Lake Shore Gold Corporation (LSG)

[SsMurry]

Financing Completed, Exploration Ramping Up!
Equity Research from analyst Daniel Earle regarding recent financing.

Daniel Earle is resuming coverage of Lake Shore Gold following the close of a bought deal financing. The company sold a total of 12.9mm flow-through common shares at a price of $1.17 to raise gross proceeds of $15mm
Daniel Earle estimates that the company now has approximately $77mm in available cash (and $115mm in debt) and the company suggested that it will use the funds for general exploration in the 144 area, including the 144 Gap Zone discovery
Daniel Earle believe raising additional funds for a more aggressive exploration program is sensible, in his view, given the encouraging exploration results reported to date and the need to build resources/reserves to extend the mine life at Timmins West
Daniel Earle calculates that Lake Shore is currently trading at 0.67x to the corporate NAV5%. This is a slight discount to the emerging and mid-tier gold producers in the coverage universe, which trade at an average of 0.83x NAV5%
Daniel Earle believes the company's valuation is compelling, particularly so in terms of its free cash flow yield, which is the highest in the coverage universe (13.8%). Daniel Earle will re-iterate his BUY recommendation and $2.00 target price