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TORONTO,
ONTARIO--(Marketwire - Nov. 9, 2011) - Lake Shore Gold Corp. (TSX:LSG)(NYSE
Amex:LSG) ("Lake Shore Gold" or the "Company") today
announced details of the Company's financial and operating results for the
third quarter and first nine months of 2011.
Tony Makuch, President and CEO of Lake Shore Gold, commented: "We are
pleased with the progress made over the last few months. During the third
quarter, production from Timmins Mine rose 24% and we brought operating costs
down significantly, to $94 per tonne or US$884 per ounce. Looking ahead, we
believe the next few months will be very exciting and rewarding for the
Company. First, we expect to achieve our production target for 2011 supported
by strong operating results in the fourth quarter. We also expect to
significantly increase our resource base, with our initial resource for
Thunder Creek expected over the next few weeks and the initial resource for
Fenn-Gib, which has the potential to be a large-scale open pit deposit, to
follow before the end of the year. We are also working on updating our
existing National Instrument 43-101 reserves and resources at Timmins Mine
and resources at Bell Creek and the Thorne property, with these updates
expected to be completed by the end of March 2012. In total, we expect our
resource base to at least double over this period, increasing to a total of
between six and eight million ounces. We also have the prospect of releasing
additional drill results from a number of locations, including the results of
the deep hole we have been drilling to test the down plunge extension of
Timmins Mine and Thunder Creek below 2,000 metres."
Third Quarter 2011 Financial Review
-- Gold sales during the third quarter 2011 were 16,570 ounces at an average price of US$1,726 per ounce. Nine months ended September 30, 2011 gold sales totalled 69,512 ounces at an average price of US$1,501 per ounce. -- Cash operating costs from Timmins Mine totalled $94(i) per tonne or US$884(i) per ounce in the third quarter 2011 ($96 per tonne or US$845(i) per ounce during the nine months ended September 30, 2011). Cash margin during the quarter was US$842 per ounce. -- Cash earnings from mine operations(i) were $9.1 million or $0.02 per common share during the third quarter. Nine months ended September 30, 2011 cash earnings from mine operations(i) were $23.0 million(i) or $0.06(i) per common share. -- Net loss in the third quarter 2011 was $5.2 million or $0.01 per share, largely reflecting depreciation, depletion and share-based payments ($5.9 million), general and administrative expenses ($2.8 million, excluding stock-based compensation), exploration costs ($2.4 million) and a $1.8 million write down related to the Company's agreement to sell its Mexican assets. Net loss for the nine months ended September 30, 2011 was $5.4 million or $0.01 per common share. -- Project spending in the nine months ended September 30, 2011 was $71.1 million with $24.5 million for exploration. An additional $12.7 million was spent for the Bell Creek Mill expansion. -- Cash at September 30, 2011 was $47.6 million, including US$20 million drawn from the Company's US$50 million credit facility.
Third
Quarter 2011 Operating Review
-- Total gold poured during the third quarter of 2011 totalled 16,693 ounces (60,014 ounces in the nine months ended September 30, 2011). -- Processed gold totalled 18,833 ounces in the third quarter 2011 based on 173,877 tonnes processed at an average grade of 3.49 grams per tonne. Processed gold totalled 58,776 ounces in the first nine months of the year based on 485,236 tonnes processed at an average grade of 3.92 grams per tonne. -- Of processed gold ounces in the third quarter: -- 11,909 ounces related to Timmins Mine (32,486 ounces for the nine months ended September 30, 2011); -- 3,491 ounces were from the Bell Creek Mine advanced exploration program (17,792 ounces for the nine months ended September 30, 2011); and, -- 3,433 ounces were from the Thunder Creek advanced exploration program (8,497 ounces for the nine months ended September 30, 2011). -- Mill throughput averaged 1,890 tonnes per day during the third quarter and 1,777 tonnes per day during the nine months ended September 30, 2011. Bell Creek Mill is now meeting and exceeding expected performance levels. Throughput levels averaged over 2,000 tonnes per day in September. -- 2011 Outlook: -- Full year production is expected to total at least 85,000 ounces of gold poured. -- Project spending is expected to total $85 million, with $30 million for exploration and $20-$25 million for the mill expansion. $85 million of project spending is $10 million more than the previous estimate of $75 million and largely reflects increased underground development and infrastructure work at Bell Creek for ramp advancement and to complete an additional exploration drift, as well as increased development at Thunder Creek. Mill expansion spending in 2011 was previously estimated at $25 to $30 million. As a result, total project spending for 2011, including mill expansion, is now estimated at $105 to $110 million compared to the previous estimate of $105 million. -- Head grades, cash costs and mill throughput levels are all expected to improve during the fourth quarter 2011. -- Significant growth in resources is expected before year end with the planned release of initial National Instrument 43-101 compliant resources at Thunder Creek and Fenn-Gib.
Mill
Expansion
On August 9, 2011, the Company announced an expansion of the Bell Creek Mill
to a capacity of 3,000 tonnes per day, with a second phase of expansion
contemplated to a capacity of 5,500 tonnes per day. The first phase expansion
is targeted for completion in the second half of 2012. The total cost of the
expansion to 3,000 tonnes per day project is estimated at approximately $80
million, with $20 to $25 million to be spent in 2011. To the end of the third
quarter, a total of $12.7 million had been spent on the expansion, mainly
related to the acquisition of a SAG mill for $9.5 million. The 22' x 36.5'
SAG mill was shipped from Europe to the Port of Thunder Bay and trucked to
Timmins, arriving at Bell Creek Mill on November 1, 2011.
Drilling Program
The 2011 drill program has largely focused on establishing an initial
resource at Thunder Creek during the fourth quarter, updating existing
reserves and resources at Timmins Mine and resources at Bell Creek Mine and
the Thorne property (Gold River Trend) by the end of the first quarter 2012,
as well as releasing an initial resource at the Fenn-Gib project by the end
of 2011. A total of 133,000 metres of drilling was completed in the nine
months ended September 30, 2011.
Thunder Creek - On July 25, 2011, the Company announced drilling results
confirming and extending mineralization above and below the 730 Level,
extending the strike length of mineralization on the 730 Level by 25 metres
to a minimum length of approximately 200 metres and including the discovery of
a possible new zone 500 metres to the southwest of Thunder Creek towards 144.
Bell Creek - On August 16, 2011, the Company announced that drilling to depth
had extended gold mineralization at Bell Creek Mine 400 metres below the
current resource and intersected multiple occurrences of visible gold.
Thorne (Gold River Trend) - On August 30, 2011, the Company announced results
from infill and expansion drilling, which included extending mineralization
in the North Porphyry/4800 Zone at Gold River East by 450 metres below the
current resource (840 metres below surface) and extending mineralization by
300 metres east of the current resource.
Fenn-Gib -Subsequent to quarter end, on October 28, drilling in an untested
gap confirmed the geologic model, highlighted potential at depth and
discovered a 200 metre expansion of shallow mineralization to the north of
previous drilling. In addition, three twin holes were completed in the
central to eastern portion of the deposit with all three holes obtaining
grades and widths similar to or better than previous nearby holes.
Statements about the Company's outlook are forward looking and are subject to
the caution below. More information about Lake Shore Gold's financial and
operating results and financial condition and liquidity for the third quarter
and first nine months of 2011 is available in the Company's consolidated
financial statements and management's discussion and analysis, which are
available on sedar at www.sedar.com
and are posted to the Company's website at www.lsgold.com.
Lake Shore Gold will also host a conference call and webcast on Thursday,
November 10, 2011 at 10:00 am EST to discuss the Company's third quarter and
first nine month 2011 financial and operating results. Those wishing to
access the call can do so using the telephone numbers that follow. The call
will also be webcast and available on the Company's website.
Participant call-in: 416-695-6616 or 800-355-4959 Replay number: 905-694-9451 or 800-408-3053 Re-dial ID: 5561037 Available until: 11:59 pm, November 24, 2011
About Lake Shore Gold
Lake Shore Gold is a rapidly growing mining company with a vision to become a
mid-tier gold producer through the successful exploration, development and
operation of its properties in the Abitibi Greenstone belt in Northern
Ontario and Quebec, starting with its strong base in Timmins, Ontario. In
Timmins, the Company is in commercial production at the Timmins Mine, has
intersected underground, and is developing along, mineralization at the
adjacent Thunder Creek deposit and is advancing an underground advanced
exploration program at its Bell Creek Mine. Mine production is delivered to
the Company's wholly owned mill (located on the Bell Creek Property east of
Timmins) which has been refurbished and expanded to a current capacity of 2,000
tonnes per day. The Company continues to invest aggressively in exploration
in the Timmins Camp and in its other properties in Northern Ontario and
Quebec. The Company's common shares trade on the TSX and NYSE Amex under the
symbol LSG.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release relating to the Company's expected
production levels, production growth, exploration activities, potential for
increasing resources, project expenditures and business plans are
"forward-looking statements" or "forward-looking
information" within the meaning of certain securities laws, including
under the provisions of Canadian provincial securities laws and under the
United States Private Securities Litigation Reform Act of 1995 and are referred
to herein as "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 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 be consistent with models and
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, delays
in development or mining and 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 the Company's most recent Annual Information Form and other
regulatory filings with the Canadian Securities Administrators, which are
posted on sedar at www.sedar.com,
or the Company's most recent Annual Report on Form 40-F and other regulatory
filings with the Securities and Exchange Commission.
(i) Denotes non-GAAP (Generally Accepted Accounted Principles) measures.
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