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GOLD have fallen. Lake Shore is now targeting a figure of less than US$700/oz by 2014 as feed grades become more consistent. Exploration Potential Being Realized Quite aside from the two mines, Lake Shore has a substantial exploration portfolio, both within the Timmins camp and further afield. The company spent C$26 million on exploration during 2010 and C$32 million in 2011, with about C$10 million on surface drilling on various prospects last year. "We have a full pipeline of projects, and we have invested a lot to prove up our resource base," Utting told E&MJ.; "Our current focus is on bringing the Timmins West mine to full production, but there is no question that we have many attractive options to support our future growth. "We are doing less surface drilling at Timmins West, with more underground drilling there to get a better understanding of the deposits," he explained. "We have spent C$12 million there this year [2012] on underground 'in-mine' drilling to support production and resource definition." In all, the company's 2012 underground and surface drilling programs totaled around 120,000 m, including over 18,000 m at Fenn-Gib. Fenn-Gib is a different type of target for Lake Shore, representing a low-grade, bulk-tonnage open-pittable resource. It has been evaluated at various times over the past 90 years, with companies such as Cominco and International Corona Resources having drilled there. The most recent work was done in the late 1990s by Pangea Resources, with Barrick having acquired it in 2000. Barrick has a limited- time 51% buy-back option on the property, which applies for 90 days once Lake Shore reaches a 5 million oz resource base. At Bell Creek, meanwhile, the complex now includes the Marlhill, Vogel-Schumacher and Wetmore exploration prospects. Lake Shore has drilled all of these and has compiled initial resources estimates at Vogel and Marlhill. All of the prospects lie within easy trucking range to the existing mill. However, the Timmins West complex remains the company's priority target, not only within the existing mines, but on structures such as the Gold River Trend, which lies about 3 km to the south of them. Running from 50 to 200 m wide, this has now been traced for over 3 km, and is interpreted as a branch of the Porcupine-Destor fault. Equally, the 144 deposit, close to Thunder Creek, carries strong similarities to Thunder Creek in terms of grade and mineralization type. Lake Shore has published an initial resource estimate for the Gold River Trend, and is continuing with deep drilling to define the structures there. Lake Shore produced 7,700 oz of gold in 2009 as it processed development ore. Production increased to 43,500 oz in 2010 as Timmins West came on stream, and jumped to 86,565 oz in 2011. The company's output last year totaled 85,782 oz, with plans in place to increase production in 2013 to between 120,000 and 135,000 oz. Commenting on the production figures, Lake Shore President and CEO Tony Makuch said: "We finished 2012 strong with higher production and improved grades during the fourth quarter. For the full year, we achieved our production guidance. Equally important, we met our key mine development and mill expansion objectives. "The progress we achieved in 2012 has positioned us for significantly higher production, reduced spending and improved cash operating costs in 2013," he went on. "Capital spending on mine development and mill expansion projects is forecast at approximately C$80 million, with an additional C$10 million budgeted for exploration, largely in-mine drilling. Cash operating costs in 2013 are targeted at US$800$875/oz, including royalties." By focusing on a district with known gold-producing pedigree, Lake Shore believes that this has major benefits as it transforms from exploration to production. "Timmins is a mining town with a mining culture," Utting told E&MJ.; "In a tight labor market, it's a good place to be, since we don't have to rely on fly-in, fly-out. "We benefit significantly from the availability of the things you need when you're building a new mine," he added. "When we ran a power line into Timmins West, we only had to put in nine poles to link in to the grid." The focus now is for Lake Shore to increase the mill's processing rate to 3,000 mt/d by the middle of the year, and to increase production from Timmins West to reach that level by the year-end, with additional mill feed being drawn from Bell Creek in the interim. It is also continuing to evaluate the deep zone at Bell Creek, Fenn-Gib and a number of other prospects. The glory days of the Timmins-Porcupine camp may be in the history books now, but it looks like another chapter is in the process of being written. Lake Shore Gold Finds More Mineralization In late January, Lake Shore Gold reported the results from over 27,000 m of drilling at its 144 property during 2012. Highlights included the discovery of a new area of mineralization, 850 m south of Thunder Creek in 144 Gap, together with an area of shallow mineralization at 144 South. Company President and CEO Tony Makuch, said: "The results highlight the significant potential to continue to grow and expand the Timmins West mine operation, including exploring the gap between Thunder Creek and 144 as well as the 144 North and South zones. We have discovered new areas of mineralization in the 144 Gap, doubled the depth of known mineralization at 144 North and intersected new mineralization at 144 South. We have also gained important new information regarding controls for the mineralization and identified large syenite stocks at both the 144 North and 144 South areas that are similar to that found at Thunder Creek." The company states that the main focus of future drilling here will be to test the projected down-plunge extensions of the newly identified mineralization at the 144 Gap and South areas. 34 E&MJ; • FEBRUARY 2013 Quartz veining in the North A Deep orebody at Bell Creek. (Photo: Simon Walker) www.e-mj.com