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Gold/Mining/Energy : Gold and Silver Juniors, Mid-tiers and Producers -- Ignore unavailable to you. Want to Upgrade?

To: marcos who wrote (58149)	4/5/2008 1:23:31 PM
From: lorne	Read Replies (1) \| Respond to of 78424

News Release 19 Feb 2008 Hochschild MiningPLC - Strategic Investment Hochschild Mining PLC 19 February 2008 ______________________________________________________________________ phx.corporate-ir.net Hochschild Mining plc acquires a 19.99% stake in Lake Shore Gold Corp. for C$64.6 million Key Highlights: - Hochschild Mining plc ('Hochschild') announces a strategic investment in Lake Shore Gold Corp. ('Lake Shore'), a Toronto listed gold company with prime exploration and development projects in the Abitibi belt of the Timmins region, Ontario, Canada - Initial purchase of 19.99% with the right for Hochschild to increase its interest to 40% by the end of 2008 (up to 35% through financings and the balance through the market) - Total cash consideration of C$64.6 million, funded entirely through existing cash - Price of C$2.30 per share represents 30% premium to five day volume weighted average price - Proceeds will be used by Lake Shore to continue advancing projects towards production and accelerating their aggressive exploration campaign Eduardo Hochschild, Executive Chairman of Hochschild Mining plc, commented; 'At a time when gold companies are struggling to find profitable, high-grade gold resources, our strategic investment in Lake Shore allows Hochschild to capture significant exposure to a high-grade, long-life asset in a mining friendly jurisdiction, without the costs associated with establishing a greenfield operation. Lake Shore is a well run Canadian mining company with significant progress towards production and a strong portfolio of projects in a prolific gold mining region in Canada.' 'This step marks a key milestone towards a deepening and mutually beneficial relationship between the two companies, acknowledging the complementary strengths of Hochschild's underground mining expertise and Lake Shore's existing asset base and wealth of geological knowledge of the region. We continue to invest in high quality assets which we believe will maximize value for our shareholders in the long term at the same time as offering exciting prospects in the short term.' Alan Moon, Chairman of Lake Shore Gold Corp., commented; 'This investment by Hochschild is a strong endorsement of Lake Shore's assets and management. Forming the strategic alliance with Hochschild provides Lake Shore access to the investment dollars required to become a significant gold producer, and it also provides access to Hochschild's experience and expertise, and their extensive network of industry connections, all of which will help Lake Shore achieve its goals.' 'With this commitment of funds from Hochschild, Lake Shore is now positioned to complete the advanced underground exploration program at Timmins West, the refurbishment of the Bell Creek mill and dewatering and refurbishing the Bell Creek mine. This investment and the investment contemplated to bring Hochschild to 35% will carry Lake Shore into production and expand our exploration programs.' Hochschild announces that it has made a strategic investment in Lake Shore, a Toronto listed gold company with prime exploration and development projects in the Abitibi belt of the Timmins region, Ontario, Canada. This investment will enable Hochschild to build its exposure to high-grade, long-life gold resources through a structure that offers significant exploration potential and long term growth. Lake Shore will direct the proceeds to advancing projects towards production and accelerating their aggressive exploration campaign. Hochschild has initially purchased by way of a private placement 28,172,302 common shares representing approximately 19.99% of the non-diluted common shares of Lake Shore subject to satisfaction of certain conditions. Hochschild has the right to increase its ownership to 40% (up to 35% through financings and the balance through the market) on a fully diluted basis by the end of 2008, subject to Lake Shore shareholder approval. Lake Shore's Board has irrevocably agreed to support Hochschild's ability to increase its participation beyond the initial 19.99% investment by seeking shareholder approval within the next 60 days. As part of the overall agreement, Hochschild is subject to a standstill for five years but is able to make an offer for Lake Shore's remaining outstanding shares if supported by Lake Shore's Board or if made in response to an offer for Lake Shore from a third party. The total cash consideration of C$64.6 million or C$2.30 per share represents a 30% premium over the volume weighted average price of Lake Shore's shares over the previous five day trading period. Hochschild will finance this amount from its existing cash. As part of the agreement, Hochschild has the right to appoint two representatives to the Lake Shore Board (currently comprising seven members) and, going forward, will have the right to board representation in proportion to its ownership interest. In addition, for as long as it maintains its 19.99% interest in Lake Shore, Hochschild has a right of first offer over any new property in Canada that Lake Shore decides to joint venture. Lake Shore provides Hochschild with a foothold into long-life gold deposits in the Timmins mining district of Northern Ontario, where more than 67 million ounces of gold have been produced over the past 100 years. In addition to Lake Shore's exposure to high-quality gold projects, it has an experienced management team with technical and community relations expertise. Furthermore, Lake Shore provides Hochschild with significant exploration potential and an impressive pipeline of projects at various stages of exploration, from grass roots through to pre-feasibility and a proprietary database of exploration targets. The strategic investment does not require approval of Hochschild's shareholders. The strategic investment has been made by private agreement through a wholly-owned subsidiary within the Hochschild Group. Hochschild does not own any other shares in Lake Shore. Hochschild's purchase of 19.99% of the issued share capital of Lake Shore gives it a proportional interest in the assets of Lake Shore and will be equity accounted under IFRS.