TORONTO (miningweekly.com) – TSX- and NYSE-listed precious metals producer Primero Mining has breached its 2013 output and cost guidance and on Monday said it expected to lift its 2014 production by 15% to between 155 000 oz and 165 000 oz of gold equivalent.

The Toronto-based company reported record production in the fourth quarter ended December 31, producing 34 371 gold-equivalent ounces (GEO), boosting its full-year performance to a record of 143 114 GEO, 29% higher than in 2012 and above the company's increased guidance range.

Primero said its estimated full-year 2013 cash costs dropped by 6% over 2012 to $599/GEO, or $389/oz of gold on a by-product basis, with all-in sustaining costs estimated at $1 072/oz.

The miner said it sold 999 162 oz of silver in 2013 at spot prices that were 40% higher than 2012.

Primero last month announced that it had struck a deal to buy miner Brigus Gold for $220-million that would see the two companies form a new North American midtier gold producer, with operations in Ontario and Mexico.

Primero offered 0.175 a share for each Brigus share. The exchange ratio represented C$0.91 a Brigus share, based on Primero's closing price of C$5.22 a share on the TSX on Friday, which implied a 43% premium to Brigus' 20-trading day volume-weighted average price and a 45% premium to Brigus' closing price.

Brigus shareholders would also receive 0.1 of a common share in a newly incorporated company - SpinCo - for each Brigus common share as part of the arrangement agreement.

The SpinCo would hold Brigus' interests in the Goldfields project, in Saskatchewan, and the Ixhuatan and Huizopa projects, in Mexico, and would be capitalised with about C$10-million in cash.

At the close of the transaction, Brigus shareholders would hold a 90.1% interest in SpinCo and Primero would hold the remaining 9.9% interest.

The combined company was expected to produce 250 000 oz to 270 000 oz of GEOs in 2014, at below average cash costs. That could rise to about 400 000 oz in 2017.

"In 2013 we continued to focus on delivering strong operating results and we are very proud of the record results our operating team achieved. Their efforts led to Primero generating significant operating cash flow, despite the depressed commodity price environment.

“It also allowed us to fund an expansion at San Dimas, advance the Cerro del Gallo development project, [in Mexico] and positioned us to announce the acquisition of Brigus Gold, which will transform Primero into a diversified, multi-mine, below-average-cost, Americas-based gold producer with 240 000 to 260 000 GEOs of production in 2014,” Primero president and CEO Joseph Conway said.

He added that during 2014, the company would continue to focus on delivering strong operating results and optimising its operating cash flow as it increased San Dimas production, closed the acquisition of Brigus Gold, integrated the Black Fox mine into its portfolio and made a construction decision on the Cerro del Gallo project.

Meanwhile, Brigus had also reported that its full-year output from the Black Fox mine totalled 98 710 oz of gold, including fourth-quarter output of 21 916 oz of gold.

Primero’s TSX-listed stock traded 3.18% higher on the TSX on Monday at C$5.19 apiece.