Lake Shore Gold Corp.

Lake Shore Gold Corp.

May 20, 2008 08:40 ET

Lake Shore Gold Provides 2008/2009 Budget Plan

TORONTO, ONTARIO--(Marketwire - May 20, 2008) - Lake Shore Gold Corp. (TSX:LSG) ("Lake Shore Gold" or "the Company") today provided a project update and outlook for 2008 and 2009, which envisions initial deliveries of ore from its Timmins West property to the Company's 100%-owned Bell Creek mill by early in 2009 and a steady ramp up in production which could reach approximately 200,000 ounces of gold by 2011.

Lake Shore Gold's Board of Directors has approved a project budget for 2008 totaling $75.0 million ($15.0 million incurred in the first quarter of 2008) and gave preliminary approval for a 2009 budget totaling $78.5 million, excluding corporate costs. Through the expenditures planned to the end of next year, and subject to favourable advanced exploration and other results, specific milestones expected to be achieved include:

- Refurbishing of the Bell Creek mill by the fourth quarter of 2008, with capacity of 800 tonnes per day, to be increased to 1,500 tonnes per day as ore production increases;

- Developing a ramp at the Timmins West property with a goal of delivering development ore to the Bell Creek mill by early in 2009;

- Carrying out an advanced exploration program, including sinking a shaft to the deeper, primary deposit at Timmins West, which will be collared at the 200 metre, 400 metre, 525 metre and 650 metre levels, with development from the 650 metre level to intersect mineralized zones planned for the second half of 2009;

- Commencing development of a surface ramp to the 100%-owned Vogel property, with ramp portal and culvert construction to begin by mid-2009;

- Completing a study for the rehabilitation of the Bell Creek mine and, pending favourable results, commencing advanced exploration work including dewatering the mine and undertaking underground development and diamond drilling; and,

- Continuing exploration programs at each of the Company's properties.

Anthony (Tony) Makuch, President and CEO of Lake Shore Gold, commented: "Lake Shore Gold is on track with its goal to become Canada's next intermediate gold producer at a time when the outlook for gold prices remains highly favourable. We have an excellent portfolio of properties, with 1.2 million ounces of probable reserves (uncut) already having been identified at our Timmins West property, a 100%-owned mill at Bell Creek, the refurbishing of which is being accomplished at a fraction of the cost and time required to construct a greenfield mill, and very encouraging prospects for identifying additional reserves both at Timmins West and at a number of our other properties.

"While much work remains, we are targeting solid production growth, starting with an estimated 30,000 ounces of gold in 2009 from Timmins West. Production could then grow to just over 100,000 ounces in 2010 as we increase output at Timmins West and begin producing from the Vogel ramp. In 2011, the Company anticipates that production could reach up to 200,000 ounces reflecting increased production from Timmins West and the Vogel ramp and initial output from the Bell Creek mine. Production growth in subsequent years is expected to come from continued progress at these and other properties."

To view the Four Year Conceptual Production Outlook graph, please visit the following link:

Timmins West Ramp

Lake Shore Gold plans to commence an advanced exploration program during the third quarter of 2008 involving the development of a ramp to access mineral reserves at Timmins West above the 400 metre level. The ramp will be driven from surface to facilitate development in the Veins and Main zone, with mineralized material to be processed at the Bell Creek mill and underground diamond drilling to be undertaken. A feasibility study will be completed at the end of the program and, pending favourable results, initial ore production will begin early in 2009, providing early cash flows supporting the Company's growth plans. Total expenditures in 2008 for the Timmins West ramp project are estimated at approximately $14.3 million, mainly related to advanced exploration work, with $9.1 million budgeted for 2009, largely related to the continued advancement of the ramp, sustaining capital requirements and carrying costs.

Timmins West

A budget of $38.2 million has been approved for the Timmins West project (excluding ramp) for 2008 to fund the advanced exploration program. All surface infrastructure is nearing completion, with shaft sinking expected to begin during the third quarter. Expenditures during 2009 are estimated to total $23.6 million, and include the cost of completing the advanced exploration program as well as costs for pre-production development work late in the year.

Bell Creek Mill

Expenditures for the Bell Creek mill in 2008 are estimated at $10.0 million. Of this amount, $3.8 million relates to the refurbishing of the mill, $2.0 million for a new surge pond and the remainder covering carrying costs, mill improvements and a $1.2 million contingency. Expenditures in 2009 are estimated at $1.2 million. The re-opening of the mill is expected during the fourth quarter of 2008 with an operating capacity of 800 tonnes per day. The mill's capacity will be increased to 1,500 tonnes per day as the volume of ore feed increases.

Vogel Ramp

Work is progressing on an internal study for mining of the Vogel mineral resources above the 320 metre level by ramp access with a target to present the results of the study to the Board during the second half of 2008. Pending board approval, construction of the ramp portal and culvert would be undertaken by mid-2009 and be expected to intersect gold mineralization by the end of the year. Total expenditures for the Vogel ramp are estimated at $0.8 million in 2008 and, pending a favourable development decision, are estimated at $20.1 million for 2009.

Bell Creek Mine

The Company plans to complete a study of the scope of work and cost for de-watering and rehabilitating the Bell Creek mine. Pending favourable results from this study, an advanced exploration program would commence that would include dewatering the mine and undertaking underground development and diamond drilling. This program would extend throughout most of 2009. Total expenditures at the Bell Creek mine are budgeted at $0.4 million for 2008 and are estimated at approximately $12.8 million in 2009.

Exploration Expenditures

The Company expects to incur expenditures of $11.4 million in 2008 and $11.7 million in 2009 in support of its ongoing exploration program. Five drills are currently active on the Company's properties, and it expects to operate at least five to six drills on an ongoing basis. Management currently anticipates having three to four drills at the Timmins West, adjacent Thunder Creek and Bell Creek Complex properties, and two drills at the Tipahaakaaning joint venture property (the operator of the joint venture being Northern Superior Resources Inc.). An estimated 50,000 metres of diamond drilling is expected in both 2008 and 2009. Additional diamond drilling and/or reverse circulation drilling is contemplated for the Blakelock and Casa Berardi properties later this year and/or during 2009, either using existing drills or by adding additional drilling capacity. The exact extent and location of future drilling will largely depend on exploration results, with budgets subject to joint venture partner approval in the case of Thunder Creek and Tipahaakaaning.

About Lake Shore Gold

Lake Shore Gold Corp. is a mineral development and exploration company that is rapidly moving towards gold production through a portfolio which includes an existing processing facility and a number of quality mineral properties located in the Timmins gold mining district of northern Ontario and Quebec. The Company has completed a pre-feasibility study and is moving forward with an advanced exploration program at its Timmins West property, has begun re-commissioning work at its 100%-owned Bell Creek mill and is continuing drilling programs at a number of other prospective properties. The Company's common shares trade on the Toronto Stock Exchange under the symbol LSG.

Forward-looking Statements

Certain statements in this press release relating to the growth and development of the Company's projects and properties and anticipated future production levels and spending plans are "forward-looking statements." 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 demand for products develops as anticipated, that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts and supplies, labour disturbances, interruption in transportation or utilities, or adverse weather conditions, and that there are no material unanticipated variations in the cost of energy or supplies. The Company makes no representation that reasonable business people in possession of the same information would reach the same conclusions.

Forward-looking statements include, but are not limited to, statements with respect to the future price of gold and other metals, the estimation of mineral resources, the realization of mineral resource estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, timing of completion of pre-feasibility studies, success of exploration and development activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of exploration operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, completion of acquisitions and their potential impact on the Company and its operations, limitations on insurance coverage and the timing and possible outcome of pending litigation. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved".

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. Such factors include, among others, risks related to the completion and integration of acquisitions and actual effects of the acquisitions; risks related to joint venture operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of future economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold and other metals; possible variations in ore resources, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors discussed in the section entitled "Risk Factors" in the Company's Annual Information Form filed with Canadian provincial securities regulatory authorities. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

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