TORONTO (miningweekly.com) – Toronto- and New York-listed gold miner Primero Mining on Thursday reported record production and revenue for 2012, as it lifted throughput at its flagship San Dimas mine, in Mexico, and a positive tax ruling benefited the company.

During the fourth quarter ended December 31, Primero produced 26 310 gold-equivalent ounces (GEO), which resulted in record full-year production of 111 132 GEO, which was 9% higher compared with that of 2011.

On a year-on-year basis, the company produced 15% more gold at 23 143 oz and 10% more silver at 1.32-million ounces in the quarter, mainly owing to the higher throughput. This resulted in the company increasing gold production by 10% to 87 900 oz for the year, and lifting silver production by 12% to 5.13-million ounces.

The company said full-year production at San Dimas was higher mainly as a result of mining more ore at about 1 976 t/d, owing to the company's mining optimisation programme that was initiated mid-year.

Primero said it also lowered costs per ton when compared with 2011. Fourth-quarter cash costs were $677/GEO, or $535/oz of gold on a by-product basis. Total cash costs for the full-year 2012 were $636/GEO, or $366/oz of gold on a by-product basis, compared with $640/GEO, or $384/oz of gold on a by-product basis in 2011.

Revenues in the fourth quarter were 22.47% higher quarter-on-quarter at $43.6-million, compared with $35.6-million in the fourth quarter 2011 as a result of selling 20% more GEO at slightly higher prices.

The company sold 22 404 oz of gold at an average realised price of $1 715/oz and 1.25-million ounces of silver at an average realised price of $4.12/oz in the quarter, according to the silver purchase agreement with streaming firm Silver Wheaton.

Operating cash flow before working capital changes increased by 22% in the quarter to $17.8-million or 19c a share, compared with the $14.6-million or 17c a share recorded in the same quarter of 2011.

Primero reported net income of $1.2-million or 1c a share in the fourth quarter, compared with net income of $31.2-million or 35c a share in the fourth quarter of 2011, lower mainly owing to the income tax recovery of $28.8-million in the fourth quarter of 2011 as a result of the timing of the company's advance tax ruling application.

Adjusted net income for the fourth quarter was $4.5-million or 5c a share, compared with an adjusted net income of $4.7-million or 5c a share in the fourth quarter of 2011. Analysts on average had expected adjusted earnings for the quarter of 8c a share on revenue of $50.79-million.

In 2012, revenue increased to a record $182.9-million, compared with $156.5-million in 2011 as a result of selling 13% more gold ounces and 8% more silver ounces, at 6% higher gold prices and 2% lower silver prices.

The company earned net income of $49.6-million or 54c a share for the full year compared with $49.6-million or 56c a share in 2011. Adjusted net income for 2012 was $41.3-million or 45c a share when compared with adjusted net income of $28.3-million or 32c a share in 2011.

"We built significant value in Primero during the year, increasing reserves, resources and production while being one of the few producers to reduce cash costs. The company also significantly increased free cash-flow as the result of a positive tax ruling while also significantly reducing its debt,” CEO Joseph Conway said.

He added that the achievements translated into share price performance, with Primero shares appreciating 97% in 2012, as well as inclusion into the S&P/TSX Gold Index.

“We look forward to 2013 and continuing to focus on per share growth in production, reserves, earnings and cash flow. We expect to complete the acquisition of the Cerro Del Gallo development project, in Mexico, during the second quarter, which will further enhance our position in the region, and substantially increase our reserves, resources and near-term production,” he said.

Primero expects to increase production this year to between 120 000 GEO and 130 000 GEO, 17% higher than in 2012, based on higher throughput at slightly higher grades. Production is expected to ramp up at the end of the first quarter when the current maximum milling capacity of 2 150 t/d would be achieved.

Cash costs are expected to be in the range of $620/GEO to $640/GEO or between $280/oz and $300/oz of gold on a by-product basis, similar to or below 2012 cash costs.

Capital expenditures for the year were expected to be about $42-million, excluding capitalised exploration costs.

Primero expects to produce 250 000 GEO at below average cash costs by 2016.

The company’s Toronto-listed stock traded 2.3% higher at C$5.78 apiece on Thursday.