TORONTO (Reuters) - Lake Shore Gold Corp LSG.TO said on Wednesday it will delay completing an expansion of its Bell Creek mill in northern Ontario until 2013 and that finishing the project may cost 10 to 25 percent more than it had estimated.
Shares of the gold miner closed down 6.1 percent at C$1.07 on the Toronto Stock Exchange. The stock is down more than 18 percent so far this year.
The expansion, which will boost processing capacity at the mill by 50 percent, was originally set to be finished in late 2012. Completing the expansion is now expected to cost 10 to 25 percent more than the C$61 million ($59.5 million) budgeted for this year, the company said.
Lake Shore said it will spend C$56 million at Bell Creek this year, with the remainder of the expenditure to be incurred in 2013. It blamed industry-wide pressures on materials and labor prices for the cost increase.
The company, which in the process of ramping up production at its nearby Timmins West mine, said that it remains on track to produce 85,000 to 100,000 ounces of gold this year.
Lake Shore cut its 2012 capital budget by $15 million-$20 million on Wednesday because of the delay in the mill expansion, along with a deferral of non-essential work at Timmins West and a reduction in planned exploration spending.
The company will boost capacity at the mill to 2,500 tons a day this year, with the full expansion to 3,000 tons a day expected in 2013. Lake Shore said production at the mill will now be better aligned with the ramp-up in output at its Timmins West mine.
Reporting by Julie Gordon; Editing by Peter Galloway