Sprott gives Lake Shore Gold $70 million and a 9% bump in its stock price
Lake Shore Gold (TSX:LSG)(NYSE Amex:LSG) added 9.2% on Thursday, after announcing after the close yesterday that it has entered into an agreement with Sprott Resource Lending Partnership for a credit facility totaling up to $70 million.
Lake Shore Gold in mid-afternoon dealings was trading up 8c at $0.95 on the Toronto big board, its high for the day. The broader market was generally stronger on the day with the TSX S&P index up 1.5%
Around 2.4 million shares in the $385 million company had changed hands by 3:20 pm EST. The counter is still showing steep losses for 2012 – it is down 26% year to date.
Lake Shore Gold said the facility involves two components, a $35 million gold loan maturing on May 31, 2015 and a standby line of credit for an additional $35 million which matures at the end of 2014.
Tony Makuch, president and CEO of Lake Shore Gold, said in a statement the company we will use the funds to bring its Timmins West Mine in Ontario Canada to full production, complete mill expansion and advance underground work at its other producing mine Bell Creek:
"Based on our current development plans, we are within 12 to 18 months of Timmins West Mine becoming a significant free cash flow generator, and the debt we have arranged with Sprott will ensure we have the funding to get us to that point, while maintaining a strong and flexible treasury.
In our view, Lake Shore Gold’s share price has been adversely affected by market concerns around our balance sheet and capital funding. We have now addressed these concerns and have done so in a manner that involves very little dilution to our shareholders.”