Lake Shore Gold wins Prospector Award
It takes more than a shovel in the ground and crossed fingers to transform a mineral deposit into a producing mine.
The team at Lake Shore Gold Corporation has a clear understanding of the hard work that goes into bringing a mine online. As the company moves from a junior explorer to a mid-tier gold producer, Lake Shore Gold is playing a significant role in extending Timmins’ gold mining history.
The company was awarded the 2009 Ontario Prospectors Award in recognition of its success in the Timmins area. It was commended for sound geological interpretation and furthering the geological knowledge in the Timmins West camp, said OPA executive director Garry Clark at the Ontario Exploration and Geoscience Symposium awards dinner December 15th.
The company’s founder was Daniel Innes, who now sits on the board of directors. In 2002, he put together a number of companies, one of which was Aurora Platinum Corp., which focused on exploration in the Sudbury Basin, said current CEO and president Tony Makuch. Lake Shore Gold was spun out of Aurora.
The Timmins West land claims were some of the first properties the company acquired. A database containing 50 years of information about the region that was purchased from Inco was a big help.
“It’s very valuable and useful information,” Makuch said. “It was used for the overall strategy as to where to look for gold in northeastern Ontario and northwestern Quebec.”
That same data was also helpful in acquiring properties on the Casa Berardi break, a region that extends from Ontario into Quebec.
By using Inco’s database to hone in on targets on the Timmins West properties, Lake Shore’s exploration staff recognized similar geology and had “inklings” that the Destor Porcupine Fault continued on the west side of the Mattagami River fault, which runs through the City of Timmins, dividing the historical gold camp in the east from the virtually unexplored land to the west.
“We were able to put some of the puzzle pieces together, using the Inco database and applying some of the theories. We said, ‘This is what we think is going on, so let’s put in some test holes and drill,'” Makuch said.
In 2003, Lake Shore Gold entered into an option agreement with Holmer Gold Mines Ltd., where a 9,000-metre drill program had been completed, accompanied by a mineral resource estimate. Lake Shore continued an aggressive drilling program to update the resource. In doing so, high-grade gold discoveries were made, confirming the hunches and theories about the geology and continuation of the fault.
By 2004, an NI 43-101 compliant indicated resource of 1.3 million tonnes at a grade of 10.96 grams per tonne of high-grade gold was announced. It has since increased to an indicated resource of 3.2 million tonnes at a grade of 8.56 g/t, probable reserves at 3.4 million tonnes at a grade of 7.52 g/t and an inferred resource of 890,000 tonnes at a grade of 5.75 g/t.
Makuch described the process as happening very quickly. Other factors that have played an important role in Lake Shore’s development have been timely leadership changes, the move to Toronto and Hochschild’s role as a financial investor.
Each former president played an important role in transitioning the company from grassroots exploration to developer to mid-tier miner, and each one recognized when it was time to step aside for the next person.
“It is a real measure of how professional they were in recognizing when it was time to change and allow the company to grow,” said Makuch, who has developed and operated a number of mines in Northern Ontario and was brought on board in 2008 to turn Lake Shore Gold into a mid-tier commercial gold producer.
At the same time, the Vancouver head office moved to Toronto and the Sudbury exploration office moved to Timmins. This consolidation to Ontario made more sense logistically, and helped expand the company’s ability to attract investment in the Toronto market.
Equipped with a solid team, an eager workforce and properties with significant resources and reserves, Lake Shore still needed strong financial backing to take the project forward.
“We knew what we wanted to do, but we were a company with a $125 million market cap and we needed to raise $100 million,” Makuch said. “Hochschild (Mining Holdings Ltd.) was able to give it the financial backing that took the company from a $150 million market cap to a $1.5 billion market cap.”
Recent acquisitions of West Timmins Mining Inc. and Goldcorp Inc. property have expanded Lake Shore’s holdings in the Timmins mining camp. The company’s flagship project, the Timmins Mine Complex, sits on a 130-square kilometre land package on the city’s west side. On the east side, Lake Shore has acquired a 32-square kilometre area called the Bell Creek Complex, which contains the Bell Creek Mine and Mill, and more recently, the Vogel and Schumacher properties.
Three properties are in advanced stages of exploration: Timmins West, Thunder Creek and Bell Creek. As of mid January, the ramp at the Timmins Mine extended 230 metres, only 170 metres shy of its 400-metre target distance, which is scheduled for completion in the first quarter. The shaft is 670 metres deep, close to its target depth of 710 metres.
The Thunder Creek property has two access points: one at the 200-metre level off the ramp and the other at the 650-metre level off the shaft.
The mill was refurbished and is currently running at 1,500 tonnes per day. By year-end, it will be expanded to a 3,000 tpd capacity at a cost of $30 million. Lake Shore is targeting production of 100,000 ounces of gold for 2010, increasing to 350,000 ounces by 2013.
In addition to expanding the resource at the Timmins Mine Complex, Lake Shore is busy exploring and expanding the mineralization at Bell Creek to establish an NI 43-101 resource.
In 2010, $29 million will be invested in exploration, of which $3 million will be spent on the Casa Berardi claims.
“We’ve had a lot of success in the last year-and-a-half,” Makuch said. “As much as Lake Shore Gold is transitioning from an explorer to a developer and into production, we‘re still very focused on exploration.”
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