Primero Mining profit rises on higher output at Mexico mine

Thu Aug 2, 2012 9:02am EDT

Aug 2 (Reuters) - Gold miner Primero Mining reported a four-fold rise in quarterly profit on higher production and grades at its flagship mine in Mexico and raised its production forecast for the year.

Primero, whose only producing asset is the San Dimas gold-silver mine, said it now expects to produce 110,000 to 120,000 gold equivalent ounces in the year. The company had earlier forecast 100,000 to 110,000 gold equivalent ounces.

The company sells the bulk of the silver produced from San Dimas to Silver Wheaton at well below market prices, under agreements it inherited with the acquisition of the mine.

Primero bought the San Dimas mine from Goldcorp in August 2010. The mine has already produced about 11 million ounces of gold and 580 million ounces of silver, according to the company's website.

Net income for the second quarter rose to $15.0 million, or 17 cents per share, from $3.9 million, or 4 cents a share, a year earlier.

Revenue rose 40 percent to $57.1 million.

Primero said production rose 20 percent to 33,600 gold equivalent ounces in the quarter.

Shares of Primero, which has a market value of about C$305 million, closed at C$3.48 on Wednesday on the Toronto Stock Exchange.