Last checked at 18 Jun 2008 07:00
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18 June 2008
Increased stake in Lake Shore Gold Corp.
Hochschild Mining plc ("Hochschild") is pleased to announce that it has increased its investment in Lake Shore Gold Corp. ("Lake Shore Gold") from 19.99% to 35% by way of a second private placement of 33,166,908 shares for a cash consideration of C$79.6 million or C$2.40 per share.
Lake Shore Gold provides Hochschild with a foothold in high-grade, long-life gold deposits in the Timmins mining district of Northern Ontario. The company has a strong pipeline of projects, from grass roots through to pre-feasibility as well as a proprietary database of exploration targets. To date, Hochschild has invested C$144 million in Lake Shore Gold, reflecting its confidence in the significant production potential and long-term growth of the company.
Proceeds from the transaction will be used by Lake Shore Gold to continue advancing its projects towards production and accelerating its aggressive exploration campaign. Lake Shore Gold's management team anticipates initial deliveries of ore from its Timmins West property to the Bell Creek mill (100% owned) by early 2009, with a steady ramp up in production which could reach approximately 200,000 ounces of gold by 2011.
Under the terms of the original agreement announced on 19 February 2008, Hochschild has the ability to increase its ownership to 40% (on a fully diluted basis) through privately negotiated transactions. In addition, Hochschild is subject to a standstill until November 2010 but is able to make an offer for the remaining shares if supported by Lake Shore Gold's board or if made in response to an offer for Lake Shore Gold from a third party.
Eduardo Hochschild, Executive Chairman of Hochschild Mining plc, commented;
"This is one more step in the consolidation of our role in Lake Shore Gold. We are already realising the benefits of the complementary strengths of Hochschild's underground mining expertise and Lake Shore Gold's asset base and wealth of geological and operational knowledge. Lake Shore Gold's experienced management team has made significant progress towards production and we are extremely positive about the long-term potential of the company.
We will continue to invest in high quality assets which we believe maximise value for our shareholders in the long-term as well as offering exciting prospects in the short-term."
Analyst teach-in:
Hochschild will be holding an analyst teach-in today at 1pm (UK), at which no new material information will be disclosed. The slides will be available on the company's website www.hochschildmining.com.
Enquiries:
Hochschild Mining plc
Wray Barber +44 (0)20 7907 2934
Head of Investor Relations
Ignacio Rosado +511 437 6007
Chief Financial Officer
Jose Palma +511 317 2026
Senior Adviser, Executive Committee
Finsbury
Robin Walker +44 (0)20 7251 3801
Public Relations
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About Hochschild Mining plc:
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 development project in Mexico and sixteen long-term prospects throughout Latin America. Hochschild has over forty years experience in the mining of precious metal epithermal vein deposits.
For further information please visit www.hochschildmining.com
About Lake Shore Gold
Lake Shore Gold Corp. is a mineral development and exploration company that is rapidly moving towards gold production through a portfolio which includes an existing processing facility and a number of quality mineral properties located in the Timmins gold mining district of northern Ontario and Quebec. The Company has completed a pre-feasibility study and is moving forward with an advanced exploration program at its Timmins West property, is well advanced in refurbishing its 100%-owned Bell Creek mill and is continuing drilling programs at a number of other prospective properties. The Company's common shares trade on the Toronto Stock Exchange under the symbol LSG.
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