TIMMINS - Lake Shore Gold’s two superstar mines just keep on growing.
The company’s vice-president of operations, Dan Gagnon, didn’t have very many negatives to present to Timmins city council during a review of 2012 and a look ahead to Lake Shore’s upcoming operations in 2013.
Gagnon said that while the Fenn-Gib property, East of Matheson, has “great potential for an open pit, our great focus will be on our two main assets, the Timmins West and Bell Creek complexes.”
He called 2012 a “very exciting and good year,” and said the company is poised to reach new heights in 2013.
“We did a lot of mine building, a lot of mill construction over the past year, and a lot of improvement in our systems,” said Gagnon. “Now this year, I think we’re seeing the benefits of all that work. I think we’re poised for a break-out this year.
“We met production guidance and development and expansion objectives and expanded our milling capacity by 25%, and we’re looking to increase production capacity to 3,000 tons per day by second quarter of 2013.”
After processing 85,000 ounces of gold at the two mines last year, Gagnon said the company is expecting to produce up to 130,000 ounces in 2013 and 150,000 ounces by 2014.
Capital spending for the company reached more than $175 million in 2012 – most of which was spent within the Timmins community – and it will be paying off in spades this year as the Timmins West site enters its first year of full production.
Lake Shore will spend $80 million in 2013 to continue building their current mines and expanding mill operations, while $10 million will be dedicated to underground exploration.
“This year, we want to deliver value, we want to generate free cash flow for the shareholders, we want to make sure that stock price starts climbing,” said Gagnon. “We’re bringing Timmins West to full production, we’re going to continue to improve on our operating performance, lower our costs, increase our margins, start making money.
“This is the first year we expect to have positive free cash flow and we’re going to continue to look at our projects to make sure they continue sustainability-wise,” he said. “We have a PEA (preliminary economic assessment) at our Timmins West mine that shows 10 years of mine life, but we want to continue to do the exploration to regenerate that every year.”
Timmins West is expected to produce approximately 80% of the company’s total gold, but Gagnon said that Bell Creek is just as important.
“It’s a big year for Bell Creek,” said Gagnon. “We’re actually exploring down to 1,000 metres. This year, we’re going to be diamond-drilling to really understand where we need to go get it.
“In the future, we expect we’ll probably need to deepen our shaft, which is in the range of $100 million-plus.
But this year is the year we’re going to understand how much gold is beneath our feet.”
Gagnon was confident enough in ongoing exploration to predict the company’s next mine will probably be located somewhere along Highway 144, just 1.4 kilometres away from the existing Timmins West headframe.
With the company wishing to share its excitement with stockholders and communities, Gagnon added that gold, even with its soaring market prices, is only worth so much in the end.
“This is all important to all of us, but if we don’t do it safely, it doesn’t mean anything,” said Gagnon. “Our commitment to the families and to the people is really on safety. If we can’t do it safely, it’s probably not worth doing so we’re spending a lot of time making sure our employees go home safely at the end of the day.