RE: RE: RE: RE: Downgrade Outlook
In 2012, Lake Shore Gold is focused on completing the capital program for growing the Timmins West Mine, including expanding its mill to 3,000 tonnes per day, which will position the Company for strong production growth and positive free cash flow from Timmins West Mine starting in 2013.
Significant planned development, ore delineation and stope preparation activities early in the year affected the Company's production and operating costs during the first quarter of 2012. As the year progresses and the Timmins West Mine capital program nears completion, production levels, supported by higher grades, are expected to increase at improved cash costs. Second quarter 2012 production is estimated at 20,000 to 25,000 ounces of gold poured. The Company's full-year targets for 2012 remain unchanged, including production of 85,000 to 100,000 ounces poured at average cash costs of US$825 to US$875 per ounce.
At the end of the first quarter of 2012, the Company remained on track for capital spending of $160.0 million during the year to complete the growth capital program for Timmins West Mine, of which $93 million relates to development work at Timmins West Mine and $67.0 million to the mill expansion and other milling costs. The Company also expects capital spending during the year of approximately $18.0 million to advance Bell Creek Mine and an additional $15.0 million for exploration.
Based on existing cash resources, the Company is positioned to fund the $160.0 million of expenditures relating to Timmins West Mine and the Mill. Following the closing of the Sprott Credit Facility, expected in late May 2012, the Company will be positioned to fund all of its planned expenditures while maintaining a strong treasury.
All cash flow and other financial projections for 2012 are based on an assumed average gold price for the year of US$1,650 per ounce and a C$/US$ exchange rate of 0.98.