February 24, 2011 / 12:45 PM / 7 years ago

UPDATE 2-Primero posts surprise profit, to step up exploration

* Forecasts 2011 capital expenditure of $31 mln

* Expects 2012 output to be 25-30 pct higher than 2011

* Sees 2013 output of 200,000 gold equivalent ounces

* Q4 adj EPS $0.03 vs est loss $0.02/shr (Recasts; adds 2012 outlook)

Feb 24 (Reuters) - Canadian precious metals producer Primero Mining Corp posted a surprise quarterly profit, and said it will increase underground exploration and development activities in 2011.

The company, which bought the San Dimas mine in Mexico from Goldcorp Inc last June, also said it will pursue a U.S. listing this year.

Primero expects c apital expenditure to nearly triple to about $31 million in 2011.

The company said despite the dramatic rise in silver prices, which raises its effective tax rate, the appreciation of gold is expected to contribute to higher cash flow in 2011.

Silver is around its highest in 31 years and gold hit a seven-week high, as investor fears over inflation stemming from the spike in crude oil and escalating unrest in Libya prompted bullion buying.

Primero, which forecast 2011 production of 110,000-120,000 gold equivalent ounces, said 2012 production is expected to be 25-30 percent higher due to higher grades and throughput.


The Toronto, Ontario-based company posted a fourth-quarter net profit of $1.8 million, or 2 cents a share, compared with a net loss of $333,000, or 11 cents a share, a year ago.

On an adjusted basis, it earned 3 cents a share, compared with analysts’ average estimate of a loss of 2 cents a share, according to Thomson Reuters I/B/E/S.

Production rose 14 percent sequentially to 24,800 gold equivalent ounces.

Revenue more than doubled sequentially to $41.4 million due to higher production, reflecting the first full quarter of ownership of the San Dimas mine.

About half of the operating costs at San Dimas , which consists of five ore zones, are fixed and, as a result, total cash costs are expected to trend below $450 per gold equivalent ounce over three years, the company said.

Primero shares, which have gained more than two-thirds of their value in the last one year, were down 8 Canadian cents at C$4.05 on Thursday morning on the Toronto Stock Exchange. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Anne Pallivathuckal)

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