LAKE SHORE GOLD RAPIDLY ADVANCES THREE COMPLEXES IN TIMMINS CAMP

Its capital spending in Timmins on mine development and mill expansion projects in 2013 is forecast at approximately $80 million, says Lake Shore Gold Corp.

An additional $10 million is budgeted for exploration, largely in-mine drilling.

On Jan. 10, the company released operating results for the full year and fourth quarter 2012 and announced production and cost guidance for 2013.

Highlights included:

• Gold production in 2012 of 85,782 ounces (719,298 tonnes running 3.9 grams per tonne), with gold poured from 2012 production of 85,184 ounces, in line with company guidance

• Gold production in fourth quarter 2012 totaling 23,738 ounces (181,575 tonnes running 4.2 grams per tonne), with gold poured of 24,041 ounces

• Key 2012 mine development and expansion objectives achieved with mining and milling capacity increased 25% to 2,500 tonnes per day (on track to reach 3,000 tonnes per day during second quarter 2013)

• Targets for 2013 include: strong production growth to between 120,000 and 135,000 ounces of gold, cash costs between US$800 and US$875 per ounce (including royalties),

•  Cash and bullion inventory at Dec. 31, 2012 of approximately $61 million.

Tony Makuch, president and CEO of Lake Shore Gold, commented: “We finished 2012 strong with higher production and improved grades during the fourth quarter.

For the full year, we achieved our production guidance, producing 85,782 ounces and pouring 85,184 ounces. Equally important, we met our key mine development and mill expansion objectives, including increasing both our mining and milling capacity by 25% to 2,500 tonnes per day. We remain on track to increase production capacity to 3,000 tonnes per day during the second quarter of this year.

The progress we achieved in 2012 has positioned us for significantly higher production, reduced spending and improved cash operating costs in 2013.”

Production for the year is targeted at between 120,000 to 135,000 ounces of gold.

Timmins Mine is located at the west end of the Timmins gold mining district, 18 kilometres west of the centre of the City of Timmins and 42 kilometres by road from the Bell Creek Mill, where material from the Timmins West Mine is processed. As of Jan. 1, 2012, Timmins West is the name given to the combined operations of the Timmins Deposit and the adjacent Thunder Creek Deposit. Both deposits are in commercial production effective Jan. 1, 2012.

Only the Timmins Deposit was in commercial production during 2011.

On Jan. 21, 2013 Lake Shore announced the results from 35 holes and two extension holes totalling 27,411 metres drilled as part of the company’s 2012 exploration program at its 144 Property, adjacent to the Thunder Creek Deposit at Timmins West Mine.

The 35 holes, and one of the extension holes, were designed to test the southwest extension of the TC-144 alteration zone from Thunder Creek in three main areas including the 144 Gap, 144 North and 144 South areas. One extension hole was drilled to test the down plunge extension of a large syenite stock located immediately south of Thunder Creek with strong similarities to the syenite stock at the Thunder Creek Deposit.

Makuch commented: “The results from recent drilling at 144 highlight the significant potential to continue to grow and expand the Timmins West Mine operation, including exploring the gap between Thunder Creek and 144 as well as the 144 North and South Zones. Based on the latest results, we have discovered new areas of mineralization in the 144 Gap 850 metres south of Thunder Creek, doubled the depth of known mineralization at 144 North and intersected new mineralization at 144 South.

We have also gained important new information regarding controls for the mineralization and identified large syenite stocks at both the 144 North and 144 South areas which are similar to that found at Thunder Creek. The information we are gaining is very valuable and provides encouragement that the large mineralized systems that we are exploring along the six kilometre long TC-144 trend will in time contribute to the continued strong growth in resources at our Timmins West Mine operation.”

The Bell Creek Mine property anchors Lake Shore Gold’s 32 square kilometre Bell Creek Complex. Of the total National Instrument (NI 43-101) resources at the Bell Creek Complex of 828,800 ounces in the measured and indicated categories and 1,122,600 ounces in the inferred category, 646,400 ounces of measured and indicated and 953,800 ounces of inferred are located at Bell Creek Mine, with the majority of ounces being located in the North A Deep Zone, a new zone discovered in 2010.

The remaining resources at the Bell Creek Complex are initial, shallow resources at the nearby Vogel/Schumacher and Marlhill properties. These properties, as well as others, primarily Wetmore, are the other key properties within the Bell Creek Complex land position, all of which have significant exploration potential.

During the third quarter of 2012, the company’s mill processed a total of 193,999 tonnes for a record average rate of 2,108 tonnes per day, in excess of the mill’s current operating capacity of 2,000 tonnes per day. The third quarter 2012 throughput level compared to average throughput of 2,013 tonnes per day during the second quarter of 2012 and 1,890 tonnes per day during the third quarter of 2011.

Higher throughput levels compared to the same period in 2011 largely resulted from the availability of more feed from the company’s mining operations, primarily Timmins West Mine, as well as the impact of greater mill availability, largely reflecting more effective maintenance scheduling and improvements to key parts of the milling circuit. Recoveries at the mill remained strong, reaching a new quarterly record of 97.1% during the third quarter of 2012.

The company is currently expanding the Bell Creek Mill to a capacity of 3,000 tonnes per day. The expansion is being completed in two phases, with the first phase being completed during the fourth quarter of 2012, As a result of completing this phase, capacity at the mill has been increased 25% to 2,500 tonnes per day.

The second phase, to take the mill’s capacity to 3,000 tonnes per day, is expected to be completed during the second quarter of 2013. Higher throughput levels will support strong production growth in 2013 and additional growth in 2014.

The company has another development, known as the Fenn-Gib Project. It is located approximately 60 kilometres east of Timmins along the east extension of the Destor Porcupine Fault Zone (DPFZ) and Pipestone Fault Zone (PFZ) near a major dilatent zone.

Lake Shore acquired Fenn-Gib in August 2011 from Barrick Gold Corporation. The project provides the company with significant new mining and exploration opportunities, including the potential to establish a large-tonnage, open-pit mining operation in support of its continued rapid growth following the development of its core Timmins assets.

On May 1, 2012, significant expansions of mineralization were announced to the east and to depth, drilling in untested gaps confirmed expansion potential to the north and west, and multiple new exploration targets were identified, all within 1.5 km of the existing resource at Fenn-Gib.