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| March 12, 2009 |
| Lake Shore Gold Completes 2008 on Schedule and Under Budget |
TORONTO, ONTARIO--(Marketwire - March 12, 2009) - Lake Shore Gold Corp. (TSX:LSG) ("Lake Shore Gold" or "the Company") today reported financial and operating results for 2008. Key operating highlights for the year included commencing development of the Timmins Mine project shaft and ramp and advancing work on schedule to complete the project's advanced exploration program by the end of 2009; refurbishing the 100% owned Bell Creek Mill to a capacity of 800 tonnes per day; and announcing encouraging exploration results from a number of its properties. Project spending in 2008 totaled $56.3 million, $7.3 million below the $63.6 million budget, mainly reflecting unused contingency. Exploration expenditures totaled $15.7 million compared to a budget of $11.4 million, with higher than budgeted spending reflecting exploration success throughout the year.
At December 31, 2008, cash resources were $85.3 million. On March 5, 2009, the Company completed a bought deal financing involving the issuance of 30,615,871 common shares at a price of $1.55 per share and 6,616,185 flow-through shares at a price of $2.00 per share for proceeds of $57.6 million (net of underwriter commissions).
Anthony (Tony) Makuch, President and CEO of Lake Shore Gold, commented: "For Lake Shore Gold, 2008 was a very successful and exciting year as we took a number of critical steps in our transition from an exploration company to an emerging gold producer. When the year began, site clearing and surface excavation work was underway at the Timmins Mine project site. By year end, we had a fully constructed mine infrastructure, a shaft sunk 341 metres and a ramp that during the year had been planned, permitted and advanced 345 metres. We had also refurbished our Bell Creek Mill to 800 tonnes per day, and had completed our work programs during the year on schedule and under budget. Exploration results during the year were also very encouraging, with the known mineralization at Bell Creek extended to 900 metres from surface and an additional 400 metres along strike; the Rusk Zone at Thunder Creek extended to a depth of 575 metres, with the deepest intercept contained in a new, porphyry-hosted mineralized system; and the discovery of a new gold zone at our 50% optioned Casa Berardi property.
"Looking to 2009, the Timmins ramp has now been driven 640 metres and we expect to begin processing development ore by the end of this month and to reach the 200 metre vertical level by the end of the year. We also remain on track to complete the shaft to the 710 metre level, complete our initial bulk sample and conduct underground Diamond drilling by year end, to be followed by pre-production development. We continue to target 30,000 ounces of gold in 2009 from development ore mined through our advanced exploration program at the Timmins Mine."
Operations Review
Timmins Mine Project (formerly Timmins West)
During the year ended December 31, 2008, the Company incurred $41.0 million of expenditures on the Timmins Mine project (including advanced exploration, Timmins ramp and exploration drilling expenditures). In addition, the Company incurred costs of $11.1 million for property, plant and equipment.
Resource Property and Deferred
Exploration Expenditures Year ended December
($'000) 31, 2008(i)
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Timmins Mine $ 40,988
Bell Creek Mill and Mine 8,820
Bell Creek properties (exploration) 4,726
Thunder Creek Joint Venture (Company's share) 962
Blakelock - Little Abitibi properties 1,458
Casa Berardi 1,041
Ti-pa-haa-kaa-ning (Company's share) 4,158
Other projects 913
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Total expenditures $ 63,067
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(i)Resource property expenditures represent the change in the carrying value
of the resource properties and deferred exploration for the year ended
December 31, 2008 (for details refer to note 9 to financial statements).
In addition to the above expenditures, the Company spent $11.1 million on
equipment for the Timmins Mine project, recorded as property, plant
and equipment.
Expenditures include $2.2 million of non-cash expenses.
Advanced exploration expenditures at the Timmins Mine project in 2008 totaled $37.8 million, of which $5.8 million was property, plant and equipment. Following completion of the headframe, hoistroom and other surface infrastructure during the second quarter of 2008, the shaft sinking program was undertaken at the end of July with the shaft having been sunk to the 341 metre level by the end of the year and, since that time, advancing to the 525 metre level. The 200 Level shaft station was completed by the end October 2008, with the 400 Level station being completed in January 2009. The Company remains on track to complete the shaft to the 710 metre level, complete its initial bulk sample and conduct underground Diamond drilling by the end of 2009.
In early September, the Company commenced development of a ramp as part of an advanced exploration program to access ore at the Timmins Mine project above the 400 Level, as well as to provide ventilation and an escape raise to the lower depths of the mine. At December 31, 2008 the ramp had advanced approximately 345 metres and has currently been driven approximately 640 metres (to a vertical depth of close to 100 metres). Expenditures related to the ramp during 2008 were $11.9 million, of which $5.3 million represented property, plant and equipment expenditures.
Bell Creek Mill
As at December 31, 2008, the Bell Creek Mill had been refurbished to a capacity of 800 tonnes per day. The operating permit for the mill was returned to active status (from inactive) as of the end of October. Expenditures at the Bell Creek Mill during 2008 totaled $8.6 million. Major components of the work program in 2008 to refurbish the mill included the crushing plant, the primary ball mill, the CIP tanks, leach tanks, piping and conveyors within the mill circuit, the Knelson Concentrator, the thickener, carbon kiln, the gold furnace, general electrical upgrades throughout the mill, and upgrades to the tailings area.
Bell Creek Mine, Vogel and Schumacher
At the Bell Creek Mine, evaluations of the hoisting system, headframe and associated facilities were conducted during 2008 to estimate costs and establish a schedule for re-commissioning the mine. An internal study was ongoing at year end for an advanced underground exploration program that would include dewatering the mine and undertaking underground development and Diamond drilling.
Based on work completed in 2008 to evaluate mineralized zones above the 320 metre level at the Vogel property, the Company began 2009 assessing a plan to drive a ramp from Bell Creek, through mineralization on that property, to Vogel which is situated approximately a kilometre away. This approach would allow the Company to benefit from not having to collar a ramp in thick saturated overburden encountered on the Vogel property.
Exploration Expenditures
Included in resource property and deferred exploration expenditures for the year ended December 31, 2008, were exploration expenditures of $15.7 million, of which $4.2 million related to the Company's share of expenditures for the Ti-pa-haa-kaa-ning project, $4.7 million to Bell Creek, Vogel and Schumacher, $2.4 million to the Timmins Mine project, $1.0 million to Casa Berardi, $1.5 million to Blakelock and Little Abitibi, $1.0 million to Thunder Creek and $0.9 million to other projects.
Outlook
The year 2009 is expected to be an important year for Lake Shore Gold as it progresses towards becoming a gold producer. Initial processing of development ore from the advanced exploration program at the Timmins Mine project is targeted to commence by the end of this month with output expected to gradually increase to 500 tonnes per day by the end of 2009.
The Company expects to sink the Timmins shaft to the 710 metre level, complete its initial bulk sample and conduct underground Diamond drilling before the end of the year. A total of 30,000 ounces of gold is targeted for 2009 from ore deliveries from the Timmins Mine to the Bell Creek Mill. The mill's processing capacity, currently 800 tonnes per day, is expected to expand to 1,500 tonnes per day when the secondary ball mill is commissioned by the end of 2009 or early 2010 as additional feed becomes available.
Project spending in 2009 is forecast at $89.0 million, including exploration. The 2009 forecast is approximately $7.0 million higher than the previously announced budget for the year, reflecting management's decision to accelerate the timing of work at the Bell Creek Complex. Based on its year-end 2008 cash position of $85.3 million, the proceeds from planned gold sales in 2009, and net proceeds from the recently completed financing, 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.
2008 Results of Operations
Net loss for the year ended December 31, 2008 totaled $5.5 million or $0.04 per share compared to a net loss of $1.1 million or $0.01 per share for 2007. The higher net loss in 2008 mainly resulted from increased costs in support of capital programs and growth plans as the Company transitions from an exploration company to a gold producer. The impact of these costs was partially offset by increased interest and other income, reflecting higher cash balances, lower consulting and management fees and no write-offs of resource properties in 2008 compared to $1.6 million in 2007.
As at December 31, 2008, the Company had cash of $85.3 million and working capital of $71.4 million. Subsequent to the end of 2008, Lake Shore Gold completed a bought deal financing on March 5, 2009 for $60.7 million ($57.6 million net of underwriter commissions) through the issue of 30,615,871 common shares at a price of $1.55 per share and 6,616,185 flow-through shares at a price of $2.00 per share. Issued and outstanding common shares following the completion of the financing totaled 212,587,041 shares.
More information about Lake Shore Gold's results of operations and financial condition and liquidity is available in the Company's consolidated financial statements and management's discussion and analysis, which are expected to be filed on sedar at www.sedar.com and posted to the Company's website at www.lsgold.com within the next five business days.
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 Timmins Mine project is located 18 kilometers west of Timmins, one of the world's most productive mining camps having produced approximately 75 million ounces of gold over the last century. The wholly owned Bell Creek Mill, located just east of Timmins, has been refurbished to a capacity of 800 tonnes per day, and the Company is moving forward with a number of prospective exploration properties in the Timmins area and in other parts of Northern Ontario and Quebec. Lake Shore Gold'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 Company's development projects, exploration properties, project expenditures, business plans, capital position and financial 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. | |
| CONTACT INFORMATION:
Lake Shore Gold Corp.
Tony Makuch
President & CEO
(416) 703-6298
Fax: (416) 703-7764
or
Lake Shore Gold Corp.
Mark Utting
Vice-President, Investor Relations
(416) 703-6298
Fax: (416) 703-7764
Email: info@lsgold.com
Website: www.lsgold.com
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| INDUSTRY: Manufacturing and Production - Mining and Metals | |
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