Lake Shore Gold -a technical analysis

This is not a usual blog about the price of a stock today and it's expected price in a quarter or two.This blog looks at the operation and the production of Lake Shore and it's likely direction.It(LSG) released a press release on October7, 2014 stating that they had found gold at 144 property and that confirms an earlier deposit near the Thunder Creek deposit.Earlier LSG found low grade ore at the Ogden Zone  which is closer to the Timmins West mine.The 144 property is further away from the Timmins mine but is higher grade ore.It includes three properties,144 north,144 south, and 144Gap.The grade is from 5.87 grams per tonne to 21.87 grams per tonne.It can be accessed from the Thunder Creek mine.
     It is within 770 metres of the Thunder Creek deposit southwest of the Timmins West mine.LSG calls it a high priority target.Furthermore it believes that this has the same geological structure as the Timmins deposit and the Thunder Creek deposit.This means that LSG could have a mining complex with multiple mining deposits instead of just two deposits.The size of the resource is still unknown but they have three drilling rigs on the 144 property.
  Increased production or increased allocation
 Lake Shore recently increased their capacity of the processing mill from 2000 tonnes per day to 3550 tonnes per day.This mill serves two mines- the Timmins West mine and the Bell Creek mine.The Bell Creek mine is 20 km. north east of Timmins;it also has lower grade ore than appears to be in the new discovery.In addition,production from the Bell Creek mine has almost doubled from 21,000 ounces to 40,000 ounces for 2014.However the ore has further to go to the mill than the newly discovered orebody.Is LSG going to increase the processing capacity of the mill or reduce the processed production from the Bell Creek mine?It is not a problem yet but it may soon be.Guidance has been raised  for the year        from 135,000 to 150,000 up to 160,000 to 180,000 ounces.It is likely that the mill capacity will be raised from 3550 tonnes per day to 5000 tonnes per day sometime in 2015.
     Comparison to Crocodile Gold
 Both are junior producers and both have similar problems.Crocodile Gold has seen it's production rise quickly from two years ago and so has Lake Shore Gold.Both have had to raise milling capacity.Both have raised their guidance from last year.Crocodile Gold has a resource that has been discovered but not yet completely defined in their Maud Creek deposit.Lake Shore has a new resource that has barely been  defined.Both will likely have to increase their milling capacity in 2015.However Crocodile Gold has guidance of 200,000 to 215,000 ounces while LSG has guidance of only 160,000 to 180,000 ounces for 2014.Oh yes and the price of LSG is about five times higher than the proficient Crocodile.But LSG has a problem many producers would like to have - soon they will have too much gold for their mill to process.