GOLD MINING: Lake Shore to cut capex $15M to $20M

ONTARIO – Lake Shore Gold of Toronto will cut its 2012 capital spending budget by $15 million to $20 million. The company assured investors that the cutback would not affect this year’s target to produce between 85,000 and 100,000 oz of gold.

At the Timmins West mine, Lake Shore expects to lower capital spending by $5 million to $10 million as a result of cost savings in underground development and deferral of non-critical capital programs that will not impact production guidance.

The timing for the ongoing Bell Creek Mill expansion, where significant industry-wide cost pressures for materials and contract labour are being experienced, is being revised to more closely align with the expected increase in mine production. The Bell mill capacity will be grow to 2,500 t/d during Q4 2012, with the 3,000-t/d rate to be achieved in 2013. The total cost to complete the mill expansion will exceed the previous estimate by 10% to 25%. The company plans to spend approximately $56 million in 2012, with the remaining costs for the expansion to be incurred in 2013.

This year’s surface exploration program is being reduced by a third to $10 million, but $12-million-worth of underground exploration will continue.

Lake Shore’s May 2012 presentation is posted at LSGold.com.