By Brent Bosker

Study confirms diamond mine is “feasible”

Jul 15, 2011 | 11:43 AM

The economics of Saskatchewan’s first diamond mine have improved and so too has the prospect of it moving ahead.

This optimism comes after the release of Shore Gold’s feasibility study on the Star-Orion South project located east 60 kilometers east of Prince Albert in the Fort-a-la-Corne forest.

“We have made some conservative assumptions we have looked at an incredible amount of detail, but yet the results are incredibly positive,” said George Read, vice-president of exploration.

The document not only details the cost to build and operate a mine, but it confirms the project is feasible, Read said.

“(It’s) driven by a rising diamond price. Rough diamond prices are doing incredibly well and the outlook in the future is that will continue to do that.”

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The higher demand for diamonds has pushed up the dollar per carat price from $192 US — listed in the prefeasibility study — to $242 US in the feasibility study, said Read.

That’s significant considering Shore Gold estimates it would extract 34.4 million carats from the ground from two open pit mines over a 20 year period.

Also increasing the site’s economic strength is its proximity to highways, railroads, power, water and labour.

“All of the costs to build and operate a mine have been considered and it shows that there is a fantastic revenue stream that can come from (Star-Orion South),“Read said.

Still, there are hurdles to overcome. The most imposing is securing $1.9 billion dollars to construct a mine.

“It’s not a small number, but if you say it quick it doesn’t sound too terrible,” Read joked.

“We are in conversation with companies and with banks and we are confident, when the money is needed it will be available.”

The next step for Shore Gold will be deciding whether to bring the project into production. Read anticipates a decision later this year.

The company is also waiting on an environmental assessment to be approved by the federal and provincial governments.

Providing permits and financing come through, construction could begin next year with production happening five years later.

About 1,000 people would be needed for construction. Once in production the mine would employ 500 people over its life span.

See related: Shore Gold releases feasibility study
COMBINED STAR – ORION SOUTH FEASIBILITY STUDY

bbosker@panow.com