SHORE GOLD (TSE:SGF) Entering Diamond Business

Struggling miner Shore Gold (TSE:SGF) is about to enter the diamond business, as it has the goal of developing the first diamond mine in Saskatchewan, Canada.

Shore and others interested in the prospect had been waiting for a decision concerning putting a royalty system in place in order to project revenue and earnings.

That has now been done, as the Canadian province will take a one percent cut of the value of the annual diamond production at a mine.

The royalty cut doesn't kick in until after a five-year period where the miner can recoup investments made in the mine. There is also another royalty on the profits, which also kicks in at a 10 percent rate once investments are recovered.

Shore Gold senior vice-president George Read said, "It's very much a royalty regime that promotes the development of the diamond deposits in Saskatchewan. It's another milestone crossed. Until today, the province did not have a diamond royalty regime."

Read added the production decision will probably come in 2011, and once that is made, commercial production should start in 2016 once the mine is built.