Today, Lake Shore Gold, the rapidly growing mineral developer focused on dynamic exploration/acquisition, in addition to ongoing activity at the company’s three wholly-owned, multi-million ounce, producing gold complexes in the Timmins Gold Camp in Ontario (Timmins West, Bell Creek, and Fenn-Gib), reported Q1 operating results, which are well in-line for (if not exceeding) 2012 production targets:
• Total Q1 gold production of 16.68k oz from some 160.5k tonnes of ore at 3.4g/t (that’s a 95.1% recovery rate, vastly exceeding 15k guidance figure)
• Gold poured to mill production of 16.18k oz, with total sales at 18.4k oz ($1690 avg. price)
• Cash and bullion of roughly $84.6M ($78.9M in cash and $5.7M in bullion – as of Mar 31)
• On guidance target for 85-100k oz of Au poured for 2012
• Milling Facility expansion by some 50% on target for Q4 completion
An active drilling program, in support of current operations, as well as high-priority evaluation targets, continues to be applied strategically, as evinced by the Q1 work program at the Timmins West Mine. Additionally, infrastructural development at Timmins West and the significant ore delineation achieved via the work program thus far will support the processing of lower grade ores. This activity will continue on into Q2 and makes the better than expected Q1 production, which should be the lowest of any quarter for the year (as production is weighted to the second half of the year), look like a great example of why LSG is being talked about among investors as a rising star of NA gold producers.
President and CEO of LSG, Tony Makuch, took the time to pay homage to the passing of crewman Trevor King, who was felled in the line of duty at Timmins West loading a development round in the underground operation at the 730m level (a rock strike impact caused the fatal injury), stressing that, even though the company was able to exceed Q1 production targets, “there is no more important result than the safety and well being of our people.” Outreach to the family and loved ones has been ongoing and Makuch also took the time to thank those who responded to the scene for their courageous efforts. Safe operations have subsequently recommenced at Timmins West following this unfortunate incident.
Operationally, the company is soldering on, with expansion of the Bell Creek milling facility on target for completion in Q4 2012, ongoing initiatives to shore up capital/operating costs, and continual development focused on Timmins West.
Makuch noted the significant resource updates at the Gold River Trend Property at Timmins West and also at Bell Creek. The reserve and resource update for Timmins West, along with a Preliminary Economic Assessment offer a healthy 10-year lifecycle outlook with solid economics.
The company also managed to raise some $50M via Franco-Nevada Corp. royalties/equity investment of $1.49/share, putting LSG in prime position to execute advancement of Timmins West, as well as support ongoing exploration/acquisition.
Gold has lost about $75 in the last couple of days, looking like it might test a $1600 level and as we sit here midsession, it becomes apparent that the FRS talk of no QE3 amid operational twisting is the primary factor in the move. Silver has moved in proportion, testing the $31 level, where that level and the $30 level look like key floors for the price.
In addition to the overreaction to the Fed’s rhetoric about the end of cheap money, or lack of easing in the near future, we have a short-term reactive state in the market, as people ignore the long-term and the arc itself. Let’s be realistic and pull the 5-year chart on gold and silver though, looking at the position in the context of overall price movements and the paper economy conditions, especially sovereign debt and slowing growth, the future of gold and silver should be obvious to any savvy investor. The bottom line is reading the market though, as we all know, markets tend to be smarter than anyone, so although this feels like a good floor for the metal prices, it is important to realize that there might still be some tough road ahead.
For more information on today’s report, or to learn more about Lake Shore Gold Corp., please visit the company’s website at: www.LSGold.com
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