TORONTO (miningweekly.com) – Toronto-based Primero Mining reported record quarterly production of 39 089 oz of gold equivalent, up 16% year-on-year when compared with 33 598 oz a year earlier, at a total cash cost of $551/oz, which was 5% lower year-on-year for the quarter ended June 30.

Second-quarter output comprised 26 904 oz of gold and 1.46-million ounces of silver.

Primero, which operates the San Dimas mine, in Mexico, said despite gold-equivalent sales rising 6% to 37 555 oz in the quarter, revenues declined 8% to $52.47-million in the period, compared with $57.06-million a year earlier.

Net income was down 35.5% year-on-year to $4.24-million, or $0.04 a share, compared with net income of $6.57-million, or $0.07 a share. Adjusted to remove special items, net income declined almost 6% to $0.16 a share, but still beat an average of nine analysts’ expectations of earning $0.12 a share on an adjusted basis.

The average realised gold price in the quarter declined 13% to $1 398/oz and the average realised price for silver declined almost 5% to $11.66/oz. The all-in sustaining cost for producing an ounce of gold was $659-million in the period.

Primero had increased its production guidance to between 125 000 oz and 135 000 oz of gold equivalent, up by 21% over 2012, based on higher throughput at slightly higher grades for gold and lower grades for silver. The company now expected gold production of 95 000 oz to 105 000 oz and had revised its silver production guidance to between 5.6-million and 6-million ounces.

Cash costs for 2013 were still expected to be in the range of $620/oz to $640/oz of gold equivalent; however, the company now expected its by-product cash costs to be between $410/oz and $430/oz of gold, as a result of reduced silver by-product credits.

The company had also updated its capital and exploration expenditure guidance for San Dimas to include the start of an expansion at the company's hydroelectric facility, which was expected to total about $45-million, excluding capitalised exploration expenses of $15-million. A decision regarding the potential further expansion to 3 000 t/d at the mine is also expected in October.

Spending in 2013 at the Cerro del Gallo project, also in Mexico, was expected to be about $11-million for capital expenditures and $4-million for exploration, based on 100% ownership.

The company’s TSX-listed shares responded positively to the company’s good news, climbing 7.92% to C$5.04 apiece on Thursday.