The Fenn-Gib Project is located approximately 60 kilometres east of Timmins along the east extension of the Destor Porcupine Fault Zone (“DPFZ”) and Pipestone Fault Zone (“PFZ”) near a major dilatent zone. Lake Shore Gold acquired Fenn-Gib in August 2011 from Barrick Gold Corporation. The Project provides the Company with significant new mining and exploration opportunities, including the potential to establish a large-tonnage, open-pit mining operation in support of its continued rapid growth following the development of its core Timmins assets.

Highlights

May 1, 2012 - Significant expansions of mineralization announced to the east and to depth, drilling in untested gaps confirms expansion potential to the north and west, and multiple new exploration targets identified, all within 1.5 kms of the existing resource.

November 17, 2011 - Lake Shore Gold announces an initial resource at the Fenn-Gib project including a total of 40.8 million tonnes grading 0.99 gpt for a total of 1.30 million contained Au ounces in the Indicated category and 24.5 million tonnes at 0.95 gpt for a total of 0.75 million ounces in the Inferred category. Most of the resources are in the Main Zone, which is located in the northern portion of the Fenn-Gib property. The Company reports excellent potential to add to the resource with further work given that there is only limited drilling below 300 metres and to the north, east and west of the Main Zone.

October 28, 2011 - Lake Shore Gold announces results of confirmation and extension drilling at Fenn-Gib, including 1.31 gpt over 414.00 metres. The results confirm the geological model, highlight the potential for depth extensions and expand the shallow mineralization at Fenn-Gib by 200 metres to the north. Company announces that it is targeting an initial resource at Fenn-Gib by end of 2011.

August 18, 2011 - Lake Shore Gold acquires Fenn-Gib from Barrick Gold Corporation for 14.9 million common shares of the Company, representing approximately 3.9% of outstanding common shares. (See press release dated August 18, 2011 for more details).

History

The Fenn-Gib area has been actively explored since 1919. The most recent work consisted of diamond drilling completed by Cominco (1985), Corona (1986), Pangea Goldfields (1994-2000) and St. Andrew Goldfields (1998-1999)

1999 – MRDI Canada completed a scoping study completed on behalf of Pangea Goldfields including construction of geological block model and preliminary open-pit resource estimates.

2000 – Barrick Gold Corporation acquired Pangea and, subsequent to the transaction, only minor exploration and evaluation work was performed.

2005 – Barrick completes a series of pit simulations based on the MRDI geological block model, with the results recommending that the project had sufficient merit to warrant additional studies.

August 2011 – Lake Shore Gold acquired Fenn-Gib project from Barrick.

November 2011 – Initial National Instrument 43-101 resource released for Fenn-Gib project.

Initial National Instrument (NI) 43-101 Resource

On November 17, 2011, Lake Shore Gold announced the completion of an initial NI 43-101 resource estimate for the Fenn-Gib project. The resource estimate included a total of 40.8 million tonnes grading 0.99 gpt for a total of 1.30 million contained Au ounces in the Indicated category and 24.5 million tonnes at 0.95 gpt for a total of 0.75 million ounces in the Inferred category. Most of the resources are in the Main Zone, which is located in the northern portion of the Fenn-Gib property.

Resource estimation was completed within a newly constructed 3D model of geological domains and the Ordinary Kriging interpolation method. Kriging was completed using 10 by 5 by 10 metre blocks and a total of 5,991 composites of 5 metre length in the Main Zone with gold assays of original 1.5 metre samples capped to 25 grams per tonne. Review of data suggests the grade estimates comprise approximately 10 % dilution. Validation of the block model was done by visual comparisons of grade data from the block model and drill holes on plans and sections, as well as through cross validation studies using drill hole and block model data which showed excellent results.

Tabulation of "in pit resources" was completed from within a Whittle optimized pit shell generated using a gold price of US$1,190 per ounce and a cut off grade of 0.50 gpt. Maximum dimensions of the final pit are 1.5 km long by 800 metres wide by 460 metres deep.

Included with the "in pit" portion of the mineral resource estimate is a sensitivity analysis from the base case cut-off grade of 0.50 gpt using various cut off grades between 0.35 gpt to 0.60 gpt. The analysis indicates the robust nature of the overall resource at these cut off grades.

Exploration Potential

Lake Shore Gold believes that the potential to extend and expand the Fenn-Gib resource is excellent given that there is only limited drilling below 300 metres and to the north, east and west of the Main Zone. On October 18, 2011, the Company reported very encouraging drill results from its first four holes at Fenn-Gib, including expanding the shallow mineralization by 200 metres to the north, with this expansion not included in the initial resource. On May 1, 2012, the Company announced that drilling had resulted in the expansion of mineralization by 200 metres to the east and to depth, with drilling into untested gaps in the western portion of the property also confirming the expansion potential to the north and west. In addition, the Company also announced at that time that it had identified a number of additional high-potential exploration targets, all located within a 1.5 km radius of the current resource. Key targets to the west include the area surrounding the historic Talisman shaft and the G-101 Zone. The Talisman shaft is located approximately 500 metres west of the current resource and along the interpreted extension of the Main Zone. The G-101 Zone showing is located 1.5 kms to the southwest on a potential new structure. The key targets to the east include the direct east extension of the Main Zone from the current resource as well as a series of felsic intrusives located approximately 1.5 kms to the southeast known as the Central Syenite target. Total drilling along the east extension and Central Syenite is extremely limited.

Also contributing to the potential of Fenn-Gib are silver values, which are not factored into the initial resource estimate. The average gold:silver ratio at Fenn-Gib of about 2:1, which compares very favourably to the silver values found in most gold deposits in the Timmins Camp, which are typically closer to 6:1.