LAKE SHORE GOLD CORP 6.25 PCT DEBS T.LSG.DB

Please help explain!

[Giverbullets]

Can someone explain how cash and bullion increases by $14 million in 4 months yet net earnings is only $4.7 milllion for the quarter. 43,000 oz of gold sales at $1300 is ~$56 million, yet cash earnings from operations is only ~$32 million.  So if they are stockpiling gold......is that not somehow put towards EPS?  I see $56 mil earnigs - $29.6 production - $13 million capital = $13.3 million EBITDA. 
Keeping in mind, the $13 million capital is re-invested into the company so gross earnings/asset growth should equate to ~$26 mil per quarter or $100 mil per year. Either way, $13.3 mil equates to 3 cents per share per quarter or 12 cents over the year. At a simple 10X multiple, we should be at $1.20 at least!!!  Why is this not calculated as such? Please help!  Thx.

[FatGuyInATrackSuit]

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[Allthewaydown]

Revenue $61.4 million, minus direct cost ($29.5) and depletion/depreciation ($17.5) = $14.4 gross income. Admin expenses $4.2, FOREX losses $0.6, interest on debt $5.0, leaves $4.7 million net. Cash position always does better than net income. The $17.5 million depletion/depreciation means (in simplistic terms) that $17.5 million of assets (gold and equipment) have been converted

[yoda2]

The dangers hurting the share price and its prospects, in addition to the riskiness in the preice of Au, may be lack of trust by the investment comminity in the credibility of management, the currently stable yet fragile financial condition, and the lack of confidence shown by managemnt and the board of directors by their unwillingness to risk their own money in the shares of LSG.

[goldhappy]

allthewaydown, I really appreciate your summary as my accounting skills are not that detailed. Just one thing I would like to add to the pile is the exploration drilling that has restarted. If LSG hits significant grades and tonnage close to the infrastructure this should give us a decent kick. Perhaps not a lottery ticket but a double or tripple depending on the assays. I'm in it for the

[Allthewaydown]

Once you have your infrastructure in place, your mining costs are fairly static in terms of cost per tonne. The only thing that is going to matter from that point on is head grade, since this equates to revenue per tonne. It is certainly important to define ore to replace the ore you are mining, but the REAL win is if you find higher grade. Because of the immediate effect of high grade ore upon

[Giverbullets]

Fair enough, but production costs shouldn't double if they double the tonnage either.....at least when you look at the capacity available in the plant, the extra tonnage should be minimal.  Getting it to the plant is propbably a linear rise in costs but between the two, I would assume a 50% rise in production costs for a 80 to 100% gain.....whch is more concrete than, could happen..

[Giverbullets]

Thanks!  That helps!  Ok so the $17.5 depletion is held as a non taxable gain which has to be put back into the company. So stuff like mine upgrades, drilling, etc can be paid with this money which is "off the tax books"......correct?  But this is still earned money.....its just written off to be used as capex.....which, to me is like having money earned in your pocket

[Allthewaydown]

I'm not an accountant myself (more on the technical side of the industry), so I avoid talking about too many details of tax law, especially as it relates to the valuation of reserves. The bottom line, though, is that we are using up our assets (orebody and facilities) and converting them into cash. We tell the government, "We generated 22.2 in cash, but used up 17.5 in

[minigoon]

very good explanation, kudo's to you