Lake Shore Gold Produces 95,600 Ounces in First Half of 2015, Company Announces Improved Full-Year Operating Outlook2 hours ago by Marketwire

Lake Shore Gold Corp. (TSX: LSG)(NYSE MKT: LSG) -

--  H1/15 production of 95,600 ounces, Q2/15 production of 42,600 ounces
--  2015 production guidance revised to at least 180,000 ounces from 170,000
    to 180,000 ounces
--  2015 unit costs expected to beat guidance - Company now targeting full-
    year cash operating costs better than US$650 per ounce and all-in
    sustaining costs below US$950 per ounce
--  Cash and bullion increased to approximately $82.0 million at July 7,
    2015
--  Senior secured debt fully repaid during Q2/15
--  Continued exploration success with discovery of second gold zone at 144
    Gap

Lake Shore Gold Corp. ("Lake Shore Gold" or the "Company") today announced production in the first six months of 2015 ("H1/15") of 95,600 ounces, which compared to production of 96,900 ounces in the first half of 2014 ("H1/14"). Based on production in H1/15, the Company today revised its full-year 2015 production guidance to at least 180,000 ounces from 170,000 to 180,000 ounces. Mill throughput during H1/15 totaled 627,000 tonnes at an average grade of 4.9 grams per tonne ("gpt") and average recoveries of 96.7% versus 593,600 tonnes at an average grade of 5.3 gpt and average recoveries of 96.6% in H1/14. Gold poured in H1/15 totaled 96,400 ounces, while gold sales were 98,500 ounces at an average selling price of US$1,208 ($1,488) per ounce. The Company's cash and bullion(1) at July 7, 2015 totaled approximately $82.0 million.

Production in the second quarter of 2015 ("Q2/15") totaled 42,600 ounces with total mill throughput of 327,100 tonnes, an average grade of 4.2 gpt and average recoveries of 96.8%. The average grade in Q2/15 followed a record quarterly grade of 5.7 gpt in the first quarter of 2015, with the distribution of grades over the two quarters largely related to mine sequencing. Grades over the balance of the year are expected to be similar to the Q2/15 level. Results for Q2/15 compare to total production of 52,300 ounces (309,800 tonnes at an average grade of 5.4 gpt and average recoveries of 96.6%) in the second quarter of 2014. Gold poured in Q2/15 totaled 44,400 ounces, while gold sales were 45,900 ounces at an average selling price of US$1,197 ($1,470) per ounce.

Tony Makuch, President and CEO of Lake Shore Gold, commented: "We had a strong first half of 2015, which has resulted in a positive revision to our production guidance for the year. In addition, while we will not release our H1/15 and Q2/15 cost estimates for a few more days, we now expect to beat our unit cost guidance in 2015. We are now targeting cash operating costs of better than US$650 per ounce sold compared to our guidance of US$650 to US$700 per ounce. Our all-in sustaining costs(3) are expected to average below US$950 per ounce versus our guidance for the year of US$950 to US$1,000 per ounce. With solid production and low unit costs, we have been able to grow our cash and bullion by approximately $20 million in the first six months of 2015 with the increase coming entirely from internally generated cash flow. We have also continued to reduce debt. In late May, we made the final payment on our gold-linked note, which will save the Company over a million dollars a month in debt repayment and servicing costs going forward.

"Turning to exploration, we continue to generate very encouraging drill results at 144, including the discovery of a second gold zone, our 144 Gap SW Zone, located 200 metres to the southwest of the 144 Gap Zone. Based on the success we have achieved, we recently announced plans to increase our exploration expenditures at 144 in 2015 by $7.0 million, with work to focus on both of our discoveries, as well as to begin assessing additional targets such as 144 North, 144 South and the area between 144 South and our Gold River Trend project. We remain on track to release a first resource at the 144 Gap Zone as part of our next resource update early next year."

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                                Three Months Ended        Six Months Ended
                          --------------------------------------------------
                            June 30,  Mar. 31,  June 30,  June 30,  June 30,
                                2015      2015      2014      2015      2014
                          --------------------------------------------------
Tonnes milled                327,100   299,900   309,800   627,000   593,600
Recovery (%)                    96.8      96.7      96.6      96.7      96.6
Grade (grams/tonne)              4.2       5.7       5.4       4.9       5.3
Gold Ounces
  Production                  42,600    53,000    52,300    95,600    96,900
  Poured                      44,400    52,000    53,500    96,400    99,200
  Sales                       45,900    52,600    53,500    98,500    96,500
Gold price (US$/ounce)         1,197     1,219     1,289     1,208     1,291
Gold price ($/ounce)           1,470     1,504     1,404     1,488     1,416
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Qualified Person

Scientific and technical information contained in this press release related to mine engineering and production has been reviewed and approved by Natasha Vaz, P.Eng., Vice-President, Technical Services, who is an employee of Lake Shore Gold Corp., and a "qualified person" as defined by National Instrument 43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101").

Scientific and technical information related to resources, exploration drilling and all matters involving mine production geology contained in this press release, or source material for this press release, was reviewed and approved by Eric Kallio, P.Geo., Senior Vice-President, Exploration. Mr. Kallio is an employee of Lake Shore Gold Corp., and is a "qualified person" as defined by NI 43-101.

About Lake Shore Gold

Lake Shore Gold is a Canadian-based gold producer with operations based in the Timmins Gold Camp of Northern Ontario. The Company produces gold from two mines, Timmins West and Bell Creek, with material being delivered for processing to the Bell Creek Mill. In addition to current mining and milling operations, the Company also has a number of highly prospective projects and exploration targets, all located in and around the Timmins Camp. The Company's common shares trade on the TSX and NYSE MKT under the symbol LSG.

Footnotes

1.  Bullion relates to gold poured in dore which has not yet been included
    in revenues and for which cash has not yet been received (valued at
    market prices).
2.  Cash operating costs and cash operating cost per ounce are Non-GAAP
    measures. In the gold mining industry, cash operating costs and cash
    operating costs per ounce are common performance measures but do not
    have any standardized meaning. Cash operating costs are derived from
    amounts included in the Consolidated Statements of Comprehensive Income
    (Loss) and include mine site operating costs such as mining, processing
    and administration as well as royalty expenses, but exclude
    depreciation, depletion and share-based payment expenses and reclamation
    costs. Cash operating costs per ounce are based on ounces sold and are
    calculated by dividing cash operating costs by commercial gold ounces
    sold; US$ cash operating costs per ounce sold are derived from the cash
    operating costs per ounce sold translated using the average Bank of
    Canada C$/US$ exchange rate. The Company discloses cash operating costs
    and cash operating costs per ounce as it believes the measures provide
    valuable assistance to investors and analysts in evaluating the
    Company's operational performance and ability to generate cash flow. The
    most directly comparable measure prepared in accordance with GAAP is
    total production costs. A reconciliation of cash operating costs and
    cash operating cost per ounce to total production costs for the most
    recent reporting period, the three months ended March 31, 2015 and 2014,
    is set out on page 16 of the Company's first quarter 2015 MD&A filed on
    SEDAR at www.sedar.com and at www.lsgold.com.
3.  All-in sustaining cost is a non-GAAP measure. This measure is intended
    to assist readers in evaluating the total costs of producing gold from
    current operations. While there is no standardized meaning across the
    industry for this measure, the Company's definition conforms to the all-
    in sustaining cost definition as set out by the World Gold Council in
    its guidance note dated June 27, 2013. The Company defines all-in
    sustaining cost as the sum of production costs, sustaining capital
    (capital required to maintain current operations at existing levels),
    corporate general and administrative expenses, in-mine exploration
    expenses and reclamation cost accretion related to current operations.
    All-in sustaining cost excludes growth capital, growth exploration
    expenses, reclamation cost accretion not related to current operations,
    interest and other financing costs and taxes. The most directly
    comparable measure prepared in accordance with GAAP is total production
    costs. A reconciliation of all-in sustaining cost to total production
    costs for the most recent reporting period, the three months ended March
    31, 2015 and 2014 is set out on page 17 of the Company's first quarter
    2015 MD&A filed on SEDAR at www.sedar.com and at www.lsgold.com.