Lake Shore Gold Corp.
TSX : LSG

Lake Shore Gold Corp.

October 22, 2009 17:03 ET

Lake Shore Gold to Acquire "Bell Creek West" Block of Properties from Goldcorp for $20 Million of Cash and Common Shares

TORONTO, ONTARIO--(Marketwire - Oct. 22, 2009) - Lake Shore Gold Corp. (TSX:LSG) ("Lake Shore Gold" or the "Company") today announced that the Company has entered into an agreement with Goldcorp Canada Ltd. ("Goldcorp"), manager of the Porcupine Gold Mines Joint Venture ("PJV"), and Goldcorp Inc., for the purchase of approximately 28 square kilometers ("kms") of prospective exploration property (the "Bell Creek West" block of properties) in the surrounding vicinity of Lake Shore Gold's 100% owned Bell Creek Complex, currently comprised of the Bell Creek Mine and Mill and Schumacher and Vogel properties.

Tony Makuch, President and Chief Executive Officer of Lake Shore Gold, commented: "The Bell Creek West acquisition builds on the significant progress we have achieved at the Bell Creek Complex and is an important step for Lake Shore Gold in establishing a second large-scale mining complex in the Timmins Camp. With the completion of this transaction, as well as our proposed business combination with West Timmins Mining Inc. (see press release dated August 27, 2009), Lake Shore Gold will have a total land package in this highly productive mining camp totaling 162 square kilometers.

Areas included in the transaction range from projects with historic resources to early stage exploration targets (see Figure 1.), all located along the New Mine Trend, host to the PJV's Hoyle Pond Mine and Pamour operation. Among the properties included are the Marlhill Mine, located adjacent to Bell Creek, which has had limited development and mining to a depth of 150 m from surface (including a 20 m deep open pit) and where there is an historic mineral resource of approximately 100,000 ounces1. The bulk of the historic resource lies below the 150 m level. The Wetmore, Stringer and East Whitney blocks are located 1.0 km, 1.2 kms and 2.0 kms from the Bell Creek Mine, respectively. Exploration drilling on these properties has shown strong evidence of gold mineralization, making them attractive exploration targets. Favourable drill intersections from past exploration on these properties include 9.39 grams per tonne ("gpt") over 2.2 m (Hole PS-1, Pentland Firth Ventures,1995) and 19.36 gpt over 1.0 m (Hole CB-374, Canamax, 1988-1990) from the Stringer property (600 m along strike west from Marlhill), 14.43 gpt over 4.2 m (Hole PW-16, Pentland Firth Ventures,1996) and 7.75 gpt over 13.9 m (Hole PW-26, Pentland Firth Ventures, 1998) from the Wetmore property, and 6.4 gpt over 0.4 m (Hole PWH-2, Pentland Firth Ventures, 1996) from the Whitney block.

Also included in the transaction is the Beaumont Property, located 2.0 kms southwest of the Bell Creek Mine and Mill, where recent exploration drilling on the property by the PJV returned values of 7.4 gpt over 4.0 m (Hole BM-05-9, PJV, 2005), 21.3 gpt over 1.0 m (Hole BM-06-2, PJV, 2006) and 11.8 gpt over 1.45 m (Hole BM-04-5, PJV, 2004) from quartz vein zones with visible gold occurring near mafic volcanic and ultramafic volcanic contacts. There are also a number of early-stage exploration properties included which cover over 5 kms of strike length hosting favourable lower Tisdale Group stratigraphy, mainly to the north, south and west of the Bell Creek Mine and Mill.

(1) The historic resource estimate cited above for the Marlhill Mine is taken from a report titled "Marlhill Mine Project - Inferred and Indicated Resource Estimate" prepared by Pentland Firth Ventures Ltd., dated April 29, 1997. A qualified person has not done sufficient work to classify the historic estimate as current mineral resources. Lake Shore Gold is not treating the historic estimate as a mineral resource as defined in National Instrument 43-101, and the historical estimate should not be relied upon.

Mr. Makuch added: "We value the excellent working relationship we have established with Goldcorp in the Timmins Camp and very much appreciate Goldcorp's efforts in working with us on this new opportunity. Once the transaction is completed, we will be adding historic resources located within 500 m of our existing mine infrastructure with significant depth potential, multiple targets where the presence of gold mineralization has been demonstrated, and considerable land along the New Mine Trend that is yet to be extensively explored. We are also adding land positions around our Bell Creek property that will support our expansion plans for the Bell Creek Mill."

Consideration for the proposed transaction totals $20 million, including $15 million of cash and $5 million in Lake Shore Gold common shares. The Porcupine Joint Venture will obtain a 2% net smelter royalty relating to any future production from the properties. Completion of the transaction is subject to receipt of regulatory approvals with closing expected in December.

Lake Shore Gold's Bell Creek Complex is a highly prospective land package along the New Mine Trend. The Company has completed close to 40,000 metres ("m") of surface drilling at the Bell Creek Complex in 2009 and is advancing an underground advanced program. Recent exploration results at Bell Creek have extended gold mineralization to a plunge length of 1,150 m and included intercepts of 12.63 gpt over 11.65 m in Hole BC-09-24B and 12.67 gpt over 14.4 m in BC-09-53.

About Lake Shore Gold

Lake Shore Gold is a mineral development and exploration company that is moving towards gold production through its 100%-owned Timmins Mine project, where the Company is sinking a shaft and driving a ramp. The wholly owned Bell Creek Mill, located on the east side of Timmins, has been refurbished to a capacity of 1,500 tonnes per day. The Company is also making progress with an underground advanced exploration program at its Bell Creek Complex, including the Bell Creek Mine, Schumacher and Vogel properties, which have the potential to become the Company's second mining project in the Timmins Camp. In addition, Lake Shore Gold is pursuing a number of other highly prospective exploration properties in Northern Ontario and Quebec. The Company's common shares trade on the TSX under the symbol LSG.

On August 27, 2009, Lake Shore Gold and West Timmins Mining Inc. ("West Timmins") announced an agreement for a business combination under which Lake Shore Gold would acquire all outstanding West Timmins common shares at an exchange ratio of 0.73 of a Lake Shore Gold share for every West Timmins common share. As a result of the proposed transaction, Lake Shore Gold would acquire the 40% of Thunder Creek not currently owned and approximately 120 square kilometers of highly prospective property in close proximity to Thunder Creek, as well as a significant land position in Mexico. Subject to the approval of West Timmins shareholders and the satisfaction of other conditions, the transaction is expected to close in November.

Forward-looking Statements

Certain statements in this press release relating to the Company's proposed acquisition of property from Goldcorp, as well as its business combination with West Timmins, general exploration activities and business plans, are "forward-looking statements" within the meaning of securities legislation. The Company does not intend, and does not assume any obligation, to update these forward-looking statements. These forward-looking statements represent management's best judgment based on current facts and assumptions that management considers reasonable, including that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts, labour disturbances, interruption in transportation or utilities, or adverse weather conditions, that there are no material unanticipated variations in budgeted costs, that contractors will complete projects according to schedule, and that actual mineralization on properties will not be less than identified mineral reserves. The Company makes no representation that reasonable business people in possession of the same information would reach the same conclusions.

Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In particular, fluctuations in the price of gold or in currency markets could prevent the Company from achieving its targets. Readers should not place undue reliance on forward-looking statements. More information about risks and uncertainties affecting the Company and its business is available in Lake Shore Gold's most recent Annual Information Form and other regulatory filings which are posted on SEDAR at www.sedar.com.

To view Figure 1 (Map of Bell Creek Complex and Bell Creek West properties), please visit the following link: http://media3.marketwire.com/docs/lsgfi11022.pdf

Contact Information

  • Lake Shore Gold
    Tony Makuch
    President & CEO
    (416) 703-6298
    or
    Lake Shore Gold
    Mark Utting
    Vice-President, Investor Relations
    (416) 703-6298
    info@lsgold.com