GREAT NEWS ! A 30% PERMIUM $2.30Lake Shore Gold Announces Private Placement of $64.5 Million at 30% Premium and Forms Strategic Alliance With Hochschild MiningMarketwire
Lake Shore Gold Corp.
February 19, 2008 - 03:00:01 AM
Lake Shore Gold Announces Private Placement of $64.5 Million at 30% Premium
and Forms Strategic Alliance With Hochschild Mining
TORONTO, ONTARIO--(Marketwire - Feb. 19, 2008) - Lake Shore Gold Corp.
(TSX:LSG) ("Lake Shore" or "the Company") is pleased to announce that it has
completed a private placement financing at a 30% premium to market, raising
$64.5 million for development of the Timmins West Mine and Bell Creek Mill. In
addition, as part of this financing, Lake Shore is pleased to announce that it
is entering into a strategic alliance with Hochschild Mining plc (LSE:HOC)
("Hochschild").
As part of the strategic alliance, Lake Shore will complete a private
placement to Hochschild of 28,172,302 common shares at $2.30 per share for a
total consideration of $64.5 million, subject to the approval of the Toronto
Stock Exchange ("TSX"). The private placement will result in Hochschild
holding 19.99% of Lake Shore's issued and outstanding shares. Following the
private placement, Lake Shore has agreed, subject to approval of shareholders
and the TSX, to issue additional common shares to Hochschild that will result
in Hochschild owning approximately 35% of the issued and outstanding shares of
Lake Shore.
"We are delighted that Lake Shore was able to complete this transaction to
raise money for the development of the Company's assets at a 30% premium to
the market and that Hochschild has chosen to work with Lake Shore in its first
foray into Canada. This investment by Hochschild is a strong endorsement of
Lake Shore's assets and management," said Lake Shore's Chairman, Alan Moon.
"Forming the strategic alliance with Hochschild provides the Company with
access to the investment dollars required to become a significant gold
producer, and it also provides access to Hochschild's expertise and extensive
networks of industry connections, all of which will help Lake Shore achieve
its goals.
"With this commitment of funds from Hochschild, Lake Shore is now positioned
to complete the advanced underground exploration program at Timmins West, the
refurbishment of the Bell Creek Mill, dewatering and refurbishing the Bell
Creek Mine. This investment and the investment contemplated to bring
Hochschild to 35% will carry Lake Shore into production and allow an expansion
of our exploration programs."
Eduardo Hochschild, Executive Chairman of Hochschild Mining plc, commented:
"At a time when gold companies are struggling to find profitable, high-grade
gold resources, our strategic investment in Lake Shore allows Hochschild to
capture significant exposure to a high-grade, long-life asset in a mining
friendly jurisdiction, without the costs associated with establishing a
greenfield operation. Lake Shore is a well run Canadian mining company with
significant progress toward production and a strong portfolio of projects in a
prolific gold mining region in Canada."
Hochschild will initially acquire 28,172,302 shares at a price of $2.30 per
share, a premium of 30% to the volume weighted average price of Lake Shore's
shares for the week of February 11 to February 15, for total proceeds of
approximately $64.5 million. In connection with the subscription, Lake Shore
has agreed to appoint two additional members to the board of directors, to be
nominated by Hochschild.
Upon the closing of the private placement, Hochschild and Lake Shore will
enter into a Strategic Alliance Agreement to govern their relationship going
forward. The key terms of the Strategic Alliance include the following: Lake
Shore agrees to seek shareholder approval for an additional financing that
would allow Hochschild to increase its holdings to 35%; Hochschild will have a
preemptive right to maintain its percentage interest in any future financings,
will be Lake Shore's preferred partner for any future joint ventures and will
have a first right to acquire any assets Lake Shore decides to sell, and will
be entitled (if it so chooses) to board representation proportional to its
shareholdings. As well, Hochschild agrees to a standstill with Lake Shore,
with shareholdings limited to no more than 40% on a fully diluted basis, for 5
years, subject to certain exceptions.
About Lake Shore
Lake Shore is a mineral exploration company focused on the acquisition,
exploration and development of mineral properties with prospects for hosting
economic gold deposits in the Canadian Shield in Ontario and Quebec. The
Company holds a number of 100% owned and joint ventured gold properties in
Ontario and Quebec, including the Bell Creek Mine and Mill Complex and has
commenced sinking a shaft on its 100%-owned Timmins West gold deposit near
Timmins, Ontario. Lake Shore is a reporting issuer in British Columbia,
Alberta, Manitoba, Ontario and Quebec, and trades on the Toronto Stock
Exchange under the symbol LSG.
About Hochschild
Hochschild Mining plc is a leading precious metals company listed on the
London Stock Exchange (HOCM.L for Reuters / HOC LN for Bloomberg) with a
primary focus on the exploration, mining, processing and sale of silver and
gold. Hochschild currently operates five underground epithermal vein mines,
four located in southern Peru and one in southern Argentina and one open pit
mine in northern Mexico. Hochschild also has one early stage development
project in Mexico and fifteen long-term prospects throughout Latin America.
Hochschild has over forty years experience in the mining of precious metal
epithermal vein deposits.