The Fenn-Gib Project 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 Gold 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.

Highlights

November 17, 2011 – Lake Shore Gold announces an initial resource at the Fenn-Gib project including 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. The Company reports excellent potential to add to the resource with further work given that there is only limited drilling below 300 metres and to the north, east and west of the Main Zone.

October 28, 2011 – Lake Shore Gold announces results of confirmation and extension drilling at Fenn-Gib, including 1.31 gpt over 414.00 metres. The results confirm the geological model, highlight the potential for depth extensions and expand the shallow mineralization at Fenn-Gib by 200 metres to the north. Company announces that it is targeting an initial resource at Fenn-Gib by end of 2011.

August 18, 2011 – Lake Shore Gold acquires Fenn-Gib from Barrick Gold Corporation for 14.9 million common shares of the Company, representing approximately 3.9% of outstanding common shares. (See press release dated August 18, 2011 for more details).

History

The Fenn-Gib area has been actively explored since 1919. The most recent work consisted of diamond drilling completed by Cominco (1985), Corona (1986), Pangea Goldfields (1994-2000) and St. Andrew Goldfields (1998-1999)

1999 – MRDI Canada completed a scoping study completed on behalf of Pangea Goldfields including construction of geological block model and preliminary open-pit resource estimates.

2000 – Barrick Gold Corporation acquired Pangea and, subsequent to the transaction, only minor exploration and evaluation work was performed.

2005 – Barrick completes a series of pit simulations based on the MRDI geological block model, with the results recommending that the project had sufficient merit to warrant additional studies.

August 2011 – Lake Shore Gold acquired Fenn-Gib project from Barrick.

Project Overview

The Fenn-Gib Project is located approximately 60 kilometres east of Timmins and 20 kilometres east of Matheson (see Figure 1). The Project consists of 171 mining claims, patents and leases covering approximately 29 square kilometres. Geologically, Fenn-Gib lies along the east extension of the DPFZ and PFZ near a major change in trend from southeasterly to east–west which is interpreted as a major dilatent zone. Associated with the interpreted dilatent zone are a number of syenitic intrusions and a major east-west trending Arrow fault. Fenn-Gib overlies a southeast trending contact between mafic volcanic (Kidd Munroe Assemblage) and sedimentary rocks (Hoyle Group) which follows the trend of the PFZ and has been intruded by a series of mafic to syenitic intrusions. A portion of the land position being acquired lies approximately four kilometres to the south of the main Fenn-Gib Project and covers 6 kilometres of strike length along the DPFZ. This land position, called Guibord Main, contains a mixture of mafic to ultramafic volcanics, which have also been intruded by syenite. This geologic setting has some strong similarities to the geology found west of Timmins where the Company is in commercial production at its Timmins Mine and is developing the adjacent Thunder Creek deposit.

Based on recent evaluations by the Company, the Fenn-Gib Project hosts strong mining and exploration potential with most significant gold mineralization identified to date being at the Main Zone, located on the west side of the main Fenn-Gib property. Mineralization in the Main Zone consists of broad disseminated mineralization surrounding a distinct flexure of the PFZ and mafic volcanic-sedimentary contact where it has been intruded by mafic and syenitic intrusive rocks. The most common style of gold mineralization consists of quartz-carbonate veins, stringers and breccias hosted within intensely altered volcanic rocks and syenitic intrusions with lesser amounts being associated with fine crystalline pyrite in altered sediments and volcanic rocks.

Past work at the property was conducted mainly by Pangea Goldfields and included diamond drilling, metallurgical testing, preliminary geology and mineralization modeling and baseline environmental studies. Past diamond drilling included approximately 350 diamond drill holes (92,000 metres) with approximately 320 holes (86,000 metres) being drilled on the Fenn-Gib property and the vast majority of these holes being focused near the Main Zone within 250 metres of surface. Most of the remaining holes were drilled at the Guibord Main property. The best results from past drilling were from the Main Zone and defined a mineralized envelope with a minimum 1 kilometre strike length and widths of up to 250 metres containing numerous broad zones of mineralization such as 1.79 grams per tonne (“gpt”) over 187.45 metres (“m”) in FE-88-10, 1.93 gpt over 169.90m in FE-96-27, 1.85 gpt over 163.50m and 1.26 gpt over 206.60m in FE-94-09, and 1.93 gpt over 128.85m in FE-9-31. Drilling to the east, west and to depth of the Main Zone is very limited with the potential for further expansion considered excellent. There have yet to be NI 43-101 compliant evaluations completed on the Fenn-Gib Project.

Initial National Instrument (NI) 43-101 Resource

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.

Resource estimation was completed within a newly constructed 3D model of geological domains and the Ordinary Kriging interpolation method. Kriging was completed using 10 by 5 by 10 metre blocks and a total of 5,991 composites of 5 metre length in the Main Zone with gold assays of original 1.5 metre samples capped to 25 grams per tonne. Review of data suggests the grade estimates comprise approximately 10 % dilution. Validation of the block model was done by visual comparisons of grade data from the block model and drill holes on plans and sections, as well as through cross validation studies using drill hole and block model data which showed excellent results.

Tabulation of "in pit resources" was completed from within a Whittle optimized pit shell generated using a gold price of US$1,190 per ounce and a cut off grade of 0.50 gpt. Maximum dimensions of the final pit are 1.5 km long by 800 metres wide by 460 metres deep.

Included with the "in pit" portion of the mineral resource estimate is a sensitivity analysis from the base case cut-off grade of 0.50 gpt using various cut off grades between 0.35 gpt to 0.60 gpt. The analysis indicates the robust nature of the overall resource at these cut off grades.

Exploration Potential

Lake Shore Gold believes that the potential to extend and expand the Fenn-Gib resource is excellent given that there is only limited drilling below 300 metres and to the north, east and west of the Main Zone. On October 18, 2011, the Company reported very encouraging drill results from its first four holes at Fenn-Gib, including expanding the shallow mineralization by 200 metres to the north, with this expansion not included in the initial resource. Of the four holes completed, three were confirmation (“twin”) holes and 1 was an infill/expansion drill hole. The twin holes drilled and related check sampling work completed clearly demonstrated that past results were holding up well, with there being some upside potential. The results from Hole FG-11-04, the infill/expansion hole which was drilled into an untested gap, included an intercept of 1.31 gpt over 414.00 metres and provided strong confirmation of the geologic model, demonstrated that mineralization extends from the syenite into the mafic volcanics and continues to depth uncovered the 200 metre expansion of shallow mineralization to the north mentioned above.

Also contributing to the potential of Fenn-Gib are silver values, which are not factored into the initial resource estimate. The average gold:silver ratio at Fenn-Gib of about 2:1, which compares very favourably to the silver values found in most gold deposits in the Timmins Camp, which are typically closer to 6:1.