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Lake Shore Gold Corp. Announces Revised Agreement With Hochschild Mining; Second Private Placement Priced at 44% Premium to Market(Market Wire Via Thomson Dialog NewsEdge) TORONTO, ONTARIO, April 16 / MARKET WIRE/ -- Lake Shore Gold Corp. (TSX: LSG) ("Lake Shore Gold," "the Company" or "LSG") is pleased to announce that it has reached a revised agreement with Hochschild Mining Holdings Ltd. ("Hochschild"), a wholly owned subsidiary of Hochschild Mining plc (LSE: HOC), to raise $79.0 million through a private placement transaction. The transaction will allow Hochschild to increase its interest in the Company to 35.0% of issued and outstanding common shares from its current ownership of 19.9%. Subject to shareholder approval of the transaction and the termination of the Company's Shareholders' Rights Plan, Hochschild has the right to acquire approximately 32.9 million common shares at a price of $2.40 per share, a 44% premium to the closing price on Tuesday, April 15, 2008. Hochschild will also have a right to increase its ownership to 40%, on a fully diluted basis, through market and private agreement transactions. Hochschild has agreed to a standstill with Lake Shore Gold, limiting its shareholdings to no more than 40%, on a fully diluted basis, until November 22, 2010. Anthony (Tony) Makuch, President and CEO of Lake Shore Gold, commented: "Hochschild's desire to increase its interest in Lake Shore Gold by an additional 15.1% at a 44% premium to market illustrates its strong support for, and belief in, our vision to become Canada's next intermediate gold producer. The $79.0 million from the second private placement would benefit all of our shareholders as it gives us the capital required to develop and commence production at our Timmins West mine, to re-commission our 100%-owned Bell Creek mill, and to significantly advance our other projects in the Timmins area, including the Bell Creek mine and the Vogel and Schumacher properties. While considerable work remains, we fully expect Lake Shore Gold to be a very different company by the end of 2010, a gold producer with quality assets that is growing internally and through the pursuit of attractive acquisition and joint venture opportunities." The private placement transaction announced today follows an initial private placement with Hochschild, which was completed in February 2008, through which Lake Shore Gold raised $64.7 million by issuing to Hochschild 28,172,301 common shares at a price of $2.30 per share, a 30% premium to the then market price. At the time of the initial financing, the Company and Hochschild entered into a strategic alliance agreement. Among the key terms of this agreement, Lake Shore Gold agreed to seek shareholder approval to terminate the Company's Shareholders' Rights Plan and to complete an additional financing that would allow Hochschild to increase its holdings to 35% of issued and outstanding shares, to be priced on a five-day volume weighted average price of LSG shares prior to the closing of the transaction. As well, Hochschild agreed to a standstill with Lake Shore Gold, with shareholdings limited to no more than 40%, on a fully diluted basis, for five years, subject to certain exceptions. As part of the revised agreement announced today, and subject to shareholder approval and termination of the Shareholders' Rights Plan, the price of the second financing is set at $2.40 per share and the duration of the standstill is being reduced to a period ending on November 22, 2010. Eduardo Hochschild, Executive Chairman of Hochschild Mining plc, commented: "We are pleased to be taking this next step in enhancing our relationship with Lake Shore Gold. Our two companies have a number of complementary strengths and we have high regard for the Company and its asset base. Lake Shore Gold provides attractive growth potential to Hochschild in Canada and we view it as an important strategic investment moving forward." The $2.40 per share private placement transaction is subject to both TSX and shareholder approval. Lake Shore Gold's shareholders will vote on the transaction, as well as a motion to terminate the Company's Shareholders' Rights Plan, at its Annual General and Special Meeting in Toronto on May 15, 2008. In advance of the Meeting, an information circular and proxy form will be mailed to shareholders. About Lake Shore Gold Lake Shore Gold Corp. is a mineral development and exploration company that is rapidly moving towards gold production through a portfolio which includes an existing processing facility and a number of quality mineral properties located in the Timmins gold mining district of northern Ontario and Quebec. The Company has completed a pre-feasibility study and is moving forward with an advanced exploration program at its Timmins West property, has begun re-commissioning work at its 100%-owned Bell Creek mill and is continuing drilling programs at a number of other prospective properties. The Company's common shares trade on the Toronto Stock Exchange under the symbol LSG. About Hochschild Hochschild Mining plc is a leading precious metals company listed on the London Stock Exchange (HOCM.L for Reuters / HOC LN for Bloomberg) with a primary focus on the exploration, mining, processing and sale of silver and gold. Hochschild currently operates five underground epithermal vein mines, four located in southern Peru and one in southern Argentina and one open pit mine in northern Mexico. Hochschild also has one early development project in Mexico and sixteen long-term prospects throughout Latin America. Hochschild has over forty years experience in the mining of precious metal epithermal vein deposits. Forward-looking Statements Certain statements in this press release relating to Hochschild's investment in Lake Shore Gold, and the growth and development of the Company's projects and properties are "forward-looking statements" within the meaning of securities legislation. The Company does not intend, and does not assume any obligation, to update these forward-looking statements. These forward-looking statements represent management's best judgment based on current facts and assumptions that management considers reasonable, including that demand for products develops as anticipated, that operating and capital plans will not be disrupted by issues such as mechanical failure, unavailability of parts and supplies, labour disturbances, interruption in transportation or utilities, or adverse weather conditions, and that there are no material unanticipated variations in the cost of energy or supplies. The Company makes no representation that reasonable business people in possession of the same information would reach the same conclusions. Forward-looking statements include, but are not limited to, statements with respect to the future price of gold and other metals, the estimation of mineral resources, the realization of mineral resource estimates, the timing and amount of estimated future production, costs of production, capital expenditures, costs and timing of the development of new deposits, timing of completion of pre-feasibility studies, success of exploration and development activities, permitting time lines, currency fluctuations, requirements for additional capital, government regulation of exploration operations, environmental risks, unanticipated reclamation expenses, title disputes or claims, completion of acquisitions and their potential impact on the Company and its operations, limitations on insurance coverage and the timing and possible outcome of pending litigation. In certain cases, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, risks related to the completion and integration of acquisitions and actual effects of the acquisitions; risks related to joint venture operations; actual results of current exploration activities; actual results of current reclamation activities; conclusions of future economic evaluations; changes in project parameters as plans continue to be refined; future prices of gold and other metals; possible variations in ore resources, grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of development or construction activities; as well as those factors discussed in the section entitled "Risk Factors" in the Company's Annual Information Form filed with Canadian provincial securities regulatory authorities. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Contacts: Lake Shore Gold Corp. Tony Makuch President & CEO (416) 703-6298 Email: [email protected] Lake Shore Gold Corp. Mark Utting Vice-President, Investor Relations (416) 703-6298 Email: [email protected] Website: www.lsgold.com Copyright ? 2008 Market Wire, Incorporated |