Lake Shore Gold (LSG.TO, NYSEMKT:LSG) seems to be keeping its promise to lower the cost base at its Timmins West and Bell Creek mines in Ontario, Canada. The all-in sustaining cost for the second quarter of this year was $784/oz which is a remarkable improvement from the $1,264/oz in the same period last year, and it’s clear the company is now free cash flow positive at the current gold price. This is due to the much higher production (52,300 oz in Q2 2014 versus 30,800 ounces of gold in Q2 2013) so fixed costs and capital costs can now be spread over more ounces than before.
Lake Shore Gold isn’t what you’d call ‘cheap’ at the moment, but we like turnaround stories and Lake Shore’s management team has proven it’s capable of actually generating a profit. Additionally, there’s lots of exploration potential on the company’s assets and we are looking forward to see an update on its development pipeline.
Disclosure: The author holds no position in Lake Shore Gold. Please see our disclaimer for current positions.