Lake Shore Gold Reports Solid Progress in 2012, Company Nearing Completion of
Key Construction Programs, Strong Production Growth and
Lower Costs Planned in 2013
TORONTO, ONTARIO -- (Marketwire) -- 03/18/13 -- Lake Shore Gold Corp.
(TSX:LSG)(NYSE Amex:LSG)(NYSE MKT:LSG) ("Lake Shore Gold" or the
"Company") today announced financial and operating results for the
full-year and fourth quarter of 2012. Highlights of the year include:
meeting the Company's production guidance; achieving significant
development and construction progress; effectively managing operating
costs and capital investment; and ending the year positioned for
production growth of 40% or more in 2013 (120,000 to 135,000 ounces)
and well financed.
Tony Makuch, President and CEO of Lake Shore Gold, commented: "Last
year was our peak year for capital investment, development and
construction as we advanced the Timmins West Mine and kept our mill
expansion on track for completion during the second quarter of 2013.
It was also a year in which we achieved our production guidance,
reported average cash costs per tonne below expected levels and
capital expenditures at the low end of our target range. Based on the
progress achieved in 2012, we are now poised for strong production
growth, sharply lower capital investment and improved operating costs
Full Year and Fourth Quarter 2012 Review
Met Production Guidance
-- Produced 85,782 ounces of gold in 2012 (719,298 tonnes at 3.9 grams per
tonne), in line with guidance. Gold poured from 2012 production totaled
85,184 ounces with 83,779 ounces sold at an average price of US$1,666
-- Produced 23,738 ounces of gold in the fourth quarter of 2012 (181,575
tonnes at 4.2 grams per tonne), with gold poured of 24,041 ounces and
19,940 ounces sold at an average price of US$1,719 per ounce.
Achieved Significant Development and Expansion Progress
-- Completed 11,900 metres of mine development at its Timmins West and Bell
Creek mines, as well as approximately 140,000 metres of delineation and
infill drilling. Development and drilling during the year was completed
to better define resources and outline mineralization in support of
production growth and to optim
ize mine planning.
-- Extended Timmins Deposit ramp to 790 Level and connected lower mine at
Thunder Creek from 660 Level to 765 Level. Ramp at Bell Creek driven to
610 Level with drill drift established to support evaluation of the Bell
Creek deposit at depth.
-- Completed phase one of Company's mill expansion in December, increased
processing capacity by 25% to 2,500 tonnes per day.
-- Completed 3,030 metres of mine development in fourth quarter of 2012, as
well as 27,000 metres of delineation and infill drilling.
Effectively Managed Operating Costs and Capital Investment
-- Reported cash operating costs per tonne in 2012 of $115, below target
levels. On a per ounce basis, cash operating costs were US$996 in 2012
(including $30 relating to royalties). For the fourth quarter 2012, cash
operating costs totaled $124 per tonne or US$990 per ounce (including
$36 relating to royalties).
-- Effectively managed capital investment during peak investment phase of
Timmins West Mine development and mill expansion projects with total
investment of $160.7 million for projects and $9.1 million for
exploration, in line with the Company's target for total capital
investment of $170 to $175 million.
-- Capital investment during the fourth quarter 2012 totaled $36.6 million,
with $1.5 million invested in exploration.
Increased Cash Earnings and Added Capital to Fund Growth
-- Cash earnings from mine operations in 2012 were $53.7 million, an
increase of approximately 70% from 2011. Fourth quarter 2012 cash
earnings from mine operations totaled $14.3 million compared with $8.7
million for the same period in 2011. (In 2012, Timmins West Mine,
including Timmins Deposit and Thunder Creek, and Bell Creek Mine were in
commercial production, while only Timmins Deposit was in commercial
production in 2011.)
-- Net loss for the year totaled $317.9 million or $0.77 per common share.
Excluding a non-cash impairment charge of $302.5 million and related
deferred tax recovery of $2.1 million, net loss for 2012 was $17.5
million or $0.04 per common share, higher than the net loss in 2011 of
$10.9 million or $0.03 per common share, due largely to higher depletion
and depreciation expenses compared to the prior year. The $302.5 million
non-cash charge relates to the write down of the Company's mining
interests as a result of the impairment assessment performed by the
Company at December 31, 2012 (refer to the "Impairment" discussion in
the Company's Management Discussion & Analysis dated March 18, 2013).
-- Net loss in the fourth quarter of 2012, excluding the impairment charge
of $302.5 million and related deferred tax recovery of $2.7 million, was
$2.4 million or $0.01 per common share, an improvement from the net loss
in the fourth quarter of 2011 of $5.5 million or $0.01 per common share.
Including the impairment charge and the related deferred tax recovery,
the net loss in the fourth quarter of 2012 is $302.2 million or $0.73
per common share.
-- During 2012, the Company raised more than $220 million of capital to
fund its growth by completing a royalty and equity investment
transaction with Franco-Nevada Corporation for $50 million; completing a
credit facility with Sprott Resource Lending Partners ("Sprott") for
$70.0 million, with $35.0 million from a gold-linked note drawn on July
16, 2012 and a $35.0 million standby line drawn subsequent to year end;
and issuing Convertible Unsecured Debentures for an aggregate principal
amount of $103.5 million. Of the funds raised, US$50.0 million was used
to repay a credit facility with UniCredit Bank AG.
-- Cash and gold bullion inventory at December 31, 2012 totaled
approximately $61 million, including $48.7 million of cash and the
remainder in bullion inventory (valued at market prices).
Continued Exploration Success
-- Achieved exploration success at Timmins West Mine, including
intersecting high-grade mineralization outside the existing resource
around the 750 metre level at Timmins Deposit as well as 50 metres west
of the existing resource at the 765 metre level at Thunder Creek.
-- Discovered new areas of mineralization in the Highway 144 gap 850 metres
south of Thunder Creek, doubled the depth of known mineralization at 144
North and intersected new mineralization at 144 South.
-- Intersected high-grade mineralization in the North A Deep Zone at Bell
Creek below the 600 metre level, verifying the continuity of the Zone
and confirming the structure and orientation of the mineralization.
The progress the Company achieved in 2012 has positioned Lake Shore
Gold for higher production, reduced investment and improved cash
operating costs in 2013. Production in 2013 is targeted between
120,000 to 135,000 ounces of gold. Capital investment on mine
development and mill expansion projects is forecast at approximately
$80 million, with an additional $10 million budgeted for exploration,
largely in-mine drilling. Cash operating costs in 2013 are targeted
at US$800 to US$875 per ounce, including royalties.
Based on cash and gold bullion inventory at the beginning of 2013 of
approximately $61 million, $35 million received from Sprott in
January 2013 and anticipated cash flows during the year, the Company
is positioned to finance its planned expenditures in 2013. (All cash
flow and other financial projections for 2013 are based on an assumed
average gold price for the year of US$1,650 per ounce and a C$/US$
exchange rate of 1.00).
Reserve and Resource Update
The Company will be publishing updated reserve and resource estimates
in connection with the filing of its 2012 Annual Information Form.
The results are expected to include an increase in total probable
reserves of just over 100,000 ounces reflecting the release of an
initial probable reserve for Bell Creek Mine of 129,000 ounces
(960,000 tonnes at an average grade of 4.2 grams per tonne). The
initial reserve estimate at Bell Creek incorporates results from
mining, development and detailed diamond drilling during 2012 with
ounces located between the 300 and 775 levels. The majority of
resources at Bell Creek are located below the 775 Level. Updated
probable reserves at Timmins West Mine are estimated at approximately
798,000 ounces (following depletion of 64,177 ounces in 2012). The
updated estimate is based on 4.8 million tonnes at an average grade
of 5.2 grams per tonne, largely unchanged from the previous reserve
estimate in May 2012.
Indicated resources (inclusive of reserves) and inferred resources at
Bell Creek are expected to be similar to the levels reported in the
March 2012 resource estimate. Updated resources are estimated at 4.7
million tonnes at an average grade of 4.7 grams per tonne for 710,000
ounces in the indicated category and 6.1 million tonnes at 4.6 grams
per tonne for 904,000 ounces in the inferred category. Ounces
included in the updated indicated resources at Timmins West Mine,
inclusive of reserves, are expected to total 1,060,000 ounces (6.0
million tonnes at an average grade of 5.5 grams per tonne) compared
to the 1,122,500 ounces (5.8 million tonnes at an average grade of
6.0 grams per tonne) of indicated resources in the previous estimate
reported in March 2012. Inferred resources are expected to total
615,000 ounces (3.5 million tonnes at an average grade of 5.4 grams
per tonne) versus the previous estimate of 791,500 ounces (4.3
million tonnes at an average grade of 5.8 grams per tonne). The
reduction in inferred resources largely reflects the removal of
ounces at Thunder Creek where drilling at the periphery of the
deposit did not encounter sufficient continuity to maintain the
ounces in inferred resources. More drilling is required to fully
assess these areas.
First Quarter 2013
During the first quarter of 2013, the Company has continued to make
significant progress towards completing the construction of its
Timmins mining operations, which include the development of Timmins
West Mine and expansion of its milling facility to a capacity of
3,000 tonnes per day. Production for the quarter is expected to total
20,500 - 23,000 ounces, representing growth of between 23% and 38%
from the first quarter of 2012. Mill throughput for the quarter is
expected to average approximately 2,150 tonnes per day, reflecting
the impact of very cold winter conditions, unplanned maintenance in
the crushing circuit and disruptions caused by the ongoing mill
expansion. Mill throughput has improved in March and is averaging
approximately 2,400 tonnes per day. The average grade for the quarter
is estimated at 3.5 - 3.8 grams per tonne compared to the expected
level of 3.9 - 4.1 grams per tonne. For the full year, the Company is
targeting production of 120,000 to 135,000 ounces of gold based on
the expectation of higher average throughput, improved grades and the
planned increase in milling capacity to 3,000 tonnes per day in June.
Conference Call & Webcast
Lake Shore Gold will also host a conference call and webcast on
Tuesday, March 19, 2013 at 10:00 am EST to discuss the Company's
full-year and fourth quarter 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: 416-340-2216 or 866-226-1792
Replay number: 905-694-9451 or 800-408-3053
Re-dial ID: 8256094
Available until: 11:59 pm (March 26, 2013)
Mine development and operating activities at the Company's Timmins
assets are conducted under the supervision of Dan Gagnon, Senior
Vice-President, Operations. Mr. Gagnon is a qualified person ("QP")
as defined by National Instrument 43-101 and has reviewed and
approved the information included in this news release. Mr. Gagnon is
an employee of Lake Shore Gold.
The QP for the Company's reserve estimates at Timmins West Mine and
Bell Creek Mine is Natasha Vaz, P. Eng. As QP, Ms. Vaz has prepared
or supervised the preparation of the scientific or technical
information, and verified the underground drill data, disclosed in
this press release. Ms. Vaz is an employee of Lake Shore Gold.
The QP for the Company's resource estimates at the Timmins West Mine
and Bell Creek Mine is Dean Crick, Director of Geology. As QP, Mr.
Crick has prepared or supervised the preparation of the scientific or
technical information, and verified the underground drill data,
disclosed in this press release. Mr. Crick is an employee of Lake
About Lake Shore Gold
Lake Shore Gold is a mine development and operating company that is
in production and pursuing rapid growth through the advancement of
three wholly owned, multi-million ounce gold complexes in the Timmins
Gold Camp. The Company is in 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
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
Lake Shore Gold
President & CEO
Lake Shore Gold
Vice-President, Investor Relations
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