January 19, 2011 / 2:50 PM / in 7 years

UPDATE 2-Endeavour Silver sees lower costs, higher output in '11

* Expects 2011 silver output to exceed 3.7 mln ounces * Says gold production expected to be more than 19,000 oz * Plans major expansion of Mexico’s Guanajuato plant

* Says oper profit margin to top $18/ounce

* Shares rise 4 pct (Adds details, updates stock movement)

Jan 19 (Reuters) - Canada’s Endeavour Silver Corp EDR.TO said it expects costs to come down in 2011 and forecast strong production growth, sending the mineral company’s shares up as much as 4 percent.

The Vancouver, British Columbia-based company owns and operates two high grade, underground, silver-gold mines in Mexico -- the Guanacevi and the Guanajuato mines.

Mexico is expected to invest about $13.1 billion in mineral projects during the next three years, according to the company’s website.

Endeavour expects silver production to exceed 3.7 million ounces and gold output to be more than 19,000 ounces in 2011.

For 2010, the company had forecast silver production of 3.1 million ounces and gold output of about 15,000 ounces.

Endeavour said it will expand its Guanajuato plant in Mexico up to 1000 tonnes per day (tpd) from the current 600 tpd at a cost of $4.3 million.

Silver production is expected to increase in the third and fourth quarters of 2011 as the expanded Guanajuato plant comes online and new ore-bodies under development start production during the first half, the company said.

Endeavour, which expects cash costs to fall from the $5.93 per ounce reported in the third quarter, forecast operating profit margin to exceed $18 per ounce in 2011.

Shares of the company were up 3 Canadian cents at C$6.33 in late morning trade on the Toronto Stock Exchange. They touched a high of C$6.53 early on Wednesday.

The stock has risen 75 percent since the company reported strong second-quarter results in early August last year. (Reporting by Bhaswati Mukhopadhyay in Bangalore; Editing by Joyjeet Das and Gopakumar Warrier)

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