Company History
2002 was Lake Shore Gold´s inaugural year 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.
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.
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.
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.
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, adjacent to Lake Shore Gold´s Vogel-Schumacher property.
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 July 2007, the Company signed the definitive agreement with the PJV for the acquisition of the Bell Creek assets, which included the Bell Creek Mine property, a hoist, headframe and underground infrastructure, a 1,500 tonne per day mill with permitted tailings facilities, plus all surface infrastructure, including office buildings and road and hydro access.
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) or an uncut grade of 12.29 grams per tonne gold (1,291,000 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”). Pending final confirmation of exploration expenditures, the Thunder Creek property will move 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.
In February 2008, Lake Shore Gold entered into a strategic alliance with Hochschild Mining plc (“Hochschild”), resulting in Hochschild becoming a significant shareholder of Lake Shore Gold and a strategic partner for future projects. Lake Shore Gold and Hochschild entered into an agreement governing the future relationship, including terms with respect to Hochschild´s representation on the Company´s Board of Directors and Hochschild´s shareholding percentage.
On April 16, 2008, the Company announced a revised agreement with Hochschild to raise $79.0 million through a private placement transaction. The transaction would allow Hochschild to increase its interest in Lake Shore Gold to 35.0% of issued and outstanding common shares from 19.9%. 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. 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. As part of the strategic alliance agreement between the two companies, Hochschild´s interest in Lake Shore Gold is limited to 40% on a fully diluted basis until November 22, 2010.
At the end of July 2008, the Company commenced shaft sinking operations at Timmins West. September, the Company announced that it had commenced driving a ramp from surface to access reserves above the 400 metre level. In late 2008, Lake Shore Gold renamed Timmins West the Timmins Mine Project. By the end of 2008, the shaft at the Timmins Mine had been sunk 340 metres while the ramp had advanced 345 metres with the advanced exploration program at the Timmins Mine on track for completion by the end of 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. The Company is targeting 30,000 ounces of gold in 2009 from material mined as part of the Timmins Mine advanced exploration program and processed at the Bell Creek Mill.
On June 24, 2009, the Company announced drill results from its 60%-owned Thunder Creek property (Lake Shore Gold is the project operator). The results included 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 Timmins Gold Camp (drill results for Thunder Creek are reviewed in more detail under Properties - Thunder Creek).
On August 27, 2009, the Company announced an agreement to acquire all the outstanding shares of West Timmins Mining Inc. The acquisition will create a new large-scale, wholly owned Timmins West Gold Mine Complex, covering 130 square kilometers on the western Timmins mining trend and accelerate development of the Thunder Creek property. The acquisition was completed on November 6, 2009.
On October 23, 2009, the Company entered into an agreement with Goldcorp Canada Ltd. , manager of the Porcupine Gold Mines Joint Venture (“PJV”) and Goldcorp Inc., for the purchase of approximately 28 square kilometers of prospective exploration property in the surrounding vicinity of Lake Shore Gold´s 100% owned Bell Creek Complex for consideration of $20 million ($15 million in cash and the remainder in shares of Lake Shore Gold). Areas included in the transaction range from a project with historic resources, Marlhill Mine, to early stage exploration targets, all located along the New Mine Trend, host to the PJV´s Hoyle Pond Mine and Pamour operation. The transaction is subject to regulatory approvals and is expected to close in December 2009.
