June 27, 2011 / 10:19 PM / 6 years ago

UPDATE 1-Agnico sees higher H2 output at fire-hit mine

* H2 output at Meadowbank gold mine to rise by 50 percent

* Total H2 production expected to rise by 20 pct

* Sees H1 total production of 490,000 ounces

* Permanent kitchen at Meadowbank due by end of year

TORONTO, June 27 (Reuters) - Agnico-Eagle Mines (AEM.TO) said on Monday that production at its Meadowbank gold mine should rise by 50 percent in the second half of 2011, after being hit by a kitchen fire in March that crippled staffing levels.

The company added that operations at the mine in the Canadian territory of Nunavut have fully recovered and that a permanent replacement for the destroyed kitchen would be in place by the end of the year.

Second quarter gold production at the mine is expected to be 60,000 ounces, bringing first half output at the mine up to around 120,000 ounces.

With staffing at Meadowbank back to normal, and a new crusher in place, Agnico expects to boost production at that mine by 50 percent in the second half. Overall company production is expected to be 20 percent higher.

"Despite a difficult start to 2011, our Meadowbank mine has made good progress in ramping up operations and adding additional processing capacity," Chief Executive Sean Boyd said in a release.

"We are in a very good position to significantly increase gold production and reduce unit operating costs in the second half of 2011."

Total mine production for the first half of 2011 is expected to be about 490,000 ounces with average cash costs of $540-$570 per ounce.

Agnico also said that it continues to upgrade the resource at its Meliadine project in Nunavut. As of December, the project had probable reserves of 2.6 million ounces of gold.

Shares of Agnico closed up 1.8 percent at C$64.20 on Monday on the Toronto Stock Exchange.

$1=$0.99 Canadian Reporting by Julie Gordon; editing by Rob Wilson

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