Third Quarter 2013


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Third Quarter 2013 results presentation.

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Third Quarter 2013

  1. 1. Lake Shore Gold Corp. Third Quarter 2013 Conference Call and Webcast November 6, 2013 Lake Shore Gold Corp. TSX & NYSE MKT : LSG
  2. 2. Forward Looking Statements Information included in this presentation relating to the Company's 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 management's 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 Company's 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 Scientific and technical information contained in this presentation has been reviewed and approved by Dan Gagnon, P.Geo., Executive Vice-President, Operations, and Natasha Vaz, P.Eng., Director of Technical Services & Project Evaluation, both of whom are employees of Lake Shore Gold Corp., and “qualified persons” as defined by National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”). Scientific and technical information related to resources, drilling and all matters involving mine geology contained in this presentation was reviewed and approved by Eric Kallio, P.Geo., Vice-President, Exploration, who is an employee of Lake Shore Gold Corp., and a “qualified person” as defined by NI 43101. 2
  3. 3. Q3/13 – Pivotal Quarter for LSG  Cash op. costs(1) improved to target levels  US$701/oz in Q3/13  Completed mill expansion  In September: 3,370 tpd & 13,400 oz  Continued to improve grades   Average grade of 4.7 gpt Average grade at Timmins West of 4.9 gpt  Capital investment of $14.2M, roughly half of Q2/13 level  Poised to generate free cash flow going forward (1) Example of non-GAAP measure (see Slide 19) 3
  4. 4. Solid Production Despite Commissioning  Produced 28,900 oz with gold poured of 25,900 oz  Sales of 32,300 oz, up 58% from Q3/12, 17% from Q2/13  Average price of US$1,324/oz ($1,372) vs. US$1,665/oz ($1,650) in Q3/12 & US$1,409/oz ($1,441) in Q2/13  Mill throughput of 2,200 tpd reflected mill commissioning  Mill currently operating at well over 3,000 tpd  9M production of 82,900 oz, up 34% from 9M 2012  9M 2013 sales of 86,000 oz at US$1,444/oz ($1,476) vs. 59,800 oz at US$1,649/oz ($1,657) in 2012 4
  5. 5. Q3/13 – Strong Cost Performance  Q3/13 cash op. cost/oz sold of US$701/oz   31% improvement from Q3/12 (US$1,014/oz) 23% improvement from Q2/13 (US$908/oz)  Nine-month cash op. cost/oz sold of US$856/oz  Full-year 2013 target range of US$800 to US$875/oz  All-in sustaining cost (“AISC”)(1)(2) of US$1,027/oz in Q3/13, 46% improvement from Q3/12 and 18% from Q2/13  9M 2013 AISC of US$1,307/oz compared to US$1,838/oz for 9M 2012 (1) (2) Example of non-GAAP measure (see Slide 19) AISC = production costs + sustaining capital + corporate costs + exploration costs (sustaining) + reclamation cost accrual (current operations) 5
  6. 6. 2013 Guidance(1)  On track to achieve 2013 guidance  Production of 120,000 to 135,000 oz  Cash operating costs of US$800/oz to US$875/oz  Capital investment of approximately $90 million (1) Examples of forward-looking information 6
  7. 7. Q4/13 – Off to a Great Start October 2013  Record production of 17,500 oz  Record mill throughput of 3,550 tpd  Average grade of 5.2 gpt 7
  8. 8. Q3/13 Operating Details Q3/13 Q2/13 Q3/12 % Change Q3/Q3 202,300 230,900 194,000 4 4.7 4.3 3.5 34 Total production (ozs) 28,900 30,800 20,900 38 Gold poured (oz) 25,900 31,800 20,700 25 Cash op costs incl. royalties(1) 701 908 1,014 (31) Cash op costs excl. royalties(1) 672 880 983 (32) Total tonnes Average grade (gpt) (1) US$/oz 8
  9. 9. Q3/13 Financial Review  Sales of 32,300 ounces @ US$1,324 ($1,372)/oz (Q3/12: 20,500 oz @ US$1,665($1,650)/oz)  Earnings from mine operations (EMO) Q3/12 EMO: $2.6 Revenue: Volume Δ: 19.6 Price Δ: (9.0) 10.6 Cash op costs: -2.9 Depreciation & Depletion: -2.7 58% growth in sales more than offsets C$278/oz reduction in gold price Higher volumes partially offset by lower cash cost/oz Higher volumes offset by impact of impairment charge at end of 2012 Q3/13 EMO: $7.6 9
  10. 10. LSG – Q3/13 Financial Highlights Q3/13 Q3/12 Revenues ($M) 44.3 33.7 Cash earnings from mine ops(1) ($M) 20.8 13.2 Earnings from mine ops ($M) 7.6 2.6 Net loss ($M) (1.7) (10.8) Net loss per share ($) (0.00) (0.03)  Reduced net loss in Q3/13 reflects higher earnings from mine operations, lower write downs on investments and lower mark-tomarket losses on an embedded derivative partially offset by higher financing costs (1) Example of non-GAAP measure (See Slide 19) 10
  11. 11. 9M/13 Operating Details 9M/13 9M/12 % Change 9M/9M 630,900 537,700 17 Average grade (gpt) 4.3 3.7 16 Total production (oz) 82,900 62,000 34 Gold poured (oz) 78,200 61,100 28 Cash op costs incl. royalties(1) 856 997 (14) Cash op costs excl. royalties(1) 823 970 (15) Total tonnes (1) US$/oz 11
  12. 12. 9M/13 Financial Review  Sales of 86,000 ounces @ US$1,444 ($1,476)/oz (9M/12: 59,800 oz @ US$1,649 ($1,657)/oz)  Earnings from mine operations (EMO) 9M/12 EMO: $7.0 44% growth in sales more than Revenue: Volume Δ: 43.4 Price Δ: (15.6) Cash op costs: Depreciation & Depletion: 27.8 -15.6 -6.0 9M/13 EMO: offsets $181/oz price drop $13.2 Reflects higher volumes offset by improved cash cost/oz Higher depletion reflects strong growth in sales 12
  13. 13. LSG – 9M/13 Financial Highlights 9M/13 9M/12 Revenues ($M) 126.8 99.0 Cash earnings from mine ops ($M) 51.6 39.4 Earnings from mine ops ($M) 13.2 7.0 Net loss ($M) (7.8) (15.7) Loss from continuing ops ($M) (3.5) (15.7) Loss from discontinued ops ($M) (4.3) (-) Net loss per share ($) (0.02) (0.04)  Reduced net loss from continuing ops. reflects increased earnings from mine operations, lower write downs on investments and a mark-tomarket gain on an embedded derivative versus a loss in 2012  Net loss from discontinued ops. reflects translation loss on disposal of Mexican assets 13
  14. 14. Financial Position (C$ Millions) as at Sept. 30, 2013 Cash and cash equivalents 14.7 Total cash and bullion 15.2 Total current assets 42.0 Total current liabilities 37.2 Current ratio (Sept. 30/13) 1.13:1 Debt (long term and current portion of long term debt) 135.2 Total equity (including $14.8M equity portion of debentures) 656.0 Debt (C$ Millions) Details Gold loan 22 19 monthly payments remaining Standby line 35 9.75% compounded monthly, due Jan. 1, 2015 103 6.25%, paid semi-annually, due Sept. 30, 2017 Convertible debentures 14
  15. 15. Timmins West Mine  Q3/13 production of 22,600 oz (148,400 t @ 4.9 gpt) up 40% from Q3/12  Production in Q3/12 focused on Rusk & Porphyry zones at Thunder Creek between 660 & 765 levels, and UM Zone between 670 & 790 levels and FW Zone between 770 & 790 levels at Timmins Deposit  YTD production of 65,500 oz (487,700 t @ 4.4 gpt)  7,685 metres of capital development completed YTD, with 36,700 metres of in-mine drilling  Ramp at Timmins Deposit extended to 830 L with ramp at TC advanced above 625 L Quarterly Production (oz) 25,000 20,000 15,000 10,000 5,000 0 Q3/12 Q4/12 Q1/13 Q2/13 Q3/13 15
  16. 16. Bell Creek Mine – Production & Growth  Q3/13 production of 6,300 oz (54,000 t @ 3.9 gpt), up from 4,900 oz (47,000 t @ 3.3 gpt in Q3/12)  Excl. 11,400 t of 1.6 gpt low-material processed during mill commissioning, 42,600 t processed @ 4.2 gpt  YTD 2013 production 17,400 oz (143,200 t @ 4.0 gpt)  3,463 metres capital development completed YTD, with 6,300 metres of drilling  Ramp at Bell Creek to 685 Level, lateral development mainly on 625, 640, 655 and 670 levels. Quarterly Production (oz) 7,000 Shaft 6,000 5,000 4,000 3,000 2,000 Potential shaft extension 1,000 0 Q3/12 Q4/12 Q1/13 Q2/13 Deep Zone Q3/13 16
  17. 17. Bell Creek Mill – Operating at >3,000 tpd SAG Mill Building New CIL Tanks Crusher Truck Dump 6,000 tonne Ore bin New Thickener  Expansion to 3,000 tpd completed in Q3/13  Average throughput in October 2013 of 3,550 tpd  Traditional gold circuit with history of excellent operational and metallurgical performance (gold recoveries +95%)  Potential expansion to 5,500 tpd to support future production increases from Timmins West and Bell Creek incorporated in current infrastructure  Crushing and grinding capabilities already at this level 17
  18. 18. Outlook(1)  On track to achieve 2013 guidance  Production of 120,000 to 135, 000 oz (100,400 oz at Oct. 31/13)  Cash costs(2) of US$800 to US$875/oz (US$856/oz YTD at Sept. 30/13)  Capital investment of approx. $90M ($80.2M for 9M/13) (1) (2) Examples of forward-looking information Example of non-GAAP measure (See Slide 19) 18
  19. 19. Non-GAAP Measures Cash Operating Costs per Ounce Cash operating cost per ounce is a Non-GAAP measure. In the gold mining industry, cash operating cost per ounce is a common performance measure but does not have any standardized meaning. Cash operating costs per ounce are based on ounces sold and are derived from amounts included in the Consolidated Statements of Comprehensive Loss (Income) and include mine site operating costs such as mining, processing and administration, but exclude depreciation, depletion and share-based payment expenses and reclamation costs. The Company discloses cash cost per ounce as it believes this measure provides valuable assistance to investors and analysts in evaluating the Company’s performance and ability to generate cash flow. This measure should not be considered in isolation or as a substitute for measures prepared in accordance with GAAP such as total production costs. All-In Sustaining Costs Effective the second quarter 2013, the Company has adopted a total all-in sustaining cost (“AISC”) performance measure. AISC is a Non-GAAP measure. The measure is intended to assist readers in evaluating the total costs of producing gold from current operations. While there is no standardized meaning across the industry for this measure, the Company’s definition conforms to the AISC definition as set out by the World Gold Council in its guidance note dated June 27, 2013. The Company defines all-in sustaining cost as the sum of cash costs from mine operations, sustaining capital (capital required to maintain current operations at existing levels), corporate general and administrative expenses, in-mine exploration expenses and reclamation cost accretion related to current operations. All-in sustaining cost excludes growth capital, reclamation cost accretion not related to current operations and interest and other financing costs. Cash Earnings from Mine Operations Cash earnings from operations are determined by deducting cash operating costs from revenues recognized in the period. 19