Hochschild Mining plc ("Hochschild"
or "the Company") announces today that it has entered into an
agreement to dispose of its remaining 6% stake in Lake Shore Gold Corp
("Lake Shore Gold") at a net price of C$3.70 per common share (the
"Transaction"). The Transaction, which is subject to shareholder
approval, represents a 37% gain on the average purchase price of C$2.70 per
share. Total net proceeds of C$79,701,670.40 million will primarily be used to support the Company's organic growth
strategy through investment in its extensive and rapidly expanding
exploration pipeline, including funding Azuca and Inmaculada to production.
Under the terms of the agreement RBC Dominion
Securities Inc. will purchase the remaining 21,540,992 common shares of Lake
Shore Gold currently held by Hochschild. The
Transaction is subject to shareholder approval at an Extraordinary General
Meeting, details of which will be provided in a circular to be despatched in due course. On completion of the
Transaction, Hochschild will cease to have an
interest in Lake Shore Gold.
Ignacio Bustamante, CEO of Hochschild
"Today's transaction represents another
important step for Hochschild and supports our
ongoing strategy of delivering organic growth through exploration. Since we
invested in Lake Shore Gold in 2007, attracted by its significant geological
potential, we have realised a very profitable return
and we will primarily apply these funds to progress our advanced projects Azuca and Inmaculada as well as
to secure and develop early stage, highly value accretive projects which have
significant upside potential and a clear path to control."
As at 30 September 2010, Lake Shore Gold's total
assets were C$1.1 billion. For the nine months ended 30 September 2010, Lake
Shore Gold reported a net loss for the period of C$7.4 million.*
For further details about Lake Shore Gold and for information
about key individuals important to the business, please visit www.lsgold.com.
*Extracted from Lake Shore Gold's unaudited Third
Quarter Report 2010.
Hochschild Mining plc
+44 (0)20 7907 2934
+44 (0)20 7251 3801
Hochschild Mining plc
Hochschild Mining plc is a leading precious metals company
listed on the London Stock Exchange (HOCM.L / HOC LN) with a primary focus on
the exploration, mining, processing and sale of silver and gold. Hochschild has over forty years' experience in the mining
of precious metal epithermal vein deposits and currently operates four underground
epithermal vein mines, three located in southern Peru, one in southern
Argentina and one open pit mine in northern Mexico. Hochschild
also has numerous long-term prospects throughout the Americas.
Lake Shore Gold
Lake Shore Gold is a rapidly growing mining company
with a vision is 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 currently carrying out
pre-production development at the Timmins Mine, where it is using both a
shaft and ramp to mine the Timmins deposit, and has intersected
mineralization underground at the adjacent Thunder Creek deposit, which is
being developed using the same infrastructure and as part of the Timmins Mine
project. Progress is also being made with an underground advanced exploration
program at its Bell Creek Mine, located on the east side of the City of
Timmins, which is moving forward to become the company's second mining
operation in the Timmins Gold Camp. The company's wholly owned mill (located
on the Bell Creek property) has been refurbished and is currently operating
at 2,000 tonnes per day. The company continues to
invest aggressively in exploration primarily in the Timmins Gold Camp and in
its other properties in Northern Ontario and Quebec, and owns a large land
position in Mexico. The company's common shares trade on the Toronto Stock
Exchange under the symbol LSG.
Merrill Lynch International is acting exclusively for Hochschild
and no-one else in connection with the Transaction and will not regard any
other person as its client in relation to the Transaction and will not be
responsible to anyone other than Hochschild for
providing the protections afforded to customers of Merrill Lynch
International, or providing advice in connection with the Transaction or any
other transaction or arrangement referred to in this announcement.
Forward looking statements
This announcement includes statements that are
forward-looking in nature. Forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the actual
results, performance or achievements of Hochschild
to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Any
information contained in this announcement on the price at which shares or
other securities in Hochschild have been bought or
sold in the past, or on the yield on such shares or other securities, should
not be relied upon as a guide to future performance.