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PENASQUITO, Mexico (Reuters) - Canadian miner Goldcorp, one of the world's largest gold producers, is considering teaming up with Mexico's Fresnillo to develop a new precious metals venture in the central Mexican state of Zacatecas.
Goldcorp Mexico's business development director, Federico Villasenor, told Reuters that Goldcorp (G.TO) and Fresnillo (FRES.L) are looking to jointly develop the Canadian miner's Camino Rojo gold and silver deposits, adding that a feasibility study is expected to be completed by early next year.
Villasenor said both companies had already worked together on geological exploration of the property, but he declined to quantify reserves or expected production.
Camino Rojo is just 31 miles southeast of Goldcorp's massive open pit mine at Penasquito.
"As neighbors, it's possible that we can create a synergy between the two companies," said Villasenor.
In addition to gold and silver deposits, Camino Rojo is believed to contain significant deposits of lead and zinc.
Fresnillo is the world's largest primary producer of silver, and is controlled by Mexican mining company Industrias Penoles PENOLES.MX. Fresnillo is also Mexico's second-largest gold producer.
Villasenor added that the Camino Rojo property is believed to feature a geological profile similar to that of Penasquito, expected to be Goldcorp's top gold-producing mine in Mexico this year.
Sustained high gold prices and relatively low Mexican labor costs have propelled increased production as well as added exploration investments over the past 10 years.
"Mexico's exploration expenditures have risen significantly over the last decade, reaching a record high of almost $1 billion in 2011," said analyst Ben Moore of Metals Economics Group.
He added that since 2003, exploration spending in Mexico has grown faster than the world average, boosting the country's global ranking to fourth from eighth.
Goldcorp expects to produce 380,000 ounces of gold from Penasquito this year, down 10.6 percent from the company's previous output forecast of 425,000 ounces.
The company says the downward revision is mainly due to a local water shortage caused by severe drought conditions that began last year.
Last year, Penasquito produced 254,100 ounces of gold.
Gold hit a 6-1/2 month high at $1,779.10 per ounce on Wednesday, before easing off.
"The rise (in prices) over the last few years has been so positive that there's still a fairly large margin" between extraction costs and attractive returns, said Villasenor.
The Penasquito property is currently the world's 35th-largest gold producing mine, and Mexico's second-largest gold mine after Fresnillo's Herradura property in the northwest state of Sonora, according to data compiled by Thomson Reuters GFMS.
Goldcorp also operates the El Sauzal mine, in the northern state of Chihuahua, as well as the Los Filos mine in southern Mexico's Guerrero state.
The company's three existing gold producing-properties contributed a quarter of Goldcorp's international gold production in 2011, or about 2.5 million ounces.
This year, Goldcorp expects to produce between 2.35 million and 2.45 million ounces of gold.
Additional reporting and writing by David Alire Garcia in Mexico City; Editing by Simon Gardner and Steve Orlofsky