Mr. Tony Makuch reports

LAKE SHORE GOLD COMPLETES CREDIT FACILITY AGREEMENT FOR UP TO $70 MILLION WITH SPROTT RESOURCE LENDING PARTNERSHIP

Lake Shore Gold Corp. has signed a definitive agreement with Sprott Resource Lending Partnership for a credit facility totalling up to $70-million. The facility involves two components, a $35-million gold-linked note maturing on May 31, 2015, and a standby line of credit for an additional $35-million. The standby line will be available to the company as of Nov. 1, 2012, and will mature on Jan. 1, 2015. Financing is subject to certain closing conditions, including consents from the Ministry of Northern Development and Mines, and various third parties to the security on the mining properties, and to approvals from the Toronto Stock Exchange and New York Stock Exchange.

Tony Makuch, president and chief executive officer of Lake Shore Gold, commented: "The $35-million of cash available from the gold note and $35-million of additional liquidity through the standby line will provide important balance sheet strength for Lake Shore Gold. With this facility, as well as our $50-million of cash and gold bullion inventory, and plans to reduce 2012 capital expenditures by $15-million to $20-million, announced yesterday, we are now well positioned to finance our business as we progress towards strong production growth and positive free cash flow from Timmins West mine in 2013. We very much appreciate Sprott's support for our company, and its hard work and commitment in completing the due diligence period and documentation required to close the transaction."

The terms of the gold note and standby line are largely the same as outlined in a press release issued by the company on April 11, 2012, with the exception that 13 million common share purchase warrants to be issued to Sprott under the initial terms of the agreement have been replaced by the issuance of five million commons shares of the company. The term of the gold note is 36 months, and the company will repay the loan by making 29 cash payments of principal plus interest beginning in month eight, subject to an adjustment depending on the difference of the gold price in each period and a linked gold price of $1,610 (U.S.) per ounce in the gold note. The cost of capital for the gold note is approximately 13 per cent, with this cost increasing or decreasing depending upon whether the gold price rises or declines, respectively, from the linked gold price, but is no less than 5 per cent.

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