Isn't this the same analyst that was with MGI Securities that was on the BTV diddy? Jumped ship to Wellington?

TORONTO (Dow Jones)--Wellington West Capital Markets Inc. issued a buy recommendation on Lake Shore Gold Corp. (LSG.T), citing the "activation energy" in place as Lake Shore transitions to gold-producer status from developer status.

In a research report initiating coverage of the stock, Wellington analyst

Paolo Lostritto said Lake Shore entered into a financing deal with Hochschild Mining Holdings Ltd. in order to fund its activities in Ontario's Timmins mining camp during a difficult market. As a result, Hochschild will own 35% of the company in the next few weeks, and has agreed to a standstill arrangement limiting its stake in Lake Shore to no more than 40% on a fully diluted basis until November 2010.

Lostritto said the market generally views the Hochschild deal as a slight

negative as it may prevent a take-out premium being built into the future share price. However, he said the capital injection allowed Lake Shore to make the transition to a producing concern without having to hedge production or dilute existing shareholders.

Lostritto expects the fully-financed Lake Shore to start production in the

first quarter of 2009 from the Timmins West ramp at a rate of 300-500 metric tons a day from high-grade veins. He said production will rise with additional feed from its remaining three assets in the Timmins camp in 2010.

Wellington expects Lake Shore to produce 39,400 ounces of gold at a total cash cost of US$407 an ounce in 2009, rising to 126,200 ounces at US$396 in 2010.

The analyst also expects an expansion of Lake Shore's Bell Creek mill to 3,000 tons a day in 2010, adding that Wellington believes the company will be able to produce about 215,600 ounces at a total cash cost of US$366 an ounce in 2011.

Lostritto assigned a target price of C$2.60 to Lake Shore, adding the

valuation has "room to grow" as earnings and net free cash flow increase. He's targeting free cash flow to start late in 2010.

Wednesday in Toronto, Lake Shore is unchanged at C$1.62.

Lostritto said Lake Shore's experienced management team should help it

navigate the challenges it will face as it moves to producer from explorer. He said Tony Makuch, president and chief executive, was previously vice-president and chief operating officer at gold producer FNX Mining Inc. (FNX.T) and has "intimate knowledge" of the Timmins area.

As reported, earlier this year Makuch took over from Brian Booth. Booth's departure, first announced late last year, prompted Raymond James Ltd. to cut its rating on Lake Shore in November, citing the uncertainty caused by the executive's departure.

Wellington doesn't have an investment banking relationship with Lake Shore. The analyst or a member of his household, or an individual involved in preparing the report, has a long position in the shares and/or the options ofLake Shore.

Company Web site: http://www.lsgold.com

-Carolyn King, Dow Jones NewsWires; 416-306-2100

(END) Dow Jones Newswires

06-04-08 1124ET

Copyright (c) 2008 Dow Jones & Company, Inc.- - 11 24 AM EDT 06-04-08

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