* Q3 gold production down 32 pct
* Cuts full-year production target
* Says will meet 2011 production view
* Shares down as much as 9 percent (Adds analyst comments, details, share movement)
By Gowri Jayakumar
BANGALORE, Oct 22 (Reuters) - Mid-tier gold miner Aurizon Mines (ARZ.TO) reported a 32 percent drop in third-quarter production, hurt by lower ore grades at its Casa Berardi mine in Quebec, and cut its full-year production target, sending shares down more than 9 percent.
Aurizon, which currently produces only at the Casa Berardi mine, cut the 2010 production outlook to 140,000-145,000 ounces, from its prior estimates of 145,000-155,000 ounces, hurt by poor ground conditions at the mine and scarcity of underground mining equipment.
Analysts, however, said the concerns are short term and they expect the Vancouver-based company to bounce back to second-quarter production levels of 38,527 ounces of gold, by the next quarter.
“These technical issues are because they got into an area that was more challenging and they probably suffered dilution because of it. I do not expect these issues to persist,” said analyst Andrew Kaip, an analyst with BMO Capital Markets Canada.
Aurizon said it was on track to attain production target of 160,000-170,000 ounces for the next three years starting 2011.
The company, which competes with Alamos Gold Inc (AGI.TO) and Centerra Gold (CG.TO), said its mine plan includes more areas containing material with average grade of about 8 grams of gold per tonne versus the current 6.15 grams of gold per tonne.
The gold miner has several exploration and development projects in the Abitibi region of north-western Quebec, including the Joanna gold project located in Rouyn-Noranda.
“Aurizon is definitely attractive in terms of being a potential consolidator (of assets),” said Catherine Gignac, an analyst with NCP Northland Capital Partners.
Gignac, who has an “outperform” rating on the stock, expects the company to achieve long-term growth through the number of early-stage exploration and development projects on their plate.
Aurizon shares have gained 24 percent in value since it posted higher operating earnings in August, despite lower production.
They were down 46 Canadian cents at C$6.40 Friday afternoon on the Toronto Stock Exchange. (Editing by Vyas Mohan)