TORONTO (miningweekly.com) – TSX- and Amex-listed Lake Shore Gold’s shares on Monday spiked by 56.25% after the company announced that it expects to report strong operating results for the second quarter of the year early in July.

The company said gold output was expected to total more than 29 000 oz at an average grade of more than 4 g/t. From the start of the second quarter, mill throughput had averaged about 2 500 t/d, gold production was about 27 000 oz and gold poured totalled more than 25 000 oz.

Cash operating costs per ounce, to be released with the company's full financial and operating results in early August, were expected to show significant improvement from the first quarter.

Lake Shore said the expansion of the Bell Creek mill to a capacity of 3 000 t/d was nearing completion, with commissioning to start late in July and the full expanded processing capacity to be achieved by early September.

Supported by the improved operating performance and progress with its key growth projects, the company affirmed that it was committed to achieving its production guidance for the year of between 120 000 oz and 135 000 oz of gold at cash operating costs of between $800/oz and $875/oz, while spending about $90-million on capital projects.

After the mill expansion had been completed, production levels would increase to more than 140 000 oz/y, at cash operating costs below $700/oz. The company was on track to start generating net free cash flow starting in September, even at current subdued gold prices.

“We decided to update the market at this time, given that we are seeing a disconnect between the excellent progress we are making with our operations and projects and recent movements in our share price. Looking at our performance, our grades are coming up, our costs are coming down, our mill is operating extremely well and, over the next couple of months, our capital investments will drop dramatically,” Lake Shore president and CEO Tony Makuch said.

Lake Shore has three wholly owned, multimillion-ounce gold complexes in the Timmins Gold Camp, including the producing Timmins West and Bell Creek mines, with material being delivered for processing to the Bell Creek mill.

On Monday afternoon, Lake Shore’s TSX-listed shares had gained C$0.09 in value to trade at C$0.25 apiece.