History
Lake Shore Gold was formed in 2002 as an explorer for gold and base metals in the Canadian Shield. Through business arrangements with Aurora Platinum Corp., the Company was able to secure both the technical expertise and a portfolio of prospective mineral properties from the moment of its inception.
The Company focused its search initially in the principal gold camps of the Abitibi Belt and in western greenstone belts in the northwest of Ontario and western Québec. Through its early acquisition of the Timmins West Gold Property, the Company quickly established itself as an aggressive junior exploration company holding an interest in a defined high-grade resource.
2004
On September 10, 2004, the Company released the results of a National Instrument 43-101 compliant resource calculation audit by Watts, Griffis and McOuat Limited on the Timmins West Gold Property. The audit reported an indicated resource of 1,369,000 tonnes at an uncut grade of 16.45 grams per tonne gold or 724,000 ounces of gold. The resource estimate represented a 200% increase over the 2002 uncut resource estimates.
On December 31, 2004 Lake Shore Gold and Holmer completed a plan of arrangement pursuant to which Lake Shore Gold acquired 100% of Timmins West by acquiring all of the issued and outstanding shares of Holmer. Holders of Holmer shares received one Lake Shore Gold share for every 1.5 Holmer shares.
2005
In March 2005, the Company purchased 100% of the Black Hawk Mining Inc. interest under the mining lease on the Vogel gold property. The property, which is subject to a maximum 3% net smelter return royalty, consists of one mining lease (approximately 160 acres) in Hoyle Township, within the eastern part of the Timmins Gold Camp.
In December 2005, Lake Shore Gold signed a 20-year lease agreement with the Canada Trust Company (surviving trustee of Frederick William Schumacher) to acquire the Schumacher estate property, which consists of one patented lot covering 64 hectares located contiguous to and west of Lake Shore Gold´s Vogel property. The property is subject to a production royalty of 2% of net smelter returns.
2006
In November 2006, Lake Shore Gold and Inco signed an agreement whereby Lake Shore Gold purchased Inco´s right to a net smelter return royalty (the “Abitibi Royalty”) in respect of certain properties acquired by Lake Shore Gold (the “Abitibi Properties”) utilizing Inco data, including Timmins West, Thunder Creek and Blakelock.
2007
In January 2007, Lake Shore Gold signed a Letter Agreement with Goldcorp Canada Ltd., manager of the Porcupine Joint Venture (the “PJV”), a joint venture between Goldcorp Canada Ltd. and Kinross Gold Corporation, to acquire the PJV´s Bell Creek Mine and Mill located in the Timmins Gold Camp. The transaction was completed in December 2007.
In April 2007, Lake Shore Gold received notice of acceptance of its certified closure plan for the Timmins West project from the Ontario Ministry of Northern Development and Mines, allowing Lake Shore Gold to initiate an advanced exploration program.
In August 2007, Lake Shore Gold released the results of a prefeasibility study for the Timmins West project, supporting the economic viability of production.
In September 2007, Lake Shore Gold entered into an option joint venture agreement with Aurizon Mines Ltd. (“Aurizon”) to acquire a 50% interest in the Casa Berardi Exploration Property surrounding Aurizon´s Casa Berardi Mine, outside of Aurizon´s existing mining leases.
In October 2007, Lake Shore Gold filed a Technical Report with respect to its Timmins West property estimating an indicated resource of 3,268,000 tonnes at a cut grade of 8.62 grams per tonne gold (905,000 contained ounces gold). As well, the Technical Report included an inferred mineral resource estimated at 968,000 tonnes with an average grade of 5.62 grams per tonne gold.
In December 2007, Lake Shore Gold completed the requirements to vest a 60% interest in Thunder Creek from West Timmins Mining Inc. (“West Timmins”), with the Thunder Creek property subsequently moving forward as a 60/40 pro-rata funded joint venture between Lake Shore Gold and West Timmins. Lake Shore also completed its acquisition of the Bell Creek Mine and Mill.
2008
In February 2008, Lake Shore Gold entered into a strategic alliance with Hochschild Mining plc (“Hochschild”).As part of the strategic alliance, Hochschild obtained a 19.99% interest in the Company through a private placement involving the acquisition of 28.2 million commons shares at $2.30 per share for total consideration of $64.5 million.
On April 16, 2008, the Company announced a revised agreement with Hochschild. The transaction was approved by shareholders, with over 90% of votes cast in favour, at the Company´s annual general and special meeting on May 15, 2008. The revised agreement provided Hochschild with the right to acquire approximately 32.9 million common shares at a price of $2.40 per share, which it did through a private placement transaction that closed on June 17, 2008 for total consideration of $79.0 million. On June 26, 2008, Hochschild acquired an additional 11.8 million common shares from a subsidiary of FNX Mining Company at a price of $1.82 per share, increasing its interest to 40% on a fully diluted basis.
2009
In late March 2009, the Company began processing development material from the Timmins Mine advanced exploration program at the Bell Creek Mill, which as of the end of 2008 had been refurbished to a capacity of 800 tonnes per day.
On June 24, 2009, the Company announced drill results from the Thunder Creek property including Hole TC09-68b which intersected 12.75 grams per tonne gold over 83.40 metres. The results were among the highest grade intercepts drilled in the Timmins Gold Camp (drill results for Thunder Creek are reviewed in more detail under Properties - Thunder Creek).
On November 6, 2009, Lake Shore Gold completed a transaction to acquire the outstanding shares of West Timmins Mining Inc., thereby acquiring 100% of the Thunder Creek property. Through the transaction, Lake Shore Gold established the next major gold mining complex in the Timmins Camp. The Timmins West Gold Mine Complex includes the Timmins Mine, the Thunder Creek property and an extensive land package surrounding these assets. The transaction also provided the Company with an extensive package of Mexican exploration properties with considerable upside potential.
On December 17, 2009, Lake Shore Gold acquired from Goldcorp Canada Ltd. and Goldcorp Inc. 28 square kilometers of prospective exploration property. The land package, which surrounds Lake Shore Gold’s 100% owned Bell Creek Complex, included properties ranging from a project with a historic resource, Marlhill Mine, to properties where exploration drilling had shown strong evidence of gold mineralization, as well as a number of early stage exploration targets.
2010
In January 2010, the Company announced it had acquired a 26.26% interest (41.59% assuming exercise of warrants with no additional dilution) of RT Minerals Corp.
On May 27, 2010, Lake Shore Gold sold the Company's 50% ownership interest in the Ti-pa-haa-kaa-ning Joint Venture to Northern Superior Resources inc. in return for the issuance from treasury of 25,000,000 common shares of Northern Superior and warrants to purchase 12,500,000 Northern Superior common shares at a price of $0.30 per share for 5 years, as well as other consideration.
On October 26, 2010, the Company announced that it had exercised the 12,500,000 warrants of Northern Superior it held, bringing its total interest in Northern Superior to 38,200,000 shares, representing a 25.87% interest in the company.
On November 3, 2010, the Company announced that Hochschild Mining plc had sold through a bought deal financing 109,000,000 common shares of Lake Shore Gold to a syndicate of investment banks, reducing its interest in the Company to 5.7%. On December 2, 2010, Hochschild announced an agreement to sell the remaining 5.7% interest in the Company (transaction closed in February 2011). As a result of these transactions, Lake Shore Gold is positioned to move forward as a widely held Canadian resource Company.
On December 1, 2010, Lake Shore Gold announced an initial resource estimate for the Company’s wholly owned Bell Creek Mine property located in Timmins, Ontario. The reported resource contained 8,427,000 tonnes with an average grade of 4.40 grams per tonne Au (“gpt”) for a total of 1,192,900 contained ounces in the inferred category and 1,790,000 tonnes at 4.36 gpt for 251,200 contained ounces in the measured and indicated categories. The base case resource was estimated assuming a long term gold price of US$1,125 per ounce and a cut off grade of 2.20 gpt. Approximately 80% of the base case measured and indicated resources, and 50% of inferred resources, are contained in the North A Zone, which has an estimated average horizontal width of 6.9 metres.
2011
On January 6, 2011, the Company announced that it had declared commercial production at Timmins Mine effective January 1, 2011. The mining rate at Timmins Mine averaged 1,700 tonnes per day (“tpd”) during December 2010 and approximately 1,600 tpd for the fourth quarter of 2010, exceeding the target rate for the Mine of 1,500 tpd and supporting production levels.
On January 31, 2011, the Company announced it had acquired an additional 6,730,769 shares of Northern Superior at a price of $0.80 per common share. As a result of the transaction, the Company’s ownership interest in Northern Superior increased to a total of 44,930,769 shares, representing a 25.5 % interest in the company.
On May 2, 2011, the Company announced initial National Instrument 43-101 resources at the Vogel and Marlhill Mine properties. The combined resources from the two properties contain a total of 2,614,000 tonnes of both open pit and underground resources at a combined average grade of 2.17 grams per tonne Au (“gpt”) for 182,400 contained ounces in the indicated category and 1,459,000 tonnes at 3.60 gpt for 168,800 contained ounces in the inferred category. The new resources brought the total current resources at the Bell Creek Complex to 433,600 ounces of Measured and Indicated and 1,361,700 ounces of inferred resources.
On August 22, 2011, the Company announced that it had acquired from Barrick Gold Corporation (“Barrick”) the Fenn-Gib and Guibord Main properties (collectively known as the “Fenn-Gib Project”). The Fenn-Gib Project provides an opportunity to add a large-tonnage, open-pit mining operation to the Company’s portfolio of assets. Total consideration to Barrick was 14.9 million common shares of the Company (representing a 3.9% interest in the Company).
On September 15, 2011, the Company and Revolution Resources Corp. announced that they had entered into a letter agreement through which Revolution may acquire a 60% interest in the Company’s portfolio of Mexican exploration assets, including the Universo, Montaña de Oro, Lluvia de Oro and La Bufa land positions, in exchange for a 9.9% equity interest in Revolution, investment requirements related to the properties, and other consideration. In addition, by meeting other terms, Revolution may acquire a 100% interest in the properties.
On November 16, 2011, the Company released a large, high-grade initial resource for the Thunder Creek project. The resource included 521,600 ounces average 5.64 grams per tonne in the indicated category and 510,000 ounces average 5.89 grams per tonne in the inferred category. Particularly significant, was the identification of a 200 metre interval between the 600 and 800 metre levels, surrounding the Company’s existing drift and infrastructure on the 730 Level, that contains approximately 650,000 ounces with an average grade of close to 6 grams per tonne and averaging over 3,250 ounces per vertical metre. The current resource extends to around the 900 metre level and the potential to discover new zones at depth and along strike, and to optimize grades, is considered excellent.
On November 17, 2011, Lake Shore Gold announced the completion of an initial NI 43-101 resource estimate for the Fenn-Gib project. The resource estimate included a total of 40.8 million tonnes grading 0.99 gpt for a total of 1.30 million contained Au ounces in the Indicated category and 24.5 million tonnes at 0.95 gpt for a total of 0.75 million ounces in the Inferred category. Most of the resources are in the Main Zone, which is located in the northern portion of the Fenn-Gib property. With the completion of the Creek and Fenn-Gib resources, Lake Shore Gold’s total resource based increased to 6.3 million ounces (3.1 million ounces in the measured and indicated categories and 3.2 million ounces of inferred).
2012
On January 1, 2012, the Company combined the operations of the Timmins Deposit and Thunder Creek Deposit into a single operation called the Timmins West Mine. In addition, the Company changed its accounting practices to report production from both Thunder Creek Deposit and Bell Creek Mine as commercial production. In 2011, only production from Timmins Deposit was commercial production.
On February 15, 2012, the Company released an updated resource estimate for Timmins West Mine totaling 1,122,500 ounces of gold (5,826,000 tonnes grading 5.99 grams per tonne) in the indicated category and 791 ,500 ounces of gold (4,272,000 tonnes grading 5.76 grams per tonne) in the inferred category (using a base case 1.5 grams per tonne cut-off grade).
On February 22, 2012, the Company announced that it had nearly tripled the ounces in resource and doubled the grade at the Gold River Trend, with the new resource totaling 117,400 ounces of gold (690,000 tonnes grading 5.29 grams per tonne) in the indicated category and 1,027,800 ounces of gold (5,273,000 tonnes grading 6.06 grams per tonne) in the inferred category.
On February 28, 2012, a Preliminary Economic Assessment (“PEA”) was released for Timmins West Mine, representing the first time the resources at the Timmins and Thunder Creek deposits have been evaluated as a fully integrated, long-term mining operation. The PEA estimated 10 years of production with 1.4 million ounces produced over that period; average cash operating costs of US$625 per ounce, and favourable project economics based on a number of pricing and exchange rate assumptions. Total growth capital in the PEA is assumed at $160 million, including $67 million for the expansion of the Company’s milling facility and other milling costs, with an additional $225 million of sustaining and other capital to be spent after 2012 over the remaining 9 years of production covered under the PEA.
On March 30, 2012, the Company announced more than a 150% increase in measured and indicated resources at the Bell Creek Mine, to 646,400 ounces (4,249,000 tonnes grading 4.73 grams per tonne). Inferred resources were also updated to 953,800 ounces (6,088,500 tonnes grading 4.87 grams per tonne). The updated resources reflected a high conversion rate of previous inferred resources to the measured and indicated categories as well as the Company’s ability to continue to add ounces to the total resource base at Bell Creek Mine.
On April 2, 2012, the Company announced a new reserve for the Timmins West Mine totaling 823,800 ounces (4,922,000 tonnes grading 5.21 grams per tonne). The new reserve is sufficient to support approximately five years of production and achieved the Company’s objective of establishing and maintaining a three to five year reserve base ahead of production.