March 28, 2012 / 11:39 AM / 6 years ago

UPDATE 2-Primero Mining profit up on tax gain, revenue falls

March 28 (Reuters) - Primero Mining Corp reported a higher quarterly profit on a tax related gain, but revenue fell 14 percent, despite higher prices, due to a sharp drop in volumes.

For the October-December quarter, the precious metal producer’s net income rose to $36.8 million, or 38 cents a share, helped by a $34.3 million tax recovery related to the acquisition of its flagship San Dimas mine. In the year-ago period, it had a profit of $6.9 million, or 8 cents a share.

On an adjusted basis, it earned 5 cents a share in the fourth quarter. Analysts were expecting earnings of 6 cents a share on average, according to Thomson Reuters I/B/E/S.

Revenue fell 14 percent to $35.6 million, below the $37 million analysts had expected.

The company sold about 18,490 ounces of gold during the quarter, down from 27,329 ounces it sold in the year-ago period.

The average realized price of gold per ounce rose to $1,679 from $1,359 last year.

In January, the company had said fourth-quarter production was down about 7 percent at 23,100 ounces of gold equivalent.

The Toronto, Ontario-based company had also said it will review the method used to estimate the reserve at its San Dimas mine in Mexico, potentially leading to lower mineral reserves in the future.

Primero, which bought the San Dimas mine from Goldcorp Inc in 2010, forecast a production of between 100,000 gold equivalent ounces and 110,000 ounces in 2012.

The output at San Dimas, which is Primero’s only producing property, was 102,200 gold equivalent ounces last year.

Historical production from the San Dimas district is estimated at 11 million ounces of gold and 582 million ounces of silver, according to the company’s website.

The company’s shares, which have shed nearly a fourth of their value in the last three months, closed at C$2.41 on Tuesday on the Toronto Stock Exchange.

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