UPDATE 1-Primero says strike at silver mine ends, keeps output view

Mon May 2, 2011 1:10pm GMT
 

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May 2 (Reuters) - Canada's Primero Mining Corp said the month-long strike at its San Dimas gold-silver mine in Mexico had ended and it did not expect the strike to hurt its full-year production outlook.

While the mine has been running below its capacity of 2,100 tonnes per day, Primero expects to process the ore stockpiled during the strike period without hurting its annual production outlook, it said in a statement.

The new collective agreement includes bonus structure terms and has been approved by the local union representing the mill workers, who returned to work on May 1.

The workers at the mine had gone on strike on March 31, demanding higher bonus payments as prices of gold and silver soared. [ID:nN31257950]

Primero expects to begin selling half of the annual silver produced at spot prices during the second quarter.

"This will be an important catalyst for the company as at current prices it is expected to add significantly to our 2011 revenue relative to 2010," Primero said in a statement.

Silver Wheaton Corp has a silver purchase agreement with Primero until Aug. 6, 2014. Primero will receive silver spot prices only after the total threshold amount has been delivered each year, it said.

The San Dimas mine produced 4.5 million ounces of silver and 85,400 ounces of gold in 2010.

Shares of the company closed at C$4.63 on Friday on the Toronto Stock Exchange. (Reporting by Maneesha Tiwari in Bangalore; Editing by Gopakumar Warrier)

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