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* Raises annual dividend to $0.64/shr from $0.18
* Sees gold output of 1.13 mln to 1.23 mln oz in 2011
* Shares fall more than 4 pct as cost concerns weigh (Adds details on growth plans, updates share price move; in U.S. dollars unless noted)
TORONTO, Dec 16 (Reuters) - Gold miner Agnico-Eagle (AEM.N) announced a big dividend increase on Thursday and outlined plans to raise its gold output, but its shares fell on concerns about its higher than expected productions costs.
Analysts noted that Agnico's average production costs of slightly above $430 an ounce over the next five years were higher than expected, sending the shares down more than 4 percent in both Toronto and New York.
TD Newcrest analyst Greg Barnes lowered his price target on Agnico to $77 a share from $80, following the company's latest forecast.
"Our estimates for 2011 and 2012 have dropped due to higher costs than we were forecasting," Barnes said in a note to clients.
Shares of Agnico were the biggest net losers on the Toronto Stock Exchange on Thursday, down $3.34 to $77.45 by midday. They were down $3.48 at $76.89 on the New York Stock Exchange.
Shares of North American gold miners were also weighed down by a decline in the price of gold on Thursday. Gold fell 1.3 percent to close in on $1,360 an ounce as a recovery in the U.S. dollar pushed the metal through key support levels, though losses were limited by persistent concerns over the euro zone debt crisis. [ID:nLDE6BF0WS]
Spot gold XAU= fell as low as $1,361.35 and was bid at $1,365.80 an ounce at 1549 GMT, against $1,380.45 late on Wednesday. The fall in the price of bullion hurt Barrick Gold (ABX.TO), Newmont Mining (NEM.N), Kinross (K.TO) and a number of other gold majors.
Toronto-based Agnico said it will raise its annual dividend to 64 cents a share from 18 cents. The company, which used to pay its dividend on an annual basis, now plans to pay it quarterly.
The first quarterly payout of 16 cents a share will be made on March 15 to shareholders of record as of March 1, Agnico said in a statement late on Wednesday.
"As we continue to grow our gold output and increase cash flows over the next several years, our goal is to further increase our dividend yield," said Chief Executive Sean Boyd.
The company said it expects payable gold production to rise about 18 percent in 2011 to between 1.13 million ounces and 1.23 million ounces, with total cash costs in the range of $420 to $470 an ounce.
Agnico also said it expects to produce an average of 1.36 million ounces of gold annually between 2012 and 2015 with total cash costs averaging $432 per ounce.
The company expects to generate sufficient cash flows to fund its internal mine expansions and the development of its Meliadine gold project in northern Canada.
$1=$1.01 Canadian Reporting by Euan Rocha; editing by Rob Wilson