Last checked at 23 Jun 2008 07:00
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23 June 2008
Increased stake in Lake Shore Gold to 40%
Hochschild Mining plc ("Hochschild" or "Group") is pleased to announce that it has increased its investment in Lake Shore Gold Corp. (TSX:LSG) ("Lake Shore Gold") to 40% (on a fully diluted basis) through a privately negotiated transaction with Aurora Platinum Corp.("Aurora"), a wholly owned subsidiary of FNX Mining Company Inc.
Hochschild has reached an agreement with Aurora pursuant to which it will acquire 11.8 million common shares of Lake Shore Gold for a total cash consideration of C$21.4 million or C$1.82 per share. The agreement is expected to close on 26 June 2008. The transaction will not take place through a stock exchange or other market. Following closing, Hochschild will hold 73,139,210 shares or 40% (on a fully diluted basis) of Lake Shore Gold.
Under the terms of Hochschild's Strategic Alliance Agreement with Lake Shore Gold, announced on 19 February 2008, Hochschild has the right to increase its stake in Lake Shore Gold to 40% on a fully diluted basis. Hochschild is pleased to have reached this milestone so quickly. As a result, Hochschild will have the right to increase its existing Board representation in proportion to its increased ownership interest. Hochschild's rights under the Strategic Alliance Agreement also include a right of first offer over any new property in Canada that Lake Shore Gold decides to joint venture and pre-emptive rights in connection with future issuances of securities by Lake Shore Gold.
The Group has spent a total of C$165.6 million to acquire a 40% (fully-diluted) stake in Lake Shore Gold, reflecting the Group's confidence in the significant production potential and long-term growth of Lake Shore Gold. 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.
The acquisition by Hochschild of the common shares of Lake Shore Gold is for strategic investment purposes. Prior to 22 November 2010, Hochschild is restricted from increasing its interest in Lake Shore Gold beyond 40% on a fully diluted basis.
As a result of its recent investments in Lake Shore Gold and the acquisition of 100% ownership of the San Felipe project, the Group has decided to draw down its $200 million syndicated loan facility, originally negotiated in February 2008. The facility, which was available for use until the end of July 2008, provides access to low cost funding and will enable Hochschild to continue to implement its strategy of maximizing its existing projects and bringing into production, new profitable projects, while pursuing additional joint venture and acquisition opportunities in the region.
Further information regarding the Strategic Alliance Agreement and the previous investments by Hochschild in Lake Shore Gold can be found in the announcements made by Hochschild on 19 February, 16 May and 18 June which are available on Hochshild'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. Hochschild Mining plc has its registered office at 46 Albemarle Street, London W1S 4JL.
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.
Forward looking statements:
The statement in this press release relating to the advancement and development of Lake Shore Gold's Timmins West project is a forward looking statement within the meaning of securities legislation. 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, and is subject to the statements by Lake Shore Gold about such forward looking statements and the assumptions and risks associated with it.
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