UPDATE 1-AuRico reports higher gold output, lower costs

TORONTO, July 12 Tue Jul 12, 2011 10:32am EDT

TORONTO, July 12 (Reuters) - AuRico Gold (AUQ.TO) said on Tuesday its gold production rose sharply in the second quarter and average production costs declined, driven by cost containment initiatives and recent acquisitions.

Gold production in the quarter ended June 30 rose to 43,652 ounces, up from 29,231 ounces a year earlier. Silver output in the period dipped slightly to 1.24 million ounces from 1.28 million ounces a year earlier.

Average realized cash costs at its flagship Ocampo mine in Mexico fell to $340 an ounce from $458 an ounce, the company said. The company also said it expects average costs at the mine this year to be lower than it had expected.

"During the quarter, the company benefited from the higher productivity at Ocampo and a reduction in cash costs, as well as from the initial production contribution from the recently acquired El Chanate mine," said Chief Executive Rene Marion in a statement.

AuRico is the new name of the former Gammon Gold. The gold miner changed its name in May after completing its takeover of Capital Gold. The company clinched the $408 million deal to acquire Capital and its El Chanate asset in Mexico after an extended takeover battle with rival Timmins Gold (TMM.TO).

Shares of the company were up 8 Canadian cents at C$11.05 on Tuesday morning on the Toronto Stock Exchange.

($1=$0.97 Canadian) (Reporting by Euan Rocha; editing by Peter Galloway)

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