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23 Jun 2008 07:00
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23Β JuneΒ 2008Β
Increased stake inΒ LakeΒ ShoreΒ Gold to 40%Β
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HochschildΒ Mining plcΒ ("Hochschild" or "Group") isΒ pleased to announce that it hasΒ increased its investment in Lake Shore Gold Corp.Β (TSX:LSG)Β ("Lake Shore Gold")Β to 40%Β (on a fully diluted basis)Β through a privately negotiated transaction withΒ Aurora Platinum Corp.("Aurora"), a wholly owned subsidiary of FNX Mining Company Inc.Β
HochschildΒ has reachedΒ an agreement with Aurora pursuant to which it will acquireΒ 11.8Β millionΒ common shares of Lake ShoreΒ Gold forΒ aΒ totalΒ cash consideration ofΒ C$21.4Β millionΒ orΒ C$1.82Β per share.Β The agreement is expected to close on 26 JuneΒ 2008.Β The transaction will not take place through a stock exchange or other market. Following closing,Β Hochschild will hold 73,139,210Β sharesΒ orΒ 40%Β (on a fully diluted basis) ofΒ Lake Shore Gold.Β
Under the terms ofΒ Hochschild'sΒ Strategic Alliance AgreementΒ with Lake Shore Gold,Β announced on 19 February 2008, Hochschild hasΒ the right to increase its stakeΒ in Lake Shore GoldΒ to 40%Β on a fully diluted basis.Β Hochschild is pleased to have reachedΒ thisΒ milestoneΒ so quickly.Β As a result, HochschildΒ will haveΒ the right toΒ increase its existingΒ Board representationΒ inΒ proportionΒ to itsΒ increasedΒ ownership interest. Hochschild's rights under the Strategic Alliance Agreement also include a right of first offer over any new property inΒ CanadaΒ that Lake Shore Gold decides to joint venture and pre-emptive rights in connection with future issuances of securities by Lake Shore Gold.Β
The Group has spentΒ a total ofΒ C$165.6Β millionΒ to acquire aΒ 40%Β (fully-diluted)Β stakeΒ in Lake Shore Gold,Β reflectingΒ the Group'sΒ confidence in the significant production potential and long-termΒ growthΒ ofΒ Lake Shore Gold.Β Lake Shore Gold's management team anticipates initiating production from its Timmins West property by early 2009, with a steady ramp up in production which could reach approximately 200,000 ounces of gold by 2011.Β
The acquisition by Hochschild of the common shares of Lake ShoreΒ GoldΒ is for strategic investment purposes. Prior toΒ 22Β November 2010,Β Hochschild isΒ restricted from increasing its interest in Lake Shore Gold beyond 40% on a fully diluted basis.
As a result ofΒ its recent investmentsΒ inΒ Lake Shore GoldΒ andΒ theΒ acquisition of 100% ownership of the San Felipe project,Β the Group hasΒ decided to draw downΒ itsΒ $200Β millionΒ syndicatedΒ loan facility,Β originally negotiatedΒ in February 2008. The facility, which wasΒ available for use untilΒ the end of July 2008, provides access toΒ low cost fundingΒ andΒ will enableΒ HochschildΒ toΒ continue toΒ implementΒ itsΒ strategy ofΒ maximizingΒ itsΒ existing projects and bringing intoΒ production, new profitable projects, while pursuing additional joint venture and acquisition opportunities in the region.Β
Further information regarding theΒ Strategic Alliance Agreement and theΒ previous investmentsΒ by HochschildΒ in Lake Shore Gold can be foundΒ in the announcements made by Hochschild on 19 February, 16 May and 18 June which are availableΒ on Hochshild's websiteΒ www.hochschildmining.com.Β
Enquiries:
Hochschild Mining plc
Wray Barber +44 (0)20 7907 2934
Head of Investor Relations
Ignacio Rosado +511 437 6007
Chief Financial Officer
JoseΒ 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 /Β HOC LNΒ 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 southernΒ PeruΒ and one in southernΒ ArgentinaΒ and one open pit mine in northernΒ Mexico. Hochschild also has one early development project inΒ MexicoΒ and sixteen long-term prospects throughoutΒ Latin America. Hochschild has over forty years experience in the mining of precious metal epithermal vein deposits.Β Hochschild Mining plcΒ has its registered office atΒ 46 Albemarle Street,Β LondonΒ W1S 4JL.
For further information please visitΒ www.hochschildmining.comΒ
AboutΒ LakeΒ ShoreΒ Gold
Lake Shore Gold Corp. is a mineral development and exploration company that is rapidly moving towardsΒ gold production through a portfolio which includes an existing processing facility and a number of qualityΒ mineral properties located in theΒ TimminsΒ gold mining district of northernΒ OntarioΒ andΒ Quebec. TheΒ Company has completed a pre-feasibility study and is moving forward with an advanced explorationΒ program at its Timmins West property, is well advanced in refurbishing its 100%-owned Bell Creek millΒ and is continuing drilling programs at a number of other prospective properties. The Company's commonΒ shares trade on the Toronto Stock Exchange under the symbol LSG.Β
Forward looking statements:Β
The statement in this pressΒ releaseΒ relating to the advancement and development of Lake Shore Gold's Timmins West project is a forwardΒ looking statement within the meaning of securities legislation.Β The statement is based on the public disclosure of Lake Shore Gold, dated 20 May 2008, which is available on SEDAR at www.sedar.com under Lake Shore Gold, andΒ is subject to theΒ statements by Lake Shore Gold aboutΒ such forward looking statements and the assumptions and risks associated with it.
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