______________________________
Fred H. Brown CPG, PrSciNat
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 76 of 169
CERTIFICATE OF QUALIFIED PERSON
WAYNE D. EWERT, P.GEO.
10 Langford Court
Brampton, Ontario, L6W 4K4
I, Wayne D. Ewert, P. Geo., do hereby certify that:
1.
I am a principal of P & E Mining Consultants Inc. who has been contracted by Shore Gold Inc.
2.
This certificate applies to the technical report titled “Technical Report and Preliminary Feasibility Study on the
Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada, (the “Technical Report”) with an effective
date of August 17, 2009 .
3.
I graduated with an Honours Bachelor of Science degree in Geology from the University of Waterloo in 1970
and with a PhD degree in Geology from Carleton University in 1977. I have worked as a geologist for a total of
39 years since obtaining my B.Sc. degree. I am a P. Geo., registered in the Province of Saskatchewan (APEGS
No. 16217), British Columbia (APEGBC No. 18965), and the Province of Ontario (APGO No. 0866).
4.
I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify
that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past
relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.
My relevant experience for the purpose of the Technical Report is:
5.
•
Principal, P&E Mining Consultants Inc.,
2004 – Present
•
Vice-President, A.C.A. Howe International Limited,
1992 – 2004
•
Canadian Manager, New Projects, Gold Fields Canadian Mining Limited,
1987 – 1992
•
Regional Manager, Gold Fields Canadian Mining Limited,
1986 – 1987
•
Supervising Project Geologist, Getty Mines Ltd.,
1982 – 1986
• Supervising Project Geologist III, Cominco Ltd.,
I visited the Star Diamond Project on October 27-28, 2008.
1976 – 1982
6.
I am responsible for the preparation of Sections 3.0 through 10.0, 14.0, and 20.0 in their entirety and Section
17.5 and for co-authoring Sections 1.0 and 2.0, and for the structuring of Section 17.1.
7.
I am independent of Shore Gold Inc. applying all of the tests in section 1.4 of National Instrument 43-101.
8.
I have had any prior involvement with the project that is the subject of this Technical Report. The nature of my
involvement is as a co-author of a technical report titled “Technical Report and Resource Estimate Update on
The Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada, NI 43-101 Technical Report” dated
March 2, 2009.
9.
I have read National Instrument 43-101 and Form 43-101F1 and the Technical Report has been prepared in
compliance therewith.
10. As of the date of this certificate, to the best of my knowledge, information and belief, the technical report
contains all scientific and technical information that is required to be disclosed to make the technical report not
misleading.
Effective Date: August 17, 2009
Signed Date: August 31, 2009
{SIGNED AND SEALED}
[Wayne D. Ewert]
________________________________
Dr. Wayne D. Ewert P. Geo.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 77 of 169
CERTIFICATE OF QUALIFIED PERSON
EUGENE J. PURITCH, P. ENG.
44 Turtlecreek Blvd.,
Brampton, Ontario, L6W 3X7,
I, Eugene J. Puritch, P. Eng., do hereby certify that:
1.
I am an independent mining consultant and President of P & E Mining Consultants Inc.
2.
This certificate applies to the technical report titled “Technical Report and Preliminary Feasibility Study on the
Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada” (the “Technical Report”) with an effective
date of August 17, 2009.
3.
I am a graduate of The Haileybury School of Mines, with a Technologist Diploma in Mining, as well as
obtaining an additional year of undergraduate education in Mine Engineering at Queen’s University. In addition
I have also met the Professional Engineers of Ontario Academic Requirement Committee’s Examination
requirement for Bachelor’s Degree in Engineering Equivalency. I am a mining consultant currently licensed
by the Professional Engineers of Ontario (License No. 100014010) and registered with the Ontario Association
of Certified Engineering Technicians and Technologists as a Senior Engineering Technologist. I am also a
member of the National and Toronto Canadian Institute of Mining and Metallurgy.
4.
I have practiced my profession continuously since 1978. My summarized career experience is as follows:
•
Mining Technologist - H.B.M.& S. and Inco Ltd., 1978-1980
•
Open Pit Mine Engineer – Cassiar Asbestos/Brinco Ltd., 1981-1983
•
Pit Engineer/Drill & Blast Supervisor – Detour Lake Mine, 1984-1986
•
Self-Employed Mining Consultant – Timmins Area, 1987-1988
•
Mine Designer/Resource Estimator – Dynatec/CMD/Bharti, 1989-1995
•
Self-Employed Mining Consultant/Resource-Reserve Estimator, 1995-2004
•
President – P & E Mining Consultants Inc, 2004-Present
5.
I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”) and certify
that, by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past
relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.
6.
I visited the Star Diamond Project on October 27-28, 2008.
7.
I am responsible for co-authoring portions of Sections 16.0, 18.0 and 19.0 of the Technical Report.
8.
I am independent of the issuer applying the test in Section 1.4 of NI 43-101.
9.
I have had any prior involvement with the project that is the subject of this Technical Report. The nature of my
involvement is as a co-author of a technical report titled “Technical Report and Resource Estimate Update on
The Star Diamond Project, Fort à la Corne Area, Saskatchewan, Canada, NI 43-101 Technical Report” dated
March 2, 2009.
10. I have read NI 43-101 and Form 43-101F1 and this Technical Report has been prepared in compliance
therewith.
11. As of the date of this certificate, to the best of my knowledge, information and belief, the technical report
contains all scientific and technical information that is required to be disclosed to make the Technical Report
not misleading.
Effective Date: August 17, 2009
Signed Date: August 31, 2009
{SIGNED AND SEALED}
[Eugene J. Puritch]
Eugene J. Puritch, P. Eng
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 78 of 169
APPENDICES
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 79 of 169
A.0
MINING
A.1
SUMMARY
The Star open pit contains an estimated 170.8 million diluted tonnes of ore in the Mineral
Reserve and 504 Mbcm of waste material. The ore zones are capped by 338 Mbcm of
overburden and 60 Mbcm of waste rock while a further 106 Mbcm of waste rock are contained
within the open pit limits. The pit will be developed in five phases as shown in Table A.1 and
Figure A-1.
Table A.1: Open Pit Development Phases
1
Phase
1a
Diluted Ore
(Mt)1
32.354
Overburden
(Mbcm)
93.28
Waste Rock
(Mbcm)
27.97
1b
33.057
41.23
15.25
2
40.674
64.01
34.27
3
41.876
58.26
45.76
4
22.877
81.96
42.39
Total
170.838
338.8
165.6
Stripping Ratio
(t waste : t ore)1
(bcm waste : t ore)1
7.37:1
3.75:1
3.32:1
1.71:1
4.72:1
2.42:1
5.16:1
2.48:1
10.73:1
5.44:1
5.86:1
2.95:1
Dry tonnes. Moisture is taken into account in pit equipment throughput and pit operating costs.
A.1.1
MINE PRE-PRODUCTION DEVELOPMENT
The overall mine development and production schedule is shown in Figure A-2. An IPCC
system will be used to pre-strip the waste materials and expose the ore. Conventional hydraulic
excavators and haul trucks will be used to mine the ore and associated waste rock. The ore and
waste rock will be separately sized in the pit and then conveyed to the processing plant ore
stockpile and to the waste management area respectively. The initial pre-stripping work will be
done using Shore’s work force, with the assistance of an earthmoving contractor(s), and
conventional excavators, haul trucks and ancillary equipment.
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Figure A-1: Plan View of Star Pit Phases 1a, 1b, 2, 3 and 4
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 81 of 169
Figure A-2: Star Pit Development and Production Schedule
Year 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026
Environmental Impact Statement accepted
Construction Permit obtained
Orders placed for pit IPCC system
Power transmission line commissioned
Pit IPCC system commissioned
Pit ore conveyor system commissioned
Processing plant commissioned Phase 1a:
Pre‐stripping using mobile equipment
IPCC system commissioned
IPCC strips tills & waste rock to 295 m bench
Mine ore and associated waste rock
Phase 1b:
Pre‐strip surficial sand & clay layers
IPCC strips waste to 280 m bench
Mine ore and associated waste rock
Phase 2:
Pre‐strip surficial sand & clay layers
IPCC strips waste to 280 m bench
Mine ore and associated waste rock
Phase 3:
Pre‐strip surficial sand & clay layers
IPCC strips waste to 295 m bench
Mine ore and associated waste rock
Phase 4:
Pre‐strip surficial sand & clay layers
IPCC strips waste to 295 m bench
Mine ore and associated waste rock
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Page 82 of 169
A.1.2
IN-PIT CRUSH CONVEY (IPCC) WASTE STRIPPING SYSTEM
The IPCC system will be commissioned in Q1-2012 and after the power transmission line and
substations have been constructed and commissioned. The IPCC system will then be utilized to
pre-strip the balance of the surficial sand and clay layers and the underlying unconsolidated till
horizons in the Phase 1a pit:
•
The proposed IPCC system is a high capacity waste excavation / conveying / stacking
system. It consists of two P&H 4100XPC shovels equipped with 60 m3 dippers; two
fully-mobile 9,090 tph capacity waste sizers; two fully-mobile transfer conveyors; two
semi-mobile across-bench conveyor assemblies; an inclined conveyor and an overland
conveyor; along with conveyors and a stacker at the waste management area. The
overburden IPCC system as proposed by P&H has a 18,180 tph capacity.
•
The IPCC system will be operated and maintained by Shore. The IPCC operations will
be supported by bulldozers, a wheel loader, a 22 m3 capacity hydraulic excavator, 136 t
capacity haul trucks, a road grader, soil compactors, two 90 t capacity all-terrain cranes,
boulder drilling and blasting equipment, and field maintenance and service vehicles. The
hydraulic excavator and haul trucks will be used to pre-excavate the bench sinking cuts
and to pre-excavate the tail end of selected bench faces to help reduce IPCC system
operating delays.
•
The IPCC system will commence stripping in Q2-2012. Once the till in the Phase 1a pit
are stripped down to the 295 m bench, the IPCC shovels, sizers and in-pit conveyors will
be relocated to the Phase 1b pushback. The IPCC equipment will be progressively
relocated and used to pre-strip the waste materials in Phases 1b, 2, 3 and 4. The IPCC
system will operate using 15 m benches.
•
The projected waste stripping productivity of the IPCC system is 47.6 Mbcm/yr (about
16,650 tph or 7,930 bcm/hr) in Phase 1a and 37.8 Mbcm/y (about 13,200 tph or 6,300
bcm/hr) in Phases 1b to 4.
•
It is assumed that the tills to be excavated by the P&H4100 shovels will be free-digging
material, and that 40 % of the kimberlite and waste rock will be drilled and blasted.
A.1.3
ORE PRODUCTION
Ore production at a rate of 14.2 Mtpa (40,000 tpd) is scheduled to start in Q2-2014. The ore and
the waste rock on the benches containing ore will be mined by Shore’s workforce and equipment
including a conventional hydraulic excavator, haul trucks and ancillary equipment. The ore and
waste will be trucked to mobile sizers to be utilized in a semi-mobile capacity in the pit. The
sized ore will be conveyed to the processing plant ore stockpile, and the sized waste rock will be
fed to the IPCC waste conveyor system. The key activities scheduled to be completed prior to
ore production are shown in Table A.2.
Based on geotechnical data acquired during core drilling programs, it is assumed that 40 % of
the ore and associated waste rock will be drilled and blasted, and that dewatering will be carried
out in advance so that mining occurs in the depressurized zone of the pit.
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Table A.2: Key Events to be Completed Prior to the Start of Ore Production
Event
In 2010:
Regulatory acceptance of the Environmental Impact Statement.
Construction Permit received.
Place the order for the waste stripping IPCC System.
In 2012:
Commission the power transmission line and substations.
Commission the waste stripping IPCC System.
In 2013:
Place the order for the semi-mobile ore and waste sizers and ore conveyor system.
In 2014:
Commission the pit semi-mobile sizers and the ore conveyor system.
Commence sustained ore production.
A.2
Projected Completion
Q3 – 2010
Q4 – 2010
Q4 – 2010
Q1 – 2012
Q1 – 2012
Q1 – 2013
Q1 – 2014
Q2 – 2014
HYDROGEOLOGY AND PIT DEWATERING
The initial hydrogeological investigations and preliminary modeling provide a basis for the
projected mine dewatering requirements and local stream recharge and post-mining pit lake
formation. Preliminary modeling by HCI (2005, 2007) indicated that:
•
Total pumping from the dewatering wells to maintain water levels within the Mannville
Formation dewatering wells at 30 m below the bottom of the pit during the life of the pit
would peak at about 98,700 m3/d.
•
A RPI of up to 7,800 m3/d would occur when pit bottom elevation is above the top of the
Mannville Formation. Most of this inflow would occur from the surficial sand at the
beginning of the excavations or from the major push-backs at the ground surface.
•
A RPI of up to 2,100 m3/d for the Star pit would occur when the pit bottom elevation is
below the top of the Mannville Formation. Most of this inflow would occur from the
surrounding sandstone assuming no kimberlite shells.
•
The pit lake would eventually reach a steady state level of about 390 m asl.
SRK is currently carrying out additional and detailed hydrogeological modeling of the Star pit.
The resulting information will be utilized to refine the envisaged pit dewatering program and
estimated costs, and revise the mine water balance. The current PFS includes provisional cost
allowances for pit perimeter dewatering wells, in-pit pumps, and for the operation of the pit
dewatering system.
A.3
GEOTECHNICAL AND PIT SLOPES
The geotechnical investigations and assessments of the pit slope stability in the overburden soils
were carried out by Clifton and in the sub-overburden materials and kimberlite formations by
SRK.
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A.3.1
PIT SLOPES IN THE OVERBURDEN SOILS
Clifton carried out field and lab investigations and preliminary technical assessments including a
pre-feasibility stability evaluation of the Star pit overburden slopes in March 2009. Clifton
(2009a) reported:
•
The principal drivers of slope stability concerns relate to high ground water levels in
shale and glacial sediments that will be slow to depressurize upon dewatering; and the
existence of glacially sheared horizons, mostly in the Joli Fou shale and near the driftbedrock contact.
•
The Star shaft pilot hole was taken as typical stratigraphy for the Star pit and the
piezometric levels observed in the 2006-2007 piezometers at the Star and Orion sites
were assumed to apply for the Star site. Similarly, geotechnical properties for Star were
assumed to be the same as for similar strata tested at the Orion sites. Based on the
continuity of the overburden stratigraphy between Star and Orion, it was determined that
the dewatering of the unconfined surface sand aquifer and stability of the lacustrine clay
strata that were outlined for Orion South would apply at Star.
Clifton assessed the pit slope stability of the Star pit for the following alternatives based on
maintaining a factor of safety of at least 1.1:
•
•
•
•
•
berm and slope flattening;
berms with shear keys where the weak zone is excavated and replaced;
tied back systems, with / without lagged walls or tangent pole wall systems;
freezing the weak zones; and
combinations of the above alternatives.
Clifton also examined the effect of 7°, 9° and 12° friction angles at the Joli Fou - drift contact.
The results for the berm and slope flattening alternative are shown in Table A.3.
Table A.3: Preliminary Pit Stability Results for the Berm and Slope Flattening Alternative
Berm and Slope Flattening
Option
150 m wide X 30 m vertical
95 m wide X 30 m vertical
65 m wide X 30 m vertical
Source: Clifton (2009b)
A.3.2
Ø
7°
9°
9°
C
2 kPa
2 kPa
15 kPa
Surficial
stratified
sand and clay
cut slope
3.5:1 (16°)
3.5:1 (16°)
3.5:1 (16°)
Till
Cut Slope
2.5:1 (21.8°)
2.5:1 (21.8°)
2.5:1 (21.8°)
Overall Slope
in
overburden
12.9°
14.7°
16.0°
Factor of
Safety
1.10
1.11
1.10
PIT SLOPES IN THE SUB-OVERBURDEN ROCK
In 2005, SRK issued preliminary conceptual design data for a generic pit based on geotechnical
conditions at Orion South (Kimberlite 140 / 141). SRK generally characterized the stratigraphy
as follows (typical thicknesses and depth intervals are shown in brackets):
•
•
•
sand, unit 1 (11 – 17 m thickness; typical depth interval: 0 to 15 m);
clay, unit 2 (5 – 11 m thickness; typical depth interval: 15 to 23 m);
fine sand, unit 3 (6 – 14 m thickness; typical depth interval: 23 to 32 m);
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•
•
•
•
•
•
silty clay, unit 4 (7 – 12 m thickness; typical depth interval: 32 to 45 m);
till, unit 5 (65 m thickness; typical depth interval: 45 to 110 m);
Lower Colorado mudstone (70 – 80 m thickness; typical depth interval: 110 to 190 m);
Mannville sandstone (100 – 110 m thickness; typical depth interval: 190 to 300 m);
kimberlite (thickness and depth are extremely variable); and
limestone.
For the PFS it was agreed to use 30° inter-ramp slope angle for the Mannville Formation.
A.3.3
KIMBERLITE PIT SLOPE RECOMMENDATIONS
The geotechnical data available at the end of 2007 were summarized in the draft SRK report
from January 2008 and based on this summary SRK issued pit slope recommendation for the
Star pit in June 2009 (Table A.4). The pit slope parameters are:
•
Individual bench heights should not exceed 15 m. For very poor quality rock, it may be
necessary to limit the bench height to 5 m or flatten the bench face angle to 45°. The
width of bench should not exceed 15 m for the pyroclastic kimberlite, 20 m for the
volcaniclastic kimberlite and reworked volcaniclastic kimberlite, and 25 m for the
kimberlite breccia. The slope of individual bench faces should not exceed 65°.
•
It is assumed that the pit would reach a maximum depth of 150 m below the upper
boundary of the kimberlite. In the upper 90 m, the bench stack height should be limited
to 45 m (e.g. three 15 m benches per stack). The lower 60 m would consist of one stack
with four 15 m high benches. The stacks would be separated by safety berms. Safety
berm widths would be 23 m in the pyroclastic kimberlite; 28 m in the volcaniclastic
kimberlite, reworked volcaniclastic kimberlite and Mannville Formation; and 33 m for
the kimberlite breccia.
•
Additional geotechnical drilling and testing program required for the feasibility study was
executed in 2008 but the data has not been interpreted and analyzed yet. Stability
analyses based on new information could potentially change the slope angle values
recommended in the 2009 report. All slope angle recommendations assume depressurized
slopes.
Table A.4: Proposed Pit Slope Angles in Kimberlite and the Mannville Formation
Formation
Mannville Formation
Domain
Primary sandstone and siltstone
Kimberlite
Very poor rock quality
(mainly kimberlite breccias)
Poor to fair rock quality
(mainly volcaniclastic kimberlite
reworked volcaniclastic kimberlite)
Fair to good rock quality
(mainly pyroclastic kimberlite)
Projected UCS
35 % @ <20 Mpa
60 % @ 20 Mpa
5 % @ >20 Mpa
10 MPa
Proposed
slope angle
30° inter-ramp
25°
20 MPa
30°
40 MPa
35°
&
Source: SRK (2009)
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Page 86 of 169
A.4
PIT DESIGN
The Star open pit will be a conventional open pit mining operation that will encompass the open
pit mining and processing of 14.2 Mtpa of ore. The pit will be developed both by contractor and
Shore using their own equipment and work force. Shore will be responsible for: establishment
of the pit haulage roads; de-watering, production drilling and blasting; the excavation of ore to
the primary crusher; excavation of overburden and waste rock to the waste management area;
boulder drilling and blasting, oversize breakage; haul road maintenance; and equipment
maintenance. The pit will be developed using 15 m high benches.
In Phase 1a, the surficial sand and clay layers will be stripped by Shore with the assistance of an
earthmoving contractor(s). Most of the surficial waste will be stripped using conventional
excavators, trucks, loaders, bulldozers and scrapers. Shore will then commission its IPCC waste
stripping system and use it to strip the tills to expose ore. The ore and associated waste rock will
be mined using a conventional hydraulic excavator and trucks. The ore and waste rock will be
hauled to in-pit semi-mobile ore / waste sizers, sized, and conveyed to the processing plant ore
stockpile / waste management area. Once the IPCC shovels and sizers have completed their
work in Phase 1a they will be moved to the Phase 1b pushback to recommence stripping. This
process will be repeated between pit phases.
Based on Cliftons’ pre-feasibility stability evaluation of the Star pit overburden slopes, P&E
utilized an inter-ramp design slope of 16° above the 340 m elevation for overburden and an interramp design slope of 30° below the 340 m elevation. The 16° inter-ramp slope design would
consist of a bench height of 15m with a 25° batter angle, resulting in an approximate 20.2 m
wide berm. The 30° inter ramp slope design would consist of a bench height of 15 m with a 40°
batter angle, resulting in an approximate 8.15 m wide berm which would be adequate to allow
dozers to clean off bench sloughing and overbank rock accumulations. Haulage ramps were
designed to be 32 m wide to accommodate two-way traffic for the 6.7 m wide Caterpillar 785
type haulage trucks. Ramp gradients were designed at 10 %. See Figure A-3, Figure A-4 and
ultimate pit design plan view in Figure A-5. Figures A-3 and A-4 incorporate the
recommendations of the preliminary geotechnical study, modified to accommodate the mining
method for the phased approach, while the overall slope angles required for a factor of safety of
1.1 are maintained.
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Page 87 of 169
Figure A-3: Cross Section 514,650E Showing Surficial Sand and Clay Layers
Figure A-4: Typical Pit Slope Configuration
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Figure A-5: Ultimate Pit Design – Pit Phases 1a, 1b, 2, 3 & 4
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Star Diamond Project - Report No 169
Page 89 of 169
A.5
PIT OPTIMIZATION
In order to undertake the pit design exercise, a Whittle 4X pit optimization was undertaken to
create a pit shell that could be used as a guide for design purposes. The inputs to the Whittle
optimization were as follows:
Diamond Price: Taken from WWW and the Resource model:
Overburden removal cost ............... = $0.80/t
Ore & waste mining cost ................ = $1.56/t
Processing cost ............................... = $3.58/t
G&A cost ....................................... = $1.50/t
Pit slopes ........................................ = 16° above 340 m el; 30° below 340 m el
The resulting optimized pit shell was exported to the Gemcom pit design utility where plan
views were developed to guide the pit design on a bench by bench basis from pit bottom to pit
crest.
A five phase pit design approach was taken in order to reduce the amount of pre-strip waste
removal and to reduce the waste/ ore ratio in the early years of pit production and pit equipment
capital expenditures. The starter pit (Phase-1a) is developed on a high-grade zone, located in the
southern portion of the deposit to a depth of 175 m el. The pit is expanded to Phase-1b, Phase-2,
Phase-3 and Phase-4 as shown in Figures A-1 and A-6. The five pit phases contain the tonnages
and waste / ore ratios shown in Table A.5.
Table A.5: Pit Phases
Phase
1a
Diluted Ore
(kt)
32,354
Overburden
(Mbcm)
93.28
Waste Rock
(Mbcm)
27.97
1b
33,057
41.23
15.25
2
40,674
64.01
34.27
3
41,876
58.26
45.76
4
22,877
81.96
42.39
Total
170,838
338.8
165.6
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Stripping Ratio
(t waste : t ore)
(bcm waste : t ore)
7.37:1
3.75:1
3.32:1
1.71:1
4.72:1
2.42:1
5.16:1
2.48:1
10.73:1
5.44:1
5.86:1
2.95:1
Page 90 of 169
Figure A-6: Pit Phases - Cross Section 514,650E
A.6
PRODUCTION SCHEDULE
The overall mine production schedule is shown in Table A.6. The schedule was developed taking
into consideration: the time line to procure the pit equipment and carry out the mine preproduction works including the pre-stripping of the surficial sand and clay layers within the
Phase 1a pit; establishing services including electrical power; a 14.2 Mtpa ore production rate;
ore available on each bench and stripping requirements; phased pit development; waste stripping
rates; IPCC waste system conveying capacity; and quarterly scheduling of pit development and
operations with time allowances for IPCC inter-bench and inter-phase moves. This information
was used to develop a detailed project schedule and annual bench plans. The pre-production
time line was then shortened by six months. As such, the production schedule shown in Table
A.6 and the annual gross revenue estimates used in the cash flow analysis are based on ore
production starting in the start of Q3-2014.
The tonnages shown in Table A.6 are based on dry bulk densities. The pit equipment selection
process and the mine operating cost estimates take additional weight due to moisture into
account.
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Table A.6: Star Pit Production Schedule
Year
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
A.7
Pit
Phase
Phase 1A
Phase 1A
Phase 1A
Phases 1A, 1B
Phases 1A, 1B
Phases 1A, 1B, 2
Phases 1B, 2, 3
Phases 1B, 2, 3
Phases 2, 3, 4
Phases 2, 3, 4
Phases 2, 3, 4
Phases 3, 4
Phases 3, 4
Phases 3, 4
Phases 4
Phases 4
Totals
Ore
(kt)
7,675
14,200
14,200
14,200
14,200
14,200
14,200
14,200
14,200
14,200
14,200
14,200
6,963
170,838
Overburden
(Mbcm)
22.30
38.60
32.38
13.97
27.26
3.00
33.59
36.58
44.97
26.61
4.39
37.95
17.15
338.8
Waste Rock
(Mbcm)
4.61
19.88
7.96
10.16
0.04
11.01
15.20
18.79
14.55
8.29
17.09
17.98
12.84
7.25
165.6
Total Tonnes
(Mt)
33.31
78.76
75.75
71.58
87.35
41.04
70.00
110.72
134.89
102.54
51.96
110.72
86.02
53.21
42.06
22.58
1,172
Stripping Ratio
(t waste: t ore)
8.33
5.15
1.89
3.93
6.80
8.43
6.22
2.66
6.80
5.06
2.75
1.96
2.29
5.86
MINING EQUIPMENT
The mining equipment proposed for the Star pit was selected taking into consideration: the ore
production and waste stripping requirements; the pit phases; the overburden, ore and waste rock
characteristics; the results of a preliminary trafficability assessment; scheduling requirements;
equipment suitability and fabrication, delivery and assembly time lines; projected field
conditions including wet conditions; pit dewatering plans; pit slope stability; available operating
hours and delays; equipment productivities; operational flexibility; environmental protection and
health and safety; costs and the projected time line to payback.
In the proposed IPCC system, two shovels will load overburden directly into fully mobile
crawler-mounted sizer units, and the sized waste will be conveyed to a stacker at the waste
management area. The IPCC system is comprised of:
•
•
•
•
•
•
two P&H4100XPC (109 t per /pass capacity, 60 m3 range dipper) electric, rope shovels;
two fully mobile sizer units;
two fully mobile transfer conveyors;
two cross-bench conveyor systems;
an up-ramp and overland conveyor; and
one overburden stacker.
In regard to the proposed IPCC system:
•
Each P&H4100XPC shovel will load a mobile waste sizer that will automatically move
in relation to the shovel. The envisaged IPCC system will include additional controls to
let the shovel operator accurately position the dipper over the sizer hopper and avoid
overshooting the hopper and having to creep back to the dump position; and allow the
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Star Diamond Project - Report No 169
Page 92 of 169
shovel and sizer to automatically creep forward together when the shovel and sizer are
working and advancing parallel to a long face.
•
The P&H4100 type series shovels are proven technology. The P&H4100XPC shovels
proposed will be equipped with wide tracks, and 60 m3 capacity dippers.
IPCC work will be planned and organized so that each shovel-sizer combination operates
efficiently. The performance (e.g. Mbcm overburden/yr) of the shovel-sizer units is reduced by
operational delays such as unproductive shovel, sizer and conveyor moves. As such, the
proposed IPCC program includes measures to reduce non-productive delays:
•
Low-productivity work such as bench sinking cut excavation and the pre-excavation of
the final 30 m of some bench faces will be done using hydraulic shovels and trucks.
•
Fully mobile transfer conveyors will be used to transfer material between the sizers and
the cross-bench conveyors. This will reduce delay time due to cross-bench conveyor
moves.
•
The work will be scheduled so that inter-bench moves are made one shovel at a time to
facilitate the bench moves and set-ups on the new benches.
•
The IPCC waste shovels and sizers will be relocated to the next phase once they reach a
bench where there is sufficient ore available to commence ore production. The ore and
associated waste rock will then be mined using hydraulic excavators and haul trucks.
The haul trucks will dump into mobile sizers located in the pit in a semi-mobile
configuration. The ore will be conveyed to the processing plant and the waste will be fed
to the overland waste conveyor.
•
The projected overburden stripping rates for the IPCC waste handling system take bench
configuration into account. The projected waste stripping productivity of the IPCC
system is 47.6 Mbcm/yr (about 7,930 bcm/hr or 16,650 tph) in Phase 1a and
37.8 Mbcm/yr (about 6,300 bcm/hr or 13,200 tph) in Phases 1b to 4.
The mine equipment procurement schedule is shown in Table A.7.
A.8
MAINTENANCE
The mine will have a centralized maintenance management and planning group, and three
maintenance departments to provide continuous 24 hour maintenance coverage to the pit mobile
equipment, the pit stationary pit equipment, and the process plant.
The pit mobile equipment shop, light vehicle shop, fabrication/machine shop, electrical shop,
wash bay and tire bay will be located in the main maintenance building. It is envisaged that the
mine will optimize its equipment fleet to reduce component stocking costs and warehouse
stocking requirements. In keeping with the planned preventative maintenance program, major
components will be changed out according to oil analyses and on regular hour intervals. Major
component rebuilds will be performed off-site.
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The maintenance shop will be equipped with overhead cranes, central lubricant system, and shop
tools including tire handling and mounting equipment, welding equipment, and other specialized
tools. The pit maintenance department will also be equipped with field service vehicles.
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Table A.7: Mine Equipment
Number of units scheduled to be procured
Mine Equipment
IPCC system
Semi-mobile sizers
Ore conveyor system
2010
1
2011
Mine mobile equipment:
Hitachi EX-3600 shovel
Caterpillar 785C haul truck
Caterpillar 993K wheel loader
Caterpillar 385 excavator
Caterpillar D10 bulldozer
Caterpillar D11 bulldozer
Caterpillar 854 wheel dozer
Caterpillar 836H compactor
Caterpillar 16M grader
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2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2
1
1
12
1
1
2
1
1
1
1
Drills:
Blast hole drills
Boulder/oversize drill
Mine ancillary equipment:
Water truck
Fuel/lube truck
Backhoe/cable reel
Mechanical service truck
Welding truck
Tire truck
Light service truck
Tire manipulator
90t rough terrain crane
Equipment trailer
Maintenance Nodwell
Lighting towers
2012
1
1
1
1
1
1
1
1
1
2
1
1
1
1
2
4
22
4
4
9
3
6
4
5
1
1
1
1
1
1
2
1
1
3
1
2
1
1
1
1
1
1
1
1
1
1
10
1
1
1
2
1
1
1
4
2
1
1
1
1
1
LOM
1
1
1
1
1
1
1
1
2
1
2
1
2
4
2
7
5
1
5
1
4
2
2
7
2
2
1
1
2
2
Page 95 of 169
A.9
OPERATIONS AND MAINTENANCE PERSONNEL REQUIREMENTS
The numbers of pit operations and maintenance personnel included in the pit operating cost
estimates are identified in Table A.8. Note that:
•
•
the pit will operate using two shifts per day with four rotating crews; and
the maintenance personnel listed in Table A.8 will maintain the mine mobile and
stationary equipment including the IPCC system, conveyors, mobile equipment and pit
dewatering pumps.
Mine and maintenance management personnel such as the general manager, mine manager, mine
maintenance superintendent, maintenance clerk, maintenance planners, and administrative and
technical services personnel are included in the annual G&A cost starting in year 2014. Pit
management and maintenance personnel required in the pit pre-production period are included in
the Phase 1a Mine Development Indirect cost.
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Table A.8: Number of Operations and Maintenance Personnel Included in the Pit Operating Cost Estimates
Number of pit operations and maintenance personnel on payroll
Open Pit
Operations & Maintenance
Personnel
During surficial sand & clay removal
Excavate
Excavate
Excavate
sand & clay
sand & clay
till horizons
using
using
using
trucks and
IPCC system
IPCC
shovels
system
Operations Personnel:
Operations Supervisor
IPCC system:
P&H4100 Shovel operator
P&H4100 Shovel operator trainee
MMC Sizer tender
Overland conveyor beltman
Stacker operator
Semi-mobile sizers & ore conveyor:
Hydraulic excavator operator
Pit mobile equipment:
Hydraulic excavator operator
Wheel loader operator
Haul truck operator
Spare haul truck operator
D10 bulldozer operator
D11 bulldozer operator
Soil compactor operator
Grader operator
Wheel dozer operator
Water truck / fuel truck operator
Operations personnel on payroll
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1
4
8
8
4
8
4
4
8
2
8
4
4
In Phase 1a
Mine ore using
excavator,
trucks, &
semi-mobile
ore sizer
& ore
conveyors
4
4
6
8
4
2
4
2
62
4
4
Excavate
till horizons
using
IPCC
system
8
In Phases 1b, 2,3 & 4
Mine ore using Mine waste rock
excavator,
using excavator,
trucks, &
trucks,
semi-mobile
semi-mobile
ore sizer
waste sizer
& ore
sizer &
conveyors
conveyors
4
8
8
4
4
4
2
1
12
1
1
2
1
1
1
1
24
Mine waste rock
using excavator,
trucks,
semi-mobile
waste sizer
sizer &
conveyors
2
4
20
8
4
4
4
2
4
4
4
4
4
4
70
50
No. of persons in Phase 1a =
4
20
26
146
4
2
4
2
20
2
4
20
8
4
4
4
2
4
4
4
4
4
4
64
50
No. of persons in Phases 1b4:
26
140
Page 97 of 169
Number of pit operations and maintenance personnel on payroll
Open Pit
Operations & Maintenance
Personnel
During surficial sand & clay removal
Excavate
Excavate
Excavate
sand & clay
sand & clay
till horizons
using
using
using
trucks and
IPCC system
IPCC
shovels
system
Maintenance personnel:
Mechanical Supervisor
Electrical Supervisor
IPCC System maintenance:
Heavy Duty Mechanic
Electrician
Machinist
Instrument Technician
Shop mechanic/electrician
Semi-mobile sizers & ore conveyor:
Mechanic/electrician
Pit mobile equipment:
Mechanics
Maintenance personnel on payroll
11
12
6
58
Total no. of personnel on payroll
36
120
1
4
4
4
4
8
8
4
4
20
8
8
2
4
8
In Phase 1a
Mine ore using
excavator,
trucks, &
semi-mobile
ore sizer
& ore
conveyors
2
10
10
48
30
No. of persons in Phase 1a:
Total in Phase 1a:
Excavate
till horizons
using
IPCC
system
4
4
In Phases 1b, 2,3 & 4
Mine ore using Mine waste rock
excavator,
using excavator,
trucks, &
trucks,
semi-mobile
semi-mobile
ore sizer
waste sizer
& ore
sizer &
conveyors
conveyors
2
8
8
2
4
6
10
8
P&E Mining Consultants Inc
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Mine waste rock
using excavator,
trucks,
semi-mobile
waste sizer
sizer &
conveyors
2
14
16
94
240
8
2
10
20
46
30
No. of persons in Phases 1b-4:
Total in Phases 1b-4:
14
16
92
232
Page 98 of 169
A.10
MINE INFRASTRUCTURE
Electrical power required for mining will be supplied from SaskPower at 230 kV via a single
circuit overhead transmission line and stepped down on-site to 25 kV for distribution to the mine
load centers. The pit electrical distribution battery limits are the load terminal of 25 kV breakers
at the Main Substation busses 23 and 30. P&E has estimated that the total mining load is
36.5 MW normal running and 69.2 MW peak demand with splits for the mining areas as follows:
•
•
•
The power consumption for the open pit is 24 MW normal running load with peak
demand load of 47.9 MW. The major power consumers in this area are two shovels with
maximum average running load of 2 MW each and peak load of 4.8 MW each. Shovels
regenerate approximately 1.8 MW of power, all, or a portion, of which may be fed back
to the system.
The power consumption at the waste management area is 9 MW with peak demand load
of 16.3 MW.
The power consumption for the pit ore conveyor system is 3.5 MW with peak demand
load of 5 MW.
In the mining area, there will be insulated-gate bipolar transistor type of variable frequency
drives using Pulse Width modulation technology. Groups of drives used on the shovels and
sizers will use active front end with regenerative capability with a common DC bus to feed the
power to these drives. The power factor will be close to unity and the total harmonics generated
as seen by the utility network are within the Institute of Electrical and Electronics Engineers 519
guidelines. The total harmonic distortion as seen by the grid is projected to be less than 5 % with
the use of ABB equipment as proposed by P&H.
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B.0
PROCESSED KIMBERLITE AND WATER MANAGEMENT STRUCTURES
Currently, the mine plan is based on a five phase approach over a total Project life of 16 years.
The kimberlite processing technology currently being pursued is AG Milling in which two
separate waste streams are created: Coarse PK and Fine PK.
B.1
COARSE PK MANAGEMENT
The Coarse PK will range in size from 1 mm to 45 mm, with a dry bulk density of approximately
1.42 t/m3 and an average in place void ratio of approximately 0.6. This would be a relatively
free-draining material that would be dewatered (to low moisture content) and conveyed using
conveyor belts into a stockpile. The total quantity of Coarse PK expected to be generated at the
Star Diamond Project is 86.7 Mt.
The overall size of the Coarse PK dump will be 54 m in maximum height with 4H:1V side
slopes, covering an area of 2,345,800 m2 (234.6 ha), with an storage volume of 60.6 Mm3. The
pile would be located on the southeast side of the Property. Siting and layout considerations for
the Coarse PK pile included minimum clearances from: the final Star pit rim; the South
Saskatchewan River; the English Creek; and the Duke Ravine, the distance to plant, along with
surface runoff and drainage considerations. The pile would not have containment dykes, but
runoff and contact water would be collected in perimeter drainage trenches and sediments
filtered by the large perimeter security berm of the site. If necessary, and to provide sediments
adequate time to settle, additional erosion control and sediment retention would be implemented
as needed.
Planned slopes for the final Coarse PK pile would allow proper closure, rehabilitation and
revegetation methods to be implemented. Material obtained from a sub-excavation (average 1 m
thick) across the footprint to provide adequate foundation conditions would be used for
progressive and final reclamation as cover material.
Project risks associated with the Coarse PK pile design and construction are outlined, mainly due
to the limited amount of select detailed information available at this stage of the Project. The
information relates to the Coarse PK material properties (geotechnical and geochemical),
foundation conditions around the footprint of the facility, and expected drainage water quality
and sediment control during operations. Recommendations to mitigate these risks, include a
thorough review of the 3-D overburden model and soil database, subsurface site investigations at
select locations, and additional laboratory testing (physical and analytical). Project opportunities
for the Coarse PK pile relate to the optimization of the layout, side slopes, minimum pile
footprint, and maximizing the potential use of the Coarse PK as construction material.
B.2
FINE PK MANAGEMENT
The Fine PK is expected to be a fine grained material, with particle sizes less than 1 mm and a
fines content (percent by dry weight finer than the #200 mesh) of 40 %. Approximately 87.6 Mt
of Fine PK will be pumped as slurry to the Fine PK containment facility, where cycloning would
take place for 6.5 months per year. In the summer, the overflow would be discharged into the
facility, and the underflow would be used for dyke construction. In the winter, all of the Fine PK
stream (process water and all solids) would be discharged into the containment facility with no
cycloning.
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With little topographic relief and no significant valleys close to the proposed plant site, or within
the pit watershed, a self contained, ring dyke management facility was selected as the preferred
option. The ultimate Fine PK facility has been sized to contain a total of 76.2 Mm3 of Fine PK
solids plus a 1.5 m freeboard allowance for extreme precipitation events. The starter facility
(which includes an earthfill starter berm) has been sized to store approximately 9.3 Mm3 of PK
solids plus 2.5 m in freeboard to contain water inflows.
The ring dyke has been designed as an engineered free-draining structure constructed with Fine
PK cycloned underflow (coarse fraction). A blanket drain constructed of Coarse PK or other
suitable granular material sourced from the pit overburden stripping as available (providing filter
compatibility exists) is also included as part of the dyke structure. The ring dyke would be built
by the centerline method of construction using cyclone underflow, with a downstream slope of
4H:1V and a maximum height of 55 m.
Process water from within the impoundment would be pumped to the adjacent polishing pond
via pump barges to provide additional settling prior to either reuse by the plant or discharge into
the environment. Water management at the Fine PK containment facility includes: runoff
collection for surface contact water coming off containment dykes directed towards the Duke
Ravine; sloping the facility base to direct seepage waters towards one low point; and internal
dyke drainage or seepage control measures to manage water produced from on-going
consolidation of the Fine PK.
In preparing the concepts, siting and layout of the Fine PK containment facility, several factors
were taken into consideration, including the following: minimum distance to plant site; effective
runoff collection and minimum watershed impacts; minimum footprint for the required storage
volumes; minimum offset distances to the Star open pit rim and adjacent streams; cut and fill
balance optimization to maximize the use of select excavation material in the construction of the
starter berm; and the use of natural terrain topography and key operating risk factors such as
construction material availability, seasonal operating conditions, and water management. The
site location for the Fine PK facility was selected northeast of the plant directly upstream of the
Duke Ravine, outside of the immediate pit watersheds.
The projected shape of the final Fine PKCF will allow proper closure, rehabilitation and
revegetation methods to be implemented. Material obtained from the sub-excavation across the
footprint of the containment facility would be used for both construction of the starter berm
(select fill materials), as well as fill material for progressive and final reclamation as cover
material. The berms of the Fine PK facility would be progressively reclaimed using stockpiled
soil and mulch during operations. The Fine PK materials within the containment facility would
be shaped to promote drainage and faster consolidation, so that a reclamation cover will be
placed directly on dry Fine PK. The cover would be designed to promote drainage away from the
facility along designed preferential surface water pathways, and revegetated.
B.3
PROCESSED KIMBERLITE GEOCHEMISTRY
Metal leaching and acid rock drainage (“ML/ARD”) characterization of kimberlite at the Star
Diamond Project was initiated in 2008. The acid base accounting (“ABA”) test results indicate
that the kimberlite facies at the Star Diamond Project are not acid-generating. Metal leaching
studies based on standard waste extraction procedure (“SWEP”) testing of weathered PK
indicate that metals including chromium and nickel may be elevated in leachate, although the
test is not a direct indication of potential site drainage. As the Star Diamond Project develops
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into feasibility and detailed design, ML/ARD characterization of the kimberlite waste rock and
PK will continue.
While ABA testing of the kimberlite showed it to be non-acid generating, the acid generation
potential of the Fine PK and Coarse PK from the Star Diamond Project requires testing to
increase confidence and completeness of the ML/ARD characterization data set. ABA testing is
proposed for Coarse and Fine PK from the Star Diamond Project when the material becomes
available in the future. The results for an ongoing field test pad in FALC along with laboratory
kinetic test should be investigated and evaluated at the next project study level to identify any
potential metal leaching issues, possible impacts to water quality in the open pit, site water
runoff and PK containment facilities, and any requirements for further test work and / or
monitoring.
B.4
SITE WATER MANAGEMENT STRUCTURES
The Star Diamond Project will generate volumes and qualities of water requiring management.
Required on-site water management structures include primary (16 m high) and secondary (10 m
high) water retention dams (shown on Figure E-1) and the Fine PK polishing pond.
The water retention dams have been designed to collect surface water runoff and prevent water
channelled through the water management reservoir from entering the open pit. Water collected
behind these two dams will be used for process water within the plant. Both dams have been
designed with 4H:1V upstream and downstream slopes, and are to be constructed of suitable
overburden till excavated from within the open pit, with a blanket drain and a low permeability
geosynthetic liner (GCL or similar) on the upstream slope to limit seepage losses. The total
storage volume of the water retention pond is 2.12 Mm3.
The Fine PK polishing cell has been designed to provide additional clarification of supernatant
water after being removed from within the Fine PK facility prior to discharge to the
environment. The polishing cell has been designed with 2H:1V upstream and 4H:1V
downstream slopes and is to be constructed with a blanket drain to reduce pore water pressures
within the dam. The structure is to be constructed of suitable overburden till excavated from
within the open pit. The total storage volume of the polishing pond is 1.25 Mm3 of decant water.
At the end of the mine life, closure of the water management structures would involve
construction of proper spillways with adequate capacity to pass the probable maximum flood
(“PMF”), restoration of natural stream habitats, decommissioning the water management pond
and levelling and re-vegetation of polishing pond area.
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Page 102 of 169
C.0
HYDROGEOLOGY AND WATER MANAGEMENT
The hydrogeology from ground surface down through the top portion of the Devonian Souris
River Formation can be divided into three units or systems, which are described below:
•
•
•
a shallow groundwater system comprised of the surficial stratified drift which is
composed of surficial sand, silt, and clay;
a confining layer comprised of till, locally the Empress Group, and the Lower Colorado
Group shale; and
a deep groundwater system comprised of the Mannville Group and the upper several
metres of the underlying carbonates of the Souris River Formation.
The FALC area is drained by several small creeks that eventually flow into the Saskatchewan
River. In general, background surface water is moderately hard (188 to 336 mg/L) with a
moderate TDS content (251 to 1,058 mg/L) and generally low metal concentrations.
Groundwater samples were collected from local monitoring wells in 2007 and 2008. The natural
water qualities of the upper groundwater flow system were generally good with moderate TDS
concentrations (200 to 500 mg/L) and generally low metals concentrations. Water quality in the
confining layer was variable with the TDS varying from 367 to 4,460 mg/L. Water quality in the
deep groundwater flow system was generally brackish with a high TDS (2,000 to 4,500 mg/L).
C.1
WATER MANAGEMENT
The water management plan will require refinement for inclusion into a FS. The main
components of the water management system can be discussed in terms of: the dewatering wells;
the in-pit dewatering system; the water management reservoir; and the associated water
diversion channel.
The dewatering wells will depressurize the deep groundwater flow system to improve both the
geotechnical stability of the pit slopes, and to control or preferably eliminate the flow of
groundwater through the kimberlite into the pit. It is currently estimated that 22 pumping wells
will be required to depressurize the country rock around the Star open pit, and that these wells
will pump between 60,000 and 90,000 m3/day from the deep groundwater aquifer, on an annual
basis at full development (HCI 2007). The water from the dewatering wells will be piped to the
water management reservoir.
The in-pit dewatering system must be able to manage precipitation, water contained within the
rock that is mined, groundwater seepage from pit walls, and potentially any drains that may be
required for geotechnical stability. The in-pit dewatering system will be designed to be a series
of temporary and permanent ditches, drains and sumps which must maintain flexibility and be
easily modified as the pit expands. The water that is pumped out of the pit will be piped to the
water management reservoir. The in-pit dewatering system will need to be designed to handle
up to a maximum of 20,000 m3/day of groundwater and precipitation/snow melt. The volumes of
water that require pumping from the open pit will be highly seasonal and vary with the stage of
development.
The water management reservoir will be used to store groundwater from the dewatering wells,
the water from the in-pit collection system, the surface runoff that currently flows into the water
management reservoir and potentially a lesser amount of surface runoff from the site and
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surrounding areas. Much, if not all, of the water discharged to the reservoir will be used in the
plant processing and the excess water will be allowed to discharge into the Duke Ravine, via a
proposed 2 km long diversion channel. The water management reservoir will require the
construction of two dams (see Appendix B.4). Using the Stage-Storage-Area curve, the volume
of the reservoir would be approximately 2,120,000 m3 with a surface area of 46.8 ha.
The diversion channel will be crossed by the access corridor to the site facilities. Maximum
flow from the water management reservoir through the channel for the PMF and including
dewatering discharge was estimated to be 87 m3/s. At the present time, this diversion channel
has been assumed to be armoured to further protect it against erosion.
C.2
WATER BALANCE
The water balance considered the three major water streams: the water management reservoir,
the open pit and the PKCF. The water balance was calculated based on annual average volumes
without detailed consideration for inter-annual or seasonal/monthly variations; however, three
climatic scenarios were considered with respect to precipitation and evaporation: average;
average plus one standard deviation (wet; and average minus one standard deviation (dry). The
yearly process plant demands exceed reservoir inflow during all production years for each of the
three climate scenarios. The forecasted volume shortfalls in an average year and a dry year are
0.83 Mm3 and 10.2 Mm3, respectively. Additional supplemental water for the process plant can
be provided by either reclamation from the PKCF discharge stream, or potentially a deep well
dewatering system in the immediate area of the facilities.
The initial water balance for the PKCF PFS suggests that the PKCF cells will reach capacity
volume and overflow to the polishing pond, and ultimately to the Saskatchewan River every year
of production.
C.3
GEOLOGY
The lower boundary of the bedrock geology for the purposes of the hydrogeology discussion has
been defined at a depth of 135 m asl, within the Middle Devonian carbonates of the Souris River
Formation (this is at a depth from surface of approximately 320 m bgl. In this area, the bedrock
geology, in ascending order consists of:
•
•
•
Souris River Formation - fossiliferous limestone, and dolostone with a typical thickness
of less than 210 m;
Mannville Group - sandstone, mudstone and shale, with a typical thickness of 110 m -170
m; and
Lower Colorado Group (Westgate and Joli Fou Formations) - dark grey shale with
mudstone and rare, thin laminated sandstone, with a typical thickness of 75 to 80 m.
The local overburden geology, in ascending order consists of the Empress Group, Quaternary
aged tills (Sutherland and Saskatoon groups) and recent reworked glacial material (deposited by
alluvial, colluvial and eolian processes) at surface. Overburden thickness generally ranges from
90 m to 130 m but closer to the Saskatchewan River the overburden thickness decreases to
approximately 40 m.
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C.4
HYDROGEOLOGICAL SYSTEMS
The stratigraphy of the Star Kimberlite deposit area has been defined in detail by Clifton (2008)
and HCI (2007). As noted above the hydrogeology from ground surface down through the top
portion of the Souris River Formation can be divided into the shallow groundwater system, the
confining system and the deep groundwater system.
The key hydrogeological parameters are summarized on Table C.1.
Table C.1: Summary of Hydrogeological Parameters
Flow System
Shallow Flow System
- Surficial Sand Unit - Silt Unit
Confining Layer
- Sutherland and Saskatoon tills - Westgate and Joli Fou Shale
Deep Groundwater Flow System
- Mannville - Kimberlite
Typical Thickness
(m)
Hydraulic
Conductivity (K)
(m/d)
TDS content
(mg/L)
8 19-28
1 0.01 – 0.1
**3 200 – 500
40 – 130 80
3x10-3 (bulk avg.) 2 x 10-4 **1
370 – 4,250 **4
110 - 150 variable
1 x 10-2 2 x10-4 **2
2,000 – 4,500 **4, **5 4,130 – 4,540
Notes:
**1 – A pumping test conducted near the Star Kimberlite deposit (south Star site) suggests that at this location the Joli Fou Shale may contain
features leading to increased permeability.
**2 - Calculated the weighted mean for the Orion South Kimberlite, assumed to be representative of Star Kimberlite deposit (HCI, 2007)
**3 – No chemistry that is believed to be reflective of natural conditions is available from this unit at this time.
**4 – This range is for all of the piezometers and wells completed into this system.
**5 – General range of values, the actual observed range was from 309 to 4,630 mg/L.
C.5
WATER QUALITY
The FALC area is drained by several small creeks that eventually flow into the Saskatchewan
River. The creeks near the Star pit are located in the East Ravine and West Ravine. The largest
creek within the area of the site is English Creek. The White Fox River defines the northern
boundary of the FALC forest and the Saskatchewan River is found immediately south of the Star
pit. Surface water sampling has been conducted at a number of sites around the Project area
(since 2006) and from the Saskatchewan River (since 2006 and historically by the Saskatchewan
MOE).
In general, background surface water is moderately hard (188 to 336 mg/L) with a moderate salt
content (TDS of 251 to 1,058 mg/L). Metals levels are generally low, with many at
concentrations that are below detection levels, with the exception of aluminum, iron, and
chromium. Nitrogen and phosphorus levels are also relatively low.
The current groundwater monitoring network consists of 24 wells constructed in the various
hydrostratigraphic units and is located at three separate locations in the region. Groundwater
samples were collected during aquifer tests conducted in 2007 and during monitoring events in
2007 and 2008. The TDS content of the three groundwater flow systems are shown on Table
C.1. Generally, metals and nutrient concentrations are relatively low from all units, with some
incidences of naturally elevated metals.
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C.6
WATER MANAGEMENT
The main objectives of the Star Diamond Project water management strategy are:
•
•
•
control the flow of groundwater, surface water and runoff that could potentially flow into
the Star pit;
alleviate sediment loading and minimize the potential impacts to the Saskatchewan River
from site operations; and
ensure that there are sufficient volumes of water available for the various sections of the
processing plant once this facility is operational.
Achieving these objectives requires several different measures working together to form an
effective mine water management system. The water management plan would be revisited and
refined as part of a FS.
The main components and the expected water flows from the water management system are
shown schematically in Figure C-1. The water management system is described in terms of
dewatering wells; in-pit dewatering; water management reservoir; and diversion channel.
C.6.1
DEWATERING WELLS
An estimated 22 dewatering wells located around the ultimate perimeter of the Star pit will
depressurize the deep groundwater flow system to improve both the geotechnical stability of the
pit slopes, and control or eliminate the flow of groundwater through the kimberlite into the pit.
Opportunity also exists to also locate dewatering wells within mined out or inactive areas of the
pit. The water from the bedrock aquifers would mainly be from the Mannville Group (which
starts approximately 170 m bgl and is known to have heterogeneous hydraulic characteristics.
Spacing of the wells may vary based on specific conditions encountered during installation.
It is currently estimated that, at full development, these wells will generally need to pump
between 60,000 and 90,000 m3/d from the deep groundwater aquifer on an annual basis (HCI
2007). This water will be discharged via a main header system into the water management
reservoir. The proportion of water pumped out with these wells and water seepage in to the open
pit will change over time due to drawdown of the Mannville Aquifer and the saturated thickness
of the aquifer.
C.6.2
IN-PIT DEWATERING SYSTEM
The in-pit dewatering system will consist of a series of temporary and permanent ditches, drains
and sumps to maintain flexibility and be easily modified as the pit expands. Generally, this
system will manage up to 9,830 m3/d of precipitation (based on Prince Albert climate records)
and up to 10,000 m3/d of groundwater contained within the rock that is mined, groundwater
seepage from pit walls, and potentially any drains that may be required for geotechnical stability.
As discussed above, the volume of seepage will increase when the wells become less efficient.
There will also be major changes in the volumes handled by this system in response to
precipitation events, the time of year (i.e., the spring freshet with high volumes versus frozen
winter conditions with low volumes) and the stage of development of the pit (i.e. as mining
reaches the bottom of pit).
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Figure C-1: Water Management Schematic (values are for the average climatic and general conditions)
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It should also be noted that the freezing conditions during the winter months will necessitate
weather proofing the system (e.g. insulated and heat-traced or insulated and double walled
piping) and potential changes in the operation of the system such as minimizing standing water.
C.6.3
WATER MANAGEMENT RESERVOIR AND DIVERSION CHANNEL
The water management reservoir will be constructed using two dams (primary and secondary) on
the East Ravine to store groundwater from the dewatering wells, the water from the in-pit
collection system, the surface runoff that currently flows within the East Ravine and potentially a
lesser amount of surface runoff from the site and surrounding areas. Most, if not all, of the water
discharged to the reservoir will be taken from the reservoir for plant processing and the excess
water will be allowed to discharge via a proposed diversion channel.
The elevation of the crest of the two dams is 439 m asl, and the elevation of the diversion
channel invert was established at 436.6 m. Using the Stage-Storage-Area curve for the primary
dam, the volume of the reservoir is approximately 2,120,000 m3 with a surface area of 46.8 ha.
The diversion channel (approximately 2 km in length) will be constructed to divert excess and
overflow water from the water management facility to the Duke Ravine. The diversion channel
will be crossed by the access corridor. Maximum flow from the water management reservoir
through the channel for the PMF and including dewatering discharge was estimated to be
87 m3/s. At the present time, this diversion channel has been assumed to be armoured to further
protect it against erosion.
C.7
SITE WATER BALANCE
A water balance for the proposed mine site has been completed to determine if the proposed
water supply and storage is adequate for the 12 year operational life of the mine.
The water balance considered the three major water streams: the water management reservoir;
the open pit; and the PKCF located east of the plant. The water balance was calculated based on
annual average volumes and the proposed mine plan using three climatic scenarios: average;
average plus one standard deviation (wet); and average minus one standard deviation (dry).
Precipitation and evaporation data were taken from 113 years of data for Prince Albert.
Average annual discharge from the water management reservoir to the diversion channel ranged
from 0 m3/s (dry year) to 0.1 m3/s (wet year). The process plant demands exceed reservoir
inflow on a yearly basis during all production years under each of the three climate scenarios.
The forecasted volume shortfalls in an average year and a dry year are 0.83 Mm3 and 10.2 Mm3,
respectively. Additional supplemental water for the process plant could be provided by a
potential deep well dewatering system in the immediate area or from water reclaimed from the
PKCF.
An in-depth water balance based on seasonal changes in operation and climatic conditions would
be developed and opportunities for re-use of process water or water from the PKCF be examined
as part of a FS.
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D.0
ANCILLARY BUILDINGS AND FACILITIES
D.1
SUMMARY
The process plant, the administrative / changehouse building, maintenance shop and technical
offices, warehouse, and support buildings and facilities will be located within the plant site
footprint. A layout of the site facilities plan is shown in Figure D-1.
D.2
ADMINISTRATION AND CHANGEHOUSE BUILDING
The administration and changehouse building will be a two storey building measuring 37 m by
38 m. The first floor will include change facilities (separate clean and dirty locker areas,
showers, washrooms and laundry), a. separate change room with lockers and sinks for visitors,
and an operations area including three offices for the front line supervisors, foreman, and safety
officer, a health center, training room, two conference rooms, and a mustering area for dispatch
of workers.
The second storey will be the administration floor containing offices for senior staff and support
personnel and a presentation and interpretation centre. Fifteen offices have been provided for
senior management and additional offices have been provided for Human Resources, Accounting
and Payroll, and Secretarial. Support facilities will include two conference rooms, a lunch room,
filing, and washrooms.
This building will be constructed as a pre-engineered steel frame building with metal siding and
a commercial finish.
D.3
MAINTENANCE AND TECHNICAL SERVICES BUILDING
The maintenance and technical services building will provide service bays and offices for both
the mine and process plant maintenance requirements and, in addition, will contain offices for
the Technical Services group. The building will measure 125 m long by 42 m wide except for
the technical services area which will 50.6 m wide. The building has been designed with service
bays on either side and a 7.0 m wide centre aisle running the full length of the building.
The mine section of the building will consist of a total of eight bays, each 15 m wide and 17.5 m
long. Travelling bridge cranes with 50 t load capacity will be provided. The eight mining bays
have been designated as six heavy equipment repair bays, one tire bay, and one light vehicle
repair bay.
The process and general maintenance section of the building will consist of a total of six bays,
also at 15 m wide and 17.5 m long. Travelling bridge cranes with 50 t load capacity will be
provided.
The remaining two bays, located at the end of the building, will house a machine shop and
component rebuild facility and an electrical and instrumentation shop.
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Figure D-1: General Plant Site Layout
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The office section will be located in the center of the building and will occupy two 20 m wide
bays on two floors. On the first floor, a conference room and six offices will be provided for the
maintenance department along with service facilities. The Technical Services group will be
located on the second floor with twelve offices plus eighteen cubicle spaces, conference room,
and service facilities.
This building will be constructed as a pre-engineered steel frame building with metal siding and
a commercial finish.
D.4
WAREHOUSE AND COLD STORAGE BUILDING
The warehouse building will provide storage for parts and supplies as well as receiving and
shipping services for all materials entering or leaving the Project site. The building will measure
56 m by 45 m.
Two loading docks and one drive in at grade entrance will be located at one end of the building
for receiving and shipping. A monorail with 50 t load capacity will be provided immediately
below the monorail crane at the drive in entrance. In addition to warehouse space, five offices
will be constructed along with washrooms, service counter, and mechanical room. A small upper
floor will include a meeting room and lunch room.
At the opposite end of the building, a separate security lean-to extension measuring 7 m by 15 m
will be attached. This lean-to will be equipped with an x-ray machine and used to search all
supplies leaving the property.
A 1200 m2 cold storage building will be provided for warehousing of operating supplies and
bulk items.
D.5
FUEL STORAGE
Two 75,000 L diesel tanks, an in-pit 60,000 L diesel tank complete with lube station and a
10,000 L gasoline tank will be installed for fuel storage.
D.6
VEHICLE WASH FACILITY, WARM-UP SHED AND FIRE AND EMERGENCY
RESPONSE BUILDING
The vehicle wash facility will consist of a 1000 m2 pre-engineered building equipped with steam
cleaners and high pressure washing facilities.
The warm-up shed and fire and emergency response building will be a 1500 m2 pre-engineered
building and will accommodate the open pit haul trucks. The fire side will accommodate a fire
truck, ambulance and emergency response vehicle as well as associated equipment and supplies.
D.7
SECURITY
There will be three levels of security zones for the Project: Green; Blue; and Red. Green is low
level with deer fencing and security gate, Blue is mid level with a chain link fence with security
checking and monitoring along all entry and exit points, and Red is high level limited to the
recovery plant.
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The administration and changehouse building, primary substation, fuel and bulk lube storage and
dispensing facilities, warehouse and parking lot will be situated in the Green zone. The
maintenance and mine operating facilities, technical offices and process plant will be contained
within the Blue security area. A Red zone secure helipad will be located adjacent to the Red
Zone process plant recovery building and will be used to transport recovered diamonds from the
site by helicopter.
Entry to the Blue zone will be through a security gate located between the administration
building and the warehouse. Materials will be unloaded at warehouse in the Green zone and
then checked through security before delivery into the Blue zone. All supplies leaving the Blue
zone will be checked through a security inspection area in the warehouse before being released
for pick-up.
The only other entrance to the Blue area will be the road to the open pit which will be controlled
by a remote controlled gate. Generally all heavy open pit equipment will remain in the pit
except when returning to the maintenance shop for service.
D.8
BULK SAMPLE PLANT (BSP)
A 50 t/h BSP (similar to the existing BSP) will be constructed to support continued exploration
activities in the FALC area, to serve as an audit facility and to process kimberlite from other
projects located outside of the FALC project area. This BSP will be permitted as a commercial
operation to allow Shore the flexibility to process material from its other (current and future)
exploration projects, joint ventures, and other operators. The sample plant would use the same
PKCF as the production plant. Coarse PK could be stockpiled separately for auditing purposes,
and eventually either placed in the production Coarse PK pile or returned to the owner
depending on specific requirements of the batch.
This plant will be constructed in an area provided in the process plant site.
D.9
SORTING FACILITY
A diamond sorting facility will be constructed at an off-site location near Saskatoon. This
building will be 37 m by 20 m and will be two stories high. Due to unique security requirements,
this building will be a custom design.
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E.0
INFRASTRUCTURE
The site infrastructure includes those components of the Project required to support the mining
and processing operations. These consist of:
•
•
•
•
•
•
•
•
•
E.1
plant site and location;
access and site roads;
electrical supply and distribution;
water supply and distribution;
natural gas supply and distribution;
telecommunications;
fuel supply and distribution;
explosives supply and storage; and
domestic and industrial disposal.
PLANT SITE LOCATION AND DESCRIPTION
The plant site for the PFS is located generally midway between the Star and Orion South
Kimberlites, on high land between the East Ravine and the Duke Ravine. The site is
approximately 1 km from each of the Star and Orion South Kimberlite deposits and provides an
ideal location for processing of the Star and Orion South Kimberlite deposits.
The general site plan with the principal facilities required for the Star Diamond Project is shown
in Figure E-1. These facilities consist of the following:
•
•
•
•
•
•
•
•
Star open pit;
PKCF;
overburden and waste rock disposal facility;
water management reservoir and water diversion channel;
plant site including process plant and Project support buildings and facilities;
ore and waste conveyors from the Star open pit;
access and site roads; and
allowance for a potential Orion South open pit.
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Figure E-1: General Site Plan
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E.2
ACCESS ROAD AND UTILITIES CORRIDOR
For the purposes of the PFS, it is assumed that the access road from the site will be routed
northwest connecting to Highway 55 at Shipman as shown on Figure E-2.
Figure E-2: Site Access Road Routing
This routing was selected as it will provide good access to Prince Albert and the communities
located along Highway 55. The road will be constructed along existing rural municipality rights
of way, with 10.6 km built over existing provincial grid roads, and 25 km built through the
FALC forest. Through the FALC forest, the road will generally follow the existing forestry
roads.
Provincial secondary highway grade standards will be followed for the construction of this
highway. The road will be 8.8 m wide with an asphalt mat 7.6 m wide and 0.6 m gravel
shoulders on either side.
The access corridor will cross the White Fox River and will require a single span bridge or series
of culverts. In addition to the main access road, this road route will form an access corridor
encompassing communication lines and potentially a railroad and / or natural gas pipeline. A
power transmission line may also be routed along part of this corridor.
Construction of the access corridor would begin as soon as the required permitting is in place, as
completion would be necessary to support other contemplated construction activities. The length
of the new access corridor is approximately 35 km.
E.3
RAILWAY SPUR
A railway spur was not included in the PFS for the Project but remains as an opportunity for the
future. The railway spur could be extended from the end of the existing line at Choiceland to
Shipman (34 km) along a pre-existing railroad alignment and then parallel the proposed access
corridor to the site (35 km).
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The uses and advantages of a railway spur to the site include:
•
•
•
E.4
To transport in bulk supplies more economically than trucks. These supplies would
include fuel, explosives and reagents.
Bulk rail cars could be used for interim storage reducing the cost of providing permanent
fuel tankage and reagent storage.
To transport gravel and other potential saleable products from the site to market. The
preparation of clean and graded gravel products represents an opportunity to increase
revenues that takes advantage of the large amount of gravel bearing overburden that will
be stripped during mining.
POWER SUPPLY AND DISTRIBUTION
Electrical service would be provided by SaskPower to the site by a transmission line at 230 kV.
SaskPower is considering three route options for the transmission line. The routing used as a
basis for the PFS is a new 230 kV power line running to the southeast of the site and tying to an
existing 230 kV power line connecting the Codette and Beatty substations (see Figure E-3). This
existing line is located in the FALC provincial forest on the south side of the Saskatchewan
River. The new 230 kV feeder will be approximately 16 km long and will involve a river
crossing of the Saskatchewan River.
The estimated electrical load for the Star Diamond Project is approximately 72 MVA with a
power factor of approximately 100 %.
If the Orion South Kimberlite is put into production concurrently with the Star Kimberlite
deposit, using similar process and mining techniques as proposed for the Star Diamond Project,
it is estimated the future electrical load for the site will increase by approximately 60 to 70 MVA
to a total in the order of 140 MVA.
The electrical system for the Project can be divided into three basic areas: main substation,
distribution network and utilization systems.
The main substation will be used to transform the incoming 230 kV transmission voltage,
provided by SaskPower, into the site distribution voltage(s), requiring three 40 / 54 / 66 MVA
230 kV to 25 kV power transformers.
The distribution network will be used to distribute electrical services at 25 kV to all the remote
electrical rooms, and the mining area. A 2000 kW backup genset will provide power for essential
services and anti freeze protection to specific equipment.
The utilization systems will be used to distribute electrical services to various extraction plant
and mining loads at various voltages.
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Figure E-3: Power Transmission Line and Natural Gas Pipeline Options
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E.5
NATURAL GAS SUPPLY
No product heaters are required in the processing plant. A hybrid system combining a
geothermal system for most of the heating and cooling requirements, supplemented with some
natural gas for heating of smaller buildings and point heating, was used as the basis of the PFS.
TransGas provided a conceptual proposal for routing options and estimate of costs. The route
selected for the PFS is a four inch branch line constructed from a TransGas trunk line that
parallels Highway 55 near Shipman and routed south to the Project via the access corridor
alongside the access road (See Figure E-3).
E.6
FUEL SUPPLY AND DISTRIBUTION
Fuel will be stored on-site at a tank farm consisting of double walled above-ground tanks located
within the plant footprint. Fuel would be transported to site by truck. There will be re-fuelling
stations both at the plant site and in-pit to increase truck efficiency and to reduce fuel
consumption. A reinforced pipeline is proposed parallel to the conveyor to transport fuel in-pit.
E.7
EXPLOSIVES SUPPLY AND DISTRIBUTION
Explosives requirements for mining are estimated at 70 t/week. An on-site explosive magazine
will be provided to store the components of the explosives on-site. To ensure safe transportation
of explosives, the components of the explosives (ammonium nitrate and fuel oil consisting of
prills and diesel fuel) will be delivered to the on-site storage facility and speciality explosives
vehicles will be used to deliver explosives directly to the pit and charge the blast holes.
E.8
TELECOMMUNICATIONS
Site telecommunications will be provided to the site via a high speed fibre optic link from
Highway 55 near Shipman. The current SaskTel capacity for this type of line is 10 Mb per
second.
E.9
PROCESS AND POTABLE WATER SUPPLY
All process water will come from pit dewatering and surface run-off collection. Current plant
water use is estimated at 113,560 m3/d, not including recycling back from the Fines PK polishing
pond.
The process water will be drawn from the water management reservoir by pumps mounted on a
barge. Pipelines will be installed from the barge to the plant. The water will be pumped directly
from the water management reservoir to the process plant.
In addition, water will be recirculated as required back from the polishing cell, located in the
PKCF. A barge with pumps and the required pipelines to the process plant will be provided such
that water collected in the PKCF can be fed back to the plant as required.
Supply of potable water for the site will be provided from dewatering wells and will be treated
with a reverse osmosis system prior to use.
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E.10
WASTE POTABLE WATER AND SEWAGE
Waste potable water (grey water) will be a very small amount compared to the overall process
requirements; therefore, it is planned to be discharged into the PKCF after mixing with the
process water discharge, dependent on the guidelines developed during the permitting process. It
is estimated that approximately 25 m3 of grey water will be produced daily from all the site
facilities.
The waste products from toilets and urinals (black water) will be handled separately from the
grey water, and disposed in a separate lagoon. The lagoon will contain two cells each with
approximately 15,000 m3 of containment which will be enough for five years of discharge per
cell. After a cell fills with solids, it will be allowed to dry and then the contents will be excavated
and incinerated. It is estimated that about 11 m3 of black water will be generated daily.
E.11 COMBUSTIBLE SOLID DOMESTIC WASTE MANAGEMENT FACILITIES
AND RECYCLING
During the construction and mining phases it is planned to handle all waste products without the
use of an on-site landfill. Solid waste, depending on its nature, will either be incinerated on-site
or hauled off site. Recycling will occur where ever operationally possible.
A 180 kg/d capacity incinerator has been included in the PFS.
E.12
HAZARDOUS WASTE
The management of hazardous substances and waste dangerous goods (“HSWDG”) at the Star
Diamond Project is a priority. Shore will implement a plan to address the management, storage,
and disposal of all HSWDG. In addition, the plan will put into place procedures and practices to
prevent the accidental discharge of substances into the environment, and plan for efficient and
thorough cleanup in case of an accidental discharge.
Shore will have a Spill Contingency Plan in place before work occurs. This plan will outline
what is to be done and who is responsible if and when a spill occurs.
E.13
INFORMATION TECHNOLOGY
Information Technology (“IT”) will function as an extension of Shore’s Head Office. All
accounts and account permissions will be generated, monitored, and audited at Head Office.
Data storage, retention, and backup will take place at site and stored in combination at site and
Head Office.
All IT related equipment, i.e., routers, servers, etc, will be placed in a secure area with limited
physical access. Physical access will be regulated electronically via card lock system controlled
at Head Office. The secure area will include air conditioning and humidity controls to prevent
overheating and static build up.
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F.0
WORKFORCE, HEALTH, SAFETY AND SECURITY
Employees for the Star Diamond Project will be drawn primarily from local communities based
on the available skill set. Positions requiring specialized skills, not available in the area, will be
sourced from other locations as required through the recruitment process. Workers filling these
positions will be expected to relocate to the surrounding communities.
Health, Safety and Security policies developed during the exploration phase will be modified to
reflect the larger operation. These are recognized as the key principles in workforce
development.
The location of the Star Diamond Project site makes it accessible to local communities where
Shore’s employees will reside. Travel distances to the three major communities in the area are
as follows:
•
•
•
Prince Albert – 94 km (via Shipman);
Nipawin – 101 km (via Shipman); 87 km (via Hwy 6 and Division Road East); and
Melfort – 87.1 km (via Hwy 6 and Division Road East).
Given its close proximity to local communities, employees will be responsible for their
transportation to and from the work site.
Work schedules would be as follows:
•
40 h/wk.
This schedule will be worked primarily by management and administrative personnel and
other positions where 7 d/wk coverage is not required.
•
12 h/d and 84 h over 2 wk.
This schedule will be worked by personnel where 24 h or 12 h coverage is required daily.
This rotation will include a day and night shift schedule for certain positions.
Start times will be set to maximize production and operational efficiency and minimize any
‘down time’ incurred through shift changes.
F.1
WORKFORCE SUMMARIES BY AREA
Table F.1 provides a breakdown of the Project’s typical workforce requirements by area.
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Table F.1: Project Workforce by Area
Area
Number
Operations Management:
General Manager
1
Administrative Support
1
Sub-total
2
Administration (including Finance, Information Systems, HR and Training):
Management and Support (including Finance, Info Systems, HR & Training)
3
Finance and Accounting
4
Information Systems
2
Human Resources
1
Training
3
Sub-total
13
Environment:
Management and Support
1
Environmental
5
Sub-total
6
Health, Safety & Wellness:
Management and Support
2
Health & Safety
1
Occupational Health and Wellness Nurse
2
Sub-total
5
Maintenance:
Management and Support
5
Engineering and Planning
3
Fabricating Shop
20
Electrical
24
Mobile Shop
84
Process Plant
28
Site Services
5
Sub-total
169
Materials and Warehousing:
Management and Support
1
Buyer / Expeditor / Shipper / Receiver
4
Warehousepersons
4
Sub-total
9
Mining:
Management and Support
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Area
Number
Production
134
Sub-total
147
Technical Services:
Management and Support
2
Engineering and Geology
15
Bulk Sample Plant
4
Sub-total
21
Processing:
Management and Support
4
Engineering and Metallurgy
2
Processing Operations
36
Recovery Operations
14
Sort House
20
Equipment Operators
8
Lab Technicians
4
Sub-total
88
Security:
Management and Support
3
Security
33
Sub-total
36
TOTAL
496
Note: “Management & Support” includes Managers, Superintendents, General Foreman and administrative personnel (i.e., clerks) which support
the department
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G.0
ENVIRONMENTAL, PERMITTING AND CLOSURE
G.1
EXISTING ENVIRONMENT
The FALC forest is an island forest surrounded by open agricultural land, with pockets of
forested land and pasture. In general, the vegetation within the FALC forest consists of jack pine
dominated ecosite phases on well drained sites with coarse soil texture, with black spruce,
tamarack larch, and trembling aspen found in areas that are poorly drained. Wetlands are often
dominated by willows. Riparian vegetation, (i.e., along the banks of the Saskatchewan River and
neighbouring tributaries) can include balsam poplar and white spruce. There is a wide range in
the stage of the vegetation communities due to frequent forest fires. A large portion of the
Project area was burnt in the Henderson Fire of 1989 and contains open, immature jack pine.
Details of the existing environment can be found in the environmental project proposal,
submitted to the Saskatchewan MOE on November 3, 2008 (Shore 2008). Additional details will
be available upon completion of the baseline reports that are included as part of the EIA
(discussed below in Appendix G.3).
G.2
ENVIRONMENTAL IMPACT AND MITIGATION
The EIA process was initiated with the submission of the project proposal referenced above. In
Saskatchewan, the EIA takes place under the terms of the Saskatchewan Canada Harmonization
Agreement. Under this agreement, projects that require an environmental assessment by both the
federal and provincial governments undergo a single assessment, administered cooperatively by
both governments.
In response to the Shore’s project proposal, the province, in conjunction with the Federal
government, developed draft PSG to outline the requirements of the EIA. These draft guidelines
were released for comment on July 11, 2009. Shore intends to prepare the EIS for submission in
2010. The EIS will identify potential environmental issues, propose mitigative measures and
provide an assessment of the Project.
The proposed mine layout is estimated to disturb approximately 3,000 to 4,000 ha, or 2.3 to
3.0 % of the FALC forest, and among other impacts, results in changes to several small
waterways, requires crossing of water courses, requires construction and management of
overburden storage areas and PK storage areas, and requires management of mine water. Those
potential environmental impacts that may result from the project activities and have been
identified will be evaluated using the concept of valued ecosystem components (“VEC”) in the
EIA. These VEC are described in the project proposal (Shore 2008) and include soils and
geology, surface water, groundwater, aquatic biota, air quality, soils and vegetation, wildlife, and
rare species.
Preliminary internal review, regulator feedback, and public engagement feedback have identified
water management as a key potential impact. In order to keep the Star pit dry and enable
mining, approximately 10,000 m3/d of water will need to be pumped from the surficial aquifers,
and approximately 90,000 m3/d of water will need to be pumped from the deeper Mannville
Formation.
The effect of dewatering both shallow and deeper local groundwater systems has been assessed
through the development of a preliminary groundwater flow model (HCI 2007). This model is
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being updated based on recent hydrogeological investigations conducted in the area. The effects
on the shallow groundwater system would likely be very limited as these aquifers are of limited
areal extent and tend to close with time. The water in the deeper groundwater system is of
poorer quality and is not considered potable without treatment. As a result, the use of water
from this deeper system by other users is expected to be negligible.
Changes to surface water quality are possible as a result of operations and pit dewatering. Water
flowing from the PKCF, which will contain process water from the plant and brackish
groundwater from the mine dewatering system, are expected to reach the Saskatchewan River
using existing waterways depending on the water management option selected. This water will
have different water chemistry than from the water chemistry prior to development. The effects
on the Saskatchewan River will be subject to further study, but are expected to be low due to the
small relative contribution of this water to the overall flows of the Saskatchewan River,
generally less than 0.77 % of the low flow based on the 20 year average seven day low flow of
the Saskatchewan River (149 m3/s) and the 100,000 m3/day (or 1.16 m3/s) of water from pit dewatering systems once operations reach a steady state at full development.
Potential water issues are to be mitigated based on the overall site water management plan. In
general, it is expected that mining activities will not create a significant effect on the
Saskatchewan River. Use of water from pit-dewatering in the processing plant eliminates the
need to pump water from the Saskatchewan River. Management of this water in the PKCF and
water management reservoir, and possible re-use of this water, allows Shore to control timing
and volumes of release. The effectiveness of the water management strategy will be assessed in
the EIA.
Mitigation for other issues will be determined in the EIS based on the results of the overall EIA.
G.3
STAKEHOLDER ENGAGEMENT
Stakeholder engagement is a key component to successful community relations and is part of the
EIA process. Shore conducts ongoing stakeholder engagement activities which are designed to
ensure there is a social license to operate. Engagement activities are intended to provide
information to a broad array of individuals and organizations but primarily focused on residents
in communities closest to the Project. The target audience includes the general public
neighbouring the FALC site, as well as a number of distinct stakeholder groups such as;
aboriginal communities, special interest groups (e.g. Saskatchewan Eco Network), provincial
and federal governments and the Diamond Development Advisory Committee (“DDAC”). The
DDAC was created in January, 2007 and it includes representation from local communities
(urban and municipal) including elected Métis representation (Métis Nation Eastern Region II
and Métis Nation Western Region II). Neighbouring First Nations are invited and a member
from the FALC Development Corporation (“FCDC”), the economic development arm of the
James Smith Cree Nation, regularly attends meetings.
In general, there is over-whelming support for the activities of Shore and the potential
development, so long as appropriate environmental standards are maintained. This support was
and has been consistently expressed at the Open Houses and elsewhere. There is a high level of
confidence that federal and provincial regulators and Shore will arrive at an appropriate
environmental framework for development.
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G.4
PERMITTING
The regulatory framework for the normal construction and operation of any mine site is subject
to an ongoing process during which permits, licences and approvals are requested, reported on,
amended, expire and are renewed. Shore currently has all required licences and permits for the
present operations.
The proposed diamond mine, when it is operational, will have regulatory obligations to both the
federal and provincial governments that will be described in permits issued to Shore.
The permits that will be required for the construction and operation of the proposed mine will be
applied for following Ministerial approval of the EIA. The submissions for these applications
are expected to generally take up to 90 days for review and approval. Provincial regulatory
authority will be stipulated in the Surface Lease Agreement and Approval to Operate between
the province of Saskatchewan and Shore. In numerous situations there is coordination amongst
the federal and provincial regulatory agencies (e.g. Human Resources Development Canada and
Saskatchewan Labour, Environment Canada and the MOE), but each agency retains
responsibility for administering its own approvals, licences and permits where required.
Additional permits will be required from the Federal government, including authorization from
DFO to allow change to fish and fish habitat, permits from Natural Resources Canada for the
explosives storage site, and authorizations from Environment Canada and Transport Canada.
In addition, appropriate lease agreements will be required prior to construction, as the Project is
located on Crown land. These include a Surface Lease, lease agreements for portions of the
access corridor in the FALC, a Mineral Lease to extract diamonds, and potentially others.
Royalty agreements for all commercial products would also need to be in place.
G.5
MONITORING PROGRAM
Environmental monitoring required for operation will be specified in the conditions of the
expected Approval to Operate. Environmental monitoring will be used to confirm predictions
made in the EIA and measure potential environmental effects. Compliance monitoring is
expected to focus on water quality (mainly surface water) and groundwater monitoring.
Groundwater monitoring may require the installation of additional monitoring wells.
EIA related monitoring will be determined at the conclusion of the EIA process. It is expected
that part of this monitoring will be conducted by third party consultants, and may include such
programs as periodic wildlife surveys or fish surveys.
As part of Shore’s adaptive environmental management strategy regarding reclamation,
additional research is expected to supplement existing experience in the FALC. Research
projects may include continuation of the reclamation monitoring trial, leachate pad trials, and
revegetation plots established in 2008, or other investigation of issues identified in the EIA.
These trials are expected to involve Shore staff, as well as external experts (e.g., universities or
consultants).
Based on existing permit conditions in place for Shore’s existing BSP, it is assumed that
geotechnical berm inspections will be required on a regular basis on all containment berms and
dams.
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G.6
RECLAMATION AND CLOSURE
Site reclamation and closure, including the removal of site facilities, will be performed at the end
of the life of mine. Site closure will have the following goals:
•
•
•
•
•
creation of stable self sustaining landforms;
re-contour facilities to blend into the surrounding topography as practical;
re-establish an acceptable end land use;
re-establish appropriate vegetation on-site, as dictated by the target end land use; and
reduce any long-term safety concerns.
The conceptual closure plan is based on a target end land use of self sustaining forest. As such,
revegetation efforts will target vegetation communities similar to those found in the FALC forest
at closure. The conceptual closure plan that has been developed addresses the closure of each
major project component. Generally the approach is to recontour the facility to blend it into the
natural topography; re-create drainage channels, apply suitable surface reclamation soil on the
surface, and revegetate the areas. The main facility where this approach would not be applicable
is the Star pit. For the Star pit the conceptual closure plan calls for this pit to be allowed to flood
naturally with water at closure.
The final target end land use will be determined by the EIA process, through public engagement
process and comments by regulatory agencies. The final conceptual closure plan will be drafted
to incorporate those results and subsequently developed into a Preliminary Decommissioning
Plan (“PDP”). The estimated cost of implementing the PDP is calculated in a preliminary
decommissioning cost estimate (“PDCE”). Financial assurances to cover the anticipated PDCE
for the proposed facility will then be posted with the MOE in the form of irrevocable standby
letters of credit or other form of credit that is acceptable to the Province, as the facility is
developed.
The cost to conduct the reclamation of all of the components of the proposed facility have been
estimated by Shore based on their experience reclaiming areas during the exploration phase of
the Project and with input from local contractors. Table G.1 summarizes the preliminary
estimated costs, by major component, to reclaim the proposed facility. The costs shown in Table
G.1 are based on the currently conceptual closure plan and assume a target end land use of self
sustaining forest.
Table G.1 shows that the preliminary estimated reclamation cost is approximately $64,785,000
(in 2009 dollars).
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Table G.1: Preliminary Reclamation Cost Estimate
Estimated
Area
(ha)
480
Contouring
($)
1,200,000
Reclamation
Material
Depth (m)
0.25
Reclamation
Material
($)
4,800,000
Drainage
($)
2,400,000
Revegetation
($)
528,000
Total
($)
8,928,000
CPK
Low Grade
Stockpile
260
650,000
1
10,400,000
1,300,000
286,000
12,636,000
50
125,000
1
2,000,000
250,000
55,000
2,430,000
Overburden
Pile
975
2,437,500
0
0
4,875,000
1,072,500
8,385,000
325
812,500
0.3
3,900,000
1,625,000
357,500
6,695,000
231
0
0
0
2,887,500
254,100
3,141,600
469
0
0
0
0
0
0
Facility
PKCF
Star Pit
100
250,000
0.3
1,200,000
500,000
110,000
2,060,000
Plant Site
Structures &
14,500,000
HSWDG*
Roads and
30
0
0.3
360,000
0
33,000
393,000
Access
Other
360
900,000
0.3
4,320,000
0
396,000
5,616,000
cleared
Areas
Total
3280
6,375,000
26,980,000
13,837,500
3,092,100
64,784,600
* Note the Structure and HSWGD costs include a contingency for remediation and removal of structures with no salvage value.
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H.0
CONSTRUCTION AND DEVELOPMENT
H.1
PROJECT ORGANIZATIONAL STRUCTURE
The development of the Star Diamond Project will utilize a combination of in house expertise,
coupled with EPCM based contracts for selected areas.
Shore personnel will provide the overall management of project development, with the use of
selected contract personnel working under Shore direction to fill specific or specialty rolls.
Select positions from project development will evolve into Operations positions upon
completion of the construction phase through the handover period and into commissioning. This
will provide operations continuity and reduce the commissioning period to commercial
production.
Project development will be subdivided into key departments reflecting the transition to
operations including processing, accounting, procurement, safety, engineering, construction,
security and mining.
H.2
PROJECT PLANNING AND MOBILIZATION
The project plan is based on providing required facilities prior to their expected need, but timed
to optimize pre-commissioning cash flow, thus improving NPV.
Current project planning is centered around the critical path tied to the production decision and
project permitting. Several aspects of the Project will need to start prior to the final production
decision to ensure the critical path is not compromised.
Following the PFS completion, work will focus on filling identified gaps and progressing to
feasibility level design, both for the process plant and the mine layout.
During the latter phases of the FS, management and engineering personnel not already part of
Shore’s staff, will need to be recruited. These positions will assist in developing the
specifications on the long lead equipment. Further construction personnel will be recruited in the
months following the production decision to ensure an adequate lead time for familiarity and
planning prior to the work commencing.
Mobilization of equipment and contractors to site is planned to occur prior to the receipt of the
construction permits, such that work may start as soon as possible once the approvals are in
hand.
Site activities in 2010 include removal of the Star processing plant, and relocation of the existing
office complex to the FALC JV core shack area. Current Shore facilities including 7 office
trailers, wash facilities and security shacks will be relocated and placed into one complex at the
core shack area. The existing removable structure over the Star processing plant will be relocated
to this area and set up for use as a temporary maintenance shop. This area will be
decommissioned upon completion of the main site facilities.
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H.3
ENGINEERING
Engineering of the Star Diamond Project will follow several phases at various levels of detail.
Much of this work will be consultant based, with some components provided by local utility
companies.
Mine design for the FS will be consultant driven. This design will be at an appropriate level to
develop contracts and tender documents for the initial pre-strip. After the FS, a company based
mining engineer will be recruited to continue the planning and monitoring during pre-strip and
detail the mine plan into commercial production.
For the design and construction, engineering consultants will be hired to oversee detailed design
and construction drawings / documents in the areas of civil, electrical and mechanical
engineering.
Process plant and site facilities design will be consultant based. Existing Shore personnel, along
with recruited professionals, will be involved directly with the design to ensure that an
operations perspective is maintained.
Site power distribution will be designed via consultants, while the primary incoming power will
be designed by SaskPower, the provincial utility.
TransGas, a division of SaskEnergy, will be responsible for the engineering design of the natural
gas supply line to site.
Engineering controls, including document control QA/QC procedures and survey control will be
established by Shore personnel immediately following the production decision.
H.4
TENDERING PROCESS
When tendering materials, services and equipment, Shore will utilize its methodology process,
which ensures the five key measurement criteria are met before awarding a contract to a vendor.
Vendors are measured on their safety, service, quality, delivery and price. The results of the
measurements assist the Shore in identifying which category the vendors are best suited for in
assisting the Shore in meeting their goals and objectives. At a minimum, three competitive
quotes are required from approved and / or preferred vendors.
Allowances for the tendering and ordering of equipment that require a long lead time to delivery
have been introduced into the schedule. Tenders and evaluations have been estimated at 8 to 15
weeks depending on the complexity of equipment and communications from suppliers. Long
delivery time items for the Project include:
•
•
•
•
•
•
•
main power transformers, up to 80 weeks;
AG Mills, Spiral Classifiers, up to 80 weeks;
overburden shovels, IPCC systems, up to 68 weeks;
ore shovels, trucks, 26 weeks;
electrical switch gear, up to 60 weeks;
ore IPCC systems, 52 weeks;
DMS Modules, up to 26 weeks; and
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•
diamond recovery equipment, sorting equipment, up to 26 weeks.
In order to meet the schedule production milestones, the specifications for the longest lead items
will be developed during the FS, such that the tendering and order process may begin
immediately following the production decision. All other equipment falls well within the
timeframes above, and do not affect the project schedule.
H.5
CONTRACTING PLAN
The majority of pre-production work will be conducted by contractors, with mobilization to site
commencing in anticipation of the receipt of final construction approvals.
Development of the contracts will be determined by suitability to the applicable tasks and local
conditions. A mix of Lump Sum, Unit Rate and Cost Plus contracts will be used, with Shore
providing certain portions of the equipment under installations contracts, and other components
being supply and install.
H.6
CONSTRUCTION
The construction of the majority of the site facilities, plant and mine will commence immediately
following receipt of the Construction Approval documents from the MOE.
H.7
PROJECT IMPLEMENTATION SCHEDULE
Primary constraint dates are based on the production decision, acceptance of the EIS, and receipt
of the Construction Approval from the MOE. All tasks are linked to one of these constraints.
Secondary constraints to the Project are based on commissioning of primary site power, large
equipment deliveries, and contractor availability.
To achieve milestone dates for construction, commissioning and commercial production, several
tasks will need to commence in advance of the production decision. These tasks include
commencement of detailed design engineering, hiring of key management personnel, site
reconnaissance, geotechnical investigations, large equipment selection and tendering.
Key tasks and milestones are shown in Table H.1 below.
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Table H.1: Key Project Tasks and Milestones
Item
Milestone Completion Date
Completion of Star Feasibility Study
February, 2010
Detailed Design Engineering of Site Facilities, Geotech February, 2010
investigations, Process Plant Design
Production Decision
March, 2010
Procurement of Long Lead Items
March, 2010
Ministerial Approval of EIS
August, 2010
Construction Permit Approval
November, 2010
Commence Pre-stripping, Site Construction
November, 2010
Primary Power to Site
January, 2012
Overburden IPCC System Operational
January, 2012
Process Plant Construction Start
July, 2012
Ore IPCC System Operational
November, 2013
Process Plant Functional
May, 2014
Commercial Production Achieved
October, 2014
The critical path for the Project is dictated by the production decision and the environmental
permitting. Following this is the shovel availability and power supply for the overburden
stripping. The process plant construction is not on the critical path due to the long time frame
required for overburden removal.
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I.0
CAPITAL COSTS
I.1
SUMMARY
The capital cost for the Star Diamond Project is comprised of: (1) pre-production stripping,
mining, processing plant and infrastructure capital costs; and (2) sustaining capital. The
estimated pre-production capital cost for the Star Diamond Project is shown in Table I.1.
Table I.1: Pre Production Capital Cost Summary
Year
Area
Processing plant and infrastructure
capital
Mine pre-production development
capital
Mine EPCM and pre-production
indirect costs
Mine equipment capital
(1)
2010
2011
2012
2013
2014
$86,797k
Total
$58,175k
$226,880k
$28,188k
$419,184k
$819.2M
$1,557k
$99,526k
$49,670k
$45,299k
$3,627k
$9,715k
$10,431k
$11,015k
$7,085k
$41.9M
$41,091k
$287,654k
$40,206k
$12,350k
$48,189k
$429.5 M
Total by Year
$104,450k
$623,775k
$128,495k
$487,848k
$142,071k
$1,486.6 M
Cumulative Total
$104.4 M
$728.2 M
$856.7 M
$1,344.6 M
$1,486.6 M
$196 M
An allowance of $32.967M for Provincial Sales Tax has been included in the capital cost estimates
Sustaining capital is summarized in Table I.14. Sustaining capital includes primarily pit and site
services equipment. Plant sustaining capital is not defined, as replacement spares are included in
the operating cost estimates. No capital upgrades are estimated for the life of the processing
plant, as the plant design is based on a 20 year operating life span. The total capital cost for the
Project is shown in Table I.2.
Table I.2: Total Capital Cost
AREA
Pre-Production Capital
Sustaining Capital
Total Project Capital
$MM
1,486.6
159.6
1,646.2(A)
(A)
Excludes a capital cost contingency of $178.24 M as estimated for the processing and infrastructure capital costs only.
I.2
BASIS OF ESTIMATE
The capital cost estimate for the Star Diamond Project is compiled from costs derived by P&E,
AMEC and Shore.
The Project scope was defined as follows:
•
Mining: By P&E, includes all mine plans, pit infrastructure design, mine equipment
capital estimates, pit dewatering estimates, overburden dump designs and cost estimates,
overburden and waste conveying, ore delivery to the ROM stockpile at the process plant.
•
Processing: By AMEC, includes all plant design including the feed system from the
ROM stockpile, AG Mill layout, DMS layout and recovery room design, coarse and fine
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reject disposal. Flow Sheet development was conducted in co-ordination with AMEC,
Shore and Metso. The AG Mills and spiral classifier designs were provided by Metso.
•
Infrastructure: By AMEC, includes site access road, site power transformation and
distribution up to the edge of pit, administration, warehousing, maintenance shop, coarse
PK disposal design, fine PK disposal design, security design, fuel storage, and off site
sorting facilities.
As the processing and infrastructure portions of this PFS were derived by AMEC, the capital
cost estimates include both of these areas.
For the portions of this PFS where engineering assessment was performed, cost analyses were
included in the capital cost estimate. Where an engineering assessment was not complete,
allowances were made and added to the cost estimate.
I.3
I.3.1
MINING
MINE CAPITAL COST SUMMARY
The mine capital cost includes pre-production stripping costs, pit indirect costs and mine
equipment costs incurred in years 2010 to 2014. The estimated mine capital cost is shown in
Table I.3.
Table I.3: Mine Capital Cost Summary
Item
Mine pre-production development cost
Mine pre-production indirect and EPCM cost
Mine equipment cost
Total
I.3.2
Estimated Cost
$196.0 M
$41.8 M
$429.5 M
$667.3 M
MINE PRE-PRODUCTION DEVELOPMENT COST
The cost of the mine pre-production work is $196M as shown in Table I.4. The mine preproduction cost estimates were developed from first principles taking the mine schedule,
equipment capabilities and anticipated field conditions into consideration. It is envisaged that an
earthmoving contractor will strip a portion of the surficial clay and sand layers and that Shore
will carry out the balance of the pit pre-production work.
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Table I.4: Mine Pre-Production Development Cost
Year
Item
No.
Unit
Unit Cost
2010
2011
2012
Total
Cost
2013
Star Pit pre-production development costs:
Earthmoving
contractor(s)
mobilization and set-up
Excavate perimeter
ditches
Develop pit access
ramps
Contractor strips
surficial sand
Shore field set-up
Shore excavates slot
across 400 m bench
Shore excavates clay
using mobile equipment
Shore excavates clay
using IPCC system
Shore excavates tills
using IPCC system
Shore excavates waste
rock using IPCC system
IPCC system interbench moves and
sinking cuts
1
$1,000k
$1,000k
$150/hr
$72k
$72k
lot
$485k/lot
$485k
$485k
Mbcm
$6.02/bcm
$45,150k
$45,150k
1
lot
$800k/lot
$800k
$800k
4
Mbcm
$3.62/bcm
$14,480k
$14,480k
12
Mbcm
$3.62/bcm
$39,096k
2.54
Mbcm
67.2
480
1
7.5
lot
hours
$1,000k/lot
$4,344k
$43,440k
$1.38/bcm
$3,507k
$3,507k
Mbcm
$0.92/bcm
$32,069k
4.60
Mbcm
$1.25/bcm
6
moves
$3,250k/move
Total
I.3.3
$1,557k
$99,526k
$29,793k
$61,862k
$5,756k
$5,756k
$9,750k
$9,750k
$19,500k
$49,670k
$45,299k
$196,052k
MINE PRE-PRODUCTION INDIRECT AND PIT EPCM COST
The estimated mine pre-production indirect and EPCM costs are summarized in Table I.5.
Table I.5: Mine EPCM and Pre-Production Indirect Costs
Year
2012
Item
Pit development indirect costs
2010
2011
$1,915k
$5,065k
$5,781k
$6,365k
$4,585k
Total Cost
$23,711k
Mine EPCM costs
$1,712k
$4,650k
$4,650k
$4,650k
$2,500k
$18,162k
$3,627k
$9,715k
$10,431k
$11,015k
$7,085k
$41,873k
Total
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2013
2014
Page 134 of 169
Shore will coordinate and manage the engineering, procurement and construction activities
required to bring the Phase 1a open pit into production:
•
Shore will establish a mine EPCM group supported by external senior EPCM consultants.
Its scope of its work will extend from supplier pre-qualification, through award-ofcontracts for the mine equipment and pit development work to be completed by
contractors, to pit development works management.
•
Shore will carry out most of the mine pre-stripping work using its own equipment and
work force. Shore will also hire specialist contractors to develop the pit dewatering wells,
establish the mine electrical distribution system, construct the conveyor systems and
assist in pre-stripping the surficial sand and clay horizons in the pit.
I.3.3.1
MINE EPCM GROUP
The EPCM activities for the development of the mine including the waste conveying system and
overburden management area will be carried out by Shore with the assistance of EPCM
specialists. Shore will assume responsibility for project planning and coordination:
•
Equipment supply contracts will be negotiated and signed between Shore and suppliers
with advice and assistance from external EPCM specialists. As part of this activity Shore
will prepare specifications and issue request for quotations from pre-qualified suppliers.
The EPCM specialists will provide input during supplier pre-qualification and selection,
specifications preparation, request for quotation preparation, and bid evaluations, contract
negotiations and awards. The specialists will also provide input during equipment
fabrication and scheduled fabrication and pre-assembly inspections, transportation, and
on-site assembly and commissioning. The level of specialist involvement will vary
depending upon the particular price of equipment. The mine equipment and supplies to
be procured include: the mine mobile equipment fleet including ancillary equipment; the
waste IPCC system including two P&H4100 shovels, two waste sizers, conveyors, and
the waste stacker at the overburden management area; the semi-mobile ore and waste
sizers, and the conveyors including the ore conveyors to the processing plant; and other
equipment and materials including pumps, piping, and electrical supplies. It is envisaged
that the specialists will also have considerable and in-depth involvement of the
engineering procurement, and construction and commissioning of the waste IPCC system
and the ore sizers and conveyors.
•
Specialist contractors will be hired to assist Shore in pre-stripping the overburden and
establishing the perimeter dewatering wells and other mine services. The contracts for
these mine site construction contracts will be negotiated and signed between Shore and
contractor (s) with input from the EPCM specialists.
It is envisaged that the EPCM multi-disciplinary group will operate using formalized procedures
requiring input and approvals from corporate personnel including legal and finance experts and
from relevant departments including maintenance, health and safety, environmental protection,
training, security, exploration, and the processing group. The projected annual mine EPCM cost
is shown in Table I.6.
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Table I.6: Projected Annual Mine EPCM Cost
Item
Q4-2010
Projected Annual Mine EPCM Cost ($k)
2011
2012
2013
2014
Shore’s EPCM personnel:
EPCM co-ordinator
Administrative assistant
Engineers (average $150k/yr)
Scheduler
Technical writer
Survey group
Drawing group
Document control
Procurement co-ordinator
Procurement assistant
Monitoring/inspection engineers
Hiring costs
250
60
750
150
150
180
325
60
90
60
300
250
60
750
150
150
180
325
60
90
60
300
250
60
750
150
150
180
325
60
90
60
300
250
30
300
75
25
90
100
30
45
30
150
Subtotal
62
15
185
37
37
45
80
15
22
15
37
300
850
2,375
2,375
2,375
1,125
Subtotal
50
75
125
325
325
650
325
325
650
325
325
650
325
325
650
Subtotal
262
60
322
1,050
250
1,300
1,050
250
1,300
1,050
250
1,300
500
65
565
200
125
200
125
200
125
100
60
Subtotal
Total
25
90
300
415
1,712
325
4,650
325
4,650
325
4,650
160
2,500
Corporate Mine EPCM support:
Finance/Accounting
Legal
EPCM Consultants:
Fees
Disbursements
EPCM operating costs:
Office operating
Travel
EPCM Office set-up
I.3.3.2
MINE INDIRECT OPERATING COSTS DURING PRE-PRODUCTION
DEVELOPMENT
The mine pre-production indirect costs include the cost of management and administration
personnel required to support the mine pre-production work; and field office operating costs. The
estimated annual mine indirect cost during pit pre-production is shown in Table I.7. Additional
details are provided in Table I.8.
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Table I.7: Projected Mine Pre-Production Indirect Costs
Mine indirect staff
Mine crane operating
Site office operating
Light vehicles (4)
Waste management
Training/H&S consumables
Subtotal
Insurance
Legal
Surface leases
Subtotal
Total
(A)
Q4-2010
$864k
$50k
$11k
$925k
$250k
$740k
$990k
$1,915k
2011
$2,303k
$330k
$300k
$100k
$10k
$60k
$3,103k
$1,000k
$100k(A)
$862k
$1,962k
$5,065k
2012
$2,303k
$660k
$300k
$100k
$20k
$165k
$3,548k
$1,000k
$125k(A)
$1,107.5k
$2,232.5k
$5,781k
2013
$2,303k
$660k
$802k
$100k
$40k
$80k
$3,985k
$1,000k
$150k(A)
$1,230k
$2,380k
$6,365k
Q1&Q2-2014
$1,727k
$660k
$150k
$50k
$20k
$40k
$2,647k
$1,000k
$75kA)
$862.5k
$1,937.5k
$4,585k
These legal costs are in addition to those included in the mine EPCM cost estimate.
The direct costs of the pre-production development work to be done by Shore’s work force and
by contractors do not include mine indirect operating costs. The estimated direct cost of work to
be done by contractors is based on budgetary quotes and estimates that include assumed
operating and maintenance labour costs, equipment operating costs, equipment rental rates and
overhead and fee mark-ups. The direct costs for the pre-production development to be done by
the Shore’s work force includes operating and maintenance labour costs and equipment
operating costs including diesel fuel. Shore’s direct costs include supervision up to the level of
operations shift supervisors, and maintenance lead mechanics. Shore’s equipment is included in
the mine equipment capital cost.
Table I.8: Projected Annual Cost of Mine Indirect Staff
Position
General Manager
Administrative Assistant
HR Co-ordinator
Accountant
Accounts Payable
Payroll
Buyer
Shipper/Receiver
Environmental engineer
Maintenance Manager
Maintenance Planner
Mine Manager
Mine Planning Engineer
Geotechnical Engineer
Surveyors
OH & S coordinator
OH&S Nurse
Security
Total
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Number on payroll
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
2
1
20
Extended Annual Cost
$217.8k
$61.8k
$101.3k
$103.5k
$67.3k
$67.3k
$91.7k
$82.8k
$114.3k
$162.4k
$122.7k
$166.2k
$122.7k
$116.7k
$167.1k
$121.8k
$280.7k
$135.1k
$2,303k
Page 137 of 169
I.3.4
MINE EQUIPMENT COST
The projected mine capital equipment expenditure is shown in Table I.9.
Table I.9: Mine Equipment Cost
Year
Item
Waste stripping IPCC system
2010
$34,019k
2011
$212,773k
2012
$10,000k
Ore conveyor system
Mine mobile equipment
Ancillary pit equipment
2013
2014
Total Cost
$256,792k
$3,500k
$15,800k
$19,300k
$19,505k
$84,986k
$56,660k
$8,821k
$4,999k
$4,823k
$620k
$1,300k
$7,700k
$5,116k
Pit perimeter wells and in-pit pumps
Pit electrical power distribution
$15,558k
$10,750k
$19,750k
$13,600k
$13,600k
Subtotal
$39,135k
$274,432k
$38,544k
$11,820k
$46,055k
$409,986k
Estimated Provincial Sales Tax
$1,956k
$13,222k
$1,662k
$530k
$2,134k
$19,504k
Total
$41,091k
$287,654k
$40,206k
$12,350k
$48,189k
$429,490k
I.3.4.1
IPCC SYSTEM
The envisaged IPCC system includes two P&H4100XPC shovels, two fully mobile waste sizers,
two fully mobile transfer conveyors, two semi-mobile across-bench conveyors, an up-ramp
conveyor and overland conveyor to the waste management area, and a waste management area
conveyor and stacker. The equipment will be purchased new. The estimated capital cost of the
IPCC system is shown in Table I.10.
Table I.10: IPCC System Capital Cost
Year
2010
$34,019k
Total
$34,019k
P&H IPCC overburden system
IPCC system set-up & commissioning
I.3.4.2
2011
$192,773k
$20,000k
$212,773k
2012
2013
$10,000k
$10,000k
ORE CONVEYOR SYSTEM
The installed cost of the semi-mobile ore and waste sizers and the ore conveyors is shown in
Table I.11. The equipment will be new.
Table I.11: Ore Conveyor System
Year
Semi-mobile ore and waste sizers and the ore
conveyors
Total
P&E Mining Consultants Inc
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2010
2011
2012
2013
2014
$3,500k
$15,800k
$3,500k
$15,800k
Page 138 of 169
I.3.4.3
MINE MOBILE AND ANCILLARY EQUIPMENT
The estimated cost of the mine mobile equipment and ancillary equipment to be procured by
Shore in years 2011 to 2014 is shown in Tables I.12 and I.13. New equipment will be purchased.
Table I.12: Mine Mobile Equipment Cost
Mine equipment
Cat 785 haul truck
Hitachi EX3600 shovel - waste
Hitachi EX3600 shovel - ore
Cat 993K wheel loader
Cat 385 excavator
Cat D10 bulldozer
Cat D11 bulldozer
Cat 854 wheel dozer
Cat 836H Compactor
Cat 16M road grader
Water truck
Fuel/lube truck
Cable reel backhoe
Field service truck
Weld truck
Tire truck
Light service truck
Shop tire manipulator
90t rough terrain crane
Pit trailer & tractor
Lighting towers
Nodwell (conveyor maintenance)
Blasthole drills
Boulder drilling equipment
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Year
Unit Cost
$2,675k
$6,900k
$6,900k
$3,082k
$1,291k
$1,618k
$2,563k
$2,381k
$1,148k
$1,017k
$1,500k
$412k
$228k
$311k
$224k
$399k
$41k
$166k
$989k
$550k
$25k
$695k
$1,250k
$600k
Total
2010
Number of units purchased
2011
2012
2013
2014
12
1
1
1
2
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
2
1
$56,660k
1
$8,821k
$19,505k
Page 139 of 169
Table I.13: Mine Ancillary Equipment Capital Cost
Pit ancillary equipment
Cat 980 wheel loader
Cat 938G wheel loader
Backhoe 420E type
Cat D10 bulldozer
Telehandler
Fuelling Stations
Vacuum Truck (15,000 L)
Pick-up trucks
Incinerator 180kg/hr capacity
Crane - Grove RT540E type
Crane - Grove GMK4115 type
Crane - Manitowoc 999 type
Skidsteer S300 type
Fire Truck
Ambulance
Bucket Truck
Pit shop tools & equipment
Heavy truck wash
Light truck wash
Forklifts
Pit survey system
Yard sander
Pit road sander
Material carts
Bus
I.3.5
Unit
Cost
$646k
$319k
$164k
$1,618k
$167k
$700k
$330k
$41k
$300k
$466k
$1,573k
$3,348k
$52k
$350k
$150k
$150k
$1,065k
$471k
$200k
$50k
$620k
$100k
$300k
$6k
$241k
Year
Where utilized
Site Services
Site Services
Site Services
Fines management
Site Services
Pit and shop
Site Services
Pit and shop
Site Services
Site Services
Site Services
Site Services
Site services, plant
Safety
Safety
Site Services
Maintenance
Maintenance
Maintenance
Shop
Pit
Yard
Pit
Shop
Pit
Total
2010
2011
2012
2013
Number of units purchased
1
1
0.6
1
12
1
6
1
1
1
1
0.4
1
6
1
1
1
4
1
1
1
0.25
1
1
1
0.25
1
1
1
1
1
1
8
1
$5,116k
$4,999k
$4,823k
$620k
MINE SUSTAINING CAPITAL
The estimated sustaining capital cost is shown in Table I.14. The equipment addition and
replacement schedule is shown in Table I.15.
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Table I.14: Mine Sustaining Capital Cost
Year
Item
IPCC system
2015
2016
$10,000k
2017
Ore conveyors
2018
$10,000k
2019
2020
$2,000k
Pit electrical distribution
Mine mobile equipment
Ancillary equipment
Total
$5,000k
2021
$10,000k
2022
2023
2024
$10,000k
2025
2026
Total
$40,000k
$2,000k
$2,500k
$4,000k
$5,000k
$2,500k
$15,000k
$5,078k
$311k
$14,021k
$7,450k
$37,362k
$15,594k
$1,844k
$2,317k
$3,410k
$12k
$250k
$262k
$592k
$1,797k
$2,685k
$226k
$1,198k
$4,152k
$1,254k
$279k
$471k
$13,178k
$5,090k
$10,561k
$19,283k
$20,042k
$41,659k
$18,279k
$14,070k
$8,515k
$7,562k
$11,254k
$2,779k
$471k
$159,565k
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$87,387k
Page 141 of 169
Table I.15: Sustaining Pit Equipment Schedule
Year
Pit equipment:
Cat 785D truck
Hitachi EX3600 shovel - waste
Hitachi EX3600 shovel - ore
Cat 993K wheel loader
Cat 385 excavator
Cat D10
Cat D11
Cat 854 wheel dozer
Cat 836H Compactor
Cat 16M road grader
Water truck
Fuel/lube truck
Cable reel backhoe
Field service truck
Weld truck
Tire truck
Light service truck
90t rough terrain crane
Pit trailer & tractor
Lighting towers
Nodwell (conveyor maintenance)
Blasthole drills
Boulder drill
(A)
2015
2016
2017
1
1
2
1
1
1
1
2018
2019
2020
2021
2022
Number of pieces of equipment purchased
10
1
1
1
1
3
2023
2024-2026
1
2
1
1
1
1
1
1
1
1
1
2
1
2
0.5(A)
2
2
1
2
1
2
1
1
It is assumed that the tire truck is rebuilt in 2020.
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Page 142 of 169
I.4
PROCESSING & INFRASTRUCTURE
The total estimated cost to construct, install and commission the 40,000 tpd diamond process
plant and associated infrastructures described in this Report is $801.093 million. Contingency for
this portion of the study was estimated by AMEC at 22.25 % of the total, or $178.241 million.
This amount covers the direct field costs of executing the Project, plus the indirect costs
associated with design, construction and pre-commissioning for the areas of processing and
infrastructure. The estimate is summarized in Table I.16. All costs are expressed in first quarter
(Q1) 2009, with no allowance for interest or financing fees, escalation, taxes or duties and
working capital during construction.
Table I.16: Processing and Infrastructure Capital Costs
AREA
Site Preparation and Roads
Process Plant
Coarse Disposal, PKCF and Water
Management
Utilities
Ancillary Buildings and Facilities
Off Site Facilities
Total Directs
Indirects, Processing and
Infrastructure
Total Direct and Indirect Costs
Contingency @ 22.25 % of Total
Directs and Indirects
2009 $
32,174,695
410,486,534
14,713,449
71,859,888
75,356,175
8,132,873
612,723,613
188,369,972
801,093,585
178,241,415
Sustaining capital for plant mobile equipment is included in the initial capital estimate for plant
mobile equipment. PK dam construction is not included for sustaining capital, as berm
construction through the use of hydrocycloning is covered under site services operator’s cost,
along with water management, water treatment and community support.
I.4.1
PROCESS EQUIPMENT
Major process equipment was priced as new equipment, based on Q1 2009 and also based on
preliminary design specifications. Major equipment was priced by Metso for the process plant.
Freight costs to site were included in the indirect cost.
I.5
INDIRECT COSTS
Indirect costs associated with the plant and infrastructure are summarized in Table I.17.
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Table I.17: Indirect Costs for Processing and Infrastructure
Area
EPCM
Construction Indirects
Freight
Vendor Representatives
Capital Spares & First Fills
Start Up & Pre-Commissioning
Shore’s Costs
Total
Total Cost $
73,526,833
56,627,970
44,708,993
2,037,000
7,052,647
4,416,529
0
188,369,972
No allowance has been made in this capital cost estimate for Shore’s costs in the areas of
temporary camp facilities, living out allowances or freight staging.
I.5.1
CONTINGENCY
Contingency is an allowance included in the capital cost estimate to cover unforeseeable items
within the scope of the estimate. These can arise due to currently undefined items of work or
equipment or to uncertainly in the estimate quantities and unit prices for labour, productivity
loss, equipment and materials. Contingency does not allow for items beyond the scope of work
or under exclusions, as listed in the basis of estimate. The contingency has been included in the
estimate of $178.241 million, based on 22.25 % of Direct and Indirect Plant and Infrastructure
costs.
I.6
MINE CLOSURE
Closure costs are estimated to be $64,784,600 as described in Appendix G.6 and Table G.1.
Reclamation cost is based on the amount of material required (i.e., depth of reclamation material
required) and the area of each facility. Components of the reclamation cost include $0.25/m2 to
re-grade and contour existing landforms, reclamation material handling costs of $4/m3, $5.00/m2
to construct stable drainage channels in sloped landforms, and revegetation costs of $1,100/ha. A
contingency for remediation of any HSWDGs and removal of structures with no salvage value is
estimated at $14,500,000. The closure costs are included in Appendix K., Financial Analysis at
the end of the mine life, and thus are not included in the capital cost estimate. A Reclamation
Credit Facility at a fixed percentage of the closure cost is also carried as part of General &
Administration under Appendix J, Operating Costs.
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J.0
OPERATING COSTS
J.1
BASIS OF ESTIMATE
The operating cost estimate covers mining, plant, G&A, sorting and evaluation and sales and
marketing costs. Key parameters used in developing the operating costs are presented in Table
J.1.
Table J.1: Key Parameters Used in Developing the Operating Costs
Parameter
Processing plant capacity
Mine and processing plant throughput
Plant operating hours
Diesel fuel cost
Electrical power cost
Unit
Mtpa
Mtpa
Hours per year
L
kWh
Cost / Amount per Unit
14.6
14.2
7271
$1.00
$0.0575
The open pit operating costs include operating and maintenance labour, direct supervision,
electrical power, diesel fuel and equipment parts and consumables for ore mining and waste
stripping. The processing operating costs include operating and maintenance labour, direct
supervision, electrical power, diesel fuel and equipment parts and consumables for ore
processing, coarse reject piling and fines deposition. G&A covers costs associated with
management, accounting, security, environment, health and safety, road and building
maintenance, public relations, and materials management. Sorting, evaluation, sales and
marketing include the costs of shipping diamond concentrate from the mine site to an off-site
sort house, cleaning, third party evaluations, and direct marketing costs.
The mine operating cost estimates were developed from first principles taking into consideration
the pit production schedule, the pit layout and projected field conditions and moisture levels,
estimated equipment cycle times and productivities, regional labour cost information and shift
rotations, input received from suppliers including P&H and Continental Conveyor, projected pit
dewatering requirements, contractor budget quotes for stripping surficial drift materials and
IPCC system developments and experience at other projects.
The plant operating cost estimates were developed from first principles, where possible, using
estimated manpower levels and flow sheet feed rates to the various plant circuits. Plant
consumables were estimated by applying factors developed at other operating diamond mines.
Electrical cost estimates were based on equipment sizing from Metso and the preliminary
general arrangements.
The PFS has identified opportunities to reduce the estimated operating costs. For example:
•
The proposed IPCC system has a maximum throughput capacity of 18,180 tph. Some
IPCC system suppliers offer systems with capacities that are up to 1.5 times higher than
that proposed in the PFS. A FS for the Project could assess re-designing the pit phase
layouts to reduce the number of curved pit faces to increase the IPCC system throughput
and assess the use of a higher capacity IPCC system.
•
The proposed processing plant has a throughput capacity of 14.6 Mtpa. The PFS
assumes that the open pit will produce 14.2 Mtpa ore taking IPCC shovel, sizer and
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Page 145 of 169
mobile conveyor inter-bench and inter-phase moves into account. There is an
opportunity to improve on IPCC scheduling and ore stockpiling and increase the mine
throughput to 14.6 Mtpa.
J.2
LABOUR COSTS
Labour costs are based on direct salary and hourly rates with the following factors for salaries
and indirects:
•
•
•
•
•
•
•
•
•
•
J.3
Canadian Pension Plan (“CPP”), employment insurance (“EI”) fees are based on
established values with maximum payable EI and CPP at $2,978.45 per employee per
year.
Workers Compensation Board (“WCB”) rates are estimated based on $1.27 per $100 of
payroll, calculated on total payroll to a maximum of $55,000 per year per employee.
Health and dental benefits are set at a fixed amount of $121.99 per year.
Employee and family life insurance is set at $0.037 per $1,000 of gross income.
A company provided defined contribution pension plan is envisaged, at a cost of 5 % of
salary.
A personal health allowance, an employee family assistance plan, a drug and alcohol
treatment plan, boot and glass allowances and criminal background checks are planned,
totalling $804.75 per employee-year and allocated in the payroll burdens.
A tool allowance of $0.75 per hour is allocated for trade persons.
An overtime allowance for employees on a continuous shift rotation is estimated based
on approximately 8 hours of overtime per month for hourly paid employees.
Vacation pay is based on 7.7 % of annual pay.
Unscheduled overtime is estimated at 7 % of total salary for hourly paid workers.
MINING
J.3.1
MINING OPERATING COST SUMMARY
The estimated mine operating cost in each pit phase is shown in Table J.2. Additional
information on the IPCC system operating cost, and the cost of mining ore and waste rock is
provided in the following subsections. Pit operating costs incurred during pit pre-production
development in years 2010 to 2013 are included in the capital development costs.
Table J.2: Estimated Open Pit Operating Cost
Phase
1a
1b
Item
Conventional equipment:
Sinking cut on 310 bench
Mine ore
Mine waste rock
IPCC system:
Excavate waste rock
Move to Phase 1b
Conventional equipment:
Excavate surficial sand and clay
Mine ore
Mine waste rock
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Quantity
Unit
Unit Cost
1
32.35
7.803
lot
Mt
Mbcm
$3,250k
$1.60
$2.20
15.561
1
Mbcm
move
3
33.05
0.66
Mbcm
Mt
Mbcm
Cost ($k)
/lot
/t ore
/bcm
$3,250
$51,766
$17,167
$1.25
$900k
/bcm
/move
Subtotal
$19,452
$900
$92,535
$6.02
$1.60
$2.20
/bcm
/t ore
/bcm
$18,060
$52,891
$1,464
Page 146 of 169
Phase
2
3
4
1a to 4
J.3.2
Item
IPCC system:
Excavate surficial sand and clay
Excavate tills
Excavate waste rock
Bench moves
Move to Phase 2
Conventional equipment:
Excavate surficial sand and clay
Mine ore
Mine waste rock
IPCC system:
Excavate surficial sand and clay
Excavate tills
Excavate waste rock
Bench moves
Move to Phase 3
Conventional equipment:
Excavate surficial sand and clay
Mine ore
Mine waste rock
IPCC system:
Excavate surficial sand and clay
Excavate tills
Excavate waste rock
Bench moves
Move to Phase 4
Conventional equipment:
Excavate surficial sand and clay
Mine ore
Mine waste rock
IPCC system:
Excavate surficial sand and clay
Excavate tills
Excavate waste rock
Bench moves
IPCC pit equipment move
Quantity
Unit
Unit Cost
10.966
27.260
14.580
10
1
Mbcm
Mbcm
Mbcm
moves
move
$1.38
$1.14
$2.20
$250k
$1,000k
3
40.67
11,057
Mbcm
Mt
Mbcm
$6.02
$1.60
$2.20
20.645
40.365
23.215
9
1
Mbcm
Mbcm
Mbcm
moves
moves
$1.38
$1.14
$2.20
$250k
$1,000k
3
41.87
21.063
Mbcm
Mt
Mbcm
$6.02
$1.60
$2.20
6.167
40.365
23.215
8
1
Mbcm
Mbcm
Mbcm
moves
move
$1.38
$1.38
$2.20
$500k
$1,000k
12.235
22.87
20.086
Mbcm
Mt
Mbcm
$6.02
$1.60
$2.20
14.628
55.101
22.305
10
1
Mbcm
Mbcm
Mbcm
moves
move
$1.38
$1.14
$2.20
$500k
$1,000k
Cost ($k)
/bcm
/bcm
/bcm
/move
/move
Subtotal
$15,133
$31,082
$32,088
$2,500
$1,000
$154,218
/bcm
/t ore
/bcm
$18,060
$65,079
$24,327
/bcm
/bcm
/bcm
/move
/move
Subtotal
$28,491
$46,016
$51,075
$2,250
$1,000
$236,298
/bcm
/t ore
/bcm
$18,060
$67,002
$46,340
/bcm
/bcm
/bcm
/move
/move
Subtotal
$8,511
$55,975
$54,343
$4,000
$1,000
$255,231
/bcm
/t ore
/bcm
$73,659
$36,604
$44,190
/bcm
/bcm
/bcm
/move
/move
Subtotal
Total pit direct operating cost
$20,187
$62,816
$49,072
$5,000
$1,000
$292,528
$1,030,810
years
$2,931k /yr
years
$660k /yr
Total (LOM) pit operating cost
LOM average mine operating cost (based on 170,838 kt ore)
$35,468
$7,585
$1,073,863
$6.29/t ore
Pit operations indirect costs:
Pit dewatering operating costs
Mobile pit crane operating costs
12.1
11.5
IPCC SYSTEM OPERATING COST
The estimated direct cost of waste rock stripping in Phase 1a using the IPCC system
$1.25/bcm as shown in Table J.3.
P&E Mining Consultants Inc
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is
Page 147 of 169
Table J.3: IPCC System – Projected Waste Rock Stripping Cost in Phase 1a
Estimated Annual Cost
($k)
$6,768
$5,359
$7,441
$5,644
$9,316
$1,340
$7,665
$43,533
47.6 Mbcm /yr
$0.91/bcm
$0.34/bcm
$1.25/bcm
Operating Cost Component
IPCC operating labour
IPCC maintenance labour
Shovel operating costs (2 units)
Sizer operating costs (2 units)
Electrical power cost
Conveyor consumables
Pit support equipment
Total
Stripping rate
Stripping unit cost
Plus waste rock drilling and blasting cost
Estimated waste rock stripping unit cost
J.3.2.1
IPCC SYSTEM OPERATING LABOUR
The projected operating labour cost is shown in Table J.4.
Table J.4: IPCC System – Projected Phase 1a Operating Labour Cost
IPCC System
Operating Labour
Position
Shift Supervisor
Percent
Allocation
To
Pit Budget
(%)
100 %
Shovel operator
Shovel trainee
Sizer tender
Conveyor tender
Stacker operator
100 %
100 %
100 %
100 %
100 %
2
1
2
1
1
2
Bulldozer operator
(at shovels)
Wheel dozer operator
Bulldozer operator
(at waste stacker)
100 %
Excavator operator
Haul truck driver
Grader operator
Service truck driver
Compactor operator
J.3.2.2
Crew 1
No. of Operators
Crew 2 Crew 3 Crew 4
On-site
Shift 1 Shift 2
2
2
Off-site
Shift 3 Shift 4
2
2
Labour Cost
c/w burdens
per person
Extended
Labour
Cost
8
($k/yr)
$128.4
($k/yr)
$1,027
$101.4
$91.3
$87.9
$87.9
$87.9
$812
$182
$704
$352
$352
Total
2
2
1
1
2
1
2
1
1
2
1
1
8
2
8
4
4
2
2
2
2
8
$95.2
$762
100 %
100 %
1
1
1
1
1
1
1
1
4
4
$95.2
$95.2
$381
$381
100 %
100 %
100 %
100 %
100 %
Totals
1
1
1
1
1
18
1
1
1
1
1
17
1
1
1
1
1
18
1
1
1
1
1
17
4
4
4
4
4
70
$101.4
$85.6
$95.2
$85.6
$85.6
$406
$342
$381
$342
$342
$6,768
IPCC SYSTEM MAINTENANCE LABOUR
The projected IPCC maintenance labour cost is shown in Table J.5.
P&E Mining Consultants Inc
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Table J.5: IPCC System – Phase 1a Maintenance Labour
IPCC System
Maintenance labour
Percent
Allocation
To
Pit
Budget
(%)
Crew 1
No. of maintenance personnel
Crew 2
Crew 3 Crew 4
On-site
Off-site
Position
Shift 1
Shift 2
Supervision:
Electrical Supervisor
100 %
1
1
Mechanical Supervisor
100 %
1
1
Shovel, sizer & conveyor maintenance:
Heavy duty mechanic
100 %
2
2
Electrician
100 %
2
2
Machinist
100 %
1
Instrument Technician
100 %
1
1
Ancillary pit mobile equipment:
Heavy duty mechanic
100 %
4
1
Other maintenance personnel (pumps, gas vehicles):
Shop personnel
100 %
2
2
Totals
14
10
J.3.2.3
Total
Labour Cost
Extended
Labour
Cost
$/person
Shift 3
Shift 4
$k/yr
$k/yr
1
1
1
1
4
4
$121.6
$131.0
$487
$524
2
2
1
1
2
2
1
8
8
2
4
$109.3
$109.3
$96.5
$109.3
$875
$875
$193
$437
4
1
10
$109.3
$1,093
2
14
2
10
8
48
$109.3
$875
$5,359
IPCC SYSTEM – CONSUMABLES
The estimated costs for equipment parts, lubricants and consumables are shown in Table J.6.
Table J.6: IPCC System – Projected Equipment Parts, Lubricants and Consumables Cost
Item
P&H4100XPC shovels
(2 shovels X 6,000 hrs X $620.15/hr)
10,000 tph capacity sizers
(2 sizers X 6,000 hrs X $470.34/hr)
Waste conveyors and stacker
J.3.2.4
Estimated Annual Cost
($k)
$7,441
$5,644
$1,340
IPCC SYSTEM – ELECTRICAL POWER
The estimated annual electrical power cost for the IPCC overburden system is shown in Table
J.7.
Table J.7: Estimated IPCC Electrical Power Cost
Item
Estimated running load for IPCC system
Operating and maintenance hour per year
Annual electrical power consumption
Unit electrical power cost
Estimated electrical power annual cost
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Estimated Annual Cost
25,572 kW/h
6,336 h/y
162 million kWh/y
$0.0575/kWh
$9,316 k
Page 149 of 169
J.3.2.5
IPCC SYSTEM SUPPORT EQUIPMENT
The estimated annual cost for IPCC support mobile equipment is shown in Table J.8. The costs
include equipment parts, diesel fuel at $1/L, ground engagement tools, tires, and lubricant costs.
Table J.8: Projected IPCC System Support Equipment Cost
Item
Caterpillar D-10 bulldozers with rippers
(two units support the shovel operations)
Caterpillar D-11 bulldozer with ripper
(one unit support the waste stacker operation)
Grader
Hydraulic shovel
Haul truck
Wheel dozer
Compactor
Fuel truck
Water truck
Pick-up trucks - operations (4)
Pick-up trucks - mine maintenance (3)
Mechanic service vehicles (4)
Portable lighting
Total
J.3.3
Estimated Annual Cost
($k)
$2,408
$1,565
$458
$1,181
$315
$546
$728
$77
$77
$100
$75
$131
$4
$7,665
DRILLING AND BLASTING
It is assumed that the development of the pit will require the drilling and blasting of an average
of 17.6 Mt of ore and waste rock per year. The blast pattern and the drilling and blasting cost are
summarized in Tables J.9 and J.10 respectively.
Table J.9: Projected Blast Pattern
Item
Bench height
Sub-drill
Blast hole diameter
Burden
Spacing
Stemming
Estimated average density
Tonnes broken per blasthole
Kg ANFO per blasthole
Powder factor
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Parameter
15m
2m
172mm (6 ¾ inch rotary)
7m
10 m
4.25 m
2.2 t/m3
2,310 t
295 kg
0.13 kg/t
0.28 kg/m3
Page 150 of 169
Table J.10: Estimated Drilling and Blasting Cost
Item
Production blasthole drilling cost (17.6 Mtpa x $0.08/t)
Blasting consumables cost (17.6 Mtpa x $0.21/t)
Estimated explosive supplier costs:
• Operator and helper
• Equipment rental
Blasting crew costs:
• Shore’s blasting crew and equipment operating cost.
Shore supplied services:
• Shore supplied electrical power, and diesel fuel consumed
in the explosive supplier’s vehicles
Subtotal
No. of years
Total
Distribute costs over estimated total tonnage of waste rock and ore
Equivalent unit cost
Estimated Annual Cost
($k)
$1,408 (A)
$3,678(B)
$575(C)
$410
$652(D)
$120(E)
$6,843k / year
12
$82,116 k
530 Mt
$0.16/tonne of ore
$0.34/ bcm waste rock
(A): Estimated cost based on four drill-shifts per day and includes 4 drill operator shifts/day; 2 mechanics shifts/day; diesel fuel; maintenance
parts and lubes; drill string and bit costs for two Sandvik D245S type rotary drills operating a total of 7,000 hours/year; 5 % hole re-drill / cleanout.
(B): Blasting consumables include ANFO; two detonators and 454 g boosters per blast hole; surface initiation components; and stemming
material.
(C): Estimate based on two operators and two helpers on payroll at annual cost of $457k plus assumed supplier’s overhead and fee, regulatory
compliance and insurance mark-ups.
(D): Six persons on payroll at average cost of $97,100/person plus $69,400/year equipment operating cost.
(E): Provisional allowance for services supplied to the explosive supplier by Shore.
J.3.4
ORE MINING AND WASTE ROCK COST
The estimated cost to mine ore and waste rock using conventional excavators, loaders, 136 t
capacity haul truck, sizers and conveyors is summarized in Table J.11. Additional information is
shown in Table J.12.
Table J.11: Estimated Cost to Mine Ore and Waste Rock Using Conventional Mobile
Equipment
Item
Drilling and blasting
Excavate and haul material to sizer
Size and convey
Total
Ore
$0.16/t ore(A)
$1.34/t ore
$0.10/ t ore(B)
$1.60/t ore
Waste Rock
$0.34/bcm(A)
$1.79/bcm
$0.07/bcm(C)
$2.20/bcm
(A): It is assumed that 40 % of the ore and waste rock will be drilled and lightly blasted.
(B): The sized ore is conveyed to the processing plant. The estimated ore sizer and conveyor operating cost includes electrical power, parts, and
lubricant and consumables costs.
(C): The sized waste is conveyed to the IPCC system’s overland conveyor and waste stacker. The estimated waste sizer and conveyor operating
cost includes parts and lubricants and consumables costs for the waste sizer and the waste conveyor between the waste sizer and the IPCC system
overland waste conveyor, and the cost of the electrical power to size and convey the material to the waste management area.
P&E Mining Consultants Inc
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Page 151 of 169
Table J.12: Estimated Cost to Mine Ore and Waste Rock Utilizing Conventional
Equipment
Operating Cost Component
Mine ore
The ore is excavated, hauled
to sizer, sized and conveyed
to the processing plant.
Direct labour:
Shovel operator
Front end loader operator
Haul truck driver
Grader operator
Bulldozer operator (in-pit)
Compactor operator
Wheel dozer operator
Excavator operator (at sizers)
Fuel truck/water truck operator
Semi-mobile sizer operator
Subtotal
Annual direct labour cost
No. of persons on payroll
4
Pit indirect labour:
Operations Supervisor
Lead mechanic
Mechanic/electrician
No. of persons on payroll
4
2
28
34
$3,794k/yr
No. of persons on payroll
Direct supplies:
Diesel fuel ($1/L)
Parts and lubricants
Wear parts/tires
Annual direct supplies cost
$5,707k/yr
$3,825k/yr
$1,213k/yr
$10,745k/yr
$4,169k/yr
$2,770k/yr
$816k/yr
$7,755k/yr
Estimated total annual cost
Production rate
Unit excavate and haul cost
$19,091k/yr
14.2 Mtpa
$1.34/t ore
$11,750k/yr
6.56 Mbcm/a
$1.79/bcm
Subtotal
Annual pit indirect labour cost
J.3.5
Mine waste rock
The waste rock is excavated,
hauled to waste sizer, sized,
and conveyed to the IPCC
system waste conveyor.
No of persons on payroll
4
20
20
4
4
2
4
4
4
4
50
$4,552k/yr
2
26
$2,294k/yr
16
16
$1,701k/yr
PIT–SPECIFIC INDIRECT COSTS
The pit-specific indirect costs are shown in Table J.13 for the operation of two rough terrain
cranes that will be used to maintenance the conveyors and facilitate inter-bench conveyor moves.
Table J.13: Estimated Mine-Specific Indirect Costs
Item
Rough terrain crane operating cost
• 4 operators (4 @ $101.4k/ yr)
• Operating cost
Total
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Estimated Annual Cost
($k)
$406
$254
$660
Page 152 of 169
J.4
OPERATING COSTS – PROCESSING
J.4.1
OPERATING COST SUMMARY
The estimated plant operating costs are summarized in Table J.14. These costs include operating
and maintenance labour, consumables, and supplies for the following:
•
•
•
coarse ore stockpile, but excluding the mine-to-stockpile conveying system, semi mobile
primary crushing station and low-grade stockpile;
process plant including autogenous milling, classification, dense media separation and
PK disposal; and
recovery plant.
Processing costs do not include the following:
•
•
•
•
•
•
security;
off-site diamond cleaning and valuation;
building costs;
heating and ventilation;
primary crushing and conveying to the coarse ore stockpile; and
freight costs.
Table J.14: Operating Cost Summary – Process Plant
Description
Labour (149 personnel)
Power
Plant
Operating supplies
Maintenance supplies
Total Plant Supplies
Recovery Plant
Operating supplies
Maintenance supplies
Total Recovery Plant Supplies
Grand Total – Supplies
Total Plant Operating Cost
J.4.2
Annual
Cost
($000)
14,406
10,485
Cost
($/t)
5,449
12,697
18,146
0.38
0.89
1.27
2,218
1,656
3,874
22,020
46,910
0.16
0.11
0.27
1.54
3.29
1.01
0.74
LABOUR REQUIREMENTS
The estimated annual labour costs are $14,405,761. The plant labour includes Processing,
Recovery and Maintenance.
Labour requirements by area for the plant are shown in Table J.15.
P&E Mining Consultants Inc
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Page 153 of 169
Table J.15: Plant Workforce
Direct Plant Workforce
Direct process Plant Workforce
Management and Support
Engineering and Metallurgy
Processing Operations (including Supervisors)
Recovery Operations (including Supervisors)
Sort House (including Supervisors)
Equipment Operators
Lab Technicians
Maintenance
Supervisor
Total Number
Day or Rotational
3
2
36
14
20
8
4
D
D
R
R
R
R
D
Professional Designation
Professional Designation
2
D
Industrial Mechanic
8
R
Instrumentation Technician
8
R
Electrician
6
D
Welder
2
D
Journeyperson
Ticket
Journeyperson
Ticket
Journeyperson
Ticket Journeyperson
Ticket
Journeyperson
Ticket 2
1
116
D
D
2
D
Maintenance Clerk / Scheduler
Fab Shop Supervisor
2
1
D
D
Welder
4
D
Machinist
2
D
Industrial Mechanic
4
D
Pipefitter
2
D
Automotive Mechanic
2
D
Heavy Duty Mechanic
2
D
Apprentice
Electrical Supervisor
1
2
D
D
Electrician
4
D
Instrumentation Technician
4
D
1
33
149
D
Lube Man
Apprentice
Total Direct Process Plant Workforce
Indirect Plant Workforce
Maintenance Planner
Apprentice
Total Indirect Plant Workforce
Total Plant Workforce
J.4.3
Qualification
Technical Diploma
Journeyperson
Ticket
Journeyperson
Ticket
Journeyperson
Ticket
Journeyperson
Ticket
Journeyperson
Ticket
Journeyperson
Ticket
Journeyperson
Ticket
Journeyperson
Ticket
Journeyperson
Ticket
Journeyperson
Ticket
Journeyperson
Ticket
PLANT POWER
The estimated cost of plant power was based on an installed power of 37,998 kW, a load factor
of 0.66 and a cost of $0.0575/kWh.
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J.4.4
PLANT OPERATING SUPPLIES
The cost basis for operating supplies excluding freight costs to site is summarized in Table J.16.
Table J.16: Plant Operating Supplies – Basis for Estimate
J.4.5
Item
Basis
Ferrosilicon
• DMS consumption 0.15 kg/t.
Screen panels
• Four complete change outs per year for all screens except
for screens in the Recovery plant where three complete
change outs have been provided for.
Cyclone spares
• Two complete replacements in the grinding circuit, four
complete replacements in the DMS circuit, two complete
replacements for DMS densification and one complete
replacement for fines disposal.
Process water heating
• 88 m3/h of heated water is required for grease belt operation.
Water will be heated to 22°C using propane.
Mobile equipment
• Operating costs for two Bobcats, four pick-ups, one
bulldozer, and one recovery rejects haul truck.
Recovery plant
• In addition to the above, allowances are made for nondiamond digestion chemicals, x-ray tracers and grease belt
simulants.
• Grease consumption 0.15 l/t of grease belt feed.
• Four complete cyclone replacements per year.
Miscellaneous
• Allowance for all plant sections.
PLANT MAINTENANCE SUPPLIES
The cost basis for maintenance supplies excluding freight costs to site is summarized in Table
J.17. Equipment costs are based on budget quotations. Platework costs are based on in-house
data. Conveyor costs are based on costs obtained for other projects.
Table J.17: Summary of Cost Basis for Maintenance Supplies (excluding freight costs)
Item
Basis
Conveyor spares
• Estimated as 7 % of conveyor cost.
Wear lines
• Estimated as 7 % of platework cost.
Autogenous mill liners
• Mill operating costs are split into two categories, energy
63 % and wear liners 37 %. Mill energy consumption
4.5 kWh/t.
Equipment spares
• Estimated as 7 % of equipment cost.
Mobile equipment
• Maintenance costs for two Bobcats, four pick-ups, one
bulldozer, and one recovery rejects haul truck.
Oil, lube, filters
• Allowance.
Miscellaneous
• Allowance.
P&E Mining Consultants Inc
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Page 155 of 169
J.5
J.5.1
GENERAL AND ADMINISTRATION
COMPONENTS
The G&A cost components are shown in Table J.18.
Table J.18: Estimated G&A Cost
Cost Component
G&A labour
Building utilities and building maintenance
Potable water supply and treatment
G&A consumables including safety supplies, employee relations
costs, environmental monitoring, office supplies, equipment rental
Surface leases
Legal and professional services
Project insurance
Road maintenance
Waste management
Light vehicles operation and maintenance
Project reclamation credit facility allowance
Project property taxes
Communication system costs
Public Relations / Training
Software and licensing
Janitorial services
Recruiting
Total
Cost per tonne processed (based on 14.2 Mtpa)
J.5.1.1
Estimated Annual Cost ($)
10,702,800
390,784
118,957
1,083,500
1,724,000
175,000
2,000,000
1,096,000
375,000
433,200
105,000
3,000,000
212,400
525,000
361,900
604,440
426,515
23.4 million
$1.65/t processed
G&A LABOUR
G&A labour includes project management, administrative, technical, environmental, security,
safety, warehouse and site services personnel. Table J.19 lists planned positions and total annual
cost including salary burdens. Salary burdens details are presented in Appendix J.1, ‘Basis of
Estimate’.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 156 of 169
Table J.19: Estimated G&A Labour Cost
Position
General Manager
Administrative Assistant
Superintendent, HR & Training
Training Coordinator
Training Specialist (Plant)
Training Specialist (Heavy equipment)
Training / HR Clerk
Manager, Administration
Site Controller / Senior Accountant
Accountant
Accounts Payable Administrator
Payroll Administrator
IS Supervisor
IS Technician
Manager, Corporate Procurement
Purchasing Agent / Warehouse Supv
Buyer / Expeditor
Shipper / Receiver
Warehouse Floor
Manager, Environment
Environmental Coordinator
Environmental Technician
Environmental Lab Technologist
Manager, Maintenance
Maintenance General Foreman
Maintenance Engineer
Site Services Supervisor
Site Services Operator
Manager, Mining
Manager, Technical Services
Technical Services Clerk
Mine Planning Engineer
Geotechnical Engineer
Surveyor
Senior Mine Geologist
Mine Geologist
Mine Geological Technologist
Superintendent, Bulk Sample Plant
BSP Operator
Manager, Processing
Superintendent, Health & Safety
Health & Safety Clerk
Health & Safety Coordinator
OH&S Nurse
Manager, Security
Superintendent, Technical Security
Investigator
Security Supervisor
Security Team Lead
Security Officers
Security Clerk
Security Officers – Surveillance (Sktn)
Total
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Count
1
1
1
1
1
1
1
1
1
1
2
1
1
1
1
1
1
2
4
1
1
2
2
1
2
1
1
4
1
1
1
2
1
4
2
2
4
1
3
1
1
1
1
2
1
1
1
2
4
24
1
2
103
Projected labour cost
including burdens ($/a)
217,900
61,800
135,200
104,900
101,600
101,600
59,800
145,500
97,700
103,500
134,700
67,400
120,700
82,100
145,700
113,400
91,800
165,700
376,400
151,000
114,800
194,800
182,300
162,400
245,700
116,700
120,100
358,000
166,200
163,200
67,600
245,400
116,700
334,300
237,200
218,300
405,500
140,400
284,200
170,500
138,800
67,600
121,800
280,700
163,200
135,100
104,900
252,100
447,700
2,125,400
64,900
177,100
10,702,800
Page 157 of 169
K.0
FINANCIAL EVALUATION
The Star Diamond Project has been valued using a discounted cash flow analysis, and the effects
of changes in key cash flow inputs on the economic viability of the Project has been assessed.
K.1
SUMMARY
The after-tax basis results of the cash flow analysis for the base case and a modified base case
are summarized in Table K.1. The base case includes a 1 % per annum diamond price escalation
and excludes capital contingency. The modified base case includes a $178M capital contingency.
The results of the sensitivity analysis show that the Project is most sensitive to $CAD/$US
exchange rate fluctuations, followed by the price of diamonds or recovered grade, capital costs
and operating costs, respectively.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 158 of 169
Table K.1: Results of the Cash Flow Analyses
Item
After-tax cash flow
(undiscounted total)
After-tax IRR
After-tax NPV (7 %)
Payback
Base Case
(1 % price escalation and
excluding capital
contingency)1,2,3,4,5
$1,540 M
Modified Base Case
(1 % Price escalation and
$178 plant and infrastructure
capital contingency)1,2,3,4,5
$1,433 M
10.4 %
$291M
5.2 years
8.9 %
$179 M
6.2 years
1
The Project schedule includes an estimated 4 year pre-production period and a 12 year long mine production phase followed by mine closure.
These durations were developed based on currently projected time lines for power distribution line design and construction; equipment and
materials procurement, deliveries, assembly and commissioning; environmental assessment and review; technical studies including a
recommended feasibility study for the Project; permitting and other factors. The assumed dates and timing of milestone events such as the date
for corporate approval to proceed with the Project, the mid-2014 commencement of ore production, and the mid-2026 cessation of operations
were based on available information and the time lines between the assumed dates are 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 originally projected time lines for environmental assessment and public consultation, and engineering,
procurement, construction and commissioning. Based on P&E’s perception of the information available to it at the effective date of this technical
report, the projected 4 year pre-production period and the 12 year producing life of the mine are reasonable.
2
The projected gross annual revenues from rough diamond sales have been estimated taking into consideration the mining and processing
schedule; High price scenario modeled diamond parcel values by kimberlite unit presented in WWW’s March 2008 re-pricing of samples of Star
Project diamonds; a US$0.85 = CAD$1.00 exchange rate; and Shore’s current perception of the future diamond market including a projected
1 %/annum rough diamond price escalation commencing year 2010. The WWW valuation noted that the High Price scenario does not represent
maximum values, and that, for modelling purposes, the same average price was applied to all stones of 6 ct or higher. Readers are reminded that
rough diamond pricing is not static and is known to fluctuate. Shore has utilized diamond valuations completed in March, 2008 and although
diamond prices have since dropped by 10 to 15 %, changes in the Canadian $/US $ exchange rate have improved by approximately 15 %, thereby
supporting the use of the March, 2008 diamond price valuation. The projected effects of 0 %/a, 1 %/a and 2 %/a diamond price escalation rates
on total LOM gross revenue, NPV and IRR are compared in the Table X.14. Gross revenues were converted from USD to CAD using a
projected $1/US$0.85 exchange rate which approximates the 60 and 72 month trailing averages to the end of Q1 2009 of $1/US$0.87 and
$1/US$0.84 (rounded) respectively. The sensitivity analysis showed that the project is most sensitive to grade, diamond pricing, and $/$US
exchange rate changes.
3
The cash flow model for the Project estimates future federal, provincial and local government taxes. Federal and provincial (Saskatchewan)
corporate income taxes payable on pre-tax cashflows were estimated based on future tax rates substantively enacted as March 31, 2009. The
value of future property and school taxes were estimated based on the current understanding of the levels of local government taxes paid by
similar scale mines in Saskatchewan. Diamond royalty payments have been estimated based on an assumed diamond royalty structure generally
consistent with terms and royalty payments of diamond royalty regimes already in place in the Northwest Territories and Ontario, Canada. The
Government of Saskatchewan is developing its diamond royalty regime and may issue it for public review later this year but this may occur later
than anticipated. Depending on the details of the Government of Saskatchewan’s diamond royalty structure, it has the potential to affect the
projected economics of the Project. Additionally, both the base case and modified base case cashflows utilize 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.
4
The estimated capital and operating costs (± 25 % 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 modified base case includes a $178M plant
and infrastructure contingency but no mine contingency in consideration of the envisaged mining methodology and identified opportunities for
improvement including potential IPCC operation improvements and reduced overburden stripping costs, and utilizing ore stockpiling to enable
the plant to process at its 14.6 Mpta ore capacity instead of processing 14.2 Mtpa ore as currently proposed. In concept, a plant feed rate of 14.6
Mtpa ore could reduce the operating life of the mine by about 0.3 years, and reduce the total estimated cost of duration-dependent cost
components such General and Administration costs over the operating life of the mine.
5
The results of the PFS presented in this Report are based on developing the Project as a standalone project and does not assess the potential
economic viability of the Orion-South deposit.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 159 of 169
K.2
CASH FLOW MODEL
The cash flow models for the base case and modified base case are summarized in Tables K.2
and K.3 respectively.
The cash flow model was developed by Shore and reviewed in detail and refined for use in the
PFS by P&E. The discounted cash flow analysis is conventional utilizing annual cash flow
inputs (annual revenues) and annual costs (i.e. operating costs, capital costs, taxes) based on the
mine plan and ore processing schedule and 100 % equity (0 % debt). The annual net cash flows
are discounted back to present value at the date of evaluation (mid-2009) using a range of
discount rates and summed to determine the after-tax NPV of the Project. The IRR, the discount
rate at which the NPV equals zero, was determined using the cash flow model. The cash flow
inputs including the key economic criterion and assumptions are reviewed in Appendix K.3.
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
Page 160 of 169
Table K.2: Base Case Cash Flow (1 % price escalation and before capital contingency)
Total
Ore Tonnes
Recoverable grade
Total carats recovered
Average carat value
(before escalation)
Value per Ore tonne
(before escalation)
2010
Mt
171
2011
0
2012
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
0
0
7.7
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
7.0
0.09
ct/t
0.118
0.0
0.0
0.0
0.0
0.11
0.11
0.17
0.10
0.13
0.12
0.10
0.14
0.11
0.11
0.13
0.09
Mct
20.10
0.0
0.0
0.0
0.0
0.9
1.6
2.4
1.4
1.8
1.7
1.4
2.0
1.6
1.6
1.9
1.2
0.6
$/ct
$263.88
$
-
$
$254.69
$286.95
$248.08
$258.36
$248.75
$272.72
$341.12
$244.33
$240.02
$277.36
$295.29
-
$
-
$
-
$231.41
$245.84
$/t
$31.04
$
-
$
-
$
-
$
-
$ 25.97
$ 27.59
$ 42.88
$ 29.22
$ 31.87
$ 30.67
$ 24.43
$ 37.99
$ 38.88
$ 26.84
$ 31.46
$ 24.21
$ 27.34
Revenues before escalation
Escalation factor (1 %
compounded per annum)
$M
$ 5,303
$
-
$
-
$
-
$
-
$
$
$
$
$
$
$
$
$
$
$
$
$
Revenues
$M
$ 5,912
$
-
Mining costs
$M
$ 1,038
$
-
Process costs
$M
$
562
$
-
G&A costs
$M
$
282
$
Marketing costs
$M
$
130
Pit dewatering costs
Reclamation costs
Total cash operating
costs before royalties and
taxes
Earnings before taxes,
royalties
and
amortization
$M
$M
$
$
$M
$ 3,799
Amortization
Earnings before taxes
and royalties
Estimated taxes and
royalties to be paid in
period
$M
$ 1,950
$
26
$
18
$
13
$M
$ 1,849
$
(26)
$
(18)
$
(13)
$M
$
Net Income
$M
$ 1,249
$
(26)
$
(18)
$
(13)
$ (1,111)
$ (450)
$
188
$
491
$
276
$
308
$
206
$
174
$
313
$
297
$
177
$
232
$
170
$
37
Plus: Amortization
Minus: Change in working
capital
$M
$ 1,950
$
26
$
18
$
13
$ 1,111
$
$
73
$
6
$
8
$
11
$
16
$
20
$
19
$
17
$
15
$
14
$
12
$
38
$M
$
Minus: Capital expenses
$M
Net Cash Flow
$M
Cum Cashflow
$M
1.010
1.020
$
1.030
1.041
199
1.051
392
1.062
-
$
-
$
-
$
209
$
416
$
-
$
-
$
-
$
79
$
72
$
-
$
-
$
-
$
25
$
47
-
$
-
$
-
$
-
$
13
$
23
$
-
$
-
$
-
$
-
$
5
$
35
65
$
$
-
$
$
-
$
$
-
$
$
-
$
$
3
-
$ 2,113
$
-
$
-
$
-
$
-
$
124
609
1.072
$
415
1.083
453
1.094
653
$
449
$
$
67
$
81
$
$
47
$
47
$
$
23
$
23
$
9
$
14
$
10
$
$
3
-
$
$
3
-
$
$
$
154
$
155
$
262
$
498
495
436
1.105
347
1.116
539
1.127
552
1.138
381
1.149
447
1.161
344
190
1.173
1.184
$
481
$
387
$
608
$
628
$
438
$
519
$
403
$
225
91
$
171
$
98
$
66
$
85
$
81
$
69
$
52
$
27
47
$
47
$
47
$
47
$
47
$
47
$
47
$
47
$
23
23
$
23
$
23
$
23
$
23
$
23
$
23
$
23
$
11
$
11
$
11
$
9
$
13
$
14
$
10
$
11
$
9
$
5
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
0
65
$
164
$
175
$
255
$
179
$
153
$
172
$
163
$
153
$
134
$
132
$
285
$
320
$
226
$
208
$
455
$
456
$
275
$
365
$
269
Cash costs:
599
-
$
$
-
-
$
$
-
-
$
$
$
1,111
-
$
$
$
$ (1,111)
110
$
$
128
$
94
73
$
6
$
8
$
11
$
16
$
20
$
19
$
17
$
15
$
14
$
12
$
38
$ (447)
$
189
$
492
$
277
$
309
$
210
$
188
$
436
$
439
$
260
$
351
$
257
$
55
$
2
533
$
1
$
1
$
1
$
1
$
4
$
14
$
123
$
142
$
83
$
120
$
87
29
$
19
$ (29)
488
$
142
$
5
$
11
$
20
$
21
$
44
$
19
$
15
$
9
$
8
$
12
$
3
$
0
$ (110)
$ (624)
$ (128)
$ (488)
$
(88)
$
255
$
486
$
263
$
298
$
179
$
175
$
317
$
305
$
184
$
234
$
180
$
104
$ (110)
$ (733)
$ (862)
$ (1,350)
$(1,438)
$ (136)
$
42
$
217
$
534
$
839
$ 1,023
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
624
$
$
$
$
85
533
-
-
$ 1,659
$ 1,540
$
$(1,183)
$ (697)
$ (434)
$ 1,257
$ 1,437
Page 161 of 169
$ 1,540
Table K.3: Modified Base Case Cash Flow (1 % price escalation and $178 M capital contingency)
Total
Ore Tonnes
Recoverable grade
Total carats recovered
Average carat value
(before escalation)
Value per Ore tonne
(before escalation)
2010
Mt
171
2011
0
2012
0
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
0
0
7.7
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
14.2
7.0
0.09
ct/t
0.118
0.0
0.0
0.0
0.0
0.11
0.11
0.17
0.10
0.13
0.12
0.10
0.14
0.11
0.11
0.13
0.09
Mct
20.10
0.0
0.0
0.0
0.0
0.9
1.6
2.4
1.4
1.8
1.7
1.4
2.0
1.6
1.6
1.9
1.2
0.6
$/ct
$263.88
$
-
$
$254.69
$286.95
$248.08
$258.36
$248.75
$272.72
$341.12
$244.33
$240.02
$277.36
$295.29
-
$
-
$
-
$231.41
$245.84
$/t
$31.04
$
-
$
-
$
-
$
-
$ 25.97
$ 27.59
$ 42.88
$ 29.22
$ 31.87
$ 30.67
$ 24.43
$ 37.99
$ 38.88
$ 26.84
$ 31.46
$ 24.21
$ 27.34
Revenues before escalation
Escalation factor (1 %
compounded per annum)
$M
$ 5,303
$
-
$
-
$
-
$
-
$
$
$
$
$
$
$
$
$
$
$
$
$
Revenues
$M
$ 5,912
$
-
Mining costs
$M
$ 1,038
$
-
Process costs
$M
$
562
$
-
G&A costs
$M
$
282
$
Marketing costs
$M
$
130
Pit dewatering costs
Reclamation costs
Total cash operating
costs before royalties and
taxes
Earnings before taxes,
royalties
and
amortization
$M
$M
$
$
$M
$ 3,799
Amortization
Earnings before taxes
and royalties
Estimated taxes and
royalties to be paid in
period
$M
$ 2,129
$
26
$
18
$
13
$M
$ 1,670
$
(26)
$
(18)
$
(13)
$M
$
Net Income
$M
$ 1,142
$
(26)
$
(18)
$
(13)
Plus: Amortization
Minus: Change in working
capital
$M
$ 2,129
$
26
$
18
$
13
$M
$
Minus: Capital expenses
$M
Net Cash Flow
$M
Cum Cashflow
$M
1.010
1.020
$
1.030
1.041
199
1.051
392
1.062
-
$
-
$
-
$
209
$
416
$
-
$
-
$
-
$
79
$
72
$
-
$
-
$
-
$
25
$
47
-
$
-
$
-
$
-
$
13
$
23
$
-
$
-
$
-
$
-
$
5
$
35
65
$
$
-
$
$
-
$
$
-
$
$
-
$
$
3
-
$ 2,113
$
-
$
-
$
-
$
-
$
124
609
1.072
$
415
1.083
453
1.094
653
$
449
$
$
67
$
81
$
$
47
$
47
$
$
23
$
23
$
9
$
14
$
10
$
$
3
-
$
$
3
-
$
$
$
154
$
155
$
262
$
498
495
436
1.105
347
1.116
539
1.127
552
1.138
381
1.149
447
1.161
344
1.173
190
1.184
$
481
$
387
$
608
$
628
$
438
$
519
$
403
$
225
91
$
171
$
98
$
66
$
85
$
81
$
69
$
52
$
27
47
$
47
$
47
$
47
$
47
$
47
$
47
$
47
$
23
23
$
23
$
23
$
23
$
23
$
23
$
23
$
23
$
11
$
11
$
11
$
9
$
13
$
14
$
10
$
11
$
9
$
5
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
3
-
$
$
0
65
$
164
$
175
$
255
$
179
$
153
$
172
$
163
$
153
$
134
$
132
$
285
$
320
$
226
$
208
$
455
$
456
$
275
$
365
$
269
Cash costs:
528
-
$
$
-
-
$
-
$
-
$
$
$
1,225
-
$
$
$
$ (1,225)
-
123
$
$
134
94
82
$
6
$
8
$
11
$
16
$
20
$
19
$
17
$
15
$
14
$
12
$
38
$ (503)
$
180
$
492
$
277
$
309
$
210
$
188
$
436
$
439
$
260
$
351
$
257
$
55
$
2
$
2
$
2
$
2
$
2
$
4
$
6
$
84
$
124
$
85
$
112
$
86
$
18
$ (504)
$
178
$
491
$
275
$
307
$
206
$
182
$
352
$
315
$
175
$
239
$
171
$
37
$
$
$
82
$
6
$
8
$
11
$
16
$
20
$
19
$
17
$
15
$
14
$
12
$
38
1,225
$
579
$
588
29
$ (29)
163
$
5
$
11
$
20
$
21
$
44
$
19
$
15
$
9
$
8
$
12
$
3
$
0
$ (123)
$ (672)
$ (134)
$ (579)
$ (108)
$
254
$
485
$
263
$
297
$
178
$
183
$
357
$
323
$
182
$
241
$
180
$
104
$ (123)
$ (795)
$ (929)
$ (1,507)
$(1,616)
$(1,361)
$ (138)
$
45
$
402
$
725
$
907
$ 1,148
P&E Mining Consultants Inc
Star Diamond Project - Report No 169
672
$
$
$
$
85
588
$ (1,225)
-
$ 1,838
$ 1,433
$
$ (876)
$ (613)
$ (316)
$ 1,329
Page 162 of 169
$ 1,433
K.3
ECONOMIC CRITERIA AND ASSUMPTIONS
The economic criteria utilized in the cash flow model are summarized in Table K.4 and reviewed
in the following subsections.
Table K.4: Economic Criteria Utilized in the Cash Flow Model
Area
Project start date:
Production parameters:
Revenue:
Criterion
Basis Used In Cash Flow Model
Assumed date of corporate Approval
to proceed with project
Projected start of ore production
No. of operating days per year
Process plant availability
Processing rate
Estimated LOM total processing
plant feed
Diamond recovery
Ore processing rate / plant capacity
Instantaneous process rate
Source of revenue
Projected diamond price
Projected diamond price escalation
March 31, 2010
Cost escalation
Exchange rate
Payable
Marketing costs
Royalties
Operating costs ($/t processed):
Open pit mining
Ore processing
General and Administration
Marketing
Taxes and royalties
Closure cost
Capital costs:
Pre-production capital
Mine EPCM & indirects
Plant EPCM & indirects
Contingency
Sustaining capital
Total
Unit costs of production:
Total
Capital
Operating before tax and royalties
Taxes and royalties
Q2 – 2014
360 days per year
97 %
40,000 tpd ore
170.8 Mt ore at
average 11.7 cpht
100 %
14.2 Mtpa ore / 14.6 Mtpa ore
2,000 tph / 17.5 Mtpa. (1)
Rough diamond sales
refer to Appendix K.3.6
1 % price increase per year
commencing in year 2010
0%
US$0.85 = CAD$1.00
100 %
2.2 % of gross revenue
Assumed basis generally consistent
with diamond royalty structures in
the Northwest Territories and
Ontario, Canada
$6.29 / t processed
$3.29 / t processed
$1.65 / t processed
$0.76 / t processed
$3.51 / t processed
$0.38 / t processed
$15.88/ t processed
$7.72 / t processed
$0.25/t processed
$0.76/ t processed
None in base case cash flow.
$0.98 / t processed
$9.71 / t processed
$82.57 per carat
$105.12 per carat
$29.83 per carat
(1) Instantaneous processing rate is 2,000 tonnes per hour for a maximum of 17.5 Mtpa. When the mechanical availability of 83 % for the process
plant is applied, the nameplate capacity becomes 14.6 Mtpa.
K.3.1
PROJECT SCOPE
The cash flow model is based on developing the Star pit and processing plant and infrastructure
as a stand-alone project. The Project has a 4 year long pre-production development period
followed by a 12 year production period. On-site construction is scheduled to start by Q4-2010
with ore production commencing in mid-2014 and ending in mid-2026.
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K.3.2
100 % BASIS
The Star Diamond Project encompasses the Star Kimberlite deposit, which straddles a mineral
disposition boundary between ground that is held 100 % by Shore, and ground that is held by the
FALC-JV, between Kensington, a wholly owned subsidiary of Shore (60 %) and Newmont
(40 %). The Star Diamond Project is operated by Shore, and is being explored and developed as
a single entity. The Mineral Resource Statement for the Star Kimberlite deposit including the
Star Diamond Project (100 % Shore) and Star West (60 % Shore, 40 % Newmont) is shown in
Section 16.1 and Tables 16.1, 16.2 and 16.3. The financial evaluation in the PFS is done on a
100 % basis and does not separate the cash flows of the joint venture partners.
K.3.3
MINERAL RESERVE
The cash flow is based on mining the Mineral Reserve which includes mining dilution and
mining loss allowances.
K.3.4
PLANT THROUGHPUT
It is assumed that the plant will process ore at the rate of 14.2 Mtpa or at 97.3 % of the
14.6 Mtpa plant design capacity to allow for possible production interruptions due to IPCC
equipment moves. Using a 14.2 Mtpa throughput instead of the 14.6 Mtpa design throughput
extends the mine production period by about 0.3 years and adds to the total cost of the durationdependent indirect operating costs in the cash flow.
K.3.5
EIS, PERMITTING, AND FEASIBILITY STUDY (FS) COSTS
The Environmental Assessment Branch of the Saskatchewan MOE has made draft guidelines for
the preparation of an EIS available for public review and comment in regard to Shore’s proposed
Star–Orion South Diamond Project (EIA Notice under Section 10, July 13, 2009). The Project
includes the excavation of an open pit at the Star Kimberlite deposit and a potential second pit at
the Orion-South Kimberlite and constructing a common processing plant and associated
infrastructure.
The cash flow includes $5.2M for the completion of the EIA and preparation of the EIS,
permitting, the preparation of the FS for the Star Diamond Project, and the cost of purchasing the
NPI.
K.3.6
BASIS OF GROSS REVENUE ESTIMATES
The projected annual gross revenues from the sale of rough diamonds are based on the ore
release and processing schedule and a diamond valuation carried out by WWW. The projected
annual gross revenues were converted to Canadian dollars and escalated.
K.3.6.1
DIAMOND VALUATION
The diamond values used in the present PFS are based on WWW’s March 13, 2008 valuation of
diamonds from the Star Diamond Project which was an update of WWW’s November 5, 2007
valuation using WWW’s March 11, 2008 price book. The WWW price book is adjusted
regularly to take into account market price fluctuations for rough diamonds. The exercise
involved re-pricing samples valued in December, 2004, February, 2005, February, 2006 and
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October, 2007 and producing a model of the average price (News release June 9, 2008). The
results were provided by WWW on March 13, 2008. Variable diamond prices were provided by
kimberlite unit relative to the WWW March 11, 2008 price book.
The prices determined by WWW and used by P&E for the February, 2009 Mineral Resource
Estimate are summarized in Table K.5. The WWW valuation noted that the High Price scenario
does not represent maximum values, and that, for modelling purposes, the same average price
was applied to all stones of 6 ct or higher. Due to the conservative nature of the WWW price
models, where the upside potential of the coarse size frequency distribution was not fully
reflected, P&E used the WWW High Price scenario for the reporting of economic resources and
to estimate the gross annual revenues shown in the cash flow.
Table K.5: WWW Modelled Diamond Price by Kimberlite Unit (March 2009 re-pricing)
Kimberlite Lithology
CPK
PPK
EJF
MJF-LJF
Weighted Average
K.3.6.2
Model
Price
(US$/ct)
$309
$103
$167
$105
$172
Minimum
Price
(US$/ct)
$247
$88
$138
$75
$141
High Price
(US$/ct)
$420
$126
$216
$152
$225
CURRENCY EXCHANGE RATE
The projected exchange rate (US$0.85=CAD$1.00) approximates the 60 and 72 month trailing
average exchange rates as shown in Table K.6.
Table K.6: 12 To 72 Month Trailing Average Currency Exchange Rates
Trailing Period(A)
12 months
24 months
36 months
48 months
60 months
72 months
(A)
Trailing Average Monthly
Exchange rate(A)
US$0.8946 = CAD$1
US$0.9328 = CAD$1
US$0.9151 = CAD$1
US$0.8960 = CAD$1
US$0.8736 = CAD$1
US$0.8418 = CAD$1
Source: www.bank-banque-canada.ca. Exchange rate monthly (noon) data to end of Q1, 2009.
K.3.6.3
PRICE ESCALATION
The base case and modified base case cash flows shown in Tables K.2 and K.3 utilize a 1 %
annual compound diamond price escalation rate starting in year 2010. Pre-tax and after-tax
results based 0 %, 1 %, and 2 % pricing escalation are shown in Table K.7 for comparison. Shore
anticipates that diamond prices will increase at a rate faster than costs due to long-term diamond
supply / demand fundamentals.
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Table K.7: Projected NPV and IRR for 0 %, 1 % and 2 % Price Escalation Rates in Base
Case
Item
Total LOM
gross revenue
Undiscounted
Cumulative
Cash Flow
NPV (4 %)
NPV (5 %)
NPV (6 %)
NPV (7 %)
NPV (8 %)
NPV (9 %)
NPV (10 %)
IRR
K.3.7
Pre-Tax Basis
Escalation Rate (compounded annually)
0%
1%
2%
After-Tax Basis
Escalation Rate (compounded annually)
0%
1%
2%
$5,303M
$ 1,469M
$5,912M
$ 2,003M
$6,591M
$ 2,596M
$5,303M
$ 1,151M
$5,912M
$ 1,540M
$6,591M
$ 1,974M
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 1,332M
$ 1,110M
$
916M
$
747M
$
598M
$
467M
$
353M
14.3 %
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
617M
469M
340M
227M
129M
43M
(31)M
9.6 %
957M
774M
614M
474M
352M
245M
152M
12.0 %
433M
308M
199M
103M
20M
(52)M
(116)M
8.3 %
687M
537M
406M
291M
191M
103M
26M
10.4 %
965M
787M
632M
495M
376M
271M
179M
12.4 %
CAPITAL COST
The capital cost estimates utilized in the cash flow are described in Appendix I.
K.3.8
OPERATING COSTS
The operating costs utilized in the cash flow are described in Appendix J.
K.3.9
MARKETING COST
Shore will sell and promote its rough diamonds and provide assurance as to their origin. It is
assumed that Shore will enter into an arrangement with a diamond marketer in Antwerp and that
marketing costs will amount to 2.2 % of gross revenue.
K.3.10
INDIRECT COSTS
The following indirect costs are included in the cash flow.
K.3.10.1
EPCM COSTS
The estimated mine and plant and infrastructure EPCM costs are included in the capital costs:
•
•
the plant and infrastructure EPCM cost is detailed in Appendix I.5; and
the mine EPCM cost is detailed in Appendix I.3.3.1.
K.3.10.2 INDIRECT COSTS DURING THE PRE-PRODUCTION PHASE (Q4-2010 TO
MID-2014)
The plant and infrastructure indirect costs are detailed in Appendix I.5. The mine indirect
operating costs are detailed in Appendix I.3.3.2 and include:
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•
•
•
The pre-production project management team including the General Manager and
accounting, payroll, purchasing, shipping / receiving, human resources and security
personnel; the Mine Manager; and the Maintenance Manager and maintenance planner;
the mine planning engineer, geotechnical engineer and surveyors; the Health and Safety
Co-ordinator and nurses.
Site office set-up and operating costs, and the costs of operating and maintaining Shore’s
light vehicles, and training, health and safety, and waste management costs.
Estimated project-specific insurance, legal, and surface lease costs.
The cash flow excludes Shore’s corporate staff and corporate operating costs with the exception
of Shore’s corporate costs included in the mine EPCM and mine pre-production indirect
operating costs.
K.3.10.3
GENERAL AND ADMINISTRATION COSTS (MID-2014 TO MID-2026)
The G&A costs are incurred over the operating life of the mine.
K.3.10.4
PIT DEWATERING AND CRANE COSTS
Pit dewatering costs incurred during the pre-production phase are included in the pit capital cost.
The pit dewatering cost over the operating life of the mine amounts to approximately $35M. The
annual mine operating cost also includes the cost of operating and maintaining two mobile
cranes that will be used for inter-bench conveyor moves and equipment maintenance.
K.3.11
WORKING CAPITAL
The working capital is based on 25 % of the mining, processing and G&A costs in year 2014.
K.3.12
MINE CLOSURE COST
The cash flow includes $64.78M for closure costs.
K.3.13
SALVAGE VALUE
The cash flow does not include salvage value.
K.3.14
TAXES AND ROYALTIES
The tax flow model takes Federal and Provincial corporate income taxes, the Federal Goods and
Services Tax, Saskatchewan Provincial Sales Tax, and Municipal property and education taxes
and projected royalties into consideration.
There are currently no producing diamond mines in the Province of Saskatchewan, but in
anticipation of the development of a diamond mine the Province is developing its diamond sector
royalty structure. The PFS utilizes an assumed diamond royalty structure that is generally
consistent with those being applied in the Northwest Territories and Ontario. The estimated
diamond royalties are included with annual payable taxes in Tables K.2 and K.3. As part of its
work to estimate the diamond royalties, Shore consulted with authorities at various
Saskatchewan government ministries. The consultation process was positive in that it is
anticipated that the Province will implement a royalty structure similar to those used in other
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jurisdictions in Canada such as in the Northwest Territories and in Ontario. The Province has
been working towards developing a diamond sector royalty as indicated in Saskatchewan
Industry and Resources’ 2004-2005 and 2005-2006 Provincial Budget Performance Plans.
Expectations are that the diamond royalty structure will be competitive with those in other
Canadian jurisdictions and that Saskatchewan’s diamond sector royalty structure may be
available for review later this year.
According to currently enacted legislation, the combined federal and provincial income tax rates
applicable at the time of anticipated production will be 27 % of net income. The federal
component will be 15 % of net income while the provincial component will be 12 % of net
income. Net income for tax purposes allows for the deduction of normal operating costs as well
as capital development and previous exploration work.
The cash flow model assumes Canadian exploration expenses (“CEE”) and Canadian
development expenses (“CDE”) tax pools incurred to the end of 2008 by Shore and its
subsidiaries are available as a tax deduction to the Project. All other tax pools currently
available to Shore and its subsidiaries, such as non-capital losses, capital cost allowance
(“CCA”), and cumulative eligible capital have been excluded from the cash flow model. CEE are
generally exploration expenses incurred to determine the existence of a Mineral Resource in
Canada while CDE are generally, in Shore’s case, payments for interests in Canadian resource
properties. Where tax pool deductions are limited as a percentage on an annual basis, the cash
flow model assumes the Company will claim deductions to generate non-capital losses which
will maximize the present value of such tax pools.
All goods and services are subject to the Federal goods and services tax (“GST”) at rate of 5 %.
This tax is refundable to Shore and is therefore not included in the analysis.
Certain goods and services are subject to a Saskatchewan Provincial sales tax (“PST”) at a rate
of 5 %. The capital and operating costs that are estimated to be subject to PST have been
included in this model with an additional 5 % of the estimated costs to account for the PST.
The municipal property tax and education taxes have been included in the G&A expense line of
the cash flow analysis and have been estimated based on what similar scale mining operations in
the Province of Saskatchewan pay for such taxes.
K.3.15
CONTINGENCY
The plant and infrastructure cost contingency amounts to $178M. No cost contingency is
included in the mine costs in consideration of the mining approach and cost basis and the
opportunities for improvement described in Section 18.
K.4
SENSITIVITY ANALYSIS
Economic risks were assessed using base case cash flow sensitivities to recovered grade,
diamond prices, $CAD/$US exchange rate, capital costs (“CAPEX”), and operating costs
(“OPEX”). Each of the sensitivity items were independently adjusted up and down by 10 %,
20 % and 25 % to project the impact it would have on the NPV at a 7 % discount rate. The NPV
of the Project after each sensitivity item was adjusted by 75 %, 80 %, 90 %, 110 %, 120 % and
125 % of the base case. The results are presented in Table K.8.
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Table K.8: Sensitivity Analysis Results (After-Tax Basis, NPV(7 %))
75 %
Recovered Grade
(cpht)
Diamond Price
$CAD/$US
Exchange rate
CAPEX
OPEX
80 %
90 %
100 %
110 %
120 %
125 %
$(187)M
$(85)M
$107M
$291M
$471M
$649M
$737M
$(187)M
$849M
$(85)M
$711M
$107M
$479M
$291M
$291M
$471M
$134M
$649M
$(2)M
$737M
$(60)M
$545M
$495M
$393M
$291M
$187M
$82M
$30M
$468M
$433M
$363M
$291M
$219M
$146M
$110M
As depicted in Figure K-1, the Star Diamond Project is most sensitive to $CAD/$US exchange
rate fluctuations, followed by the price of diamonds or recovered grade, capital costs and
operating costs, respectively.
Figure K-1: Sensitivity Analysis (After Tax Basis, NPV (7 %))
Sensitivity Graph at 7 % NPV
NPV @ 7 % After Tax ($M CAD)
$1,000.00
$800.00
$600.00
Recovered Grade (cpht)
$400.00
Diamond Price
$200.00
CAD/US$ exchange rate
$0.00
Capital Expenses
‐$200.00
Operating Expenses
‐$400.00
70%
80%
90%
100%
110%
120%
130%
Percent of Value
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