Here's why BMO downgraded LSG to underperform from an article I found:
"BMO cut Lake Shore Gold's target price to $0.75 from $1.20 based on the fact that the NPV calculated by Quast declined on reduced confidence in gold grades going forward and the fact that the company won't expand beyond 3,000 tonnes per day until it can raise the capital to do so. The new valuation means Lake Shore is trading at a premium to its peers."
Poor grades and unability to increase production ... this has brought then net present value down. However, I'm not sure how they can say what the future grade will be.
Not sure how it works in gold mines ... but in the mine I worked at, it was easy to manipulate the grades. Higher grade rock was always mixed with lower grade stuff from different areas to get the grade they wanted. This is assuming there is lots of higher grade stuff around. I can't really see how they can make a judgement on future performance like this unless they're privy to some inside track information. Not sure what other people here think.