DIAMOND STUDY: Combined Star-Orion South project contains 35-million-ct reserve

SASKATCHEWAN - Shore Gold of Saskatoon has released a combined prefeasibility study (PFS) for the Star and Orion South kimberlites indicating that they contain 279 million tonnes of probable reserves at a grade of 12.5 cpht or close to 35 million contained carats of diamonds.

The combined project has a net present value (NPV) of $1.3 billion (using a 7% discount rate) and an internal rate of return (IRR) of 16% before taxes and royalties. After taxes and royalties the NPV would be $786 million and the IRR 13.5%. A pre-production capital commitment of $1.6 billion will be necessary to establish a producer. A further $900 million in capital expenses would be needed over the 20-year life of the mine. The payback period for the initial capital cost would be 4.6 years.

If corporate approval were given in Q1 2011 and permitting proceeds without problems, diamond production could begin in Q1 2016.

Shore is the 100%-owner of the Star kimberlites and 60% owner of the Orion South joint venture with Newmont Mining. For further information contact Joseph Dickson, Shore's investor relations manager at 306-667-3505 or visit www.ShoreGold.com.