Lake Shore, Porcupine JV finalize Bell Creek deal (July 23, 2007)

After protracted negotiations and an extension to due-diligence investigations, Lake Shore Gold (LSG-T) and the Porcupine Joint Venture have reached a final agreement on the sale of the Bell Creek mine and mill to Lake Shore.

The Joint Venture, owned by Goldcorp (G-T, GG-N) and Kinross Gold (K-T, KGC-N), gets $6 million in cash, $4 million worth (about 2.2 million) of Lake Shore’s shares, and 2 million warrants that can be exercised at $2.86. The Joint Venture also retains a 2% net smelter return.

Bell Creek has a 1,500-tonne-per-day mill, a tailings pond, and surface infrastrcture, and is close to Lake Shore’s Vogel-Schumacher property. The remnant resource at Bell Creek is around 191,000 tonnes indicated, grading 8.25 grams gold per tonne, plus 347,000 tonnes inferred at 7.7 grams per tonne. Vogel has a 643,000-tonne indicated resource at 12.7 grams per tonne and a 934,000-tonne inferred resource at the same grade; the Schumacher property to the west hosts extensions of that mineralization.

Lake Shore also reported that the feasibility study on its Timmins West gold project is in final review and should be out in August. Lake Shore has Provincial approval for the planned underground exploration program at Timmins West, where an indicated resource of 3.3 million tonnes grading 12.3 grams gold per tonne has been outlined.