May 5 (Reuters) - Canadian miner Lake Shore Gold Corp said it would acquire the Fenn-Gib gold project from Barrick Gold for C$60 million ($62.6 million) in stock as part of its plans to double the size of its gold resource.
Lake Shore recently said it expects to double the size of its gold resource over the next 12 months and aims to produce about 300,000 ounces a year of gold by 2013. [ID:nN09208393]
The Fenn-Gib project is an advanced project and had the potential to become Lake Shore Gold’s third major production source around the Timmins Gold Camp, in addition to its Timmins West and Bell Creek complexes, the company said in a statement.
Lake Shore said it would issue about 14.9 million shares to pay for the deal. Of those shares, about 14.4 million shares would go to Barrick, which would give it a 3.6 percent stake in the Lake Shore.
Barrick also retains back-in rights for a 51 percent interest in Fenn-Gib project if a minimum of 5 million ounce resource estimate is confirmed, Lake Shore said.
Lake Shore is targeting an initial resource estimate of at least 2-3 million ounces.
However, Lake Shore said limited work was planned at the Fenn-Gib project this year, with the company choosing to focus on developing its Timmins assets in northern Ontario.
Lake Shore said its planned project development costs for the year remained at C$75 million, with an additional C$31 million earmarked for the Timmins assets.
Shares of Lake Shore closed at C$3.77 on Wednesday on the Toronto Stock Exchange, while those of Barrick closed at C$46.06. ($1 = 0.958 Canadian Dollars) (Reporting by Savio D‘Souza; Editing by Maju Samuel)