Lake Shore Gold Corp.
TSX : LSG

Lake Shore Gold Corp.

August 05, 2009 20:38 ET

CORRECTION FROM SOURCE: Lake Shore Gold Advances Projects on Schedule and Budget and Achieves Exploration Success in Second Quarter and First Half of 2009

TORONTO, ONTARIO--(Marketwire - Aug. 5, 2009) - A correction from source is being issued with respect to the release that was disseminated on August 5, 2009, at 18:27 ET. An incorrect quarter end date was given in reference to the company's cash and cash equivalents. The complete and corrected version follows.

Lake Shore Gold Corp. (TSX:LSG) ("Lake Shore Gold" or "the Company") today reported financial and operating results for the second quarter and first half of 2009. Key operating highlights included:

- Sinking the Timmins shaft to the 650 Level, with the 650 shaft station being completed and development towards the Ultramafic Zone advancing by 71 metres to date with bulk sampling to commence by the end of August;

- Advancing the Timmins ramp a total of 1,060 metres (approximate vertical depth of 160 metres) as of June 30th (1,215 metres or 180 metre vertical depth currently) with work during the quarter largely focused on development and advanced exploration work to better define and expose the vein systems in the Veins 1 and Main zones on the 50, 60, 80 and 90 metre levels;

- Limited processing at the Bell Creek Mill, mainly related to testing the circuit and "bedding" the Mill (457 ounces of gold poured in July);

- Deliveries from Timmins Mine to the Bell Creek Mill to increase in the third quarter as bulk sampling commences from both the ramp and the 650 Level in the shaft;

- Commencing the refurbishment of the secondary ball mill at the Bell Creek Mill, which will increase the Mill's capacity to 1,500 tonnes per day during the third quarter, with processing at the Bell Creek Mill to ramp up in support of the Company's target of 30,000 ounces of gold by year end;

- Undertaking an advanced exploration program at the Company's Bell Creek Complex, including de-watering and rehabilitating the existing Bell Creek shaft and collaring a ramp at Bell Creek to first be connected to the Bell Creek Mine workings and then to be driven across Bell Creek to the contiguous Schumacher to the Vogel properties;

- Reporting encouraging exploration results at Thunder Creek, including Hole TC09-68b, which included 12.75 gpt Au over 83.40 metres and encountered mineralization in a new, second porphyry unit near the bottom of the hole; and,

- Subsequent to the end of the quarter, reporting encouraging drill results at Bell Creek, including 12.63 gpt Au over 11.65 metres, with the eastern plunging system identified at Bell Creek being extended to a plunge length of 1,150 metres from surface and 500 metres along strike and the system remaining open along strike and at depth.

Project spending in the first half of 2009, including exploration expenditures of $5.9 million, totaled $40.5 million (excluding non-cash charges and changes in working capital). Cash and cash equivalents at June 30, 2009 totaled $93.8 million, excluding approximately $5.1 million in reclamation bonds. On March 5, 2009, the Company completed a bought deal equity financing involving the issuance of 30,615,871 common shares at a price of $1.55 per share and 6,616,185 flow-through common shares at a price of $2.00 per share for net proceeds of $57.0 million.

Anthony (Tony) Makuch, President and CEO of Lake Shore Gold, commented: "We continue to advance our development plans on schedule and budget. At our Timmins Mine, mill feed will increase as bulk sampling commences from both the ramp and the 650 Level in the shaft. The Bell Creek Mill circuit has performed very well during operating campaigns, at times exceeding 900 tonnes per day. We are close to completing the refurbishing of the secondary ball mill circuit at the Mill, as well as construction of a cyanide destruction plant and improved sampling system, which will allow the Mill to operate at a capacity of 1,500 tonnes per day and to increase throughput over the balance of the year. At the Bell Creek Complex, we are progressing advanced exploration work with the Bell Creek shaft de-watered down to 110 metres and the ramp having advanced 330 metres. Also very significant is the exploration success we continue to achieve at our properties, particularly Thunder Creek and Bell Creek. We recently reported our best results to date from both properties, which confirm our view that each contains a large gold system with the potential to support profitable, long-life mining operations."



Second Quarter and First Half 2009 Operations Review

Six months ended
Project and Exploration Spending ($'000) June 30, 2009
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Resource property and deferred exploration
Timmins Mine $22,728
Bell Creek Mill 5,121
Bell Creek mine and exploration properties 6,821
Thunder Creek Joint Venture (Company's share) 1,366
Blakelock - Little Abitibi properties 62
Casa Berardi net 452
Ti-pa-haa-kaa-ning (Company's share) 82
Other projects 18
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$36,650
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Property, Plant and equipment
Timmins Mine $541
Bell Creek Mill 397
Bell Creek Mine 2,947
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$3,886
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Total Project and Exploration Spending $40,536
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Timmins Mine Project

During the first half of 2009, the Company spent $23.3 million on the Timmins Mine project (including advanced exploration, ramp development and exploration drilling expenditures).

The Company is carrying out an advanced exploration program for delineation of bulk sampling of the Footwall, Ultramafic and Main Zones of the property, along with supporting an underground diamond drilling program to both expand the currently identified probable reserve and identify new resources. During the first half of 2009, the Company's spending on advanced exploration at Timmins totaled $11.7 million.

On May 13, 2009, the Timmins shaft reached the 650 Level. The 650 Level shaft station was completed as of June 2, 2009 and development from the 650 Level towards the ore in the Ultramafic Zone, representing approximately 60% of the Timmins Mine deposit, commenced in July. Bulk sampling is expected to begin by the end of August. The shaft has currently been deepened to the 668 metre level in order to place the shaft sinking structure below the 650 Level. The current work plan envisions sinking the shaft to the 710 metre level by year end, with consideration currently being given to continuing to deepen the shaft to the 1200 metre level. A decision on deepening the shaft is anticipated by the end of the year and will be assisted by results from diamond drilling planned to be carried out in the third and fourth quarters from surface and underground on the 650 Level. A favourable decision to deepen the shaft is not expected to affect the Company's production plans.

At June 30, 2009 the Timmins ramp had advanced approximately 1,060 metres and has currently been driven approximately 1,215 metres (to a vertical depth of approximately 180 metres). Work in the ramp during the second quarter largely focused on development and advanced exploration work to better define and expose the vein systems in the Veins 1 and Main zones on the 50, 60, 80 and 90 metre levels. This work involved moving significant waste and development material. Project spending related to the ramp during the first half of 2009 was $10.3 million.

Bell Creek Mill

The Bell Creek Mill, acquired in 2007 together with the Bell Creek Mine, was made operational in December 2008 at a capacity of 800 tonnes per day. Processing of low-grade material from development and advanced exploration work at the Timmins Mine ramp commenced at the Bell Creek Mill near the end of the first quarter. The Mill is initially running in campaigns processing material as stockpiles are established. The Mill will run on a more continuous basis during the second half of the year as deliveries from the Timmins Mine increase, both from the ramp and shaft. In addition, near the end of the second quarter work commenced to refurbish the secondary ball mill at the Bell Creek Mill, which is expected to increase the Mill's capacity to 1,500 tonnes per day during the third quarter. In July, the Company poured 457 ounces of gold at the Bell Creek Mill.

Spending at the Bell Creek Mill in the first half of 2009 totaled $5.5 million, mainly related to new surface buildings, the construction of a cyanide destruction plant and other mill improvements and repairs.

Bell Creek Mine, Vogel and Schumacher

In May 2009, the Company commenced an advanced exploration program at its 100% owned Bell Creek Complex following receipt of Closure Plan approval and the completion of an Exploration Agreement with four First Nations. The Bell Creek Complex advanced exploration program includes de-watering and rehabilitating the existing Bell Creek Mine shaft and workings and collaring a ramp at Bell Creek to be connected to the Bell Creek Mine workings and then to be driven across the Bell Creek property to the contiguous Schumacher and Vogel properties in order to access known mineralization at Vogel. As at August 4, 2009, the Bell Creek shaft had been de-watered to the 110 metre level and the ramp had been advanced 330 metres. Project spending related to the Bell Creek Complex advanced exploration program during the first half of 2009 totaled $7.1 million.

Exploration Expenditures

Exploration expenditures for the first half of 2009 totaled $5.9 million (representing 47,123 metres of drilling) and included $1.3 million at the Timmins Mine project, $1.4 million at Thunder Creek, $2.7 million at Bell Creek, Vogel and Schumacher, $0.5 million at Casa Berardi and the remainder at other projects.

On May 4, 2009, the Company announced encouraging results from 20 holes (12,297 metres) at Bell Creek and Vogel, including holes at Bell Creek confirming at least a 200 metre easterly extension of mineralization from the Bell Creek mine workings; holes intersecting mineralization 350 metres below the Bell Creek mine workings; and holes intersecting mineralization 225 metres south of the historic mine workings and near the collar location for the new Vogel ramp.

On May 5, 2009, the Company announced results from Thunder Creek, including hole TC09-68, with an intercept of 10.09 grams per tonne gold over 4.70 metres, including 17.16 grams per tonne gold over 2.25 metres and hole TC09-69a, which intersected 7.97 grams per tonne gold over 19.45 metres in the Rusk Horizon. Both of these holes intersected multiple Porphyry horizons similar to those announced in an earlier press release on March 31,2009.

On June 24, 2009, the Company announced the most encourage exploration results to date from Thunder Creek, including Hole TC09-68b, which intercepted 12.75 grams per tonne gold over 83.40 metres (13.73 grams per tonne gold over 77.50 metres, including 24.68 grams per tonne gold over 13.00 metres, 38.22 grams per tonne gold over 11.00 metres and 26.78 grams per tonne gold over 8.50 metres). The broad intercept in TC09-68b spanned the full width of the Porphyry unit and also intersected mineralization in the Rusk Zone as well as in a new, second Porphyry unit discovered near the bottom of the hole.

Subsequent to the end of the second quarter, the Company announced additional encouraging results from 16 holes and 7 wedge holes (12,593 metres) from the Bell Creek and Vogel properties on July 7, 2009. These results included holes at Bell Creek which encountered attractive grades and widths of gold mineralization below and to the east of the historic resource. In addition, results at Vogel included intersecting visible gold with assays of 22.50 grams per tonne gold over 1.00 metre, 8.39 grams per tonne gold over 1.60 metres and 7.06 grams per tonne gold over 1.95 metres. The historic area of mineralization at Vogel has been extended by 300 metres, to a total depth of 650 metres.

Additional results from Bell Creek were released on July 21, 2009 and included 12.63 grams per tonne gold over 11.65 metres within a broader intercept of 11.09 grams per tonne gold over 13.75 metres. Included within the 12.63 grams per tonne gold intercept were 24.73 grams per tonne gold over 2.20 metres and 23.16 grams per tonne gold over 1.50 metres. The July 21st results added a significant new dimension to the Bell Creek project identifying a large gold system at depth where drilling has demonstrated attractive grades and widths. The system, which plunges eastward towards the Company's wholly owned Schumacher property, where there is limited past drilling, has now been identified to a total plunge length of 1,150 metres from surface and 500 metres along strike and remains open both along strike and at depth.

Outlook

The year 2009 is critical for Lake Shore Gold as it progresses towards commercial gold production, expected during the second half of 2010. Initial processing of development material from the advanced exploration program at the Timmins Mine project commenced near the end of the first quarter 2009. A total of 30,000 ounces of gold is targeted for 2009 from bulk sample material and development ore mined from the Timmins ramp and shaft and processed at the Bell Creek Mill, as part of the ongoing advanced exploration program.

Near the end of the second quarter, the Company commenced work to refurbish the secondary ball mill circuit at the Bell Creek Mill, which is expected to increase the Mill's capacity to 1,500 tonnes per day during the third quarter of 2009.

The Company commenced the Bell Creek Complex advanced exploration program during the second quarter of 2009, which includes de-watering and rehabilitating the existing Bell Creek Mine shaft and workings and collaring a ramp at Bell Creek to be connected to the Bell Creek mine workings and then to be driven across the Bell Creek property to the contiguous Schumacher and Vogel properties. Work is expected to advance on a schedule to allow bulk sampling at the Bell Creek Complex to commence around the middle of 2010.

Project spending in 2009 is forecast at $89.0 million related to advanced exploration work at the 100% owned Timmins Mine and Bell Creek Complex, refurbishing and improvements at the Bell Creek Mill and exploration progress. Based on its June 30, 2009 cash position of $93.8 million and the proceeds from planned gold sales in 2009 and 2010, Lake Shore Gold is positioned to finance its currently planned activities for 2009 and 2010, including bringing the Timmins Mine to commercial production, advancing the Bell Creek and Vogel projects and completing other planned operating, development and exploration activities.

More information about Lake Shore Gold's second quarter and first half 2009 results and financial condition and liquidity is available in the Company's consolidated financial statements and management's discussion and analysis, which have been filed on sedar at www.sedar.com and posted to the Company's website at www.lsgold.com.

Lake Shore Gold will also host a conference call and webcast on Thursday, August 6, 2009 at 10:00 am EST to discuss the Company's second quarter 2009 performance. Those wishing to access the call can do so using the telephone numbers listed below. The call will also be webcast and available on the Company's website.



Participant call-in: 416-641-2140 or 800-766-6630
Replay number: 416-695-5800 or 800-408-3053
Replay ID: 6640704
Available until: 11:59pm, August 13, 2009


About Lake Shore Gold

Lake Shore Gold Corp. 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 to access shallow mineralization. The wholly owned Bell Creek Mill, located on the east side of Timmins, was refurbished to a capacity of 800 tonnes per day as of the end of 2008, with the Mill's capacity currently being increased to 1,500 tonnes per day. The Company recently commenced 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, and is pursuing a number of other highly prospective exploration properties in Northern Ontario and Quebec. Lake Shore Gold's common shares trade on the TSX under the symbol LSG.

Forward-looking Statements

Certain statements in this press release relating to the Company's exploration activities, project expenditures, business plans and financial and operating performance 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.

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