Lake Shore Gold Reports Record Production in Second Quarter 2013

TORONTO, ONTARIO–(Marketwired – Jul 4, 2013) –

Lake Shore Gold Corp. (TSX:LSG)(NYSE
MKT:LSG)(“Lake Shore Gold” or the “Company”) today
announced details of the Company’s operating results for the second
quarter and first six months of 2013. For the second quarter, the
Company reported record quarterly production of 30,800 ounces of
gold, an increase of 26% from the second quarter of 2012 and 33%
from the first quarter of 2013. Mill throughput during the second
quarter of 2013 totaled 230,920 tonnes at an average grade of 4.3
gpt with average mill recoveries of 95.7%. Mill throughput averaged
2,540 tpd for the quarter and averaged over 2,800 tpd during the
final three weeks of June. Average grades improved throughout the
second quarter and included 3.9 gpt in April, 4.5 gpt in May and
4.6 gpt in June. Total gold poured for the second quarter of 2013
was a record 31,800 ounces, while gold sales totaled 27,600 ounces
at an average price of US$1,409 per ounce.

For the first six months of 2013, 428,560 tonnes were processed
at an average grade of 4.1 gpt for 54,000 ounces of recovered gold.
Gold poured totaled 52,300 ounces with gold sales of 53,700 ounces
at an average price of US$1,516 per ounce. Supported by strong
second quarter results and continued progress with its growth
projects, the Company remains committed to achieving its key
guidance for the year, including producing 120,000 to 135,000
ounces of gold at cash operating costs between US$800 and US$875
per ounce, with total capital investment of approximately $90
million.

Entering July, the Company is rapidly nearing completion of its
current mill expansion project, to a capacity of 3,000 tonnes per
day. Commissioning of the expansion is set to commence later this
month with the new processing capacity to be achieved by early
September. Following completion of the expansion, production levels
will increase to over 140,000 ounces on an annual basis, cash
operating costs will improve to around US$700 per ounce, capital
requirements will decline dramatically for the balance of the year
and the Company will begin generating net free cash flow at current
gold prices.

Tony Makuch, President and CEO of Lake Shore Gold, commented:
“We achieved strong operating results in the second quarter,
including record quarterly production, average mill throughput in
excess of current design capacity and higher grades that increased
as the quarter progressed, averaging 4.6 gpt in June. We also
continued to advance our key projects during the second quarter and
are nearing the end of our mill expansion, with commissioning set
to commence later this month. As a company, we are now fast
approaching a major turning point. Once we reach 3,000 tonnes per
day in early September, our production will increase, our cash
operating costs will improve to around US$700 per ounce and the
majority of this year’s capital for building Timmins West Mine and
expanding our mill will be invested. At that point, we will begin
generating net free cash flow at the current gold price for the
balance of the year.”

Details of the Company’s financial performance, including
capital and operating costs, will be included in its second quarter
and six month 2013 financial results to be released after the
market close on Monday, August 12, 2013. A conference call and
webcast will follow on Tuesday, August 13, 2013 at 10:00 am EST.
Details of the conference call and webcast will follow.

Qualified Person

Mine development and operating activities at the Company’s
Timmins assets are conducted under the supervision of Dan Gagnon,
Senior Vice-President, Operations. Mr. Gagnon is a qualified person
(“QP”) as defined by National Instrument 43-101 and has reviewed
and approved the information included in this news release. Mr.
Gagnon is an employee of Lake Shore Gold.

About Lake Shore
Gold

Lake Shore Gold is a gold mining company that is in production
and pursuing rapid growth through the advancement of three wholly
owned, multi-million ounce gold complexes in the Timmins Gold Camp.
The Company is in production at both the Timmins West and Bell
Creek mines, with material being delivered for processing to the
Bell Creek Mill. A 50% expansion of the Company’s milling facility,
to a capacity of 3,000 tonnes per day, is on track for completion
during the third quarter of 2013. The Company also has a large
portfolio of prospective projects and exploration properties to
support continued growth well into the future. The Company’s common
shares trade on the TSX and NYSE MKT under the symbol LSG.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release relating to the
Company’s expected production levels, production growth,
exploration activities, potential for increasing resources, project
expenditures and business plans are “forward-looking statements” or
“forward-looking information” within the meaning of certain
securities laws, including under the provisions of Canadian
provincial securities laws and under the United States Private
Securities Litigation Reform Act of 1995 and are referred to herein
as “forward-looking statements.” The Company does not intend, and
does not assume any obligation, to update these forward-looking
statements. These forward-looking statements represent management’s
best judgment based on current facts and assumptions that
management considers reasonable, including that operating and
capital plans will not be disrupted by issues such as mechanical
failure, unavailability of parts, labour disturbances, interruption
in transportation or utilities, or adverse weather conditions, that
there are no material unanticipated variations in budgeted costs,
that contractors will complete projects according to schedule, and
that actual mineralization on properties will be consistent with
models and will not be less than identified mineral reserves. The
Company makes no representation that reasonable business people in
possession of the same information would reach the same
conclusions. Forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual
results, performance or achievements of the Company to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements. In particular, delays in development or mining and
fluctuations in the price of gold or in currency markets could
prevent the Company from achieving its targets. Readers should not
place undue reliance on forward-looking statements. More
information about risks and uncertainties affecting the Company and
its business is available in the Company’s most recent Annual
Information Form and other regulatory filings with the Canadian
Securities Administrators, which are posted on sedar at
www.sedar.com, or the Company’s
most recent Annual Report on Form 40-F and ot her regulatory
filings with the Securities and Exchange Commission.