Lake Shore links Timmins mine with Thunder Creek

Lake Shore Gold (LSG-T), a company that’s helped revive the Timmins gold camp, has now officially connected its Timmins mine to the Thunder Creek deposit, as planned, via an access ramp it’s been working on.

Linking the two deposits, just 800 metres apart, will allow Lake Shore to start processing ore from Thunder Creek at its Bell Creek mill later this year. Lake Shore is aiming for 10,000 oz. of gold production from Thunder Creek in addition to the 50,000 oz. of gold from the Timmins mine in 2010.

“Reaching mineralization at Thunder Creek is a critical milestone,” said Tony Makuch, president and CEO of Lake Shore in a statement.

What’s more, Lake Shore has intersected high grade gold mineralization at Thunder Creek  that is consistent with mineralization from surface and underground drilling while developing the 200 L access ramp.

“Over the next month, our work along the 200 L access ramp will focus on diamond drilling, drifting in support of diamond drilling and establishing required infrastructure,” Makuch says. “Once more drill results are received we plan to commence development along the mineralization in August which will allow us to begin initial processing of Thunder Creek mineralization at the Bell Creek mill later this year.”

The company has plans to complete an initial resource estimate for Thunder Creek as well.

Underground drilling was done from two cut-outs off the 200 L access ramp located 150 metres and 400 metres north of the Thunder Creek deposit and targeted the intersection of the new ramp with what is known as the Rusk Horizon.

Highlights from this drilling include 9.1 metres grading 12.6 grams gold per tonne, including 5.6 metres grading 19.27 grams gold ; 10.4 metres grading 15.07 grams gold per tonne including 3.6 metres grading 65.89 grams gold; and 8.9 metres grading 8.59 grams gold per tonne including 5.6 metres grading 15.03 grams gold per tonne.

Lake Shore reports that the best mineralization occurred in locally intense carbonate, hematite and potassic alteration included 1to 5% sulphide mineralization and had visible gold.

The Timmins mine, located 18 km west of the city of Timmins, has probable reserves of 3.4 million tonnes grading 7.52 grams gold per tonne for 812,000 oz. gold. A technical report gave the mine a life of 7.5 years with production peaking at 120,000 oz. gold per year at a cash cost of US$322 per oz. gold. Lake Shore expects to reach commercial production by the fourth quarter. A shaft was installed there between July 2008 and March 2010.

The Bell Creek mill is a 1,500-tonne-per-day facility located about 42-km by road from the Timmins mine. Lake Shore aims to produce 200,000 oz. gold per year by 2011 and has plans to increase capacity at the mill to 3,000 tonnes per day, raising production to upwards of 300,000 oz. gold per year, according to some analyst’s estimates (though there is no resource estimate on Thunder Creek yet).

Lake Shore shares were down 1¢ in Toronto today to $3.11 on a trading volume of 591,000 shares. The company has 349.2 million shares outstanding a market cap of $1.09 billion and a 52-week trading range between $4.37 and $2.30 per share.