TORONTO (miningweekly.com) – Vancouver-based Minefinders Corp entered positive cash flow in February at its Dolores mine, in Chihuahua, Mexico, and is on target to reach commercial production in the second quarter, the firm reported on Thursday.

The mine began generating positive cashflow earlier than expected, thanks to higher gold and silver prices, a weaker peso and a rapid uptick in production levels, president and CEO Mark Bailey said.

Minefinders produced 5 089 oz of gold and 111 010 oz of silver at Dolores last month, up from 2 700 oz of gold and 50 000 oz of silver in January.

The firm expects that the rate of production of both metals will escalate to a steady state level later this year, as the volume of ore under leach and time under leach increases, Bailey added.

The average throughput at the mine is also expected to be at or near 18 000 t/d in March, which is the planned average rate throughout the life of the operation.

The Dolores mine started production in November 2008, and is expected to produce more than 1,7-million ounces of gold and 64-million ounces of silver over a more than 15-year life-of-mine.

Minefinders sold 2 440 oz of gold and 42 800 oz of silver in the 2008 fourth quarter, all in December.

The average realised price was approximately $843/oz of gold and about $10,69 an ounce of silver. Precommercial production operating costs, net of sales revenue, were capitalised to mine development costs.

The company recorded a net loss in 2008 of $29,12-million, compared with a net loss of $19,20-million in 2007, mainly because of increased activity as the Dolores Mine transitioned to precommercial production.

The firm also recorded a $1,25-million foreign exchange loss, higher interest expense associated with the revolving credit facility and lower interest income during the year.

At December 31, 2008, the company had $26,02-million in cash and cash equivalents and net working capital of $24,83-million, which is “more than sufficient liquidity” to attain commercial production at Dolores, Minefinders said.

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