What Lake Shore Gold has to say about the Tahoe takeover

PRESS RELEASE (ABRIDGED)

SHORE LAKE GOLD SOCIETY

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VANCOUVER – Tahoe Resources Inc.(“Tahoe”) (TSX: THO) (BVL: THO) (NYSE: TAHO) and Lake Shore Gold Corp. (“Lake Shore Gold”) (TSX: LSG) (NYSE MKT: LSG) are pleased to announce that they have entered into a definitive agreement (the “Arrangement Agreement”) whereby Tahoe will acquire all of the shares issued and in circulation from Gold from the shore of the lake (the transaction”).

Under the terms of the Arrangement Agreement, all Gold from the shore of the lake issued and outstanding common shares will be exchanged on the basis of 0.1467 common shares of Tahoe for each Gold from the shore of the lake common stock (the “exchange ratio”).

Upon closing of the transaction, Tahoe and Gold from the shore of the lake shareholders will own approximately 74% and 26% of the company pro forma, respectively, on a fully diluted in-the-money basis.

The exchange ratio involves taking into account CA$1.71 by Gold from the shore of the lake common stock, based on the closing price of Tahoe common stock at the Toronto Stock Exchange (TSX) onFebruary 5, 2016representing a premium of 14.8% over the closing price of Gold from the shore of the lake to February 5, 2016 and a premium of 28.6% on the closing share of Gold from the shore of the lake to February 4, 2016.

Based on each company’s 20-day volume-weighted average price on the Toronto Stock Exchange, the exchange ratio implies a premium of 25.7% and 30.4% for Gold from the shore of the lake common shares for the periods ending February 5, 2016 and February 4, 2016respectively.

The implied equity value (assuming in-the-money conversion of convertible debentures) is equal to 945 million Canadian dollars.

Gold from the shore of the lake operates the low-cost West Timmins and Bell Creek mine in Timmins, Ontario, Canada.

With Tahoe’s world-class Escobal Mine in Guatemala and its low price The Arenaand the mines of Shahuindo in Peruthe combined company is firmly established as the premier Americasproducer of precious metals.

With a diverse suite of low-cost, high-potential assets and a quality pipeline of new development opportunities, Tahoe is well positioned to maintain and grow its production base.

Additionally, with zero net debt, industry-leading operating margins and moderate capital requirements, the combined company will continue to generate strong free cash flow.

Accordingly, following completion of the Transaction, Tahoe intends to continue to pay a dividend of 0.02 euro cent per share per month.

Operation Highlights

The main investments of the pro forma company include:

• A leader Americas based precious metals producer: the combined company will have a strong diversified production platform anchored by the Escobal mine, one of the largest and richest silver mines in the world, and growth operations at low cost in Peru and Ontario.

• Significant Production at Low Cost: 2016 production forecast of 18 to 21 million ounces (moz) of silver at total cash costs of US$7.50-US$8.50/oz and all-in sustaining costs (AISC) ofwe$10.00-US$11.00/oz and 370,000 to 430,000 ounces of gold for total cash costs ofwe$675-US$725/oz and AISC of US$950-US$1,000/oz. All businesses generate free cash flow in the current commodity price environment.

• Low-risk growth: Growth will be driven by the expansion of Shahuindo to 36,000 tpd and the advancement of a number of growth initiatives at Timmins, including the ramp-up of the 144 Gap field, extending the Bell Creek deep mining and the potential for open pit mining at the Whitney project.

• Exciting exploration potential: over 3.4 moz of M&I gold resources and 6 moz of inferred gold resources in 8 exploration projects in Peru and Canada with strong near-mine potential to add additional gold resources. Large sets of unexplored land in all regions.

• Strong balance sheet and superior financial performance: Zero net debt, modest capital requirements and strong free cash flow generation from operations provide industry-leading financial strength and flexibility.

Kevin McArthurExecutive Chairman of Tahoe, said, “The combination with Edge of the lake Gold strengthens Tahoe’s position as a new leader in precious metals by adding another low-cost operation in Timmins, one of the most prolific gold camps in the world. We are impressed with the long-term presence and see huge regional opportunities in the future. We look forward to continuing the strong relationships that Gold from the shore of the lake promoted in Timmins with local stakeholders. Finally, I am very happy to welcome Alan Moonthe current president of Lake shore goldto our Board of Directors upon closing of the transaction, as well as Tony Makuchcurrent CEO of Gold from the shore of the laketo Tahoe’s management team as President of Canadian Operations. »

Tony MakuchPresident and CEO of Gold from the shore of the lakesaid, “The combination with Tahoe represents a unique opportunity for our shareholders to gain exposure to a high-quality portfolio of long-life producing mines with substantial mineral reserves. Today’s announcement of an initial resource at our 144 Gap deposit is a perfect example of the long-term growth potential of our Timmins portfolio. Tahoe’s strong balance sheet and superior cash-generating capabilities will provide Gold from the shore of the lake with the financial resources to unlock the enormous growth potential of our asset base.”

Tahoe Shareholder Benefits

• Establishes a significant presence in Canada with well-established, low-cost operations, and a talented and focused management team.

• Improved high-margin gold production with organic growth opportunities.

• Strengthens Tahoe’s ability to generate strong free cash flow per share.

• Addition of significant exploration potential to existing operations as well as attractive targets near established and well-constructed mining and milling infrastructure.

• Positions Tahoe to evaluate further consolidation opportunities in Ontario.

Benefits for Lake Shore Gold shareholders

• Immediate initial premium while maintaining a significant equity stake.
  
• Superior financial strength and flexibility to support the progress of Timmins projects.
  
• Pro forma exposure to a large, long-lived reserve base from Tahoe’s world-class Escobal mine and growing low-cost platform in Peru.
  
• Develops operational capabilities, adding proven expertise in surface mining.
  
• Access to an attractive dividend policy.
  
• Increased trading liquidity, improved value proposition and capital markets profile.

Board Recommendations

The Arrangement Agreement has been unanimously approved by the Boards of Directors of Tahoe and Gold from the shore of the lakeand each board recommends that its respective shareholders vote in favor of the transaction.

GMP Securities SEC and BMO Capital Markets provided opinions to the Board of Directors of Tahoe and the Special Committee of Lake Shore Gold, respectively, that, and subject to and subject to the assumptions, limitations and qualifications set forth therein, the consideration offered under the transaction is fair, from a financial point of view, to the shareholders of Tahoe and Gold from the shore of the lake shareholders, respectively.

summary of transactions

The proposed business combination will be effected by way of a plan of arrangement made under the Canada Business Corporations Act.

The transaction will require the approval of 66 2/3 percent of the votes cast by shareholders of Gold from the shore of the lake at a special meeting of Gold from the shore of the lake shareholders.

The issuance of Tahoe common stock in connection with the transaction will require the approval of a simple majority of Tahoe shareholders voting at a special meeting.

Officers and directors of Gold from the shore of the lake and Tahoe intend to enter into voting support agreements, pursuant to which they will vote their common shares held in favor of the transaction.

In addition to shareholder and court approvals, the transaction is subject to applicable regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature.

The Arrangement Agreement contains customary provisions, including non-solicitation provisions, a right to match any Superior Proposal and a C$37.8 million termination indemnity payable to Tahoe in certain circumstances.

A C$20.0 million cancellation fees are payable at Gold from the shore of the lake in certain circumstances.

A change of control offer will be made for Lake Shore Gold’s outstanding 6.25% convertible unsecured senior debentures (the “Debentures”) pursuant to their indenture dated September 7, 2012.

Within 30 days following the effective date of the Arrangement Agreement, holders of Debentures will receive a notice (the “Debenture Change of Control Notice”) indicating that a change of control was made together with an offer to purchase the Debentures at 100% of the principal amount together with accrued and unpaid interest on the date that is 30 business days after the delivery of the notice of change of control of the Debentures. As part of the arrangement agreement, Gold from the shore of the lake has agreed not to purchase any of its outstanding securities. As a result, Gold from the shore of the lake suspends its normal course issuer bid on the debentures.

Hourly

Full details of the transaction will be included in Tahoe’s management information circulars and Gold from the shore of the lake and should be mailed to their respective shareholders at the start March 2016.

It is expected that shareholder meetings and the closing of the transaction will take place at the beginning April 2016.

Advisors and advice

GMP Securities SEC and Canaccord Genuity Corporation acted as financial advisors to Tahoe and McMillan LLP acted as legal counsel.

BMO Capital Markets acted as financial advisor to Gold from the shore of the lake. Cassels, Brock & Blackwell LLP acted like Lake Shore Gold’s Jural advisor.

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