Lake Shore Gold Corp.

Lake Shore Gold Corp.

November 19, 2009 08:58 ET

Lake Shore Gold Announces Plans to Aggressively Advance Timmins Projects, Arranges $100 Million In Financing

TORONTO, ONTARIO--(Marketwire - Nov. 19, 2009) – Lake Shore Gold Corp. (TSX:LSG) ("Lake Shore Gold," "the Company" or "LSG") today announced an agreement with Hochschild Mining Holdings Ltd. ("Hochschild"), a wholly owned subsidiary of Hochschild Mining plc (LSE:HOC), to raise $85.0 million through a private placement transaction for 19.2 million shares at a price of $4.43 per share. In addition, the Company announced a non-brokered structured flow-through financing co-led by Wellington West Capital Markets Inc. and Canaccord Capital Corporation for the issuance of 2.7 million shares at an average price of $5.94 per share for net proceeds of $15.0 million.

Hochschild will, through the private placement, increase its interest in the Company to approximately 36% of the common shares (on a fully diluted basis) from the current level of approximately 32%. Under the terms of the Strategic Alliance Agreement, entered into as part of a financing completed in February 2008, Hochschild's ownership in Lake Shore Gold is limited to 40% of the outstanding common shares (on a fully diluted basis). The limitation under the Strategic Alliance Agreement expires on November 22, 2010. 

Anthony (Tony) Makuch, President and CEO of Lake Shore Gold, commented: "Hochschild's additional investment in Lake Shore Gold, at a premium to market, is a strong endorsement of the quality of Lake Shore Gold's projects and the progress we are making. We appreciate Hochschild's ongoing support, which benefits all shareholders, and its continued commitment to the Strategic Alliance Agreement we signed early last year. Together, the two transactions announced today represent a blended 18% premium to yesterday's close. When compared to the expected price and costs related to a marketed transaction, the premium is approximately 30%.

"The funds being received from these transactions will support our plans to move all of our projects forward as aggressively as possible. We expect to produce 100,000 ounces of gold in 2010 and then to build production over the following three years to upwards of 350,000 ounces annually. Over the next 12 months, we will bring the Timmins Mine to commercial production, establish National Instrument 43-101 resources at Thunder Creek and the Bell Creek Complex, commence processing ore from the advanced exploration programs at Thunder Creek and the Bell Creek Complex and complete the expansion of the Bell Creek Mill to 3,000 tonnes per day. We also plan to significantly increase our exploration spending to $29 million with a focus on our Timmins West properties, including the Timmins Mine, Thunder Creek and additional targets acquired through the recently completed business combination with West Timmins Mining, as well as our Bell Creek Complex properties, including a large land position we have agreed to acquire from Goldcorp." 

In addition to the $29 million of exploration spending in 2010, Lake Shore Gold also today announced that the Company is forecasting 2010 project spending of $134 million (before proceeds from anticipated gold sales). Of the project spending, new projects account for approximately $58 million, including $30 million for the expansion of the Bell Creek Mill in 2010 to 3,000 tonnes per day and $28 million for an underground advanced exploration program at Thunder Creek (see Figure 1.), which commenced earlier this month. The remaining $76 million relates to continued progress at the Bell Creek Complex and work to advance the Timmins Mine to commercial production, which the Company expects to achieve in the fourth quarter of 2010.

Both transactions announced today are subject to final documentation as well as to TSX and other customary regulatory approvals. The funds raised from the issuance of the flow-through shares shall be used for general exploration expenditures, which will constitute Canadian Exploration Expenditures ("CEE") as defined in the Income Tax Act. Finder's fees will be payable to certain parties, including Wellington West Capital Markets Inc. and Canaccord Capital Corporation, in relation to the offering of flow-through shares.

About Lake Shore Gold

Lake Shore Gold is a rapidly growing mining company with large land positions on the west and east-sides of the Timmins gold mining camp. The Company is currently carrying out an underground advanced exploration program at its 100%-owned Timmins Mine project, where it has both a shaft and a ramp, and is commencing advanced exploration at the adjacent Thunder Creek property. The 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 is moving forward to become the Company's second mining operation in the Timmins Camp. The Company continues to invest aggressively in exploration primarily in Timmins and in select other areas of Northern Ontario and Quebec, and owns a large land position in Mexico. The Company'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, financing initiatives 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

To view Figure 1. (Thunder Creek Underground Advanced Exploration Program) please visit the following link:

Contact Information

  • Lake Shore Gold Corp.
    Tony Makuch
    President & CEO
    (416) 703-6298
    Lake Shore Gold Corp.
    Mark Utting
    Vice-President, Investor Relations
    (416) 703-6298