Mr. Tony Makuch reports
LAKE SHORE GOLD ANNOUNCES LARGE, HIGH-GRADE INITIAL RESOURCE AT THUNDER CREEK
Lake Shore Gold Corp. has completed an initial National Instrument 43-101 resource estimate for the company's wholly owned Thunder Creek property located in Timmins, Ont. The reported resource contains 521,600 contained ounces of gold in the indicated category and 510,000 ounces Au in the inferred category as shown in the attached table.
Capped grade (gpt (i)
Category Tonnes Au) Ounces Au
Indicated 2,877,000 5.64 521,600
Inferred 2,693,000 5.89 510,000
(i) Grams per tonne
The Thunder Creek resource was estimated using the inverse distance to the second power (ID2) interpolation method with all gold assays capped to 75 gram metres and an assumed long-term gold price of $1,200 (U.S.) per ounce. The base case estimate assumes a cut-off grade of 1.50 grams per tonne, which includes 10-per-cent internal dilution at 1.75 g/t.
Tony Makuch, president and chief executive officer of Lake Shore Gold, commented: "We are off to a good start at Thunder Creek in establishing a resource base to support long-life, profitable mining. Through these results, we have succeeded in meeting our objective for total ounces and are very pleased with the resource grades achieved. Of particular importance, the 200-metre interval we have identified between the 600- and 800-metre levels will provide a number of years of efficient, productive mining that can draw on existing infrastructure and can be advanced quickly towards commercial production, while we continue to build and grow our Thunder Creek and Timmins mine deposits. This interval will also be a key target as we build throughput to support our ongoing expansion of the Bell Creek mill, first to a capacity of 3,000 tonnes per day by late next year, and subsequently to 5,500 tonnes per day. We have commenced detailed engineering studies for mining the interval and are also working on an overall scoping study for mining at Thunder Creek and Timmins mine, which going forward we plan to operate as a single mining operation.
"With the ounces being added today, we now have a very solid base of resources at the combined operation and believe that the base will grow significantly over the next few years. The intersection of ultramafic-style mineralization 1.9 kilometres below the bottom of the existing resource at Timmins mine, announced last week, is a good indication of the opportunity that exists to extend these deposits to depth. We have also reported recent drill results showing potential extensions of Thunder Creek mineralization along strike and continue to drill to the southwest on the 144 property. Based on our progress to date, we are extremely confident that with additional work, we will establish Timmins West as a large-scale, long-life mining complex in the tradition of the historic Timmins gold deposits."
The resource estimate was completed using a total of 440 holes of new drilling for 131,431 total metres. Of the new drilling, 89 holes (77,870 metres) were from surface drilling and 351 holes (53,561 metres) were from underground platforms located near the 300 and 730 levels at Thunder Creek. All recent drilling has been focused on a 300-metre strike length to a depth of over 900 metres. Typical drill spacing for indicated resources is less than 30 metres and for inferred resources is less than 60 metres. The alteration system that hosts the current resources is open along strike and to depth and, based on this, the potential to discover new zones of mineralization in the area is considered excellent.
The total resources reported are contained in 11 separate zones lying between the 250 level and the 900-metre level. Two key zones were identified in the porphyry mineralization which account for over three quarters of the total ounces in resource. Average horizontal widths for these two zones are estimated at 14.7 metres and 24.4 metres, respectively. A detailed review of estimated tonnages and grades by zone is presented in the attached table.
While the two key zones cover a total vertical depth of approximately 350 metres, they are most concentrated in a 200-metre vertical interval between the 600-metre and the 800-metre levels. This interval contains 2,371,000 tonnes grading 5.82 g/t (443,400 ounces Au) in the indicated category and 1.05 million tonnes grading 6.16 g/t (207,800 ounces Au) in the inferred category.
Included within the mineral resource estimate is a sensitivity analysis from the base case cut-off grade of 1.5 g/t using various cut-off grades between 1.00 g/t and 5.00 g/t. The analysis indicates the robust nature of the overall resource, and potential to optimize the mining grade and maximize margins and profitability at increased cut-off grades with little loss of ounces.
Cut-off grade Tonnes Grade Ounces Au
(g/t) (g/t)
1.0 6,130,000 5.35 1,054,300
1.5 (base case) 5,570,000 5.76 1,031,600
2.0 4,975,000 6.24 998,200
3.0 3,982,000 7.18 919,000
5.0 2,423,000 9.25 720,700
Notes:
(1) Grades are capped to 75 gram metres.
(2) Sums may not add due to rounding
(3) Tonnages and grades are reported on an unclassified basis for
information purposes only.
The base case resource estimate and sensitivity calculations were completed using an assumed minimum mining width of two metres, U.S.-dollar-to-Canadian-dollar exchange rate of 0.93, average production costs of $82.00 per tonne and average processing recoveries of 96.5 per cent. Lake Shore Gold intends to file a technical report that is in compliance with the requirements of National Instrument 43-101 within 45 days of the issue of this news release.
Qualified persons
The company's overall qualified person for the new NI 43-101 technical report is Dean Crick, PGeo, director of geology, while the QP for the new resource estimate is Bob Kusins, PGeo, chief resource geologist. The resource estimate has also been reviewed by Michel Dagbert, PEng, SGS Geostat. Both Mr. Crick and Mr. Kusins are employees of Lake Shore Gold, while Mr. Dagbert is independent of Lake Shore Gold. All three are considered qualified persons according to the definitions of NI 43-101. As QPs, they have prepared or supervised the preparation of the scientific or technical information and have verified the data disclosed in this press release.
THUNDER CREEK RESOURCE -- SUMMARY BY ZONE (NOVEMBER, 2011)
Ounces Au Capped Ounces
Category Zone Tonnage Grade uncapped grade capped
tonnes g/t g/t
Indicated PZ1A 1,514,000 6.06 294,900 6.06 294,900
PZ1B 958,000 6.88 212,000 5.26 162,100
PZ1C 0.00 0 0.00 0
PZ_3 0.00 0 0.00 0
RZ2 32,000 4.89 5,000 4.89 5,000
RZ2A 46,000 6.01 8,800 5.02 7,400
RZ3 140,000 4.96 22,200 4.90 22,000
RZ3A 147,000 5.32 25,100 5.26 24,800
RZ3A1 0.00 0 0.00 0
RZ3B 0.00 0 0.00 0
RZ5 41,000 4.15 5,500 4.15 5,500
Total 2,877,000 6.20 573,500 5.64 521,600
Inferred PZ1A 875,000 7.38 207,500 7.38 207,500
PZ1B 798,000 6.02 154,700 5.40 138,700
PZ1C 634,000 5.69 115,900 4.77 97,200
PZ_3 123,000 3.58 14,200 3.58 14,200
RZ2 43,000 9.30 12,900 9.30 12,900
RZ2A 0.00 0 0.00 0
RZ3 69,000 6.20 13,700 6.18 13,700
RZ3A 0.00 0 0.00 0
RZ3A1 24,000 5.44 4,200 5.44 4,200
RZ3B 57,000 5.18 9,600 5.18 9,600
RZ5 70,000 5.41 12,100 5.41 12,100
Total 2,693,000 6.29 544,700 5.89 510,000
Notes:
(1) CIM definitions were followed for classification of mineral resources.
(2) Mineral resources are estimated at a cut-off grade of 2.0 g/t Au.
(3) Mineral resources are estimated using an average long-term gold price
of $1,190 (U.S.) per ounce and a U.S.-dollar-to-Canadian-dollar exchange
rate of 0.93.
(4) A minimum mining width of two metres was used.
(5) Capped gold grades are used in estimating the mineral resource average
grade.
(6) Sums may not add due to rounding.
(7) There are no mineral reserves estimated for the Thunder Creek
property.
(8) Metallurgical recoveries are assumed to average 96.5 per cent.
(9) Mining costs are assumed to average $82.00 per tonne.
(10) Inclusive of recent development and test stoping.
We seek Safe Harbor.
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