By The Canadian Press

TORONTO - Lake Shore Gold Corp. (TSX:

Under the deal, Franco-Nevada paid US$35 million for a 2.25 per cent net smelter return royalty on Lake Shore's Timmins West Complex and an additional C$15 million for 10 million shares in the company.

"With the funds we have received, our pro forma cash position at the end of February stood at approximately $95 million, which provides significant financial flexibility as we prepare for a sharp increase in production beginning late this year," Lake Shore president and chief executive Tony Makuch said in a statement.

Last month, Lake Shore said its Timmins West mine in northern Ontario shows potential for 10 years of production based on current resources, with indicated annual gold production in years three to nine averaging 160,000 ounces recovered and peaking at 175,000 ounces.

The company's mill can handle 2,000 tonnes or ore per day and is currently being expanded to 3,000 tonnes per day with completion expected late this year.

Lake Shore shares were up three cents at $1.41 on the Toronto Stock Exchange on Thursday.