First Quarter 2012


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First Quarter 2012

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First Quarter 2012

  1. 1. Lake Shore Gold First Quarter 2012Conference Call & Webcast May 11, 2012 TSX, NYSE Amex: LSG
  2. 2. Forward Looking Statements Information included in this presentation relating to the Companys expected production levels, production growth, costs, cash flows, economic returns, exploration activities, potential for increasing resources, project expenditures and business plans are "forward-looking statements" or "forward-looking information" within the meaning of certain securities laws, including under the provisions of Canadian provincial securities laws and under the United States Private Securities Litigation Reform Act of 1995 and are referred to herein as "forward-looking statements." The Company does not intend, and does not assume any obligation, to update these forward-looking statements. These forward- looking statements represent managements best judgment based on current facts and assumptions that management considers reasonable, including that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts, labour disturbances, interruption in transportation or utilities, or adverse weather conditions, that there are no material unanticipated variations in budgeted costs, that contractors will complete projects according to schedule, and that actual mineralization on properties will be consistent with models and will not be less than identified mineral reserves. The Company makes no representation that reasonable business people in possession of the same information would reach the same conclusions. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In particular, delays in development or mining and fluctuations in the price of gold or in currency markets could prevent the Company from achieving its targets. Readers should not place undue reliance on forward- looking statements. More information about risks and uncertainties affecting the Company and its business is available in the Companys most recent Annual Information Form and other regulatory filings with the Canadian Securities Administrators, which are posted on sedar at, or the Company’s most recent Annual Report on Form 40-F and other regulatory filings with the Securities and Exchange Commission. QUALITY CONTROL Lake Shore Gold has a quality control program to ensure best practices in the sampling and analysis of drill core. A total of three Quality Control samples consisting of 1 blank, 1 certified standard and 1 reject duplicate are inserted into groups of 20 drill core samples. The blanks and the certified standards are checked to be within acceptable limits prior to being accepted into the GEMS SQL database. Routine assays have been completed using a standard fire assay with a 30-gram aliquot. For samples that return a value greater than three grams per tonne gold on exploration projects and greater than 10 gpt at the Timmins mine and Thunder Creek underground project, the remaining pulp is taken and fire assayed with a gravimetric finish. Select zones with visible gold are typically tested by pulp metallic analysis on some projects. NQ size drill core is saw cut and half the drill core is sampled in standard intervals. The remaining half of the core is stored in a secure location. The drill core is transported in security-sealed bags for preparation at ALS Chemex Prep Lab located in Timmins, Ontario, and the pulps shipped to ALS Chemex Assay Laboratory in Vancouver, B.C. ALS Chemex is an ISO 9001-2000 registered laboratory preparing for ISO 17025 certification. QUALIFIED PERSON The Company’s Qualified Persons (“QPs”) (as defined in National Instrument 43-101, “Standards of Disclosure for Mineral Projects”) for diamond drilling projects at the Timmins deposit surface; Thunder Creek, Gold River Trend and 144 properties; Bell Creek Mine; and Casa Berardi optioned property are Jacques Samson, P.Geo., Stephen Conquer, P.Geo, and Keith Green, respectively. Dean Crick, P.Geo. is the QP for the Timmins deposit and Thunder Creek underground drilling projects, and Bob Kusins, P.Geo., is the QP for resource estimation at all of the Company’s properties. As QPs, Messrs. Samson, Conquer, Green, Crick and Kusins have prepared or supervised the preparation of the scientific or technical information for their respective properties as provided in this presentation. Messrs., Samson, Conquer, Kusins, Crick and Green are employees of the Company.2
  3. 3. LSG – Excellent Progress in Q1/12  Exceeded targets for production and cash costs Actual Target Gold poured (ozs) 16,180 15,000 Cash costs (US$/oz) 1,048 1,450  Three consecutive quarters of meeting or exceeding targets  On schedule with extensive development program at Timmins West Mine  Poised for strong production growth & free cash flow  Mill expansion on track for completion by late 2012 Timmins Deposit reaches 100,000 ounces of total gold production3
  4. 4. LSG – Excellent Progress in Q1/12  Updated reserve for Timmins West Mine  4,922,000 tonnes @ 5.21 gpt for 823,400 ozs  Supports the first 5 Year Mine Plan  Strong growth in resources  3.4M ozs of Measured and Indicated, 3.7M ozs inferred  Released Preliminary Economic Assessment for Timmins West Mine  Reported continued exploration success  Announced major expansion of Fenn-Gib mineralization  Strengthened balance sheet  $50M from Franco-Nevada royalty and equity transactions  $70M Sprott credit facility (expected to close in late May)4
  5. 5. LSG: Q1/12 Operating Highlights Q1/12 Gold poured (ozs) 16,180 Total tonnes (ozs) 160,510 Average grade (gpt) 3.40 Total Production 16,680 Cash Costs* ($/t) 109 Cash Costs* (US$/oz) 1,048 * Non-GAAP measure.  Surpassed expectations for throughput and unit costs ($109/tonne), average grade largely in line 5
  6. 6. LSG: Q1/12 Financial Highlights Q1/12 Total gold sold (ozs) 18,474 Commercial gold sales (ozs) 14,437 Average price (US$/oz) 1,690 Proceeds from gold sales ($M) 31.3 Proceeds from commercial gold sales ($M) 24.6 Cash earnings from operations* $ millions 9.4 Net loss $ millions 3.0 $ per share 0.01 * Non-GAAP measure.  Net loss largely reflected non-cash charges and impact of high level of mine development on operating costs 6
  7. 7. LSG: Q1/12 Expenditures $ millions 2012 Projects 24.9 Exploration 4.5 Mill Expansion 14.1 Total 43.5  On track with full-year spending  Timmins West Mine development: $93M  Mill expansion/other costs: $67M  Bell Creek Mine: $18M  Exploration: $15M 7
  8. 8. LSG – Enhanced Balance Sheet StrengthFranco-Nevada US$35 million from sale of 2.25% NSR related to Timmins West Complex $15 million related to sale of 10,050,591 shares @ 1.49/shareSprott Resource Lending Partnership Agreement $35 million gold loan – repayment based on 29 monthly cash payments linked to gold price $35 million standby line of credit – Interest rate of 9.75% compounded monthly Expected to close later in May Addressed balance sheet requirements with8 little dilution to shareholders
  9. 9. 2012 – Funded for Growth(1) Sources of Cash $ millions Cash and bullion inventory (January 1, 2012) 66.2 Franco-Nevada royalty & equity investment 50.0 Gold Loan (expected close May/12) 35.0 Standby Line (expected close May/12) 35.0 Operating Cash Flow(2) 75.5 Total sources of cash 261.7 Uses of Cash $ millions Development of Timmins West Mine 93.0 50% mill expansion and other improvements 67.0 Advancement of Bell Creek Mine 18.0 Exploration 15.0 Corporate G&A 10.5 Financing costs 5.0 Total uses of cash 208.5 (1) Examples of forward-looking information9 (2) Assumptions include 92,500 ozs Au sold (middle of range for gold poured), US$850/oz cash cost (middle of range), US$1,650/oz gold price, C$/US$ exchange rate: $0.98
  10. 10. LSG – Effectively Executing 2012 Plan  On schedule with extensive development program  2,900 metres of total capital development  33,000 metres of definition and delineation drilling  16,180 ounces poured in Q1/12, exceeded target of 15,000 ounces  Processed 16,680 ozs in Q1/12 (160,510 t grading 3.40 gpt)  Timmins Mine: 133,044 tonnes @ 2.92 gpt  Bell Creek: 47,465 tonnes @ 4.54 gpt  Cash costs of US$1,048 per ounce, better than budget of US$1,450 per ounce  Mill expansion on track for 3,000 tonnes per day by late 201210  Tracking well to plan to date in Q2/12
  11. 11. Timmins Deposit 565L Setting Ourselves UpFor Rapid Growth 585L In Q1/12 610L  Development in UM Zone below 650L Shaft  650L  Working to establish multiple mining 670L  horizons between 650L 690L  and 730L 710L  Recently commenced 730L  stoping on 730L 750L  790L  810L 11
  12. 12. Timmins Deposit 565L Setting Ourselves UpFor Rapid Growth 585L  610L  Shaft  650L  670L  690L  710L  730L  750L  790L  810L  2013 +12
  13. 13. Thunder Creek DepositSetting Ourselves UpFor Rapid GrowthIn Q1/12: Ramped from 370L Thunder Creek  to 395 L Lower Mine Ramped from 730L 660L  up to 695 L and down to 765L Recently began 695L  stoping above 730L Targeting multiple 730L  mining horizons between the 660L 765L  and 800L 800L  *Examples of Forward Looking Statements.13
  14. 14. Thunder Creek DepositSetting Ourselves UpFor Rapid Growth Thunder Creek  Lower Mine 660L  695L  730L  765L  800L 14 2013 +
  15. 15. Shaft Bell Creek Complex Bell Creek Mine Mined out areas 47,465 tonnes @ 4.54gpt Recent mining in Q1/12 North A Deep ramp North A reached 535L (total “Deep” vertical advance of 37m) Development of upper stopes in North A Deep and North B zones completed Pillar recoveries in North A Main Zone largely completed in Q1/12 Diamond drilling program in North A Deep Zone ongoing15 * Examples of Forward Looking Statements. Conceptual view of planned work in 2012
  16. 16. 2012 Production and Cash Costs(1)  Production to reach 25,000 to 30,000 per quarter by Q3/12, Company to be positioned for strong growth in 2013  Cash costs to improve, to end year in low US$700/oz range, and to improve below US$700/oz in 2013 Target US$1,450 Actual US$1,048 16,180 (Actual) Denotes target range16 (1) Examples of Forward Looking Statements,
  17. 17. Mill Expansion – Site Construction Crusher 6,000 tonne Ore bin SAG Mill Building Truck Dump New Leach Tanks New Thickener17
  18. 18. Mill Expansion – Site Construction18
  19. 19. Fenn-Gib – Potential Large Open Pit Mine  Current resources: (within pit shell)  M&I - 1.3M ozs (40.8M tonnes @ 0.99 gpt)  Inferred - 0.75M ozs (24.5 tonnes @ 0.95 gpt)  Excellent exploration upside – 200 metre expansions announced to the north, east and to depth  New exploration targets identified  Potential large-scale, open-pit operation19
  20. 20. Fenn-Gib – Majors Expansions Announced 11-07 0.89/260.50m 11-06 12-32 Incl. 1.93/41.00m 1.01/22.10m 0.97/140.00m Incl. 2.48/5.00m 11-05 1.26/324.00m 11-08 Incl. 2.27/50.50m 12-27 0.67/189.50m 0.63/79.4m and 3.41/63.00m 12-17 Incl. 2.08/21.00m Incl. 0.82/28.00m 2.24/39.40m 0.73/68.80m 11-04 Incl. 1.13/27.80m 1.31/414.00m 12-29 1.66/41.00m 2.40/20.00m 12-13 Incl. 2.96/21.10m 12-14 0.70/88.40m 12-23 12-22 12-15 Incl. 0.90/36.90m 0.72/50.30m 0.87/71.80m 0.73/284.00m 1.93/241.20m Incl. 1.46/20.00m Incl. 1.01/28.00m Incl. 1.12/50.00m Incl. 8.00/18.00m Incl. 2.42/14.00m 12-24 Incl. 3.82/32.70m 12-19 Incl. 3.66/21.00m 1.02/190.50m 0.58/74.50m Incl. 2.03/8.00m 12-25 12-34 1.39/20.10m 0.88/177.10m Incl. 2.09/9.10m Incl. 0.94/82.00m 12-33 12-21 Incl. 1.32/26.00m 0.70/183.50m 0.76/34.00m Incl. 2.04/8.80m 12-31 Incl. 2.48/50.10m 1.01/52.50m Incl. 3.76/14.20m Incl. 1.43/32.70m20
  21. 21. Fenn-Gib – New Targets Identified Main Zone Extension Talisman Shaft G-101 Zone C4-3: 4.91/11.98m C4-5: 3.25/5.18m Central Syenite C4-5A: 1.18/10.06m 9.00/3.00m 3.75/3.00m21
  22. 22. Timmins West Mine – Realizing the Potential (1) Estimated Production and Sales 3.7 Ounces 2012 Full-Company Guidance 100,000 85,00022 (1) Examples of Forward Looking Statements
  23. 23. Moving Towards Lower Cash Costs(1) Operating and capital costs over 10 years: <US$900/oz 3.7 US$/oz 2012 Full-Company Total cost (opex & sustaining): <US$700/oz 3.1 Guidance Timmins West Mine Only23 (1) Examples of Forward Looking Statements
  24. 24. Timmins West Mine – Capital Spending(1) Rapid Decline in Planned Capital Spending 3.7 $ Millions Growth Capital Sustaining Capital24 (1)Examples of Forward Looking Statements
  25. 25. LSG – Approaching a Turning Point (1)The Key: Realizing the Potential of Timmins West Mine In the coming months, LSG plans to:  Increase production to 25,000 to 30,000 ounces per quarter  Demonstrate track record of meeting or exceeding targets  Complete capital program at Timmins West Mine, including mill expansion  Position Company for strong production growth and positive free cash flow from Timmins West Mine entering 201325 (1) Examples of Forward Looking Statements
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