The Northern Miner, 7/7/2008

Diamond junior Shear Minerals hedges bets with potash earn-in

Like many other diamond juniors that have seen their share prices tank over the last year, Shear Minerals (SRM-V) has helplessly charted the fall of its stock from a high of 75¢ a share to a low of 25.5¢ a share, as many investors have either migrated to more upwardly mobile base- and precious-metal stocks or abandoned the equity markets altogether.

But now the Edmonton-based diamond exploration company with a portfolio of eight diamond projects, five of which are drill-ready, is taking a new tack.

In an announcement today, Shear Minerals says it is entering into an agreement with Grizzly Diamonds (GZD-V) to acquire land for potash in Alberta, 200 km southeast of Edmonton along the border with Saskatchewan.

Under the agreement, Shear can earn an initial 51% stake in the project by spending C$2 million on exploration of the 50,000-acre Rattlesnake North property before September 1, 2009, including a drill hole to test the Prairie evaoporite horizon.

Shear can increase its interest to 70% by carrying Grizzly to a pre-feasibility study by September 1, 2011. Other terms include $25,000 cash on signing and 200,000 shares of Shear.

Exploration for potash in this area dates to the 1940s and 1950s. The company says a large chunk of the property is close to areas reported to be underlain by potash-bearing beds within the uppermost portion of the Prairie evaporite formation. The land is allegedly close to a reported occurrence of potash minerals in a deep well in the Vermilion area of east-central Alberta.

While Shear will try to capitalize on the world's apparently insatiable appetite for potash, the company's expertise really lies in diamonds.

Shear owns a 58.1% interest in and is operator of its flagship Churchill Diamond project, which is made up of more than two million acres near the northern communities of Rankin Inlet and Chesterfield Inlet in the Kivalliq region of Nunavut.

News of Shear's foray into potash bumped its share price up 2¢, or 7.14%, to close at 30¢ a share on a trading volume of 317,750.

The company has 83.1 million shares outstanding.