March 23, 2011 / 11:49 AM / 7 years ago

UPDATE 2-Gammon Gold sees higher prices in 2011; shares rise

* Q4 EPS $0.17 vs EPS $0.10 year ago

* Q4 revenue up 4 pct at $71 mln

* Sees higher gold, silver prices in 2011

* Shares up 5 pct (Follows alerts, adds details, share movement)

March 23 (Reuters) - Gammon Gold’s quarterly income nearly doubled on higher gold and silver prices, and the Canadian miner said it expects to benefit from rising prices this year as well, sending its shares up about 5 percent.

For the fourth quarter, Halifax, Nova Scotia-based Gammon realized an average gold price of $1,381 per ounce, up from $1,093 a year earlier, while silver prices jumped to $27.40 per ounce from $17.54.

Spot gold was bid at $1,432.61 a troy ounce on Wednesday. The precious metal hit a record high of $1,444.40 an ounce on March 7.

Spot silver was bid at $36.51 an ounce, at near 31-year highs, and have outperformed gold through last year.

Gammon’s fourth-quarter revenue rose about 4 percent to $71 million, but was limited by lower sales of gold and silver due to suspension of operations at its El Cubo mine in Guanajuato, Mexico.

The gold and silver producer expects to resume development activities at El Cubo in April. Workers at the site went on strike last June.

Gammon, which has been at war with Timmins Gold for ownership of New York-based Capital Gold’s El Chanate mine in northern Mexico, produced 195,566 gold equivalent ounces in 2010, in line with its forecast, helped by strong performance at its flagship Ocampo mine.

Fourth-quarter net income nearly doubled to $23.5 million, or 17 cents a share.

Gammon shares were trading up 3 percent at C$9.29, after touching a high of C$9.43, in morning trade on Wednesday on the Toronto Stock Exchange. (Reporting by Gowri Jayakumar in Bangalore; Editing by Maju Samuel, Unnikrishnan Nair)

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