Lake Shore Gold Corp. (TSX:LSG)(NYSE MKT:LSG)(NYSE Amex:LSG) ("Lake
Shore Gold" or the "Company") today announced financial and
operating results for the second quarter and first six months of
2012. During the second quarter, the Company achieved strong
production and cash cost results with production of 24,426 ounces,
near the top of the 20,000 to 25,000 ounce target range, and cash
operating costs of US$849 per ounce produced, in line with the
target for the year of US$825 to US$875 per ounce. The Company also
continued to strengthen its balance sheet and to make excellent
progress with its development program designed to position the
Company for strong production growth in 2013.
Tony Makuch, President and CEO of Lake Shore Gold, commented:
"We performed well against our targets during the second quarter.
In fact, our strong second quarter results represent the third
consecutive quarter that we have met or exceeded our production
targets. Growth in production from the first quarter of this year
reflected increased tonnes from stope production and mining in
higher-grade areas at Timmins West Mine, including the UM Zone and
lower Thunder Creek Deposit, where grades during the quarter
averaged approximately 5.0 grams per tonne. We also continued to
make excellent progress with our development program, which by the
end of this year will set us up for strong production growth going
forward and position us to execute the mine plan outlined in the
Timmins West Mine Preliminary Economic Assessment.
"We also took steps during the second quarter to strengthen our
balance sheet and effectively manage our costs to ensure we are
funded to achieve our growth plans. Firstly, we arranged a $70
million credit facility with Sprott Resource Lending Partners
("Sprott"). Of The $70 million, $35 million has been received
through a gold-linked note, with the remaining $35 million relating
to a standby line of credit which becomes available effective
November 1, 2012. In terms of our costs, we announced plans in
early June to reduce our 2012 capital budget by $15 to $20 million
through cost savings and the deferral of expenditures not
immediately critical to achieving our key production targets."
Second Quarter 2012 Highlights
-- Production for the second quarter 2012 of 24,426 ounces recovered
(183,215 tonnes processed at an average grade of 4.3 grams per tonne
("gpt") gold), near the top of the Company's target range of 20,000 -
25,000 ounces; a total of 24,298 ounces were poured during the quarter,
with 24,915 ounces being sold at an average price of US$1,605 per ounce
-- Production from Timmins West Mine: 18,894 ounces (136,455 tonnes @
4.44 gpt)
-- Production from Bell Creek Mine: 5,532 ounces (46,760 tonnes @ 3.83
gpt).
-- Production for the first six months of 2012 of 41,106 ounces recovered
(343,724 tonnes grading 3.87 gpt), 40,479 ounces were poured and 43,389
ounces were sold at an average price of US$1,641 per ounce.
-- Mill throughput during the quarter averaged 2,013 tonnes per day with an
average recovery rate of 96.8%.
-- Cash operating costs(1) per ounce of gold sold during the second quarter
of 2012 were US$916. (Based on ounces produced during the second
quarter, cash operating costs(1) averaged US$849 per ounce.)
-- Cash operating costs(1) per ounce of gold sold during the first half of
2012 averaged US$963 per ounce (US$949 per ounce based on ounces
produced).
-- Cash earnings from mine operations(1) for the second quarter of 2012 of
$16.8 million, up significantly from $2.6 million for the second quarter
of 2011 due to an increase in gold sales, a higher average gold price
and lower cash operating costs(1). Cash earnings from mine operations(1)
for the first six months of 2012 totaled $26.3 million, up from $14.0
million during the first half of 2011.
-- Net loss for the second quarter 2012 was $2.0 million or $0.00 per
common share compared to net loss of $2.5 million or $0.01 per common
share during the second quarter 2011. The net loss during the second
quarter of this year largely reflected higher depreciation and depletion
costs. Net loss for the first half of 2012 totaled $4.9 million ($0.01
per common share) versus $0.2 million or ($0.00 per common share) for
the same period in 2011.
-- Capital expenditures for the first six months of 2012 totaled $85.9
million with an additional $6.4 million of expenditures for exploration.
-- Significant development, ore delineation and stope preparation work was
completed during the first half of 2012 with the capital program for
development of Timmins West Mine on track to position the Company for
higher levels of production in 2013.
-- 5,186 metres of total development completed
-- 64,875 metres of definition and delineation drilling completed.
-- Exploration success during the second quarter included major extensions
of the high-grade core at the Gold River Project and the expansion of
Fenn-Gib mineralization in multiple directions, as well as the
identification of new exploration targets at both projects
-- An updated reserve estimate was released for Timmins West Mine during
the second quarter, including probable reserves of 823,848 ounces of
gold (4,922,180 tonnes grading 5.21 grams per tonne), in line with the
Company's objective of establishing and maintaining three to five years
of reserves ahead of production.
Outlook
In 2012, Lake Shore Gold is focused on completing an extensive
capital development program at the Timmins West Mine that will
position the Company for strong production growth in 2013.
During the first half of 2012, the Company met target production
levels and made good progress with its development, ore delineation
and stope preparation work. Production during the second half of
the year is expected to increase from the first half level leading
to full-year production within the previously announced target
range of 85,000 to 100,000 ounces. The cash cost target for 2012 of
US$825 to US$875 per ounce remains unchanged.
During the second quarter of 2012, the Company announced plans
to reduce capital spending in 2012 by $15 to $20 million through
cost savings and the deferral of expenditures not immediately
critical to achieving key production targets. Total capital
spending for 2012 is now projected at $170-$175 million, including
approximately $85 million related to work at Timmins West Mine, $56
million to the mill expansion, $6 million of other milling costs,
$16 million to advance Bell Creek and an additional $10 million for
surface exploration drilling.
As of July 31, 2012, the Company had cash and cash equivalents
of $57.7 million as well as $4.7 million of gold bullion inventory
and an additional $35 million of liquidity from the Sprott credit
facility (through a standby line of credit), which was finalized
late in the second quarter 2012. The standby line can be drawn as
of November 1, 2012. Based on its current liquidity position and
anticipated cash flow to the end of the year, the Company is
positioned to fund all remaining planned expenditures in 2012. (All
cash flow and other financial projections for 2012 are based on an
assumed average gold price for the year of US$1,650 per ounce and a
C$/US$ exchange rate of 0.98.)
Conference Call & Webcast
Lake Shore Gold will also host a conference call and webcast on
Friday, August 10, 2012 at 10:00 am EST to discuss the Company's
second quarter and first half 2012 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: 416-340-9432 or 888-340-9642
Replay number: 905-694-9451 or 800-408-3053
Re-dial ID: 2569205#
Available until: 11:59 pm (August 17, 2012)
About Lake Shore Gold
Lake Shore Gold is a gold mining company that is in production
and pursuing rapid growth through the successful exploration,
development and operation of three wholly owned, multi-million
ounce gold complexes in the Timmins Gold Camp. The Company is in
commercial production at both the Timmins West and Bell Creek
mines, with material being delivered for processing to the Bell
Creek Mill. The Company continues to have an active drilling
program aimed at supporting current operations and evaluating
high-priority exploration targets around the Timmins Camp. The
Company's common shares trade on the TSX and NYSE MKT 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.
(1) Cash operating costs per ounce are shown before royalties. Royalties
increased cash operating costs per ounce for the second quarter and
first six months of 2012 by US$33 and US$12, respectively.
Contacts: Lake Shore Gold Corp. Tony Makuch President & CEO
(416) 703-6298info@lsgold.com Lake Shore Gold Corp. Mark Utting
Vice-President, Investor Relations (416) 703-6298info@lsgold.com
www.lsgold.com
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