Gold pour LSG

Gold poured in August from Lake Shore Gold (Image: Lake Shore Gold)

This morning I take a look at third-quarter production results from Lake Shore Gold and Endeavour Mining.

Lake Shore Gold - (LSG:TSX) - Lake Shore is out with another strong quarter at the Timmins West and Bell Creek Mines in Ontario. Production for the third quarter was 40,600 ounces at 4.0 grams per tonne. Lake Shore remains on track to meet production guidance and to potentially beat cost guidance for 2015.

Investors will need to wait for financial results to come out but can expect another quarter of free cash flow generation.

Lake Shore did tell us the average gold price received during the quarter was US$1,128, a significant $69-dollar drop from Q2.

Said Tony Makuch, Lake Shore Gold's President and CEO: "After the first nine months of the year, we are on track to achieve our full-year targets for both production and unit costs. Our production in the Q3/15 is expected to be our lowest quarterly production of the year and reflected a lower average grade than in the previous two quarters as well as the impact of development work during the quarter. Looking ahead to the fourth quarter, we expect to see both grades and mill throughput increase from Q3/15 levels, which will position us to end the year strong."

LSG 1 yr chart

Lake Shore stock has remained in a fairly tight range over the last couple months as they continue to generate free cash flow. The high-grade nature of their gold - 4 g/t compared to a global average of 1 g/t - certainly helps.

With a market cap of $514 million, Lake Shore has to be on the radar of majors looking to add production. The company's cash and bullion position continues to grow, last at $84 million (as of July 29), up 36% from the beginning of the year.

Upcoming catalysts include a reserve and resource estimate as well as a maiden resource for the 144 Gap Zone in the first quarter of 2016.

Read: Lake Shore Gold Produces 136,200 Ounces in First Nine Months of 2015, Cash Operating Costs Average US$567/oz, AISC US$844/oz

Related:5 gold producers making money at $1170 gold

Endeavour Mining - (EDV:TSX) - Endeavour is another intermediate producer that continues to deliver solid operational results for investors. Endeavour operates five mines and produced 124,893 ounces in the quarter.

Investors can expect another quarter of after-tax net earnings when third-quarter results are announced. In the first two quarters of this year, EDV has earned after-tax net earnings of $46 million.

Not many mining companies can boast numbers like that at current gold prices.

Neil Woodyer, chief executive officer, stated: "Group production from the mines continues to be at the high end of production guidance. AISC per ounce will be reported in the Q3 2015 financial results to be released in November, and it is expected that AISC will continue to be below our full-year $930-to-$980 guidance range."

edv 1 yr

EDV stock is up almost 50% from August and now trading at 52-week highs.

On Sept. 21 a partnership was announced with La Mancha Holding SARL (a privately held gold investment company controlled by the billionaire Sawiris family) that will see EDV acquire 55% of the Ity gold mine in the Ivory Coast as well as a cash investment of $63 million US.

The deal will see Woodyer eventually transition to an executive chairman role and La Mancha president and CEO Sebastien de Montessus join Endeavour in the newly created position of President.

A construction decision on the fully permitted Hounde project is expected in early 2016 and will likely be a significant catalyst for the stock. If Hounde is not built, $EDV will see production start to fall off in 2017.

EDV provides excellent leverage to the price of gold and is followed closely by Riley Skinner, a young up-and-coming investment advisor at Haywood Securities.

Read: Endeavour Mining Reports Q3 Gold Production Of 125,000 Oz And 380,000 Oz For 9 Months

Related: Endeavour Mining adds production through deal with billionaire Sawiris family

Thanks for reading.

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This is not investment advice. All facts are to be checked and verified by reader. As always please do your own due diligence.